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The concept of banking was first introduced in
medieval Florence in 1397, as a network of shops to transfer large sums of money from one place to another against the risk of
robbery. Modern banking has come a long way from those humble beginnings in Florence. The
origin of the Indian banking system began in the later part of the
18th century with the establishment of
General Bank of India in 1786. Today, banks have
become a part and parcel of every individual. They cater to the needs of agriculturists, industrialists, traders and all other
sections of the society. Banks are competing in providing
a variety of noble services to their customers. Service quality is an important aspect
which determines the success of such services and
the organization as a whole. Today, the customers are
trying to make a choice among suppliers which leads to a trade off between relationship and economies, trust and products,
service and efficiency, etc. In addition, improved technologies are resulting in customer
service breakthrough that significantly alters
customers' expectations and perceptions.
`Perceived service quality' has been defined as the consumers' global attitude or judgment of the
overall excellence or superiority of the services, which can be measured by service quality
dimensions. These factors increase the speed of processes such as solving customer problems, handling
of customer complaints, service delivery, handling of applications, etc.
The Indian banking industry is now in a position to face the challenges of increased
competition, complexity of business and highly demanding consumers. Entry of new private banks
and foreign banks with updated technology is another challenge to the existing banks. Though
the public sector holds a major share of the industry, its performance is lagging behind the
private and foreign banks. Private banks are gradually eroding and capturing the share of public
sector banks. The Indian economy under Liberalization, Privatization and Globalization (LPG)
throws a mind-boggling process for existence and growth of the sector. WTO was established in
1995 and the signing of WTO agreement by the Indian government meant greater competition
from foreign and domestic bankers in terms of speed, sophistication and professionalism. The
banks are now expected to maintain transparency in their operational and financial
statements. However, in the deregulated virtual market, small banks with high return on equity will have
an edge over the large banks. In fact, modern commercial banks have to be much more agile
to stay in the competitive market. Adoption of information technology and improved services
are vital for survival and growth of the sector and will fix the future of commercial banks in
the LPG economy. |
