Total Quality Management in Banking Sector
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The document discusses quality management in private banking sector. It first provides context on the expanding Indian banking sector and increasing competition. It then covers key dimensions of service quality like reliability, responsiveness etc. It presents models like Kano model and tools for quality management. The case study focuses on HDFC bank, outlining its history, quality policies, objectives and processes. It demonstrates quality tools like cause-and-effect diagram, scatter plot, Pareto chart and FMEA applied to HDFC bank. It concludes with recommendations to establish continuous improvement culture and link between quality and customer satisfaction in banks.
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Total Quality Management in Banking Sector
- 1. Quality Management in Private Banking Sector GROUP 9 Suyash Jain C016 Apoorva Jajoo C017 Shreya Khare C018 Akshay Khatri C019 Tejasv Kumar C020 Aakarsha Lamba C021
- 2. Introduction Total - made up of the whole Quality - degree of excellence a product or service provides Management - act, art or manner of planning, controlling, directing,…. Therefore, TQM is the art of managing the whole to achieve excellence. Service quality is defined as the degree of discrepancy between customers’ normative expectations for service and their perceptions of
- 3. • Global world suffered from financial depression in recent years, it is essential for banks to establish a sturdy and solid loyal customer base to weather tougher economies and more intense competition. • Indian banking sector continuously expanding still it has faces tough competition between public sector and private sector banks • The public sector banks dominate the banking industry in terms of size of assets . • The government has now recognized the need to make banking industry more competitive and made various policies to support them. • Banks have expanded their operations and more foreign sector banks have entered the Indian banking industry
- 4. Dimesions of Service Quality RESPONSIVENES RELIABILITY ASSURANCEEMPATHY TANGIBILITY
- 6. Ease of Access Tangibles Security Credibility Communication
- 9. Kano Model • Availability of multifunction kiosks. • Ease of Access • Reliability • Banks should remain open on Sunday • Expert service available for import/export business • Supportive behavior of member of staff • Space available for sitting/writing /waiting • Reliability • Courtesy • Locker service rendered by branch • Availability of ATM facilities • Short Duration of time in payment of cash /DD/FD • Issue of cheque book in current a/c • Layout & signboards • Sanctioning of loans • Responsiveness • Nominal Interest Rates • Security • Locker Facility
- 10. Case Study
- 11. History • First to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector • HDFC was incorporated in 1977 with the primary objective of meeting a social need that of promoting home ownership by providing long-term finance to households for their housing needs • VISION STATEMENT- To build a world class Indian bank. • MISSION STATEMENT: Use enabling technologies to provide value added products and services to customers at value for money price. • It has also received a CII-EXIM Bank Commendation Cert. for commitment to TQM- 2000. • Various researches conducted for quality enhancement.
- 12. Quality Policy • SECURITY: The bank provides long term financial security to their policy. The bank does this by offering life insurance and pension products. • TRUST: The bank appreciates the trust placed by their policy holders in the bank. Hence, it will aim to manage their investments very carefully and live up to this trust. • INNOVATION: Recognizing the different needs of our customers, the bank offers a range of innovative products to meet these needs. • INTEGRITY • CUSTOMER CENTRIC • PEOPLE CARE “ONE FOR ALL AND ALL FOR ONE” • TEAM WORK • JOY AND SIMPLICITY
- 13. Quality objective Decrease number of customer complaints Improve customer service scores in every branch time to time Reduce customer wait time in line and ensuring adequate staffing during peak periods. Reduce data-entry time per customer by consolidating multiple databases into one data management system by the end of this year. Increasing the security in internet banking portals. Reducing the transaction failure rate for online payments. Improving the instant fund transfer app Chillr-HDFC Bank
- 14. Quality process
- 15. TQM implementation Reducing the processing times of key products and services Promptness in responding to customer inquiries Accuracy and timeliness of statements of accounts and records Customer Service Quality Banking Service Product Quality E-banking Improvement Increasing Customer Satisfaction & Security
- 16. Quality Tools They are called basic because they are suitable for people with little formal training in statistics and because they can be used to solve the vast majority of quality-related issues.
- 18. Account Opening Delays Environment People Process Measurements Machine No back-up support system Management issues Absenteeism No training program Workload Material Maintenance issues Network issues Low employee engagement Rules and Regulations Infrastructure Law and Order Location No proper tracking system No proper return mail monitoring Service Desk Less printers Outdated systems No token System Unavailability of stationary Improper sealing of envelopes Low quality paper Delay caused in Opening a new account
- 19. Scatter Diagram 0 2 4 6 8 10 12 0 10 20 30 40 Service Time (in minutes) Customer Feedback (scale from 1- 10) Independent Variable : Service Time Dependent Variable : Customer Feedback
- 20. PARETO CHARTS 39% 63% 76% 87% 96% 100% 0% 20% 40% 60% 80% 100% 120% 0 2 4 6 8 10 12 14 16 18 20 General behavior of member of staff Performance of internet banking &mobile banking Availability of staff member for enquiry & listening of problem Time taken in proceed of outstation cheques Duration of time in payment of cash /DD/FD Time taken in sanctioning of loan
- 21. FMEA for HDFC Bank Failure Mode Effect Analysis
- 22. Why companies go for FMEA?? • Get it right the first time • Identifies any inadequacies in the development of the product • Tests and trials may be limited to a few products • Continuous improvement • Preventive approach
- 24. Effect SEVERITY of Effect Ranking Hazardous without warning Very high severity ranking when a potential failure mode affects safe system operation without warning 10 Hazardous with warning Very high severity ranking when a potential failure mode affects safe system operation with warning 9 Very High System inoperable with destructive failure without compromising safety 8 High System inoperable with equipment damage 7 Moderate System inoperable with minor damage 6 Low System inoperable without damage 5 Very Low System operable with significant degradation of performance 4 Minor System operable with some degradation of performance 3 Very Minor System operable with minimal interference 2 None No effect 1
- 26. Process Step potential failure mode potential failure effect Severi ty Potential causes likelin ess of failure current process control detectab ility of failure RPN action recommen ded Resposibility action taken new severity new likelines s of failure new detectabi lity new RPN Withdraw al of cash Cash not disbursed dissatisfie d customer 7 Machine out of cash 7 internal alert of low cash in machine 4 196 improve monitorin g of cash threshold levels across machines manager minimum cash threshold limit of heavily used machine is increased to prevent out- of -cash situation 7 4 3 84 Account debited but cash not disbursed very dissatisfie d customer 8 transactio n failure or network/s erver issue 3 load balancer installed to distribute workload 4 96 enhance transactio n processing system manager proper verification of the trnsaction 8 3 2 48 extra cash disbursed bank loses money 8 bills stuck to each other 2 verification while loading cash in machine 3 48 change the quality of paper manager verification while loading cash in machine 8 2 2 32
- 29. RECOMMENDATIONS • Provide the bank employees first-hand best corporate practices • Expose the bank employees to the environment in which the bank customers use the bank's services • Constantly retrain the bank staff in the theory and practice of TQM • Showcase the customer quality • Establish a continuous improvement culture in the Bank Initiate vigorously continuous process improvement in the Bank. The process improvement can be brought about by; • Breakthrough thinking; • Process stabilization; and • Incremental Imrovement
- 30. Conclusion • A link between service quality and satisfaction level can be established, i.e. customers’ satisfaction is influenced by the level of total service quality. • However, it was also found that certain service quality dimensions fell short of customer’s expectation as their perceived service quality was less than their expectations.
- 31. • There is a close relationship between the employee perceived quality in banks and the actual service quality perceived by bank clients. • Customers are important aspect of bank and loyal consumers can add value to profitability of banks. • TQM can improve performance of a bank by lowering costs, increasing revenues, delighting customers, and empowering employees.
Editor's Notes
- While many of us may feel that we are now all part of the quality movement, there is still a huge gap between the rhetoric and real understanding. The philosophies of the pioneers of the quality movement, Deming, Juran and Crosby, have not been translated very accurately into the practice of education
- As the global world has suffered from financial depression in recent years, it is essential for banks to establish a sturdy and solid loyal customer base to weather tougher economies and more intense competition.
- Reliability: Consistency of performance and dependability. Many of the factors promoting reliability are common to overall success. We employ back up systems and personnel to insure that an adequate supply of workers are available to complete the job. 2. Responsiveness: Willingness and readiness to perform services. Our managers, supervisors and all personnel are encouraged to work under a “spirit of service”. We understand that our customer’s would not need our service, if they never had problems. We teach our personnel to understand and appreciate the term “job security”. 3. Competence: Possession of skills and knowledge to perform. Our management team benefits from some of the most knowledgeable resources in the business. Our cleaning experience is unsurpassed! We are confident that there is no cleaning situation that we cannot manage! 4. Understanding: Knowing the customer's needs and requirements. We know how to listen. 5. Access: Approachability and ease of access to management. As owner managers Bobby Blain and Scott Patterson interact daily with customers and operations. We return phone calls. 6. Communication: Providing the customer with effective information. We retrieve a huge amount of information from our operations’ personnel. We have a number of effective means for passing this information on to our customers. 7. Courtesy: Friendliness of personnel and ownership. We know how to handle complaints. We strive to be “peacemakers not troublemakers”. We find answers, not excuses. 8. Credibility: Trust and personal characteristics of personnel. We have experienced recruiters who ask pertinent questions, check references and conduct background checks on all new hires. 9. Security: Safety, financial security, and confidentiality. 10. Tangibles: Physical evidence of service. Reports, inspections. . We want our customers to know what we are doing for them, so we have a very elaborate communications system that includes: a bar code inspection program, a verbal report translatable into E-mail (for an early morning breakdown of evening activity), and a computerized schedule process, so that our customers know when to expect specific work items.
- Reliability: Consistency of performance and dependability. Many of the factors promoting reliability are common to overall success. We employ back up systems and personnel to insure that an adequate supply of workers are available to complete the job. 2. Responsiveness: Willingness and readiness to perf orm services. Our managers, supervisors and all personnel are encouraged to work under a “spirit of service”. We understand that our customer’s would not need our service, if they never had problems. We teach our personnel to understand and appreciate the term “job security”. 3. Competence: Possession of skills and knowledge to perform. Our management team benefits from some of the most knowledgeable resources in the business. Our cleaning experience is unsurpassed! We are confident that there is no cleaning situation that we cannot manage! 4. Understanding: Knowing the customer's needs and requirements. We know how to listen. 5. Access: Approachability and ease of access to management. As owner managers Bobby Blain and Scott Patterson interact daily with customers and operations. We return phone calls. 6. Communication: Providing the customer with effective information. We retrieve a huge amount of information from our operations’ personnel. We have a number of effective means for passing this information on to our customers. 7. Courtesy: Friendliness of personnel and ownership. We know how to handle complaints. We strive to be “peacemakers not troublemakers”. We find answers, not excuses. 8. Credibility: Trust and personal characteristics of personnel. We have experienced recruiters who ask pertinent questions, check references and conduct background checks on all new hires. 9. Security: Safety, financial security, and confidentiality. 10. Tangibles: Physical evidence of service. Reports, inspections. . We want our customers to know what we are doing for them, so we have a very elaborate communications system that includes: a bar code inspection program, a verbal report translatable into E-mail (for an early morning breakdown of evening activity), and a computerized schedule process, so that our customers know when to expect specific work items.