Quality of services is the most
important aspect in banking too. Business success can be reinforced if you
conscientiously search for newer and more effective ways of improving the
quality of your ways of serving your customer. Your organisation becomes more
useful to the society as a whole thus. As far as banking is concerned,
effective TQM measures bring in a transition form the good old good to the
novel better or best from the bank’s internal department to its front-line
employees. Marketing a bank is not just the same as marketing an FMCG
company. TQM, if effectively formulated
and practised, provides extreme ease and clear direction to a bank marketeer in
understanding what makes his bank the first choice to its customers before
What is effective TQM as far as a
bank is concerned. Is it the physical amenities provided at each of the
branches, is it a pleasing smile and a warm hand-shake at the front door, is it
convenient hassle-free paperwork, or well thought about, well planned, target
oriented, tailor-made product mix, ICT
enhanced sophisticated operational eases, or a properly balanced mix of all
these. Will a centralised TQM plan is enough or freedom at the levels of
individual branches needed, or a regional/zonal segmentation is enough? What
could be the optimal level of decentralisation of decisions to achieve the
maximum quality of services and at the same time achieve maximum profitability?
These are the various issues
discussed and probed into in this study. An attempt to conceptualise and
suggest some innovative TQM designs also is made here. It’s envisaged that the findings of this
study will be of some real use to the banking industry as a whole, the
population pf students who are interested in pursuing higher studies in
banking, and thus to the society in toto.
Objectives of the
The researcher intends to examine the present state of the total quality
management in banks, analyse the present situation, make comments on the
observed facts and suggest some innovative strategies.
The mode of collecting relevant
information has been direct interviews of some bank officials, telephonic
interviews of some bankmen, resource persons in the subject of banking and
finance, direct beneficiaries and prospective beneficiaries of these financial
services etc. Convenience sampling is
the sampling modality chosen.
As a case study the Total Quality
Management measures adopted by CenterBank, Ohio, USA is discussed in detail,
and some innovative Quality Assurance measures are suggested.
Published secondary data from
books, journals and Internet also has been utilised. The findings or the suggestions put forth in
this study hopefully will be of some real use to the industry or the students
who intend to do a study in these lines.
As mentioned before a
strongly founded quality assurance efforts can, perhaps only can, reinforce the
success in a bank from its back office to the front office and in all its
dealings. Service quality empowerment begins by giving the necessary training
to the managers to train their employees in a proper way. They must then be
provided with the resources required, to develop and train the employees on a
continual basis. The training must be powerful enough to change the basic
concepts of the employees especially those who come into direct contact with
the customers. The training must enable them to derive satisfaction out of
their everyday official chore, what you call job satisfaction. They must be
taught the psychological aspects of rendering a good service, thus making
themselves happy and through that making the customers also happy. In the end of
each day the employees too will be freed from a lot of job related frustrations.
A properly formulated
training programme will ensure the employees their all round personality
development, so that they will be able to win the esteem of the customers. From
a mere mechanical dispensing of the boring duties entrusted on them, they will
get transformed to happy and enthusiastic solution providers. This is the only
way they can build up their social esteem also.
Perhaps finding out the
real performers and rewarding them for their exclusive capabilities is not
possible in the present government set-up. We reward them class or
category-wise, as a group. This will never be useful. We have found it from the
recent bounteous hikes in salary and other perks of bank employees. They are
one of the most highly paid clerks in the world, perhaps. Corresponding
infrastructural improvements were also were brought in, but because of the
resistance of the employees to change and acquire new knowledge most technical
advancement some of the public sector banks has brought in, is not available in
its full sense to the customer population. This causes huge losses to the
public coffin and allows even small private sector banks overtake them and
achieve faster business growth.
So a well thought about national
training strategy for different levels of managers and employees has to be
formed with the definite structure of an academic course. All efforts must be
utilised to see that the attendees really learn and master the theories and
techniques taught to them. This with intensified on the job training makes them
masters in the art. This will help them develop self confidence also. Knowledge
and wit commands reverence and so the public will come to respect them. They
from the mere “weight throwing” public servants abhorred by the public, will be
transformed to “esteem worthy problem solvers” liked and respected by the
to Retire but to Acquire
Normally a job in a public
sector bank or for that matter in any government organisation is sought by a
citizen as a happy culmination of his(er) quest to find a sure, safe and
permanent way of winning a sustenance first, then to bargain collectively and
get the resources to suffice all his whims and fancies, as far a s possible.
This condition should be changed to a creative condition where all of them get an
opportunity to acquire the necessary skills and expertise which they can use
throughout their life.
After passing out from the
education institutions (the courses prescribed as the basic qualification for
managing an entry to any of the posts in a bank) they get into a bank. Theres’s
a training course he has to undergo and emerge out successfully. Then he is
paid a higher salary and continues in the job or if qualified gets promoted.
One of the parameters set
for assessing his qualification for promotions and salary must be the
customer’s opinion recorded as and when he served them. This must be done on a regular basis. Each
approach by any of the customers to a bank officer/employee must be recorded
and his satisfaction level in that transaction recorded.
of the Retirement Age
Since we have made the
service in a bank especially in the public sector banks as a qualification for
getting into any other jobs in the private sector, in government sector we can
effectively and creatively reduce the age of retirement. It must be brought
down to 35 or if the person wants it can be extended to 38, which will have
some minus points, if not compensated by some extra achievements in the
continuation phase. Then he is provided the minimum superannuation benefits,
which will be almost equal to everyone, irrespective of the positions held, and
will be in accordance with the recorded achievements during his career, basic
education qualifications at the time of retirement, contributions made to the
organisation, accrued up customer opinions etc. Then he goes on to other jobs
in some other organisations. We can lay out some conditions for a re-entry also
into the bank.
There must be provisions to
go for educational courses without compromising on the requirements of the job.
Achievements of extra qualifications can be treated as a weight point while
assessing the amount of the pension he can draw after retirement.
After retirement he gets
qualified to accept suitable jobs in any other organisations. His ability to be
a capable person is enhanced by his career in the bank. Since there is a little
healthy competition induced into the content of his profession/job he will
constantly try to achieve excellence. Achieving excellence brings him life-long
benefits. So he will not leave any occasions for achieving or attaining
excellence. Normal ways of manipulations must be leaned well and these
loopholes as far as possible must be closed effectively.
There must not be any limit
to the age of entry to the services of a bank. The aim of the banks is to
provide opportunities of employment and at the same time ensure of quality of
services. So a man seeking a job for the first time in his life, that means he
has not entered into a job in any of the public sector organisations, he has
the necessary entry qualifications and has been employed or engaged in some
other works in our country, abroad or self employment avenues, has meritorious
achievements to his credit he can be given an entry into a suitable position,
the same chances for other employees is provided to him. He also has to comply
with the rules and regulations. He can continue for ten years in service and
get qualified for outside employments in the meantime. He also is provided with
all the benefits following the same laid out conditions.
This kind of an innovative
Quality Assurance Measure will ensure Total Quality in every aspect of the
banking business, especially in the public sector, which is being accused of
having a poor service quality.
All the paper-works must be
scrutinised and must be brought to the bare minimum. Value added, multiple use
tools must be introduced. Advancement in ICT can also be used to reduce the
usages of paper. It reduces the total paper use and saves the environment. Those
who are not aware of the required principles and techniques of using these
tools must be provided the know-how. Both employees and customers. Their
effectiveness and speed of using these tools must be constantly improved.
Expertise Earned through Exposure,
Being exposed to a
particular system, device or condition of operation anyone can in a particular
span of time achieve mastery over it. The time required to achieve this mastery
may vary form individual to individual. A system must be introduced by which we
effectively measure the time every bank employee takes to master properly a
particular system, device or condition of operation (s)he is being exposed to
as part of his duty in the bank and the degree of mastery too. This must also
be noted with event wise details in a certificate given to each employee while
he retires and goes out of the bank. This certificate should contain all
details about the services he rendered, educational qualifications attained
after getting the job, in house trainings undergone and details of achievements
he had got in those trainings, and the pension he is entitled to get. A man’s
ability to continuously better his nature of dispensing a job must be monitored
on a regular basis. This of course is a tougher proposition, even then with the
advent of modern technology this can be judged and recorded without much of a
Global Nature of TQM in Banking
a total quality management program is an ongoing process consisting of many different
components. Banks that have begun such a journey say it is an intense learning
process that spans a lifetime. "It is a process that works backwards to
the absolute heart of the organisation," says Bill Placke, president and
chief operating officer at Centerbank, Waterbury, Conn.
CenterBank is a locally owned, independent community
bank headquartered in Milford, Ohio. It is a new bank founded on an old concept
– Community Banking. Providing things the big banks can’t offer like
relationship banking, exceptional service, local ownership, local
decision-making, and community involvement.
As a community bank they’re obsessed with customer
service, with having the best employees and taking the best care of their
customers. By big things like taking the time to know each customer by name and
understanding his(er) individual needs. And by little things like answering the
phone with a real person – not a machine.
Their main characteristics are exceptional service and
great products with reasonable fees, so the choice is easy for their customers.
As a a small bank which has grown by successfully implementing the principles
of TQM in the banking sector understanding this case is useful for this study,
describes the effort as creating a high level partnership between those who
provide internal service and those who deliver external service. "The
support level of your back office is absolutely critical to the job you are
doing at the front line," he says.
Using a Harvard University analogy on the service
profit chain, Placke explains how total quality management works.
"Internal service quality leads to employee satisfaction, which leads to
employee retention," he says. "Employee retention leads to external
quality service, which leads to customer satisfaction, which in turn leads to
customer retention and greater profitability
are six discrete pieces, all of which have to be inter-related with each other
for this to work," he adds
the importance of interdependency has helped Centerbank develop its total
quality management program. Banks that only think of the customer when they
begin a quality management program, are making a mistake, says Placke.
"Only a limited number of people are at the front line of sales," he
explains. "If they are not tended to extremely well by people who provide
them service, they will tire quickly when providing customer service because
they are hassled at the back end."
has defined three ways to provide total quality service: provide a high level
of employee training; understand what satisfies customers; and develop
measurement systems that provide regular feedback. "Communication is a
huge part of all of this," says Placke.
strategy for developing highly trained employees begins at the hiring process
by identifying people who believe delivering quality service is a key goal.
Finding the right person leads to expanding the interviewing pool and taking
more time in selecting new hires, asserts Placke.
key component for the training process is empowering employees to make
on-the-spot decisions. Through nontraditional training, managers act as mentors
for their employees. Branch managers coach the customer service representatives
and tellers only after they have been coached by their supervisors. Everyone,
including Placke, participates in the training. "It is a cascading
approach and there are many benefits," he says.
instance, training while on the job does not disrupt the flow of business. If any
interpersonal problems arise within the staff, they are identified and handled
immediately, says Placke. The interaction between boss and subordinate also
improves, he says.
part of the coaching program includes videotaping participants while they
role-play. In these sessions, employees learn how to ask customers leading
questions to determine financial needs. Special attention is paid to voice
tone, facial expressions, eye contact and attitude. "If someone approaches
you with a dazzling smile, a great tone of voice and good eye contact, you
can't resist," says Placke. "We're trying to develop a style in the
service level and attitude we deliver."
in attitude can sometimes make all the difference in the world. The results at
Centerbank are dramatic, according to Placke. He gets letters frequently from
customers who notice the difference in employees. Customers write, "You
wouldn't believe how attentive this person was. He made me feel like I was the
only person in the bank."
what satisfies customers is an important component in delivering total quality
service. Focus groups and questionnaires are all part of what Placke calls the
basic research. Secondary research digs much deeper into customer behaviour with
the use of segmentation and predictive modelling.
determining the net present value of its customers, Centerbank has been putting
more emphasis on retention strategies. The premise for the strategies is that
some segments of the customer base will be more profitable over time than
others, based on the type and number of accounts and balances.
Quality as a Banking Strategy
Surveys show results. Customers
register complaints. Employees leave. America is in the midst of a service
crisis and the customer is the casualty. Financial service companies, including
banks, are no different. Banks are struggling to improve service and proclaim
that they are customer-focused, yet outstanding, exceptional quality service is
still the exception rather than the rule. Two routes to profit growth in
financial organisations are cost-efficiency and differentiation.' Excellent
service contributes to both.
In this chapter, the use of
quality in banking focuses on strategy and moves the focus from quality to
total quality management. While banks understand the value of service
quality, getting started can be a struggle. This chapter discusses the
implementation of the quality process, the need for commitment, and the impact
of quality on the bank. The quality process is complex and frustrating at
times, but focus is critical. The process begins with top management's
commitment to quality.
Must be a Management Priority
Management participation and
leadership is crucial to building a service quality culture. This vision and
leadership is also important in developing and implementing a total quality
management strategy. Lack of management commitment could lead to service gaps
or cause service gaps to widen. Quality must be a management priority.
Igniting the explosion of quality leadership in a company means repositioning
quality from a secondary to a primary management role. Although much of the
research indicates the need for management commitment, renowned quality
consultant Philip Crosby says he does not want "commitment" from top
managers, he wants "participation."
One of the most important
functions of the total quality leader is the ability to empower people. It
includes transferring power downward and outward and fostering wide employee
participation in the quality process.
Service quality is everybody's business, and effective leaders empower
employees to make on-the-spot decisions that are in the customer's interest.
According to William Davidow and Bro Uttal in Total Customer Service: The
Ultimate Weapon, employees will commit to quality if they see management
commitment and believe it is sincere.
What is remarkable about service
leaders is the way they treat employees. Getting their hands dirty keeps top
managers in touch with the problems of customers and the experience of the front
line, and it shows everybody that serving customers is important
Quality service comes from
inspired leadership. Employees and managers at all levels look to top
executives to set an example and a tone for the rest of the organisation. Top
management must foster a general awareness that quality improvement will take
its place as equal in importance to traditional cost, profit, growth, and sales
goals. "Leadership is the backbone of quality, as it is for all planned
Adopting quality as a bank
strategy means cultural change. Change is difficult to accomplish without
solid, committed leadership. The bank president and other senior executives set
the pace. It is imperative that senior managers in service organisations
provide the leadership to focus their company around a set of core values that
include customer service and service quality.
A quality strategy requires people and
resources. Without the commitment of top management and their willingness to
back it up with considerable resources at their disposal, quality improvement
will not be possible. Total quality leaders know and understand that personal
success comes from group success and that credit for success must be
distributed throughout the group
One of the most important functions of
the total quality leader is the ability to empower people. It includes
transferring power downward and outward and fostering wide employee participation
in the quality process. Service quality is everybody's business, and effective
leaders empower employees to make on-the-spot decisions that are in the
According to Edward Furash
Edward E. Furash, President
& CEO of City First Bank of DC & Vice Chairman of the Board, has been a
banker, educator, speaker, and industry strategist for nearly 45 years. Mr.
Furash recently retired as Chairman of Treasury Bank, N.A. which he acquired in
2000 in partnership with Countrywide Financial Corporation. He has been the
chairman of Bank of America Corporation.
According to Edward Furash, bank management must have three
1.A style of doing business that
makes customers feel the bank is something special;
2.A management process that is
systematic and transferable from region to region, bank to bank, and department to department;
3.A management style that also
balances individual and unit freedom, creativity, and incentive with central
control of risk, quality, and efficiency.
According to Ray F Boedecker
Ray Boedecker the author of
“Eleven Conditions for Excellence: The IBM Total Quality Improvement
process” outlines the importance of management backing up strong words with
visible action. Boedecker suggests management take the following actions:
1.Incorporate quality into the
bank's strategic plan;
2.Issue a policy stressing the
importance of quality, the commitment of the organisation to quality
improvement, and everyone's responsibility for improvement;
3.Make organisational changes;
4.Form a quality council composed
of senior managers who report to the CEO;
5.Initiate quality training
6.. Incorporate quality improvement
goals in operating plans on par with other traditional bank goals;
7.Listen to customers through
various forms of market research;
8.Visit operating units and
community offices to talk with managers and employees about their feelings on
quality. Find out what problems they face in meeting customer expectations;
9.Make quality a periodic agenda
item at meetings;
10.Insure that quality is a factor
in all performance, compensation, and incentive programs;
11. Initiate a recognition and reward system to
reward quality achievements for individuals and groups;
12.Review quality goals and
targets and challenge them frequently;
13. Educate the senior management group on quality
14.Visit other firms that have
embarked on quality improvement programs;
15.Go public with details on the
company's quality improvement plan
Introducing the Quality
After identifying the need for change, committing to a
customer-driven focus on service, and gaining top management commitment, a bank
must assess the level of quality in the organisation. Customer and employee
research is critical. After gathering the information, the bank can use the
information and can begin to formulate a strategy for total quality
Quality is a process. Many different elements comprise the
process. Most strategies develop from top-down, but bottom-up works as well. It
is crucial to understand that there are many approaches, but all require
patience and time. Banks have to implement quality strategies that make sense
for them, and it may take years to figure out exactly what works and even more
time to get it right.
Although a bottom-up approach can work,
a top-down method works better for two reasons. First, managers will be able to
support the effort due to adequate communication and some experience. Second,
management may be capable of pursuing meaningful initiatives with
non-management support. All the elements outlined below must be implemented
over the course of time. There is no correct or incorrect order, although
elements do interrelate. For bankers, the move to quality may be frustrating,
but the rewards are great.
Once senior management has a vision
statement that reflects the opinion and brain power of the entire management
team, they ask the employees for feedback. Feedback from customers are also
really important. Effective ways of collecting feedback from customers are to
be implemented successfully.
Outside business organisations also can
be utilised to collect feed-back about the satisfaction levels of the Bank’s
customers. A supermarket, a bookstall, or such other sales points where banks
customers also frequent can be chosen as feedback collection centres.
A bank has to clearly
examine the nature of each product they are offering to their customers. A
need-identification programme conducted prior to the conceptualisation of the
product will clear idea about the nature of the need the market has. Fine
tuning the product of the bank in accordance with that must be a continuous
process. Levels of freedom of decision available at the local level, at the
levels of individual branches may vary from bank to bank and it’s a problem in
this respect. But they convey up their findings and suggestions and these
suggestions must be considered when a centralised policy on product designs are
A convenient and problem
solving product will get faster acceptance in the market. A continuous feed back machinery will be
useful in fine tuning it from time to time. This will help in improving the
profitability of the bank and will enthuse up organisational growth.
Tools means the various
forms and other documents used in the banks for receiving and processing the
requests from customers for availing the various products offered by the bank.
They must be made very simple, so that even customer with the minimum education
even can understand it and provide the necessary information sought through
that easily . They should be reduced to the minimum possible. Unnecessary
paper-works are burden on the employees, a trouble to the customers and
unfriendly to the environment.
The Indian banking system
though lauded by the global experts, especially in the time of the recession
has got a long way to develop, especially in the matter of customer relation.
Total Quality Management (TQM) in the Indian banking scenario can do a lot in
improving the present conditions, in rendering it more useful to the people and
in improving the profitability. Training the employees, fine-tuning the product
mix, improving the top management commitment to quality, fine-tuning of the
processes of ensuring quality top-bottom and bottom-top, reduction of
retirement age, introducing employee development programmes with the nature of
an academic course, monitoring of the performances and proper rewarding based
on achievements, empowering the employees professionally and personally,
ensuring the customer satisfaction in everything etc are the ways suggested as
a aspects of Total Quality Management in Banking