Customer Criterion for Selecting a Bank: An Exploratory Factor Analysis from an Indian Perspective

Abstract

The Indian banks are paving their way towards the goal of financial inclusion, i.e., making financial services accessible to everyone. With the growing economy, banks are acting as a pillar for sustainable development. These days banks are facing a challenge to attract and retain their customers. They are formulating various strategies in order to gain or tap the maximum number of customers; therefore, it becomes imperative for banks to recognize the factors which the consumer consider while selecting a bank. This study focuses on the customers of north India , specifically the tier-2 and tier-3 cities, where people still lack in terms of financial literacy. A survey was conducted with a sample size of 330 respondents out of which 308 were considered for analysis. Various factors were identified using exploratory factor analyses which were reputation, technology, branch availability, appearance, word of mouth, customer services, price and amenities, These were well thought-factors by the customers keeping bank selection dimensions in the center stage. This kind of study would help banking specialists to customise their strategies in terms of increasing the number of customers as the competition is high in the market. Moreover, it would also help banks in formulating region-wise strategies.

Keywords: Banks, India, Exploratory Factor Analysis, Customers, Selection Criteria

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