Skip nav to main content.

It is time for PSBs to roll up their sleeves and start enhancing their service quality

Posted In:

Author: Uthaman Bakthikrishnan

The current scenario of the Indian banking sector is very dynamic and competitive. To maintain market share, banking institutions must acquire a large customer base. Customers today are well aware and spoilt for choices when it comes to financial services. Therefore, they can only be retained by providing quality services.

How do you assess the quality of service provided by banks?

I was reading a research paper on “Service quality in public and private sector banks of India,” authored by Shurthi Agrawal, Manish Mittal, and Ratish Gupta. This paper was published in the International Journal on Customer Relations.

The research objectives included:

  1. To examine the service quality expectations of the bank customers
  2. To examine the level of satisfaction of the customers towards services rendered by banking institutions
  3. To compare the difference between customer expectation and satisfaction with the banking services of public and private sector banks

They have assessed the service quality of public and private sector banks on various parameters – tangibility, responsiveness, reliability, and empathy.

These are the findings on these parameters:

Tangibility: The expectation-experience gap was higher with public sector banks than private sector banks. It concluded that public sector banks (PSBs) lacked appropriate physical facilities and modern equipment.

Responsiveness: Private sector banks have better-equipped ATMs and a better range of products and services compared to public sector banks

Reliability: The customer perception of safety was more or less the same for public and private sector banks. When it came to trustworthiness, customers preferred private sector bank employees more than public sector employees.

Empathy: Right service the first time, prompt service delivery, interest in solving a customer problem, polite employees, consideration of customer interest, and understanding of customer problem are the variables that showed a high expectation – experience gap in public sector banks in comparison to private sector banks.

Not everything is lost for public sector banks. Customers prefer public sector banks when you speak about bank staff knowledge and understanding of customers’ individual needs.

Overall, the study showed that public sector banks need to improve the service quality parameters considerably, which will allow them to compete in the market.

Given this background, what can public sector banks do to up their image and improve their service quality?

PSBs and service quality

On the 20th of June, 2022, senior officials of the finance ministry, including the minister of state for finance Bhagwat Kishanrao Karad met with the CEOs of public sector banks for an annual performance review and to set the agenda for the next phase of reforms under Easenext.

Going forward, public sector banks will be assessed for customer service, which will be measured based on customer service ratings. They will also focus on younger generations’ banking needs and develop plans for meeting all-around customer requirements.

Each PSB will sign a memorandum of understanding with the finance ministry focusing on performance parameters which will now include their usage of data analytics, technology investment for end-to-end digital systems, and strengthening of IT systems.


PSBs, in my mind, are the backbone of small and medium enterprises and can drive the economy positively. These are good times as the PSBs are gearing up to equip themselves with digital transformation and compete on an even footing with the private players.

I also see this as a massive opportunity for the tech players to get involved and have a significant impact, as only PSBs have the necessary infrastructure to address the rural needs.

Besides, the financial health of the PSBs is excellent, and they only have to work on improving their customer experience quality.


About the Author: Uthaman Bakthikrishnan


Uthaman believes in the power of creation - it gives him a high to grow something from scratch and make it sustainable. Uthaman is the Executive Vice President and helps set the strategic direction and roadmap for ClearTouch, a pioneering provider of a cloud-based call center platform for enterprises, contact centers, BPOs, and financial services companies in India.