Communication and Customer Service in Banks

The communication process

Communication is the transfer of information and understanding from one person to another. The elements are:

1. Sender - has an idea
2. Encoding - puts the idea into words, figures or gestures
3. Message and channel - letter, email, phone, face to face
4. Receiver and decoding - interprets the message
5. Feedback - the receiver's response, which makes communication two-way
6. Noise - anything that distorts the message

The Shannon-Weaver model (Shannon's 1948 paper; book with Warren Weaver, 1949) has source, transmitter, channel, receiver and destination, with noise interfering. It had no feedback loop; that was added later by Wilbur Schramm.

Channels

Formal communication follows the official chain of command.

• Downward: circulars, instructions, policies
• Upward: reports, suggestions, grievances
• Horizontal (lateral): between departments at the same level
• Diagonal: across levels and departments

Informal communication is the grapevine. It is fast and builds social ties, but can carry rumour and nobody is accountable for it. Keith Davis identified four grapevine patterns:

Barriers

• Semantic: jargon, ambiguous words, faulty translation
• Psychological: distrust, emotion, poor listening, premature evaluation
• Organisational: too many levels, rigid rules, status differences
• Physical: noise, distance, faulty equipment
• Personal: fear of authority, unwillingness to communicate

Remedies are simple language, active listening, feedback, the right channel and fewer levels.

Office correspondence and records

Bank correspondence includes letters, memos, circulars, notices, minutes and reports. Good correspondence follows the 7 Cs: clear, concise, concrete, correct, coherent, complete and courteous.

Records management covers creating, filing, indexing, retaining and disposing of documents. Filing is arranging and storing records systematically; indexing is the guide that helps locate a file quickly. Good records give evidence, support audit and speed up customer service.

Service quality

Services are intangible, inseparable from the provider, variable in quality and perishable, so quality depends on people and processes.

SERVQUAL, developed by Parasuraman, Zeithaml and Berry (published 1988), measures the gap between what customers expect and what they perceive, using 22 paired items on five dimensions (remembered as RATER):

• Reliability - performing the promised service dependably and accurately
• Assurance - knowledge and courtesy of staff that inspire trust
• Tangibles - premises, equipment, appearance of staff
• Empathy - caring, individual attention
• Responsiveness - willingness to help and give prompt service

Complaint handling

A complaint is a chance to keep a customer. The steps are: listen without interrupting, apologise and empathise, record the complaint, resolve it or escalate within a set time, inform the customer, and analyse causes to prevent recurrence.

In Nepal, customers who are not satisfied by their bank can use Nepal Rastra Bank's Grievance Management System at gunaso.nrb.org.np, run by the Financial Consumer Protection Unit. A registered complaint receives a number for tracking.

Relationship marketing and the marketing mix

Relationship marketing, a term introduced by Leonard Berry in 1983, aims at attracting, maintaining and enhancing long-term customer relationships. It stresses retention and satisfaction over one-off sales; cross-selling and loyalty follow from it.

The 4Ps were proposed by E. Jerome McCarthy (1960). Booms and Bitner (1981) extended them to 7Ps for services:

Exam pointers

• Encoding is done by the sender, decoding by the receiver; feedback completes the loop.
• Grapevine means informal communication; Davis's four patterns are single strand, gossip, probability and cluster.
• Jargon and unclear wording are semantic barriers.
• SERVQUAL has five dimensions; reliability is the dependable, accurate delivery of the promised service.
• McCarthy gave the 4Ps; the extra three for services are people, process and physical evidence.
• Relationship marketing focuses on customer retention.