Recently, M Nagaraju, Secretary, Department of Financial Services (DFS), made surprise visits to a few bank branches in Delhi — posing as a regular customer. In one case, he waited an hour just to speak with the branch manager, who remained engaged on a call. Similar experiences were reported in other branches he went. Media coverage highlighted his concern over “behavioural” issues and the lack of “courteous” interaction with customers. The Secretary urged banks to improve their customer service standards, especially in how they engage with people. To seasoned observers, this is not surprising. While many bank branches do offer efficient service, bankers know that customer service needs substantial improvement across their network. And the issue is ownership-neutral — creamy layer banking is out of the purview here.

Banks need to realise that the focus on customer protection and grievance redressal should not override the importance of “customer interaction and experience”. Even regulatory committees tasked with studying customer service have often used terms like “customer service” and “customer protection” interchangeably, missing the nuance. What truly matters is how customers are treated at the counter, via email, or over the phone — before complaints even arise.

Therefore, the DFS Secretary’s emphasis on behavioural issues is important from a sectoral perspective. If customers feel respected and welcomed, much of the dissatisfaction can be prevented. Admittedly the entire gamut of “customer service” is broader and needs a separate analysis.

Courteous interactions, timely email responses, acknowledgement of issues, and a sense of attentiveness are the first steps in shaping customer perception. The question here is: how can the system make staff warm, responsive, and customer-friendly across all touchpoints?

Areas needing attention

To improve customer experience at touch points, banks must address several issues. Here are a few areas needing attention:

Low customer-facing staff ratio: Only about 60 per cent of staff in banks are in customer-facing roles as per certain studies, compared to 80 per cent internationally. Redeployment from administrative offices to customer-facing seats could help correct this imbalance and improve service.

Redefine the role of service managers: Designate operations/service managers or deputy branch heads in branches as “Customer Service Managers” with clear responsibility and primacy of their KPIs tied to customer satisfaction — while remaining under the BM’s authority for unified command. Single officer branches may need additional support, through own/outsourced human resources.

Weakened institutional oversight: The reported dissolution of the Banking Codes and Standards Board of India in the recent past needs rethinking. In its absence, there must be alternative oversight mechanisms to monitor and enforce service standards.

Revising terminology in grievance systems: Terms like “Ombudsman” are not intuitive for most customers and may even be intimidatory. Simpler, more relatable language — like “Customer Complaints Authority” — would be more effective in communicating purpose and intent.

Customer Service Index: As suggested by the Kanungo committee, RBI could build and publish a “Customer Service Index” to benchmark banks on behavioural and service quality metrics. This will drive competition and accountability.

Primacy in “customer service” in evaluating branch heads: Branch managers juggle up to 40-80 tasks, often prioritising “campaigns”, in-house meetings and compliance over customer service. “Customer experience” must be a “weighty” performance indicator (KPI) in their evaluations.

Use of AI in service monitoring: AI tools can be developed to flag dissatisfaction based on keywords in customer emails or even detect body language through CCTV footage. Automated escalation of issues on this basis can speed up resolutions.

Leadership outreach to remote branches: Senior executives may frequently visit rural and semi-urban branches to assess service standards first-hand. These areas often lack awareness of grievance mechanisms and are under-represented in oversight.

Zero tolerance for misconduct: Staff indifference or rudeness to customers should not be tolerated. While the focus should be on retraining and improvement, serious lapses must have consequences that set a precedent.

Improving customer service in banks is not just about speeding up transactions or resolving complaints faster — it’s about changing the mindset on how customers are treated at every level.

The reviewer is a commentator on banking and finance

Published on June 16, 2025