NAGINDAS KHANDWALA COLLEGE OF COMMERCE, ARTS, SCIENCE AND

MANAGEMENT STUDIES, MALAD (WEST), MUMBAI - 400064

Project Report on:

A STUDY ON CUSTOMER LOYALTY PROGRAMS IN THE BANKING SECTOR WITH

REFERENCE TO HDFC BANK

A Dissertation Submitted in Partial fulfilment of the Requirements for the Degree of Bachelor of
Management Studies [TYBMS] – Semester VI

Submitted by:
Renuka Raju Meghwani
Roll No – 5038
Gr No - 3047686
TYBMS Marketing, Semester VI

Under the guidance of

Prof. Gargi Dubey

Submitted to:
Nagindas Khandwala College

Academic Year
2023-2024
 ACKNOWLE DGE ME NT

I take this opportunity to thank Nagindas Khandwala College for giving me chance to do this Research
Project. I would like to thank our Principal, Prof Dr. Moushumi Datta for providing the necessary
facilities required for the completion of this project. I take this opportunity to thank our Vice Principal
and IQAC Co-ordinator Dr. Mona Mehta, for her moral support and guidance.

I would also like to express my sincere gratitude towards my Project Guide, Prof. Gargi Dubey, whose
gratitude and care made the project successful and without whom this research would not have been
possible.

I would also like to thank my College Library, for having provided various reference books and
magazines related to my project. Lastly, I would like to thank each and every person who directly or
indirectly helped me in the completion of the project especially my parents and peers who supported me
throughout my project.

Renuka Raju Meghwani

 Malad Kandivli Education Society’s
Nagindas Khandwala College of Commerce, Arts & Management Studies and
Shantaben Nagindas Khandwala College of Science
Re-accredited by NAAC with ‘A’ grade
ISO 9001: 2015 certified

Bhavishya Bharat Campus, S. V. Road, Malad (W), Mumbai – 400 064

CERTIFICATE

I, Prof. Gargi Dubey, hereby certify that Ms. Renuka Raju Meghwani of T.Y.BMS B (Marketing),
Semester Vl of Nagindas Khandwala College has completed the Research Project on “ A study on
customer loyalty programs in the banking sector with reference to HDFC Bank” in the Academic
Year 2023-2024

I further certify that the entire work has been completed by the learner under my guidance
and that no part of it has been submitted previously for any Degree or Diploma of any University. The
information submitted is true and original to the best of my knowledge.

Project Co-Ordinator External Examination Principal

Seal of the College

 Malad Kandivli Education Society’s
Nagindas Khandwala College of Commerce, Arts & Management Studies and
Shantaben Nagindas Khandwala College of Science
Re-accredited by NAAC with ‘A’ grade
ISO 9001: 2015 certified

Bhavishya Bharat Campus, S. V. Road, Malad (W), Mumbai – 400 064

DECLARATION

I, Renuka Raju Meghwani, student of Nagindas Khandwala College, TYBMS B (Marketing)

Semester VI, hereby declare that I have completed this project on “A study on Consumer Loyalty
Programs in the Banking Sector with reference to HDFC Bank” on 20th March 2024 in the
academic year 2023-2024.

The information submitted is true and original to the best of my knowledge.

Renuka Raju Meghwani

Certified by,

Prof. Gargi Dubey

EXECUTIVE SUMMARY
Loyalty programs help banks enhance customer retention and revenue. Loyalty programs help banks
enhance retention of customers and profitability. A loyalty program should align with the Bank’s
strategy and new loyalty initiatives.

It should also evaluate the various products, services, and channels through that customers communicate
with the banking institution. To create a successful loyalty program, banks ought to split the project into
three independents but totally interwoven phases: program design, which is improvement, and
continuous management.

The loyalty program should identify particular features of the program, such as the customer lifecycle,
process map, and organisation, as well as who is liable for each component under the program. The bank
ought to realise its capacity to capture existing markets and work

Loyalty program help to retain customers. Insurance and banking institutions enjoy high brand loyalty
and purchase frequency. They are defined by their distinguishing characteristics that set them apart from
others. It is a traditional incentive system. reward points, discounts, cashback, and special offers are
common types of loyalty program in the banking industry. These programs are intended to incentivize
clients to continue utilising the bank's services and products. For example, reward points can be earned
by making purchases with a credit card and then redeemed for a variety of prizes such as travel vouchers
or products. Cashback program give clients a proportion of their spending back in cash, whilst
discounting gives lower rates on certain products or services.
 TABLE OF CONTENTS

SR. NO PARTICULARS PAGE NO

CHAPTER 1 INTRODUCTION 1
1.1 Introduction of the study 2
1.2 Definition of the Study 2
1.3 Customer loyalty and Customer Relationship 3
1.4 Types of Loyalty Programs in banks 3-6
1.5 About of customer 6
1.6 Introduction & History of HDFC bank 7
1.7 Profile of HDFC Bank 7-8
1.8 HDFC Bank loyalty Program 8-9
CHAPTER 2 RESEARCH METHODOLOGY 10
2.1 Types of Research Methodologies 11
2.2 Area of Study 12
2.3 Sample size 12
2.4 Data collection 12
2.5 Tabulation of data 13
2.6 Objective of the Study 14
2.7 Significance of the Study 14
2.8 Limitation of the Study 15-16
CHAPTER 3 REVIEW OF LITERATURE 17
CHAPTER 4 DATA ANALYSIS 25-47
CHAPTER 5 SUGGESTIONS 48-49
CHAPTER 6 CONCLUSION 50-51
CHAPTER 7 REFERENCES 52-54
CHAPTER 8 WEBLIOGRAPHY 55-57
CHAPTER 9 APPENDIX 58-66
 CHAPTER 1:

INTRODUCTION

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1.1 Introduction of the Study:

The financial sector is constantly evolving, and major digitalization has transformed the banking sector.
The study on Customer Loyalty Program in the Banking industry gives information about the products
and services offered by the financial services sector to customers, as well as the degree of customer
satisfaction and how to retain them and protect long-term relationships. in the long term the banks are
concentrating on customer retention and long-term satisfaction. The banking business is today
characterised by a self-service solution, allowing customers to handle their issues from anywhere and
at any time. The banking sector is highly competitive since all banks provide comparable services and
goods that can be easily replicated. Therefore, it is more necessary for banks to differentiate themselves.
from other banks, which provide the same products and services. In today's highly competitive
marketplace, the only way to distinguish oneself is by pricing or quality. As a result, customer pleasure
which leads to customer loyalty, has the potential to provide a strategic edge in today's highly
competitive market. The goal of this thesis is to look at how bank firms use marketing tactics to achieve
client loyalty in terms of digitization making choices, and quality of service in the current banking
industry.
The financial sector is always evolving, as new firms enter the industry, others are liquidated. Banks
handle one of people's most important assets, money, hence they require a place to put their monetary
and priceless assets. Banks play an important part in today's society by offering services such as savings,
lending, risk management, house mortgages, and stock trading. Massive upheavals in the financial
industry have created a powerful force for change. Internationalisation complicates today's competitive
environment more than ever before, and the expanding market makes it more difficult for banks to
differentiate themselves. A bank's success is based on its customers, and it would be impossible to
operate without them. In this
loyalty programs important in the banking industry because they encourage customer engagement and
retention. The purpose of the study is to investigate the importance of those programs, specifically how
they improve customer loyalty, increase brand affinity, and contribute to long-term business growth in
the dynamic financial industry landscape.
A bank is a financial institution that handles cash inflows, outflows, and credits. The organisation
provides money to those in need, collects deposits, and serves as a mediator between lenders and
borrowers. They will not only deal with money, but also produce it.

1.2 Definition of Banking

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 ⮚ According to prof. Jhon Harry “ Bank is an economic institution whose main aim is to earn
profit through exchange of money and credit instrument”.

⮚ Indian Company law 1936 defines bank as “a banking company which receives deposits
through a current account or any other forms and allows withdrawal through cheques or
promissory notes”.

1.3 Customer loyalty and Customer Relationship

Today customers have more choices and are more educated about their alternatives. Customer weigh the
quality of the product, quality of the services, the degree of choice and the piece in their individual
computations of value. Also entering into their computations are intangibles those essentially human
relations that often ignore rational analysis. To a large extent it is the human connections that make
customers turn them into satisfied customers.
Overall quality of the relationship a customer has with the firm influence’s customer loyalty. These
relationship influences customer prosperity to do future business with the firm, their degree of price
loyalty or their likelihood of recommending the firm to colleagues and associates.
Research on customer relationship management (CRM) has shown a positive correlation between a
customer's level of commitment to a brand and their likelihood to continue doing business with that
brand. Approaches such as relationship marketing, customer retention, and customer loyalty are all
focused on enhancing customer value and creating long-term customer relationships. These strategies
prioritize delivering value to customers and fostering loyalty to build a sustainable competitive
advantage.

1.4 Types of Loyalty Programs in banks

➢ Point based Programs

Earn points for everyday banking activities like maintaining balances, making transactions, or using
their credit cards. Redeem those points for exciting rewards like cash back, travel vouchers, or even
cool merchandise. It's a easy way for banks to keep customer engaged and to get rewarded as per
customer financial choices
➢ pen_spark
➢ tuneshare
➢ more_vert

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Chase Bank has a rewards program called Chase Ultimate Rewards. Customers earn points on eligible
purchases with their Chase credit card

Emphasize the variety of rewards:

1. Customer can be using points to buy things on Amazon or pay with PayPal.

2. customer can Cover some or all their Apple purchases with points.

5. Get money back as a statement credit or deposit it into your U.S. checking or savings account
using points.

➢ Tiered loyalty programs

Tiered loyalty programs have different levels based on how much you buy or how loyal you are. As you
go up, you get more cool stuff like better customer service, special interest rates, and access to exclusive
events.
American Xpress, a big finance company, has a loyalty program called Membership Rewards. Where
customer who want to pay fee to join a tier or use points from their Corporate Card. It's like a club with
different levels, where customer get exclusive perks based on their level.

➢ Cashback loyalty programs

Cashback programs is type of loyalty programs where customers receive a percentage of their purchases
as cash rewards, making customer spending enjoyable. Banks like Bank of America can even include
cashback in Buy Now Pay Later services, making them even more loyal towards their banking services.
It's a win-win situation!

• For example, Bank of America has a program called Cash Rewards. If customer have a Bank 2%
cash back at grocery stores and wholesale clubs

➢ Exclusive privileges and perks

Loyalty programs in banking can offer special perks to their members Go beyond basic banking and
unlock exclusive benefits! loyalty program elevates customer experience with airport lounge access,
concierge services, fee discounts, and personalized financial guidance. Feel valued and empowered as
customer enjoy preferential loan rates and expert advice tailored to customer specific needs.

4
America credit card, they can earn cashback when they buy stuff. Customer can use that cashback to
lower their credit card bill or put it straight into their Bank of America account.

• 3% cash back in the category of the customer's choice: gas, online shopping, dining, travel, drug
stores, or home improvement furnishings.

➢ Digital Wallets
As everything goes digital, loyalty programs now join mobile wallets for easy earning and redeeming of
rewards. Citi Bank's ThankYou Rewards lets customer earn points using digital wallets like Apple Pay,
Google Pay, and Samsung Pay, redeemable for travel, merchandise, or statement credits. It's all about
making loyalty more convenient for customers and as per their needs.

➢ HDFC Bank Rewards

HDFC Bank, a leading Indian bank, rewards customer for the customer everyday activities! Where
customer can earn points for using their debit/credit cards, shopping, dining, and traveling. These points
can be redeemed for exciting rewards, making their banking experience more rewarding.

Customers can use or earn points by using HDFC Bank credit or debit cards, mobile banking or even by
using net banking and can purchases with HDFC Bank’s partner brands. The earned points can be
redeemed for a range of rewards such as flight tickets, shopping vouchers and hotel bookings, etc.

HDFC Bank Rewards has three tiers of membership: which are Regular, Silver, and Gold each tier
provides extra interest such as bonus points, purchase on discount and unique offers through partner
brands.

This bank rewards are a popular loyalty program in India, which offers wide range of partner brands
across various categories like travel, entertainment, making customer banking experience more
enriching and catering to your unique lifestyle needs.

➢ ICICI Bank Rewards

Customers can use or earn points by using ICICI Bank credit or debit cards, mobile banking or even by
using net banking and can purchases with HDFC Bank’s partner brands. The earned point scan be
redeemed for a range of rewards such as flight tickets, shopping vouchers and hotel bookings, etc.

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ICICI Bank Rewards has four tiers of membership: which are Silver, Gold, and Platinum, and Titanium
each tier provides extra interest such as bonus points, discount on purchase and unique offers through
partner brands.

➢ SBI Rewardz
SBI Rewardz is a reward programme sponsored by State Bank of India (SBI). This programme allows
consumers to earn reward points for a variety of transactions, including shopping, travel, dining, and the
use of SBI products and services.
Customers can utilise or earn points by using their SBI credit or debit cards, mobile banking, or internet
banking to make purchases from SBI partner brands. Earned points can be exchanged for a variety of
prizes, including aeroplane tickets, shopping vouchers, hotel reservations, and so on.
SBI Rewardz has two membership tiers: silver and gold. Each tier provides extra perks such as bonus
points, purchase discounts, and special partner brand deals.

1.5 About Customer

A client is an individual or business that purchases goods or services from another company. Customers
are important because they drive revenue. Without them, businesses would fail. Every firm competes
for customers by heavily promoting its products, reducing expenses to attract more customers, or
developing unique items and experiences that people enjoy.

A customer of a bank is defined as someone who has a bank account. A person cannot become a bank
customer if he has only completed one banking transaction. To become a customer, one must satisfy two
prerequisites. One is that there must be regular transactions or that the client must have the habit of When
interacting with a bank and another party, the transaction must be of a banking character.

Understanding Customer

Businesses often prioritise customer satisfaction, as happy customers are more likely to continue doing
business with companies that fulfil or excel their expectations. To improve their product offerings,
businesses often seek feedback from their customers and monitor their customer relationships closely.
Customers can be categorised in various ways, but the most common distinction is between external and
internal customers.

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External customers are individuals or entities outside of the business who are interested in purchasing
the company's final goods or services. Internal customers refer to individuals or groups within a company
who rely on each other to complete tasks and achieve common goals. These customers are often
employees or different departments within the organization that work together to provide products or
services to external customers.

1.6 Introduction & History of HDFC Bank

HDFC Bank Limited, also known as HDFC, is a multinational banking and financial services company
headquartered in Mumbai, India. As of August 2023, it is the largest private sector bank in India by
assets and the fifth largest bank globally in terms of market capitalization.
History of HDFC Bank
HDFC Bank was founded in August 1994 after its parent company, HDFC, received 'in principle'
approval from the Reserve Bank of India (RBI) to establish a bank in the private sector as part of the
liberalisation of the Indian banking industry. Manmohan Singh, then Union Finance Minister, launched
the company's first corporate headquarters and full-service branch at Sandoz House in Worli. As of 1
June, the bank's distribution network included 8,344 branches and 19725 ATMs in 3811 cities. In fiscal
year 2017, it installed 430,000 POS terminals and issued 23.5 million debit and 12 million credit cards.
As of June 1, 2023, it had a total of 1,77,000 permanent employees.

1.7 Profile of HDFC Bank

Company type Public

NSE HDFCBANK
BSE 500180
Industry Financial services
Founded August 1994
Headquarters Mumbai, Maharashtra, India
Area served India
Key people
(Chairman) Atanu Chakraborty
(CEO) Sashidhar Jagdishan

7
 Products Consumer banking, Commercial banking,
Insurance, Credit cards Investment banking
Mortgage Loans
Private banking
Private equity Investment management, Asset
management Mutual funds, Exchange-traded
funds Index funds management
Revenue Increase to ₹2.05 lakh crore (US$26 billion)
(2023)
Operating income To Increase by ₹615 billion (US$7.7 billion)
(2023)
Net income Increased by ₹459.97 billion (US$5.8 billion)
(2023)
Total assets Increase ₹25.3 lakh crore (US$320 billion) (2023)
Total equity Increase by ₹2.85 lakh crore (US$36 billion)
(2023)
Number of employees As of July 1, 2023 there are 177,000 employees
Subsidiaries HDFC Life
HDFC Credible Financial Services
Website www.hdfcbank.com

1.8 HDFC Bank loyalty program

▪ Redeem cashpoints to pay back credit card bills via Net Banking

Maintain your cashpoints in opposed to your statement to payback credit card bill.
To redeem your cashpoints as cashback

The steps to redeem cashpoints

1 step is to login to Net Banking portal -click on cards-click on enquiry- than click on option reward
points- select your card and go ahead – click redeem reward points- finally cash redemption.

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▪ Cashpoints as Insta vouchers through Net Banling

It is important that to utilise cashpoints it is required to redeem as Insta vouchers via Net Banking portal.
To redeem vouchers the card members should use gift vouchers from Raymonds, Amazone, Croma,
Reliance digital and many more brands.

Login to the Net Banking interface > The cards > inquire > Transfer Reward Points. Click your card and
go to Redeem Reward Points > Insta Vouchers. Pick any gift you prefer and click redeem.

As of February 1, 2023, HDFC Bank has introduced a new feature for its cardmembers, allowing them
to redeem up to 70% of the value of select vouchers or products using their accumulated Reward points.
Cardmembers can then pay the remaining balance using their credit card, making it easier and more
convenient to redeem rewards. This new feature provides cardmembers with greater flexibility and
choice when it comes to redeeming their rewards.

▪ Redeem your cashpoints towards the Product List using internet banking and Smart Buy.

Apply your cashpoints to get rewards with various product portfolios via Net Banking and SmartBuy.
To use your cashpoints on the product catalogue using Net Banking:
Sign in to Net Banking Cards > Inquire > Redeem Reward Points. Choose the card you are using and
proceed. Earn Reward Points > Product Catalogue. Select any product that interests you and click Add
to Cart> Buy Soon.

▪ Redeem your cashpoints to airmiles converted through Net Banking.

Use the cashpoints to redeem Airmiles using Net Banking.

Register in to the Net Banking connect with your User ID and Password > Cards > Enquire > Redeem
Reward Points. Select your card and proceed. Airmiles > Frequent Flyer signup (only for first-time
users)> Enter the details that are required >Register > Airmiles > Airmiles redemption> Enter the
necessary data and click Proceed.

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 CHAPTER 2:

RESEARCH METHODOLOGY

10
2.1 Types of Research Methodology
Methodology is a crucial step in any research because it directly influences the whole research and
findings. This study will help and carried out the gain and insight into the Consumer loyalty programs
provided by the banking sector and also in detailed understanding about satisfaction level of customer
and quality of services provided in the banking sector.

1. Survey Research : The methodology helps research about what are the data has been used in the
methodology. In Survey research data is gathered through survey that could be completed online
over the phone, or in person. This survey helps to gather information on consumer behaviour and
satisfaction on loyalty programs provided by the banking sector which helps to know that how
many people aware about the loyalty programs and how they are utilising it.

2. Content Analysis: It provides the authentic information for the interpretation of data from
documents, such as articles, news, official reports and financial statements from businesses.

3. Secondary Data Analysis: In secondary data analysis the data we are getting from this which
helps to interpret and analyse the present research. It’s obvious to examine data that has already
been collected for other purposes, like market research report, government surveys, and
accounting and financial statements, for instance, secondary data could be used to perceive
patterns and trends in Indian Consumer satisfaction and the expansion of the loyalty programs in
banking.

4. Mixed Method Research: This method helps to understand in depth research and the research
problem in detail. This methodology combines two or more research .
involves gathering data and conducting case study

5. Quantitative Research

In This study the research has collected a statistically /numerical data via questionnaires and
survey
A simple questionnaire has been shared to collect respondents’ point of view about the topic. 100
respondents of Mumbai were the part of this survey and the graphs also has been shared in chapter
data analysis bellow.

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2.2 Area of Study

The research has done on the basis of area/ location, wherefore the research has survey respondents of
age group of 18 -24 and 55 and above in Mumbai. The research is more focused on the effectiveness
and the impact of loyalty programs in attracting new customer in the bank and are the programs act as a
differentiator in a competitive market.
This research also studies about identify the extent to which loyalty programs contribute to customer
retention in the banking industry, this study also enhances to study the role of technology, such as mobile
apps or digital platforms, influences the success of loyalty programs and how it impacting customer
satisfaction level.
By conducting this study, HDFC Bank can gain insights into how loyalty programs have impacted
customer satisfaction level and identify areas for improvement to enhance customer satisfaction levels.

2.3 Sample size:

Sample size refers to the number of things to be selected from the universe to constitute a sample. The
decision on sample size must be made before selecting the tactic of sampling. It's important to choose a
sample size that is neither too big nor too small for research study. The data for the study collected from
100 respondents.
The population of the study consist of the various age group 18-25 and 55 and above. The respondents
consist of all types of customers such as Students, Employed, Self-employed, are considered for the
study. For the purpose of data collection questionnaire was prepared. Questionnaire was distributed to
all the 100 respondents. All of them was duly filed with adequate information and was considered for
the study.

2.4 Data collection

In research, data is really crucial. Data must be gathered in accordance with study project's
requirements. Primary and secondary data are collected during data collecting. Primary data is obtained
in this study, which is backed up by secondary data.
To examine the impact of loyalty programs on customer primary data is collected via a questionnaire.
Structured questionnaires, as well as schedules, are produced and used for data gathering. Since “Data”
is the primary basis of the data gathering techniques. The main benefit of data gathering is that it will

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aid in the determination of many crucial factors, most notably success wherein secondary information
was gathered from a variety of public sources.

Primary Data
The primary data collection method used is Questionnaire Data collection Methods. “Numerical data is
collected using close end questions, such as multiple-choice question type.
The questionnaire contained multiple-choice questions with single options and multiple options choices,
checkbox. Its initial part of the questionnaire collected demographic information of the respondents and
the latter part consisted of questions regarding participation in loyalty program, about significance,
satisfaction level of loyalty programs.

Secondary Data

The research has collected the secondary data i.e. referring to the data or using it which is already
available. As it helps in understanding the topic well and gives correct and large and quality information
that can helpful for researcher to collect and utilize if for their research.
The secondary data has been gathered from various sources such as internet searches, articles, journals
etc.
secondary source of data like journals, PhD. Thesis, Internet and Published Report have been used for
Literature Review, Reference and also for better reliability of the study.

2.5 Tabulation of data:

Tabulation is a technique or process for summarizing and organizing data for further analysis. It
prepares quantitative data in a clear and concise format. Tabulation is the process of sorting and counting
data and assigning it to relevant classification categories. It transforms raw statistics into useful statistical
tables for analysis. Data tabulation is required because it provides an orderly arrangement of data for
analysis. It serves as a link between data organization and data interpretation.
Data tabulation is accomplished using one of two methods. There are two types of tabulation: manual
tabulation and mechanical tabulation. Manual tabulation is done with hands, whereas mechanical
tabulation is done with computers. The current study employs mechanical tabulation with the assistance
of computers. When the number of variables is large and the sample size is also large, this method is
required. The current study includes both univariate and multivariate variables.

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2.6 Objective of the Study:

● To identify and evaluate the extent to which loyalty programs contribute to customer retention
in the banking industry
● To analyse the impact of loyalty programs on customer satisfaction level
● To identify specific program features or rewards that enhance customer experience
● To study the effectiveness of loyalty programs in attracting new customers to the bank.
● To explore whether these programs act as a differentiator in a competitive market.
● TO Identify areas for improvement and optimization to enhance program performance.
● To study the role of technology, such as mobile apps or digital platforms, influences the success
of loyalty programs.
● To Know about the Customer preferences.
● To Investigate the impact of loyalty programs on the long-term value of customers for the bank.
● To Understand the lifetime value of customers who actively participate in loyalty programs

2.7 Significance of the Study:

This research focuses on how the banking sector is changing at an increasing rate. The most
significant development is the introduction of modern technology into the banking industry. To
ensure that this transformation is profitable and contributes to growth.
The significance of studying customer loyalty programs in the banking sector comes from their
potential to influence customer retention, satisfaction, and overall behaviour in financial businesses.
We must understand people's attitudes towards change and loyalty to banking services. Hence,
measuring service quality is vital and important for understanding what customers exactly want.
This study examines customer interest and loyalty to the banking sector. As we all know, people in
today's world are more evolved in the sense that they prefer to follow new market trends rather than
technology. Technology is fast expanding in all segments, including company growth, shopping,
banking, and commerce. Similarly, the function of technology, such as mobile apps or digital
platforms, influences the performance of loyalty programmes based on customer tastes and
expectations. The young people of today are of a more demanding and technologically advanced
age. The modern customer demands instant, anytime, anywhere banking services. Information
technology enables banks to satisfy the high expectations of youth. Customer loyalty programs are
one of the most important aspects for the bank to market.

Today's youth are a demanding and technologically savvy generation. Customers today expect
instant banking, which means anytime and anywhere. Information technology enables banks to fulfil
the high expectations of today's youngsters. Customer loyalty programmes are an important feature
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 for banks to use to promote their products and services. how today's kids are familiar with their
individual banks and the loyalty programs they offer. For example, providing customers with
rewards, travel rewards, gift cards, and special deals.

Understanding the efficiency of these program could help banks prioritise customer retention and
relationship management, thereby improving their competitiveness and financial performance. This
provides fulfilment and a feeling of belonging for loyalty programmes.

By studying the role of customer knowledge and happiness as antecedents of customer trust, this
study can provide insights into the mediating function of loyalty programmes in various banking
organisations that will eventually attract new customers and generate significant profits. Overall, this
study is notable for its ability to inform strategic decision-making and improve customer-centric
methods in

2.8 Limitations of the Study

The customer loyalty programs in the banking sector have some limitations are as follows.
1. Expiration of Points
According to secondary data and market conditions, HDFC Bank's reward points are
only valid for two years from the date of collection and will lapse for cards that are customer has
not engaged in any activity or interaction with a business for a period of 365 days or more,
2. Transaction Exclusion
3. Certain transactions, such as fuel, cash advances, e-wallet loading, and insurance transactions,
do not collect reward points, and the maximum cap is 2,000 points per transaction.
4. Minium spending required
To redeem reward points, a minimum amount owing must be paid, and a minimum of 250 points
must be collected for redemption.
5. Card Inactivity
Reward points will expire if the card is inactive or dormant for longer than 365 days. Reward
points will expire if the card is inactive or dormant for longer than 365 days.
6. Capping Points Reward
points are limited to 2,000 per calendar month for grocery transactions and 50,000 per calendar
month for redemption against the statement amount.
7. Maximum points per transaction
Insurance transactions earn a maximum of 2,000 reward points.

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8. Cap on monthly points.
Reward points are limited to 2,000 per calendar month for Infinia Credit Card transactions on
SmartBuy.

9. Customers may not find the program's benefits enticing enough to continue utilising the bank's
services. Another issue is that the program's implementation and maintenance costs may
outweigh its benefits.
10. limitation is that customers may not find the rewards offered by the program attractive enough
to continue using the bank's services. Another limitation is that the cost of implementing and
maintaining the program may outweigh the benefits.
11. Additionally, some reward points are only valid at select merchant outlets in Chennai and Pune.
These limitations may affect the effectiveness of the program in retaining customers.

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 CHAPTER 3:

REVIEW OF LITERATURE

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3.1 Reichheld (1993;1996). “Customer Loyalty and Retention”

Each and every firm and especially in service sector how important is to retain the customer .When it is
come to service and after sales services every individual provides better quality services to their clints,
and customers. Here Reichheld was concluded that in marketing field retaining a current client is not
that much difficult which compare to new customer. Loyalty is connected with firm or the organisation
growth that is one should focus on services and remain loyal and fair as far as organisation is concerned.
Well acknowledged in the marketing field that retaining a current client is significantly less expensive
than acquiring a new customer (Reichheld, 1993; 1996) and that loyalty can be connected to firm growth
(Reichheld, 2003). Given the importance of loyalty to marketers, there is a huge body of literature
devoted to loyalty, also known as retention.

3.2 Swift (2001,p.12). “CUSTOMER RELATIONSHIP MANAGEMENT”

CRM. It is very essential in any organization and this study focuses on the how customer is important
and how to make a good relationship with them and how and what are the ways are available to grab
their attention . Hence CRM is described by Swift (2001, p. 12) as a "business method for recognizing and
shaping customer behaviour with appropriate interactions with the goal to improve the acquisition and retention
of clients, loyalty, and competitiveness. "As it was mentioned that in order to enhance customer loyalty
and retention the financial institutions should understand the behaviour of the customer

3.3 Narasimhan, M.S. (1999). “Studies on Consumer Credit and Retail Banking in General”
According to Narasimhan, M.S. an individual can borrow from multiple banks at the same time it means
that the customer or the person who is taking credit from the bank should follow the protocols of the
respective bank. But first, some groundwork must be done each and every documentation must be done
accurately. Bankruptcy, on the other hand, will reflect negatively on our credit history and rating the
customer should look on his bank accounts. It will always come up later when someone runs a credit
check on us. It is very essential that to look out the transaction because if there is an issue comes such
as bankruptcy or withdrawal amount can represent a negative impact on a credit history. It's a lasting
scar.

Alessie Rob and Hochguertel Stefan (2001) analysed data on loan applications received by Italy's main

18
consumer credit provider (Findomestic) and discovered that demand is interest rate elastic, particularly
in the North, where the consumer credit market is competitive.

3.4 Jacob Robort and Sharma, Arti (2002) “HDFC Bank focuses on retail financing”.

has observed that ICICI Bank, after the merger with ICICI, has become the second largest bank in the
country with a total asset base of over Rs. 1 trillion and a network of 540 branches and more than 1,000
ATMs. The bank will continue to be into the project. The ICICI Bank has been growing world-wide and
it stands out as the 2nd largest bank in the country with total assets over 1 trillion and 540 branches. The
ICICI Bank focuses more on the retail financing Puri. Aditya was found out and observed in the year
2002 HDFC Bank prompted by HDFC, the country's leading housing finance company. he knew that it
is one of the first new generation banks which have an impeccable track record in the domestic market.
In February 20000, Times banks was merged with HDFC Bank. The amalgamation added significant
value to HDFC Bank in terms of increased banking network, expanded geographical reach and enhanced
customer base.

3.5 Bandyopadhyay and Tamal (2003),

floating-rate clients of the Housing Development Finance Corporation (HDFC) who got loans before
February of this year are paying a 10% interest rate. However, individuals who take out loans right now
will just have to pay 9.75 percent. This is despite the fact that they are all floating-rate clients. The State
Bank of India now has three sets of floating rate clients, and they are not benefiting from the rate
reduction.

3.6 “ Aditya Puri (2002) Management of Credit Schemes in banks”

The literature review highlights Aditya Puri's 2002 comments about HDFC Bank's concentration on
retail lending, benefiting from its connection with HDFC, a major home finance provider. It also
acknowledges HDFC Bank's position as a distinguished new-generation bank, and its growth through
the merger with Times Bank in 2000, which enhanced its network, coverage, and customer base. The
review underscores HDFC Bank's strategic placement in retail lending, leveraging its advantages and
expansion prospects.

19
3.7 “(Hasim et al., 2015). “Loyalty Programs and Customer Retention in the Banking Sector”

According to the literature, loyalty reward programmes are one of the most essential marketing
techniques for defending the brand and maintaining product quality, as well as avoiding hyper-
competition during the product's life cycle (Hasim et al. 2015). According to Zakaria et al. (2013),
rewarding customers with points can increase their purchasing rates and differentiate them based on
profitability, loyalty, and brand faithfulness. These benefits boost the likelihood of brand recognition,
organisational commitment, and consumer superego (Hwang and Choi, 2020). It promotes repeat
purchases, enhances consumer retention, and boosts brand satisfaction and loyalty (Hasim et al., 2015)

3.8 Lorne and Serenko (2007) “The Impact of Customer Service on Customer Loyalty: “An HDFC
Bank Case Study”

Bontis, Nick, Booker, Lorne, and Serenko researched the relationship between customer satisfaction and
loyalty in the US-based banking business and discovered a positive correlation. Arokiasamy A. et al.
(2013) investigated the effect of customer satisfaction on customer loyalty and desire to switch in
Malaysia's banking sector. The study sought to determine the impact of customer satisfaction on
customer loyalty and inclinations to move banks. The researcher created a questionnaire and collected
responses from 165 walk-in consumers who held accounts with banks serving Ipoh, Perak, and Malaysia.
The study's findings revealed a positive association between customer satisfaction and loyalty but also
a negative correlation.

3.9Mohsan F. (2011)“Investigated the impact of customer satisfaction on customer loyalty and

propensity to switch”

According to Mohsan F. he analysed and found out the data and evidence from Pakistan's banking sector.
The study aims to determine the impact of customer satisfaction on customer loyalty and inclinations to
switch. Data was obtained from 120 clients who visited the bank's counters. After being collected by
120 customers, the response was a delight and positive for the clients. hence the study found that
customer pleasure was positively connected with customer loyalty and negatively correlated with
customer plans to switch.

20
3.10 Patel and Desai (2016). “investigated the relationship between customer happiness, loyalty,
and retention in Surat-based banks”.

The researcher also attempted to uncover the influence of demographic characteristics on bank choice.
A non-probability convenience sampling method was employed to gather data from 350 respondents.
The results indicate that there is a link between customer satisfaction and loyalty. Indian banking is the
lifeline of the country and its people. Banking has aided in the development of critical sectors of the
economy, ushering in a new era of progress on the Indian landscape. In the recent environment, there is
a throat-crushing competition between banks, and customers are also eager to migrate to another bank
if they are getting better service at another bank.

3.11 D. Srinivas and Prof. N. Hanumantha Rao (2018) The study report "Service Quality for
Commercial Banks”

A Study of Public Sector Banks in Warangal the district’s targets of the research study were to identify
the perceptions of customers regarding the quality of service delivered by public and private banks, to
determine the relevant dimensions of service quality for the banking sector, and to identify the elements
of SERVQUAL (service) that ensure the highest level of satisfaction among consumers in the banking
sector. The study investigates the quality of service provided by public sector banks in Telangana's
Warangal district. As a pilot study, data were collected from 100 respondents from the Warangal District
using convenience sampling. A Likert scale with five points was employed to measure service quality.
From the above suitable information and data, it was analysed that the customer looks for quality services
from the Bank and the bank should take an active steps and decisions to fulfil the customer needs and
SERQUAL Quality which required a lot and must. The appropriate score values were assigned to the
responses obtained for each point. Dissatisfied consumers see responsiveness and empathy as twin
concepts that the bank lacks. In terms of pleased clients, there is a significant discrepancy between
expected service quality (what type of services customers expect from the bank) and real service level
(what sort of service users actually receive from the bank).

3.12 Rd. Biju John M. (2017) “The aim of his study paper, titled 'Dynamics of Service Quality in
the Indian Banking Sector'

were to analyse the perceived service quality in commercial banks, identify the aspects of service quality
in banks, and make recommendations to improve service quality in banks. The paper is based on a
descriptive and exploratory study using primary data. Primary information is gathered through the use
of surveys. The study's population consists of commercial bank clients from the Thrissur District in
Kerala State. The study used a straightforward sampling strategy to pick 200 commercial bank clients

21
from various districts of Thrissur district, Kerala. It is advised to the financial sector that, aside from
ensuring trust Customers' Operations should be improved in order to provide highly advanced technical
services that are easy to obtain and supply instantly.

3.13 A.K Sohania Technology in Banking Sector: Rapid advancement and Gains to the Banking
Sector

Technological innovation has transformed the financial sector, allowing for faster processing and
transmission of information, more efficient marketing of banking products, and improved client access
and awareness. These technological breakthroughs have resulted in unprecedented levels of regional
and global networking. The advancement of information technology (IT) has not only altered the
product range and development within banks, but it has also affected service channels and packaging.

Banks have widely adopted IT innovations, realising their enormous efficiencies not only within the
banks but also across supplementary and feeder businesses. This reliance on IT has become so
established that the financial services industry places a high value on technological breakthroughs.
Most banks actively explore the adoption of new technologies and processes.
to remain relevant and competitive in the marketplace.

According to research, banks benefit more from using technology because it streamlines operations,
speeds up transactions, and ensures the smooth flow of information. This electronic connection has
simplified and accelerated banking operations for customers, resulting in a more seamless experience.
As a result, the financial sector's reliance on technology is clear, with IT providing a foundation for
both current operations and future expansion.

3.14 VS Daddihal and PK Kulkarni,"Technology in Banks: A Case Study of HDFC Bank"

argues that the Indian banking sector and financial system have been transformed by the revolution in
information technology. Science and technology have enabled virtual banking through the use of
Automated Teller Machines (ATMs), a common ATM network, Electronic Fund Transfer at Point of
Sale (EFTPOS), Smart Cards, phone banking, Internet banking, and related services. It is noted that
technology enhances service quality, lowers operational costs, boosts efficiency, and delivers faster
service. This article gives a case study of HDFC Bank in India. It emphasises the efforts taken by the
bank to better serve its customers, confirming the customer's eligibility for

A fast-track loan. The article discusses some of HDFC Bank's high-tech customer services, including as
e-mail account statements, round-the-clock mobile refilling service, prepaid mobile refill at ATMs,

22
prepaid mobile refill via SMS, Easy Shop Business Debit Card, and E-Age banking. According to the
writers, HDFC Bank uses cutting-edge technologies to attract consumers in the face of fierce market
rivalry.

3.15 Couldwell in 1998 (Book by Bank Marketing by Hari Shankar)“Customer Relationship

Management”

Couldwell (1998) defines CRM as a combination of business process and technology that aims at
knowing the consumers of a business in terms of what they are, what they do, and the things they are
like. The technical definition of CRM was presented as "the market place of the future is undergoing a
technology-driven metamorphosis" by Peppers and Rogers in 1995. As a result, IT and marketing
departments must collaborate closely to ensure effective CRM implementation.

3.16 Meanwhile, Mihelis et al. (2001 “investigated CRM deployment in the banking sector” Book
by Bank Marketing by Hari Shanka

They concentrated on evaluating essential satisfaction metrics and identifying client groups with unique
preferences and expectations in the private banking industry. The methodological approach is based on
the principles of multi-criteria modelling and preference disaggregation modelling, used for data analysis
and interpretation. Yli-Renko et al. (2001) focused on interchange relationship management and the
consequences for the performance and development of technology-based enterprises and their clients.
The customer interactions of modern technology-based enterprises have been specifically researched.

3.17 Hari Shankar “CRM Objectives in the Banking Sector” Book by Bank Marketing

CRM is designed to help firms leverage technology and human resources to gain insight into customer
behaviour and value. If it performs as planned, a company can improve customer service, make contact
centres more efficient, cross-sell items more efficiently, assist sales personnel in closing transactions
faster, streamline marketing and sales procedures, uncover new customers, and enhance customer
revenues. It does not happen by just purchasing software and installing it. To effectively use CRM,
organizations must first determine the type of customer information they need and what they plan to do
with it. For example, many financial companies keep track of their customers' lives. stages in order to
promote relevant banking products to consumers, like mortgages or IRAs, at the optimal time to meet

23
their needs. Next, the organization must investigate all of the many methods by which consumer
information enters a business, as well as where and how this data is stored and used now

3.18 Reichheld and Sasser (1990) highlighted the need for loyal customers and claimed by Bank
Marketing.

That customer service is such a fundamental issue that all companies (including banks) have to
constantly improve the quality of services that they provide. Bontis et al. (2007) went further by
suggesting that customer satisfaction enhances reputation in the service environment. Also, they deemed
that reputation partially mediates the relationship between satisfaction and loyalty, and that reputation
partially mediates the relationship between satisfaction and recommendation. Papasolomou-Doukakis
(2002) claimed that the service is a means of differentiation in competitive markets. In that respect, it
can serve as a means of acquiring competitive advantage and empower the position of a company within
its industry. As far as it concerns the banks, they have to constantly try to keep their customers due to
high costs related to marketing campaigns

24
 CHAPTER 4:

DATA ANALYSIS

25
4.1 INTRODUCTION

I'm excited to share my research project on customer loyalty programs in the banking sector, focusing
on HDFC Bank. I conducted an online survey and received 100 responses from people sharing their
experiences with banking loyalty programs.

In my survey, I collected information about the respondents' age, gender, and occupation to understand
their demographic backgrounds. I also asked about their banking behaviour, specifically their awareness
of loyalty programs, their likelihood to recommend these programs, their perceived value of the
programs, their influence on their banking decisions, their preferred communication channels, and their
overall satisfaction.

The goal of my data analysis is to find patterns and connections between these factors. I want to
understand how demographic factors might influence banking behaviours and loyalty program
perceptions. I'm also interested in seeing how awareness, perceived value, and satisfaction with loyalty
programs might affect recommendations and banking decisions.

By analysing this data, I hope to gain valuable insights into what customers value in a loyalty program
and how banks like HDFC can improve their programs to increase customer loyalty. I'm looking forward
to diving into the data and sharing my findings."

26
4.2 DEMOGRAPHIC INFORMATION

I received a wide variety of responses from respondents in my survey, both male and female. Of the
replies received, 43% came from men and 57% from women. Although women participate at a somewhat
higher rate than men, our results show that both genders are fairly represented. It can provide more
about potential disparities in loyalty program views and banking practices between males and females
by examining this gender distribution.

27
4.3 AGE

"A wide range of age groups were represented in my survey responses, which helped me to understand
how perceptions of loyalty programs and banking practices might differ between generations. The
distribution of ages is broken down as follows:

18–24: This demographic, which makes up the youngest respondents to my poll, is probably just starting
out in banking.
25–34: This age group consists of young adults with a few years of banking expertise who may be more
financially independent.
35–44: This age range is representative of middle-aged adults, who are perhaps more seasoned bankers
in terms of both tastes and habits.
45–54: This age group is representative of older people who may have different expectations from
reward programs and a longer banking background.
55 and older: This demographic consists of the elderly, who may have particular banking demands and

inclinations.
I learn more about how age and life stage may affect banking habits and loyalty program perceptions
by examining the replies from these various age groups. This can assist banks such as HDFC in
customizing their loyalty programs to better suit the requirements of various age groups."

28
4.4 OCCUPATION

• Most people (61%) were students, who might have different banking needs than people with jobs.
• Many people (23%) had regular jobs, which might affect how they use the bank.
• Some people (16%) were self-employed, and their banking needs might be unique.
By analysing the responses from these different occupation groups, I can gain insights into how work
status might influence banking behaviours and loyalty program perceptions. This can help banks like
HDFC tailor their loyalty programs to better meet the needs of different work status groups."

29
4.5 BANKING BEHAVIOUR

Twenty-eight percent of those surveyed said they had used financial services for less than a year. This
group consists of people who may still be investigating several banks and loyalty programs to see which
one best suit their needs since they are new to banking services.

30% of those surveyed said they had been using financial services for one to three years. This category
consists of people who are still developing their preferences but have recently started using financial
services. They may also have some experience with reward schemes.

13% of those surveyed said they had been using banking services for three to five years. This category
includes those who have used financial services for a moderate length of time and may have more set
preferences for loyalty programs and banking practices.

30
4.6 BANKING SERVICES

Regular use of financial services: 52% of respondents said they regularly use banking services. This
category consists of people who interact with their bank on a regular basis and may be more inclined to
take part in loyalty programs.

22% of respondents said they occasionally use banking services. This group consists of people who may
use their bank less regularly while engaging in loyalty programs.
Very regularly: 26% of respondents said they frequently use banking services. This category includes
people who interact with their bank even more frequently than those who use it regularly; these people
may also be the most inclined to take part in

Regular use of financial services: 52% of respondents said they regularly use banking services. This
category consists of people who interact with their bank on a regular basis and may be more inclined to
take part in loyalty programs. Loyal towards the banking services.

We may learn more about how frequently customers use banking services and how this may affect their
involvement with reward programs by examining the replies from these various groups. For instance,
banks may choose to reward consumers who use their services more regularly with more frequent offers
and to reward customers who use their services less frequently with more infrequent offers. Banks may
also want to think about ways to incentivize infrequent consumers to use their services more regularly.

31
4.7 AWARENESS OF LOYALTY PROGRAMS

62% of those surveyed are aware of the bank's loyalty scheme for customers. This category consists of
people who may be more inclined to join the bank's loyalty program since this creates awareness of
loyalty programs. according to 38% of those surveyed, the bank's customer loyalty program is unknown.
This group consists of people who could be less inclined to participate in the bank's loyalty program
because they are unaware of it. e I may learn more about how many clients are aware of the bank's
loyalty program and how this may affect their involvement in it by examining the answers from these
two groups. For instance, banks may wish to educate clients who are unfamiliar with their loyalty
program about it, as this could result in
enhanced involvement and participation. Furthermore, banks should think about how to better
communicate and showcase their loyalty program so that all of their clients are aware of its advantages.

Customer loyalty program participants analysis .

32
4.8 PARTICIPATION

The survey asked respondents about their participation in the bank's customer loyalty program. Here's a
look at the responses:

• 11% of respondents participate regularly in the bank's loyalty program, indicating consistent
engagement and appreciation of the program's benefits.
• 39% of respondents, particularly students, participate rarely in the program. The bank could
focus on educating and enticing this demographic with tailored perks or incentives.
• 18% of respondents participate occasionally, signalling some level of interest and potential for
further investment.
• 30% of respondents never participate in the program, representing a missed opportunity for the
bank. Strategies to attract this group could include targeted marketing or enhanced program
benefits.
• 2% of respondents explicitly stated "No," indicating
• a lack of understanding or indifference. Further investigation is needed to ensure all customers
feel informed and valued.

In conclusion, while some customers actively participate in the bank's loyalty program, there's still room
for improvement in engaging other segments, particularly students and those who have yet to join. By

33
understanding the motivations and barriers to participation, the bank can refine its approach, tailor its
offerings, and ultimately foster stronger relationships with its customers.

34
4.9 ANALYSIS OF LOYALTY PROGRAM ATTRIBUTES PREFERENCES

To better understand what customers value most in a loyalty program, we surveyed 100 participants and
asked them to select their preferred attributes. Here's a breakdown of their responses:

• Benefits including rewards: 45% of respondents expressed a preference for loyalty programs that
offer rewards, such as discounts, cashback, or redeemable points. This suggests that customers
are motivated by tangible benefits and incentives for continued engagement and loyalty.
• Fee discounts: 38% of respondents indicated a preference for loyalty programs that offer fee
discounts. This finding highlights the importance of cost-saving opportunities for customers, as
fee discounts can attract potential participants and retain existing ones by providing tangible
financial benefits.
• Access to exclusive services: 35% of respondents expressed interest in loyalty programs that
offer access to exclusive services, such as priority customer support, complimentary upgrades,
or tailored recommendations. This aspect of the loyalty program emphasises the importance of
personalised experiences and added value beyond monetary rewards.
• Benefits including rewards: It appears there was a duplication in the dataset, with another entry
for benefits including rewards, though with only 1 respondent selecting it.

Implications: These findings provide valuable insights into customer preferences and priorities regarding
loyalty programs. The overwhelming preference for rewards suggests that designing programs that offer

35
tangible and enticing incentives is crucial. Customers seek immediate gratification and value
propositions that directly impact their financial well-being or purchasing power.
Moreover, the substantial interest in fee discounts indicates a desire for financial flexibility and savings
opportunities. Incorporating fee waivers or discounted rates can not only attract new customers but also
foster loyalty among existing ones, as they perceive added value in their banking relationship.

Furthermore, the emphasis on exclusive services underscores the importance of differentiation and
personalization in loyalty programs. By offering tailored experiences and privileges, such as
personalised financial advice or curated offerings based on spending habits, banks can deepen customer
engagement and strengthen brand loyalty.
Addressing the issue of duplicate entries ensures data integrity and accuracy in future analyses. It's
essential to maintain transparency and rigour in data collection processes to draw meaningful insights
and inform strategic decisions effectively.
In summary, prioritising these attributes in loyalty program design and implementation can drive
customer satisfaction, retention, and ultimately, sustainable business growth in the competitive banking
landscape.

36
4.10 INFLUENCE ON BANKING DECISIONS

• 21% of respondents stated that the bank's loyalty program has no influence on their decision to
stay with it, suggesting that other factors may be more important to them.
• 38% of respondents indicated that the loyalty program has some influence on their decision to
stay with the bank, while 33% reported moderate influence, indicating that the program
contributes to their satisfaction and retention.
• 16% of respondents expressed that the loyalty program significantly influences them
decision to stay with the bank, placing high importance on its benefits and rewards
This summary is highlighting the varying degrees of influence the loyalty program has on customers'
decisions to stay with the bank, and suggests that other factors such as customer service, convenience,
or product offerings may also play a role in their decision-making process

37
4.11 PERCEIVED VALUE

The loyalty program received varied ratings from participants: 2% gave it the lowest rating (1), 18%
rated it slightly higher (2), 44% rated it moderately (3), 17% rated it high (4), and 16% gave it the highest
rating (5). This indicates opportunity for improvement, especially for those who rated it low. To enhance
program effectiveness, the bank should identify and address underlying reasons for lower ratings.
Regular evaluations, feedback, and adjustments are necessary to align with evolving customer
preferences and maintain high perceived value. Capitalizing on high satisfaction ratings can contribute
to increased customer retention and loyalty. Understanding perceived value helps the bank optimize
program offerings and enhance overall customer satisfaction in the competitive banking landscape.

38
4.12 BUILDING TRUST

90% of respondents agree that loyalty programs contribute to building trust among customers, indicating
that these programs foster positive relationships with the bank. The remaining 10% disagree, suggesting
potential concerns or reservations that banks should address to improve trust.
Trust is crucial for customer retention, satisfaction, and advocacy. Banks can strengthen trust and loyalty
by offering transparent, fair, and valuable loyalty programs. HDFC Bank, a leading player in the banking
sector, recognizes the importance of trust and aims to foster it through its loyalty initiatives, such as
HDFC Rewards and Cashback offers.
By consistently delivering tangible benefits and rewards, HDFC Bank demonstrates its commitment to
customer satisfaction and retention. The bank continually innovates and enhances its loyalty offerings
to meet evolving customer needs, solidifying its position as a trusted financial partner.
In summary, loyalty programs like HDFC Bank's play a vital role in building trust among customers,
reinforcing its position as a trusted leader in the banking industry.

39
4.13 INFLUENCE ON BANKING DECISIONS

The analysis of the data reveals that a majority of respondents (54%) have considered switching banks
based on their loyalty program offerings. This highlights the importance of loyalty programs as a
significant factor in customers' decision-making processes when choosing a bank.
On the other hand, 46% of respondents have not considered switching banks based on loyalty programs.
This suggests that while loyalty programs are essential, other factors such as customer service,
convenience, or product offerings may also play a crucial role in their banking decisions.
Overall, the findings emphasise the need for banks to prioritise and invest in robust loyalty strategies to
remain competitive in the banking sector. Attractive loyalty program offerings can provide banks with
a competitive advantage, potentially leading to higher customer retention and acquisition rates.

40
4.14 COMMUNICATION CHANNELS

The analysis of the data shows that customers have varying preferences for learning about loyalty
programs. The most popular method is email notifications, preferred by 32% of respondents, followed
closely by mobile apps at 38%. This highlights the significance of digital platforms in creating awareness
about loyalty programs.
Traditional advertising methods, such as in-branch posters and leaflets, were the least preferred, with
only 10% of respondents favouring this approach. This suggests that these methods may not be as
effective in reaching customers as digital channels.
Social media was chosen by 20% of respondents, indicating its relevance in spreading information about
loyalty programs. However, it ranks lower than email and mobile app notifications, signalling that social
media may be a secondary channel for communication.
In conclusion, the data emphasises the importance of utilising digital channels, particularly email and
mobile apps, to effectively communicate loyalty program offerings to customers in the contemporary
banking landscape. Banks should focus on these platforms to maximise program awareness and
engagement.

41
4.15 SATISFACTION

The data collected from 100 respondents reveals their satisfaction levels with the loyalty program. The
majority of respondents, 80%, expressed satisfaction with the program, indicating that it meets their
expectations and provides value.
On the other hand, a smaller but significant portion of respondents, 18%, answered "No," suggesting
that they do not experience satisfaction with the loyalty program. This highlights the need for
improvement in the program offerings to better cater to this segment of customers.
Interestingly, only 2% of respondents explicitly chose the "Satisfied" option, which could be due to its
redundancy with the "Yes" option. Nonetheless, this data point indicates that a small number of
respondents specifically wanted to express their satisfaction with the program.
In summary, the loyalty program appears to be successful in satisfying the majority of its users, with
80% expressing satisfaction. However, there is still room for improvement, as 18% of respondents
indicated dissatisfaction. To enhance overall customer satisfaction and retention, it's essential for banks
to address the concerns of the dissatisfied segment and continuously evaluate and improve their loyalty
program offerings.

42
4.16 SATISFACTION LEVEL

A survey of 100 people showed different satisfaction levels with loyalty programs. Most people (39%)
were neutral, neither satisfied nor dissatisfied. A good number of them (38%) were satisfied, and a
smaller group (18%) were very satisfied. Only a few were dissatisfied (3%) or very dissatisfied (2%).
This shows that many people have positive or neutral experiences with loyalty programs, which are
important for keeping customers happy and loyal in the banking sector.

43
4.17 IMPROVEMENTS

Key Finding:
The data reveals that while some users have specific requests for the loyalty program, a significant
portion remains unclear about its features or benefits.
Breakdown:
• More Benefits (25%): This is the largest single request, indicating a quarter of users want the
program to offer more rewards or incentives.

• More Awareness (12.5%): Two equal-sized groups (12.5% each) highlight the need for
increased program awareness. This suggests some users might not be familiar with the
program's existence or its full potential.

• Other Requests (50%): The remaining half of the responses fall under the "Other" category. It
may occur for a variety of causes:
44
o Users might be satisfied with the current features and have no suggestions.
o The survey format might not have captured their specific desires clearly.
o Users might have provided vague or unclear feedback that couldn't be easily
categorised.

45
4.18 RECOMMENDATION

Out of 100 respondents, 47 (47%) answered "Yes," 47 (47%) answered "Maybe," and 6 (6%) answered
"No" when asked if they would recommend the loyalty programs to others.

Interpretation: The data indicates that almost half of the respondents (47%) are willing to recommend
the loyalty programs to others, suggesting a positive experience or perception of the programs. However,
an equally large portion of respondents (47%) are uncertain about recommending the programs, which
could be due to various reasons such as lack of information, mixed experiences, or indifference. Finally,
a small minority of respondents (6%) would not recommend the loyalty programs, potentially indicating
dissatisfaction or negative experiences.

Implications:

The high percentage of respondents who answered "Maybe" presents an opportunity for banks to
improve their loyalty programs and communicate their value more effectively to customers. By
addressing concerns, enhancing benefits, and increasing awareness, banks may be able to convert
uncertain customers into advocates, leading to increased customer retention and acquisition.

46
Additionally, understanding the reasons behind the negative recommendations can help banks identify
areas for improvement and mitigate potential issues.

47
CHAPTER 5:

SUGGESTIONS

48
Improve incentives and perks: The most appreciated aspect of the loyalty program is its benefits, which
include awards. HDFC Bank should prioritise improving the awards and perks it provides to clients in
order to boost their pleasure and loyalty. using a variety of channels, including email notifications,
mobile apps, in-branch banners and brochures, and social media.

Improve communication: Customers want to be kept informed about new loyalty program features,
updates, and special offers. HDFC Bank can strengthen its communication approach to keep clients
informed by assessing client data and providing appropriate incentives and benefits.

Provide more discounts: Customers regard fee discounts as a benefit of the loyalty program. HDFC Bank
should provide additional discounts on banking services and goods in order to attract and keep clients.
Customers desire more service-oriented programs, better response times, and speedier service. HDFC
Bank should prioritise customer service to improve the entire customer experience.

Educate clients: In today's digital banking environment, HDFC Bank should educate customers about
online scams and fraud. This can help to increase customer trust and loyalty.
Consider the public sector banks: HDFC Bank may explore making the loyalty program applicable in
public sector banks to acquire a larger customer based of the program's benefits and updates.

Improve the user interface: HDFC Bank should enhance the user interface of its mobile app and website
to make it easier for users to access and use the reward programme.
More incentives: HDFC Bank should provide more incentives, such as reward programs, vouchers, and
discounts, to encourage users to enrol in the loyalty program and recommend it to others.

49
CHAPTER 6:

CONCLUSION

50
According to the data supplied, customer loyalty programs in the banking sector are popular with
customers, with 62% of respondents being aware of their bank's loyalty program. The majority of clients
(52%) utilise banking services on a regular basis, and 26% have done so for more than five years.

The most valued features of loyalty programs are advantages such as rewards (45%) and fee savings
(38%). Customers are more likely to stick with their bank because of the loyalty program, with 33%
stating it has a moderate impact and 16% saying it has a significant impact. However, just 10% of
respondents believe that the loyalty program improves client trust.

Customers are mainly satisfied with the rewards program, with 80% reporting satisfaction.
8% gave the perceived value of the loyalty program a 4 or 5 on a scale of 1 to 5. However, there is still
room for improvement, since 39% of respondents are ambivalent about their level of satisfaction and
3% are dissatisfied or extremely dissatisfied.

Most customers prefer to be notified about reward programs via email (32%), or mobile app (38%).
Many consumers have contemplated switching banks based on their loyalty program features (54%),
and the majority would suggest the program to friends (52%).
Customers have recommended new features such as more service-oriented programs, reward points,
cashback programs, and speedier response times. Banks could explore implementing these elements to
boost client happiness and loyalty even further.

In conclusion, customer loyalty programs in the banking industry are critical for client retention and
satisfaction. HDFC Bank and other banks should continue to improve their loyalty program offers and
promote them effectively via digital channels. Incorporating consumer input and recommendations can
also help to improve the program's functionality and increase its appeal to customers.

51
CHAPTER 7:

REFERENCES

52
1. Muhammad Asyraf Hasim, Khairul Nizam Mahmud, Mohd Farid Shamsudin, Hafezali Iqbal
Hussain, & Milad Abdelnabi Salem Methods (2010). Loyalty Programs and Customer Retention in
the Banking Industry, Global Journal of Interdisciplinary Social Sciences

2. Bholane, Kishor. (2019). Impact of Customer Service on Customer Loyalty-A Case Study of HDFC
Bank. 9. 280-85.

3. Raj, Manisha & Bansal, Shruti. (2023). CUSTOMER SATISFACTION IN BANKING SECTOR-A
CASE STUDY OF H.D.F.C BANK. 6.

4. Reichheld 1993;1996 Customer Loyalty and Retention-by Dr. Meenakshi Gandhi 2011 OF “Service
Quality and Customer Relationships in Indian Banking” Himalaya Publishing House.

5. Customer Relationship Management - By Swift 2001,P.12

6. Jacob Robort (2002) and Sharma, Arti (2002) HDFC Bank focuses on retail financing Loyalty
Programs and Customer Retention in the Banking Sector

7. Methods (Clark, 2010). The loyalty programs become a crucial part of the marketing plan to attract
new customers (Hasim et al., 2015)

8. The study report "Service Quality for Commercial Banks:

9. Patel and Desai (2016) investigated the relationship between customer happiness, loyalty, and
retention in Surat-based banks.
10. Rd. Biju John M. (2017) The aim of his study Paper, titled 'Dynamics of Service Quality in the Indian
Banking Sector’
11. The Impact of Customer Service on Customer Loyalty: An HDFC Bank Case Study

12. Narasimhan, M.S. (1999) “Studies on Consumer Credit and Retail Banking in General” by DR. Usha
Arora and DR. Monica Bansal Management of Credit Schemes in Banks. Regal Publications ISBN
978-81-8484-100-8
Aditya Puri (2002) of Management of Credit Schemes in Banks

13. Retail borrowing by to Jacob Robort (2002) and Sharma, Arti (2002), Aditya Puri 2002

53
 Bandyopadhyay and Tamal (2003),

14. Mohsan F. (2011) investigated the impact of customer satisfaction on customer loyalty and
propensity to switch:

15. A.K Sohani (2012) Technology in Banking Sector: Rapid advancement and Gains to the Banking
Sector The Icfai University Press 332.106’5 SOH E01602The eleventh paper, titled "Technology in
Banks: A Case Study of HDFC Bank" by VS Daddihal and PK Kulkarn.

16. Customer Relationship Management by Couldwell in 1998 (Book by Bank Marketing by Hari
Shankar) 332.1068;8 E01641 SHA Aadi Publications

54
 CHAPTER 8:

WEBLIOGRAPHY

55
1. Types of loyalty programs in banks -
https://www.voucherify.io/blog/bank-and-fintech-loyalty-programs

2. HDFC bank rewards -

https://www.inventiva.co.in/trends/top-15-best-loyalty-in-india-2023/

3.HDFC bank loyalty programs -

https://www.hdfcbank.com/personal/pay/cards/creditcards/rewardpo+6532100ints

4. Limitation of the study - https://www.hdfcbank.com/personal/pay/cards/credit-cards/business-

money-back/terms-and-conditions-reward-point

5. HDFC bank rewards debit card -

https://www.hdfcbank.com/personal/pay/cards/debit-cards/rewards-debit-card

6. Rewards point programs -

https://www.hdfcbank.com/personal/pay/cards/debit-cards/rewards-debit-card/fees-and-charges

7. HDFC Bank removes Infinia daily capping on rewards for SmartBuy purchases - Live from a Lounge
https://livefromalounge.com/hdfc-bank-removes-infinia-daily-capping-on-rewards-f or-smartbuy-
purchases/

8. HDFC Bank -
https://leads.hdfcbank.com/applications/misc/instawonderz/tnc.htm

9. Data sampling
https://gyankovandar.com/definition-or-meaning-of-sample-and-sampling-in-research-reasons-for-
selecting-sample-factors-affecting-the-size-of-the-sample-the-sampling-process-types-of-sam

10. Profile of HDFC Bank -

https://en.wikipedia.org/wiki/HDFC_Bank

11. HDFC Bank loyalty program

https://www.hdfcbank.com/personal/pay/cards/millennia-cards/millennia-easyemi-card

12.

56
https://www.researchgate.net/publication/307476373_Loyalty_Program_Customer_Loyalty_in_Banki
ng_Industry

13.
https://www.researchgate.net/publication/331744624_Impact_of_Customer_Service_on_Customer_Loyalty-
A_Case_Study_of_HDFC_Bannk

14.
https://www.researchgate.net/publication/374004993_CUSTOMER_SATISFACTION_IN_BANKING_SE
CTOR-A_CASE_STUDY_OF_HDFC_BANK

15.
https://www.researchgate.net/publication/374004993_CUSTOMER_SATISFACTION_IN_BANKIN
G_SECTOR-A_CASE_STUDY_OF_HDFC_BANK

57
CHAPTER 9:

APPENDIX

58
 A Study on Customer Loyalty Programs in the Banking Sector with reference to HDFC Bank.

1. Gender

Male

Female

2. Name

Short -answer text

3. Age:

18-24

25-34

35-44

45-54

55 and above

59
 4. Occupation

Student

Employed

Self Employed

5. How long have you been using banking services?

less than one year

1-3 years

3-5 years

6. How often do you use banking services?

Rarely

On a regular basis

Occasionally

7. Are you familiar with the bank's customer loyalty program?

Yes

No

60
 8. How often do you participate in the bank's customer loyalty program?

On a regular basis

Rarely

Occasionally

Never

9. Which particular attributes do you value the most in the loyalty program?

Benefits include rewards

Fee discounts

Access to exclusive services

10. How much does your bank loyalty programs influence you to stay with it ?

Not at all

Somewhat

Moderately

Very much

61
 11. Rate the perceived value of the loyalty program on a scale of 1 to 5

(1 being low, 5 being high).

Options 1 2 3 4 5

12. Does the loyalty program build trust among customers?

Agree

Disagree

13. Have you considered switching banks depending on their loyalty program offering

Yes

No

14. How do you want to be made aware of the loyalty programs ?

Notifications by email

Mobile app

In- branch posters and leaflets

Social media

62
 15. Do you experience any satisfaction with the loyalty program?

Yes

No

16. What level of satisfaction do you experience with loyalty programs?

Satisfied

very satisfied

Neutral

Dissatisfied

Very dissatisfied

17. What new features do you want to incorporate in the loyalty program?

Short-answer text

18. Will you recommend the loyalty programs to others?

63
Yes

No

May be

64
APPENDIX

65
66