Financial inclusion has emerged as one of the most important drivers of equitable economic development for making financial services more accessible and enhancing the overall banking experience for various customer segments. The banks of public sector in India have already developed many initiatives to promote the inclusive banking, such as expanding the branches, establishing digital financial services and government supported activities, however there is little empirical evidence to attest the level of customer satisfaction in Kerala in relation to these initiatives. This study aims at understanding the impact of Financial Inclusion on Customer Satisfaction with the customers of public sector banks in Kerala with an objective of 5 dimensions of financial inclusion namely financial access, financial usage, financial literacy, digital financial inclusion and customer service quality. The research design used was a quantitative cross sectional type and primary data were obtained by structured questionnaire through a five point Likert scale from 230 customers. Descriptive statistics, reliability analysis, exploratory factor analysis, Pearson correlation, multiple regression analysis and Partial Least Squares Structural Equation Modeling (PLS-SEM) were used to analyze the collected data. The results show that customer satisfaction is positively affected by all five dimensions of financial inclusion and that all these effects are statistically significant. In terms of ranking, the highest ranking determinant was service quality followed by digital financial inclusion, financial access, financial usage, and financial literacy. The result of the proposed model showed that it was able to account for 72.8% of the variance in customer satisfaction, which means that the model was enough to explain the dependent variables. This confirms that customer satisfaction is related to access to banking services, but also to quality, access to and convenience of, and effective use of, financial services. The study adds to the financial inclusion literature by confirming a multidimensional framework which focuses on financial inclusion and customer satisfaction, in the context of public sector banks. The outcomes also contribute to the practical knowledge of policy makers and banking institutions in the areas of inclusive banking, enhancing service delivery, and promoting sustainable financial development; all centred on the customer.

References:

Aaker, D. A. (1991). Managing brand equity. Free Press. Anderson, E. W., Fornell, C., & Lehmann, D. R. (1994). Customer satisfaction, market share, and profitability: Findings from Sweden. Journal of Marketing, 58(3), 53–66. https://doi.org/10.1177/002224299405800304

Arora, R. U. (2010). Measuring financial access. Oxford Development Studies, 38(1), 133–149.

Babu, P., & Thomas, A. (2021). Financial inclusion through kiosk-based banking services: A study with reference to business correspondent models in the state of Kerala. Benchmarking: An International Journal, 29(9), 2900–2923. https://doi.org/10.1108/BIJ-11-2020-0591

Beck, T., Demirgüç-Kunt, A., & Levine, R. (2007). Finance, inequality and the poor. Journal of Economic Growth, 12(1), 27–49.

Beck, T., Demirgüç-Kunt, A., & Martinez Peria, M. S. (2008). Banking services for everyone? Barriers to bank access and use around the world. The World Bank Economic Review, 22(3), 397–430. Berry, L. L., Parasuraman, A., & Zeithaml, V. A. (1988). The service-quality puzzle. Business Horizons, 31(5), 35–43.

Cronin, J. J., Jr., & Taylor, S. A. (1992). Measuring service quality: A reexamination and extension. Journal of Marketing, 56(3), 55–68. https://doi.org/10.1177/002224299205600304

Demirgüç-Kunt, A., Klapper, L., Singer, D., Ansar, S., & Hess, J. (2022). The Global Findex Database 2021: Financial inclusion, digital payments, and resilience in the age of COVID-19. World Bank.

Fornell, C. (1992). A national customer satisfaction barometer: The Swedish experience. Journal of Marketing, 56(1), 6–21. https://doi.org/10.1177/002224299205600102

Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2019). Multivariate data analysis (8th ed.). Cengage Learning.

Kahn, C. M. (2018). Financial inclusion and banking development. Annual Review of Financial Economics, 10, 321–340.

Kamath, R. (2007). Financial inclusion vis-à-vis social banking. Economic and Political Weekly, 42(15), 1334–1335.

Kotler, P., & Keller, K. L. (2016). Marketing management (15th ed.). Pearson.

Kumar, N. (2013). Financial inclusion and its determinants. Margin: The Journal of Applied Economic Research, 7(1), 113–122.

Lewis, B. R., & Mitchell, V. W. (1990). Defining and measuring the quality of customer service. Marketing Intelligence & Planning, 8(6), 11–17.

Ministry of Finance. (2023). Economic Survey 2022–23. Government of India.

National Payments Corporation of India. (2023). Annual Report 2022–23. NPCI.

NITI Aayog. (2023). National Strategy for Financial Inclusion. Government of India.

OECD. (2020). OECD/INFE 2020 International Survey of Adult Financial Literacy. OECD Publishing.

Oliver, R. L. (1980). A cognitive model of the antecedents and consequences of satisfaction decisions. Journal of Marketing Research, 17(4), 460–469. https://doi.org/10.1177/002224378001700405

Oliver, R. L. (1997). Satisfaction: A behavioral perspective on the consumer. McGraw-Hill.

Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1988). SERVQUAL: A multiple-item scale for measuring consumer perceptions of service quality. Journal of Retailing, 64(1), 12–40.

Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. Free Press.

Prahalad, C. K. (2005). The fortune at the bottom of the pyramid: Eradicating poverty through profits. Wharton School Publishing.

Reserve Bank of India. (2021). Report on Trend and Progress of Banking in India 2020–21. Reserve Bank of India.

Reserve Bank of India. (2022). Report on Trend and Progress of Banking in India 2021–22. Reserve Bank of India.

Reserve Bank of India. (2023). Report on Trend and Progress of Banking in India 2022–23. Reserve Bank of India.

Reserve Bank of India. (2024). Financial Stability Report. Reserve Bank of India.

Sarma, M. (2008). Index of financial inclusion (ICRIER Working Paper No. 215). Indian Council for Research on International Economic Relations.

Sarma, M., & Pais, J. (2011). Financial inclusion and development. Journal of International Development, 23(5), 613–628.

Sharma, D. (2016). Nexus between financial inclusion and economic growth: Evidence from the emerging Indian economy. Journal of Financial Economic Policy, 8(1), 13–36.

Singh, N., & Malik, S. (2020). Customer satisfaction in Indian banking: A service quality perspective. International Journal of Bank Marketing, 38(5), 1091–1110.

Srinivasan, R. (2010). Financial inclusion in India: An assessment. Reserve Bank of India Bulletin. Sureshchandar, G. S., Rajendran, C., & Anantharaman, R. N. (2002). The relationship between service quality and customer satisfaction—A factor-specific approach. Managing Service Quality, 12(6), 363–379.

Suhair, N. K., & Kavitha, S. (2020). A study on customer satisfaction: A comparison between private sector and public sector banks with reference to Calicut District, Kerala. International Journal of Management, 11(8), 2337–2343.

United Nations. (2015). Transforming our world: The 2030 Agenda for Sustainable Development. United Nations.

Upadhyay, B. R. (2020). Role of FinTech in accelerating financial inclusion in India. SSRN Electronic Journal.

World Bank. (2022). Global Financial Development Report 2022. World Bank.

Zeithaml, V. A. (1988). Consumer perceptions of price, quality, and value: A means-end model and synthesis of evidence. Journal of Marketing, 52(3), 2–22. https://doi.org/10.1177/002224298805200302

Zeithaml, V. A., Bitner, M. J., & Gremler, D. D. (2018). Services marketing: Integrating customer focus across the firm (7th ed.). McGraw-Hill.