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Measuring Customer experience in bancassurance: An empirical study

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Measuring Customer Experience in Bancassurance: An Empirical Study UDK 658.89:336.71:368(540.35)

MEASURING CUSTOMER EXPERIENCE

IN BANCASSURANCE: AN EMPIRICAL
STUDY

MJERENJE ISKUSTVA KORISNIKA

BANKOOSIGURANJA: EMPIRIJSKO
ISTRAŽIVANJE

Market-Tržište
Vol. 28, No. 1, 2016, pp. 47-62
UDK 658.89:336.71:368(540.35)
Preliminary communication

Mousumi Choudhurya, Ranjit Singhb, Hemanta Saikiac

a)
Jawaharlal Nehru School of Management Studies, Assam University (A Central University), Silchar-788011, Assam, INDIA,
choudhurymousumi@yahoo.in
b)
Jawaharlal Nehru School of Management Studies, Assam University (A Central University), Silchar-788011, Assam, INDIA,
look_for_ranjit@yahoo.co.in
c)
Kaziranga University, Jorhat-Assam, INDIA, h.saikia456@gmail.com

Abstract Sažetak
Purpose – This study attempts to investigate customer Svrha – Studija istražuje iskustvo korisnika pri kupovini
experience with respect to the bancassurance channel. police osiguranja u banci (usluga bankoosiguranja) kao
Design/Methodology/Approach – The study is based prodajnom kanalu.
on primary data collected using a structured question- Metodološki pristup – Istraživanje se temelji na primar-
naire from customers buying life insurance policies from nim podacima prikupljenim korištenjem strukturiranog
SBI Life through different branches of State Bank of In- anketnog upitnika na uzorku korisnika koji kupuju SBI
dia in the city of Guwahati in the state of Assam, India. policu životnog osiguranja u različitim podružnicama
Cronbach’s alpha was used to test the reliability of the banke State Bank of India u gradu Guwahati, savezna
questionnaire. Statistical tools, such as mean, standard država Assam u Indiji. Pouzdanost anketnoga upitnika
deviation, and factor analysis were used to attain the ob- testirana je koeficijentom Cronbach alfa. Statističke mje-
jective of the study. re srednje vrijednosti i standardne devijacije te faktorska
Findings and implications – The study found that cus- analiza korištene su da bi se ostvario cilj istraživanja.
tomers have favorable experiences when buying life in- Rezultati i implikacije – Istraživanje otkriva da korisnici
surance through the bancassurance channel. There are imaju pozitivno iskustvo u kupovini police životnog osi-
seven core factors that affect customer experience in guranja u banci kao kanalu prodaje. Utvrđeno je sedam
Vol. 28, No. 1, 2016, pp. 47-62

bancassurance: ease of buying, whether maturity ben- glavnih čimbenika koji utječu na iskustvo korisnika pri
efit is received, reliability of the channel, responsiveness kupovini osiguranja u banci kao kanalu prodaje, a to su:
of the channel, after-sale services, stock market-related jednostavnost kupovine, dobivanje povlastica vezano
information, and accuracy of the channel. Banks should uz dospijeće police, pouzdanost kanala, odgovornost
devise a strategy to sustain favorable experiences of kanala, poslijekupovne usluge, informacije o radu burzi
their customers, as this enables banks to retain their ex- te preciznost kanala. Banka bi trebala osmisliti strategi-
isting customers while also attracting new ones. ju održivosti pozitivnog iskustva korisnika jer će joj to
Limitations – The study is restricted to customers buy- omogućiti zadržavanje postojećih i privlačenje novih
ing life insurance policy from various branches of State korisnika.

47
 Mousumi Choudhury, Ranjit Singh, Hemanta Saikia

Bank of India in Guwahati, India. Therefore, longitudi- Ograničenja – Istraživanje je ograničeno na korisnike
nal and cross-sectional research is needed to generalize koji kupuju policu životnog osiguranja u različitim po-
the findings. družnicama banke State Bank of India u gradu Guwahati,
Originality – The study is first of its kind and hence orig- savezna država Assam u Indiji. Zbog toga je potrebno
inal in nature. longitudinalno i kros-kulturno istraživanje kako bi se ovi
rezultati mogli generalizirati.
Keywords – bancassurance, customer experience,
bank, insurance, factor analysis Doprinos – Ovo je istraživanje prvo ovakve vrste, a sa-
mim time i originalno.
Ključne riječi – bankoosiguranje, korisnikovo iskustvo,
banka, osiguranje, faktorska analiza
Vol. 28, No. 1, 2016, pp. 47-62

48
Measuring Customer Experience in Bancassurance: An Empirical Study UDK 658.89:336.71:368(540.35)

1. INTRODUCTION 2012). In banking, customer experience is an

important differentiator (Croxford, Abramson
Recently, customer experience has attracted & Jablonowski, 2006). It is therefore the experi-
a great deal of attention within the financial ence of customers that can make the difference
service industry. This is because nowadays, in the bancassurance channel (Shaw, 2005) and
customers do not hesitate to switch to the enable the channel to develop a competitive
companies that are able to offer them better advantage (Shukla, 2007).
customer experiences (Shaw & Ivens, 2005). The
In today’s commoditized economy, custom-
term customer experience (CE) means the sum of
er experience is a critical differentiator for the
all experiences a customer has with a supplier
bancassurance channel. This is because the sig-
of goods or services over the duration of their
nificant things that customers remember, over
relationship. It is a journey which makes the cus-
and above a product or service, are related to
tomer feel happy, satisfied, and justified with a
their feelings about and perceptions of an or-
sense of being respected, served, and cared for
ganization derived through their experiences
in accordance with his/her own expectations
as customers (Drotskie, 2009). Providing good
or standards. It starts with the first contact and
customer experience is also important be-
continues through the whole relationship. The
cause it affects customer satisfaction (Liljander
term can also be used to refer to an individual
& Strandvik, 1997) and creates customer loyalty
experience during one transaction or multiple
(Yu & Dean, 2001; Pullman & Gross, 2004; Mas-
transactions (Varma, 2012).
carenhas, Kesavan & Bernacchi, 2006). Consider-
The banking industry has changed rapidly in ing all these aspects, the survival and growth of
the current, changing economic environment bancassurance depend not only on the assess-
throughout the world. Financial deregulation ment of its customers’ experiences but also on
and technological innovation have restruc- the focus they place on the creation of positive
tured the banking industry (Kumarswamy, customer experiences.
2012). To remain competitive in this financial
metamorphosis, banks have begun to take
innovative approaches towards banking (Shar- 2. CUSTOMER EXPERIENCE IN
ma, Dhaundiyal & Srivastava, 2012). One such BANCASSURANCE
activity is the bancassurance business model.
Bancassurance is a fusion of banking and in-
Bancassurance refers to the selling of insur-
surance. A number of researchers have studied
ance policies through a bank’s established
customer experience in the banking industry.
distribution channels (Aggrawal, 2004; Malik,
Grewal, Levy and Kumar (2009) studied the
2014; Neelamegan & Veni, 2009; Viswanadham,
factors affecting customer experience in retail
2005). It is the concept of selling insurance
banking and emphasized that service delivery
plans, along with a complete range of banking
and service quality shape customers’ experienc-
and investment products and services (Venu-
es. Backstrom and Johansson (2006) concluded
gopal, 2011).
that the friendliness of the bank personnel, their
In the bancassurance business, banks face com- competence and knowledge about the prod-
Vol. 28, No. 1, 2016, pp. 47-62

petition within the banking industry, as well as ucts and services offered, as well as a pleasant
within the insurance industry. In an era of finan- and welcoming branch environment, can lead
cial business, where products, prices, people, and to enhanced customer experience. A branch’s
technology are all so similar (Drotskie, 2009), it layout and design have a significant impact on
is a challenge for the bancassurance channel to its customers’ experiences. Ng (2003) found that
attract and retain its customers. In such a scenar- the physical features of the retail outlet, such
io, differentiation is the key to success (Varma, as the layout and background music, influence

49
 Mousumi Choudhury, Ranjit Singh, Hemanta Saikia

customers’ experiences. Various channels may emphasized the need to create integration as
be used for efficient and seamless delivery of ser- fundamental to customers’ experience of ban-
vices with a focus on broadening the dialogue cassurance. A study by Berghe and Verweire
and deepening the relationship between the ad- (2001) reported that the experience of custom-
visor and the banking customer, hence improv- ers with insurance services offered through
ing the customer experience (Laukkanen, 2007; their bank is high because banks have devel-
Yap, Wong, Loh & Bak, 2010; Ioannou & Zolkiews- oped a strong customer focus, resulting in sim-
ki, 2009). Ramathe (2010) found that past expe- pler and more transparent products designed
riences, brand, and prices all impact customer for their large customers. Bancassurance chan-
experiences in retail banking. nels are also regarded as reliable (Choudhury
& Singh, 2015a) and responsive (Choudhury &
Studies of customer experience have also been
Singh, 2015b). Cotham, Ross and Rajagopalan
conducted in the insurance industry. A report
(2008) explore the scenario of Bancassurance
by Accenture (2013) concluded that, in today’s
in the markets of Asia (China and India) from
commoditized insurance environment, cus-
the consumer’s point of view. The study con-
tomer experience is becoming one of the pri-
cludes that customer experience is far from
mary drivers of differentiation in the insurance
delightful. Choudhury and Singh (2015c) found
industry. Delivering an exceptional and unique
that customers have favorable experiences
customer experience improves profitability
when buying insurance policies through the
by reducing costs, increasing retention, and
bancassurance channel.
achieving a higher share of wallet. Capgemini
(2013) explain that insurers must enhance cus- Previous research studies, as mentioned in Sec-
tomer experience to improve retention. Their tion 2, undertook descriptive studies of cus-
report reveals that only 30% of insurance cus- tomer experience in bancassurance. This paper
tomers report a positive ‘insurance customer attempts to investigate empirically customer
experience’. Seventy percent of insurance cus- experience in bancassurance by considering
tomers are at risk of competitive attack or are the dimensions identified in the previous stud-
prone to switching carriers on account of a lack ies. The paper also aims at identifying the core
of positive customer experience. Market lead- factors that influence customer experience in
ers in the insurance business have viewed cus- bancassurance.
tomer experience as a means to demonstrate
true customer centricity. They are rightly focus-
ing on their claims processes as an important 3. OBJECTIVE OF THE STUDY
part of the overall policyholders’ experience Customer experience plays a significant role in
(Michaels, 2013). The customer experience de- shaping the future of a product. Based on the
livered by many providers in the UK insurance previous experience of their customers, service
industry still appears to be quite poor (Micro- providers try to design their product so as to
soft, 2015). In a 2014 research report, Breading enhance that experience. The present study
assesses how insurers in North America are attempts to analyze customers’ experiences
leveraging customer communications and when buying insurance policies through the
Vol. 28, No. 1, 2016, pp. 47-62

document management to enhance customer bancassurance channel.

experience. Customer communication man-
agement is initiated in the insurance industry
in order to provide personalized experiences to 4. RESEARCH QUESTION
customers (Cognizant, 2013).
The answer to the following questions will be
Other researchers have considered customer sought in this study:
experience in bancassurance. Morgan (1994)

50
Measuring Customer Experience in Bancassurance: An Empirical Study UDK 658.89:336.71:368(540.35)

a) What is the overall level customer experi- able, 31 items were considered. These 31 items
ence in the bancassurance channel of SBI were chosen by consulting various studies, such
Life Insurance Company Limited? as Grewal et al. (2009), Backstrom and Johansson
(2006), Ng (2003), Ramathe (2010) and Berghe and
b) What factors affect customer experience in
Verweire (2001). Apart from this, experts’ opinions
the bancassurance channel of SBI Life Insur-
and the results of a pilot survey were also consid-
ance Company Limited?
ered in framing the 31 items of the questionnaire.
c) Are all these factors equally important; that The items were given as follows:
is, do they equally affect customer experi-
o Item 1 was related to explaining the fea-
ence in the bancassurance channel of SBI
tures of an insurance policy in detail;
Life Insurance Company Limited?
o Item 2 was related to suggesting the most
suitable policy;
5. RESEARCH METHODOLOGY
o Item 3 was related to not disclosing cus-
The study was conducted using the following tomers’ financial information to others;
research methodology: o Item 4 concerned not disclosing customers’
personal information to others;
5.1. Universe of the study
o Item 5 was related to convenience of pay-
The universe of the study consists of all the cus-
ing the first premium;
tomers of 37 branches of State Bank of India in
the city of Guwahati who have received life in- o Item 6 concerned the time required to get
surance-related services through the different the policy document;
branches of State Bank of India.
o Item 7 concerned the accuracy of details in
the policy bond/certificate as mentioned in
5.2. Sample units and sample size
the application form;
Using a random sampling design from a popu-
o Item 8 was related to the correction of an
lation of 3,315 customers (as of March 11th, 2013)
inappropriate policy bond/certificate, if any;
at 95% confidence level and 5% confidence in-
terval, a sample of 345 customers was obtained. o Item 9 was related to medical examinations
All these 345 customers had bought a life insur- required before an insurance policy could
ance product or received life insurance-related be issued;
services through one of the branches of State o Item 10 concerned the customer’s comfort
Bank of India in Guwahati. with the type of information asked;
5.3. Data collection o Item 11 concerned the customer’s comfort
with the type of document sought;
The study was based on primary data and a
structured questionnaire was used to collect o Item 12 was related to getting help while
the necessary information relevant for the filling out the application form;
Vol. 28, No. 1, 2016, pp. 47-62

study. For secondary data, official reports and o Item 13 concerned the payment of a re-
records, journals, newspapers, and magazines newal premium;
were assessed.
o Item 14 was related to getting help with the
5.4. Development of questionnaire revival of a lapsed insurance policy;
Customer experience is considered as a latent o Item 15 was related to the procedure for the
variable in the study. To measure this latent vari- assignment of insurance policies for loans;

51
 Mousumi Choudhury, Ranjit Singh, Hemanta Saikia

o Item 16 was related to getting a loan on an 5.5. Administration of

insurance policy; questionnaire
o Item 17 was related to giving intimation re- A list of 3,315 customers was obtained on March
garding the date of premium renewal; 11th, 2013. Out of these 3,315 customers, 415 cus-
o Item 18 was related to intimation regarding tomers were identified by using a random num-
the maturity amount; ber table at a 95% confidence level and a 5%
confidence interval. Then the questionnaire was
o Item 19 was related to help in getting the distributed among these 415 customers. Out of
maturity amount; this group, 350 completed questionnaires were
o Item 20 was related to the procedure for returned. After scrutinizing the 350 completed
getting the maturity value; questionnaires, 5 questionnaires were found
defective and incomplete. Therefore, these 5
o Item 21 was related to the time required for questionnaires were rejected. Thus, 345 ques-
getting the maturity value; tionnaires were filled out accurately.
o Item 22 was related to information about
the fund value / surrender value; 5.6. Data analysis
o Item 23 was related to receiving help in get- To analyze the experience of customers with
ting the surrender value / fund value; the bancassurance channel, statistical tools,
such as mean, standard deviation, Cronbach’s
o Item 24 was related to information about a alpha, etc. were used. The reliability of the ques-
new policy coming on the market; tionnaire was assessed by computing the coef-
o Item 25 was related to information about ficient alpha, which measured the internal con-
any changes in regulation with respect to sistency of the items. Factor analysis was used
life insurance; for data reduction. This is a statistical method
concerned with the reduction and summariza-
o Item 26 was related to eagerness to solve
tion of observed variables in terms of common
problems at the earliest possible time;
underlying dimensions or factors (Hair, Ander-
o Item 27 was related to the giving away of oc- son, Tatham & Black, 2003).
casional gifts, such as diaries, calendars, etc.;
o Item 28 was related to keeping accurate re- 6. ANALYSIS AND FINDINGS
cords of premiums;
The analysis and findings of this study are
o Item 29 was related to telling exactly when
presented in the following paragraphs:
services would be performed;
o Item 30 was related to variance in the willing- 6.1. Reliability of the tool
ness to provide service with each occasion; TABLE 1: Reliability statistics
o Item 31 was related to getting individual at-
Cronbach’s
tention. Cronbach’s No. of
Alpha Based on
Vol. 28, No. 1, 2016, pp. 47-62

Alpha Items
For measuring customer experience, the re- Standardized Items
sponses to the above-mentioned items were .908 .918 31
obtained on a five-point scale ranging from 5 to Source: Compiled from questionnaire
1, where 5 denotes a very favorable experience
and 1 denotes a very unfavorable experience.
Some of the questions had reverse scaling to A reliability test of the scale was performed
ensure accuracy of responses. and the coefficient of Cronbach’s Alpha was

52
Measuring Customer Experience in Bancassurance: An Empirical Study UDK 658.89:336.71:368(540.35)

found to be 0.908 for 31 items (or statements) the latent variable are actually measuring the
included in the study. The very high value of latent variable.
Cronbach’s Alpha (0.908) is indicative of a very
high degree of reliability of the scale, and it 6.2. Measuring customer
also shows that the items are highly correlated. experience
A Cronbach’s Alpha of more than 0.70 is con- The two basic statistics (i.e. mean and standard
sidered to be a good measure of reliability of deviation) for measuring the experience of cus-
scale (Nunnaly, 1978). Its high value also indi- tomers with respect to the various items consid-
cates that the items considered for measuring ered for the study are presented in Table 2.

TABLE 2: Item statistics

Particulars Mean Std. Deviation

Getting help with filling out application form 4.31 0.538
Not disclosing personal information 4.18 0.439
Not disclosing financial information 4.16 0.434
Comfort with type of document sought 4.16 0.411
Comfort with type of information asked 4.14 0.399
Convenience of paying first premium 4.13 0.386
Details in policy bond are same as in application form 4.06 0.531
Keeping accurate records of premiums 4.05 0.411
Medical examination requirement for insurance policy approval 3.99 0.451
Time required to get policy document 3.95 0.636
Payment of renewal premium 3.79 0.668
Getting individual attention 3.69 0.661
Willingness to provide service does not vary 3.65 0.675
Giving intimation regarding renewal premium date 3.43 0.896
Eager to solve problems at earliest point in time 3.43 0.683
Knowing exactly when the service will be performed 3.43 0.721
Suggesting most suitable policy 3.21 0.807
Explaining insurance policy 3.09 0.873
Procedure for getting maturity value 3.09 0.367
Time required to get maturity value 3.09 0.37
Getting help reviving lapsed insurance policy 3.07 0.312
Intimation regarding maturity amount 3.07 0.339
Help getting maturity amount 3.07 0.334
Information about fund value 3.07 0.379
Receiving help in getting fund value 3.06 0.353
Vol. 28, No. 1, 2016, pp. 47-62

Procedure for assignment of insurance policy for loan 3.05 0.291

Getting a loan on an insurance policy 3.04 0.307
Correction of inappropriate policy 3.03 0.294
Information about changes in the regulation of life insurance 2.4 0.798
Information about new policy on market 2.37 0.938
Receiving occasional gifts 1.22 0.692
Source: Compiled from questionnaire

53
 Mousumi Choudhury, Ranjit Singh, Hemanta Saikia

As evident from Table 2, the top items contribut- By looking at the scale statistics, the mean score
ing to favorable customer experience are iden- is 105.47, which falls under favorable experi-
tified as “getting help with filling out application ence. Thus, it can be inferred that customers
form”, “not disclosing personal information of cus- of bancassurance have “favorable experience”
tomers”, and “not disclosing financial information with respect to getting insurance-related ser-
of customers.” The top factors responsible for un- vices from State Bank of India.
favorable customer experience are “information
about changes in the regulation of life insurance”,
TABLE 4: Overall experience
“information about new policy on market”, and
“receiving occasional gifts.” Frequency Percent
Moderate experience 216 62.6
6.3. Scale statistics Favorable experience 119 34.5
TABLE 3: Scale statistics Very favorable
10 2.9
experience
Std. No. of Total 345 100.0
Mean Variance
Deviation Items
Source: Compiled from questionnaire
105.47 81.500 9.028 31
Source: Compiled from questionnaire
Using Exhibit 1, overall experience is calculated
for each of the respondents, as shown in Table 4.
There are a total of 31 items, and each item is It has been observed that 62.6% of the respon-
measured based on the responses from the re- dents have moderate experience with bancas-
spondent using a Likert scale. The responses surance services provided by the State Bank of
ranged from very favorable experience to very India in Guwahati.
unfavorable experience. For the response of very
favorable experience, a score of 5 was assigned. 6.4. Identification of core factors
Similarly, for the responses of favorable, moder- affecting customer experience
ate, unfavorable, and very unfavorable experi-
TABLE 5: KMO and Bartlett’s Test
ence, the scores of 4, 3, 2, and 1 were assigned
respectively. Thus, for a scale consisting of 31 Kaiser-Meyer-Olkin
items, the maximum possible score is 155 (31×5), Measure of Sampling .841
and the minimum possible score is 31 (31×1). The Adequacy
range is 124 [155(max)-31(min)]. Now, if 124 is di- Approx.
vided by 5, 24.8 is obtained. This 24.8 is added to Bartlett’s 7286.913
Chi-Square
31 (lowest possible score), then the range of 31- Test of
Df 465
55.8 is obtained. Similarly, other intervals are ob- Sphericity
Sig. .000
tained and several layers of customer experience
Source: compiled from questionnaire
are obtained, as presented in Exhibit 1, along
with their interpretations:
Table 5 shows the p-value at 0.000 (which is less
Vol. 28, No. 1, 2016, pp. 47-62

EXHIBIT 1: Interpretation table than 0.05), corresponding to KMO & Bartlett’s

31-55.8 Very unfavorable experience Test. This confirms that the data considered for
55.8-80.6 Unfavorable experience factor analysis is appropriate.
80.6-105.4 Moderate experience
105.4-130.2 Favorable experience
130.2-155 Very favorable experience

54
Measuring Customer Experience in Bancassurance: An Empirical Study UDK 658.89:336.71:368(540.35)

TABLE 6: Total variance explained

Extraction Sums of Rotation Sums of Squared

Initial Eigenvalues
Com- Squared Loadings Loadings
ponent % of Cumula- % of Cumula- % of Cumula-
Total Total Total
Variance tive % Variance tive % Variance tive %
1 9.189 29.641 29.641 9.189 29.641 29.641 4.473 14.428 14.428
2 4.050 13.063 42.704 4.050 13.063 42.704 3.668 11.833 26.261
3 2.225 7.177 49.882 2.225 7.177 49.882 3.392 10.941 37.202
4 1.443 4.654 54.535 1.443 4.654 54.535 2.532 8.167 45.369
5 1.290 4.161 58.697 1.290 4.161 58.697 2.532 8.166 53.536
6 1.196 3.858 62.555 1.196 3.858 62.555 1.973 6.364 59.900
7 1.104 3.562 66.116 1.104 3.562 66.116 1.927 6.216 66.116
8 .992 3.201 69.318
9 .920 2.969 72.287
10 .854 2.755 75.042
11 .767 2.473 77.515
12 .728 2.348 79.863
13 .657 2.121 81.983
14 .646 2.085 84.069
15 .583 1.882 85.950
16 .509 1.643 87.593
17 .469 1.514 89.107
18 .442 1.427 90.533
19 .422 1.361 91.894
20 .397 1.279 93.173
21 .346 1.117 94.290
22 .318 1.025 95.315
23 .301 .971 96.286
24 .269 .869 97.155
25 .232 .748 97.903
26 .216 .697 98.600
27 .181 .585 99.185
28 .118 .381 99.565
29 .058 .188 99.754
30 .043 .139 99.893
31 .033 .107 100.000
Extraction method: principal component analysis.
Source: compiled from questionnaire
Vol. 28, No. 1, 2016, pp. 47-62

Table 6 shows the actual factors that were ex- variance” column enlightens us as to how much
tracted. When we look at the section labeled total variability (in all the variables together) can
“Rotation Sums of Squared Loadings”, it provides be accounted for by each of these factors. Here,
only those factors that met the cut of criterion by 66% total variability is explained by the first 7 fac-
extraction method. In this case, there are 7 fac- tors, and thus we have 7 components based on
tors with Eigen values greater than 1. The “% of the principal component analysis.

55
 Mousumi Choudhury, Ranjit Singh, Hemanta Saikia

TABLE 7: Rotated component matrixa

Component
1 2 3 4 5 6 7
comfort with type of information asked .867 .032 .148 .076 .015 .145 .038
comfort with type of document sought .849 .050 .165 .104 .019 .181 .075
non-disclosure of personal information .823 .153 .121 .054 -.032 -.122 .153
non-disclosure of financial information .814 .180 .148 .051 -.055 -.165 .147
convenience of paying first premium .582 .043 .040 .125 .220 -.007 .416
getting help in filling out application form .574 -.019 .226 -.027 .157 -.064 .107
medical examination requirement for
.460 .070 .062 .355 -.063 .271 .037
insurance policy approval
procedure for getting maturity value .108 .902 .141 .125 .147 .168 .008
time required to get maturity value .091 .887 .102 .159 .143 .048 -.005
help in getting maturity amount .134 .833 .099 .128 .223 .174 .046
intimation regarding the maturity amount .039 .725 .067 .099 .229 .273 .137
willingness to provide service does not vary .134 .082 .851 .116 -.035 .080 .093
getting individual attention .173 .064 .819 .187 -.012 .081 .082
knowing exactly when the service will be
.193 .139 .750 .113 .147 -.091 .170
performed
eager to solve problems at an earliest point in
.215 .103 .686 .302 .135 .070 .238
time
suggesting most suitable policy .356 .034 .484 .402 .163 .036 .064
information about new policy in market -.017 .144 .135 .754 .054 .106 .034
information about changes in regulation of life
.076 .230 .173 .670 .245 -.023 .125
insurance
explaining insurance policy .324 .076 .327 .557 .158 .052 .053
providing intimation regarding renewal
.025 .046 .187 .509 .029 -.056 .445
premium date
payment of renewal premium .150 .140 .333 .415 .096 -.041 .380
getting a loan on insurance policy -.040 .151 -.024 .061 .772 -.051 .010
giving of occasional gifts .147 .063 .162 .328 .661 .191 -.160
procedure for assignment of insurance policy
.012 .456 .027 .108 .650 .266 .098
for loan
getting help with revival of lapsed insurance
.114 .289 .167 .184 .560 .247 .096
policy
correction of an inappropriate policy .023 .287 .077 -.097 .549 .053 .436
receiving help in getting fund value .011 .340 .058 .050 .110 .846 .077
information about fund value .009 .273 .050 .039 .229 .832 .086
Vol. 28, No. 1, 2016, pp. 47-62

time required to get policy document .277 -.026 .149 .231 -.039 .086 .651
details in the policy bond are same as in
.460 -.036 .211 .031 .021 .112 .597
application form
keeping accurate records of premiums .151 .213 .328 .051 .075 .123 .415
Extraction method: principal component analysis.
Source: compiled from questionnaire

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Measuring Customer Experience in Bancassurance: An Empirical Study UDK 658.89:336.71:368(540.35)

Table 7 contains the rotated factor loadings rep- Component 4 is a grouping of the following
resenting how the variables are weighted for factors: information about new policies on the
each component, as well as the correlation be- market, information about changes in the reg-
tween the variables and the components. This ulation of life insurance, explaining an insurance
process helps to identify the low correlation policy, giving intimation regarding renewal pre-
variables with the components. Component 1 is mium date, and payment of renewal premium,
a combination of the following factors: comfort with respective loadings of .754, .670, .557, .509,
with type of information asked, comfort with and .415.
type of document sought, non-disclosure of
Component 5 is a combination of the following
personal information, non-disclosure of finan-
factors: getting a loan on an insurance policy,
cial information, convenience of paying the first
giving of occasional gifts, procedure for assign-
premium, getting help in filling out application
ment of insurance policy for loan, getting help
form, and the medical examination requirement
with revival of lapsed insurance policy, and cor-
for insurance policy approval, with loadings of
rection of an inappropriate policy, with loadings
.867, .849, .823, .814, .582, .574, and .460, respec-
of .772, .661, .650, .560, and .549, respectively.
tively.
Component 6 is a blending of two factors: re-
Similarly, component 2 consists of factors such
ceiving help with getting fund value and infor-
as the following: procedure for getting maturity
mation about fund value, with loadings of .846
value, time required for getting maturity value,
and .832, respectively.
help in getting maturity amount, and intimation
regarding the maturity amount, with respective Component 7 is a combination of three factors:
loadings of .902, .887, .883, and .725. time required to get policy document, details in
the policy bond being the same as in applica-
Component 3 is a combination of the follow-
tion form, and the keeping of accurate records
ing factors: willingness to provide service,
of premiums, with respective loadings of .651,
non-varyingly getting individual attention, to
.597, and .415.
tell exactly when the service will be performed,
eager to solve problems at an earliest point in Finally, all the components thus located are pre-
time, and suggesting the most suitable policy, sented in Table 8.
with factor loadings of .851, .819, .750, .686, and
.484, respectively.
Vol. 28, No. 1, 2016, pp. 47-62

57
 Mousumi Choudhury, Ranjit Singh, Hemanta Saikia

TABLE 8: Results of factor analysis

Name of
Component Variables included
component
comfort with type of information asked
comfort with type of document sought
non-disclosure of personal information
1
non-disclosure of financial information
Ease of buying
convenience of paying first premium
getting help with filling out application form
medical examination required for insurance policy approval
procedure for getting maturity value
Getting
time required to get maturity value
2 maturity
help with getting maturity amount
benefit
intimation regarding maturity amount
willingness to provide service does not vary
getting individual attention
Reliability of the
3 ability to tell exactly when the service will be performed
channel
eagerness to solve problems at earliest point in time
suggesting the most suitable policy
information about new policies on market
information about changes in regulation of life insurance
Responsiveness
4 explaining insurance policy in detail
of the channel
giving intimation about renewal premium date
payment of renewal premium
getting a loan on insurance policy
giving of occasional gifts
After-sale
5 procedure for assignment of insurance policy for loan
services
getting help with revival of lapsed insurance policy
correction of an inappropriate policy
Getting stock
receiving help with getting fund value
6 market-related
information about fund value
information
time required to get policy document
Accuracy of the
7 details in the policy bond are the same as on application form
channel
keeping of accurate records of premiums
Source: compiled from questionnaire

7. POLICY IMPLICATIONS AND and retaining old customers. This is definitely a

Vol. 28, No. 1, 2016, pp. 47-62

CONCLUSION strong point for the bank, yet there is still room
for improvement in customer experience, just
This study has found that customers have favor- as there are ways in which overall customer
able experiences when buying insurance poli- experience could be raised to the level of very
cies via the bancassurance channel. Berghe and high, as well. To upgrade customer experience,
Verweire (2001) have reached similar findings. banks should put an emphasis on creating great
This is significant for bringing in new customers customer experience through multiple chan-

58
Measuring Customer Experience in Bancassurance: An Empirical Study UDK 658.89:336.71:368(540.35)

nels (online channels, in addition to traditional The study also identifies factors that are responsi-
“brick-and-mortar” channels) (Michaels, 2013). ble for forming unfavorable experiences among
There should be clear communication with customers. One such factor is the giving of occa-
the customers about the features of each pol- sional gifts to customers. Giving occasional gifts
icy (Varma, 2012; Breading, 2014). Furthermore, creates positive switching barriers for a customer
employees play an important part in delivering (Kovesi & Demontrond, 2011) that affirmatively
positive customer experience. Banks should affects the customer’s experience with the ser-
train their employees to become knowledge- vice provider. This is because switching barriers
able, motivated, and engaged in creating influence the degree to which customers expe-
memorable customer experience (Varma, rience a sense of being locked into a relationship
2012). with the service provider (Allen & Meyer, 1990).
This is the question of whether the customer
Several authors, such as Vikas (2011), Devi (2008),
experiences “wanting to be” in a relationship or
Khurana (2013), Bapat, Soni and Joshi (2014), and
the (negative) status of “having to be” in a rela-
Madan (2012), have found that customers have
tionship (Hirschman, 1970). In this context, pro-
a favorable perception of the agency chan-
viding positive switching barriers creates an affir-
nel of public-sector life insurance companies.
mative reason to remain and reflects the status
Therefore, even a small decline in the customer
of wanting to be in the relationship (Hirschman,
experience in the bancassurance channel may
1970; Han, 2007). Other features, such as keeping
lead to an outpour of customers from the ban-
customers informed about new policies com-
cassurance channel to the agency channel of
ing onto the market and informing customers
public-sector life insurance companies. But if
regarding changes in rules and regulations gov-
efforts are made in the right direction, custom-
erning insurance services are identified as re-
ers will prefer the bancassurance channel, in
sponsible for unfavorable customer experience
accordance with the findings of several authors,
in bancassurance. In this regard, the bank should
such as Wang and Hwang (2009) and Tiwari and
focus on communication management to en-
Yadav (2012), namely, that customers trust banks
hance customer experience (Breading, 2014). Var-
and consider them to be more authentic than
ious channels of communication may be used
insurance companies. Reliability and trust are
for expanding contact with customers. This will
very important in gaining customers’ loyalty,
improve customer experience (Laukkanen, 2007;
which is something that banks do have (Kuusik
Yap et al., 2010; Ioannou & Zolkiewski, 2009).
& Varblane, 2009). Customers prefer banks due
to convenience, interpersonal relationships, The study identifies seven core factors that af-
safety, and customized service (Popli & Rao, fect customer experience in bancassurance.
2009; Fan, Lee, Tang & Lee, 2011; Kumari, 2012; Ali These factors are the following: ease of buy-
& Chatley, 2013; Berghe & Verweire, 2001; Shukla, ing, receiving maturity benefit, reliability of
Bhatt & Shrivastava, 2012). the channel, responsiveness of the channel,
after-sale service, receiving stock market-relat-
When selling an insurance policy, a bank has a
ed information, and accuracy of the channel.
competitive advantage over traditional chan-
Therefore, service providers should try to create
nels of insurance companies. A bank has the
Vol. 28, No. 1, 2016, pp. 47-62

ease of buying for the customers in order to

financial data of its clients. Therefore, a bank can
have favorable customer experience, while also
offer tailor-made insurance solutions according
provide help to customers with receiving matu-
to the financial position and requirements of its
rity benefit. Service providers should also ensure
customers. Offering customized insurance plans
the reliability of the channel.
will boost the business of the bancassurance
channel.

59
 Mousumi Choudhury, Ranjit Singh, Hemanta Saikia

8. LIMITATIONS OF THE 9. SCOPE OF FUTURE

STUDY RESEARCH
The present study considers those customers The experiences of customers buying insurance
who have bought an SB Life life insurance policy from private banks can be analyzed. Similar
from State Bank of India. Therefore, the findings studies can be done in different cultural and
cannot be generalized for bancassurance chan- geographical settings. Furthermore, a compara-
nels of other insurance companies. The survey tive study of customer experience in private and
was conducted in the city of Guwahati in the public banks can also be carried out. A compar-
state of Assam. Thus, the findings of this study ative study of the experiences, perceptions and
cannot be generalized for other geographical satisfaction of customers who have used a ban-
regions either. The responses were collected in cassurance channel, as well as an agency chan-
the year 2013-2014. This time limitation affects nel, can also be undertaken.
the study because the rules and regulations gov-
erning banking, insurance, and most importantly,
bancassurance keep changing.

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