Clustering Customers on the Basis of Their Perceptions of Microfinancing by Banks

Abstract

In the present era, microfinance is no longer the domain of development institutions. The banking sector has been emerging in a big way to participate in the microfinance movement. Gradually, with experience, the banking sector has realized the importance of serving the “bottom of the pyramid.” At present, most of the commercial banks have delved into microfinance business. As microfinance is a recent addition in the arena of commercial banks’ services, an understanding of the customers’ perception of microfinance is very crucial as it would enable the bankers to identify and target the most deserving customers in an effective and efficient manner. The present study is a modest attempt to analyse customers’ perceptions towards the microfinance services provided by banks and to segment the customers on the basis of their perception thereof.