Customer-Base Analysis of Bank through Markov Model

Abstract

The objective of the present paper is to find out if the present state of a bank customer (primary j secondary) influences his/her future state and in distant future assuming that the facilities of a bank branch remaining constant. The study also investigates if the cohort of customers considered for the study is homogenous in nature. Customers are selected randomly from the branch of a given bank using simple random sampling and information was collected from them through telephonic interview. The collected data were analysed using Markov model. It is found that the previous prime status of a bank customer does not have much impact on his/her future status. A prime customer today may not remain so in near future. It is evident that there is homogeneity among the customers in terms of their switching between primary and secondary account. It implies that the future situation of the business of bank will be more dependent on the available facilities and services of the bank at that instant. Thus, it is implied that a bank can gain more prime customers by improving its services and quality of offerings irrespective of what happened in the past.