Will Citi’s Retail Customers Stick with Axis Bank, the Private Sector Market Leader in Customer Complaints?
Hemindra Hazari 23 June 2023
The gap between Axis Bank’s own portrayal of customer experience and the reality of customer complaints recalls Robert Louis Stevenson’s classic tale of Dr Jekyll and Mr Hyde. 
 
Let us begin with Dr Jekyll. The Bank claims, in its FY21-22 Sustainability Report, that “we are committed to delivering the greatest levels of customer-experience and satisfaction to our user base…” The Bank’s commitment to reaching the 'greatest' heights of customer experience would appear to be borne out by awards: the Bank ranked 8th among the ‘Most Recommended Banks’ in the Asia Pacific region in the Asian Banker Quality Consumer Survey on Retail Banks, and ranked 4th among ‘Most Helpful Banks’ during COVID-19 in the same survey.
 
Extract from Axis Bank FY 2022 Sustainability Report on Customer Satisfaction
 
   
The report goes on to state that Axis Bank aspires to be “India’s most customer obsessed bank.”
 
 
The dark character of Mr Hyde emerges, however, in a Reserve Bank of India (RBI) committee on customer service, whose report was released to the public on 5 June 2023. The report documents customer complaints of each bank from FY19-20 to FY21-22.
 
In complete contrast to the impression conveyed in Axis Bank’s Sustainability Report, the data reveals that customer complaints for Axis Bank rose by 80% in FY20-21 to 360,342, second only to ICICI Bank’s 482,213 in the private sector. In FY21-22, it ousted the much larger ICICI Bank to become the undisputed private sector market leader with an astounding 935,005 complaints, constituting a 9% industry (private, government and foreign banks) market share.
 
Customer Complaints in the Banking Industry
 
 
The data carries a caveat, which states that Axis Bank is the only bank in the industry whose FY21-22 data is not comparable with FY20-21, as the Bank had tightened the tagging norms since FY20-21. Since the annual growth in customer complaints in FY21-22 was a staggering 159%, this analyst sought greater clarity from Axis Bank on the tightening norms it had introduced which resulted in the dubious distinction of achieving the status of private sector market leader. 
 
Normally, when a change in norms results in abnormal volatility in data reporting, listed companies take pains to provide greater granularity and also provide alternative data to make the year-on-year data comparable. Surprisingly, Axis Bank declined to respond to this analyst’s questionnaire seeking greater clarity on the tightening of norms for customer complaints.
 
On the critical issue of customer satisfaction, it reflects poorly on Axis Bank’s board of directors and senior executive management that, when they assure stakeholders of their commitment to deliver “the greatest levels of customer experience-satisfaction,” they are in reality the market leader in customer complaints in the private sector. Worse, there is a complete lack of transparency on the claimed tightening of norms for customer complaints. It is also pertinent to note that when the norms were unchanged between FY19-20 and FY20-21, customer complaints soared by 80% in FY20-21. That is a fair indication of poor service standards even prior to the tightening of the norms.
 
Axis Bank Customer Service Committee in FY21-22
 
 
Axis Bank’s customer service committee of the board of directors, chaired by G Padmanabhan, a former executive director of RBI, is the highest authority within the Bank for monitoring of customer complaints. It also has nominee directors of key institutional shareholders. As a former senior executive of the banking regulator, the chairman, as well as the nominee directors, should be extremely concerned with this track record of customer service.
 
Axis Bank’s grievance redressal policy defines a complaint “as any deficiency or gap in service delivery towards the commitment provided to the customer. Complaints could be on account of breach in committed turnaround time or non-fulfilment of the request customer has placed with the bank.” The policy does not refer to any tightening of the complaint norms.
 
In the absence of any clarification from Axis Bank, a possible partial explanation for the poor customer service standards could be the high attrition in the Bank. In FY21-22, overall attrition jumped to 31.6% from 23.8% in FY20-21. In the frontline and under-30 years of age category (there may be an overlap as youngsters are normally in sales/ frontline) the attrition in FY21-22 was a shocking 58% for frontline and 40.7% in the under-30 years category. 
 
When there is such huge attrition among the staff, especially at the entry-level and in sales, customer service is bound to suffer. The board of directors and the banking regulator must probe the causes of such high attrition, as it appears to be impacting customer service.
 
 
Against the background of Axis Bank’s acquisition of Citibank India’s retail division, this private sector market leadership in customer complaints, and its lack of transparency on its ‘tightened’ norms, are a matter of concern.
 
Axis Bank, like most banks, has been shifting focus from corporate loans to retail loans. Not only was it forced to take significant credit costs on its corporate loans in the past, but the current growth in corporate loans is sluggish. When the strategy shifts from corporate to retail, there are obviously more customer touch points and, hence, there is a rise in customer complaints. Within retail loans, credit card loans tend to have an even higher rate of customer complaints, on account of various charges and much higher interest rates.
 
Axis Bank Loan Composition
 
 
In March 2022, despite Axis Bank having a three-month average of 8.7mn (million) credit cards outstanding, compared with 16.3mn cards for HDFC Bank and 12.8mn for ICICI Bank, the bank reported nearly 2.5 times’ HDFC Bank’s customer complaints. Another aspect is that the three-month average credit card spend for Axis Bank is not only the lowest amongst the major credit card issuers, but it is also lower than the industry’s average in March 2022. Citibank’s card spend was the highest, while Axis Bank’s was the lowest.
 
 
The problem with having the highest customer complaints in FY21-22, prior to the acquisition of Citibank’s retail business, is that the clientele of Citibank is premium: high-income, high-spending and also very demanding with regard to customer service. Given the apparently poor state of Axis Bank’s customer service in FY20-21 and FY21-22, and assuming, in the absence of data, that it may not have significantly improved in FY22-23 and FY23-24, erstwhile Citibank retail customers are unlikely to experience premium service at Axis Bank staff. 
 
While Axis Bank may continue to purvey Dr Jekyll-like commentary regarding superior customer satisfaction in its public relations literature, the customer experience of Mr Hyde may drive out erstwhile Citibank customers, undermining the high cost (Rs116bn/US$1.41bn) acquisition of Citibank’s erstwhile Indian operations.
 
On the stock market, Axis Bank is trading close to its all-time high of Rs990, which it reached some days ago. The surge in share price is on the market’s expectation of superior performance. However, when the present CEO, Amitabh Chaudhry, took charge on 1 January 2019, there was a huge expectation of a complete turnaround in the Bank. Sadly, while the stock has risen by 56% in the period, it has under-performed the Nifty-50, Bank Nifty and ICICI Bank. The only consolation has been that it has out-performed HDFC Bank.
 
Stock Market Performance since Amitabh Chaudhry Took Charge as CEO of Axis Bank
 
 
Sell-side analysts are apparently unconcerned about Axis Bank’s customer complaints, and believe it is inconsequential for the success of the Citibank India retail acquisition or for Axis Bank’s future performance. As per Moneycontrol, the overwhelming majority of analysts have a ‘Buy’ recommendation, and the fact that the share price is close to its all-time high is a testimony to their optimistic outlook.
 
Sell-side Recommendations on Axis Bank
 
 
While the outlook appears promising for shareholders, customers have been recording record levels of complaints against the Bank at least till FY21-22. In the absence of any clarity from Axis Bank on the unprecedentedly high levels of customer complaints, the market’s only hope is that Dr Jekyll can eventually overcome Mr Hyde*.
 
Note: The writer had emailed Axis Bank with detailed queries and also sent a reminder on 15th June that the queries remain unanswered. There has been no response from the Bank. 
 
*In the novel Dr Jekyll commits suicide by consuming poison.
 
DISCLOSURE 
 
I, Hemindra Hazari, am a Securities and Exchange Board of India (SEBI) registered independent research analyst (Regd. No. INH000000594). I own equity shares in the banks mentioned in this report. HDFC Bank subscribes to this analyst’s research and a member of this analyst’s family is employed with HDFC Bank. Views expressed in this Insight accurately reflect my personal opinion about the referenced securities and issuers and/or other subject matter as appropriate. This Insight does not contain and is not based on any non-public, material information. To the best of my knowledge, the views expressed in this Insight comply with Indian law as well as applicable law in the country from which it is posted. I have not been commissioned to write this Insight or hold any specific opinion on the securities referenced therein. This Insight is for informational purposes only and is not intended to provide financial, investment or other professional advice. It should not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security.
 
 
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Comments
tonyluis309
3 months ago
My experience here was a very terrible one. After I had made my second deposit I was blocked out. Nothing I did worked. I was so frustrated and giving up on my money when Mrs. HARPER JAMES came to my rescue and helped me out with the issue. I would have been in a big mess if I had not met Mrs. HARPER JAMES ( HARPERJAMESPLATFORM @ GMAIL . COM ) personal email them privately. I wish to recommend Mrs. HARPER to anyone in recovery of loss. She saves me and I believe She can also save others who have run into loss.
pradeepbm
3 months ago
I am both axis Bank and citi bank customer. Axis Bank is fraud. They deducted money from my mother's fast tag from a toll booth 350 kms from where the car was parked. The car never went to toll booth in its lifetime. Complained several times but they did not return the money . They said SBI has deducted the money and closed it. This is fraud by axis bank. I will close the citi card soon . If anyone knows how to recover money please let me know. It is just rs 50 but it is fraud.
adityag
3 months ago
I'm a happy Citibank credit card customer for over 20 years. Their product line is nothing special and is boring (which is exactly how it's supposed to be). I'm not sure how Axis will take care of the new portfolio. If they mess with the basics I'll jump ship.
piupab
3 months ago
At Axis Bank customer service is like an orphan because (1) the entire focus is on SALES. The employees' careers and even jobs depend on obtaining sales across all products day in and day out. Managers turn a blind eye to misselling , until there is a written complaint - then the employee who had mis sold under pressure stands alone and is often put out to pasture. (2) There is no specific provision in the employees' annual assessment plan regarding customer service. So, the employees, mainly the frontline staff at the branches, are not incentivised to serve customers properly.(3) It is a daily phenomenon at the branches that customers (including senior citizens) who have come for some purely service requirement are not attended to properly. Rather, the focus of the staff is on customers who they consider can be sold some products, by hook or by crook.(4) Most of the frontline positions at branches are manned by relative newcomers to the industry, who are not taught banking laws - they are daily flogged to sell. This lack of knowledge about banking is also responsible for a large number of customer complaints.
Kamal Garg
3 months ago
In fact, Axis Bank is only taken as a study. It is requested to take more such cases of public and private sector banks to highlight complete apathy and lack of customer service and satisfaction. In fact, most of the private sector banks' employees have no idea how a process takes place in their bank. They are completely clueless.
I am narrating my today's experience with a different very large private sector bank. They asked for new locker agreement as per RBI direction. They had no idea what is required, where all signatures are required, what KYC papers (btw, I also have an account with them, so they had all the KYC papers with them) are required and how to authenticate them. So much so that when the entire set of signed papers were submitted to the Branch, the employee even did not care to mark my locker number somewhere in the Agreement. I wonder, if there are many customers approaching the bank on the same day with locker agreement, and if the bank employee does not mark the locker number on the top or somewhere in the agreement, how they will know which locker agreement belongs to which customer and how they will fill up the blanks (because all the agreements are signed in blank only).
Gross negligence on the part of employees and complete nonsense and unacceptable behaviour and attitude.
eas4jobs
3 months ago
I am a Citibank customer, I have both savings and credit Card. I chose to continue with Axis bank as I read that most of the Citi Bank employees have been retained and hence customer experience may not be very different. But will not hesitate to reconsider should the need arises.
Dr.Manohar
Replied to eas4jobs comment 3 months ago
Axis and Kotak are the worst among the new gen banks in terms of customer service. Their service channels are so designed that a normal customer never get to talk to a human and email is not provided for grievance redressal except for a web form and their template responses and reasons for rejection are never mentioned in unambiguous terms. Even if one approaches branch they show us their 1860 phone no. to call which takes ages with their ads at our phone call costs before one gets to the real window to get response. Till first 18 months or so Citi team will continue to provide service, real issues would start after that period
r_ashok41
3 months ago
I am also not sure how will the axis bank be since i do not hear good news about their service and
will wait for some time and slowly close it after switching all my dealings with citi bank wherever I have given citi as reference.
sureshnair.trivandrum
3 months ago
I refused to switch my Citi Bank credit card to Axis Bank and preferred to close it also together on account of Axis Bank's pathetic customer service.

I had opened a premium account in Axis bank over 4 years ago. I had a RM for a very brief period and since his departure no RM has been allotted to me. Numerous call to the the BM went answered and complaints to my "Virtual RM " highlighting poor customer service also fell on deaf ears!

Last week I closed my Axis Bank account!
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