Imapct factor(SJIF): 5.889
Examination of Customer Perception on Quality of Banking Services: Evidence from Private Sector Banks and Public Sector Banks
Dr. Nilanjan Ray
Department of Commerce and BBA
Netaji Mahavidyalaya, West Bengal, India
This research paper mainly deals customer perception of select private sector banks and public sector banks. The research survey was based on SERVQUAL dimensions (Parasuraman et al. 1988) which measures service quality and internet service quality in terms of customer expectations and perceptions of banking services. This study is based on cross-sectional survey that employed the use of pre-structured questionnaire to collect primary data from a sample of 120 respondents through personal contact, field survey and email.
Key Words: Internet Banking, SERVQUAL, Customer Perception
Customer satisfaction is a serious issue for the success of any organization. Service quality is the main indicator to measure the client satisfaction. The relation between expectations and perceptions are very important in business especially in service industry to identify the service quality. In modern business environment, providing high service quality is the major key for a sustainable competitive advantage. Being a service industry catering to the millions of customers, banks are constantly offering new products to satisfy their diverse client bases with varied tastes and preferences. In recent years, internet banking is one of the facilities are offering to their clients to ensure client satisfaction along with improved business. The internet banking or online banking is a win-win solution for both the banks and their clients. The clients are advantaged because of the convenience, flexibility and literally 24-hour banking solutions in their hands and the banks get benefitted because of lower operating costs, wider geographical reach and reduced client pressure on their branches. Present status of Indian commercial banks
demonstrates that maximum amount of branches are computerized and with CBS (Core Banking Solution). Commercial banks working in rural areas also providing most of internet banking services like mobile banking, NEFT, RTGS, ATM, credit cards, POS etc. Basically e-banking includes all non-traditional and electronic means of banking such as ATM, internet banking (IB), mobile banking, banking through credit cards and debit cards etc.
Survey of Existing Literature:
Curry et al., (2002, p.197) in an attempt to assess the quality of physiotherapy services used the SERVQUAL model and three physiotherapy services in Dundee, Scotland. They considered the ten original criteria for evaluation and combined them into five; tangibles, reliability, responsiveness, assurance (including competence, courtesy, credibility, and security) and empathy (including access, communication, and understanding). Avkiran (1999) used service quality instrument developed in Australia to measure service quality in retail banking as perceived by customers (BANKSERV). It was adapted from SERVQUAL to specifically suit the Australian banking industry. The major reason for customers to choose banks for investment funds is because of the dependability and reputation of banks. Banks always promise customers a high level of security during transactions. Banking service can increase customers’ confidence and trust if employees are able to provide appropriate service to each customer. For instance, understanding the needs of each individual customer, such as knowing the customers’ expected retirement age, annual income, and hobbies are required to help provide a good match of insurance and fund products for customers. Assurance is the knowledge and courtesy of employees and their ability to inspire trust and confidence. Bank commitments are important, as customers may save a large sum of money in banks. For complicated products such as insurance, funds, and margins, employees must provide a clear explanation of each product to customers, so that customers can feel confident about the services provided by banks. The final dimension is empathy, which represents the individualized attention that firms provide to its customers.
Service quality has a positive influence on customer satisfaction (Yee et al., 2010). Customer satisfaction is defined as the attitude resulting from what customers believe should happen (expectations) compared to what they believe did happen (performance perception) (Neal, 1998). Satisfaction reinforces quality perception and drives repeat purchases.
Zaim, Bayyurt, and Zaim (2010) found that tangibility, reliability and empathy are important for customer satisfaction, but Mengi (2009) found that responsiveness and assurance are more important. Siddiqi (2010) examined the applicability of service quality of retail banking industry in Bangladesh and found that service quality is positively correlated with customer satisfaction; empathy had the highest positive correlation with customer satisfaction, followed by assurance and tangibility.
On the other hand, Lo, Osman, Ramayah and Rahim (2010) found that empathy and assurance had the highest influence on customer satisfaction in the Malaysian retail banking industry. Arasli, Smadi and Katircioglu (2005) found that reliability had the highest impact on customer satisfaction. A number of studies have identified the dimensions of service quality as the antecedents of customer satisfaction. Kotler and Armstrong (2012) preach that satisfaction is the pos-purchase evaluation of products or services taking into consideration the expectations. Researchers are divided over the antecedents of service quality and satisfaction. Whilst some believe service quality leads to satisfaction, others think otherwise (Ting, 2004).
Lee et al. (2000); Gilbert and Veloutsou (2006); Sulieman (2011) and Buttle (1996) suggest service quality leads to customer satisfaction. To achieve a high level of customer satisfaction, most researchers suggest that a high level of service quality should be delivered by the service provider as service quality is normally considered an antecedent of customer satisfaction. As service quality improves, the probability of customer satisfaction increases.
Wang et al. (2002) found in Chinese banks that reliability was the key drivers of the product quality &followed by tangibility. The authors argued in favor of improving service quality &product quality to build and enhance company reputation.
Understanding of select Literature Review
This study can be ascertained by the following Research objectives:
Data for the study undertaken has been collected from the primary source, which is again collected through pre-structured questionnaire. The questionnaires include information on their name, sex, age, country and occupation. Based on SERVQUAL’s five dimensions sample size was restricted to 240 respondents (120 respondents each public and private sector bank). This study is representative in nature so far as the banks are concerned and focuses on client satisfaction of internet banking services and not on a particular bank’s internet banking services.
Measures and Analysis
Primary data were collected using a predetermined personally administered questionnaire. The questionnaire was designed to capture sample characteristics and the objectives. It has a mix of quantitative and qualitative feedbacks. For the quantitative feedbacks, a five point Likert scale from 1 to 5 was used, where 1 was for the lowest satisfaction level and 5 was for the highest satisfaction level.
Analysis of Perception Customer Service Quality and Interpretations
Table: 2 SERVQUAL Dimensions in Banking industry
Sources: 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), p.12-40.
Above figure shows that the mean scores of perception of customers on SERVQUAL dimensions public sector banks gain attention as these banks are rated high except responsive dimension by the customers than private sector bank.
Fig.2 Customer Perceptions of Reliability dimension of Public and Private Sector Bank
Above figure depicts that in case of public sector bank providing reliable information (3.732) is higher, followed by online reliability (3.647), error free services (3.433) and perform well right from the first time (3.322). In case of private bank reliable information (3.423) is higher followed by online reliability (3.343), perform well right from the first time (3.311) and error free services (3.121).
Fig.3 Customer Perceptions of Empathy dimension of Public and Private Sector Bank
Above figure shows that in case of public sector bank location factor (3.643) is higher, followed by understanding needs and wants of customer (3.465) , sincerity concern (3.354) and willing to help (3.224). In case of private bank understanding needs and wants of customer (3.342) is higher followed by location factor (3.643), sincerity concern (3.350) and willing to help (3.212).
Fig.4 Customer Perceptions of Responsiveness dimension of Public and Private Sector Bank
Figure 4 depicts that in case of public sector bank strong positive service attitude (3.657) is higher, followed by customer service (3.565), treat customers with politely (3.435), instant service (3.342) and low waiting time (3.231). Again in case of private sector bank customer service (3.664) is higher, followed by low waiting time (3.658), treat customers with politely (3.332), instant service (3.312) and strong positive service attitude (3.243).
Fig.5 Customer Perceptions of Tangibility dimension of Public and Private Sector Bank
Above figure depicts that in case of public sector bank comfortable waiting lounge is higher (3.546), followed by neat & clean environment (3.432), proper maintenance of equipment (3.332) and staff appearance (3.323). In case of private sector bank comfortable waiting lounge (3.453) is higher, followed by neat & clean environment (3.401), staff appearance (3.320) and proper maintenance of equipment (3.221).
Fig.6 Customer Perceptions of Assurance dimension of Public and Private Sector Bank
Above figure depicts that in case of public sector bank trustworthy (3.565) is higher, followed by communicate and interact with customers to understand their needs (3.343), reasonable cost and price (3.342) and assured safety (3.221). In case of private sector bank reasonable cost and price (3.212) is higher, followed by communicate and interact with customers to understand their needs (3.210), assured safety (3.220) and trustworthy (3.201).
Findings of the Study
This study reveals that among all SERVQUAL dimensions, public sector bank rated higher by the customers except responsiveness which is higher in private sector bank. This present study depicts that among all reliability parameters, reliable information provided by public sector bank has been highly rated by customers. This study indicates that well right from the first time service in reliability dimension public and private sector banks are to some extent nearby rated by the respondents. This study reveals that public sector banks location factor rated highly by customers whereas willing to help to customers of private sector banks rated low score. This present study also depicts that considering two types of banks it is clearly understood that customer support of private sector banks remain the highest parameter of responsive dimensions. This present study reveals that waiting time of public sector bank is high rather than private sector bank due internet link failure or lack of expertise. Present study depicts that in assurance dimension trustworthy parameter of public sector bank is high as customer relies on Government organization than private organizations. This present study depicts that according to customer public sector banks should provide better infrastructure like – toilet for customer, drinking water, Customer Care personnel etc. Service quality is a vital part for any organization for attracts more customers and customer loyalty. Service quality is most important and action like rapid response, efficient staffs, commitment, right service at right time, quick complaint solution, competencies, trustworthy, awareness, accessibility, rigidity, navigations, communications, web customizations are most vital factors to increase satisfaction, provide better infrastructures like automated pass book vending machine which reduce customers waiting time and zone of tolerance, efficient official staffs, quick and error free services , quick response for customer quires etc.
The nature of administration can be accessed through steady criticism instrument for diverse administration measurements and this can help the banks to perform all the more adequately and productively. Clients are the spirit of any business organization and banks being in the administration division are likewise customer driven and are continually overhauling their operations to guarantee better client fulfillment. Be that as it may, expanding standards, regulations, advancements, rivalry and vicinity of tech-adroit customers make a bank more helpless against diverse parts of administration quality. This requires an inside and outside
examination of present managing account operations to oblige new administration quality measurements in both conventional and virtual banking operations. Easy navigated website would be soothing for customers and they would like better to use online services. Trustworthy and secured online system, if provided, would make the decision easy for the customer moving to internet banking. It is very significant that their transactions and personal information must be fully secured. In case of any query there must not be communication gap and customer have access to the management and banking staff when needed. If banks works on these determinants that it would surely increase its customers using online banking.
Arasli, H., Smadi, S. M. & Katircioglu, S. T. (2005). Customer service quality in the Greek Cypriot banking industry. Managing Service Quality, 15(1), 41-56.
Avkiran, N.K. (1994). Developing an instrument to measure customer service quality in branch banking. International Journal of Bank Marketing, 12 , 10-18.
Badri, M.(2003) The Measurement of IT Centers Service Quality at the Institutions of Higher Education in the UAE, Proceedings of the Baptist University ,Fourth Annual Research Conference at the UAE University, Al-Ain, 27-29 (April)
Chi Cui, C., Lewis, B.R. & Park, W. (2003). Service quality measurement in the banking sector in South Korea. International Journal of Bank Marketing, 21, 191-201
Churchill, G. & Surprenant, C. (1982). An investigation into the determinants of customer satisfaction. Journal of Marketing Research, 19 (4), 491-504.
Clemes MD (2008). An empirical analysis of customer satisfaction in international air travel, Innovative Marketing, 4,pp.49-62.
Cronin, J.J. and Taylor, S.A. (1992). Measuring service quality: a re-examination and extension. Journal of Marketing, 56, 55-68.
Curry, A. & Sinclair, E. (2002) 'Assessing the quality of physiotherapy services using Servqual ', International Journal of Health Care Quality Assurance, 15 (5), 197-205.
Ganesan-Lim, C., Russell-Bennett, R. & Dagger, T. (2008) 'The impact of service contact type and demographic characteristics on service quality Perceptions ', Journal of Services Marketing, 22 (7).
Gilbert GR, Veloutsou C (2006). A Cross-Industry Comparison of Customer Satisfaction, Journal of Service Marketing, 20(5),298-308
Gronroos, C. (1984), “A service quality model and its marketing implications”, European journal of marketing, 18 (4), 36 -44
Haywood-Farmer, J. (1988), “A conceptual model of service quality” International journal of operations and production management, 8 (6) 19-29
Hazlina (2011). Impacts of service quality on customer satisfaction: Study of Online banking and ATM services in Malaysia, International Journal of Trade Economics Finance, 2(1).
Huseyin Arasli, Salime-Smachi and Salih Turan Katircioglu,(2005).Customer Service Quality in the Derek Cypriot Banking Industry. Managing Service Quality, 15(1): 41-56.
Kang Gi-Du, James Jeffrey, (2004) "Service quality dimensions: an examination of Grönroos’s service quality model", Managing Service Quality, Vol. 14 Iss: 4, pp.266 – 277
Kotler, P. & Armstrong, G. (1999). Principles of Marketing. Upper Saddle River, NJ: Prentice Hall
Kumar, S. A., Mani, B. T., Mahalingam, S., and Vanjikovan, M. (2010). Influence of Service Quality on Attitudinal Loyalty in Private Retail Banking: an empirical study. IUP Journal of Management Research, 9(4),21-38.
Lee MC (2000). The determinants of perceived service quality and its relationship with satisfaction, Journal of Services Marketing, 14(3),217-231
Lo, L. K., Osman, M., Ramayah, T. & Rahim, M. (2010). The impact of service quality on customer loyalty: A study of banks in Penang, Malaysia. International Journal of Marketing Studies, 2 (2), 57-66.
Meng, J., Summey, J., Herndon, N. & Kwong, K. (2009) 'Some retail service quality expectations of Chinese shoppers', International Journal of Market Research, 51 (6), 773-796.
Mengi, P. (2009). Customer satisfaction with service quality: An empirical study of public and private sector banks. Journal of Management Research, 8 (9), 7-17.
Neal, W. D. (1998). Satisfaction be damned, value drives loyalty. Paper presented at the ARF Week of Workshops, New York.
Negi, R. (2009). Determining customer satisfaction through perceived service quality: A study of Ethiopian mobile users, International Journal of Mobile Marketing;4(1),31-38.
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), p.12-40.
Rai, R. (2009) “Service quality gap analysis in Indian bank: An empirical study” Paradigm, 13 (2), July-dec, 29-35
Ray N, Ghosh D (2014). Internet Service Quality (I-SQ) Dimensions and their Impact on Consumer Satisfaction: Case from Banking Industry, Asian Journal of Research In Banking and Finance, Vol.4, Issue. 8, 212-221
Siddiqi, K. O. (2010). Interrelationships between service quality attributes, customer satisfaction and customer loyalty in the retail banking sector in Bangladesh. Paper presented at the International Trade and Academic Research Conference, London.
Siu, N. & Cheung, J. (2001) 'A measure of retail service quality', Marketing Intelligence & Planning, 19 (2), pp. 88-96.
Slu, N. YM & Mou, JCW (2003), “A study of service quality in Internet Banking”, BRC Working papers May 2003,Hong Kong
Sulieman (2011) Banking Service Quality Provided by Commercial Banks and Customer Satisfaction , American Journal of Scientific Research, 27(2),68-83
Ting DH (2004). Service Quality and Satisfaction Perceptions: Curvilinear and Interaction Effect, The Int. J. Bank. Mark. 22(6): 407 – 420.
Van Iwaarden, J., van der Wiele, T., Ball, L. & Millen, R. (2003). Applying SERVQUAL to Web sites: An exploratory study. International Journal of Quality and Reliability Management, 20 (8), 919-935.
Wang Y. & Hing-Po L. (2002.) Service quality, customer satisfaction and behaviour intentions: Evidence from China’s telecommunication industry, 4(6), 50-60.
Wilson A., Zeithaml V.A., Bitner M.J., Gremler D.D. (2008) Services Marketing, McGraw-Hill Education
Yaghi Derar Shaker (2010), A Customised Scale for Measuring Retail Service Quality in a College Shop: A Context Specific Approach, thesis, Newcastle Business School June 2010.
Yee, R. W. Y., Yeung, A. C. L. & Cheng, T. C. E. (2010). An empirical study of employee loyalty, service quality and firm performance in the service industry. International Journal of Production Economics, 124(1), 109-120.
Zaim, H., Bayyurt, N. & Zaim, S. (2010). Service quality and determinants of customer satisfaction in hospitals: Turkish experience. The International Business & Economics Research Journal, 9(5), 51-58.
Zanna van Dun, Josee Bloemer & Jorg Henseler ,(2009), Perceived customer contact centre quality: conceptual foundation and scale development , The Service Industries Journal, ISSN 0264-2069, 2009-10, 1–17
Pacific Institute of Management, Pacific Hills, Airport Road, Udaipur - 313001,