An Empirical Investigation of Perceptions of Customers About Quality of Services Offered Banks - Thesis Example

Gautam, Vikas. “An Empirical Investigation of Perceptions s About Quality of Services Offered by Public and Private Sector Banks.” Asia Pacific Journal of Research in Business 2 (5), (2011), pp. 93-115. Print. This article is an empirical study aiming to explore the perceptions that customers have about the service quality in the Indian banking sector. As customers increasingly have the choice to move from one bank to the other, and as liberalization opens up the Indian banking sector, customer service is gaining in importance. Improved customer service is related to both better company performance and higher quality in the operation. Furthermore, the Indian government has embarked on a program of banking reform, which is still in its early stages, and so there is an opportunity to see if this is affecting the level of service offered to customers. Both public sector and private sector banks are included in this study. The method chosen was a survey based on the SEVQUAL model. This particular model was chosen because it has been tried and tested in other settings and its 22 item scale gives a good picture of the quality of service as it occurs in different kinds of service industry. The 22 items were grouped into five sections and participants were invited to rate different aspects of banking service according to a 7 point Likert type scale. Participants were asked about two particular banks, the State Bank of India and the Industrial Credit and Investment Corporation of India (ICICI). These two banks were chosen because they are the representatives of public and private sectors respectively. The starting hypothesis was that there would be no significant difference in the customer perceptions of service in the two banks, or alternatively that there would be a significant difference. The survey was conducted in the city of Dehradun. Age, gender and employment status were mixed, with a majority of males, married persons, and people in professional jobs. The data was analyzed using the statistical software package SPSS. Exploratory factor analysis and regression analysis were carried out. The findings were that empathy, reliability, assurance and responsiveness were higher in the case of the public banks whereas tangibility was higher for private sector banks. This shows that there is a difference in the perception of customer service of the two kinds of bank, and on the whole, public sector banks are perceived as having better customer service. The research gap identified by the author in this study is the fact that Indian banking is undergoing a period of great change. India has in the past not placed very much emphasis on customer service, and so it is a relatively new area of research in India. It is likely to become even more important in the future, and so this study provides a starting point against which to measure further investigations of customer perception about banking service in India. The small sample size of 235 respondents and the convenience sample type were chosen, since the researcher was under a time constraint when collecting the data. This represents a weakness in the paper, since the sample may be biased and it is too small to be generalized beyond the immediate context. A strength of the paper lies in its focus on the recent changes in the Indian bank account since it is important to know how customers perceive the reforms. Kaura, Vinita and Datta, Saroj Kumar, “Impact of Service Quality on Satisfaction in the Indian Banking Sector. (2012) This study is based on only two Indian banks, and both of these banks are in the public sector. The aim of this study was to find out whether there is any relationship between service quality and customer satisfaction since this link is well established in the current literature on service industries in general. India has a large market for banking services, though there is intensive competition for business is very high. Because of the Indian banking reforms which began in 1991 and have continued ever since, Indian customers enjoy greater freedom of choice. The study identified three aspects of service quality: people, process through technology and physical evidence. This study used a survey of 150 bank customers in the Sikar district of Rajasthan. Demographic details were collected such as age, gender, and number of years of transaction at the bank. In this case there was a considerable majority of female respondents. Data on wealth and employment status was not collected. It was anticipated that there would be some correlation between service quality and customer satisfaction but there was no way of knowing how strong this would be, and which aspects of customer service would turn out to be the most important. The data was analyzed using KMO and Bartlett’s test and standardized regression coefficients were used. As expected, the study did find the usual correlation between service quality and customer satisfaction but there was a difference in the impact of the three chosen aspects of service quality. The people aspect had more impact than the process through technology or physical evidence. The result is in line with previous research but the emphasis on people is a little different from the results obtained by other studies. The author explains this in terms of Indian cultural values which prioritise social bonding, rather than the more individualistic values of some other cultures. In the Sikar district traditional values are very highly prized, and this also may explain why the respondents did not value the technology, or aspects of the physical bank such as parking, furniture, brochures etc as much as they valued contact with the staff of the bank. The author warns that the sample size in this study is small, and the location has its own distinctive characteristics, and these factors indicate that the results should be generalized with caution. There is a general lack of research on the recent banking reforms in India and this represents the initial gap for research, but there is another area that is much in need of research and that is the area of process through technology. The geographical area of Sikar in Rajasthan is also rather neglected in the literature so far, and so there is a gap to be filled in establishing whether trends in this part of India are taking the same form as those in other parts. The sample was chosen by the researcher using a convenience sampling technique and this is a weakness of this study. It has strengths in the inclusion of technology because this is a relatively new feature of banking in India. Mittal, Sanjiv and Gera, Rajat, “Relationship between service quality dimensions and behavioural intentions: An SEM study of public sector retail banking customers in India. Journal of Services Research 12 (2) (2012-13), pp. 147-171. This paper aimed to study the causal relationship of the service encounter constructs of perceived service quality dimensions, customer satisfaction and perceived value with behavioural intentions. The focus is on the public banking sector and the researchers chose the second largest public sector bank in India as the location for their study. The paper begins with a brief review of the dimensions of service quality that have been identified in previous studies. It is noted that these matters are very much context dependent and that research tools and goals appropriate to the contemporary context in India are needed if the banking sector is to be appropriately researched there. The lack of a proper understanding of service quality dimensions is identified as a barrier to the success of quality initiatives and this explains why the authors explore the background to the Indian banking system very thoroughly before launching into a report of their own empirical study. A combination of regulatory and technological changes is now affecting the and the authors note that Indian banks are under pressure to differentiate their offering if they are to survive a more crowded market in which international banks are also involved. The SERVQUAL instrument is described and its usefulness across a large variety of service organizations is explained. Its limitations are also mentioned, along with the need to ensure that any test instrument is designed to suit each particular service and cultural context. This means in particular that the scale may need to be adjusted to fit the context. Several different ways of measuring service quality are mentioned. The authors decided in the end upon a total of 31 service quality attributes to include in their instrument but they used factor analysis on their selection of 31 items. This and this resulted in the removal of two of them which overlapped, leaving a total of 29. Only two dimensions were finally chosen also. Key terms are used in the study such as customer satisfaction, perceived value and behavioural intentions Customer satisfaction is identified as an important determinant of customer loyalty, and it is theorized also that it has a moderating effect on the relationship of service quality with behavioural outcomes. The linkages between these concepts are illustrated by means of a diagram and the hypotheses all revolve around the relationship between each of these concepts and customer perceptions. The bank that was the focus of the fieldwork is the Punjab National Bank in the national capital region of Delhi. The data collection method was by personal interview in the branches of the bank, asking customers to fill out a questionnaire. Only customers who had at least one year of experience with the bank were included. A total of 188 usable questionnaires were collected. The subjects were predominantly male, married and under 25 years old. The researchers note that the demographics are “slightly skewed, but representative of the banking population of India” (p. 154). The questionnaire asked participants to rate their satisfaction with the bank’s services over all 31 items, ranging from use of the automatic Teller for issuing cash to politeness of staff, ease of understanding forms, opening hours, parking spaces etc. Willingness to recommend the bank to others, and to do more business with the bank in the next few years are the means used to judge behavioural intention. The study shows that customers have diverse perceptions about the performance attributes of the bank. Speed at answering telephones was rated lowest, while service charges being explained clearly and staff listening to customers were rated highest. The great variation in customer response indicates that the bank needs to improve its performance. The authors analyzed the results using AMOS but rejected this as not being a suitable fit for the data in question. Service quality dimensions were shown to directly influence value perceptions, satisfaction judgements and behavioural intentions, but the authors concede that the effect is weak. The authors conclude that the bank needs to measure and manage both customer satisfaction and value perceptions if they want to enhance customer loyalty in the future. This was a far-reaching exploration going into a great detail, which is a strength of the article. A useful final single-item measure of overall satisfaction was included also, using a five point Likert scale and this is a weakness because it condenses too much detail into a superficial final estimate. Swar, Biranchi and Sahoo, Prasant, “Determinants of Effective Service Delivery: A Study of Selected Public, Private and Foreign Sector Banks in Odisha. Business Perspectives and Research (July-December 2012), pp. 47-59. The recent changes in the Indian banking sector are described by way of introduction to this paper, and there is an emphasis on the opening up of the sector to international standards and competition. There is also an important factor in the maturing of the banking sector, which encourages banks to work towards retaining existing customers as well as gaining new ones. There has been a shift, therefore, from marketing towards customer service, in the hope of increasing customer loyalty in the face of stiffer competition. The sector now has a much greater reach than before, extending out from the cities into rural areas, but this brings challenges, as the banks seek to meet the different needs of their customers in cities and in villages. The empirical part of this study consists of a large sample of 600 bank customers, broken down into 300 from public sector banks, 200 from private sector banks, and 100 from foreign sector banks. These individuals are located in several cities in Odisha including Bhubaneswar, Cuttack and Brahmapur. 125 bank employees were also surveyed, giving an interesting perspective on the issues discussed relating to customer service. Six banks in total are covered, and simple random sampling was used to select participants. Data was analyzed using SPSS and one way ANOVA percentages were used on the demographic data. Customer expectations and perceptions were found to differ between the three types of bank, with all three demonstrating areas which are in need of improvement. The views of bank employees showed interesting results since there was not much difference between public and private banks from within India, but there was significant difference in their perceptions of foreign banks as compared with Indian banks. On the other hand, customers had quite different perceptions of each of the three types of bank. The authors acknowledge that more work is needed to extend this kind of study to a wider area and continue with measuring customer perception so that the whole sector can keep up with international standards and competition. Ideally a method should be found to research banking across the nation, in order to monitor what progress is being made towards implementing the government’s reform directives. Future gap remaining. There is a very obvious gap in the general literature about banking service quality inn so far as most of the recognized academic literature refers to banking in developed countries. It is not always appropriate to use the definitions, constructs and assumptions that apply in this context to a situation like the present day banking sector in India. The articles summarized above provide evidence of some preliminary research into the service quality of both public and private banks in India. These are mostly small scale studies, however, based in a particular region of India and using convenience samples. Although these studies are valuable in giving a snapshot of what is happening in these places, they are too small to be of much use in evaluating the banking sector in the country as a whole. Larger sample sizes are needed, along with wider geographical range, in order to produce data that is more reliable as an indicator of what is happening across the board. Other factors in the success and failure of banks in attracting customers should also be considered such as price and value. The overview of the four articles above has shown that the literature on customer perceptions of banking services in India is patchy, with some findings that, on the surface, appear to be contradictory. More work is needed to explore age and gender differences, for example, and to investigate local, national and international cultural factors which appear to influence expectations very strongly. The questionnaire method appears to be well suited to the task of researching this area, but more rigorous sampling methods are needed in order to ensure that results are representative of the population as a whole, and are comparable with other studies. Read More