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Service Quality (SQ) and Bank Client Satisfaction

(BCS) in South Eastern Region (SER) of Sri Lanka

Conference Paper · January 2012

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2 authors, including:

Mohamed Ismail Mohideen Bawa

South Eastern University of Sri Lanka

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Service Quality (SQ) and Bank Client Satisfaction (BCS) in South Eastern Region (SER) of

Sri Lanka

Mohamed Ismail Mohideen Bawa (2012), Senior Lecturer in Management, Department of

Management, Faculty of Management and Commerce, South Eastern University of Sri Lanka,

Oluvil, mbmismail1974@gmail.com, 0094 77 69 444 44, March, 2012.

ABSTRACT

Eastern province of Sri Lanka has Bank of Ceylon (BOC) and Peoples’ Banka (PB) as state

owned- commercial banks. Parasuraman et. al., (1998) have identified 5 dimensions of service

quality such as reliability, assurance, responsiveness, tangibles, empathy which can directly be

applied to financial services and banking industry. Number of researchers has been done in

foreign and Srilankan contexts using service quality elements. But, very few researches have

been done in south eastern region. Therefore, objective of this paper is to know the whether service

quality elements satisfy bank clients in south eastern region. Data are collected during the period

of 2012. Primary data are collected from 100 retail bank clients are selected using convenience

sampling. Researcher used questionnaire as an instrument for data collection. Collected data

presented in multiple line chart. Run test is run in the research. Correlation is also found for data

analysis. It is concluded that all service quality elements satisfy bank clients but there is room for

further satisfaction.

Key words: Bank Client Satisfaction, Service Quality, South Eastern Region.

1. INTRODUCTION

Sri Lanka has the population of 20,010,000 (Department of Census and Statistics, Sri Lanka

(web)). Whereas the Eastern province consisting of three cardinal districts such as Ampara

(615000), Batticaloa (523000) and Trincomalle (355000) is having the population of 1493000.

This is 15 % of the total population of Sri Lanka. There is an opportunity for banks to render

their services to the bank customers. Eastern Province has diverse types of commercial banks.

Commercial Banks includes state- owned banks such as Bank of Ceylon (BOC) and Peoples’ Banka (PB). Parasuraman et. al., (1998) have identified 5 dimensions of service quality such as

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reliability, assurance, responsiveness, tangibles, empathy which can directly be applied to

financial services industry. Regardless of the type of the service, quality of service can be

determined by reliability, responsiveness, assurance, empathy and tangibles (Parasuraman and

Berry (1991). Kotler (1998); Liyanege (1999); Kotler (2000) defines customer satisfaction as

what is expected by customers from banks is more than what is offered by banks to customers.

Liyanage (1999) defines customer satisfaction as indicated below. Customers have pre- purchase

expectations of regarding the performance of the service. If expectations are negatively

disconfirmed (positively mismatched) customer is dissatisfied. If their expectations are

confirmed (matched), customer is satisfied. If expectations are positively disconfirmed

(positively mismatched) customer is highly satisfied called as delight. Oliver (1981), Churchill

and Suprenant (1982), Rust and Oliver (1994), Oliver (1997), Carunal et. al. (2000) and Zeithaml

and Bitner (2000) are also having the same idea of notion about dissatisfaction, satisfaction and

delight. The succeeding section of the research is organized into content, conclusion and

reference.

2. STATEMENT OF THE PROBLEM

Service quality is important for bank client satisfaction. Bank clients look at every aspects of

satisfying their bank transaction. Bank clients observe availability of bank forms & slips,

condition of computer systems, help of guard, music and staff dress in the bank. These are

important to attract and satisfy bank clients. Number of researchers has studied service quality in

different service settings including bank services. In particular, Zithaml and Bitner (2000)

introduced service quality measures which are known as SERVQUAL. Kotler (2000) stated

service product, price, place, promotion, people, process and time for satisfying customers. As

far as the bank is concerned, service products are different accounts maintained by clients, price

is the service charge for bank transaction, place is by which channels clients receive their

services, promotion is advertisement and service promotion done by bank for clients, people are

banking staff, process is how quickly bank transactions are processed and time is the opening

and closing time of the bank. Sunethra and Perera (2005) identified customer & managers’

perception and quality related variables such as reliability, reactiveness, self- reliance and good

rapport in banks. Different authors indicated and identified different factors for satisfying bank

clients. Customer satisfaction is one of the major objectives of each organization. In service

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industry, the quality of service is highly important for to satisfy bank clients. This is true in the

banking sector of Sri Lanka. But, there are few researches in south eastern region of Sri Lanka.

Therefore, researcher is motivated to do a study on service quality and bank client satisfaction

3. RESEARCH QUESTION AND OBJECTIVE

Statement of the problem confirms that research problem lies on service quality and bank client

satisfaction. Therefore, research question is “to know the whether service quality elements

satisfy bank clients in south eastern region?”. This research question is answered by an objective

of “to know the satisfaction between service quality and bank client in south eastern region.

4. REVIEW OF LITERATURE

Researches on determinants of customer satisfaction were carried out in UK, Italy and Denmark.

These researches have attempted to directly assess satisfaction and dissatisfaction among bank

customers. Johnston (1997) studied about “brick and mortar” bank customers in UK and found

that certain action result in satisfying, or as he states, “delighting” customers, while other

activities will only lessen dissatisfaction rather than delight customers. Speed of processing was

a major factor in delighting customers while improving equipment reliability only lessened

dissatisfaction. His research also identified two areas where banks achieved a distinct advantage:

genuine commitment to the customer and attentiveness by front- line staff. In this research, some

factors lesson dissatisfaction some factors create satisfaction whereas some other factors create

delight to customers. Researcher can argue that there are several factors which contribute to

dissatisfaction, satisfaction and delight of bank customers.

Flitto, et. al., (1997) reinforced a study of Italian bank customers who indicated that human

contact attributes are the most important when customer satisfaction is observed In this research,

human contact elements such as bank customer tangibles play a vital role in delighting bank

customers. Mols (1998) compared internet bank customers with traditional bank customers in

Denmark. He found users of Internet banking to be more satisfied, less price- sensitive, have

higher intentions to repurchase and have more positive word- of- mouth communication. He

further concluded that users of traditional banking to be poorly satisfied more price- sensitive,

have lower intentions to repurchase and have low positive word- of- mouth communication. In

this research, traditional banks customers and internet bank customers were studied.

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Determinants of the Internet bank customers and traditional bank customers have different

delight creating factors.

There are few researches in Sri Lanka. Wijetunge and Goonathillake (2003) researched the

determinants of customer satisfaction in Retail Banking Sector of Sri Lanka. The findings

indicated that service quality is more important in determining the satisfaction than service

features or price. Rajapakshe and Ratnayeke (2005) studied the importance and growing pressure

from shareholders on Intellectual Capital. This study was conducted over five limited

commercial banking companies currently operating in Sri Lanka. Studies have been done in

different countries in different time frames, in different contexts. Different countries have carried

out researches and found different determinants for bank customer satisfaction. This study adopts

service quality technical quality, tangibility, responsiveness, understanding and empathy

introduced by Parasuraman (1998). Based on the literature review, a conceptual framework is

developed by researcher. Conceptual framework is shown in figure1.

Figure 1 Conceptual Framework

Responsiveness

Tangibility Understanding

Technical Bank Client

quality Satisfaction

Empathy

(Source: Literature Review)

5. OPERATIONALISATION

Factors are identified from conceptual framework. They are broken into measures which are

then converted into questions. Operationalisation is shown in table 1.

Table 1: Operationalisation

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Factor Measures Number Question of number

measures

Technical Data processing of computer system 1 1 quality

Forms and slips 2

Computer systems 3

Tangibility Guard 6 4

Soft music in the bank 5

Well- dressed bank staff 6

Pass book covers 7

Responsiveness Guiding customer to meet the banking officer 1 8

Understanding Problem solving skills 1 9

Individual cares to aged person, pensioner or senior 10 citizen 2

Empathy Managers listening to customers 11

(Source: Literature survey)

6. METHODOLOGY

6.1 Sample size and sampling technique

Study setting is banks. State commercial banks are engaged in this survey. Bank clients from

state commercial banks are conveniently selected. Retail customers are questioned here.

Population is all retail bank clients from all state commercial banks who undertake the retail

banking services in Eastern province. Researcher could not collect the sampling frame.

Therefore, researcher could not decide the actual sample size. Only 100 bank clients are

considered in this research. These bank clients are selected by convenience sampling. Researcher

uses primary data collection method using questionnaire. One scale was developed on the basis

of dichotomous scale where respondents were asked to reply “yes or no” questions.

6.2 Method of data presentation and analysis

Based on the data collected with respect to satisfaction and dissatisfaction, data are presented in

figure 2.

Figure 2: Satisfaction/ dissatisfaction

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Data are analysed using run test. Correlation is tested at 5 % of the significant level. Tool for

data presentation and analysis is statistical package for social sciences with version of 16.0.

7. RESULTS AND DISCUSSION OF FINDINGS

Since statement are responded on the basis of dichotomous scale (yes/ no) questions run test is

conducted. Test results are shown in table 2.

Table 2: Run test

Statements Runs The The Number Number P- α valve

above and observed expected of of value = 0.05 below K number of number of observatio observati =

runs runs ns above ons 0.000

K below K

(dissatisfa (satisfact

ction) ion)

Data input was done correctly by bank employee 0.5 9 42 29 71 0.000 0.05 Form & slip in bank was available 0.5 11 49 40 60 0.000 0.05 Printed entry in bank pass book was done by system 0.5 11 46 35 65 0.000 0.05 correctly

Guard helped to client 0.5 11 49 40 60 0.000 0.05 Song/ film in banks was broadcasted 0.5 9 42 29 71 0.000 0.05 Bank staff was well- dressed staff 0.5 11 49 40 60 0.000 0.05 Bank pass book contained its cover 0.5 11 46 35 65 0.000 0.05 Bank staff guided its bank client 0.5 11 49 40 60 0.000 0.05 Problem was solved to clients. E.g. banking product, 0.5 11 49 40 60 0.000 0.05 banking rate, etc.

Aged person, pensioner or senior citizen was cared in 0.5 11 46 35 65 0.000 0.05 bank

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Managers listened client 0.5 11 49 40 60 0.000 0.05 (Source: survey data)

Data input was delayed power failure in bank. Clients have to ask and collect form & slip in

bank because they were not in the table. Printed entry in bank pass book delayed due to system

struck and network busy. Guard rested at the guard room without opening and closing the door

properly. Song/ film in banks was broadcasted in only one channel. Female bank staff were well-

dressed staff most of the time than males. When clients miss the cover of bank pass book they

did not get an additional cover for their pass book. Bank staff guided its bank client. Problem

was solved to clients e.g. banking product, banking rate, etc. Not all aged person, pensioner or

senior citizen was cared in bank. Managers sometimes listened clients. Sometimes, they did not

listen clients.

7.1 Hypotheses testing

Two sets of hypotheses are set. First set is related to nulls. Order of satisfaction is random/ there

is no pattern in the satisfaction data. Second set is related to alternatives. Order of satisfaction is

not random/ there is pattern in the satisfaction data. Hypothesis test rule states if p value is less

than alpha value (p < α) researcher should reject null and accept alternative hypothesis. Since

0.000 < 0.05 in all situations null is rejected. That is, there is pattern in the data set of

satisfaction. This pattern is shown in figure.

8. CONCLUSION

Bank clients are satisfied in all service quality elements such as technical quality, tangibility,

responsiveness, understanding and empathy to a more than average level. There are rooms for

satisfying clients in banking industry.

9. LIMITATIONS AND FURTHER RESEARCH VENUES

This research pays attention on state- owned commercial banks. There are a number of banks

undertaking banking business in south eastern region. Sample size was not calculated in terms of

the sampling frame. Findings of this research cannot be generalized to all other provinces in Sri

Lanka.

10. POLICY IMPLICATIONS

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There are more number of satisfied clients as well as a significant number of dissatisfied clients.

Therefore, bankers have to try to mitigate the reasons for dissatisfaction in future whereas they

have to maintain their existing level of satisfaction for clients.

11. VALUE ADDITION

After peace situation in Eastern Province, there are a number of new entrants in banking

industry. There are more chances for the growth in banking industry. This research adds value to

identifying the causes for dissatisfaction and satisfaction in relation to service quality elements.

12. REFERENCES

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Press, New York: NY.

Caruana, A. (2002). Service loyalty: the effect of service quality and the mediating role of

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Caruna, Albert, Money, Arthur, H. and Burthon & Pierre R. (2000). Service quality and

satisfaction- the moderating role of value. European Journal of Marketing, 34(11/12), 1338-

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Coyle, M. P. & Dole, B. G. (1993). Quality in the hospitality industry: a study. International

Journal of Hospitality Management, 12(2), 141-53.

Cronin, Jr. J. J. & Taylor, S. A. (1992). Measuring a service quality: a re- examination of and

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Department of Census and Statistics, Sri Lanka, (Ep 2007). Department of Census and Statistics, Sri Lanka 2007. Retrieved from http://www.citypopulation.de/SriLanka.html Flitto, U., Tanzi, P. M., & Sita, F. (1997). Customer needs and front office technology adoption.

International Journal of bank marketing, 15(1), 13-21.

Gronroos, C. (1982). Strategic Management and Marketing in the Service Sector. Swedish

School of Economics and Business Administration, Helsinfors.

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Gronroos, C. (1988). Relationship Approach to Marketing in Service Contexts: Marketing

organizational behavior interface. Journal of Business Research, 20, 3-11.

Gronroos, C. (1984). A service quality model and its marketing implications. European Journal

of Marketing, 4, 36-44.

Johnson, P. (1988). Service Industry improving competitive performance. Journal of Service

Industry, 18 (2), 202-11.