Fyp MBA Gap Model

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A

DISSERTATION REPORT

ON

“SERVICE QUALITY GAP ANALYSIS FOR BANKS”

SUBMITTED TO

UTTARAKHAND TECHNICAL UNIVERSITY, DEHRADUN

IN PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

Supervised By: Submitted By:

Mr. DEV KANT KALA SHOBHIT KR RASTOGI

FACULTY – M.B.A. MBA (Marketing)

UIT, Dehradun 4th Semester

[Batch - 2010-2012]

UTTARANCHAL INSTITUTE OF TECHNOLOGY,

DEHRADUN

http://www.finalyearthesis.com/

http://www.final-yearproject.com/


GUIDE CERTIFICATE

This is to certify that Mr. Shobhit Kumar Rastogi of M.B.A (Batch - 2010-2012), Uttaranchal

Institute of Technology, Dehradun has successfully completed his dissertation report on

“Service Quality Gap Analysis for Banks” under my guidance and supervision. This

dissertation report is his original work and not copied from any other source.

I wish him best of luck for his future.

Date: Mr. Devkant Kala

Place: Dehradun Asst. Professor,

UIT, Dehradun




STUDENT DECLARATION

This dissertation report has been under taken as a partial fulfillment of the requirement of the

award of the degree of the “Master of Business Administration” Uttarakhand Technical

University, Dehradun.

This dissertation report was executed during IV Sem. of MBA program under the supervision

of Mr. Devkant Kala.

Further I declare that this dissertation report is my original work and the analysis are for

academic purpose only. This dissertation report has not been present in any seminar or

submitted.

Shobhit Kumar Rastogi




ACKNOWLEDGEMENT

In the presence of Divine Power I express my deep gratitude to all those persons who

has been very supportive and Co-operative and without their valuable Suggestions; the

dissertation would have not been completed .

Today after completion of the dissertation, I feel great relief and satisfaction. Now

when I look back, I remember the day when I was assigned this dissertation “SERVICE

QUALITY GAP ANALYSIS FOR BANKS”. I would never have completed this

dissertation, if my supervisor Mr. Devkant Kala had not guided me. I was very happy with

his precious guidance and valuable suggestions. Truly, this was a new exposure for me.

I am thankful for efforts and support to my guide Mr. Devkant Kala who made lot of

contribution in completion of this report. In the end I would like to thanks all the people for

giving response and filling questionnaire, which is the cornerstone of the report.

SHOBHIT KUMAR RASTOGI

MBA – 4th semester




CONTENTS

Chapter 1 Introduction

1.1 Banking Industry in India

1.1.2 Evolution of the Indian Banking Industry

1.1.3 Service Quality

1.1.4 Dimensions of Service Quality

1.1.5 Gap Model

1.1.6 Service Quality in Banks

1.1.7 Major Players of Banking Industries

Chapter 2 Literature Review

Chapter 3 Research Objectives and Research Methodology

3.1 Research Hypothesis

3.2 Research Methodology

3.3 Research Design

3.4 Sample Design

3.5 Data collection sources

3.6 Tools uses for analysis

3.7 Limitations of the study

Chapter 4 Data Analysis

Chapter 5 Findings

Chapter 6 Suggestions and Conclusion




Chapter 7 Bibliography

Chapter 8 Annexure




Chapter 1

Introduction




1. Introduction

1.1 Banking Industry in India

1.1.2 Evolution of the Indian Banking Industry:

The Indian banking industry has its foundations in the 18th century, and has had a varied

evolutionary experience since then. The initial banks in India were primarily traders’ banks

engaged only in financing activities. Banking industry in the pre-independence era developed

with the Presidency Banks, which were transformed into the Imperial Bank of India and

subsequently into the State Bank of India. The initial days of the industry saw a majority

private ownership and a highly volatile work environment. Major strides towards public

ownership and accountability were made with nationalisation in 1969 and 1980 which

transformed the face of banking in India. The industry in recent times has recognised the

importance of private and foreign players in a competitive scenario and has moved towards

greater liberalisation.

In the evolution of this strategic industry spanning over two centuries, immense

developments have been made in terms of the regulations governing it, the ownership

structure, products and services offered and the technology deployed. The entire evolution

can be classified into four distinct phases.

Phase I- Pre-Nationalisation Phase (prior to 1955)

Phase II- Era of Nationalisation and Consolidation (1955-1990)

Phase III- Introduction of Indian Financial & Banking Sector Reforms and Partial

Liberalisation (1990-2004)

Phase IV- Period of Increased Liberalisation (2004 onwards)

Current Structure

Currently the Indian banking industry has a diverse structure. The present structure of

the Indian banking industry has been analyzed on the basis of its organised status,

business as well as product segmentation.




Organisational Structure

The entire organised banking system comprises of scheduled and non-scheduled banks.

Largely, this segment comprises of the scheduled banks, with the unscheduled ones forming a

very small component. Banking needs of the financially excluded population is catered to by




other unorganised entities distinct from banks, such as, moneylenders, pawnbrokers and

indigenous bankers.

Scheduled Banks

A scheduled bank is a bank that is listed under the second schedule of the RBI Act, 1934. In

order to be included under this schedule of the RBI Act, banks have to fulfill certain

conditions such as having a paid up capital and reserves of at least 0.5 million and satisfying

the Reserve Bank that its affairs are not being conducted in a manner prejudicial to the

interests of its depositors. Scheduled banks are further classified into commercial and

cooperative banks. The basic difference between scheduled commercial banks and scheduled

cooperative banks is in their holding pattern. Scheduled cooperative banks are cooperative

credit institutions that are registered under the Cooperative Societies Act. These banks work

according to the cooperative principles of mutual assistance.

Scheduled Commercial Banks (SCBs):

Scheduled commercial banks (SCBs) account for a major proportion of the business of the

scheduled banks. As at end-March, 2009, 80 SCBs were operational in India. SCBs in India

are categorized into the five groups based on their ownership and/or their nature of

operations. State Bank of India and its six associates (excluding State Bank of Saurashtra,

which has been merged with the SBI with effect from August 13, 2008) are recognised as a

separate category of SCBs, because of the distinct statutes (SBI Act, 1955 and SBI Subsidiary

Banks Act, 1959) that govern them. Nationalised banks (10) and SBI and associates (7),

together form the public sector banks group and control around 70% of the total credit and

deposits businesses in India. IDBI ltd. has been included in the nationalised banks group

since December 2004. Private sector banks include the old private sector banks and the new

generation private sector banks- which were incorporated according to the revised guidelines

issued by the RBI regarding the entry of private sector banks in 1993. As at end-March 2009,

there were 15 old and 7 new generation private sector banks operating in India.

Foreign banks are present in the country either through complete branch/subsidiary route

presence or through their representative offices. At end-June 2009, 32 foreign banks were

operating in India with 293 branches. Besides, 43 foreign banks were also operating in India

through representative offices.




Regional Rural Banks (RRBs) were set up in September 1975 in order to develop the rural

economy by providing banking services in such areas by combining the cooperative specialty

of local orientation and the sound resource base which is the characteristic of commercial

banks. RRBs have a unique structure, in the sense that their equity holding is jointly held by

the central government, the concerned state government and the sponsor bank (in the ratio

50:15:35), which is responsible for assisting the RRB by providing financial, managerial and

training aid and also subscribing to its share capital.

Between 1975 and 1987, 196 RRBs were established. RRBs have grown in geographical

coverage, reaching out to increasing number of rural clientele. At the end of June 2008, they

covered 585 out of the 622 districts of the country. Despite growing in geographical

coverage, the number of RRBs operational in the country has been declining over the past

five years due to rapid consolidation among them. As a result of state wise amalgamation of




RRBs sponsored by the same sponsor bank, the number of RRBs fell to 86 by end March

2009.

Scheduled Cooperative Banks:

Scheduled cooperative banks in India can be broadly classified into urban credit cooperative

institutions and rural cooperative credit institutions. Rural cooperative banks undertake long

term as well as short term lending. Credit cooperatives in most states have a three tier

structure (primary, district and state level).

Non-Scheduled Banks:

Non-scheduled banks also function in the Indian banking space, in the form of Local Area

Banks (LAB). As at end-March 2009 there were only 4 LABs operating in India. Local area

banks are banks that are set up under the scheme announced by the government of India in

1996, for the establishment of new private banks of a local nature; with jurisdiction over a

maximum of three contiguous districts. LABs aid in the mobilisation of funds of rural and

semi urban districts. Six LABs were originally licensed, but the license of one of them was

cancelled due to irregularities in operations, and the other was amalgamated with Bank of

Baroda in 2004 due to its weak financial position.

Business Segmentation

The entire range of banking operations are segmented into four broad heads- retail banking

businesses, wholesale banking businesses, treasury operations and other banking activities.

Banks have dedicated business units and branches for retail banking, wholesale banking

(divided again into large corporate, mid corporate) etc.




Retail banking

It includes exposures to individuals or small businesses. Retail banking activities are

identified based on four criteria of orientation, granularity, product criterion and low value of

individual exposures. In essence, these qualifiers imply that retail exposures should be to

individuals or small businesses (whose annual turnover is limited to Rs. 0.50 billion) and

could take any form of credit like cash credit, overdrafts etc. Retail banking exposures to one

entity is limited to the extent of 0.2% of the total retail portfolio of the bank or the absolute

limit of Rs. 50 million. Retail banking products on the liability side includes all types of

deposit accounts and mortgages and loans (personal, housing, educational etc) on the assets

side of banks. It also includes other ancillary products and services like credit cards, demat

accounts etc.

The retail portfolio of banks accounted for around 21.3% of the total loans and advances of

SCBs as at end-March 2009. The major component of the retail portfolio of banks is housing

loans, followed by auto loans. Retail banking segment is a well diversified business segment.

Most banks have a significant portion of their business contributed by retail banking

activities. The largest players in retail banking in India are ICICI Bank, SBI, PNB, BOI,

HDFC and Canara Bank.

Among the large banks, ICICI bank is a major player in the retail banking space which has

had definitive strategies in place to boost its retail portfolio. It has a strong focus on

movement towards cheaper channels of distribution, which is vital for the transaction

intensive retail business. SBI’s retail business is also fast growing and a strategic business

unit for the bank. Among the smaller banks, many have a visible presence especially in the




auto loans business. Among these banks the reliance on their respective retail portfolio is

high, as many of these banks have advance portfolios that are concentrated in certain usages,

such as auto or consumer durables. Foreign banks have had a somewhat restricted retail

portfolio till recently. However, they are fast expanding in this business segment. The retail

banking industry is likely to see a high competition scenario in the near future.

Wholesale banking

Wholesale banking includes high ticket exposures primarily to corporates. Internal processes

of most banks classify wholesale banking into mid corporates and large corporates according

to the size of exposure to the clients. A large portion of wholesale banking clients also

account for off balance sheet businesses. Hedging solutions form a significant portion of

exposures coming from corporates. Hence, wholesale banking clients are strategic for the

banks with the view to gain other business from them. Various forms of financing, like

project finance, leasing finance, finance for working capital, term finance etc form part of

wholesale banking transactions. Syndication services and merchant banking services are also

provided to wholesale clients in addition to the variety of products and services offered.

Wholesale banking is also a well diversified banking vertical. Most banks have a presence in

wholesale banking. But this vertical is largely dominated by large Indian banks. While a large

portion of the business of foreign banks comes from wholesale banking, their market share is

still smaller than that of the larger Indian banks. A number of large private players among

Indian banks are also very active in this segment. Among the players with the largest

footprint in the wholesale banking space are SBI, ICICI Bank, IDBI Bank, Canara Bank,

Bank of India, Punjab National Bank and Central Bank of India. Bank of Baroda has also

been exhibiting quite robust results from its wholesale banking operations.

Treasury Operations

Treasury operations include investments in debt market (sovereign and corporate), equity

market, mutual funds, derivatives, and trading and forex operations. These functions can be

proprietary activities, or can be undertaken on customer’s account. Treasury operations are

important for managing the funding of the bank. Apart from core banking activities, which

comprises primarily of lending, deposit taking functions and services; treasury income is a

significant component of the earnings of banks. Treasury deals with the entire investment




portfolio of banks (categories of HTM, AFS and HFT) and provides a range of products and

services that deal primarily with foreign exchange, derivatives and securities. Treasury

involves the front office (dealing room), mid office (risk management including independent

reporting to the asset liability committee) and back office (settlement of deals executed,

statutory funds management etc).

Other Banking Businesses

This is considered as a residual category which includes all those businesses of banks that do

not fall under any of the aforesaid categories. This category includes para banking activities

like hire purchase activities, leasing business, merchant banking, factoring activities etc.

Products of the Banking Industry

The products of the banking industry broadly include deposit products, credit products and

customized banking services. Most banks offer the same kind of products with minor

variations. The basic differentiation is attained through quality of service and the delivery

channels that are adopted. Apart from the generic products like deposits (demand deposits –

current, savings and term deposits), loans and advances (short term and long term loans) and

services, there have been innovations in terms and products such as the flexible term deposit,

convertible savings deposit (wherein idle cash in savings account can be transferred to a fixed

deposit), etc. Innovations have been increasingly directed towards the delivery channels used,

with the focus shifting towards ATM transactions, phone and internet banking. Product

differentiating services have been attached to most products, such as debit/ATM cards, credit

cards, nomination and demat services.




Other banking products include fee-based services that provide non-interest income to the

banks. Corporate fee-based services offered by banks include treasury products; cash

management services; letter of credit and bank guarantee; bill discounting; factoring and

forfeiting services; foreign exchange services; merchant banking; leasing; credit rating;

underwriting and custodial services. Retail fee-based services include remittances and

payment facilities, wealth management, trading facilities and other value added services.

1.1.3 Service Quality

Service quality is a term which describes a comparison of expectations with performance.

"Service quality is a focused evaluation that reflects the customer's perception of specific

dimensions of service: reliability, responsiveness, assurance, Empathy, tangibles.

Satisfaction, on other hand, is more inclusive: it is influenced by perceptions of service

quality, product quality, and price as well as situational factors and personal factors.

Service quality affects customer satisfaction by providing performance (real benefits). For

example, if consumers believe they have entered the McDonald's restaurant, they will get

food, service, high quality everywhere the same, no matter the location of the restaurant.

"The creation of customer satisfaction can provide several benefits, including the relationship

between companies and consumers are harmonious, providing a good basis for the purchase




and re-creation of customer loyalty, and form a recommendation by word of mouth that can

benefit the company.

1.1.4 Dimensions of Service Quality

Reliability-Ability to perform the promised service dependably and accurately

Responsiveness-Willingness to help customers and provide prompt service

Assurance-Knowledge and courtesy of employees and their ability to convey trust

and confidence

Empathy-Caring, individualized attention the firm provides its customers

Tangibles-Appearance of physical facilities, equipment, personnel, and

communication material

Reliability :

This dimension is shown to have the highest influence on the customer perception of quality.

It is the ability to perform the promised service dependently and accurately. Sahara Airlines,

an upcoming domestic air carrier within India, has been striving to protect itself as a reliable

airline. It hopes to differentiate itself from other airlines Indian Airlines. To protect this

reliability, Sahara Airways has a scheme of full refund plus a coupon of Rs3,000 to every

passenger on delay of flights by more than 59 minutes. When service delivery fails the first

time, a service provider may get a second chance to provide the same service in the phase

called ‘Recovery’. The expectations of the customer are usually higher during the recovery

phase than before because of the initial failure. Thus, the service provider is likely to come

under greater scrutiny, thereby increasing the possibility of customer dissatisfaction. The

reliability dimension, which ensures timely delivery time after time, helps the service

provider to meet the customer expectations fully at the lowest level of service expectation.

Responsiveness :

It is the willingness of the service firm’s staff to help customers and to provide them with

prompt service. The customers may have queries, special requests, complaints, etc. In fact,




each customer may have problems of his or her own. While the front-end employee may have

been trained or equipped to deliver standardized services, the customers want them to go

beyond this limit. It is the willingness to help the customer or willingness to go that extra

distance that is responsiveness. Example: A customer calls room service to find out if they

would pack a Jain lunch. It is not the hotel’s normal policy to cook such specialty and

customized meals. However, the customer being very religious minded would be very

pleased if the hotel could pack it for him to carry and eat. This may impose some strain on the

kitchen. However, the hotel may be rewarded in two different ways if it agreed to provide the

meal. The customer would be very pleased with the service and is very likely to recommend

the hotel to his friends and acquaintances. In addition, the hotel could charge extra

commensurate with the extra efforts. He is unlikely to mind paying more. The second aspect

of responsiveness is speedy response to a customer request. When response is delayed

customers usually loses interest. Many sales representatives respond on the phone, ‘I will call

you back’. The call is never returned. The customer draws his or her own conclusion about

the quality of service he is likely to receive in the future.

Assurance :

It defined as the ability of the company to inspire trust and confidence in the service delivery.

It refers to knowledge and courtesy of the service firm’s employees and their ability to inspire

trust and confidence in the customer toward the company. This dimension is considered vital

for services that involve high risk as customers may not be able to evaluate all the

uncertainties involved in the process by them. Example: Medical services requiring complex

uncommon procedures, sales / purchase of financial securities, investment issues, legal

affairs, etc. demand this service quality dimension. There are property developers/builders

who provide a list of previous buyers of flats or apartments to potential buyers. The

evaluation of construction services is beyond technical capabilities of most buyers. However,

the prospective customers are free to call the previous customers. When prospective

customers hear from them about the company and its satisfactory delivery, they feel assured

and develop a more positive attitude towards the company.

Empathy :

It refers to the caring, individualized attention the service firm provides each customer. When

service provider puts himself in the shoes of the customers, he may see the customer’s




viewpoint better. When customers feel that the provider is making his best effort to see their

viewpoint, it may be good enough for most. Example: a lady customer with a young child

arrives slightly late at the check-in counter and requests the agent for a seat along the aisle

and near the toilet. Even if all such seats have already been taken up, the agent and the airline

may make even effort to request another passenger to exchange seats and meet the customer

demand. The lady passenger would be delighted if her request could be honored despite the

last minute checking in, and even if she does not get such a seat, she would be grateful for

their effort.

Tangibles :

It refers to physical facilities, equipment, and appearance of a service firm’s employees. The

job of the tangible and physical evidence of a service is multifunctional. When a patient in

the waiting room of a clinic sees the doctor’s certificate, he becomes aware of the quality of

service he is about to receive. If a dental clinic provides patients with clean rubber footwear

and freshly laundered bibs or coats before the actual service, the patients and their

accompanying relatives or friends will be impressed. A dentist dressed in a spotless white

coat is likely to impress, them even further. Tangibles provide the customer proof of the

quality of service.




1.1.5 Gap Model

The five gaps that organizations should measure, manage and minimize:

Gap 1 is the distance between what customers expect and what managers think they

expect - Clearly survey research is a key way to narrow this gap.




Gap 2 is between management perception and the actual specification of the customer

experience - Managers need to make sure the organization is defining the level of

service they believe is needed.

Gap 3 is from the experience specification to the delivery of the experience -

Managers need to audit the customer experience that their organization currently

delivers in order to make sure it lives up to the spec.

Gap 4 is the gap between the delivery of the customer experience and what is

communicated to customers - All too often organizations exaggerate what will be

provided to customers, or discuss the best case rather than the likely case, raising

customer expectations and harming customer perceptions.

Finally, Gap 5 is the gap between a customer's perception of the experience and the

customer's expectation of the service - Customers' expectations have been shaped by

word of mouth, their personal needs and their own past experiences. Routine

transactional surveys after delivering the customer experience are important for an

organization to measure customer perceptions of service.

1.1.6 Service Quality in Banks

In the days of intense competition, the banks are no different from any other consumer

marketing company. It has become essential for the service firms in general and banks in

particular to identify what the customer's requirements are and how those customer

requirements can be met effectively. In the days where product and price differences are

blurred, superior service by the service provider is the only differentiator left before the banks

to attract, retain and partner with the customers. Superior service quality enables a firm to

differentiate itself from its competition, gain a sustainable competitive advantage, and

enhance efficiency (Mei et al. 1999; Kandampully and Suhartanto 2000; Gounaris et al.

2003). The benefits of service quality include increased customer satisfaction, improved

customer retention, positive word of mouth, reduced staff turnover, decreased operating

costs, enlarged market share, increased profitability, and improved financial performance

(Rust and Zahorik 1993; Cronin et al. 2000; Kandampully and Suhartanto 2000; Duncan and

Elliott 2002; Janda et al. 2002; Sureshchandar et al. 2002; Gounaris et al. 2003; Kang and




James 2004; Yoon and Suh 2004). The construct of service quality has therefore been a

subject of great interest to service marketing researchers.

Banking services worldwide can broadly classified into investment banking and commercial

banking is primarily concerned with helping corporate bodies raise funds at the best possible

rates from various markets. Commercial banking is concerned with channelling savings to

productive uses. Banking in an intermediary function but one that is very essential for

sustained economic growth. In India, since the nationalization of banks in 1969, banking has

been primarily in the Central Government’s domain. As part of the Government’s

liberalization policy which began in 1991, New Private Sector Banks (NPSBs) were allowed

to be set up. Today, India has nine NPSBs that provide commercial banking services. In a

relatively short period, the NPSBs have managed to achieve about 2% of the market share in

terms of business, a disproportionate of 2% share of the total income and almost 17% of the

total net profit earned by the banking system as a whole. This success can be attributed in

large measure to the superior Quality of Services that these banks have been able to provide.

Measuring Quality in the Services Sector and in particular in the Banking sector, is more

difficult than measuring the quality of manufactured goods. This is mainly due to the

following:

The Services Sector as a whole is very heterogeneous and what is very heterogeneous

and what may hold true for one service may not hold true for another service sector.

For example, the nature of banking services is very different from, say ,the nature of

services provided by an airline or a hotel. Even within banking there are a variety of

dissimilar services like retail banking, commercial banking, investment banking etc.

This heterogeneity makes standardized service quality measurement very difficult.

Most manufacturing companies, on the other hand, have been able to adopt standard

measures to improve the quality of goods produced.

Services are intangible in nature and, unlike in the case of goods, there is no ‘real’

product that the customer takes home. This is true of banking services and most other

financial services where the service offered is only what the customer experiences

fleetingly. Some service sectors like the hotel industry, the tourism indistry,etc.

provide services that may be considered somewhat more tangible.

There is no scope for inspection before the service delivered. All services have a here-

and-now attribute that makes standardised quality testing and control procedures




followed by manufacturing sector difficult to adopt. Unlike a good manufacturer, a

bank cannot inspect its services and products to weed out unsatisfactory ones before

they are presented to the customer

Unlike in the case of manufacturing companies where the goods are manufactured and

then sold to customers, in the services sector, the customer is a part and parcel of the

process that provides the service. The service is created with the involvement of the

customer , if there is no customer there can be no service. In this sense, the customers

is inseparable from the service. This is especially true of banking services, both retail

and corporate. Customers are central to the banking service that is sought to be

provided.




1.1.7 Major Players of Banking Industries

State Bank of India

State Bank of India (SBI) is that country's largest commercial bank. The government-

controlled bank--the Indian government maintains a stake of nearly 60 percent in SBI through

the central Reserve Bank of India--also operates the world's largest branch network, with

more than 13,500 branch offices throughout India, staffed by nearly 220,000 employees. SBI

is also present worldwide, with seven international subsidiaries in the United States, Canada,

Nepal, Bhutan, Nigeria, Mauritius, and the United Kingdom, and more than 50 branch offices

in 30 countries. Long an arm of the Indian government's infrastructure, agricultural, and

industrial development policies, SBI has been forced to revamp its operations since

competition was introduced into the country's commercial banking system. As part of that

effort, SBI has been rolling out its own network of automated teller machines, as well as

developing anytime-anywhere banking services through Internet and other technologies. SBI

also has taken advantage of the deregulation of the Indian banking sector to enter the banc

assurance, assets management, and securities brokering sectors. In addition, SBI has been

working on reigning in its branch network, reducing its payroll, and strengthening its loan

portfolio. As of March 2011, it had assets of US$370 billion with over 13,000 outlets

including 150 overseas branches and agents globally.

The roots of the State Bank of India lie in the first decade of 19th century, when the Bank of

Calcutta, later renamed the Bank of Bengal, was established on June 2, 1806. The Bank of

Bengal was one of three Presidency banks, the other two being the Bank of Bombay

(incorporated on April 15, 1840) and the Bank of Madras (incorporated on July 1, 1843). All

three Presidency banks were incorporated as joint stock companies and were the result of the

royal charters. These three banks received the exclusive right to issue paper currency in 1861

with the Paper Currency Act, a right they retained until the formation of the Reserve Bank of

India. The Presidency banks amalgamated on January 27, 1921, and the re-organized banking

entity took as its name Imperial Bank of India. The Imperial Bank of India remained a joint

stock company.




Pursuant to the provisions of the State Bank of India Act of 1955, the Reserve Bank of India,

which is India's central bank, acquired a controlling interest in the Imperial Bank of India. On

April 30, 1955, the Imperial Bank of India became the State Bank of India. The government

of India recently acquired the Reserve Bank of India's stake in SBI so as to remove any

conflict of interest because the RBI is the country's banking regulatory authority.

In 1959, the government passed the State Bank of India (Subsidiary Banks) Act, enabling the

State Bank of India to take over eight former state-associated banks as its subsidiaries. On

September 13, 2008, the State Bank of Saurashtra, one of its associate banks, merged with the

State Bank of India.

SBI has acquired local banks in rescues. For instance, in 1985, it acquired the Bank of Cochin

in Kerala, which had 120 branches. SBI was the acquirer as its affiliate, the State Bank of

Travancore, already had an extensive network in Kerala.

The State Bank Group includes a network of eight banking subsidiaries and several non-

banking subsidiaries. Through the establishments, it offers various services including

merchant banking services, fund management, factoring services, primary dealership in

government securities, credit cards and insurance.

The eight banking subsidiaries are:

State Bank of Bikaner and Jaipur (SBBJ)

State Bank of Hyderabad (SBH)

State Bank of India (SBI)

State Bank of Indore (SBIR)

State Bank of Mysore (SBM)

State Bank of Patiala (SBP)

State Bank of Saurashtra (SBS)

State Bank of Travancore (SBT)




Products And Services

Personal Banking

SBI Term Deposits SBI Loan For Pensioners

SBI Recurring Deposits Loan Against Mortgage Of Property

SBI Housing Loan Loan Against Shares & Debentures

SBI Car Loan Rent Plus Scheme

SBI Educational Loan Medi-Plus Scheme

Other Services

Agriculture/Rural Banking

NRI Services

ATM Services

Demat Services

Corporate Banking

Internet Banking

Mobile Banking

International Banking

Safe Deposit Locker

RBIEFT

E-Pay

E-Rail

SBI Vishwa Yatra Foreign Travel Card

Broking Services

Gift Cheques




Punjab National Bank

Punjab National Bank was registered on 19 May 1894 under the Indian Companies Act with

its office in Anarkali Bazar Lahore. The founding board was drawn from different parts of

India professing different faiths and a varied back-ground with, however, the common

objective of providing country with a truly national bank which would further the economic

interest of the country.

With over 60 million satisfied customers and more than 5100 offices including 5 overseas

branches, PNB has continued to retain its leadership position amongst the nationalized banks.

The bank enjoys strong fundamentals, large franchise value and good brand image. Besides

being ranked as one of India's top service brands, PNB has remained fully committed to its

guiding principles of sound and prudent banking. Apart from offering banking products, the

bank has also entered the credit card, debit card; bullion business; life and non-life insurance;

Gold coins & asset management business, etc. PNB has earned many awards and accolades

during the year in appreciation of excellence in services, Corporate Social Responsibility

(CSR) practices, transparent governance structure, best use of technology and good human

resource management.

Since its humble beginning in 1895 with the distinction of being the first Swadeshi Bank to

have been started with Indian capital, PNB has achieved significant growth in business which

at the end of March 2011 amounted to Rs 5,55,005 crore. PNB is ranked as the 2nd largest

bank in the country after SBI in terms of branch network, business and many other

parameters. During the FY 2010-11, with 39.16% share of CASA to domestic deposits, the

Bank achieved a net profit of Rs 4433 crore. Bank has a strong capital base with capital

adequacy ratio of 12.42% as on Mar’11 as per Basel II with Tier I and Tier II capital ratio at

8.44% and 3.98% respectively. As on March’11, the Bank has the Gross and Net NPA ratio

of 1.79% and 0.85% respectively. During the FY 2010-11, its ratio of Priority Sector Credit

to Adjusted Net Bank Credit at 40.67% & Agriculture Credit to Adjusted Net Bank Credit at

19.30% was also higher than the stipulated requirement of 40% & 18% respectively.

The Bank has been able to maintain its stakeholders’ interest by posting an improved NIM of

3.96% in Mar’11 (3.57% Mar’10). The Earning per Share improved to Rs 140.60 (Rs 123.86

Mar’10) while the Book value per share improved to Rs 661.20 (Rs 514.77 Mar’10). Punjab




National Bank continues to maintain its frontline position in the Indian banking industry. In

particular, the bank has retained its NUMBER ONE position among the nationalized banks in

terms of number of branches, Deposit, Advances, total Business, Assets, Operating and Net

profit in the year 2010-11. The impressive operational and financial performance has been

brought about by Bank’s focus on customer based business with thrust on CASA deposits,

Retail, SME & Agri Advances and with more inclusive approach to banking; better asset

liability management; improved margin management, thrust on recovery and increased

efficiency in core operations of the Bank. The performance highlights of the bank in terms of

business and profit are shown below:

Bank always looked at technology as a key facilitator to provide better customer service and

ensured that its ‘IT strategy’ follows the ‘Business strategy’ so as to arrive at “Best Fit”. The

Bank has made rapid strides in this direction. All branches of the Bank are under Core

Banking Solution (CBS) since Dec’08, thus covering 100% of its business and providing

‘Anytime Anywhere’ banking facility to all customers including customers of more than

3200 rural & semi urban branches. The Bank has also been offering Internet banking services

to its customers which also enables on line booking of rail tickets, payment of utilities bills,

purchase of airline tickets, etc. Towards developing a cost effective alternative channels of

delivery, the Bank with 5050 ATMs has the largest ATM network amongst Nationalized

Banks.With the help of advanced technology, the Bank has been a frontrunner in the industry

so far as the initiatives for Financial Inclusion is concerned. With its policy of inclusive

growth, the Bank’s mission is “Banking for Unbanked”. The Bank has launched a drive for

biometric smart card based technology enabled Financial Inclusion with the help of Business

Correspondents/Business Facilitators (BC/BF) so as to reach out to the last mile customer.

The Bank has started several innovative initiatives for marginal groups like rickshaw pullers,

Parameters

Mar'09

(Rs.In Crore)

Mar'10

(Rs. In Crore)

Mar'11

(Rs. In Crore) CAGR(%)

OperatingProfit 5690 7326 9056 26.16

NetProfit 3091 3905 4433 19.76

Deposit 209760 249330 312899 22.14

Advance 154703 186601 242107 25.10

TotalBusiness 364463 435931 555005 23.40




vegetable vendors, dairy farmers, construction workers, etc. Bank has launched a welfare

scheme of adoption of village viz., “PNB VIKAS”. Under the scheme, Bank has selected 117

villages (60 in lead districts and 57 in non lead district) in different circles for all-round

improvement in the living standards of the villagers. Besides, Bank has formed “PNB

PRERNA”, an association of the wives of the Bank’s senior management. The association

through its voluntary initiatives has undertaken activities like distribution of food to the poor

and needy, provision of computers, books, stationary items to poor girl students at various

orphanages and schools etc.

Backed by strong domestic performance, the Bank is planning to realize its global

aspirations. Bank has opened one branch each at Kabul and Dubai, two branches at Hong

Kong and an Off Shore Banking Unit at Mumbai. In addition to the above, Bank has

Representative offices at Almaty, Dubai, Shanghai and Oslo, a wholly owned subsidiary in

UK with 7 branches and a subsidiary each in Kazakhstan & Bhutan, and joint venture with

Everest Bank Ltd. Nepal. During the year, Bank acquired majority equity stake of 63.64% in

Dana Bank of Kazakhstan.




I.C.I.C.I. Bank

ICICI is an Indian diversified financial services company headquartered in Mumbai,

Maharashtra. It is the second largest bank in India by assets and third largest by market

capitalization. It offers a wide range of banking products and financial services to corporate

and retail customers through a variety of delivery channels and through its specialized

subsidiaries in the areas of investment banking, life and non-life insurance, venture capital

and asset management. The Bank has a network of 2,630 branches and 8,003 ATM's in India,

and has a presence in 19 countries, including India. ICICI Bank had total assets of Rs.

4,062.34 billion (US$ 91 billion) at March 31, 2011 and profit after tax Rs. 51.51 billion

(US$ 1,155 million) for the year ended March 31, 2011.

The bank has subsidiaries in the United Kingdom, Russia, and Canada; branches in United

States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance

Centre; and representative offices in United Arab Emirates, China, South Africa, Bangladesh,

Thailand, Malaysia and Indonesia. The company's UK subsidiary has established branches in

Belgium and Germany.ICICI Bank is one of the big four banks of India, along with State

Bank of India, Punjab National Bank and HDFC Bank.

Products & Services

Personal Banking

Deposits

Loans

Cards

Investments

Insurance

Demat Services

Wealth Management

NRI Banking

Money Transfer

Bank Accounts




Investments

Property Solutions

Insurance

Loans

Business Banking

Corporate Net Banking

Cash Management

Trade Services

FXOnline

SME Services

Online Taxes

Custodial Services

H.D.F.C. Bank

HDFC Bank is an Indian financial services company that was incorporated in August 1994.

HDFC Bank is the fourth largest bank in India by assets and the second largest bank by

market capitalization as of February 24, 2012. The bank was promoted by the Housing

Development Finance Corporation, a premier housing finance company (set up in 1977) of

India. HDFC Bank is headquartered in Mumbai .HDFC Bank has 1,986 branches and over

7,110 ATMs, in 996 cities in India, and all branches of the bank are linked on an online real-

time basis. As of 30 September 2008 the bank had total assets of Rs.1006.82 billion. For the

fiscal year 2010-11, the bank has reported net profit of Rs.3,926.30 crore (US$783.3 million),

up 33.1% from the previous fiscal. Total annual earnings of the bank increased by 20.37%

reaching at Rs.24,263.4 crore (US$4.84 billion) in 2010-11. HDFC Bank is one of the big

four banks of India, along with: State Bank of India, ICICI Bank and Punjab National Bank.

HDFC Bank deals with three key business segments. - Wholesale Banking Services, Retail

Banking Services, Treasury.




Wholesale banking services

Blue-chip manufacturing companies in the Indian corp to small & mid-sized corporates and

agri-based businesses. For these customers, the Bank provides a wide range of commercial

and transactional banking services, including working capital finance, trade services,

transactional services, cash management, etc.

Retail banking services

HDFC Bank was the first bank in India to launch an International Debit Card in association

with VISA (Visa Electron) and issues the Master card Maestro debit card as well. The Bank

launched its credit card business in late 2001. By March 2009, the bank had a total card base

(debit and credit cards) of over 13 million. The Bank is also one of the leading players in the

“merchant acquiring” business with over 70,000 Point-of-sale (POS) terminals for debit /

credit cards acceptance at merchant establishments. The Bank is positioned in various net

based B2C opportunities including a wide range of internet banking services for Fixed

Deposits, Loans, Bill Payments, etc. With Finest of Technology and Best of Man power in

Banking Industry HDFC bank's retail services have become by and large the best in India and

since the contribution to CASA i.e total number of current and savings account of more than

50% ,HDFC bank has full potential to become India’s No.1 Private Sector Bank. HDFC Bank

website including hdfcbank.com and hdfcsec.com are not available 24X7. This has become a

habit of HDFC Bank. Customers of the HDFC Bank are requested to check the website

availability 24 X 7 and if available can do the transaction.

Treasury

Within this business, the bank has three main product areas - Foreign Exchange and

Derivatives, Local Currency Money Market & Debt Securities, and Equities. These services

are provided through the bank's Treasury team. To comply with statutory reserve

requirements, the bank is required to hold 25% of its deposits in government securities. The

Treasury business is responsible for managing the returns and market risk on this investment

portfolio.




Products & Services

Personal Banking

Savings Accounts

Salary Accounts

Current Accounts

Fixed Deposits

Demat Account

Safe Deposit Lockers

Loans

Credit Cards

Debit Cards

Prepaid Cards

Investments & Insurance

Forex Services

Payment Services

Net Banking

Insta Alerts

Mobile Banking

Insta Query

ATM

Phone Banking

NRI Banking

Rupee Savings Accounts

Rupee Current Accounts

Rupee Fixed Deposits

Foreign Currency Deposits

Accounts for Returning Indians

Quickremit (North America, UK, Europe, Southeast Asia)

IndiaLink (Middle East, Africa)

Cheque Lock Box




Telegraphic / Wire Transfer

Funds Transfer through Cheques / DDs / TCs

Mutual Funds

Private Banking

Portfolio Investment Schemes

Loans

Payment Services

Net Banking

Insta Alerts

Mobile Banking

Insta Query

ATM

Phone Banking




Chapter 2

Literature Review




2. Literature Review

1. Article: Service quality in the banking industry: an assessment in a

developing economy

Journal: International Journal of Bank Marketing

Vol. 17 No.3 , pp. 116-125.

Authors: Madhukar G. Angur, Associate Professor of Marketing, School of

Management, The University of Michigan-Flint, Flint, Michigan,

USA

Rajan Nataraajan, Associate Professor of Marketing, Auburn

University, Auburn, Alabama, USA

John S. Jahera Jr, Colonial Bank Professor of Finance, Auburn

University, Auburn, Alabama, USA

Regulatory, structural, and technological factors are significantly changing the banking

environment throughout the world. It is within this rapidly changing environment that

customer satisfaction and service quality are compelling the attention of all banking

institutions. Although the concepts of customer satisfaction and service quality are obviously

related, the focus of this paper is only on service quality. Perceived quality of service tends to

play an important role in high involvement industries like banking services. Banks have

traditionally placed a high value on customer relationships with both commercial and retail

customers. However, the nature of the customer relationship is changing, particularly on the

retail side of banking.

The purpose of this research is to examine the performance of alternative measures of

service quality proposed by Cronin and Taylor (1992) in an international setting, and

particularly in a developing economy, India. The four alternative measures of service quality

used by Cronin and Taylor (1992) were the SERVQUAL scale, importance weighted

SERVQUAL, the SERVPERF scale, and importance weighted SERVPERF. The




applicability of these four alternative measures of service quality is assessed in the context of

the banking industry in India. Confirmatory factor analysis using LISREL 8 (Jöreskog and

Sörbom, 1993) was used to test for the generalizability of the five-factor conceptualization of

service quality (Parasuraman et al., 1988). Exploratory factor analysis using the OBLIMIN

oblique factor rotation procedure (using SPSS-X) was also conducted on the SERVQUAL

and SERVPERF items to determine if the service quality concept was multidimensional.

Further, convergent and discriminant validities of the SERVQUAL and SERVPERF scales

were tested using correlation analysis of the alternative measures used. Stepwise regression

analysis was used to assess the predictive ability of the alternative measures of service

quality. In other words, responses to the 22 expectation and performance statements were

regressed (in each of the four cases of alternatives measures of service quality) with the

directly measured “overall service quality”. Finally, the mean performance (SERVPERF)

and performance-minus-expectation (SERVQUAL) gap scores for the two banks used in the

study were computed to assess their diagnostic value.

Based on data gathered from customers of two major banks, overall results support a

multidimensional construct of service quality and suggest that the SERVQUAL scale

provides greater diagnostic information than the SERVPERF scale. However, the five-factor

conceptualization of SERVQUAL does not seem to be totally applicable, and no significant

difference was found in the predictive ability of the two measures. Further, although

SERVQUAL and SERVPERF have identical convergent validity, SERVPERF appears to

have higher discriminant validity than SERVQUAL.




2 Article: Comparative Study of Customer Satisfaction in Indian Public Sector and

Private Sector Banks

Journal: International Journal of Engineering and Management Sciences.

I.J.E.M.S., Vol.1(1) , pp. 42-51

Author: Puja Khatri and Yukti Ahuja

School of Management Studies, Guru Gobind Singh Indraprastha

University, Kashmiri gate, Delhi, India

Jagan Institute of Management Studies, 3, Institutional area, sector –5,

Rohini, Delhi – 85, India

With the advent of liberalization policy and RBI’s easy norms several private and foreign

banks have entered in Indian banking sector which has given birth to cut throat competition

amongst banks for acquiring large customer base and market share. Banks have to deal with

many customers and render various types of services to its customers and if the customers are

not satisfied with the services provided by the banks then they will defect which will impact

economy as a whole since banking system plays an important role in the economy of a

country, also it is very costly and difficult to recover a dissatisfied customer. Since the

competition has grown manifold in the recent times it has become a herculean task for

organizations to build loyalty, the reason being that the customer of today is spoilt for choice.

It has become imperative for both public and private sector banks to perform to the best of

their abilities to retain their customers by catering to their explicit as well as implicit needs.

Many a times it happens that the banks fail to satisfy their customer which can cause huge

losses for banks and there the need of this study arises.

The purpose of this study is to compare the public sector banks and private sector banks in

terms of customer satisfaction and to study the various variables of service quality using

servqual model. The work has been carried out with the objective of understanding the

reasons of customer dissatisfaction and what are the opportunity areas wherein these banks

need to focus and strengthen their Customer Relationship Management practices. The

research work uses both the sources of information, i.e. Primary and Secondary sources, and

thereafter SERVQUAL model has been used to identify the discrepancy in the service




delivery system. Finally the study concludes by giving some recommendations to improve in

the area where these banks do not meet the expectation of their customers.

The commercial Banks in India comprise both public sector as well as private sector banks.

In an initiative towards bringing about reforms in the financial sector, overall development in

the economy along with reforms in industry, trade, taxation, external sector, banking and

financial markets have been carried out since mid 1991. It took almost 10 years for the Indian

economy to strengthen its footing and bring about a sea change in the way financial

institutions in the country work today. It is because of the sustained and gradual pace of

reforms that has helped us in avoiding any crisis and has actually fuelled growth. As pointed

out in the RBI Annual Report 2001-02, GDP growth in the 10 years after reforms i.e. 1992-

93 to 2001-02 averaged 6.0% against 5.8% recorded during 1980 81 to 1989-90 in the pre-

reform period. After almost 7% growth in 2008/09 fiscal year, in the first three months of

2010 India's economy expanded 8.6% boosted by industrial production and services.

According to a compilation of facts done by India Brand Equity Foundation, the RBI has the

tenth largest gold reserves in the world after spending US$ 6.7 billion towards the purchase

of 200 metric tonnes of gold from the International Monetary Fund (IMF) in November 2009.

The purchase has increased the country's share of gold holdings in its foreign exchange

reserves from approximately 4 per cent to about 6 per cent. In the annual international

ranking conducted by UK-based Brand Finance Plc, 20 Indian banks have been included in

the Brand Finance® Global Banking 500. In fact, the State Bank of India (SBI) has become

the first Indian bank to be ranked among the Top 50 banks in the world, capturing the 36th

rank, as per the Brand Finance study. ICICI Bank also made it to the Top 100 list with a

brand value of US$ 2.2 billion. Following the financial crisis, new deposits have gravitated

towards public sector banks. According to RBI's 'Quarterly Statistics on Deposits and Credit

of Scheduled Commercial Banks: September 2009', nationalized banks, as a group, accounted

for 50.5 per cent of the aggregate deposits, while State Bank of India (SBI) and its associates

accounted for 23.8 per cent. The share of other scheduled commercial banks, foreign banks

and regional rural banks in aggregate deposits were 17.8 per cent, 5.6 per cent and 3.0 per

cent, respectively. Foreign exchange reserves were up by US$ 1.69 billion to US$ 272.783

billion, for the week ending June 11, on account of revaluation gains. In this era of mature

and intense competitive pressures, it is imperative that banks maintain a loyal customer base.

Increasing competition from both inside and outside the country is leading to compression of

profits and forcing banks to work efficiently only with the available resources. One positive

fallout of competition is the greater choice available to consumers, and the increased level of




sophistication and technology in banks. In order to achieve this and improve their market and

profit positions, Study of customer satisfaction in public sector and private sector banks of

India many retail banks are directing their strategies towards increasing customer satisfaction

and loyalty through improved service quality. As banks benchmark themselves against global

standards, there has been a marked increase in disclosures and transparency in bank balance

sheets with a greater focus on corporate governance. Though banks have become quality

conscious in providing their services, they are still struggling with resisting to change. The

seller market mindset is yet to be changed coupled with fear of uncertainty and control

orientation. Acceptance of technology is slowly creeping in but the utilization is not

maximized. In terms of workforce management, placing the right skill at the right place will

determine success for the banks. For most of the public sector bank employees it is difficult

to cope up with the customer requirements because they are yet to learn the customer centric

orientation in work. The competency gap needs to be addressed simultaneously otherwise

there will be missed opportunities. The focus of people will be on doing work but not

providing solutions, on escalating problems rather than solving them and on disposing

customers instead of using the opportunity to get more business. Once the service quality

dimensions that lead to customer satisfaction are identified, service managers should be able

to improve the delivery of customer perceived quality during the service process and have

greater control over the overall outcome. It is for these reasons why practices of customer

relationship management, assessment of customer lifetime value, relationship marketing are

gaining ground. Along with it the measurement of quality which is provided at the banks is

becoming the sole reason behind preferring one brand over the other. Many of these new

private sector banks have brought with them state-of-the-art technology, have built up on

modern infrastructure, a wide network of branches, shown superior standards in productivity,

encouraged several global practices. The most significant achievements have been in the field

of recruiting, training the right set of individuals who possess the suitable skills for the jobs at

bank and have created a place for themselves along with attaining a large share in the

financial market within a short span of time. The success of most of the private sector banks

can be attributed to their proactive measures with respect to their relationship with the

customer. This has compelled the public sector banks to do some introspection and work

towards understanding the changing demands of the customer and equip themselves in order

to cater to the growing expectations of the customer. Some of the public sector banks having

understood the urgency to mend their ways, have either changed or perished from the market.

They have tried to incorporate superior standards in productivity and are making constant




efforts to adapt to the changing environment with key focus on customer relationship

management. This research mainly focuses on studying about both customer perception and

expectation of services provided by public and private sector banks to draw a comparison

between the two using the servqual model.

The Indian banking sector has witnessed heightened competition with so many banks

coming up with all their potential and using their global strength to their advantage in order to

establish themselves in the market. Private Banks seem to have satisfied its customers with

good services and they have been successful in retaining its customers by providing better

facilities than Public sector banks. But, still Private Banks need to go a long way to become

customer’s first preference. In an economy of innovative technologies and changing markets,

each and every service quality variable has become important. New financial products and

services have to be continuously introduced in order to stay competent. Success mantra could

be customer centric orientation, where the organization builds long term strategic

relationships with its customers and Private sector Banks have been successful in achieving

such relationship with customers however public sector banks have to improve in this area.

Private Banks need to concentrate more on their credit facilities and insurance services since

customers do not have a very good opinion about these facilities being offered by Private

Banks. Public sector banks enjoy the trust of the customers, which they have been leveraging

to stay in the race however they need to improve their service quality by improving their

physical facility, infrastructure and giving proper soft skill trainings to their employees.




3. Article: E-Banking Service Quality Based on Service Gaps

Journal: Research on E-Banking Service Quality Based on Service Gaps

As Internet technology continues to mature and widely used, internet banking which has

especial characters Portals have played a more and more important role in Banks operation.

In the absence of direct communication network environment, service quality has become a

key factor of internet banking reflecting the differentiation and competitive advantage.

Currently many problems restricted the internet banking service quality improvement, such as

the homogenization of the product, capital flow and information flow security risks under

control, not enough propaganda, the lack of legal protection and other issues are very

prominent. This paper is aimed through the service gap analysis, to establish a “customer-

centric” internet banking service gaps model, and through the implementation of this model

to enhance banking services in order to achieve the quality of customer service and meet the

demands of the reality of purpose, so as to promote Internet banking sustainable and healthy

development. Firstly, this paper through the analysis of the current development of internet

banking services, propose internet banking service quality research background and

significance, and systematically explain the research ideas and research methods. Then, from

the existing literature research of service quality management theory and service remedy,

etc., which lay a theoretical foundation for this paper. Secondly, through this paper analyzed

specific reasons of the PZB service gap model of cognitive service agencies gap, gap of

formulating the standard of service, service trade gap and service marketing gap, the

characteristics of Internet banking services in China conclude the impacting factors of

Internet banking service quality. Again, this paper constructes internet banking service gaps

model, and explain the relationship between the various parts of the model parts. On this

basis, this paper proposes implementation of Internet banking gaps model from the internet

banking system design, product design and service recovery system design three aspects and

the organization security measures to enhance the internet banking service quality. Finally,

the bank of China, online banking, for example, analyzes its quality management strategy and

implementation effect, to Support the conclusion of this paper. This article innovations: First,

contrast with previous research about internet banking service quality, which analysis from

the process service transactions, this paper based on the entire service delivery process from

perceived customer expectations to the service provide, from customer expectations and




customer perceptions two aspects systematically analyzed the effect factors of the Internet

banking services quality. Secondly, the establishment of internet banking service gaps model,

which blends customer perceptions and customer expectations of service quality factors in the

service gap model; according to service recovery and customer satisfaction research, in the

model by adding service recovery factors; Internet banking service quality management is a

closed system the feedback of customer perception service quality will further affect the

manager cognition of customer expectations. Finally, from system design, product design, the

design of service recovery to implement service gaps model, and by establishing excellent

enterprise culture, improving the financial service personnel quality, organization structure

adjustment to smooth communication channels, perfecting laws and regulations as

organizational guarantee.




4. Article: Service Quality Scale Development in Indian Retail Banking Sector:

An Empirical Investigation.

Journal: Journal of Applied Sciences, 7: 766-771.

Author: J.Clement Sudhahar and M. Selvam

The time has arrived for a re look on the research literature on service quality as the

SERVQUAL instrument forms the basis on which all other works have been actualized.

Interestingly, over the years, the conceptualization, measurement and applications of

SERVQUAL across different industrial and commercial settings are not bereft of

controversies. The current research work strives to bring to light some of the critical

determinants of service quality that have been overlooked in the earlier models and proposes

a revised comprehensive model and an instrument framework for measuring customer

perceived service quality. Data for this study has been collected from customers of Indian

retail banking sector. The present study offers a systematic procedure that could form the

cornerstone for providing further insights on the conceptual and empirical comprehension of

customer perceived service quality and its constituents. The business environment in the last

decade has faced a paradigm shift, with quality consistently being considered as one of

management’s top-most competitive priorities and a prerequisite for sustenance and growth.

Quality is proposed as the most potent tool for enhanced business performance (Corbett et al.,

1998). In today’s world of fierce competition, rendering quality service is a key for

subsistence and success (Parasuraman et al., 1985, 1988; Zeithaml et al., 1998, 1990; Cronin

and Taylor, 1992, 1994; Teas, 1993a,b; Berry et al., 1983, 1985, 1994; Zeithaml et al., 1996).

The cardinal accent of both academia and business focused essentially on ascertaining the

customers perceptions of service quality and subsequently contriving strategies to meet and

surmount customer expectancies. But most of these efforts have drawn more criticisms than

acceptance by a large section of seasoned researchers.In this background, the current research

work aspires to develop an empirical model of service quality that could form the basis for a

better understanding of the determinants of customer perceived service quality.Therefore, the

basic objective of this paper is to develop and purify the scale for measuring service

quality.In the tough competitive milieu, measurement of service quality has increasingly

created an interest among the service providers and the scholars alike. It is so because service




quality is being used to position their respective products in the market place (Stephen and

Swartz, 1989). The different service quality models that have been developed to measure the

quality of services in chronological order are as follows:

• The SERVQUAL Model (Parasuraman et al., 1985).

• The SERVQUAL Model (Parasuraman et al., 1988).

• The SERVPERF Model (Cronin and Taylor, 1992).

• The Human-Societal Element Model (Sureshchandar et al., 2002a, b), Parasuraman et

al., (1985, 1988, 1990,1991a, 1993,1994a) have coined the concept of measuring

‘service quality’ very popularly referred to as SERVQUAL Model. They have started

the unending journey of conceptualizing the measurement of service quality in 1985

with ten service quality dimensions, later on the customer’s perception and expectation

regarding the service was filtered and refined to five major service quality dimensions,

as follows; tangibles, reliability, responsiveness, assurance and empathy. Again the five

major service quality dimensions were refined further and fine tuned by changing the

statements to get more reliable and valid results but same criteria is used to check the

psychometric properties of the SERVQUAL scale. All new models and any new

theories will always prone to criticisms similarly the SERVQUAL model also widely

criticized on different times by different authors. It is limited to one sector say banking

alone; the score is biased because of wrong terminology used in the statements. Mostly

it has preoccupied the psychometric and methodological soundness of scales. Cronin

and Taylor (1992) commented on, that it is unnecessary to measure customer

expectations in service quality research. Cronin and Taylor (1994) contended that

measuring perceptions is sufficient they contend. SERVQUAL model is based on

Disconfirmation Paradigm, which is not suitable for services and Teas (1993a,b)

commented on interpretation and operationalization of the expectations standard.

The strong critiques of SERVQUAL model were Cronin and Taylor (1992), they had

developed a new model and was popularly called as SERVPERF model. Their

conceptualization of service quality model is, based on the performance component alone.

They proposed what is popularly referred to as the ‘SERVPERF’ scale. It is a single item

scale. They have developed their model based on Performance Model Satisfaction over the

Disconfirmation Paradigm used by the SERVQUAL scale. They have reduced the number of

items to be measured but they have used the same service quality dimensions of SERVQUAL




viz., tangibles, reliability, responsiveness, assurance and empathy. The critique of this

SERVPERF model is, it is preoccupied with psychometric and methodological soundness of

scales. It is used and tested only in developed nations.

The Human-Societal Element Model (Sureshchandar et al., 2001a, b and 2002a) was

developed with a view to overcome the drawbacks of SERVQUAL scale as the SERVQUAL

Instrument does not address certain important constituents of service quality, like service

product or core service and systematization /standardization of service delivery. This model

conceptualizes customer-perceived serviced quality based on the following five service

quality dimensions they are; Core service or Service Product, Human element of Service

Delivery, Systematization of Service Delivery, Tangibles of Service and Social

Responsibility. In this background, the current empirical research work strives to bring to

light some of the critical determinants of service quality that have been overlooked in the

Sureshchandar et al. (2002b) and proposes a revised comprehensive model and an instrument

framework for measuring customer perceived service quality. The instrument has been

designed with specific reference to the banking sector. Data have been collected from

customers of Indian banking sectors. The proposed instrument has been empirically tested for

unidimensionality, reliability and constructs validity. The present study offers a systematic

procedure that could form the cornerstone for providing further insights on the conceptual

and empirical comprehension of customer perceived service quality and its constituents.

Finally suggests the future research directions so as to develop country and industry specific

SQ models.

Service researchers of late attach paramount importance to the study and measurement of

service quality as the crux of services marketing is solely dependent on customers’ perception

of quality and their satisfaction. While in numerous studies have been conducted right across

the world using different models for the measurement of service quality, the authors have

found only a handful of studies have been attempted in a developing country like India. Apart

from this, the changing situational and economic factors necessitate the need to develop an

exclusive scale for measuring the service quality in Indian context, considering the cultural

norms, values and ethos shared by corporate and the Indian consumers at large. Though this

inventory is empirically tested with the retail banking customers of India, the authors of this

research paper exhort that this scale can be used by service researchers of any developing

economy endeavouring to measure service quality of any service sector.




5. Article: Service Quality Perspectives and Customer Satisfaction in Commercial

Banks working in Jordan

Author: Anber Abraheem Shlash Mohammad

Assistant Professor, Marketing Department Petra University, Jordan

Shireen Yaseen Mohammad Alhamadani

Assistant Professor, Finance and Banking Department Petra University,

The aim of this research was to examine the level of service quality as perceived by

customers of commercial bank working in Jordan and its effect customer satisfaction, Service

quality measure is based on modified version of SERVQUAL as proposed by Parasuraman et

al. (1988), which involve five dimensions of Service quality, namely Reliability,

Responsiveness, Empathy, Assurance, and Tangibles. Customer satisfaction was measured by

a nine item adapted from Walfried et al. (2000), 260 questionnaires were distributed

randomly to customers of commercial banks branches located (thirteen commercial banks in

Jordan ) in IRBID (A city of Jordan ). Multiple regression analysis was employed to test the

impact of service quality on customer satisfaction. The results of this study indicated that

service quality is an important antecedent of customer satisfaction. It is apparent from the

present study that managers and decision makers in Jordanian commercial banks to seek and

improve the elements of service quality that make the most significant contributions on

customer satisfaction. Quality is such an important issue that it is considered a really

significant concept in our real life. It is regarded as a strategic organizational weapon. And

the pressing need of developing service organizations and upgrading their services

necessitates the measuring of service quality. These assets in checking the quality progress

and providing bases for improving it. As a result of economic changes throughout history, the

concept of 'quality' has changed. 'Quality' comes from the Latin word 'Qualitas', which refers

to the nature of a person or the nature of an object. In the past Quality meant accuracy and

perfection (Al-Dararkah, 2002).

Crosby (1981) defined Quality as consistency with fixed specifications and this agrees

with Karim's definition (1996), who defined Quality as anything that accords with the

characteristics of the product to meet the external clients' needs. In addition, the product

quality differs from that of a service as the earlier is tangible, whereas the latter is intangible.




Service is also defined differently. The American Society for Marketing, for example, defines

service as activities or benefits that are offered for sale, or that are offered for being related to

a particular product. Kotler (2003), defined service as 'any behaviour or act based on a

contact between two parties: the provider and the receiver, and the essence of this reciprocal

process in intangible. Hakesver (2000) looked at service as a set of economic activities that

provide time, location form and psychological benefits. Beer (2003) defined service as a set

of characteristics and overall properties of the service which aim to satisfy the clients and

meet their needs. Mohamed & Shirley (2009) emphasized that banks have to care about the

quality of their services since this quality is considered the essence or core of strategic

competition. Walfried, et. al. (2000) defined service as a set of characteristics that meet the

clients' needs, strengthen the links between the organization and them, and enhance the

clients' value as well. Huseyin, et. Al. (2005) believes that good knowledge of the

characteristics and advantages of service quality on the part of banks do contribute for their

success and their persistence in the international banking competitive environment. From

these definitions we conclude that the quality of banking service is an integrative assessment

of the services offered to the external client, for clients are considered to be independent

individuals with various requirements on the basis of which services are provided, based on

certain specification. This requires that banks have to carefully select creative employees

with high qualifications and capabilities. Parasurama Zeltham, I & Berry that there exist ten

criteria and dimensions through which service quality can be assessed:

• Reliability: the ability of an organization to accurately achieve its services in the proper

time and according to the promises it has made to its clients.

• Responsiveness: the tendency and willingness of service providers to help clients and

satisfy their needs, immediately reply to their inquiries, and solve their problems as quickly

as possible.

• Competence: having adequate skills and knowledge that enable the employees to perform

their jobs properly.

• Accessibility: providing easy access to a service in terms of location and through services

provided via the telephone, the internet, or any other means of communication.

• Courtesy: treating clients respectfully in a polite friendly manner, understanding their

feelings, and answering their phone calls gently.

• Communication: this occurs through gentlemanly listening to the client conveying

information to them clearly and facilitating external communication with workers.




• Credibility: this can be achieved through full trust and confidence in the service provider as

well as his honesty and straight forwardness.

• Security: this depends on whether the service is free from risks and hazards, defects or

doubts so that it provides bodily safety, financial security as well as privacy.

• Understanding/ knowing the customer: this can be made achievable through the ability to

pinpoint the customers' needs as well as understanding their individual problems.

• Tangibility: this includes physical aspects connected with service such as instruments and

equipment, persons, physical facilities like buildings and nice decoration and other

observable service facilities.

The above-mentioned ten dimensions have been integrated into only five ones. Researchers

agreed on the fact that these dimensions are appropriate ones which help reveal the

customers' expectations and perception. This new model is called 'Servqual'. This compound

word consists of the two words 'Service' and 'Quality', these five dimensions include:

1. Tangibility: this includes physical facilities, equipment, and the physical appearance of on

employee.

2. Reliability: this refers to the ability to provide the exact required service according to

given specifications and conditions.

3. Responsiveness: the inclination and willingness of the employees to serve customers

quickly and properly.

4. Assurance: feelings of trust and confidence in dealing with the organization. This reflects

the workers' knowledge and experience and their ability to build self confidence as well as

confidence in the customers themselves.

5. Empathy: understanding the customers' personal needs, taking care of them individually

and showing them all sorts of sympathy and affection, looking at them as close friends and

distinguished clients.

Al-Allaq & Al-Ta'ii see that tangibility, reliability and responsiveness are constant

dimensions, whereas; the criterion of 'Assurance' includes courtesy, reliability and security.

As for as 'Empathy' is concerned, it includes elements like providing service in terms of

place, time, communication, and to what extent the service provider understands the

beneficiary. Gronroos, however, believes that tangibility, assurance and empathy can be

classified as being functional dimensions of service quality, while responsiveness and

reliability can be classified as being technical dimensions. There are two major approaches to

creating and deciding on a model to measure service quality: the directional approach, a

concept which is connected with satisfaction but not equivalent to it, and connected with the




customers' perceptions of the actual performance of the service provided. This approach

supports the fact that satisfaction is a psychological state prior to giving judgment on the

quality of service. Service quality as perceived by customers definitely indicates what is left

of their previous perception of the service quality and the level of their satisfaction with the

current performance of the service. This means that satisfaction is an intermediary factor

between the previous perceptions of the service quality and the present perception of it.

Accordingly, and within this general framework, customers can access the service actual

quality provided to them (Mualla, 1997). Hence, the customer's satisfaction with the actual

performance level of service has a further impact on the formation of the customers'

perceptions of service quality. And one the service is purchased again, satisfaction becomes a

major approach to the process of assessing service quality (Mualla, 1998). This study

depends on this very approach – the measurement of actual performance – which is termed

'SERVPERE' (Joseph, et. al., 1992). The other approach, called the Gap Approach, or

'SERVQUAL' model developed by (Parasuraman, et. al.1988) is based on the customers'

expectations of the service level and their perceptions of the actual service performance level.

So the axis of this model is represented by the gap between the customers' perceptions of the

actual service performance level and their expectations of the service quality. This gap, in

turn, depends on the nature, design and provision of this service. The major objective of

'SERVQUAL' model is to clarify the series of gap which affect the beneficiary's perception of

service quality; that is, the four previously mentioned gaps which occur in the administrative

aspect.

The nature of banking services encourages customers to demand the highest possible quality.

In order to achieve this, it is essential to be very close to customers to capture information on

customer current and future needs, expectations and perceptions. The main objective of this

study was to examine the effect of service quality on customer satisfaction. This study posits

and develops an instrument of service quality, and examines the relationship between

perceived service quality and customer satisfaction From various studies, SERVQUAL

appears to be a consistent and reliable scale to measure banking service quality, and provide a

useful diagnostic role to play in assessing and monitoring service quality in banks. The

measurement of Banks’ service quality has to be based on perceived quality. It is because

service quality is intangible, heterogeneous and its consumption and production occur in

tandem (Lim and Tang, 2000). This research also drew conclusions and gave suggestions.

The research results are expected to provide guidance and reference for the management of

commercial banks in Jordan.




The results of this study indicated that service quality is an important antecedent of

customer satisfaction this result consistent with results drawn(Andaleeb and Conway, 2006;

Gotlieb et al., 1994; Buttle, 1996; Zeithaml and Bitner, 1996; Lee et al., 2000; Zeithaml and

Bitner, 2003 ). Five dimensions of service quality have significant influence on customer

satisfaction. These dimensions include tangibles, reliability, responsiveness, assurance, and

empathy. Moreover, our findings show that service quality is an important antecedent of

customer satisfaction. This finding reinforces the need for banks managers to place an

emphasis on the five dimensions of service quality.

6. Article: Customer Satisfaction with Service Quality in Conventional Banking

in Pakistan: The Case of Faisalabad.

Journal: International Journal of Marketing Studies, Vol.3, No.4

Author: Salman Khalid (Corresponding author)

School of Management Studies, University of Faisalabad, Pakistan

Babak Mahmood

Department of Sociology, University of Sargodha, Pakistan

Muzaffar Abbas

School of Management Studies, The University of Faisalabad, Pakistan

The purpose of this study is to evaluate the customer satisfaction of banking industry in

Pakistan general, and Faisalabad particular, based on various levels of customer perception

regarding service quality. This is an empirical study based mainly on primary data collected

through a well-structured questionnaire. The questionnaire has been personally administrated

on the a sample size of 132, chosen respondents on a convenient basis from four Pakistani

banks, i.e. Alfalah Bank Limited, Faysal Bank Limited, National Bank Limited, and The

Bank of Punjab. This paper makes a useful contribution as there are only few studies dealing

with the assessment of service quality in conventional banking sector of Pakistan .The result

indicates that customer perceive highest satisfaction in the responsiveness area and lowest in

the tangibles area. In order to achieve higher levels of service quality, the bank managers

should redesign their strategies about customer satisfaction with respect to service quality.




In services industries, the subject of service quality globally remains a critical one as service

providers strive to maintain a comparative advantage in marketplace. Financial services in

general, particularly banks; compete in marketplace with generally undifferentiated services

and products, thereby service quality becomes a key competitive weapon (Stafford, 1996). A

banking organization can only differentiate itself from competitors by providing high quality

services. It is true that structural changes have resulted in banks to perform a greater range of

activities, and enabling them to become more competitive with non-bank financial

institutions (Angur et al., 1999). Presently, technological advancements are causing banks to

revise their strategies for services offered to both individual and commercial customers.

Furthermore, banks that excel in quality services can have distinct marketing edge since

improved levels of service quality are related to higher revenue, higher customer retention,

higher cross-sell ratios (Bennett & Higgins, 1993), and increased market share (Bowen &

Hedges, 1993). In addition, the banks understand that customer will be loyal if they can

produce greater value than their competitors (Dawes & Swailes, 1999). Moreover, higher

profits will be earned by banks if they can position themselves better than competitors within

a specific market (Davies et al., 1995). Hence, banks should focus on service quality as a core

competitive strategy (Chaoprasert & Elsey, 2004). Therefore, customer satisfaction and

service quality have become the focal point of all banking institution around the world

(Hossain & Leo, 2009), and Pakistan is not an exception. Pakistani banking sector is

continuously expanding and improving with diversified patterns of ownership due to an

active participation of local and foreign stakeholders. The Pakistani banking sector comprises

of a State Bank of Pakistan (SBP), which is central bank of country and a combination of

local and foreign banks. A total of 53 banks currently are operating in Pakistan, five of which

are publicly owned (First Women Bank Limited, National Bank of Pakistan, Sindh Bank

Limited, The Bank of Khyber, and The Bank of Punjab), including four specialized banks

(Industrial development Bank of Pakistan, SME Bank Limited, The Punjab Provincial

Cooperative Bank Limited, and Zarai Taraqiati Bank Limited), seventeen private banks

(Allied Bank Limited, Askari Bank Limited, Bank Alfalah Limited, Bank Al Habib Limited,

Faysal Bank Limited, Habib Bank Limited, Habib Metropolitan Bank Limited, JS Bank

Limited, KASB Bank Limited, MCB Bank Limited, NIB Bank Limited, SAMBA Bank

Limited, SILKBANK Limited, Soneri Bank Limited, Standard Chartered Bank (Pakistan)

Limited, Summit Bank Limited, and United Bank Limited), five Islamic Banks (AlBaraka

Bank (Pakistan) Limited, BankIslami Pakistan Limited, Burj Bank Limited, Dubai Islamic




Bank Pakistan Limited, and Meezan Bank Limited), also represented are the local branches

of six foreign banks (including Barclays Bank PLC, Deutsche Bank AG- Pakistan

Operations, Citibank N.A.- Pakistan Operations, HSBC Bank Middle East Limited – Pakistan

Operations, Oman International Bank S.O.A.G – Pakistan Operations, and The Bank of

Tokyo-Mitsubishi UFJ Limited – Pakistan Operations), eight micro finance banks (KASHF

Microfinance Bank Limited, Khushhali Bank Limited, Network Microfinance Bank Limited,

NRSP Microfinance Bank Limited, Pak Oman Microfinance Bank Limited, Rozgar

Microfinance Bank Limited, Tameer Micro Finance Bank Limited, and The First Micro

Finance Bank Limited), and eight development finance institutions (House Buliding Finance

Company Limited, Pak Brunei Investment Company Limited, Pak-China Investment

Company Limited, PAIR Investment Company Limited, Pakistan Kuwait Investment

Company Limited, Pak Libya Holding Company Limited, Pak Oman Investment Company

Limited, and Saudi Pak Industrial & Agricultural Investment Company Limited)

(www.sbp.org.pk). Moreover, as their current and saving accounts, all the commercial banks

in Pakistan offer the same range of standard facilities you would expect to find anywhere in

the world including, debit cards, credit cards, travelers cheques, money transfers, personal

loans, vehicle loans, etc. selected banks also offer specialized services such as VIP accounts,

ladies accounts, children and student’s accounts, plus e-banking platforms such as telephone

and PC banking which offer 24/7 access. Particularly, the expansion in private banking

business, along with customized services, has created a cut-throat competition in this sector

(Khalid & Irshad, 2010).

Without any doubt, service quality is gaining more importance in banking industry

(Munusamy et al, 2010). Both the marketing and service management literatures suggest that

there is strong theoretical underpinning among customer satisfaction, customer loyalty and

profitability (Hollowell, 1996). Levesque & McDougall (1996) pointed out that customer

satisfaction and retention are critical for retail banks, and investigate the major determinants

of customer satisfaction (service quality, service features, situational factors and customer

complaint handling), and future intentions in the retail bank sector. Bloemer et al. (1998)

explore how image, perceived service quality and satisfaction determine loyalty in a retail

bank. Armstrong & Seng (2000) analyze the determinants of customer satisfaction in the

banking industry (purchase intentions, transactional paradigm, and fairness (equity). The

study of Lassar et al. (2000) examines the effects of service quality on customer satisfaction

from two distinct methodological perspectives – technical/functional quality and

SERVQUAL. Jamal & Naser (2002) suggest that customer satisfaction is based not only on




the judgment of customers towards the reliability of the delivered service, but also with

customers’ experiences with the service delivery process. Therefore, they report demographic

differences (education, gender and income levels) in the degree of customer satisfaction.

Hence, customer satisfaction with commercial and retail banking is composed of a wide

variety of dimensions. Thus, consumer satisfaction thus (delete it) reveals the general

evaluation of the actions carried out by a given business in relation to expectations

accumulated after various contact between the consumer and business (Bitner & Hubber,

1994). If customers perceive that they are obtaining additional benefits from their relationship

with establishment employees, their satisfaction level with the service provider will increase

(Beatty et al., 1996). Relational benefits can then be considered as important factors for

customer satisfaction with financial businesses. Therefore, relational benefits mean special

treatment, social benefits and confidence, which were investigated by Gwinner et al. (1998),

would have a strong influence on customer satisfaction with their habitual establishments.

The above discussion indicates that customer satisfaction vary according to the nature of

service. In this case, the highest customer satisfaction is demonstrated in the responsiveness

area such as willingness to help customer, friendly attitude of staff, followed by the reliability

area such as customer guidance, customer support. On the other hand, the moderate

satisfactions are in the tangibles area, such as infrastructure facilities, décor, followed

by empathy area such as banks business timing and return on investment. Due to the wide

variation of the responses, both public and private banks need to consider the weak areas in

order to meet customer requirements. Hence, to be successful in banking sector, banks must

provide service to their customer that at least meets or better if exceeds their expectations,

and the present study will provide some sort of guidelines to the policy makers (managers) of

banks to take appropriate decision to improve the quality of services in Pakistani banking

sector.




7. Article: Customer Perception on Service Quality in Retail Banking in

Developing Countries

Journal: International Journal of Marketing Studies, Vol.4, No.1

Author: Md. Abdul Muyeed (Associate Professor)

Department of Economics, Islamic University, Kushtia 7003, Bangladesh

The purpose of this study is to evaluate the service quality in retail banking in the developing

countries in general, and Bangladesh in particular. This is an analytical study based mainly on

the primary data collected through scientifically developed questionnaire. The questionnaire

has been personally administered on a sample size of 250, chosen from four banks in

Bangladesh located in the northern district of Kushtia. The result indicates that customers'

perception has reached on highest in the Prompt and accuracy in transactions of the bank and

lowest in the service of modern equipment and décor. Due to the increasing competition in

retail banking, customer service is an important part and bank must give their due attention to

the customers' perception about service quality.

Commercial banks—assaulted by the pressures of globalization, competition from non-

banking financial institutions, and volatile market dynamics—are constantly seeking new

ways to add value to their services Because financial services compete in the marketplace

with generally undifferentiated products, service quality becomes a primary competitive

weapon (Stafford, 1996). Currently technological changes are causing banks to rethink their

strategies for services offered to both commercial and individual customers (Hossain and

Shirely, 2010). Moreover, banks that excel in quality service can have a distinct marketing

edge since improved levels of service quality are related to higher revenues, increased cross

sell ratios, higher customer retention (Bennett and Higgins, 1988), and expanded market

share (Bowen and Hedges, 1993). Therefore, banks should focus on service quality as a core

competitive strategy (Chaoprasert and Elsey, 2004). Within this background customer

satisfaction and service quality are compelling the attention of all banking institutions around

the world and in recent years, academicians and practitioners give more attention in this area

as it assumed that service quality is a critical measure of firm performance (Lasser et al.,

2000; Yavas and Yasin, 2001; Bick et al. 2004; Andreassen and Olsen, 2008).

Therefore, the objective of the paper is to test a service quality instrument by using retail

banking services in the developing counting like Bangladesh as a case point.




The central issues involved in meaning service quality have been well documented

(Cronin and Taylor, 1992; Parasuraman, Berry, and Zeithaml, 1991b; Babakus and Boller,

1992; Carman, 1990). Of interest here are two aspects of service quality measurement; (1) the

number of dimensions that constitute service quality and (2) the operationalization of the

measurement. Previous researchers have been looking at the linear relationship between

service quality and satisfaction judgments. In recent studies on satisfaction judgments, it has

been suggested that the relationship should be in a non-linear form (Ding, 2004). According

to Taylor (1997), there is evidence that suggests that evaluation of satisfaction should involve

a curvilinear or higher order form as well as an interaction effect (Taylor and Baker, 1994).

This has been confirmed by Oliva et al. (1992) who stated that the satisfaction function

should not be in the linear form. A study by Edris (1997) on quality for business customers

among Kuwaitis found that local ownership is one of the determinants for bank selection.

On the other hand, a study by Athanassopoulus (1997) showed that there is no global

difference between private and the government-owned banks. There are many other

researchers who concluded that service quality is the antecedent to satisfaction (Ahmad and

Kamal, 2002; Cronin and Taylor, 1992; Yavas et al., 1997). Hence in this research, the

question of which one is the antecedent will be studied. Using service quality as the

antecedent to satisfaction is more logical and that why it has been taken into consideration.

This is because satisfaction is an important goal to be achieved by bank marketers and if the

banks want to increase satisfaction, they can do it through service quality (Goode et al.,

1996).

Financial market in Bangladesh essentially consists of banks and non-bank financial

institutions and capital market which include state owned commercial banks (SCBs), private

commercial banks (PCBs), foreign commercial banks (FCBs), government owned specialized

banks, non-banking financial institutions (NFIs), Investment Corporation of Bangladesh

(ICB), House Building Finance Corporation 59 (HBFC), Dhaka Stock Exchange (DSE), and

Chittagong Stock Exchange (CSE). Besides, a total of 44 general insurance companies

(1 state-owned) and 18 life insurance companies (1 state-owned) are operating in the country.

As of June, 2010 47 scheduled banks which include 4 state-owned commercial banks, 30

private commercial banks, 9 foreign-owned commercial banks, 4 government-owned

specialized banks, are operating in Bangladesh through their 7,246 branches . Among those

branches as many as 3,394 belong to state-owned commercial banks, 2,427 branches to local

private banks, 59 branches to foreign banks and 1,366 branches to specialized banks.




Moreover, there are 1 National Co-operative Bank, 1 Ansar VDP Bank, 1 Karmasangsthan

Bank and 1 Grameen Bank which are operating as the non-scheduled banks. In Bangladesh,

4,169 branches of the scheduled banks are operating in the rural area Bangladesh Bank has

been working as the central bank since the country's independence. Its prime jobs include

issuing of currency, maintaining foreign exchange reserve and providing transaction facilities

of all public monetary matters. To comply with international best practices and to make the

bank's capital more resilient as well as to build the banking industry more risk sensitive,

shock absorbent and stable, Bangladesh Bank commenced implementation of Basel-II capital

adequacy framework from January 2010 as regulatory requirement for banks.

As per this study, both public sector and private sector banks appear to be providing services

to the satisfaction of customers. The study indicates that customers' perception vary

according to the nature of service. Measuring customer satisfaction with surveys or focus

groups gives direction to the banks for efforts and valuable inputs for improvement. In this

case, the highest customers' perceptions reach in Prompt and accuracy in transactions

followed by Safety of customers' investments and keep confidentiality of account and

transactions. The banks need to consider the weak areas in order to meet customer

requirement. The study has limitations in terms of sample size and if more respondents could

be included might be changed in terms of satisfaction ranking.




Chapter 3

Research Objective

And

Research

Methodology




3. Research Objective

The objective of the study is as follows:

1. To measure the service quality of private and public banks in Dehradun.

2. To study about customer expectation towards service quality of banks.

3. To examine quality of services delivered by banks.

4. To identify the perceived service quality gap among public and private sector banks

3.1 Research Hypothesis

Ho: The satisfaction level of customers differs across the bank.

H1: The satisfaction level of customers does not differ across the bank.

3.2 Research Methodology

Research is a systematic and self critical enquiry of Facts for some specific purpose. The

enquiry is aimed at understanding a things or phenomenon or solving a problem. When an

enquiry is aimed at understanding it is termed as basis or fundamental research. When pursue

knowledge and may or may not have practical or commercial use. When the enquiry is aimed

at applying the available knowledge for practical or commercial use or solving a problem

faced in practice, it is termed as applied research

3.3 Research Design:-

It helps in the direction to form a blue print for my research work and to find out the answers

for followings basic questions like what to observe, whom to observe, how to observe, why

to observe, how to record the observations, how analyze the observations. Hence type of

research design for my dissertation work is Descriptive in nature.




3.4 Sample Design:-

The population of the respondent of demographic profile used with a sample size of 104

respondents. The sample was divided into different demographic factors like age groups,

gender, income categories, and occupation and education qualification. The sample was

selected from the city of Dehradun. In my sample, was identified through systematic

randomly to arrive at the targeted total of 104 respondents. The data was collected over a

period of two months.

Sample size: 104 respondents from Dehradun city.

3.5 Data collection sources:-

Primary Data: The data have been collected through structured questionnaire by

respondents in the Dehradun city. 22 statements were measured using a five point Likert

scale, from ‘1- Strongly disagree’ to ‘5- Strongly agree’.

Secondary Data: The data has been collected from the sources like Books, magazines,

marketing journals, research articles, internet search engines.

3.6 Tools uses for analysis:-

For analysis purpose I have used the following tools

1. Mean and Standard Deviation

2. Factor analysis

3. One Way ANOVA

4. Chi-square

3.7 Limitations of the study

The study was based on the perception of customers of few branches of public and private

banks in Dehradun and a very small sample of respondents. Hence the findings cannot be

treated as representative of the entire banking industry. The study can also not be generalized

for public and private sector banks of the country.




Chapter 4

Data Analysis

4. Data Analysis




4.1 Age distribution of Sample

Table 1: Age wise Distribution of Sample

In(Years) Frequency Percent Valid

Percent

Cumulative

Percent

Valid

20-30 63 60.6 60.6 60.6

31-40 26 25.0 25.0 85.6

41-50 10 9.6 9.6 95.2

51 or

Above5 4.8 4.8 100.0

Total 104 100.0 100.0

61%

25%

10%5%

Age

20-30 31-40 41-50 51 or Above

Analysis: From the above table 1, we have found that majority of the Respondents are

between 20-30 years i.e 61%, 25% Respondents are from 31-40 years, 9% Respondents are

from 41-50 years and 5% Respondents are from 51 and above




4.2 Gender distribution of Sample

Table 2: Gender wise Distribution of Sample

Frequency Percent Valid

Percent

Cumulative

Percent

Valid

Male 85 81.7 81.7 81.7

Female 19 18.3 18.3 100.0

Total 104 100.0 100.0

82%

18%

Gender

MaleFemale

Analysis: From the above table 2, we have found that 82% Respondents are male and 18%

Respondents are female




4.3 Occupation distribution of Sample

Table 3: Occupation wise Distribution of Sample


Percent

Cumulative

Percent

Valid

Student 9 8.7 8.7 8.7

Own Business 9 8.7 8.7 17.3

Govt Employees 3 2.9 2.9 20.2

Private

Employees79 76.0 76.0 96.2

Others 4 3.8 3.8 100.0

Total 104 100.0 100.0

9% 9%3%

76%

4%

Occupation

StudentOwn BusinessGovt EmployeesPrivate EmployeesOthers

Analysis: From the above table 3, it is found that most of the Respondents are Private

Employees which is 76%, 9% Respondents have their Own Business, 8% Respondents are

Students, only 3% Respondents are Government Employees and rest 4% Respondents are

from other occupation




4.4 Income distribution of Sample

Table 4: Annual Income wise Distribution of Sample

In (Rs.) Frequency Percent Valid

Percent

Cumulative

Percent

Valid

Below 1,20,000 13 12.5 12.5 12.5

1,20,001-

2,40,00031 29.8 29.8 42.3

2,40,001-

3,60,00037 35.6 35.6 77.9

3,60,000 or

Above23 22.1 22.1 100.0

Total 104 100.0 100.0

13%

30%

36%

22%

Annual Income

Below 1,20,0001,20,001-2,40,0002,40,001-3,60,0003,60,000 or Above

Analysis: From the above table 4, we found that 12% Respondents have their Annual Income

below Rs.1,20,000 , 30% Respondents have their Annual Income between Rs.1,20,001 to

Rs.2,40,000 , 36% Respondents have their Annual Income between Rs.2,40,001 to

Rs.3,60,000 and 22% Respondents have their Annual Income Rs.3,60,000 and abov




4.5 Bank distribution of Sample

Table 5: Bank wise Distribution of Sample


Percent

Cumulative

Percent

Valid

SBI 36 34.6 34.6 34.6

PNB 25 24.0 24.0 58.7

ICICI 9 8.7 8.7 67.3

HDFC 6 5.8 5.8 73.1

Others 28 26.9 26.9 100.0

Total 104 100.0 100.0

35%

24%9%

6%

27%

Banks

SBIPNBICICIHDFCOthers

Analysis: From the above table 5, we have found that 34% Respondents are using S.B.I.

24%, Respondents are using P.N.B. , 9% Respondents are using I.C.I.C.I , 6% Respondents

are using H.D.F.C , and 27% Respondents are using Other banks.




Expected MeanTable 1:- Descriptive Statistics (expectation)

Min Max Mean Std. Dev.

Bank has modern looking equipment. 2.00 5.00 4.1731 .74315Bank’s physical facilities are visually appealing. 1.00 5.00 3.9808 .69646Bank’s reception desk employees are neat appearing. 1.00 5.00 4.0000 1.12345Materials associated with the service (such as pamphlets or statements) are visually appealing at bank.

1.00 5.00 4.0288 1.11003

When bank promises to do something by a certain time, it does so.

1.00 5.00 4.1154 1.06404

When you have a problem, bank shows a sincere interest in solving it.

1.00 5.00 4.4135 .87700

Bank performs the service right at the first time. 1.00 5.00 4.2596 .93472Bank provides its service at the time it promises to do so. 1.00 5.00 4.3365 .81979Bank insists on error free records. 1.00 5.00 4.2981 .91248Employees in bank tell you exactly when services will be performed.

2.00 5.00 4.0385 .95453

Employees in bank give you prompt service. 1.00 5.00 4.1154 .93796Employees in bank are always willing to help you. 1.00 5.00 4.1538 .91130Employees in bank are never too busy to respond to your request.

1.00 5.00 3.7788 1.19835

The behaviour of employees in bank instils confidence in you.

1.00 5.00 3.6923 .97619

You feel safe in your transactions with bank. 3.00 5.00 4.4327 .66485Employees in bank area consistently courteous with you. 3.00 5.00 4.2692 .62676Employees in bank have the knowledge to answer your questions.

1.00 5.00 4.4519 .76170

Bank gives you individual attention. 1.00 5.00 4.1923 .94588Bank has operating hours convenient to all its customers. 1.00 5.00 3.9038 .95041Bank has employees who give you personal attention. 1.00 5.00 4.0962 1.10180Bank has your best interest at heart. 3.00 5.00 4.1346 .76397The employees of bank understand your specific needs. 2.00 5.00 4.3750 .76561Valid N (list wise)

From the above Table 1, it is found that the highest range of expected mean is found by the

customers in terms of employees in bank having the knowledge to answer the customers

questions and customers feel safe in their transactions with banks and the lowest range of

expected mean is found in terms of the employees in bank are never busy to respond to the




customers’ request and the behaviour of employees in bank instils confidence in the

customers.

Perceived MeanTable 2:- Descriptive Statistics Perceived

Min Max Mean Std.Dev

Bank has modern looking equipment. 1.00 5.00 3.3558 .94425Bank’s physical facilities are visually appealing. 1.00 5.00 3.1635 .88252Bank’s reception desk employees are neat appearing. 1.00 5.00 3.1058 1.17348Materials associated with the service (such as pamphlets or statements) are visually appealing at bank.

1.00 5.00 3.2019 1.12673

When bank promises to do something by a certain time, it does so.

1.00 5.00 3.3365 .96150

When you have a problem, bank shows a sincere interest in solving it.

1.00 4.00 4.5385 6.9084

Bank performs the service right at the first time. 1.00 5.00 3.2885 1.00168Bank provides its service at the time it promises to do so. 1.00 5.00 3.4615 1.13995Bank insists on error free records. 1.00 5.00 3.5000 .98533Employees in bank tell you exactly when services will be performed.

1.00 5.00 3.1346 1.15798

Employees in bank give you prompt service. 1.00 5.00 3.0865 1.00591Employees in bank are always willing to help you. 1.00 5.00 3.0577 1.01280Employees in bank are never too busy to respond to your request.

1.00 5.00 3.0385 .88046

The behaviour of employees in bank instils confidence in you.

1.00 5.00 3.0865 1.03446

You feel safe in your transactions with bank. 2.00 5.00 4.0385 1.01372Employees in bank area consistently courteous with you. 1.00 5.00 3.3942 1.22608Employees in bank have the knowledge to answer your questions.

2.00 5.00 3.5000 1.07034

Bank gives you individual attention. 1.00 5.00 3.0962 1.44491Bank has operating hours convenient to all its customers. 1.00 5.00 3.0865 1.02503Bank has employees who give you personal attention. 1.00 5.00 3.1442 1.36117Bank has your best interest at heart. 1.00 5.00 2.7885 1.08541The employees of bank understand your specific needs. 1.00 5.00 3.2596 .91371Valid N (list wise)

From the above Table 2, it is found that the highest range of perceived mean is found by the

customers in terms of employees of bank shows a sincere interest in solving the problems of

the customers and in their transactions customers feel safe with the banks and the lowest




range of perceived mean is found in terms of employees in bank are never too busy to

respond to the customers request and bank has customers best interest at heart.

Table 3:- Descriptive Statistics(E-P)

Expected

Mean

Perceived

Mean

Gap

(E-P)

Bank has modern looking equipment. 4.1731 3.3558 0.8173

Bank’s physical facilities are visually appealing. 3.9808 3.1635 0.8173

Bank’s reception desk employees are neat appearing. 4.0000 3.1058 0.8942

Materials associated with the service (such as pamphlets or

statements) are visually appealing at bank.4.0288 3.2019 0.8269

When bank promises to do something by a certain time, it does

so.4.1154 3.3365 0.7789

When you have a problem, bank shows a sincere interest in

solving it.4.4135 4.5385 -0.1250

Bank performs the service right at the first time. 4.2596 3.2885 0.9711

Bank provides its service at the time it promises to do so. 4.3365 3.4615 0.8750

Bank insists on error free records. 4.2981 3.5000 0.7981

Employees in bank tell you exactly when services will be

performed.4.0385 3.1346 0.9039

Employees in bank give you prompt service. 4.1154 3.0865 1.0289

Employees in bank are always willing to help you. 4.1538 3.0577 1.0961

Employees in bank are never too busy to respond to your

request.3.7788 3.0385 0.7403

The behaviour of employees in bank instils confidence in you. 3.6923 3.0865 0.6058

You feel safe in your transactions with bank. 4.4327 4.0385 0.3942

Employees in bank area consistently courteous with you. 4.2692 3.3942 0.8750

Employees in bank have the knowledge to answer your

questions.4.4519 3.5000 0.9519

Bank gives you individual attention. 4.1923 3.0962 1.0961

Bank has operating hours convenient to all its customers. 3.9038 3.0865 0.8173

Bank has employees who give you personal attention. 4.0962 3.1442 0.9520

Bank has your best interest at heart. 4.1346 2.7885 1.3461




The employees of bank understand your specific needs. 4.3750 3.2596 1.1154

Valid N (list wise)

The above Table 3 shows the mean performance of expectation and perceived gap score for

the banks used in the study. It is found that Employees in banks are not giving the prompt

services properly to the customers as the mean gap shows the value 1.0289. It is also found

that employees in banks are also not willing to help the customers where the gap is 1.0961 ,

banks are also not giving the individual attention to the customers as the gap is 1.0961, employees of

bank does not understand the specific needs of the customers which shows the gap of 1.1154, the

major gap is found that bank has not the best interest at heart with the customers 1.3461.

Hypothesis

Ho: The satisfaction level of customers differs across the bank.

H1: The satisfaction level of customers does not differ across the bank.

An attempt was made to check the relationship between the degree of satisfaction of the

respondents across the different banks, chi-square test was carried out using SPSS software

the present in the table below

Table 4:- Bank * Satisfaction Cross tabulationCount

Satisfaction Total

Strongly Disagree

Disagree Neutral Agree Strongly Agree

Bank

SBI 0 6 7 23 0 36

PNB 0 1 3 21 0 25

ICICI 2 0 0 7 0 9

HDFC 0 0 4 2 0 6

Others 2 0 20 6 0 28Total 4 7 34 59 0 104




Table 5:- Chi-Square Tests

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 53.875a 12 .000Likelihood Ratio 55.566 12 .000Linear-by-Linear Association

6.505 1 .011

N of Valid Cases 104

a. 13 cells (65.0%) have expected count less than 5. The minimum expected count is .23.

From the above Table 5, the calculated values of chi-square is at 5% level of significance and

12 degree of freedom is 53.875 which is higher than the critical value. Hence null hypothesis

is rejected indicating that the satisfaction level of customers does not differ across the bank.

Table 6:- Mean with Age (Expectation)

Age Tangible Reliability Responsiveness Assurance Empathy

20-30 Years 3.9325 4.2540 4.0278 4.1548 4.0698

31-40 Years 4.1827 4.4538 4.0000 4.3558 4.3538

41-50 Years 4.0750 3.8200 3.7250 3.9500 3.8600

51 or Above 4.7000 4.7200 4.6500 4.7000 4.4800

Total 4.0457 4.2846 4.0216 4.2115 4.1404

The mean of different dimensions of service quality measurement across the different level of

age (Table 6) reveals that Reliability scored highest mean across the respondents of different

age categories. At the same time this factor has scored highest among all age category

respondents.

Table 7:- ANOVA with Age (Expectation)




Sum of Squares

df Mean Square

F Sig.

Tangible

Between Groups

3.444 3 1.148 3.715 .014

Within Groups 30.902 100 .309

Total 34.346 103

Reliability

Between Groups

3.910 3 1.303 2.484 .065

Within Groups 52.465 100 .525Total 56.375 103

Responsiveness

Between Groups

2.869 3 .956 2.018 .116


Assurance

Between Groups

2.621 3 .874 3.663 .015


Empathy

Between Groups

2.861 3 .954 1.681 .176


Total 59.590 103

One-way ANOVA analysis was carried out with the assumption that expected mean of

different factors of service quality does not differ significant across the age of respondents.

From the Table7, it is clear that calculated value of F is greater than the tabulated value of F

(2.37, α = .05) except the factors like Responsiveness and Empathy. Hence the null

hypothesis is rejected, indicating that there is a significant difference in the expected mean of

different service quality factors across the different age category except in the case of factors

like Responsiveness and Empathy.

Table 8:- Mean with Age (Perceived)




Age Tangible Reliability Responsiveness Assurance Empathy

20-30 Years 3.0595 3.3429 3.0437 3.6071 3.1492

31-40 Years 3.4519 4.7154 3.2212 3.5577 3.0615

41-50 Years 3.1500 3.2000 2.7000 2.4000 2.3600

51 or Above 3.9000 3.9600 3.5500 4.1500 3.6400

Total 3.2067 3.7019 3.0793 3.5048 3.0750


age (Table 8) reveals that Reliability scored highest mean across the respondents of different

age categories. At the same time this factor has scored highest among all age category

respondents.

Table 9:- ANOVA with Age (Perceived)

Sum of Squares

Df Mean Square F Sig.

Tangible

Between Groups

5.364 3 1.788 3.140 .029


Total 62.305 103

Reliability

Between Groups

37.679 3 12.560 4.020 .010

Within Groups 312.400 100 3.124Total 350.080 103

Responsiveness

Between Groups

3.150 3 1.050 1.710 .170


Assurance

Between Groups

15.020 3 5.007 7.934 .000


Empathy Between Groups

7.060 3 2.353 2.898 .039





Total 88.255 103

One-way ANOVA analysis was carried out with the assumption that perceived mean of

different factors of service quality does not differ significant across the age of respondents.

From the Table 9, it is clear that calculated value of F is greater than the tabulated value of F

(2.37, α = .05) except the factor like Responsiveness. Hence the null hypothesis is rejected,

indicating that there is a significant difference in the perceived mean of different service

quality factors across the different age category except in the case of factor like

Responsiveness.

Table 10:- Mean with Gender (Expectation)

Gender Tangible Reliability Responsiveness Assurance Empathy

Male 4.0294 4.2800 4.0206 4.1971 4.1412

Female 4.1184 4.3053 4.0263 4.2763 4.1368

Total 4.0457 4.2846 4.0216 4.2115 4.1404


gender (Table 10) reveals that Reliability scored highest mean across the respondents of

different gender categories. At the same time this factor has scored highest among all gender

category respondents.

Table 11:- ANOVA with Gender (Expectation)

Sum of Squares

df Mean Square

F Sig.

Tangible Between Groups

.123 1 .123 .367 .546





Total 34.346 103

Reliability

Between Groups

.010 1 .010 .018 .894


Responsiveness

Between Groups

.001 1 .001 .001 .974


Assurance

Between Groups

.098 1 .098 .377 .540


Empathy

Between Groups

.000 1 .000 .000 .982


Total 59.590 103


different factors of service quality does not differ significant across the gender of

respondents. From the Table11, it is clear that calculated value of F is less than the tabulated

value of F (2.37, α = .05) Hence the null hypothesis is accepted, indicating that there is no

significant difference in the expected mean of different service quality factors across the

different gender category.

Table 12:- Mean with Gender (Perceived)

Gender Tangible Reliability Responsiveness Assurance Empathy

Male 3.1706 3.6847 2.9618 3.3647 2.9059

Female 3.3684 3.7789 3.6053 4.1316 3.8316

Total 3.2067 3.7019 3.0793 3.5048 3.0750





gender (Table 12) reveals that Assurance scored highest mean across the respondents of

different gender categories. At the same time this factor has scored highest among all gender

category respondents.

Table 13:- ANOVA with Gender (Perceived)

Sum of Squares

df Mean Square F Sig.

Tangible

Between Groups

.608 1 .608 1.005 .319


Total 62.305 103

Reliability

Between Groups

.138 1 .138 .040 .841

Within Groups 349.942 102 3.431Total 350.080 103

Responsiveness

Between Groups

6.430 1 6.430 11.289 .001


Assurance

Between Groups

9.132 1 9.132 13.502 .000


Empathy

Between Groups

13.307 1 13.307 18.110 .000


Total 88.255 103


different factors of service quality does not differ significant across the gender of

respondents. From the Table 13, it is clear that calculated value of F is greater than the




tabulated value of F (2.37, α = .05) except the factors like Tangibility and Reliability. Hence

the null hypothesis is rejected, indicating that there is a significant difference in the perceived

mean of different service quality factors across the different gender category except in the

case of factors like Tangibility and Reliability.

Table 14:- Mean with Occupation (Expectation)

Occupation Tangible Reliability Responsiveness Assurance Empathy

Student 3.9722 3.9556 3.9167 4.1111 3.8667

Own Business 3.9722 3.8444 3.6667 3.8889 3.7778

Govt Employees 4.7500 4.4667 4.4167 4.5833 4.6667

Private Employees

4.0095 4.3418 4.0475 4.2247 4.1873

Others 4.5625 4.7500 4.2500 4.6250 4.2500

Total 4.0457 4.2846 4.0216 4.2115 4.1404


gender (Table 14) reveals that Tangibility and Reliability scored highest mean across the

respondents of different occupation categories. At the same time these factor has scored

highest among all occupation category respondents.

Table 15:- ANOVA with Occupation (Expectation)

Sum of

Squares


Tangible

Between Groups 2.757 4 .689 2.160 .079


Total 34.346 103

Reliability Between Groups 3.942 4 .986 1.861 .123





Total 56.375 103

Responsiveness

Between Groups 1.963 4 .491 1.006 .408


Total 50.264 103

Assurance

Between Groups 2.140 4 .535 2.177 .077


Total 26.471 103

Empathy

Between Groups 2.911 4 .728 1.271 .287


Total 59.590 103


different factors of service quality does not differ significant across the occupation of

respondents. From the Table15, it is clear that calculated value of F is less than the tabulated

value of F (2.37, α = .05) Hence the null hypothesis is accepted, indicating that there is no

significant difference in the expected mean of different service quality factors across the

different occupation category.

Table 16:- Mean with Occupation (Perceived)

Occupation Tangible Reliability Responsiveness Assurance Empathy

Student 3.5278 3.4222 3.3611 3.6111 3.3111

Own Business 3.0556 3.0000 2.3889 2.1111 1.9111

Govt Employees 3.9167 4.0667 3.5833 4.0000 4.0667

Private Employees

3.1013 3.7747 3.0728 3.5918 3.0987

Others 4.3750 4.2000 3.7500 4.3125 3.9500

Total 3.2067 3.7019 3.0793 3.5048 3.0750


occupation (Table 8) reveals that Tangibility scored highest mean across the respondents of

different occupation categories. At the same time this factor has scored highest among all

occupation category respondents.




Table 17:- ANOVA with Occupation (Perceived)

Sum of

Squares


Tangible

Between Groups 8.983 4 2.246 4.170 .004


Total 62.305 103

Reliability

Between Groups 6.948 4 1.737 .501 .735

Within Groups 343.132 99 3.466

Total 350.080 103

Responsiveness

Between Groups 7.570 4 1.892 3.289 .014


Total 64.533 103

Assurance

Between Groups 21.526 4 5.381 9.413 .000


Total 78.123 103

Empathy

Between Groups 18.751 4 4.688 6.677 .000


Total 88.255 103


different factors of service quality does not differ significant across the occupation of

respondents. From the Table 17, it is clear that calculated value of F is greater than the

tabulated value of F (2.37, α = .05) except the factor like Reliability. Hence the null

hypothesis is rejected, indicating that there is a significant difference in the perceived mean

of different service quality factors across the different occupation category except in the case

of factor like Reliability.




Reliability Statistics (Expectation)

Cronbach's Alpha N of Items

.928 22

By applying Cronbach‟s Alpha test for 22 items on services quality expectation and it is

observed that the Cronbach‟s Alpha value is 0.928, which states that the data collected from

the samples are highly reliable.

Reliability Statistics (Perception)

Cronbach's Alpha N of Items

.795 22

By applying Cronbach‟s Alpha test for 22 items on services quality perception and it is

observed that the Cronbach‟s Alpha value is 0.795, which states that the data collected from

the samples are highly reliable.




Chapter 5

Findings




5. Findings of the Study

It is found that the expectation of consumers is highest for knowledge of employees to

answer the queries of customers (4.4519), safety in their transactions with banks

(4.4327)

The expectation of consumers is lowest for the reception desks of bank which is neat

and clean (4.0000) and the behavior of employees in bank instils confidence in the

customers(3.6923)

It is found that the perception of consumers is highest for the employees of bank

shows a sincere interest in solving the problems of the customers (4.5385) and safety

in their transactions with banks (4.0385)

It is found that the perception of consumers is highest for employees in bank are never

too busy to respond to the customers request (3.0385) and bank has customers best

interest at heart (2.7885)

The mean gap shows employees in banks are not giving the prompt services properly to the customers (1.0289), employees in banks are also not willing to help the customers (1.0961), banks are also not giving the individual attention to the customers (1.0961), employees of bank does not understand the specific needs of the customers (1.1154), the major gap is fond that bank has not the best interest at heart with the customers (1.3461)

Using Chi-square it was found that the satisfaction level of customers does not differ

across the banks.

Using one-way ANOVA on the various demographic factors the following results

concluded :-

It is found that there is a significant difference in the expected mean of different

service quality factors across the different age category except in the case of factors

like Responsiveness and Empathy.

There is a significant difference in the perceived mean of different service quality

factors across the different age category except in the case of factor like

Responsiveness.

There is no significant difference in the expected mean of different service quality

factors across the different gender category.





factors across the different gender category except in the case of factors like

Tangibility and Reliability.

There is no significant difference in the expected mean of different service quality

factors across the different occupation category.


factors across the different occupation category except in the case of factor like

Reliability.




Chapter 6

Suggestions

And

Conclusion




6. Conclusion

As per the study, both public sector and private sector banks appear to be providing

services to the satisfaction of customers. The study indicates that customers'

perception vary according to the nature of service. Measuring customer satisfaction

with surveys gives direction to the banks for efforts and valuable inputs for

improvement. In this case, the highest customers' expectation reach in knowledge to

answer the customers questions and accuracy in transactions followed by safety of

customers' investments and keep confidentiality of account and transactions. By

comparing the customers’ expectations with the perception it was found that the

employees in banks are not giving the prompt services properly to the customers and

it was also found that the employees in the banks are not willing to help the customers

not giving them the individual attention and also not understanding their specific

needs. The banks need to consider the weak areas in order to meet customer

requirement. Private Banks seem to have satisfied its customers with good services

and they have been successful in retaining its customers by providing better facilities

than Public sector banks. But, still Private Banks need to go a long way to become

customer’s first preference.

In an economy of innovative technologies and changing markets, each and every

service quality variable has become important. New financial products and services

have to be continuously introduced in order to stay competent. Success mantra could

be customer centric orientation, where the organization builds long term strategic

relationships with its customers and Private sector Banks have been successful in

achieving such relationship with customers however public sector banks have to

improve in this area. Private Banks need to concentrate more on their credit facilities

and insurance services since customers do not have a very good opinion about these

facilities being offered by Private Banks. Public sector banks enjoy the trust of the

customers, which they have been leveraging to stay in the race however they need to

improve their service quality by improving their physical facility, infrastructure and

giving proper soft skill trainings to their employees. The study has limitations in terms

of sample size and if more respondents could be included might be in terms of

satisfaction ranking.




Chapter 7

Bibliography




7. Bibliography

Books

1. PHILLIP KOTLER , Marketing Management: planning, implementation & control,

PHI, 7th edition, 1999

2. V.S. RAMASWAMY, S.NAMAKUMARI , Marketing management (planning,

implementation & control),

3. C.R.KOTHARI, Research methodology(Methods and techniques)

New Age Publication, Jaipur 2nd edition, reprint2008.

4. N.K. MALHOTRA (2002).’ Marketing Research’, Pearson Education, New Delhi.

5. CHRISTOPHER AND LOVELOCK, Services Marketing, New Delhi, 2008.

6.

Articles in Journals

1. Madhukar G. Angur, Rajan Nataraajan, John S. Jahera Jr ,” Service quality in the

banking industry: an assessment in a developing economy” International Journal of

Bank Marketing , Vol. 17 No.3 , pp. 116-125.

2. Puja Khatri and Yukti Ahuja , “ Comparative Study of Customer Satisfaction in

Indian Public Sector and Private Sector Banks” International Journal of Engineering

and Management Sciences, I.J.E.M.S., Vol.1(1) , pp. 42-51

3. J.Clement Sudhahar and M. Selvam , “Service Quality Scale Development in Indian

Retail Banking Sector: An Empirical Investigation.” Journal of Applied Sciences,

7:766-771

4. Anber Abraheem Shlash Mohammad and Shireen Yaseen Mohammad Alhamadani , “ Service Quality Perspectives & Customer Satisfaction in Commercial Banks working in Jordan”

5. Babak Mahmood , Muzaffar Abbas , “Customer Satisfaction with Service Quality in Conventional Banking in Pakistan: The Case of Faisalabad.” International Journal of Marketing Studies, Vol.3, No.4




6. Md. Abdul Muyeed , “Customer Perception on Service Quality in Retail Banking in

Developing Countries” International Journal of Marketing Studies, Vol.4, No.1

7. Zeithaml, V.A., L.L. Berry, and A. Parasuraman,(1994), “The behavioral

consequences of service quality” Journal of Marketing, 60(2), pp. 31-46.

8. Brady, M.K., and J.J. Jr Cronin, (2001), “Some new thoughts on conceptualizing

perceived service quality: A hierarchical approach”, Journal of Marketing, 65, July,

pp. 34-49.

9. Parasuraman, A., VA. Zeithaml, and L.L. Berry, (1985), “A Conceptual Model of

Service Quality and its Implication for Future Research", Journal of Marketing, 49

(Fall), pp. 41-50.

10. Parasuraman, A., Berry, L.L. and V.A. Zeithaml, (1991), “Understanding customer

expectations of service”, Sloan Management Review, 32(3), pp. 39-48.

11. Parasuraman, A., VA. Zeithaml, and L.L. Berry, (1988), “SERVQUAL: A multiple-

item scale for measuring consumer perceptions of service quality”, Journal of

Retailing, 64(1), pp. 12-40.

12. Achim, Machauer. and Sebastian, Morgner., "Segmentation of bank customers by

expected benefits and attitudes", The International Journal of Bank Marketing,

Vol.19:1, 2001, 6-15.

13. Aldlaigan, A., and Buttle, A. SYSTRA-SQ: A new measure of banks service quality.

International Journal of Service Industry Management, Vol. 13 No. 4, pp. 362-81.

14. Bahia, K., & Nantel, J. A reliable and valid measurement scale for the perceived service quality of banks. The International Journal of Bank Marketing, Vol.18 No.2, pp. 84-91.

15. Nair M.V, “Banking -new directions of growth”, The Hindu-Survey of Indian Industry 2010, pp.60-61.

Web Sites

http://ssrn.com/abstract=1584732

http://www.jstor.org/stable/1252296

http://www.google.co.in

http://www.statebankofindia.com




www.iloveindia.com/finance/bank/...banks/state-bank-of-india.htm

http:// www.icicibank.com/aboutus/history.html

http:// www.icicigroupcompanies.com

http://www.pnb.co.in

http://www.hdfc.co.in




Chapter 8

Annexure




8. Annexure

“Service Quality Gap Analysis for Banks”

Note: - This questionnaire is designed to complete my research work. The information thus received will be kept confidential and will not used for any other purpose.

Kindly Tick mark any appropriate.

1. Name : ____________________________________________________________________

2. Age: 20-30 Years 31- 40 Years

41-50 Years 51 or Above

3. Gender: Male Female

4. Occupation: Own Business Government Employee

Private Employee Any Other

5. Annual Income: Below Rs.1, 20,000 Rs.1, 20,001 to Rs.2, 40,000

Rs.2, 40,001 to Rs.3, 60,000 Rs.3, 60,000 and above

6. Which bank do you have account with present?

SBI PNB

ICICI HDFC

If any other please specify __________________________________________________

7. Do you have got all the account with one bank?

Yes No

8. On the scale of 1 to 5, kindly rate the following parameters of Bank on the basis of your

expectation and perception from the quality of bank:

1 = Strongly Disagree 5 = Strongly Agree

S.N StatementExpected Value Achieved

Value

1 2 3 4 5 1 2 3 4 5

1. Bank has modern looking equipment.




2. Bank’s physical facilities are visually appealing.

3. Bank’s reception desk employees are neat

appearing.

4. Materials associated with the service (such as

pamphlets or statements) are visually appealing

at bank.

5. When bank promises to do something by a

certain time, it does so.

6. When you have a problem, bank shows a sincere

interest in solving it.

7. Bank performs the service right at the first time.

8. Bank provides its service at the time it promises

to do so.

9. Bank insists on error free records.

10. Employees in bank tell you exactly when

services will be performed.

11. Employees in bank give you prompt service.

12. Employees in bank are always willing to help

you.

13. Employees in bank are never too busy to respond

to your request.

14. The behaviour of employees in bank instils

confidence in you.

15. You feel safe in your transactions with bank.

16. Employees in bank area consistently courteous

with you.

17. Employees in bank have the knowledge to

answer your questions.

18. Bank gives you individual attention.

19. Bank has operating hours convenient to all its

customers.

20. Bank has employees who give you personal

attention.

21. Bank has your best interest at heart.

22. The employees of bank understand your specific

needs.




9. Do you find any significant difference in your expectation and services delivered by bank?

Yes No Can’t Say

10. Are you satisfied with the quality and performance of your Bank?

Strongly Satisfied Satisfied Neutral

Dissatisfied Strongly Dissatisfied

Thanks for the Participation.



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