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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
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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
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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


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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


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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


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Chapter 7 Bibliography

Chapter 8 Annexure
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Chapter 1
Introduction
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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
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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
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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.
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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
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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.
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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. SBIs 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
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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 customers 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
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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.
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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
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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 :
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It is the willingness of the service firms 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 hotels 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 firms 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 :
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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 customers
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 firms 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 doctors 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.
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1.1.5 Gap Model

The five gaps that organizations should measure, manage and minimize:
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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.
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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 Governments domain. As part of the Governments
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.
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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.
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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.
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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)


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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


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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
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(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 Mar11 as per Basel II with Tier I and Tier II capital ratio at
8.44% and 3.98% respectively. As on March11, 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 Mar11 (3.57% Mar10). The Earning per Share improved to Rs 140.60 (Rs 123.86
Mar10) while the Book value per share improved to Rs 661.20 (Rs 514.77 Mar10). 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 Banks 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:

Mar'09 Mar'10 Mar'11


Parameters (Rs.In Crore) (Rs. In Crore) (Rs. In Crore) CAGR(%)

OperatingProfit 5690 7326 9056 26.16

NetProfit 3091 3905 4433 19.76


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Deposit 209760 249330 312899 22.14

Advance 154703 186601 242107 25.10

TotalBusiness 364463 435931 555005 23.40

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 Dec08, 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 Banks 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,
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 Banks 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
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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.
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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
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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
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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
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current and savings account of more than 50% ,HDFC bank has full
potential to become Indias 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
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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


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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
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Chapter 2
Literature Review
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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
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industry in India. Confirmatory factor analysis using LISREL 8 (Jreskog and Srbom,
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


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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 RBIs 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.
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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
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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
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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
customers 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


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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,
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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:


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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
managements 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 todays 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
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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 customers 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
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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.
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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.
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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.
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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
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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.
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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.
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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
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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 students
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
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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, dcor, 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


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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 dcor. 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 banksassaulted by the pressures of globalization, competition from non-
banking financial institutions, and volatile market dynamicsare 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.
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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
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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.
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Chapter 3
Research Objective
And
Research
Methodology
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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.
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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.
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Chapter 4

Data Analysis

4. Data Analysis
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4.1 Age distribution of Sample

Table 1: Age wise Distribution of Sample


In(Years) Frequency Percent Valid Cumulative
Percent Percent
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
Valid 51 or
5 4.8 4.8 100.0
Above
Total 104 100.0 100.0

Age

10% 5% 20-30
31-40
25% 41-50
61%
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


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Table 2: Gender wise Distribution of Sample


Frequency Percent Valid Cumulative
Percent Percent
Male 85 81.7 81.7 81.7
Valid Female 19 18.3 18.3 100.0
Total 104 100.0 100.0

Gender

18%
Male
Female
82%

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


Frequency Percent Valid Cumulative
Percent Percent
Valid Student 9 8.7 8.7 8.7
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Own Business 9 8.7 8.7 17.3


Govt Employees 3 2.9 2.9 20.2
Private
79 76.0 76.0 96.2
Employees
Others 4 3.8 3.8 100.0
Total 104 100.0 100.0

Occupation

Student
4% 9% 9%
Own Business
3% Govt Employees
Private Employees
76%
Others

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 Cumulative
Percent Percent
Valid Below 1,20,000 13 12.5 12.5 12.5
1,20,001- 31 29.8 29.8 42.3
2,40,000
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2,40,001-
37 35.6 35.6 77.9
3,60,000
3,60,000 or
23 22.1 22.1 100.0
Above
Total 104 100.0 100.0

Annual Income

13% Below 1,20,000


22%
1,20,001-2,40,000
30% 2,40,001-3,60,000
36% 3,60,000 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


Frequency Percent Valid Cumulative
Percent 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
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Others 28 26.9 26.9 100.0


Total 104 100.0 100.0

Banks

SBI
27% PNB
35%
ICICI
6%
HDFC
9%
24% Others

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 Mean
Table 1:- Descriptive Statistics (expectation)
Min Max Mean Std.
Dev.
Bank has modern looking equipment. 2.00 5.00 4.1731 .74315
Banks physical facilities are visually appealing. 1.00 5.00 3.9808 .69646
Banks reception desk employees are neat appearing. 1.00 5.00 4.0000 1.12345
Materials associated with the service (such as pamphlets or
1.00 5.00 4.0288 1.11003
statements) are visually appealing at bank.
When bank promises to do something by a certain time, it
1.00 5.00 4.1154 1.06404
does so.
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When you have a problem, bank shows a sincere interest in


1.00 5.00 4.4135 .87700
solving it.
Bank performs the service right at the first time. 1.00 5.00 4.2596 .93472
Bank provides its service at the time it promises to do so. 1.00 5.00 4.3365 .81979
Bank insists on error free records. 1.00 5.00 4.2981 .91248
Employees in bank tell you exactly when services will be
2.00 5.00 4.0385 .95453
performed.
Employees in bank give you prompt service. 1.00 5.00 4.1154 .93796
Employees in bank are always willing to help you. 1.00 5.00 4.1538 .91130
Employees in bank are never too busy to respond to your
1.00 5.00 3.7788 1.19835
request.
The behaviour of employees in bank instils confidence in
1.00 5.00 3.6923 .97619
you.
You feel safe in your transactions with bank. 3.00 5.00 4.4327 .66485
Employees in bank area consistently courteous with you. 3.00 5.00 4.2692 .62676
Employees in bank have the knowledge to answer your
1.00 5.00 4.4519 .76170
questions.
Bank gives you individual attention. 1.00 5.00 4.1923 .94588
Bank has operating hours convenient to all its customers. 1.00 5.00 3.9038 .95041
Bank has employees who give you personal attention. 1.00 5.00 4.0962 1.10180
Bank has your best interest at heart. 3.00 5.00 4.1346 .76397
The employees of bank understand your specific needs. 2.00 5.00 4.3750 .76561
Valid 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 Mean
Table 2:- Descriptive Statistics Perceived
Min Max Mean Std.
Dev
Bank has modern looking equipment. 1.00 5.00 3.3558 .94425
Banks physical facilities are visually appealing. 1.00 5.00 3.1635 .88252
Banks reception desk employees are neat appearing. 1.00 5.00 3.1058 1.17348
Materials associated with the service (such as pamphlets or
1.00 5.00 3.2019 1.12673
statements) are visually appealing at bank.
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When bank promises to do something by a certain time, it


1.00 5.00 3.3365 .96150
does so.
When you have a problem, bank shows a sincere interest in
1.00 4.00 4.5385 6.9084
solving it.
Bank performs the service right at the first time. 1.00 5.00 3.2885 1.00168
Bank provides its service at the time it promises to do so. 1.00 5.00 3.4615 1.13995
Bank insists on error free records. 1.00 5.00 3.5000 .98533
Employees in bank tell you exactly when services will be
1.00 5.00 3.1346 1.15798
performed.
Employees in bank give you prompt service. 1.00 5.00 3.0865 1.00591
Employees in bank are always willing to help you. 1.00 5.00 3.0577 1.01280
Employees in bank are never too busy to respond to your
1.00 5.00 3.0385 .88046
request.
The behaviour of employees in bank instils confidence in
1.00 5.00 3.0865 1.03446
you.
You feel safe in your transactions with bank. 2.00 5.00 4.0385 1.01372
Employees in bank area consistently courteous with you. 1.00 5.00 3.3942 1.22608
Employees in bank have the knowledge to answer your
2.00 5.00 3.5000 1.07034
questions.
Bank gives you individual attention. 1.00 5.00 3.0962 1.44491
Bank has operating hours convenient to all its customers. 1.00 5.00 3.0865 1.02503
Bank has employees who give you personal attention. 1.00 5.00 3.1442 1.36117
Bank has your best interest at heart. 1.00 5.00 2.7885 1.08541
The employees of bank understand your specific needs. 1.00 5.00 3.2596 .91371
Valid 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 Perceived Gap
Mean Mean (E-P)
Bank has modern looking equipment. 4.1731 3.3558 0.8173
Banks physical facilities are visually appealing. 3.9808 3.1635 0.8173
Banks reception desk employees are neat appearing. 4.0000 3.1058 0.8942
Materials associated with the service (such as pamphlets or
4.0288 3.2019 0.8269
statements) are visually appealing at bank.
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When bank promises to do something by a certain time, it


4.1154 3.3365 0.7789
does so.
When you have a problem, bank shows a sincere interest in
4.4135 4.5385 -0.1250
solving it.
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
4.0385 3.1346 0.9039
performed.
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
3.7788 3.0385 0.7403
request.
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
4.4519 3.5000 0.9519
questions.
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.
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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 tabulation


Count
Satisfaction Total
Strongly Disagree Neutral Agree Strongly
Disagree Agree
SBI 0 6 7 23 0 36
PNB 0 1 3 21 0 25
Bank ICICI 2 0 0 7 0 9
HDFC 0 0 4 2 0 6
Others 2 0 20 6 0 28
Total 4 7 34 59 0 104

Table 5:- Chi-Square Tests


Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 53.875a 12 .000
Likelihood Ratio 55.566 12 .000
Linear-by-Linear
6.505 1 .011
Association
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


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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 df Mean F Sig.
Squares Square
Between
3.444 3 1.148 3.715 .014
Groups
Tangible
Within Groups 30.902 100 .309
Total 34.346 103
Between
3.910 3 1.303 2.484 .065
Groups
Reliability
Within Groups 52.465 100 .525
Total 56.375 103
Between
2.869 3 .956 2.018 .116
Groups
Responsiveness
Within Groups 47.395 100 .474
Total 50.264 103
Between
2.621 3 .874 3.663 .015
Groups
Assurance
Within Groups 23.850 100 .239
Total 26.471 103
Between
2.861 3 .954 1.681 .176
Groups
Empathy
Within Groups 56.729 100 .567
Total 59.590 103
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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, = .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

The mean of different dimensions of service quality measurement across the different level of
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 Df Mean F Sig.
Squares Square
Tangible Between
5.364 3 1.788 3.140 .029
Groups
Within Groups 56.942 100 .569
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Total 62.305 103


Between
37.679 3 12.560 4.020 .010
Groups
Reliability
Within Groups 312.400 100 3.124
Total 350.080 103
Between
3.150 3 1.050 1.710 .170
Groups
Responsiveness
Within Groups 61.383 100 .614
Total 64.533 103
Between
15.020 3 5.007 7.934 .000
Groups
Assurance
Within Groups 63.103 100 .631
Total 78.123 103
Between
7.060 3 2.353 2.898 .039
Groups
Empathy
Within Groups 81.195 100 .812
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, = .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


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The mean of different dimensions of service quality measurement across the different level of
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 df Mean F Sig.
Squares Square
Between
.123 1 .123 .367 .546
Groups
Tangible
Within Groups 34.223 102 .336
Total 34.346 103
Between
.010 1 .010 .018 .894
Groups
Reliability
Within Groups 56.365 102 .553
Total 56.375 103
Between
.001 1 .001 .001 .974
Groups
Responsiveness
Within Groups 50.263 102 .493
Total 50.264 103
Between
.098 1 .098 .377 .540
Groups
Assurance
Within Groups 26.374 102 .259
Total 26.471 103
Between
.000 1 .000 .000 .982
Groups
Empathy
Within Groups 59.590 102 .584
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 gender of
respondents. From the Table11, it is clear that calculated value of F is less than the tabulated
value of F (2.37, = .05) Hence the null hypothesis is accepted, indicating that there is no
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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

The mean of different dimensions of service quality measurement across the different level of
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 df Mean F Sig.
Squares Square
Between
.608 1 .608 1.005 .319
Groups
Tangible
Within Groups 61.698 102 .605
Total 62.305 103
Between
.138 1 .138 .040 .841
Groups
Reliability
Within Groups 349.942 102 3.431
Total 350.080 103
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Between
6.430 1 6.430 11.289 .001
Groups
Responsiveness
Within Groups 58.103 102 .570
Total 64.533 103
Between
9.132 1 9.132 13.502 .000
Groups
Assurance
Within Groups 68.990 102 .676
Total 78.123 103
Between
13.307 1 13.307 18.110 .000
Groups
Empathy
Within Groups 74.948 102 .735
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 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, = .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
4.0095 4.3418 4.0475 4.2247 4.1873
Employees
Others 4.5625 4.7500 4.2500 4.6250 4.2500
Total 4.0457 4.2846 4.0216 4.2115 4.1404
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The mean of different dimensions of service quality measurement across the different level of
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 df Mean Square F Sig.
Squares
Between Groups 2.757 4 .689 2.160 .079
Tangible Within Groups 31.588 99 .319
Total 34.346 103
Between Groups 3.942 4 .986 1.861 .123
Reliability Within Groups 52.433 99 .530
Total 56.375 103
Between Groups 1.963 4 .491 1.006 .408
Responsiveness Within Groups 48.301 99 .488
Total 50.264 103
Between Groups 2.140 4 .535 2.177 .077
Assurance Within Groups 24.331 99 .246
Total 26.471 103
Between Groups 2.911 4 .728 1.271 .287
Empathy Within Groups 56.680 99 .573
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 occupation of
respondents. From the Table15, it is clear that calculated value of F is less than the tabulated
value of F (2.37, = .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.
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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
3.1013 3.7747 3.0728 3.5918 3.0987
Employees
Others 4.3750 4.2000 3.7500 4.3125 3.9500
Total 3.2067 3.7019 3.0793 3.5048 3.0750

The mean of different dimensions of service quality measurement across the different level of
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 df Mean Square F Sig.
Squares
Between Groups 8.983 4 2.246 4.170 .004
Tangible Within Groups 53.322 99 .539
Total 62.305 103
Between Groups 6.948 4 1.737 .501 .735
Reliability Within Groups 343.132 99 3.466
Total 350.080 103
Between Groups 7.570 4 1.892 3.289 .014
Responsiveness Within Groups 56.963 99 .575
Total 64.533 103
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Between Groups 21.526 4 5.381 9.413 .000


Assurance Within Groups 56.597 99 .572
Total 78.123 103
Between Groups 18.751 4 4.688 6.677 .000
Empathy Within Groups 69.504 99 .702
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 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, = .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 Cronbachs Alpha test for 22 items on services quality expectation and it is
observed that the Cronbachs Alpha value is 0.928, which states that the data collected from
the samples are highly reliable.
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Reliability Statistics (Perception)


Cronbach's Alpha N of Items
.795 22

By applying Cronbachs Alpha test for 22 items on services quality perception and it is
observed that the Cronbachs Alpha value is 0.795, which states that the data collected from
the samples are highly reliable.
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Chapter 5
Findings
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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.
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.
There is no significant difference in the expected mean of different service quality
factors across the different occupation category.
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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.
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Chapter 6
Suggestions
And
Conclusion
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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
customers 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.
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Chapter 7

Bibliography
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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
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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
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Chapter 8

Annexure
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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
Expected Value Achieved
S.N Statement
Value
1 2 3 4 5 1 2 3 4 5
1. Bank has modern looking equipment.
2. Banks physical facilities are visually appealing.
3. Banks reception desk employees are neat
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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 Cant Say

10. Are you satisfied with the quality and performance of your Bank?

Strongly Satisfied Satisfied Neutral

Dissatisfied Strongly Dissatisfied


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Thanks for the Participation.

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