ASSESSMENT OF CUSTOMER SATISFACTION ON BANK

PRODUCTS:
A CASE STUDY OF SAVINGS ACCOUNT AT CRDB BANK IN MOROGORO

By
Grace J. Matemu

A Research Report Submitted In the Partial Fulfillment of the Requirements for

the Bachelor Degree of Science in Economics, Economic Policy and Planning of
Mzumbe University

2013
 CERTIFICATION

We, the undersigned, certify that we have read and hereby recommend for acceptance by
the Mzumbe University, a research report entitled ‘‘An assessment of customer
satisfaction on bank products ,’’ A study of savings account at CRDB Morogoro in
partial/ fulfillment of the bachelor’s degree of science in economics (Economic Policy
and Planning) of Mzumbe University.

Signature

_______________________
Major Supervisor

Signature

_____________________
Internal Examiner

Accepted by the Board of the Faculty of Social Science

…………………………………………………….
Signature
_______________________________________________
CHAIRPERSON.

i
 DECLARATION

I, Grace J. Matemu, do hereby declare that this is my original work and it has not been
submitted for a similar or any other degree in any other University.

Researcher’s full name: GRACE J. MATEMU

Signature: ______________

Date: ____ /_____/_______

ii
 COPYRIGHT

This report is a copyright material protected under the Berne Convention, the Copyright
Act 1999 and other international and national enactments, in that behalf, on intellectual
property. It may not be reproduced by any means in full or in part, except for short
extracts in fair dealings, for research or private study, critical scholarly review or
discourse with an acknowledgement, without the written permission of Mzumbe
University, on behalf of the author.
©

All right reserved

2013 Grace M atemu.

iii
 ACKNOWLEDGEMENT

I am very grateful to God the Almighty, because this research would not have been
successful without his endless and unconditional love and care. He filled me with his
grace mercy, and good health throughout the research period.

Special thanks and gratitude goes to my major supervisor Dr. Fred Rwechungura for his
tireless support, supervision and guidance in all stages of report writing regardless of
much responsibilities entitled to him by the University. Without him, this work would
not have been successful. May the Almighty God guide him throughout his life and bless
whatever he will put his hands upon. I also thank my external supervisor Dr. Romanus
Dimoso for his advice, more specifically during his visit for assessment at CRDB
Morogoro.

I wish to express my gratitude to the Branch Director of CRDB Morogoro, Ms Pendo

Assey for her assistance and guidance during my field practices as well as data
collection. I am also thankful to the Business banking departmental manager, Mr. Kazi
Challe, for his tireless support, cooperation and encouragement throughout my field
session, without forgetting all the other staff at the branch for their unending
cooperation.

I am in a special way very thankful to my family and relatives for their financial, moral
and material support in the complete course of making this work successful.

iv
 DEDICATION

I dedicate this work to my ever-loving parents Mr Joseph Matemu & my late mother
Mrs Leah Matemu, the rest of my family and relatives for their unending love, courage,
prayers, and material, moral and financial support. This success is equally yours.

v
 ABSTRACT

The study was designed at making an assessment of customer satisfaction on bank

products that was conducted at CRDB in Morogoro. The driving factors of satisfaction
on savings account (Independent Variables ) studied were; Age, Education level,
duration with the bank, Occupation, 24 hours ATM banking services, and Accessibility.
All these were dummy variables and thus reference categories were constructed
accordingly for each variable. The dependent variable studied was Satisfaction on
savings account which was also categorical and ordered from positive to negative (i.e,
very satisfied, satisfied, somehow satisfied and not satisfied.

The study involved a sample of 70 respondents, who were all CRDB bank customers
with savings account that had varying individual characteristics of age, education,
occupation and sex. Questionnaires were the main data collection tools, together with
minor observation that assisted in noting some signs of satisfaction or dissatisfaction on
savings account from the respondents.

Management of the collected data was done by some statistical packages like SPSS,
STATA, and Ms Excel. Various statistics and percentages were obtained including the
ordered probit estimation results on the variables included in the study.

The study findings showed that education level, mainly university education was the
main driving factor of customer satisfaction on savings account. This meant that, the
probability of being satisfied with savings account decreased with increases in education
level. The study identified the main benefits that customers enjoy through their savings
account which were; affordable opening and operating balances, free money transfer and
24 hours ATM banking services. Upon making analysis of the recent developments in
savings account towards enhancing accessibility, it was discovered that, ATM cards
were accessible to 100% customers with savings account, followed by Simbanking that
was accessible to 47.10% of the respondents and lastly internet banking that was
accessible to only 17.10% of the respondents.

vi
 ABBREVIATIONS

ATM - Automatic Teller Machine

CRDB - Commercial Rural Development Bank.

SPSS - Statistical Package for Social Sciences

vii
 TABLE OF CONTENTS

CERTIFICATION ..............................................................................................................i
DECLARATION .............................................................................................................. ii
COPYRIGHT ................................................................................................................... iii
ACKNOWLEDGEMENT ................................................................................................iv
DEDICATION ................................................................................................................... v
ABSTRACT ......................................................................................................................vi
ABBREVIATIONS; ....................................................................................................... vii
LIST OF FIGURES ..........................................................................................................xi
LIST OF TABLES .......................................................................................................... xii

CHAPTER ONE .............................................................................................................. 1

1.0 Introduction and problem setting. ............................................................................ 1
1.1 Background information .......................................................................................... 1
1.2. Problem statement. .................................................................................................. 2
1.3 Objectives of the study: ............................................................................................ 3
1.3.1 The main objective. ........................................................................................... 3
1.3.2 The specific objectives ...................................................................................... 3
1.4 Hypotheses ............................................................................................................... 3
1.5 Significance of the study. ......................................................................................... 4
1.6 Scope of the study: ................................................................................................... 4
CHAPTER TWO ............................................................................................................. 5
LITERATURE REVIEW................................................................................................ 5
2.1 Definitions of Concepts ........................................................................................... 5
2.1.1. Customer satisfaction. ...................................................................................... 5
2.1.2 A Product ......................................................................................................... 5
2.1.3 Savings account ................................................................................................ 6
2.1.3 Banking ........................................................................................................... 6
2.1.5 Mobile banking (sim banking) ; ........................................................................ 7

viii
 2.1.6 Internet banking ................................................................................................ 8
2.1.7 Tembo cards (ATM cards); ............................................................................... 9
2.1.8 ATM (Automatic Teller Machine) .................................................................... 9
2.2 Product development and customer satisfaction for commercial firms ................... 9
2.3 Importance of customer satisfaction in firms: retention, loyalty and profitability 11
2.4 Empirical literature review. .................................................................................... 13
CHAPTER THREE ....................................................................................................... 18
RESEARCH METHODOLOGY ................................................................................. 18
3.0 Study Area .............................................................................................................. 18
3.1 Research design ...................................................................................................... 19
3.2 Sample and Sampling Techniques ......................................................................... 19
3.3 Data collection methods ......................................................................................... 20
3.4 Data analysis .......................................................................................................... 21
3.5 Research model ...................................................................................................... 21
3.6 The estimated model; ............................................................................................ 21
CHAPTER FOUR .......................................................................................................... 23
PRESENTATION RESULTS, ANALYSIS AND DISCUSSION OF FINDINGS .. 23
4.1 Introduction ............................................................................................................ 23
4.1.1 The profile of respondents .............................................................................. 23
4.2 General Customer satisfaction levels on savings account...................................... 24
4.3 Ordered Probity Regression Analysis. ................................................................... 25
4.4 Savings Account Benefits and Customer Satisfaction ........................................... 29
4.4.1 Affordable opening and operating balances:................................................... 29
4.4.2 Online shopping; ............................................................................................. 30
4.4.3 Free money transfer: ....................................................................................... 31
4.4.4 24 Hours ATM banking services; ................................................................... 32
4.4.5 Foreign currency account facility; .................................................................. 33
4.4.6; Competitive interest rates............................................................................... 35

ix
 4.5 Recent developments in savings account towards enhancing accessibility and
satisfaction.................................................................................................................... 36
4.5.1. Mobile banking (sim banking). ...................................................................... 36
4.5.2 Internet banking facility; ................................................................................. 37
4.5.3 ATM cards (Tembocard visa or Mastercard ) ................................................. 38
CHAPTER FIVE ............................................................................................................ 40
CONCLUSION AND POLICY IMPLICATIONS ..................................................... 40
5.0 Conclusion ............................................................................................................. 40
5.1 Policy implications. .............................................................................................. 41
REFERENCES ............................................................................................................... 42

x
 LIST OF FIGURES

Figure 1: Conceptual framework……………………………………...………………16

Figure 2: Customer satisfaction on savings account……………...… …………………24

Figure 3: Proportion of respondents on affordable opening and operating balances…...29

Figure 4: Satisfaction levels on affordable opening and operating balances…………...30

Figure 5: Proportion of respondents with respect to online shopping…………………..30

Figure 6: Customer satisfaction levels on online shopping………………………….….31

Figure 7: Satisfaction levels on 24 hours ATM banking services……………………....33

Figure 8: Proportion of respondents on foreign currency based savings account….…...34

Figure 9: Satisfaction levels on foreign currency account facility……………………...34

Figure 10; Proportion of respondents and competitive interest rates………………..….35

Figure 11; Satisfaction levels on competitive interest rates………………………….…35

Figure 12: Proportion of respondents’ accessibility to Simbanking………………...….36

Figure 13: Satisfaction levels on Simbanking facility……………………………...…...37

Figure 14: Proportion of respondents’ accessibility to Internet banking…………...…..37

Figure 15: Satisfaction levels on Internet Banking…………………………………......38

Figure 16: Satisfaction levels on ATM cards……………………………………...........39

xi
 LIST OF TABLES

Table 1: Characteristics of respondents according to Gender………………………......20

Table 2: Age profile of respondents……………………..………………………......….23

Table 3: Characteristics of respondents according to Education level……………….…23

Table 4: Occupation of Respondents ………………………………………..………….24

Table 5: Results of Ordered Probit on Customer satisfaction with savings account....…26

Table 6: Frequency of accessibility on free money transfer………………....……...…..32

Table 7: Free money transfer satisfaction levels…………………………………......…32

Table 8: 24 hours ATM banking services…………………………………...……...…..32

Table 9: Proportion of accessibility to ATM cards……………………….....……...…..39

xii
 CHAPTER ONE

1.0 Introduction and problem setting.

1.1 Background information

The banking industry is highly competitive, with banks not only competing among each
other; but also with non-banks and other financial institutions such as insurance
companies and micro credit institutions (Kaynak and Kucukemiroglu, 1992; Hull, 2002).
Traditionally banks have relied on savings and current accounts as key products for
ordinary customers. The challenge has been that mostly these products are fairly easy to
duplicate and when banks provide nearly identical services, they can only distinguish
themselves on the basis of price and quality (David et al, 2006). Therefore product price
and quality are seen as the main areas which matter most not only when customers
choose specific banks but also get satisfied which is also an indicator of customer
loyalty and commitment to a bank. (Hull, 2002). Customer loyalty to a bank can be
thought of as continuing patronage over time. The degree of loyalty can be gauged by
tracking customer accounts over defined time periods and noting the degree of
continuity in patronage (Yi and Jeon, 2003). However, in the market place, the
occurrence of committed and often inherited relationships between a customer and his or
her bank is becoming increasingly scarce (Lee and Feick, 2001).Thus, service providers
need to ensure that, they satisfy their customers in order to induce commitment and
hence increase the chance of attracting others and retaining the existing ones. Kotler
P(2000) stated that, the key to customer retention is customer satisfaction because, a
highly satisfied customer stays loyal longer, talks favorably about the company and its
products, pays less attention to competing brands and advertising.

As part of self reflections, customers ask themselves about the level of the services and
decide about the lack of importance given to them and decide about repurchase behavior
after using the services Ross (1995).According to Jamal and Kamal,(2004), the level of
satisfaction is always high when the customer gives minimum price and gets maximum
1
of usage and profit. Thus, Customer satisfaction can be considered as the essence of
success in today's highly competitive world of business and is increasingly becoming a
corporate goal as more and more companies strive for quality in their products and
services. In this context, an understanding of customer satisfaction’ is of great
significance to banking industry (Fox and Poje, 2002).

1.2. Problem statement.

The banking industry in Tanzania has passed through a process of reforms since 1990s
as part of wider global macroeconomic transformations. The reforms have mainly based
on general regulatory and structural functioning of modern banks which aimed at
ensuring financial discipline, less bureaucracy, sound capital structure, effective risk and
loan portfolio management. (Marthur 1994). However, traditional measures of business
growth have focused on sales volumes, profit margins and productivity, many a times
leaving out satisfaction of both internal and external customers (Ross 1995).

Porter (1980) used five forces framework to analyze the relationship between
competition, product development and customer satisfaction as one of combined strategy
for business competitiveness. More specifically, Barnes (2011) linked product
development and customer focus as leverage where competition is a result of low
product differentiation among competitors. Similarly, considering knowledge on
customer satisfaction as a comparative advantage gives the bank an account of how well
its services are meeting the expectations of its customers. No bank will afford to miss
that knowledge which is critical for future competitive strategy (Murdock et al 1986).

CRDB Bank Plc has developed a number of products as part of strategies to improve
customer satisfaction. Such products include; Savings account, Current account, Malkia
account, Junior Jumbo Account and Tanzanite account(CRDB Bank 2011).Although
these products were developed and are developing for specific types of customers, as it
has been a tradition, savings account stands out to be the major driving product in terms
of attracting customers (CRDB Bank 2011). Savings account being the focus of the

2
study has developed over time from mere deposits and withdraws to internet banking.
Notable evidence suggests that this has been the main reason as to why there is
mushrooming of many branches, agencies and teller service points (CRDB 2010).
Elangoran and Sabitha (2002), Mihelis etal(1999), and Gaur(2009) conducted
comparable studies on customer satisfaction and incorporated in them several influential
variables such as education level, occupation, age and income. Therefore, this study
aims at making a continuity from where the fore named researchers ended, by adding
some variables which are Accessibility, 24 hours ATM banking services and Duration
with the bank which possibly have an influence on customer satisfaction in savings
account.

1.3 Objectives of the study:

1.3.1 The main objective of the study was to assess the level of customer satisfaction on
savings account as well as identification of the main benefits that customers acquire
through it.

1.3.2 The specific objectives were;

i) To identify the main savings account benefits
ii) To examine recent developments in savings account put in place towards
enhancing accessibility.
iii) To assess recent developments in savings account put in place towards
enhancing accessibility.
iv) To assess the extent of satisfaction on savings account to customers.

1.4 Hypotheses

The study was guided by the following hypotheses;

1. H1= the higher the age of the respondent, the higher the satisfaction level
2. H2= the higher the level of education, the higher the satisfaction level
3. H3= the longer the duration with the bank, the higher the satisfaction level

3
 4. H4=the higher the accessibility to the account, the higher the satisfaction level
5. H5=Occupation of the respondent is significant to satisfaction level
6. H6=24 hours ATM banking services is significant to satisfaction level
7. H7=Customers are significantly satisfied with savings account

1.5 Significance of the study.

An accurate assessment of the levels of customer satisfaction on savings account will

allow bankers to set priorities of where and what may be improved, as this creates a
conducive environment of selling and extending the bank products and services at large.
Also, identification of the facilities offered through savings account that satisfy
customers will serve as a guideline for the formulation of policies on the quality of bank
products. Moreover, the assessment of customer satisfaction on bank products will
improve the already existing literatures pertaining to this field of knowledge due to the
new findings that will be acquired. And lastly, benefit the researcher in the partial
fulfillment of the requirements for the award of a degree of Bachelor of Economics,
Economic policy and Planning of Mzumbe University.

1.6 Scope of the study:

The study was confined to assessing customer satisfaction on bank products, specifically
on savings account. The research involved a single bank’s customers i.e. CRDB in
Morogoro. The problem under study was viewed as it was at the time when the research
was being conducted (January to March 2013). It is relevant to any other bank product

4
 CHAPTER TWO

LITERATURE REVIEW

2.1 Definitions of Concepts

2.1.1. Customer satisfaction.

The existing definitions and approaches define customer satisfaction as, “an overall
judgment that a customer makes after consuming a product or a service”. It is perceived
as a psychological state (feeling) appearing after buying and consuming a product or
service, (Oliver, 1997). According to him, customer satisfaction does not mean only
positive feeling (satisfaction) but could also lead to a negative (dissatisfaction) or neutral
(indifference) feeling withdrawn from consuming a product or a service.

When approaching customer satisfaction as a feeling, it is important to note that it is

mostly influenced by the customer’s experience with the firm and product. In this
perspective, customer satisfaction is conceived as “the emotional state that occurs as a
result of a customer’s interactions with the firm over time” (Anderson et al. 1994) Cited
by Verhoef (2003, 32). In fact, customers are usually comparing the product received
from the firm to their own expectations over time. If the product fulfils and performs the
customer’s expectations, customer seems to be satisfied. Briefly, customer’s satisfaction
is analyzed as a confirmation or not of customer expectations (Oliver M, 1997).

2.1.2 A Product

In Kotler P (1998), it is defined as ‘‘any marketable thing with some utility in it,
produced either by labor or through a series of automated processes that can be offered
to satisfy a need or a want’’. According to him, products can be categorized into two
major groups which are Consumer and Business products. The fore category refer to
products bought to satisfy an individual’s personal needs or wants, and the later refer to
products used to manufacture other goods or services to facilitate an organization’s
operations or to resell to other consumers. It is further stated that, the product is the

5
firm’s reason for being and all firms are in the business of satisfying customer needs and
they do this for their product.

2.1.3 Savings account

Akran G (2002) defines them as accounts provided by a bank for individuals to save
money and earn interest on the cash held in that account. It can be used to save money
for specific expenses or for longer term defined goals, all while earning interest on the
money in the account. With respect to CRDB savings account, it can be operated by
individuals at or above 18 years of age, both men and women. The minimum opening
balance amounts to 20,000/= while the operating balance amounts to 5,000/= for
accounts operated in Tanzanian shillings, and 100$ for accounts operated in dollars, and
100 EURO for accounts operated in EURO. Interests in this account accrue at the end of
June annually, and vary from year to year. It is through this mode of saving that
customers are assured of security of their cash. (CRDB 2011). With a basic savings
account, a customer can make as many deposits as he/she likes. And can usually
withdraw as much as one likes when he/she needs the money (CRDB 2010).

2.1.3 Banking

Generally, it implies to the business activities of accepting, and safeguarding money

owned by other individuals and entities and then lending out this money in order to earn
a profit.( Akran G ,2002). It also refers to the business of keeping money for savings and
checking accounts or for exchange or for loans and credit issuing. These services can be
conducted through different channels including at the bank premises, online, through
mobile phones, at bank branches, and through Automated Teller Machines etc. (Tiwari
and Buse 2006). The financial intermediary that carries out the above mentioned
activities is what is known as a Bank. Banks’ activities can be divided into retail
banking, dealing directly with individuals and small businesses; business banking,
providing services to mid market business; corporate banking, directed at large business
entities; private banking, providing wealth management services to high net worth

6
individuals and families and investment banking , relating to activities on financial
markets. Some of the bank products include savings account, credit cards, debit cards,
personal loan, ATM cards, Business loan, and Current account. Most banks are profit
making, private enterprises, however, some are owned by the government. Due to their
influence within a financial system and an economy; banks are generally highly
regulated in most countries. Most banks operate under a system known as Fractional
reserve banking where they hold only a small reserve of the funds deposited and lend out
the rest for profit. (Macesich. G. 2000).

2.1.5 Mobile banking (sim banking)

Sometimes called m-banking, refers to an application that enables people to use their
mobile telephones to manipulate their bank accounts, store value in an account linked to
their handsets, transfer funds, or even access credit or insurance products. By
complementing services offered by the banking system, such as checkbooks, ATMs,
point-of-sale networks, and internet resources, the mobile platform offers a convenient
additional method for managing money without handling cash (Karjaluoto, 2002).
Financial institutions which have had difficulties in providing profitable services
through traditional channels to clients see m-banking as a form of “branchless banking”
(Ivatury & Mas, 2008).

There is no universal form of m-banking; rather, purposes and structures vary from
country to country. The systems offer a variety of financial functions, including
micropayments to merchants, bill-payments to utilities, and long-distance remittances.
Currently, different institutional and business models deliver these systems. Some are
offered entirely by banks, others entirely by telecommunications providers, and still
others involve a partnership between a bank and a telecommunications provider (
Porteous, 2006).

CRDB bank is striving daily to fasten accessibility into customer accounts, thus enabling
customers get bank services despite of the areas they will be. This is through mobile

7
banking, which is known as Simbanking. This facility enables customers under
Vodacom, Zantel, and Tigo, to easily carry out major banking transactions (eg, inquiring
bank balance, transfer of funds etc) by simply using their cell phones or mobiles soon
after the customers contract their nearest branches for authorization. (CRDB 2011)

2.1.6 Internet banking

Internet banking, also known as online banking, refers to a number of ways in which
customers can access their banks without having to be physically present at a bank
branch. It is a service that enables people to carry out most of their banking transactions
using a safe website, which is operated by their respective banks. It provides many
features and functions to their customers, and enables them to view their account
balance, transfer money from their account to another account (be it in their respective
bank or any other bank), and also viewing their account summary, as well as enabling
people to purchase and or sell products or services (on line shopping) or using any
similar public electronic network (Rampur S. etal, 2000)

In this procedure, many financial transactions can be carried out by simply utilizing a
computer with an Internet connection. The necessary things that a person needs for using
online banking are, an active bank account with balance in it for transactions, debit or a
credit card number, customer's user ID, bank account number, the Internet banking PIN
number, and a personal computer with access to the web. (Madsen L et al, 2000)

People using Internet banking are certainly benefited by the online services their
respective banks are providing them with simply because they are allowed to bank at
non-working hours.

With regards to the password authentication and encryption, high security is maintained,
as there is a chance of hackers getting unauthorized access to the customer's account and
performing malpractices. However, banks keep their online security systems up-to-date

8
to prevent such scenarios. Moreover, banks also suggest their customers to keep on
changing passwords periodically. (Hazel P and Raphael Z, 2001)

The Internet banking facilities provided by banks differ from bank to bank, and country
to country, and thus proper care has to be taken regarding the confidential documents as,
Internet banking frauds are on an increase.(Madsen L etal,2000)

2.1.7 Tembo cards (ATM cards)

They are either Visa card or MasterCard. They are enhanced banking cards which allow
customers to withdraw cash from domestic and international ATMs as well as making
purchases in outlets without hassles of carrying cash. With these cards, customers can
have access to their accounts daily, wherever and whenever. (CRDB 2010)

2.1.8 ATM (Automatic Teller Machine)

Is a computerized telecommunications device that enables the clients of a financial

institution to perform financial transactions without the need for a cashier, human clerk
or bank teller. Most ATMs are connected to interbank networks, enabling people to
withdraw money from machines not belonging to the bank where they have their
accounts or in the countries where their accounts are held (enabling cash withdrawals in
local currency). ATMs rely on authorization of a financial transaction by the card issuer
or other authorizing institution via the communications network. Many banks
charges ATM usage fees. In some cases, these fees are charged solely to users who are
not customers of the bank where the ATM is installed and in other cases, they apply to
all users.(wikipedia)

2.2 Product development and customer satisfaction for commercial firms

Product development refers to a creation, innovation, utility enhancement or continuous

improvement of earlier features (design, service etc) of an existing product or

9
developing ( ie manufacturing of an entirely new product ) to satisfy the requirements of
its end users or consumers( Kotler P,2002).

In Doyle P (1995), it is noted that, product development takes place, works or functions
as under (a) The creation of an entirely new product or upgrading an existing product by
exploring all possibilities and outcomes (b) Innovation of a new or an existing product to
deliver better and enhanced services to the end users (c) Continuous improvement of a
new product or enhancing an existing product by giving preference to satisfy the demand
of the end users and lastly enhancing the utility of an existing product or upgrading
features for personal or commercial use to the defined goal(objective).

Corporate and retail banks are facing competition from new entrants and innovative
business models. Going forward, innovation is perceived as the key to growth and
competitive differentiation. Only those banks that can successfully develop new
products, services and channels in response to the changed market environment will
survive. This is supported by the findings of a recent survey of European retail banks
conducted by the European Financial Management Association, which state that 4 out
of 5 respondents said that innovation was extremely important for achieving growth
and efficiency.

In addition to that, Ticko and Lace (2010) emphasize that, the competitive power and
survival of a bank lies in the degree of its customer satisfaction. Customers also want the
best value for their money, and are sparing no efforts in selecting the best products and
services.

A good product development process allows firms to deal progressively with intensive
competition when facing challenges from a rapidly changing market condition. It is
through continued innovation that companies try to gain sustainable competitive
advantage and customer satisfaction, which ultimately boosts productivity and

10
profitability of entrepreneurs, and thus creates new business opportunities and brings
growth (Wheelwright S, 1995).

According to Koch (2006) financial innovation is the catalyst behind the evolving
services industry and the restructuring of financial markets. Innovations take the form of
new products, and services, new organizational forms and new delivery systems. Thus,
to maintain their competitive advantage, institutions should take a closer look on how
they handle and satisfy their customers, and thus should modify means by which they
offer their products and services.

Product development is thus a potential source of customer satisfaction hat enhances

competitive advantage for many firms (Brown & Eisenhardt, 1995). It is also important
because, probably more than acquisition and merger, it is a critical means by which
members of organizations diversify, adapt and even reinvent their firms to match
evolving market and technical conditions. Thus, product development is among the
essential processes for success, survival and renewal of organizations, particularly for
firms in competitive markets (Schoonhoven, Eisenhardt & Lyman, 1990).

2.3 Importance of customer satisfaction in firms: retention, loyalty and profitability

Loyalty and retention are often analyzed as direct consequences of customer satisfaction.
The two terms express “the attachment a customer feels for a company’s people,
products, and services. A loyal customer is someone who makes regular purchases,
purchases across product and service lines, refers others, demonstrates an immunity to
the pull of the competition” Griffin (1995) cited by ( Churchill 2002) . Financial and
marketing studies have supposed that satisfied customers constitute an important asset of
firm. Even if there is not much empirical evidence, it seems that customer satisfaction
will enhance both customer loyalty and retention through repeated purchases, less price
sensitivity and costs reduction.

11
Muffato and Panizzolo (1995) state that customer satisfaction is considered to be one of
the most important competitive factors for the future, and it is the best indicator of a
firm’s profitability. Again, customer satisfaction drives firms to improve their reputation
and image, reduce customer turnover, and to increase attention to customer needs and
create barriers to switching, and improve business relationships with their customers.
Therefore service excellence, meeting client needs, and providing innovative products
are essential to succeed in the banking industry. Leeds (1992) acknowledged that
approximately 40 percent of customers switched banks because of what they considered
to be poor service. Customer satisfaction has for many years been perceived as key in
determining why customers leave or stay with an organization. Managers need to know
how to keep their customers, even if they appear to be satisfied as unsatisfied customers
may choose to switch , because they do expect to receive better service elsewhere
(Reichheld, 1996) .

In fact, when customers are satisfied , they become more loyal and will increase their
level of purchasing from the firm over time ( Anderson and Sullivan 1993, Reichheld
1996), they will also recommend other customers to consume the firm’s products and
services . Thus, “the positive word of mouth that satisfied customers generate influences
other consumers’ future purchases” (Anderson 1996). Satisfied customers are also
expected to be “less likely to defect to competing products as a result of lower prices”
(Fornell et al. 1996). For this reason, “greater customer satisfaction may enable firm to
charge higher prices or at least to better resist downward pressure on prices” (Anderson
1996 , Narayandas 1998) . Briefly , “ a satisfied customer reacts less sensitively to price
changes and is prepared to pay a higher price for a service that corresponds to their
requirements and conceived ideas” ( Korauš 2002, Anderson et al .2004 , 172).

Customer satisfaction will also exert a positive impact on firm’s costs through retention.
Indeed, by satisfying customers, firms a will lower their actual costs avoiding gaining
new clients and making extra marketing expenses. . In fact, “ with client retention,
institutional costs decrease as the institution needs to do less marketing, less new client

12
orientation, and fewer new client background checks, staff productivity increases
because loan officers work with established clients whom they know well, clients
income increases as loan sizes generally increase with experienced clients” ( Waterfield
2006; Korauš 2002).

Briefly, by satisfying their customers, “firms will generate benefit for themselves
beyond the present transaction and the current moment. These benefits will arise from
the positive shaping of the satisfied customer’s future behavior” (Anderson 1996) cited
by (Gruca and Lopo, 2005)

2.4 Empirical literature review.

Several academicians have attempted to conduct various studies on customer satisfaction

in relation to banks and their products and services. Below are some of the notable
evidences that can be compared with the study under consideration.

Gaur A (2009) conducted a research on customer satisfaction regarding home loans and
it involved two banks, ICICI and SBI in India. The main objective of the study was to
make a comparative study of satisfaction of the borrowers from the selected banks in the
state of Haryana. The researcher used a sample of 120 borrowers from different parts of
the cities selected covering different age groups, employment status and income group
as well as education criteria. Satisfaction was categorically subdivided into 4 categories
i.e. fully satisfied, satisfied, dissatisfied and totally dissatisfied. The variables observed
were true commitment, competitive rates, better repayment and Easy accessibility. Upon
correlation it was found out that, Easy accessibility was the most significant factor at 5%
level of significance to members of both banks. Also the study revealed that, most
borrowers were satisfied with the home loans. 14% and 25% of borrowers from SBI
bank ICICI banks respectively were fully satisfied, while 25% of borrowers from
ICICI bank and 3% from SBI were satisfied.

13
Anand S. and Selvaraj M (2002) studied on Impact of Demographic Variables on
Customer satisfaction in banking products and services. The study was conducted in
East India, and they used structured questionnaire survey of 50 customers to study the
Association between Age, Education level, Income, Occupation, and Personal Choice of
Bank with the status of the residential area. Methods used in data analysis involved
percentage analysis, chi square test and descriptive analysis. The study revealed that
there is no significant relationship between the demographic variables of respondents
and satisfaction level except personal choice of bank with the status of the residential
area.

Mihelis G etal (1999) studied on customer satisfaction measurement in the private

banking sector in Greece. The main focus of the study was to access the critical
satisfaction dimensions and the determination of customer groups with distinctive
preferences. The main satisfaction criteria consisted of Personnel of the bank, Products,
Bank image, Services and Access. The study had a total of 303 customers, and it was
found out that Access had 69.5% influence on customer satisfaction. It was discovered
that Private Customers were not satisfied by the offered special services.

Gan C. (2011) in the study on Empirical analysis of New Zealand bank customers’
satisfaction investigated on the factors influencing bank customers satisfaction as well
as the banks overall satisfaction levels. A total of 425 customers were used as the
sample. The study used Multiple Regression analysis and was guided by an empirical
model that had the following variables; Corporate image, Perceived value, Service
Quality, Gender, Middle Age, Old Age, Middle education, High education,
Occupation2, Occupation3, High income, Middle Income, Ethniocity1 and Ethnicity2.
The estimation results concluded that service quality, corporate image, high income,
middle income, old age, and self employment were positive and significant at 1%, 5%,
and 10% levels. The research revealed that most customers were satisfied with the banks
services and products.

14
Elangoran K. and Sabithal M (2011) conducted their study upon the association of Age,
Education level, Income and Occupation on Customer satisfaction. The researchers
employed questionnaires as the data collection methods and percentage analysis as the
data analysis technique. At the ultimate end of the study, it was discovered that among
all variables studied and analyzed; only income had an impact on satisfaction levels of
customers. Education, Age and Occupation had no significant relationship with
satisfaction

Figure 1; Conceptual framework

INDEPENDENT VARIABLES DEPENDENT VARIABLE

Age

Education level

Occupation
CUSTOMER SATISFACTION
ON SAVINGS ACCOUNT
Duration with the bank

Accessibility

24 hours ATM banking services

Source; researcher 2013

The conceptual framework above shows the relationship that exists between the two
variables (Dependent and independent). Customers differ in preferences, feelings and
choices. What satisfies one particular customer may dissatisfy the other customer, and
the opposite holds water. So the above framework shows the major factors that drive

15
customers’ satisfaction on savings account. It also implies that, for a customer to be
satisfied with his/her savings account it will depend upon;

Age level

This represented different respondent age groups which were; age from 18 to 28 years,
age from 28 to 38 years, age from 38 to 48 years, age from 48 to 58 years and 59 years
and above. All conclusions drawn were made with reference to the group of respondents
with the age from 18 to 28 years. All these groups were taken into consideration because
banks have different types of customers and thus a respondent belonged to one of the
stated levels.

Education level

This represented different levels of education attained by respondents which were

primary secondary, college, university, and illiterates. The conclusions drawn in the
study were done with reference to primary education.

Occupation

This represented different types of activities that the respondents were engaged in which
included business, farmer, employed and others e.g. students. The group of those
employed was treated as the reference category

Duration with the bank

This represented different time periods that the respondents had been with CRDB and
thus obtained their financial services at that bank. The categories were, less than a year,
from 1 to 2 years, from 2 to 5 years, and more than 5 years. Satisfaction levels were
expected to vary among respondents in relation to duration because long term customers
have more experience on the respective bank’s products and service and thus can assess
on their performance as well as quality.

16
 Accessibility

This comprised of all other available alternatives that respondents could use in the
course of getting access into their account despite the availability of ATM cards. These
were simbanking and internet banking. From these, four categories were created that
included none (meaning those customers that used neither simbanking nor internet
banking), simbanking only, internet banking only, and both simbanking and internet
banking, treating none as the reference category.

24 hours ATM banking services

This represented the services that the respondents could get from ATMs which included
cash withdrawal, balance inquiry and easy deposits without inconveniences. This was
categorized representing only two decisions that were yes or no, if the respondents got or
missed the service. Those who did not get the service were treated as the reference
category

17
 CHAPTER THREE

RESEARCH METHODOLOGY

This chapter encompasses a systematic presentation of the research techniques that the
study employed. The methodology includes the choice of the research design, sampling
technique, and data collection techniques.

3.0 Study Area

Introduction about CRDB BANK

CRDB BANK LIMITED is a wholly owned private commercial bank in Tanzania. The
bank was established on July 1st 1996 to succeed the former Cooperative and Rural
Development Bank (CRDB), which was a public institution with majority of shares held
by the Government of the United Republic of Tanzania. The succession was a result of
the liberalization of the banking industry in Tanzania. (CRDB 2010).

The bank is owned by over 11,000 shareholders among them Private individuals
claiming 37 percent; Co operatives 14 percent; Companies 10.2 percent; DANIDA
investment fund 30.0 percent and Parastatals (National investment corporation and
Public Pension Fund) with 8.8 percent. The authorized share capital of CRDB Bank Plc
is Tshs 20.0 billion and presently the paid up capital is Tshs 12.3 billion. Ever since its
foundation, the bank has been recording progressive profit every year, and has paid
dividends annually. The Bank reached an important milestone recently and was listed in
the Dar es Salaam Stock Exchange on 17th June, 2009. (CRDB 2010).

So far, the bank has grown and prospered over the years to become innovative, first
choice and trusted bank in the country offering a comprehensive range of Corporate
Retail Business, Treasury, Premier and Wholesale Microfinance services. This is
accomplished through a network of 66 Branches, ATMs, Depository ATMs, Mobile
branches, Sales point terminals, Call Centre and Scores of Microfinance partner

18
institutions. In addition to this, the bank also operates through Internet and Mobile
Banking services (CRDB 2011).

CRDB Bank limited is a bank that cares for its customers and has the capacity to advice
its clients. It is a bank committed to responsible development of Tanzania’s economy
and society by financing only environmentally friendly projects. (CRDB 2010).The
study was conducted at CRDB Morogoro under Business and Personal Banking
departments. The reason for carrying out the study at CRDB Morogoro was that, the
researcher conducted her field practices there, under business and personal banking
departments, and so it could be easier to collect data pertaining to the study topic.

3.1 Research design

This study employed cross sectional study design because it looked at the phenomenon
as it was at the time when the research was being conducted, and thus enabled the
researcher to gather all necessary information from the respondents.

3.2 Sample and Sampling Techniques

The study included CRDB bank customers, both internal (workers/bank staff) and
external (normal customers with savings account) as they were the targeted groups
pertaining to the topic of study, ie customer satisfaction. A total of 70 customers were
consulted and issued with questionnaires. Out of these,10 were bank staff representing
five departments, with a random selection of 2 workers from each department at the
bank branch, ie personal banking, customer service, business banking, microfinance and
premier banking. The 60 respondents represented normal customers that visited the
personal banking department during business hours who were obtained by selecting the
first 6 customers from each of the ten days of data collection. These type respondents
were consulted simply because it is under this department that queries and all issues
regarding savings account are dealt and so the right group of respondents was met, hence
appropriate information in accordance with the study topic

19
Table 1; characteristics of respondents according to gender

Sex No of respondents Percentage

Female 27 38.6

Male 43 61.4

Total 70 100

3.3 Data collection methods

In the complete course of conducting this study, the researcher collected and made an
analysis to both primary and secondary data. Primary data was gathered through;

Questionnaires: The questionnaires were well structured, and administered with an aim
of knowing exactly the customers perceptions and satisfaction levels, as well as
identifying the benefits and facilities enjoyed by them through their savings account
without leaving out their views and ideas on issues that they would like the respective
bank to make a rectification upon or improve with respect to the savings account. These
were filled by both men and women with minimum age of 18 years that have savings
accounts at CRDB bank.

Interview; This was also conducted by the researcher conversation wise to the
respondents as it enabled the researcher to get access to additional data from customers
that would help in supplementing the questionnaires as a means of fulfilling the desired
objectives highlighted before.

Observation; This method was administered in order to note some signs of satisfaction
or dissatisfaction from the customers that visited the bank for different issues and
queries, thus helping in adding flesh and weight to the collected information.

Secondary data was obtained through documentary review, and the main types of
documents that were reviewed are customer’s reports on complaints, Annual Reports,

20
personnel manuals and journals that were found at CRDB as well as written reports on
related studies conducted earlier with relevant information pertaining to the study topic.

3.4 Data analysis

The complete course of managing the data in order to produce meaningful quantitative
results was done through several software and statistical packages that are STATA and
SPSS. The fore was specifically used in running the estimated model in order to identify
the correct influence of the explanatory variables ie education, age, time of stay with the
bank,24 hours ATM banking services and accessibility on customer satisfaction with the
savings account. The later enabled the researcher in coding as well as conducting
statistical analyses, and creating tables and charts. It also enabled the management of the
variables that were being studied, since they were all qualitative and so categories
(dummy variables) were successfully created among each variable.

3.5 Research model

General econometric model (Mother model)

Yi= β0+ β1X1+ β2X2+ β3 X3+ β4 X4 + β 5 X5 + β6X6 + Ut

Where: Yi represented the dependent variable which was customer satisfaction on

savings account, and X1 to X6 representing the independent variables (age, education
level, occupation, 24 hours ATM banking services, time of stay with the bank and
accessibility.) and Ut being the error term(all other factors that influence customer
satisfaction on savings account thet were not included in the model) .

3.6 The estimated model;

An ordered probity model was regressed for the purpose of this research. This category
of regression model was chosen because the dependent variable (customer satisfaction)
was categorical. In estimating the model, the qualitative variables were all turned into
quantitative variables by creating dummy variables under various categories

21
respectively. Gurin approach was also incorporated in the study because it gives an
answer to a satisfaction question with a minimum of two categories.

Thus

SWBi* = α + βXk+ µ

SWBi = ν ↔ πν ≤ SWB*< π ν +1

Where SWB (Subjective wellbeing) is the answer to the satisfaction question, SWB * is
an unobserved latent variable, i represents the individual, ν are the discrete categories (1
to 4), πν are two estimated intercept terms, Xk is the set of explanatory variables of
wellbeing (satisfaction) and ,µ is the usual error term.(Dimoso,2010).

Thus, the estimated model was

Yi = β0+ β1D1+ β2D2+ β3 D3+ β4 D4 + β 5 D5 + β6D6 + Ut

Yi=1 if customers are very satisfied with savings account

Yi=2 if customers are satisfied with savings account
Yi=3 if customers are somehow satisfied with savings account
Yi=4 if customers are not satisfied with savings account
Β0 = Intercept term
Β1 to β4 = Parameter coefficients
D1 = Age
D2 = Education level
D3 = Occupation
D4 = Duration with the bank
D5 = Accessibility
D6 = 24 hours banking services from ATMs

22
 CHAPTER FOUR

PRESENTATION RESULTS, ANALYSIS AND DISCUSSION OF FINDINGS

4.1 Introduction
This chapter gives a systematic presentation, analysis and detailed discussion of the
research findings pertaining to the data collected at CRDB Morogoro in relation to the
study topic ie, Assessment of customer satisfaction on bank products, with savings
account being the main focus of the study. This part was presented as a means to provide
evidence of the research that was carried out, as well as evidence of the fulfilled
objectives and answers to the hypotheses stated. It is also a basis for conclusion making
and giving out recommendations.

4.1.1 The profile of respondents

Table2 ; The age profile of respondents
Frequency Percentage
Age from 18 to 28 years 25 11.4
Age from 28 to 38 years 20 28.6
Age from 38 to 48 years 16 17.1
Age from 48 to 58 years 28 40
59 years and above 2 2.9
Total 70 100
Source; research findings

Table 3: Education level of respondents.

Frequency Percentage
Primary education 8 11.4
Secondary education 20 28.6
College education 12 17.1
University education 28 40
Illiterate 2 2.9
Total 70 100
Source; research findings
23
Table 4; Occupation of the respondents
Frequency Percentage
Business 14 20
Farmer 5 7.1
Employed 38 54.3
Others 13 18.6
Total 70 100
Source: Research findings

4.2 General Customer satisfaction levels on savings account.

This section gives facts on whether the CRDB bank customers are satisfied with their
savings accounts that they have been operating so far and the respective satisfaction
levels. Satisfaction is a function of so many factors, others being human and others
being situational such as influence of family members and peer groups. This part gives
facts on the major driving forces of customer satisfaction on savings account that were
studied which are age, education level, occupation, time of stay with the bank,
accessibility, and 24 hours ATM banking services.

Figure 2; customer satisfaction levels on savings account

10% very satisfied

20%
satisfied
37.14% somehow satisfied
32.86%
not satisfied

Source; Research findings

As it can be seen in the pie chart above, 10% of the respondents were very satisfied,
37.14% were satisfied, 32.89% were somehow satisfied, 20% , equivalent to 14
respondents were not satisfied . Thus it shows that most respondents were satisfied with
24
their accounts. Some respondents were not satisfied because of some reasons such as
repeated ATM card defectiveness problems, hence inconveniences when on journey
because , and sometimes forced to take risk of carrying a lot of money with them since
they can’t get such services from ATMs. Another problem was the issue of salary taking
too long to be deposited into the respondents’ accounts.

4.3 Ordered Probity Regression Analysis.

This section represents ordered probity regression analysis of customer satisfaction on

savings account against age, education level, duration with the bank, occupation,
accessibility and 24 hours ATM banking services. In interpretations and identifying the
driving factors of customer satisfaction, the P value, which is (the lowest significance
level at which a null hypothesis can be rejected), will be used. Thus, basing on the
ordered probit regression results that will be obtained, for a given p value, when
multiplied by 100% if the resulting figure exceeds 10%, then that respective factor is
statistically insignificant, meaning that the variable has no influence on customer
satisfaction. A resulting P value of less than 5% but greater than 1% implies that, the
respective variable has almost 95% influence on variation of customer satisfaction. In
other words it is statistically significant at 5% level of significance.

 The model guiding the ordered probity regression analysis was as follows

Yi = β0+ β1D1+ β2D2+ β3 D3+ β4 D4 + β 5 D5 + β6D6 + Ut

Yi=1 if customers are very satisfied with savings account

Yi=2 if customers are satisfied with savings account
Yi=3 if customers are somehow satisfied with savings account
Yi=4 if customers are not satisfied with savings account
 Β0 = Intercept term
 Β1 to β4 = Parameter coefficients
 Da1 = Age

25
  Da2 = Education level
 Da3 = Occupation
 Da4 = Duration with the bank
 Da5 = Accessibility i.e., simbanking, internet banking
 Da6 = 24 hours banking services from ATM

Table 5: Results of ordered Probit on customer satisfaction in savings account

Yi(customer Coefficient Std Error Z P>|z| 95% Conf.

satisfaction) Interval
0.252
Dage1 -.4031509 0.3517138 -1.15 1.092497 0.2861946
0.154
Dage2 -0.6137954 0.43014 -1.43 1.456854 0.2292636
0.240
Dage3 -0.718905 0.6116605 -1.18 1.917738 0.4799276
0.340
Dage4 -0.7086063 0.7433461 -0.95 -2.165538 0.7483253
-0.136
Dedu1 -0.7672595 0.5140651 -1.49 -1.774808 0.2402895
Dedu2 -0.9593403 0.5994343 -1.60 0.110 -2.13421 0.2155293
Dedu3 -1.358121 .5643194 -2,41 0.016 -2.464166 0.2520749
Dedu4 0.4714851 1.133425 0.42 0.677 -1.749987 2.692957
Dtime1 0.4932124 0.7773624 0.63 0.526 -1.03039 2.016815
Dtime2 0 .8129524 0.7297985 1.11 0.265 -0.6174264 2.243331
Dtime3 1.029317 0.7301316 1.41 1.159 -0.4017144 2.460349
Docc1 -0.4771486 0.4120561 -1.16 0.247 -1.284764 0.3304664
Docc2 0.2150353 0.6602129 0.33 0.745 -1.078958 1.509029
Docc3 -0.4652743 04568039 -1.02 0.308 -1.360594 0.430045
Datm -1.107866 0.9029836 -1.23 0.220 -2.877682 0.6619492
Dacc1 0 .1906947 0.3498588 0.55 0.586 -0.495016 0.8764055
Dacc2 -0.5928156 0.7687062 -0.77 0.441 -2.099452 0.9138209
Dacc3 0.2953785 . 0.4750351 0.62 0.534 -0.6356731 1.22643

Source; Research findings

26
The results above showed that, the only driving factor of customer satisfaction on
savings account was education level ie university education. This is so because its P
value of 0.016 implies that, the variable was statistically significant at 5% level. Since
all other variables have P values exceeding 10%, then, they are all statistically
insignificant. Thus; age level, duration of stay with the bank, 24 hours ATM banking
services, accessibility and occupation had no influence on the levels of customer
satisfaction with respect to savings account.

Education level and customer satisfaction on savings account

The variable Education was dummy, with four categories, Dedu1, Dedu2, Dedu3 and
Dedu4 having primary education as the benchmark category.

The coefficient of Education level (Dedu1) = -.7672595. This indicates that, satisfaction
on savings account for customers with secondary education decreases by 0.77 units
compared to those with primary education. These results are logical simply because a
secondary education customer is a bit more knowledgeable in comparison to the one at
primary level, and would expect to see better services and a little bit of improvement in
bank products.

The P value corresponding to Dedu1 = 0.136. This means that secondary education is
not significant in explaining the variation of satisfaction levels of customers in savings
account. These results were unexpected, and are contrary to what has been narrated in
the coefficient value above, this is so because the sample corresponding to this level of
education was very small in comparison to other levels.

The coefficient of Education level (Dedu2) = -0.9593403 This indicates that satisfaction
on savings account for customers with college education decreases by 0.96 units in
comparison to those with primary education. This is also logical because a customer
with college education has a wider base of knowledge, and is a bit exposed to many
things in comparison to the customer with primary education, and thus is at least able to

27
note the differences in bank performance as well as products that is why the coefficient
depicted a negative value.

The P value corresponding to Dedu2 = 0.110. This means that college education is not
significant in explaining the variation of satisfaction level of customers in savings
account at either1%, 5% or 10%.

The coefficient of Education level (Dedu3) = -1.358121 This indicates that the
probability of being satisfied with savings account for customers with university
education decreases by 1.36 units compared to those with primary education. These
results are also logical simply because, customers with university education are analysts,
and are exposed to many more things in comparison to those with primary education,
and thus are in a position of knowing more about banks and their products with their
respective qualities. Hence, their satisfaction levels in savings account is lessened
because they are in a position of making a daily follow up of their accounts, and are also
capable of making comparison with other banks in their environments. Thus would
expect banks to move and change at the same pace with technological advancements and
care for customers in a better way.

The P value corresponding to Dedu3 = 0.016. This means that university education is
significant at 5% level in explaining the variation of satisfaction level of customers in
savings account. Thus for a customer to be satisfied with savings account, it will depend
with the education level he or she has.

The coefficient of Education level (Dedu4) = 0.4714851. This indicates that, satisfaction
with savings account for customers that are illiterate increases by 0.5 units compared to
those with primary education. This is also logical because an illiterate customer knows
not how to analyze issues, note changes and thus is happy when he or she just saves his
cash in a bank.

28
The P value corresponding to Dedu4 = 0.677. This means that this variable is not
significant at any of the three significance levels i.e. 1%, 5% or10% in explaining the
variation of satisfaction level of customers in savings account.

4.4 Savings Account Benefits and Customer Satisfaction

The researcher made an assessment on the benefits acquired by customers through

CRDB savings account which were;

4.4.1 Affordable opening and operating balances:

These were a minimum of 20,000/= and 5000/= ,100 US Dollars and 100 EURO
respectively for savings accounts operated in Tanzanian shillings, US Dollars as well as
EURO respectively.

Figure 3; proportion of respondents on affordable opening and operating balances

21.40%
no

78.60% yes

Source; research findings

The above pie chart shows that, 15 respondents which are equal to 21.40% don’t enjoy
affordable opening and operating balances. It also reveals that, 55 respondents which are
equal to 78.6% get this benefit.

29
Figure 4; Satisfaction levels on affordable opening and operating balances.

40.00%
30.00%
20.00%
10.00%
0.00%
very satisfied satisfied somehow satisfied not satisfied

Source: research findings

The above results reveal that, of the 55 respondents who enjoy affordable and operating
balances 18.2% of them were very satisfied, while 32.72% were satisfied, 34.5% were
somehow satisfied and 14.5% being dissatisfied. This implies that most the respondents
were satisfied with the balances, since they were amounts that most respondents could
afford.

4.4.2 Online shopping;

This was also among the benefits that the customers with savings account were able to
get. Below is the summary of the findings based on the research conducted.

Figure 5; proportion of respondents with respect to online shopping

12.86%

do online shopping

dont do online
87.14% shopping

Source; research findings

30
The results above reveal that, 87.14% of the respondents did not get access to online
shopping, which is equal to a total of 61 respondents, while 12.86% did online shopping.
These statistics were of this nature because; most people are not literate enough on
internet services in making online purchases and orders. Also, majority of the
respondents were not sure of their accounts and cash security when performing such
transactions, as a result, most found it better to perform such transactions physically at
the bank branches.

Figure 6; Customer satisfaction levels on online shopping

11.10%

do on line shopping and

satisfied
88.90% do on line shopping and
not satisfied

The above results show that, of the 9 respondents that did online shopping, 8 of them
which is (88.90%) were satisfied, while 1 respondent which is equally(11.10%) % of
them were not satisfied. This shows that this service is provided in good standards and
that is why most of those who acquire it are satisfied.

4.4.3 Free money transfer:

This was also another benefit that the respondents with savings account enjoyed. The
results reveal that, of the 70 respondents, 38 of them got the benefit while 32 didn’t get
the benefit .The other table also shows that, of the 38 people that recognized the benefit,
35 of them were satisfied while 3 respondents were dissatisfied.

31
Table 6; frequency of accessibility on free money transfer

No of respondents Percentage
no 32 45.7

yes 38 54.3

Total 70 100

Source; research findings

Table 7; Free money transfer satisfaction levels

Frequency Percentage
Very satisfied 4 10.3
satisfied 15 39.5
Somehow satisfied 16 42.1
Not satisfied 3 7.9
Total 38 100
Source ; research findings

4.4.4 24 Hours ATM banking services;

Some of them included cash withdrawal, balance inquiry, easy deposit, and pin number
changes. Below is a summary of the findings on the attainment of 24 hours ATM
banking services and the respective satisfaction levels.

Table 8; 24 hours ATM banking services

No of respondents Percentage
No 2 2.9

yes 68 97.1

Total 70 100

Source; research findings

32
The findings reveal that 68 respondents, which cover 97.1%, got 24 hours ATM banking
services while 2 people (2.9%) didn’t get the services. All these that missed the services
are an example of those customers who opened accounts and never collected their cards
at the respective bank branches till they were returned to the card production
departments, or had defective ATM cards that could not work in ATMs, or went to
nearby ATMs during network inconveniences and so could not get the services they
wanted, or forgot their ATM security codes, hence capturing of their cards by the ATMs
and some had had their cards lost or stolen. So could not get the services.

Figure 7; satisfaction levels on 24 hours ATM banking services

50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
very satisfied satisfied somehow satisfied not satisfied

Source; research findings

The graph above shows that, of the 70 respondents; 4 of them which cover 5.71% were
very satisfied, 28 of them which cover 40% were satisfied, 21 of them which cover
30% were somehow satisfied, 17 of them that covered24.9% were not satisfied with
ATM services. Generally, 65 respondents, which were equal to 92.9%, were satisfied
with ATM services.

4.4.5 Foreign currency account facility

This was also among the benefits and worked as an opportunity that the respondents or
customers with savings account were made open to. These were operated in US dollars,
Euro or Pounds.

33
Figure 8; Proportion of respondents on foreign currency based saving accounts

14.29%
have no foreign currency
based savings accounts
have foreign currency
based savings accounts
85.71%

Source; research findings

The pie chart above shows the findings of the proportion of customers that had savings
accounts that were operated in foreign currency i.e. some were operated in US dollars
while others in Euro and Pounds. The results reveal that, out of 70 respondents, 60 of
them which cover (85.71%) had no accounts operated in foreign currency. In other
words, this was the group of respondents that had savings accounts operated in
Tanzanian Shillings. On the other side, 10 respondents which cover (14.29%) had
accounts operated in foreign currencies.

Figure 9; Satisfaction levels on foreign currency account facility

60%
50%
40%
30%
20%
10%
0%
very satisfied satisfied somehow not satisfied
satisfied

Source; research findings

As it can be seen from the graph above, out of 10 respondents that had savings accounts
operated in foreign currency, 5 of them, which cover (50%) were very satisfied, 3
respondents, equivalently (30%) were satisfied, and 2 of them that cover 20% were
somehow satisfied. None of them was dissatisfied, thus, revealing that CRDB savings

34
accounts operated in foreign currencies are of standards that are satisfactory and meet
customers’ need.

4.4.6; Competitive interest rates

Figure 10; proportion of respondents and Competitive interest rates

do not get competitive

35.70% interest rates
64.30% get competitive
interest rates

Source; research findings

25 respondents got interest rates while 45 respondents did not get competitive rates

Figure 11; Satisfaction levels on Competitive interest rates

40%
30%
20%
10%
0%
very satisfied satisfied somehow not satisfied
satisfied

Source; research findings

From the figure above, out of the 25 respondents that got interest rates, 9 respondents
were satisfied, 5respondents were somehow satisfied, and 11 respondents were not
satisfied.

35
4.5 Recent developments in savings account towards enhancing accessibility and
satisfaction

4.5.1. Mobile banking (sim banking).

This was a facility that enabled customers to perform various transactions through their
mobile phones.

Figure 12; Proportion of respondents’ accessibility to simbanking facility

have access to simbanking

47.10%
52.90%
have no access to
simbanking

Source; research findings

The results above show that, out of 70 respondents, 37 of them which covered 52.9%,
had no access to simbanking facility while 33 respondents which covered 47.1% had
access to simbanking facility. The reasons for lack of accessibility among the 37
respondents were; lack of awareness on the availability of the service, lack of mobile
phones among some respondents and limited simbanking services to a single
telecommunication company which was Vodacom. This reason made customers that
belonged to Tigo, Airtel as well as Zantel networks not to register their phone numbers
for simbanking enabling since they could not get access to some of the important
transactions like money transfer.

36
Figure 13; Satisfaction levels on simbanking facility

40%
30%
20%
10%
0%
very satisfied satisfied somehow satisfied not satisfied

Source; research findings

The graph above shows the satisfaction levels of the 33 respondents that had access to
simbanking in order from positive to negative.0ut of these, very satisfied, 15% were
very satisfied, 33.3% were satisfied,36% somehow satisfied and 15% were not satisfied.
This can also be concluded more than 84.8% of the respondents were satisfied with
simbanking facility.

4.5.2 Internet banking facility;

This service enabled customers to reach their accounts as well as perform various
transactions, request for statements while at home or in any other place that is
convenient through the internet or World Wide Web (www)

Figure 14; Proportion of respondents’ accessibility to internet banking facility

17.10%
no access to internet
banking
82.90% have access to internet
banking

Source; research findings

37
The results above show that, 58 respondents which covered 82.90% had no access to
internet banking while 12 of them which covered 17.1% had access to internet banking.
Lack of this facility to more than three quarters of the total respondents was attributed by
low level of knowledge on computers by many respondents, fear of hackers from
tempering with their accounts, as well power rationing problems and network
inconveniencies in some areas.

Figure 15; Satisfaction levels on internet banking

80.00%
60.00%
40.00%
20.00%
0.00%
very satisfied satisfied somehow satisfied not satisfied

Source; research findings

The results above show that, out of the 12 respondents that had access to internet
banking, 2 respondents that covered 16.7% was very satisfied with the service, 7
respondents that covered 58.3% were satisfied, 2 of them which covered 16.7% were
somehow satisfied, and the rest 1 respondent which covered 8.3% were not satisfied.

4.5.3 ATM cards (Tembocard visa or Mastercard )

Table 9; proportion of respondents’ accessibility to ATM card

No of respondents Percentage
no 0 0

yes 70 100

Total 70 100

Source; research findings

38
The above table shows that, out of the 70 respondents, all of them i.e. 100% got ATM
cards. This means that, the bank works hard in ensuring that all customers get ATM
cards so that they can use them in the ATM machines that are located in many areas as
well as other banks that accept visa and MasterCard in solving cash deficiency problems
and emergencies

Figure16; Satisfaction levels on ATM cards (tembocard visa and MasterCard)

60.00%

40.00%

20.00%

0.00%
very satisfied satisfied somehow satisfied not satisfied

Source; research findings

The above results show that, 51.4% were very satisfied with their cards, 25 respondents
that covered 35.7% were satisfied, 8.6% were somehow satisfied and 3 respondents that
covered 4.3% were not satisfied. Thus, it can be concluded that, 95.7% of the
respondents proved that, the ATM cards issued to them were satisfactory.

39
 CHAPTER FIVE

CONCLUSION AND POLICY IMPLICATIONS

5.0 Conclusion
The main objective of the study was to assess the level of customer satisfaction on
savings account as well as the identification of the main benefits that customers acquire
through it.

The findings from the study revealed that, customer satisfaction on savings account was
influenced by the level of education that the customer had acquired, and the most
significant level of education was university education. Also, in general 80% of the
respondents were satisfied with their savings account at CRDB. The main benefits that
customers enjoyed through their accounts were affordable opening and operating
balances, free money transfer and 24 hours ATM banking services. It was also revealed
that, 100% of the respondents had accessibility to ATM cards, 47.10% had access to
simbanking and 17.10% had access to internet banking. The proportion with respect to
simbanking was that low because full mobile banking services were limited only to one
Telecommunication company which was Vodacom despite the availability of other
telecommunication companies such as Tigo, Airtel,and Zantel.

The regression results revealed that Accessibility and 24 hours ATM banking services
had no influence on customer satisfaction in savings account, this happened unexpected
and one of the reasons could be the sample size that was used in the study. Logically, a
customer that has access to his account at any time when a need arises despite of the
location is satisfied with the account being operated. This is because it is through all
these means that customers are assured of successful transactions, and availability of
cash during emergencies and thus making life simple and thus saving time.

40
5.1 Policy implications.

Banks should ensure network problems are worked upon to reduce inconveniences that
happen in ATMs when people need banking services. Ensuring that will also enable all
those using simbanking and internet banking to perform successful transactions. By
doing so, customer complains will be minimal and daily banking transactions will be
successfully completed, hence improving efficiency.

Also, full simbanking services should be extended to most if not all telecommunication
companies like Tigo, Airtel and Zantel and not only with Vodacom as it is currently.
This will simplify and save time to all those customers that have to visit the banking
halls daily in order to get services they need, as they will be in a position to carry out
such transactions wherever they will be.

The bank should lower a bit the charges imposed on customer accounts when
performing transactions like cash withdrawals, both in ATMs as well as in banking halls,
and uplift the interests that are accrued in the respective accounts. Having so many
charges make customers find information about other banks, and thus, the chances of
switching increase.

Vendors for the respective ATM cards, ie MasterCard and Visa cards should maintain
the quality of the cards, and the bank should make close follow up on this because
producing cards whose chip is very delicate increases inconveniences to customers and
forces all those with similar problems take risks of having a lot of cash at hand to cater
for their daily requirements since, card problems hinder them from accessing ATM
services.

Education to customers on various bank products and services should be emphasized, in

order to make large masses of customers aware of the changes and innovations that are
taking place daily within banks.

41
 REFERENCES

Anderson, E., Fornell, C., et al (2004). Customer Satisfaction and Shareholder Value.
Journal of Marketing, 68. 172-185.

Anderson, E., Sullivan M. (1993). The Antecedents and Consequences of Consumer

Satisfaction for Firms. Mark. Sci., 12:125-43.

Barnes, J. G. (2001). Secrets of Customer Relationship Management: It's All About How
You Make Them Feel. New York: McGraw-Hill. CGAP. Cited on
10.1.2013, 2.00pm

Churchill, G. A. & Surprenant, C. (1982). An investigation into the determinants of

customer satisfaction. Journal of Marketing Research. 19(4). 491-504

Electronic Banking; From A Prudential Supervisory Perspective, Deutsche Bundes bank

Monthly report, December 2000 sited on 19.01.2013

Forell, C., Mithas, S., et al (2005). Customer satisfaction and stock prices: high returns,
low risk”, Journal of Marketing. 70. 3-14.

Fox, M. and Poje, M. (2002). ‘Churn: are rural telcos immune? (Telecommunication
service providers and customer relations), Rural Telecommunications, 21:
20-24.

George, M. (2000). Issues in Money and Banking. Praeger Publishers.

Gruca, T., and Rego, L. (2005). Customer satisfaction, cash flow and shareholder
value”, Journal of Marketing, 69 , 115-130.

Hazzel, P. and Raphael. (2001). Internet banking disruptive or sustaining technology,

The Banker.

42
http;//en.wikipedia.org/wiki/Automated-teller-machine cited on 20.12.2012. 4.00pm

Hull, L. (2002). Foreign-owned Banks: Implications for New Zealand's Financial

Stability, Discussion Paper Series, – DP2002/05

Ivatury, G. & Mas, I. (2008). The early experience with branchless banking.
Washington, DC.

Jamal, A. & Kamal, N. (2004). Customer satisfaction and retail banking: An assessment
of some of the key antecedents of customer satisfaction in retail banking,
Int. J. Bank Mark, 20(4). 146-160

Kotler, P. (2002). Marketing Management, (10th edition). Prentice Hall,

Karjaluoto, H. (2002). Selection criteria for a mode of bill payment: Empirical

investigation among Finnish bank customers. International Journal of
Retail & Distribution

Kaynak, E., & O. Kucukemiroglu (1992). Bank and Product Selection: Hong Kong, The
International Journal of Bank Marketing, 1992. – Vol 10, No. 1. – pp. 3-
17.

Korauš, M. (2002). Quality of services in the financial sector and types of client
behavior”, BIATEC, Volume X.

Cronin, J. J. & Taylor, S. A. (1992). Measuring service quality; A re-examination and

extension. Journal of Marketing, 56(3), 55-68.

Lawrence Madsen, Bruno Pereira, and Jeffrey Dawson. (2000). E-banking: Latin
Amercian Banks Go Online; Institutional Investor, Management, 30(6),
331-339.

43
Lee, J. & Feick, L. (2001). The impact of switching costs on the customer satisfaction–
loyalty link: Mobile phone service in France. Journal of Services
Marketing.

Oliver, L. (1997). Satisfaction: A Behavioral Perspective on the Consumer. New York:

The McGraw-Hill Companies.

Oliver, M. (1997). Processing of the satisfaction response in consumption: A suggested

framework and research proposition, Journal of Consumer Satisfaction,
Dissatisfaction and Complaining Behavior, 2: 1-16.

Porteous, D. (2006). The enabling environment for mobile banking in Africa. London:
DFID. cited on 9.12.2012, 10.00pm

Porter, M. E. (1980). Competitive Strategy: Techniques for Analyzing Industries and

Competitors, New York: The Free Press

Savings Account Operating Manual for CRDB Bank 2010- 2012

Teas, K. (1994), Expectations as a comparison standard in measuring service quality: An

assessment of a reassessment, Journal of Marketing, 58, 132-139

Rajnish T., Stephen B. (2006). The Mobile Commerce Prospects: A Strategic Analysis
Opportunities in the Banking Sector: Hamburg University Press

Verhoef, P. (2003). Understanding the effect of customer relationship Management

efforts on customer retention and customer share development, Journal
of Marketing, 67. 30-45

www.crdb.com cited on 19.11.2012

www.crdbintranet.com cited on 11.2.2013

44
 APPENDICES

APPENDIX 1

QUESTIONNAIRE.

ASSESMENT OF CUSTOMER SATISFACTION ON BANK PRODUCTS:

A STUDY OF SAVINGS ACCOUNT AT CRDB IN MOROGORO.

Dear Customer,

Welcome to CRDB bank Morogoro. I hope you do enjoy our services.

As our esteemed customer, I kindly request you to spend some few minutes of your time
to fill this questionnaire so that we can get your opinion on satisfaction of services you
get through our savings account. Your opinion will be highly valued as we strive to
improve our services beyond your needs and expectations.
The information you give is confidential, and will not be used by any other person and
your name will not be mentioned anywhere. . Please submit the filled in questionnaire
to…………..Thank you for participating in this study and have a good day.

1. Your age is between: (A)18-28 (B) 28-38 (C)38-48 (D)48-58 (E)59 and
above
2. Your Gender (1 ) Male (2) Female
3.
4. Your Educational level is
1) Primary ( 2)Secondary ( 3)College (4) University (5) None
5. Your occupation is
1) Business ( 2) Farmer (3) Employed 4)Others, please specify
6. How long have you stayed with CRDB?
(1)Less than a year (2) 1 – 2 years (3) 2-5 years (4)More than 5 years

7) Do you get the following facilities through your savings account?

45
A. Sim Banking. YES/NO (Please Tick)
If the answer is YES, to what extent are you satisfied? (Tick only One)
1) Very satisfied (2) Satisfied 3) Somehow satisfied (4) not satisfied.
If the answer is NO, give reasons……………………………………………………

B. Internet Banking : YES/NO

If the Answer is YES, to what extent are you satisfied?
(1) Very satisfied (2) Satisfied 3) Somehow satisfied (4) not satisfied
If the answer is NO, give reasons………………………………………………………

C. Tembocard Visa and Mastercard: YES/NO

If the Answer is YES, to what extent are you satisfied?
(1) Very satisfied (2) Satisfied 3) Somehow satisfied (4) not satisfied
If the answer is NO, give reasons…………………………………………………………

D. Foreign currency account facility: YES/NO

If the Answer is YES, to what extent are you satisfied?
(1) Very satisfied (2) Satisfied 3) Somehow satisfied (4) Not satisfied

E. Online shopping: YES/NO

If the Answer is YES, to what extent are you satisfied?
(1) Very satisfied (2) Satisfied 3) Somehow satisfied (4) Not satisfied

8. Do you enjoy the following benefits through your savings account? (Tick NO or YES)

A . Free money transfer: YES/NO

If the Answer is YES, to what extent are you satisfied?
(1) Very satisfied (2) Satisfied 3) Somehow satisfied (4) Not satisfied

46
 B. Affordable Opening and operating balance: YES/NO
If the Answer is YES, to what extent are you satisfied?
(1) Very satisfied (2) Satisfied 3) Somehow satisfied (4) Not satisfied.

C. 24 hours banking services through ATMs: YES/NO

If the Answer is YES, to what extent are you satisfied?
(1) Very satisfied (2) Satisfied 3) Somehow satisfied (4) Not satisfied
If the answer is NO give reasons……………………………………………………

D. Competitive interest rates: YES/NO

If the Answer is YES, to what extent are you satisfied?
(1) Very satisfied (2) Satisfied 3) Somehow satisfied (4) Not satisfied

9. As a conclusion, to what extent would you say you are satisfied with savings
account?
(1) Very satisfied (2) Satisfied 3) Somehow satisfied (4) Not satisfied

10.Generally what do you think should be improved and how?.........................................

……………………………………………………………………………………
………………………………………………

Thank you very much for your support

47
 APPENDIX 2

STATA OUPUT OF THE ORDERED PROBIT REGRESSION MODEL

ESTIMATION MODEL;
Ordered probit regression Number of obs = 70

LR chi2(18) = 18.02
Prob > chi2 = 0.4543
Log likelihood = -85.227941 Pseudo R2 = 0.0956

------------------------------------------------------------------------------
satisfaction | Coef. Std. Err. z P>|z| [95% Conf. Interval]
-------------+----------------------------------------------------------------
Dage1 | -.4031509 .3517138 -1.15 0.252 -1.092497 .2861956
Dage2 | -.6137954 .43014 -1.43 0.154 -1.456854 .2292636
Dage3 | -.718905 .6116605 -1.18 0.240 -1.917738 .4799276
Dage4 | -.7086063 .7433461 -0.95 0.340 -2.165538 .7483253
Dedu1 | -.7672595 .5140651 -1.49 0.136 -1.774808 .2402895
Dedu2 | -.9593403 .5994343 -1.60 0.110 -2.13421 .2155293
Dedu3 | -1.358121 .5643194 -2.41 0.016 -2.464166 -.2520749
Dedu4 | .4714851 1.133425 0.42 0.677 -1.749987 2.692957
Dtime1 | .4932124 .7773624 0.63 0.526 -1.03039 2.016815
Dtime2 | .8129524 .7297985 1.11 0.265 -.6174264 2.243331
Dtime3 | 1.029317 .7301316 1.41 0.159 -.4017144 2.460349
Docc1 | -.4771486 .4120561 -1.16 0.247 -1.284764 .3304664
Docc2 | .2150353 .6602129 0.33 0.745 -1.078958 1.509029
Docc3 | -.4652743 .4568039 -1.02 0.308 -1.360594 .430045
Datm | -1.107866 .9029836 -1.23 0.220 -2.877682 .6619492
Dacc1 | .1906947 .3498588 0.55 0.586 -.495016 .8764055
Dacc2 | -.5928156 .7687062 -0.77 0.441 -2.099452 .9138209
Dacc3 | .2953785 .4750351 0.62 0.534 -.6356731 1.22643
-------------+----------------------------------------------------------------
/cut1 | -3.11289 1.341913 -5.742991 -.4827885
/cut2 | -1.758635 1.312688 -4.331455 .8141855
/cut3 | -.7113072 1.301136 -3.261486 1.838872
/cut4 | .8670884 1.346794 -1.772579 3.506756

48