Role of Total Quality Management and Service Quality in the Banking Industry Faisal Talib* and Zillur Rahman* “University Polytechnic, Aligarh Muelim Univeral, Aligarh “Indian Institute of Technology, Roorkee E-mail fal? ?ayehonco.in, yusufdmitrernein TQM wax inuially applied ax « management philosophy in the manufacturing stor Following its enormous suces, this philosophy i inereaingly being applic inthe service sector ncluding banks reeulting in increased customer eatiafartion| [and oceuvty, improved financial performance, improved cconamiet, and better competitiveness. The purpose of this article isto present an overview of Total Quality Management (TQM) inthe banking sector together with the role of seruice quality in banking services in detail. The findings of the present article provide 3 useful overaiew of TQM implementation and concept of sersice quality in the banking sector. was also found that service quality is an important construct in banking services and iso multidimensional aspect. The scope for fulure work is presented atthe end Keywords Tots! Quality Management, Banking Sector, Seview Quality, Service Industry INTRODUCTION Service industries, especially banking services (also sometimes referred to as financial services) have beccme a mass consumption service. The deregulation of financial services during the 1980s followed by the emergence of low cost competitors using telophone plus now computer technology, and now the use of internet and information systems has further increased competition among themsolves. Banks can only bocome stronger and ‘effective if they come out with better customer service, quality, costs and innovation [1] ‘Today, customers have a wide choice of servieo providers in the market and they opt For the best corvice providers in terms of quality reliability, and profitability who are at parole of Total Qualty Management and Service Quality [nthe Banking Industry 217 with international standards, At this stage of transition, the quality of service will play ft dominant role and is a primary factor in ensuring the survival ofthe service provi fn the global market, The whole coneept is now diverted and concentrated on providing services to customers at par and beyond his expectations, This concept is applicable to fll service industries and las given birth to the concept of TOM in the service sector [2- a. ‘The popularity of TQM has encouraged a numberof organizations viewing its benefits ‘and orgenization performance. Even hard-pressed human resources departments are lunder pressure to improve the quality of their services. It follows that they have sn interest in the application of TQM principles to their functions as well as in seizing the ‘opportunity to play 2 major role in the implementation of total quality programs, particularly in service industries (1). Several research papers have investigated the Framework of TQM implementation [4-7] and results were very productive. Banking services are perhaps the largest industry in the services sector which eater to needs of the different eatogories of people, reflecting the diversity of society. Notably, the service quality of banks tonds to play an important role especially perceived service ‘quality in high-involvement industries like banks (6). Also, banks often have long-term business prospects with their customers. Leading academicians and researchers strongly believes that providing quality service to customers is not only the most important and effective factor for customer satisfaction but also tho essential criterion that measures the competitiveness ofa service organization like banks (8-11). Many studies have proved that the performance of banks is significantly and positively linked with the service ‘quality 12-19], And to achieve service quality in the hanking sector, TQM is very essential (8, 14. ‘The study aims to present an overview of TQM in the banking sector together with. the role of service quality in banking services to achieve organizational excellence in making TQM implementation a success. This study is a contribution to the academic wwork and attempts to provide a useful overview of TQM implementation in the banking tor, Further, the article is organized as follows: the next section describes TQM and vice quality approaches followed by a reviow of service quality in the banking sector, then follows the review of TQM implementation in banking. The last section éiseusee the conclusions of the present audy along with the scope for future work. SERVICE QUALITY IN BANKING [Banik customer perceptions of quality have changed over the past few years. Today quality includes a commitment to continuous improvement and service relationships with customers, measured in terme of customer satisfaction, besides this, the need for technology to support superior quality service ia viewed as boing very important. The ‘adoption of technology in banking ecctar is becoming a strong trend as service providers fare now being urged to invest in technology aa a way of securing their future in the electronic age (15)218 Suply Chan Management for Comptive Aavenage Based on literature review, the euthors identified the following broad eonceptual ‘categories related to banking service quality: + Customer service quality + Banking service product quality + Online/e-service quality. + Automated service quality ‘Customer Service Quality Banking is a high involvement industry. Customers, whether at the rete or corporate level have alwaya been important for banks. Customer satisfaction is highly related with service quality [11] as service quality improves the probability of customer satisfaction, which results in commitment, intent to stay (customer retention), creation of a mutually rewarding relationship (bond) between the service provider and the user, incroased ‘customer tolerance for service failure and positive word-of-mouth advertising about the organization (11, 16). Banks now know that delivering quality service to customers is festential for success and survival in today’s global and competitive banking environment. Tn an era when intense competition is being greatly facilitated by technology, the need for providing adequate service quality will necessitate that banks have to focus attention on isaues of improving, measuring and controlling their service quality and ffciency. Banking organizations, therefore, should emphasize deeper penetration of the fexiating customer database, The data about customer needs and behavior enables organizations to identify today’s Key customers, develop relations with tomorrows customers and estimate their own future investment opportunities, Banking Service Product Quality Bank product quality is primarily associated with product variety and diverse features. Banking service product quality plays a significant role in determining customer's perceptions of the overall banking service quality. Banks have increased emphasis on marketing a wide array of financial services in order to survive in the market due to tough competition [17]. Dixon {18} also argued that the key to getting moro customers for banks through an online service is not Che attraction of the internet itself, but the product offered to customers, Banking customera want variety of functions at one site ‘vith ease like financial transactions, paying bill electronically end automatically, viewing their balance, monthly bank statemente, purchasing shares and insurance, home loans ‘with minimum ratea of interest, purchasing cars snd lands. ‘Therefore, it should be noted that introducing and innovating continuously, the variety of banking service product ‘Quality to the present hi-tech customers, can have unlimited access to financial information and enjoy a wider range of choices in selecting competitive products and financial institutions than ever before. ‘OnlinesnternetE-Service Quality ‘The concept of e-service amerged with the growth ofthe internet and information ‘The growth in internet based services has changed the way that banks and customers