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A Thesis Presented To
By:
April 2019
CHAPTER 1
. Banks, nowadays, are vital to people specially to investors because the banking system
acts as a control mechanism for the flow of capital. The management of capital allows banks to
flourish financially, which raises the stock value for shareholders. The banking sector plays a
Investment banks play the role of intermediaries when corporate mergers occur. The
banking establishment may also provide financial consultation and information to companies.
Investment banks deal largely with such investment endeavors as initial public offerings and
private share offerings. Banks offer a safe place where people can store their money so people do
not have to carry excessive amounts of cash. Consumers also use banks to issue wire transfers.
Banks provide underwriting services by attaching the institution's name to a transaction. For
instance, a check with a bank's name on it provides credibility and peace of mind to the person
accepting the payment. The banking sector also issues debit and credit cards for the purchase of
Finance is the life blood of trade, commerce and industry. Nowadays, banking sector acts
as the backbone of modern business and development of any country mainly depends upon the
banking system. The term bank is either derived from old Italian word banca or from a French
word banque both mean a Bench or money exchange table. In olden days, European money
lenders or money changers used to display (show) coins of different countries in big heaps
(quantity) on benches or tables for the purpose of lending or exchanging. A bank is a financial
institution which deals with deposits and advances and other related services. It receives money
from those who want to save in the form of deposits and it lends money to those who need it.
(Akrani, 2011)
Since banks are vital to peoples everyday life, we as the researchers conducted this study
to help enhance the services of the top banks in commercial and government categories, to help
potential customers where to transact their business that is hassle-free, convenient, and efficient,
where after their transaction they will be satisfied on the service offered by the bank, thus,
The criteria in choosing the participants is that all of them have experienced availing car
loan transaction. Questionnaires will be given to them personally after being ensured that the
transaction mentioned above have been experienced first-hand by them. Data will then gathered
and analyzed.
Landbank of the Philippines and Banco de Oro were chosen to be the subject of the study
since both banks are ranked top 1 as to total assets in their categories, LBP for Government and
BDO for Commercial based on Bangko Sentral ng Pilipinas (BSP)’ ranking as to total assets as
This study was anchored on Pettinger (2012) concept on bank transactions which
describes that banks offers services that satisfies the customers’ need in terms of transacting car
loans and loan processing. The target of this study is to be able to assess the bank service offered
by both banks. This is to assist the customer to have maximum understanding on the services
of the participants in different context. Some studies revealed that there is positive relation, other
studies showed negative relation, while evidence exist that there is no relation between them.
Similarly, Petterson (2010) studied the relationship between customer satisfaction and profile of
the participants on the concept of the Customer Satisfaction of Landbank of the Philippines and
Civil Status refers to your family situation. It can mean being single, married, in
Educational Attainment refers to the highest level of education that a person has
successfully completed.
Occupation refers to the activity to which one regularly devotes oneself, especially one's
Convenience refers to the quality of being useful, easy, or suitable for the investor.
Security refers to the safety of a financial institution against terrorism, theft, robbery and
bankruptcy.
Landbank of the Philippines and Banco de Oro meets or surpasses the customer expectation.
Car Loan Services refers to the service offered by banks that allows the customer to have
This study assessed the customer satisfaction of Landbank of the Philippines and Banco
de Oro.
a. Age
b. Sex
c. Civil Status
d. Educational Attainment
e. Occupation
terms of:
Affordability
Accessibility
Convenience; and
Security
a. Age
a. Affordability Car Loan
b. Sex Proposed
b. Accessibility
Services Intervention
c. Civil Status c. Security
d. Educational d. Convenience
Attainment
e. Occupation
Figure 1. Schematic Diagram of the Study entitled “Customer Satisfaction of Landbank of the
Philippines and Banco de Oro in Terms of Car Loan Services in Surigao City”
Hypothesis
level of customer satisfaction when they are grouped according to the stated variables?
The result of the study would be useful to the following sectors of the society:
Investor. The results of the study will serve as knowledgeable information to be used in
their decision where they will transact their car loans in times they need it.
Bank. This study will make the bank realize how factors like accessibility, affordability,
convenience and security of the service can affect the number of possible investors in the society.
The number of investors could affect the profit of the banking institutions because the lower the
number of clients availing the loan service the lower they get profit. The result of this study can
give ideas to the bank on improving their service through which they can gain profit as well as
Future Researchers. This could be used by the future researchers as the result can
contribute ideas and concepts relative to loan services and comparability between banks in the
locality of Surigao.
Prospect Investors. The results of this study will serve as knowledgeable information to
be used in their decision where they will entrust their money to the financial institutions.
Branch Manager. This study will make the branch manager realize that a certain service
on their loans needs improvement; therefore, there is a possibility that they will change their
This study will focus on the customer satisfaction of Landbank of the Philippines and
Banco de Oro in terms of Car Loan in Surigao City. The variables that will be considered in this
study are as follows: Accessibility, Affordability, Convenience, and Security. These are
indicators that can affect the satisfaction in the Customer Satisfaction of Landbank of the
Philippines and Banco de Oro in terms of Car Loan in Surigao City. The participants are the
customers of Landbank of the Philippines and Banco de Oro in Surigao City. This study will be
Definition of Terms
The following include terms and their definition for the readers to better understand the
study.
Car Loan Service. It refers to the transaction where the customer owns a car which lends
money from the bank for personal usage and pays it in specific terms or no. of years.
CHAPTER 2
Banks take customer deposits in return for paying customers an annual interest payment.
The banks then use the majority of these deposits to lend to other customers for a variety of
loans. The difference between the two interest rates is effectively the profit margin for banks.
Banks play an important role in the economy for offering a service for people wishing to save.
Banks also play an important role in offering finance to businesses who wish to invest and
expand. These loans and business investment are important for enabling economic growth. The
main purpose of banks is keeping money safe for customers, offering customers interest on
deposits, help to protect against money losing value against inflation, lending money to firms,
customers and homebuyers, offering financial advice and related financial services, such as
According to Pettinger (2012), a bank can become more profitable by using a percentage
of its deposits to lend to other customers. If a bank pays 2% on bank deposits, but lends money
to firms and consumers at 6%, then it can make a bigger profit on its deposits. A bank just needs
to keep sufficient liquidity to meet the demands of customers to withdraw money. Bank Lending
varies from unsecured personal loans to secured mortgage lending. Unsecured lending tends to
be at a higher interest rate because of the risk factor. Secured mortgage lending is at a lower rate,
According to Heaton(2013), banks issue loans to both people and companies. Without
banks, it would be very hard for people to buy a home or start a business, or for companies to
make investments, As financial intermediaries, they earn enough to support their activities by the
difference between the interest rate paid to savers and the interest rate charged on loans. When
customers make deposits in a savings account, they earn interest on the principal. Similarly,
when customers take out loans, they pay interest on the principal. By charging the borrower a
slightly higher interest rate than that which is given to the depositor, a bank is able to cover its
expenses.
The major business of banks is that of a financial intermediary between savers and
borrowers. The bank simplifies this process by eliminating the need for savers to find the right
borrowers and the right time to directly make a loan. Banks are generally trusted by the public.
When people put their savings into banks, they receive little more than a paper receipt in
return. There are two organizations in place to ensure that banks are trustworthy with individuals'
money and reasonable in the loans that they make. A commercial bank is a financial institution
that provides various financial services, such as accepting deposits and issuing loans.
Commercial bank customers can take advantage of a range of investment products that
commercial banks offer like savings accounts and certificates of deposit. The loans a commercial
bank issues can vary from business loans and auto loans to mortgages. The types of loan a
commercial bank can issue vary and a commercial bank may specialize in just one or a few types
of loans. Commercial banks can offer mortgages, which help borrowers buy homes with the
homes as the collateral backing the loans. They can also issue car loans with automobiles as
collateral. Commercial banks also can engage in issuing personal loans, lines of credit or credit
cards. In addition to the interest it earns on its loan book, a commercial bank can generate
revenue by charging its customers fees for mortgages and other banking services (Pettinger,
2012).
According to Singidunum (2012), marketing mix has both communicative and operative
functions. Communicative function is needed to transfer to users the relevancy of services for
exchange, so that the users, who have opted for that service, can enter the exchange process with
minimal effort.
The overall confidence of clients in the banking industry has been significantly reduced
thus the contacts with their clients through the improvement of bank products and services have
to be re-established by banks. It is important for banks to find an effective way to pay attention
to clients individually and be able to distinguish and analyze financial needs of clients.
A commercial bank is a type of financial institution that accepts deposits; offers checking
account services; makes business, personal, and mortgage loans; and offers basic financial
products like certificates of deposit (CDs) and savings accounts to individuals and small
investment bank. Banks and similar business entities, such as thrifts or credit unions, offer the
most commonly recognized and frequently used financial services: checking and savings
accounts, home mortgages, and other types of loans for retail and commercial customers. Banks
also act as payment agents via credit cards, wire transfers, and currency exchange.
Banco de Oro
industry-leading products and services including Lending (corporate and consumer), Deposit-
taking, Foreign Exchange, Brokering, Trust and Investments, Credit Cards, Corporate Cash
Management and Remittances in the Philippines. Through its local subsidiaries, the Bank offers
Leasing and Financing, Investment Banking, Private Banking, Rural Banking, Life Insurance,
BDO’s institutional strengths and value-added products and services hold the key to its
successful business relationships with customers. On the front line, its branches remain at the
forefront of setting high standards as a sales and service-oriented, customer focused force. BDO
has one of the largest distribution networks, with more than 1,100 operating branches and over
Through selective acquisitions and organic growth, BDO has positioned itself for
increased balance sheet strength and continuing expansion into new markets. As of 31 December
2016, BDO is the country’s largest bank in terms of consolidated resources, customer loans,
deposits, assets under management and capital, as well as branch and ATM network nationwide.
BDO is a member of the SM Group, one of the country’s largest and most successful
conglomerates with businesses spanning between retail, mall operations, property development
BDO’s day-to-day operations are handled by a team of professional managers and bank officers.
Further, the Bank has one of the industry’s strongest Board of Directors composed of
professionals with extensive experience in various fields that include banking, accounting,
finance, law, bank regulations and risk management, strategy formulation and merchandise
marketing.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)
Corporate Governance
fairness, integrity, transparency and performance. This governance philosophy is deeply rooted
in BDO’s corporate culture as it believes that effective governance is a collective effort of its
directors, officers and staff. As such, the Bank upholds the highest standards of ethical behavior
and responsible conduct of business as it protects the interests of and creates value for its
shareholders.
The Bank carries out its corporate social responsibility (CSR) through the BDO
Foundation, the CSR arm of BDO Unibank that promotes initiatives based on the Bank’s long-
standing record of support to social development. The Bank’s corporate social responsibility
focuses on its disaster response advocacy that is achieved through three main interventions,
namely, relief, rehabilitation and reconstruction, particularly in areas affected by natural or man-
made disasters. The Bank’s CSR projects focus on the following: relief operations in disaster-
resettlement areas, multi-purpose halls and school buildings; and support for livelihood projects
Also, the BDO Foundation actively promotes volunteerism among its employees who help
out in the Foundation’s various activities that include, among others, community building,
livelihood/skills training, fund raising, and environmental/green initiatives. Through these, the
Bank hopes that it is able to give back to society and make a positive contribution to the broader
community it serves. For more details, please refer to “ESG - Corporate Social Responsibility”
Environmental Initiatives
BDO imposes limits and monitors exposure to certain industries, e.g., Gaming, Tobacco
and Alcohol, as well as restricts lending to other sectors under the Exclusion List (those deemed
Through its Sustainable Energy Finance (SEF) Program in cooperation with IFC, the Bank
supports green energy investments in Energy Efficiency (EE) and Renewable Energy (RE)
projects. The Bank likewise partnered with the Japan Bank for International Cooperation (JBIC)
for the latter’s Green Facility, a USD50 million relending credit facility open to RE, EE and
As well, BDO has a “Go Green Campaign” implemented across the Bank and its branches
that raises awareness on environmental issues, espouses good environmental practices in the
BDO’s Scanning machine is used to easily upload systemized date for easy access during
customer’s transaction in the bank. This technology has been use for about a year now in NCR
In Surigao, they have recently used this system for about a month now. The bank is still
undergoing training & adoption of the system. With the use of this system, customer’s
transaction would be a lot easier. Transactions would not be longer than 10 minutes (theoretical)
As time goes by, the system will be upgraded with the latest updates and up-to-date
The Land Bank of the Philippines is a government financial institution that strikes a
balance in fulfilling its social mandate of promoting countryside development while remaining
financially viable. This dual function makes LANDBANK unique. The profits derived from its
commercial banking operations are used to finance the Bank's developmental programs and
initiatives.
Over the years, LANDBANK has successfully managed this tough balancing act as
evidenced by the continued expansion of its loan portfolio in favor of its priority sectors: the
small farmers and fishers, a good part of which are agrarian reform beneficiaries; micro and
SMEs; agri- and aqua-projects of local government units and government-owned and controlled
LANDBANK is by far the largest formal credit institution in the rural areas. It also ranks
among the top five commercial banks in the country in terms of deposits, assets and loans.
Based on Bangko Sentral ng Pilipinas (BSP) ranking as to total assets as of December 31, 2018
6. China Bank
increasing associated wealth. This does not include traditional consumer banking. Instead, the
institution focuses on investment vehicles such as trading and asset management. Financing
options may also be provided for the purpose of assisting with these services (Pettinger, 2012).
Mullins & Walker (2010), said that “To gain the knowledge necessary to continually
improve the value of their offerings to customers, firms must understand how satisfied existing
and potential customers are with their current offerings.” This focus of customer satisfaction has
become increasingly important as more firms question whether all attempts to improve absolute
quality of their products and services generate sufficient additional sales and profits to justify
their cost.
(Baumann, et.al 2011), examined the satisfaction of financial institution’s clients which
was based on the overall satisfaction, emotional attitudes towards banks, service quality,
perception of the market situation (costs and benefits of the change) and customer characteristics.
De la Torre, et.al (2010) present the view that SME financing is a very pro table segment
for the commercial banks due to intensifying competition in the other services to the corporate
sectors, and increased competition and the improvement of subsidiaries’ lending technologies
have led banks to gradually expand into the SME and retail markets SME segment can be pro
Investigating the preference and satisfaction level of customers towards loans, deposits
schemes, insurances and value added services rendered by private and public banks in
Shivamogga district. Business and vehicle loans are fast moving than other services and overall
satisfaction resulted in 50%. Further, overall satisfaction on bank deposit schemes resulted
positively while other services of banking still need to be given attention by focusing on
customer issues. New innovative schemes, strategies to cater to non-users and other services
METHOD
This chapter presents the research design, participants of the study, research instrument,
Research Design
This study will use the descriptive method. Survey technique will be used. This method is
considered appropriate to this study because the researchers assessed the banking institutions
offering car loan services in Surigao City particularly in the level of customer satisfaction as a
Participants
The participants of this study will be 25 participants of Landbank of the Philippines and
25 participants of Banco de Oro in Surigao City. They are chosen using a purposive-quota
sampling technique. It is purposive because the researchers will only consider the customers that
have experienced all the financial institutions namely: Accessibility, Affordability, Convenience,
and Security of Landbank of the Philippines, and Banco de Oro in Surigao City. This will ensure
that the participants have enough knowledge and information about the banking institutions’
services offered.
Instrument
The study will use a researchers-made questionnaire as the tool to gather data.
Data Gathering Procedure
The researchers will send a formal letter of request to the college dean, seeking
permission to conduct a survey through the approved questionnaire. A letter of request will be
sent to the head of Landbank of the Philippines, and Banco de Oro asking permission to use their
establishment as subject for this study. Upon approval, the researchers will personally administer
the questionnaires to the informants. Some personal interviews will be conducted to elicit further
data needed in the interpretation and analysis of the results. The questionnaires will be collected
after these are answered. The data gathered from the clients will be sorted, tabulated, and
interpreted.
Ethical Consideration
The researchers will observe ethical considerations while conducting the research to
ensure the protection of the informant’s privacy. The researchers will politely ask the full
consent of the informants prior to the study. All types of communication in relation to the
research will be done with honesty and transparency. The protection of the privacy of research
informants is ensured by the researchers and results of this study are handled with utmost
confidentiality and concern. All gathered information from the informants along with the
information gathered from the other institutions needed for this study are treated with respect and
their privacy will be protected. Representation of primary data findings in a biased way will be
avoided.
Data Analysis
The following are the statistical tools used to answer the problem:
Mean and Standard deviation. These measures will be used to get the level of customer
Analysis of Variance (ANOVA). This tool will be used to test the difference in the level