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A Study on Customer Satisfaction & Service Gaps in Selected Private, Public & Foreign Banks


Prasanta Kumar Padhy


Berhampur University, India

Biranchi Narayan Swar


Symbiosis Institute of Business Management

December 18, 2009

3rd IIMA Conference, Marketing Paradigms for Emerging Economies, Indian Institute of Management, 2009

Abstract:     
The service sector has assumed greater economic importance over the past decade. India is fifteenth in services output. It provides employment to 23% of work force, and it is growing fast, growth rate 7.5% in 1991-2000 up from 4.5% in 1951-80. It has the largest share in the GDP, accounting for 60.7% in 2006 up from 15% in 1950.

Currently, banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The elimination of this waste and meeting customer expectations are the major challenges facing managers these days in the service sector. This is why quality improvement is a vital concern for many service organizations.

This paper examines the salient features of service quality, GAPS Model, SERVQUAL. Each model represents a different approach to quality improvement. The primary aims are to enhance understanding of “service quality” and to identify models that managers in the service industry can employ to improve quality. Also will examine the applicability of alternative measures of service quality in the developing economy of India and assesses related issues in that context.

Quality is increasingly being seen as a key strategic differentiator within the financial services sector, with most major players undertaking some form of quality initiative. The present paper describes work undertaken to determine both retail customer and staff perceptions of those factors which determine service quality. We initially identify the models developed by Parasuraman et al. as being the most appropriate for modeling the data, but find that although the service gap model provides an excellent basis for analysis, the SERVQUAL model is of more limited value. Hence, an alternative basis for modeling service quality based on the three dimensions of process/outcome, subjective/objective and soft/hard have been described and modeled against the experimental data. The paper describes some conclusions of significance for retail banking in particular, and service providers in general.

This study investigates the role that technology plays in banking and its impact on the delivery of perceived service quality. A sample of 440 banking customers was taken and 300 useable questionnaires were analyzed.

The paper presents an empirical study of major quality improvement initiatives recently undertaken by two banks. It provides a useful comparison of the two different approaches, and contributes new evidence on the current debate concerning the validity of the SERVQUAL model. First, it outlines the implementation of the SERVQUAL model in the bank’s subsequent quality improvement programme, as evidenced through the bank’s customer satisfaction endeavors. Second, included for comparative purposes, the paper describes the adoption and implementation of the Crosby’s total quality training programme. In both cases relevant evidence was gathered on staff attitudes. Given the long-term nature of these comprehensive quality programmes, any evaluation must necessarily be tentative, but both banks are able to report an improvement in service quality, and fresh evidence is provided in support of the SERVQUAL model.

The paper argues that one theme that has emerged consistently in the recent services marketing literature is the importance of frontline employees in service delivery. The internal marketing concept is based on the belief that a firm’s internal market/employees can be motivated to strive for customer-consciousness, market orientation and sales-mindedness through the application of accepted external marketing approaches and principles. This paper considers that the objectives of the firm could be achieved by aligning them with the values to frontline employees.

Number of Pages in PDF File: 16

Keywords: Service Quality, Banking Services, SERVQUAL Methodology, GAPS Model

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Date posted: December 22, 2009 ; Last revised: August 30, 2012

Suggested Citation

Padhy, Prasanta Kumar and Swar, Biranchi Narayan, A Study on Customer Satisfaction & Service Gaps in Selected Private, Public & Foreign Banks (December 18, 2009). 3rd IIMA Conference, Marketing Paradigms for Emerging Economies, Indian Institute of Management, 2009. Available at SSRN: http://ssrn.com/abstract=1525555 or http://dx.doi.org/10.2139/ssrn.1525555

Contact Information

Prasanta Kumar Padhy
Berhampur University, India ( email )
Berhampur, Orissa 760007
India
+919437011997 (Phone)
+916802242555 (Fax)
Biranchi Narayan Swar (Contact Author)
Symbiosis Institute of Business Management ( email )
Bangalore
Bangalore, OR 560100
India
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