Service quality gap of leading Public Sector Bank

The intent of this paper is to place the overall service quality spread ( Gap 5 ) of a taking Public Sector Bank ( Referred to as ‘The PSB ‘ here after ) , in its corporate banking sector. The paper uses SERVQUAL theoretical account, originally pioneered by Parusuraman to place the overall service quality spread.

Design/methodology/approach:

The sample consists of 30 corporate clients, of the PSB, located in Hyderabad. The research instrument used for informations aggregation is a structured questionnaire. The questionnaire consists of 11 statements related to the 5 service quality dimensions of SERVQUAL theoretical account. Respondents were asked to give their outlook and perceptual experience tonss on these 11 service quality statements. Likert graduated table with equal intervals from 1 to 7 has been used to mensurate both the outlook and perceptual experience degrees of the respondents. Data has been collected from the clients through face-to-face interviews. Appointments were fixed with top executives, particularly those related to finance section, of the proposed sample and their sentiments about the services provided by the bank were gathered.

Findingss:

It was found that that there is a important difference between the expected and perceived service ( Gap 5 ) of the clients of the PSB. Besides, it was found that the expected service is more than the sensed service in four dimensions out of the five SERVQUAL dimensions. So the PSB needs to place the ways to shut the spread and there by addition the client satisfaction degrees. Highest spread mark was found in the dimension ‘tangibility ‘ . So the bank needs to better its service quality a batch on this dimension. The spread scores on the dimensions ‘Responsiveness ‘ and ‘Empathy ‘ are reasonably high. So, the bank needs to better a just sum on these two dimensions. The bank besides needs to see the dimension ‘Reliability ‘ though it is close to the satisfaction grade where as clients are satisfied on the parametric quantity ‘Assurance ‘

Originality/Value:

Service quality provided by the organisation and Customer satisfaction are really of import in the banking sector. Excellent service quality will assist in keeping long term relationships with the profitable client group and therefore increase merchandise keeping among such groups. By mensurating the over all service quality spread utilizing SERVQUAL, the PSB can place the countries in which it can better its service in order to function its clients more efficaciously.

Keywords: SERVQUAL, Gap Scores, Public Sector Bank ( PSB ) , Corporate Banking

Introduction:

India is good positioned to go the 4th -largest economic system in the universe by 2025 [ 1 ] . One of the most of import enablers of the robust growing rate is the banking sector that is able to adequately and expeditiously run into the demands of a turning economic system. The Indian banking industry has several outstanding accomplishments to its recognition in the last three decennaries. The most dramatic is its extended range. Banks in India can be categorized into scheduled Bankss and non-scheduled Bankss. Scheduled Bankss constitute of commercial Bankss and concerted Bankss. The banking sector is dominated by scheduled commercial Bankss ( SCBs ) . Public Sector Banks ( PSBs ) , which are the foundation of the Indian Banking system history for more than 78 per centum of the entire banking industry assets. State Bank of India is the largest bank in India with a market portion of 20 % . On the other manus private sector Bankss in India are witnessing huge advancement. With the finance curate denoting in this budget ( 2010-11 ) that banking licences would be given Non-Banking Financial Institutions the competition is traveling to farther intensify. As the Banking and Financial sector in India is in spread outing and the competition is escalating, there is a demand for the bing Bankss, particularly PSB ‘s, which play a cardinal function in the Indian Banking Sector, to further solidify their place by functioning its present clients more efficaciously and thereby spread out its client base.

Customer satisfaction leads to client trueness and in return translates into addition net income ( Walsh, 2003 ) [ 2 ] . Banks which excel in service quality can hold a distinguishable selling border since improved degrees of service quality lead to higher grosss and increased market portions ( Bowen and Hedges, 1993 ) [ 3 ] . Perceived value determines client satisfaction. Customer perceptual experience about the service quality offered by a house is one of the determiners of the success of the house, as the sensed service quality is the cardinal driver of perceived value ( Collart, 2000 ) [ 4 ] . Customer satisfaction or dissatisfaction is a consequence of is a consequence of the spread between the pre-use outlooks and post-use perceptual experiences about the merchandise or service. Parusuraman et Al. ( 1985, 1988 ) designed a theoretical account called SERVQUAL theoretical account to mensurate the expected service quality, perceived service quality and the spread between them. The standard SERVQUAL theoretical account is framed around 5 dimensions called tangibleness, reactivity, dependability, confidence, empathy. Respondents were asked to give their perceptual experience and outlook mark on each of the service quality statements related to the above 5 dimensions.

This paper, utilizing the SERVQUAL theoretical account, attempts to happen out the perceived and expected service quality degrees of the PSB ‘s corporate clients. Therefore the service quality spread ( Gap 5 ) can be found in which is the difference between the expected tonss and perceived tonss. This will assist the bank to shut the service quality spreads, if any, and function its clients more efficaciously.

Literature reappraisal:

The standard SERVQUAL graduated table was used to mensurate service quality in a assortment of service environments like Retail Banking, Corporate banking, Library Services, Information Systems, Healthcare Sector, Fast Food, Telecommunications, Retail Chains. Research was done in the Malayan Banking Sector ( Mukesh Kumar et al. , 2009 ) [ 5 ] utilizing a modified SERVQUAL theoretical account consists of four critical factors ( dimensions ) as detected by factor analysis. They are: tangibleness, dependability, competency and convenience. The consequences reveal that there are important differences between the respondents ‘ outlook and their perceptual experiences. Among the four dimensions tested, tangibleness has the smallest spread whereas convenience has the largest spread. . In a research based on SERVQUAL, Customer service quality in the Grecian Cypriot banking industry ( Huseyin Arasli et al. , 2006 ) [ 6 ] , it was found that the outlooks of bank clients were non met where the largest spread was obtained in the responsiveness-empathy dimension. Reliability points had the highest consequence on client satisfaction, which in bend had a statistically important impact on the positive word of oral cavity. In a paper, Service quality measuring in the Chinese corporate banking market ( Xin Guo et Al, 2008 ) [ 7 ] , identifies that service quality in Chinese corporate banking is measured by a nested theoretical account, dwelling of two higher-order concepts ( i.e. functional quality and proficient quality ) and four lower-order dimensions ( i.e. dependability, human capital, engineering and communicating ) . A research on library services in Dakshina Kannada and Udipi Districts of Karnataka ( Manjunatha. K et al. , 2004 ) [ 8 ] revealed that there is a important difference between the outlook and perceptual experience tonss of the respondents. The difference was found in all the five dimensions of the SERVQUAL theoretical account. SERVQUAL theoretical account can besides be applied to mensurate the service quality of Police Services. A research on the Scotland Police services ( Mike Donnelly et al. , 2006 ) [ 9 ] concluded that there was a important spread between the expected and perceived tonss of the service quality. A research in the Health Care Sector in Turkey ( Coskun Baker et al. , 2007 ) [ 10 ] concluded that the patients ‘ perceived tonss were higher than expected for an ordinary infirmary but lower than expected for a high-quality infirmary. Young patients had a high-expected service mark spread and a low equal service mark difference. Highly educated patients had a high-expected service mark difference.

Theoretical frame work:

Parusuraman et Al. ( 1985 ) designed a study instrument called SERVQUAL for measuring the service quality along the five service dimensions. The five service dimensions are tangibleness, dependability, reactivity, confidence and empathy. The standard SERVQUAL instrument consists of 22 service quality statements based on the above five dimensions. The respondents are asked to give their expected and perceptual experience tonss on these 22 statements. These tonss are used to execute spread analysis which will assist the service organisation to shut the spread and better the client satisfaction. The spread mark is equal to the difference between the ‘expected mark ‘ and ‘perception mark ‘ ( Gap=E-P ) .

The five dimensions on which the SERVQUAL is framed are given below.

Tangibility:

This dimension is framed on touchable points of service like visual aspect of forces, physical installations, information stuff sing the service and equipment.

Dependability:

This dimension is base on the dependability of clients on the service provided by the service organisation. This point tests the ability of the service organisation to supply the service accurately and faithfully.

Responsiveness:

This dimension is tests the reactivity of the service forces to the clients. It contains points based on the willingness of the service forces to assist clients and supply a prompt service

Assurance:

This dimension tests the competency, courtesy of the service forces, credibleness of the service organisation and security provided by the service organisation. It contains points like accomplishments and cognition of service forces, friendliness, niceness and regard of the service forces, honestness and trustiness of the service forces and service organisation and eventually safety or hazard freeness in covering with the organisation.

Empathies:

This dimension tests – the ability of the service organisation to understand the demands of the clients, the easiness of entree to the service of the organisation and the communicating between the service organisation and the service forces.

The diagram stand foring the SERVQUAL instrument and the five service equality spreads are given below.

Figure: SERVQUAL INSTRUMENT

Gap 1:

Gap 1 is the difference between the direction perceptual experiences about the client outlooks and existent client outlooks. This spread may originate due to the undermentioned grounds:

Excessively much hierarchy in the direction.

Lack of communicating between the service forces and the top direction

Lack of marketing orientation.

Figure: Gap 1

Gap 2:

Gap 2 is the difference between service quality specifications and direction perceptual experiences. This spread is besides called as criterions spread. This spread may originate due to the undermentioned grounds:

Lack of direction committedness to supply equal service quality

Due to the absence of end scene by the direction.

Due to the perceptual experience of the direction that a peculiar criterion can non be achieved.

Figure: Gap 2

Gap 3:

Gap 3 is the difference between service quality specified by the administration and existent service bringing by the organisation. This spread may originate as a consequence of the undermentioned grounds:

Delegating an incapable system or individual for the occupation i.e. because of a hapless engineering or employee tantrum

Lack of supervisory control in appropriate degrees

Inadequate squad work.

Role struggle or function ambiguity

Figure: Gap 3

Gap 4:

Gap 4 is the difference between service bringing and promises made to the clients. This spread might originate as a consequence of the undermentioned grounds:

Lack of communicating between the horizontal sections of the service organisation.

It might besides originate due to the over promises made in order to develop the concern.

Figure: Gap 4

Gap 5:

Gap 5 is the difference between what clients expect of a service and the service really received by them. This spread can be referred as the some of the first four spread. The information:

Figure: Gap 5

Data has been collected from 30 corporate banking clients of a prima PSB. Contact Numberss of the individuals related to the finance section of the 30 companies i.e. , Finance Manager/ Accounts Manager/ Company Secretary were collected. Then they are approached on phone at random to repair an assignment with them in order to roll up meaningful informations for the undertaking. Once the assignment was fixed, concerned people were met face-to-face and got the questionnaire filled-in. In this manner information was collected from the selected sample of 30 corporate clients of the PSB.

Method of analysis:

Customers expected and perceived service quality tonss collected were analyzed utilizing descriptive statistics and mated sample t-test. T distribution is used when two conditions are satisfied. The two conditions are:

The sample size should be 30 or less.

The population standard distribution should be unknown [ 11 ] .

The two conditions are satisfied in our survey hence T distribution is used. Mated sample t trial is used when we are comparing the agencies of two dependant or related samples. Since the expected and perceptual experience tonss are related to same clients therefore paired sample t trial can be used.

The agencies of the client ‘expectation tonss ‘ and ‘perception tonss ‘ on each of the 11 statements for the 30 clients are calculated. These ‘expectation tonss ‘ and ‘perception tonss ‘ of the 11 service quality statements are used as the mated variables in the mated sample t trial. The mated sample t-test has been used to prove the hypothesis – there is no important difference between There is no important difference between the outlooks and perceptual experiences of the clients sing the overall service quality ( Gap 5 ) of the PSB.

The spread tonss for each of the 11 statements are calculated by deducting the perceptual experience scores from the expected tonss ( E-P ) . The expansive agencies of the perceptual experience and outlook tonss on each of the five dimensions were calculated to pull decisions. The service quality spread on each of the five dimensions is besides calculated to look into on comparative spread tonss of those dimensions. The service quality spread on each of the five dimensions is calculated by deducting the expansive average perceptual experience tonss from the expansive mean expected tonss.

Research Hypothesis:

The hypothesis to be tested is as follows:

H1. There is no important difference between the outlooks and perceptual experiences of the clients sing the overall service quality ( Gap 5 ) of the PSB.

Empirical findings:

The findings of the survey are given below.

Descriptive Statisticss:

Respondents were asked to give their perceptual experience and outlook degrees on each of the 11 statements related to the service quality of the bank. The perceptual experience mean tonss, outlook mean tonss and the spread tonss for each of the 11 statements of the 30 respondents are given in the below tabular array

Percept Mean Scores

Expectatation Mean Scores

Gap

Tangibility

A

A

A

Your bank has good connected communicating web

6.8

7

-0.2

Physical installations at the bank are visually appealing

5.7

6.9

-1.2

Materials associated with the service visually appealing

4.9

6.8

-1.9

Dependability

A

A

A

Provides services at the clip it promises to make so

6.2

6.2

0

Insists on error-free minutess

6.2

6.7

-0.5

Responsiveness

A

A

A

Forces give prompt service to clients

6.4

6.8

-0.4

Personnel ever be willing to assist clients

6.4

6.9

-0.5

Assurance

A

A

A

Customers feel safe in their traffics with the bank.

6.6

6

0.6

Forces have the cognition to reply clients inquiries

6.7

6.9

-0.2

Empathy

A

A

A

Working hours are convenient to all their clients

6.4

6.8

-0.4

Staff who give clients personal attending

6.4

6.8

-0.4

Table: Percept mean tonss and outlook mean tonss

Highest spread was found in the statement ‘Materials associated with the service are visually appealing ‘ . The spread mark on the above statement is ‘-1.9 ‘ . So the bank needs to happen the ways to shut this spread. The following highest spread mark was found on the statement ‘Physical installations at the bank are visually appealing ‘ . The Gap on this statement is ‘-1.2 ‘ . The spread scores on these above two statements show that the PSB needs to better a batch on the tangibleness dimension since these two statements are related to the tangibleness dimension.

A positive Gap mark was found on the Statement ‘Do you experience safe in covering with the bank ‘ . The spread mark on this dimension is ‘+0.6 ‘ . This shows that clients feel safe in covering with the bank. So the PSB needs to keep this. Besides the spread mark on the statement ‘Provides service at the clip it promises to make so ‘ is ‘0 ‘ . This shows that the bank is able to run into its clients outlooks on this statement besides.

Overall service quality spread:

The information collected about the 11 service quality statements is analyzed utilizing mated sample t trial. The Paired-Samples T Test process compares the agencies of two variables that represent the same group at different times ( e.g. before and after an event ) or related groups ( e.g. , hubbies and married womans ) . The two variables in this survey are expectation ands perceptual experience tonss.

The sample statistics table is given below. This tabular array displays the figure of instances, average value, standard divergence, and standard mistake for the brace ( s ) of variables compared in the Paired Samples T Test process.

Table: Statisticss of Paired Variables

The mated sample trial tabular array is given below. A low significance value for the t trial ( typically less than 0.05 ) indicates that there is a important difference between the two variables. Since the significance value in this survey is 0.037 ( less than 0.55 ) we can reason that there is a significance difference between the two variables. Hence we can reject our hypothesis that there is no important difference between the outlook and perceptual experience degrees of the clients about the overall service quality of the bank. So we can state that there is important spread between the outlook and perceptual experience degrees of the clients of the PSB about the service quality provided by the bank and SBI needs to happen the ways to shut the spread in order to better the client satisfaction.

Table: Consequences of mated sample trial

Gap in SERVQUAL dimensions:

Tables below shows the expansive mean tonss for the five SERVQUAL dimensions studied. Grand average tonss have been given on the footing of outlooks, perceptual experiences and spread tonss.

Dimension

Grand Mean Gap

Remarks

Tangibility

-1.1

Should better a batch on this dimension

Dependability

-0.25

Should better a small on this dimension

Responsiveness

-0.45

Should better a just sum on this dimension

Assurance

0.2

Customers are satisfied on this dimension

Empathy

-0.4

Should better a just sum on this dimension

The above tabular array shows that the PSB has to better a batch on the dimension ‘Tangibility ‘ . In the tangibleness dimension itself the spread mark is more for the statements ‘Physical installations at the bank are visually appealing ‘ and ‘Materials associated with the service are visually appealing ‘ . Many of the bank clients expressed that they have ne’er seen stuffs associated with the service like booklets. So the bank should seek to better on these two parametric quantities. Besides, the spread tonss of the dimensions ‘Responsiveness ‘ and ‘Empathy ‘ are besides high. Since these two dimensions are related to the interaction between the service forces and the clients which is the nucleus activity in a service organisation, bank demands to happen the ways to shut the spreads on these two dimensions. So, the PSB needs to better a just sum on these two dimensions. The bank besides needs to see the dimension ‘Reliability ‘ though it is close to the satisfaction grade. Customers are satisfied on the parametric quantity ‘Assurance ‘ . Most of the clients felt that it is safe to cover with the bank. So the PSB needs to keep the client satisfaction on this dimension.

Decision:

Findingss of the survey indicate that the expected service of the clients is more than the existent service provided by the PSB. The expected service is more than the sensed service in four dimensions out of the five SERVQUAL dimensions. So, the bank needs to happen the ways to shut the service quality spread. If the outlooks of the clients are non met it will take them to dissatisfaction and will finally ensue in decrease of market portion. Dissatisfaction among the clients will besides take to diminish in merchandise retention and thereby consequences in decrease of grosss. So the bank needs to place the ways to diminish the service quality spread.

Mentions:

Report on Indian Banking Sector, available at: hypertext transfer protocol: //www.scribd.com/doc/17189631/Report-on-Indian-Banking-Sector

Walsh, C. ( 2003 ) , “ Happy people A? happy clients A? higher net income? “ , available at: www.lorien.co.uk/lcf

Bowen and Hedges ( 1993 ) , “ Increasing service quality in retail banking ” . Journal of Retail Banking, Vol. 15, No. 3, pp. 21-8.

Collart, D. ( 2000 ) , Customer Relationship Management, PricewaterhouseCoopers, New York, NY.

Mukesh Kumar et Al. ( 2009 ) , “ Determining the comparative importance of critical factors in presenting service quality of Bankss ” , Managing service quality, Vol. 19, No. 2, PP. 211-228.

Huseyin Arasli et Al. ( 2006 ) , “ Customer service quality in the Grecian Cypriot banking industry ” . Managing service quality, Vol. 15, No. 1, pp. 41-56.

Xin Guo et Al. ( 2008 ) “ Service quality measuring in the Chinese corporate banking market ” . International Journal of Bank Marketing, Vol. 26, No.5, PP. 305-327.

Manjunatha K. et Al. ( 2004 ) , “ Customers perceptual experiences of service quality in libraries ” . Annalss of Library and Information surveies, Vol. 51, No.4, PP. 145-151.

Mike Donnelly et Al. ( 2006 ) , “ Measuring the quality of constabulary services utilizing SERVUAL ” . An International Journal of Police Strategies and Management, Vol. 29, No. 1, PP. 92-105.

Coskun Baker et Al. ( 2007 ) , “ The function of outlooks in patients ‘ infirmary appraisals ” . International Journal of Health Care Quality Assurance, Vol. 20, No. 5, PP. 503-513.

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