Service quality models in banking.pdf

International Journal of Islamic and Middle Eastern Finance and Management Emerald Article: Service quality models in banking: a review Jaya Sangeetha, S. Mahalingam

Article information: To cite this document: Jaya Sangeetha, S. Mahalingam, (2011),"Service quality models in banking: a review", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 4 Iss: 1 pp. 83 - 103 Permanent link to this document: http://dx.doi.org/10.1108/17538391111122221 Downloaded on: 17-10-2012 References: This document contains references to 44 other documents Citations: This document has been cited by 1 other documents To copy this document: [email protected]

Users who downloaded this Article also downloaded: * Rasem N Kayed, M. Kabir Hassan, (2011),"Saudi Arabia's economic development: entrepreneurship as a strategy", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 4 Iss: 1 pp. 52 - 73 http://dx.doi.org/10.1108/17538391111122203 Shirshendu Ganguli, Sanjit Kumar Roy, (2011),"Generic technology-based service quality dimensions in banking: Impact on customer satisfaction and loyalty", International Journal of Bank Marketing, Vol. 29 Iss: 2 pp. 168 - 189 http://dx.doi.org/10.1108/02652321111107648 Khaliq Ahmad, Ghulam Ali Rustam, Michael M. Dent, (2011),"Brand preference in Islamic banking", Journal of Islamic Marketing, Vol. 2 Iss: 1 pp. 74 - 82 http://dx.doi.org/10.1108/17590831111115259

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Service quality models in banking: a review

Service quality models

Jaya Sangeetha Modern College of Business and Science (MCBS), Muscat, Sultanate of Oman, and

83

S. Mahalingam BSMED, Bharathiar University, Coimbatore, India Abstract Purpose – The purpose of this paper is to appraise various service quality models and identify issues for future research based on the analysis of literature. Design/methodology/approach – The paper examines 14 different service quality models reported in the literature applicable to the banking sector. The critical review of the different service quality models is intended to compile the various dimensions which emerged out of the studies, compare the commonality between them, study their relevance and importance in banking in the various cultural and cultural contexts and highlight the limitations of the studies. Findings – The review of various service quality models in banking revealed that the meaning of service quality may have some universal aspects, as demonstrated by the similarities in the underlying dimensions as proposed in the different studies. This paper lends support to the contention that the dimensionality of SERVQUAL and importance of the dimensions vary with the cultural and country context even within the banking industry. Research limitations/implications – This paper comprises a compiled report on the different service quality models and the effect of application of SERVQUAL in banking in different countries. Practical implications – Service quality has some common dimensions across the different models, however, the items involved and their operationalization in different cultural contexts within the same banking sector may vary. The paper indicates that a generic instrument for measurement of service quality or even one specifically developed for banking may not be applicable in its original form for all cultural contexts including Islamic society and banks. Development of the customized scale for measuring the service quality for a particular cultural or country context at that particular time is warranted. This paper brings a lot of information on service quality in banking under one roof and provides new directions to service quality researchers. Originality/value – This paper offers practical help to researchers and practitioners in providing a direction for service quality improvement by indicating the common theme that emerges from the service quality models. Also, the differences in the relevance and importance of the dimensions, due to the change in the cultural and country contexts, have been brought to the forefront. Keywords Banking, SERVQUAL, Customer satisfaction, Customer services quality, Customer behaviour, Electronic channels Paper type Literature review

Introduction During the past two decades or so, regulatory, structural and technological factors have significantly changed the banking environment throughout the world The authors are grateful to Dr Badr-El-Din A. Ibrahim, Dean, MCBS, and the two anonymous reviewers for their constructive comments and valuable ideas on earlier versions of the manuscript.

International Journal of Islamic and Middle Eastern Finance and Management Vol. 4 No. 1, 2011 pp. 83-103 q Emerald Group Publishing Limited 1753-8394 DOI 10.1108/17538391111122221

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(Angur et al., 1999). In a milieu which becomes increasingly competitive, service quality as a critical measure of organizational performance continues to compel the attention of banking institutions and remains at the forefront of services marketing literature and practice (Lasser et al., 2002). The interest is largely driven by the realization that high service quality results in customer satisfaction and loyalty, greater willingness to recommend to someone else, reduction in complaints and improved customer retention rates (Levesque and McDougall, 1996). There has been a continued research on the definition, modeling, measurement, data-collection procedure, data analysis, etc. issues of service quality, leading to development of sound base for the researchers. This documented knowledge base through several studies on the subject can be of great use to researchers and practitioners in the banking industry in providing a direction on how to explore/modify the existing service quality concepts with the changing world scenario (shift from conventional personalized services to web-enabled services). For an organization to gain competitive advantage it must use technology to gather information on market demands and exchange it between organizations for the purpose of enhancing the service quality. Researchers and managers thrive for learning details about components of service quality in their organization for obvious reasons of customer satisfaction, increased profitability, etc. In this context, model gains specific importance as it not only helps in learning the factors associated with it, but also provides a direction for improvements. A conceptual model attempts to show the relationships that exist between salient variables. It is a simplified description of the actual situations. It is envisaged that conceptual models in service quality enable management to identify quality problems and thus help in planning for the launch of a quality improvement program thereby improving the efficiency, profitability and overall performance. This paper makes an attempt to study various service quality models covering the aspects of conventional services to web-interacted services for banking. The primary aim of these models is to enable the management to understand and enhance the quality of the organization and its offering. A total of 14 conceptual service quality models reported during the period (1984-2006) which are applicable to the banking sector (both conventional and Islamic) are reviewed in this paper. Each of them is representative of a different point of view about services. The organization of this paper is as follows: initially after highlighting the need for the present study, a generalized framework of the study is presented. This is followed by a brief discussion of the models and the next section deals with summary, discussion and conclusion of the same. Finally, the agenda for future research is spelt out. 1. Need for present study Recently, globalization and liberalization are affecting economies of not only developing, but also developed countries. The focus areas for organizations are also changing from profit maximization to maximizing profits through increased customer satisfaction. The pressures of competition are forcing the organizations to not only look at the processes, but also on the way they are delivered. During past two decades, business scenario has changed drastically. Some of the key changes that have taken place in the business are: . horizontal business processes replacing vertical functional approach; . greater sharing of information with all connected links and customers;

. . .

. . . . . . .

greater emphasis on organizational and process flexibility; necessity to coordinate processes across many sites; employee empowerment and the need for rules-based real-time decision support systems; competitive pressure to introduce new service/products more quickly; integrated customer-driven processes; quick response to customers’ needs; worldwide relationships between various trade partners, suppliers, etc.; easily accessible information through internet; flexible and efficient service/product customization; and emergence and growing importance of Islamic economies.

Owing to the factors like opening up of markets, increase in use of IT, increased customer knowledge and awareness, etc. it becomes a must to deliver the services better than its competitor at agreed price. In this context, the subject of service quality needs a fresh understanding in the current business scenario. This study can help to identify the various general models applicable for banking and the changes found in the results owing to context or cultural changes in the various countries including conventional and Islamic banking system. It is also aimed to review the models specifically developed for the banking industry, their strengths and limitations. This study thus attempts to provide benefits to practicing managers and researchers by compiling a large amount of information on service quality in banking at one place. 2. Framework for study The subject of service quality is very rich in context of definitions, models and measurement issue. Several researchers explored the subjects with varying perspectives and using different methodologies. The following factors seem to be suitable for comparative evaluations of the models: . identification of factors affecting service quality; . flexibility to account for changing nature of customers perceptions; . directions for improvement in service quality; . suitability to develop a link for measurement of customer satisfaction; . diagnosing the needs for training and education of employees; . flexible enough for modifications as per the changes in the environment/conditions; . accommodates use of IT in services; and . capability to be used as a tool for benchmarking. With these issues as focus this present study is undertaken to understand the service quality models in the above light. 3. Service quality models The present study is an attempt to review service models in the light of the changed business scenario as applied to conventional and Islamic banking and analyze the models


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for the suitability/need for modification in the current context. In this section, we would provide a brief explanation of all the major service quality models which are applicable to banking and those that have been developed for banking. The models are presented using a standard structure, i.e. covering brief discussion and the major observations on the models. The brief discussions on the models are as under. 3.1 SQ1: GAP model Parasuraman et al. (1985) proposed that service quality is a function of the differences between expectation and performance along the quality dimensions. They developed a service quality model (Figure 1) based on GAP analysis. The various GAPs visualized in the model are: GAP 1. Difference between consumers’ expectation and management’s perceptions of those expectations, i.e. not knowing what consumers expect. GAP 2. Difference between management’s perceptions of consumers’ expectations and service quality specifications, i.e. improper service quality standards. GAP 3. Difference between service quality specifications and service actually delivered, i.e. the service performance GAP. GAP 4. Difference between service delivery and the communications to consumers about service delivery, i.e. whether promises match delivery?

Words of mouth communication

Personal needs

Past experience

Consumer Expected service GAP 5 Perceived service

Marketer GAP 1

Service delivery (including pre and post contacts) GAP 3 Translation of perceptions into service quality specifications GAP 2

Figure 1. GAP analysis model

Mangement perceptions of the consumer expectations Source: Parasuraman et al. (1985)

GAP 4

External communications to the consumer

GAP 5. Difference between consumers’ expectation and perceived service. This GAP depends on size and direction of the four GAPs associated with the delivery of service quality on the marketer’s side.


According to this model, the service quality is a function of perception and expectations and can be modeled as: SQ ¼

k X

87 ðP ij 2 E ij Þ

j¼1

where: SQ k Pij Eij

¼ ¼ ¼ ¼

overall service quality; number of attributes; performance perception of stimulus i with respect to attribute j; and service quality expectation for attribute j that is the relevant norm for stimulus i.

This exploratory research was refined with their subsequent scale named SERVQUAL for measuring customers’ perceptions of service quality (Parasuraman et al., 1988). At this point, the original ten dimensions of service quality collapsed into five dimensions: reliability, responsiveness, tangibles, assurance (communication, competence, credibility, courtesy and security) and empathy which capture access and understanding/knowing the customers. Later SERVQUAL was revised in 1991 by replacing “should” word by “would” and in 1994 by reducing the total number of items to 21, but five-dimensional structure remaining the same. In addition to this empirical research, the authors characterized and further delineated the four GAPs identified in their research of 1985. This led to extended service quality model (Figure 2). According to this extended model most factors involve communication and control process implemented in organizations to manage employees. 3.2 SQ2: Technical and functional quality model A firm in order to compete successfully must have an understanding of consumer perception of the quality and the way service quality is influenced (Gro¨nroos, 1984). Managing perceived service quality means that the firm has to match the expected service and perceived service to each other so that consumer satisfaction is achieved. The author identified three components of service quality, namely: technical quality, functional quality and image: (1) Technical quality is the quality of what consumer actually receives as a result of his/her interaction with the service firm and is important to him/her and to his/her evaluation of the quality of service. (2) Functional quality is how he/she gets the technical outcome. This is important to him and to his/her views of service he/she has received. (3) Image is very important to service firms and this can be expected to build up mainly by technical and functional quality of service including the other factors (tradition, ideology, word of mouth, pricing and public relations).

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Upward communication

Gap 1

Levels of management Management commitment to service quality Goal setting Tangibles

Gap 2 Task standardization

Reliability

Perception of feasibility

Gap 5 (service quality)

Team work

Assurance

Employee job fit

Empathy

Technology job fit Perceived control Gap 3 Supervisory control systems

Role conflict Role ambiguity Horizontal communication Gap 4 Propensity to overpromise

Figure 2. Extended model of service quality

Responsiveness

Source: Zeithaml et al. (1988)

3.3 SQ3: Service quality attributes from customers’ perspective by Mersha and Adlakha (1992) The purpose of the study was to identify and rank quality attributes from the consumers’ perspective, the authors modified and extended the SERVQUAL instrument as per the Haywood-Farmer and Stuart model by including additional questions to assess service core, service customization and knowledge and information. This was an attempt to make SERVQUAL more applicable in professional settings. However, the approach used is different. Here, the attributes of “good” and “poor” quality of services are identified and ranked separately. The use of this approach was initiated by the expectation that a particular attribute may have different degrees of importance as an indicator of “poor” or “good” quality of service. Five services were selected for the study – physician services, retail banking, auto maintenance, colleges/universities and fast food restaurants. As per the study, the top six attributes for good service quality were: (1) knowledge of the service; (2) thoroughness/accuracy; (3) consistency/reliability; (4) reasonable cost; (5) willingness to correct errors; and (6) timely/prompt service. And the most important attributes for poor service quality were: . lack of knowledge about the service; . employee indifference or “I don’t care” attitude; . reluctance to correct errors; . service inconsistency; . sloppy service; and . high cost. For retail banking service type, the most important characteristics of good quality were found to be: . willingness to correct errors; . thoroughness/accuracy of service; . consistency/reliability; and . knowledgeability. And the most important characteristics of poor service quality were found to be: . reluctance to correct errors; . employees’ indifference; . lack of knowledge about the service; and . sloppy service.


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3.4 SQ4: Importance-performance analysis and service quality by Ennew et al. (1993) Approaches to the measurement of service quality have typically been based on the analysis of the relationship between customer expectations of a service and their perceptions of the quality of provision. Operationalizing these measures has been either as simple comparisons of mean scores or extensive and detailed statistical modeling. In this study, the authors examine the problems associated with the measurement of the quality of service provision and present a set of indices to provide measures of expectations, perceptions and overall satisfaction. As a result they propose a compromise solution in the form of a series of indices and related scores which makes more thorough use of survey data on expectations and perceptions and which is considerably less complex than the widely used statistical models. The 11 dimensions of service quality used in this analysis have been acknowledged by the authors as relatively narrow and are listed as follows: (1) knows business; (2) knows industry; (3) knows market; (4) gives helpful advice; (5) wide range of services; (6) competitive interest rates; (7) competitive charges; (8) speed of decision; (9) tailors finance; (10) deal with one person; and (11) easy access to loan officer. The authors suggest that the method provides easily interpretable results, indicating areas which might be of concern to the banking sector as a whole, or to individual banks. 3.5 SQ5: Customer service quality scale by Avkiran (1994) The purpose of the research was to develop a utilitarian multi-dimensional instrument that can be applied to measuring customer service quality as perceived by branch bank customers. In developing the measurement instrument, results of the first stage scale purification by Parasuraman et al. (1985) was used as the starting point. A 17-item four-dimensional scale emerged following a study to develop an instrument for measuring customer service quality at trading bank branches, with a focus on retail banking. The four dimensions that emerged are staff conduct, credibility, communication and access to teller services: (1) Staff conduct – responsiveness, civilized conduct and presentation of branch staff that will project a professional image to the customers. (2) Credibility – maintaining staff-customer trust by rectifying mistakes, and keeping customers informed. (3) Communication – fulfilling banking needs of customers by successfully communicating financial advice and serving timely notices.

(4) Access to teller services – the adequacy of number of staff serving customers throughout business hours and during peak hours.


The instrument can be applied as part of branch performance measurement, as well as help diagnose problems in delivery of service and segment the bank’s customer base for healthier decision making in marketing.

91 3.6 SQ6: Service quality model by Blanchard and Galloway (1994) The objective of the authors was to determine the perceptions of customers regarding the requirements of quality service in retail banking using SERVQUAL. The failure of the SERVQUAL model to provide any particularly useful insights into how service might be improved led to the attempt to develop an alternative model of greater utility. The model proposed by the authors is based on three dimensions which are as follows: (1) Process/outcome – key issues with regard to service design and outcome. (2) Subjective/objective – provides a measure of the degree to which the quality of that aspect of the service under consideration can be objectively specified. (3) Soft/hard – hard represents physical aspects of the service while soft represents interpersonal interaction. 3.7 SQ7: Service quality factors based on satisfaction by Johnston (1997) A disturbing paradox found by the author in the UK banking industry is the amount of reported customer dissatisfaction with banks, despite large-scale efforts of the banks, over many years, to try to improve their service to customers. This led him to derive a framework to help assess the likely impact of any service quality initiative. The study categorizes quality factors in terms of their relative importance and their effect on satisfaction and dissatisfaction. The 18 determinants of service quality proposed are: (1) Access – the physical approachability of service location, including the ease of finding one’s way around the service environment and clarity of route. (2) Aesthetics – extent to which the components of the service package are agreeable or pleasing to the customer, including both the appearance and the ambience of the service environment, the appearance and presentation of service facilities, goods and staff. (3) Attentive/helpfulness – the extent to which the service, particularly contact staff, either provide help to the customer or give the impression of being interested in the customer and show a willingness to serve. (4) Availability – the availability of service facilities, staff and goods to the customer. In the case of contact staff, this means both the staff/customer ratio and the amount of time each staff member has available to spend with each customer. In the case of service goods, availability includes both the quantity and range of products made available to the customer. (5) Care – the concern, consideration, sympathy and patience shown to the customer. This includes the extent to which the customer is put at ease by the service and made to feel emotionally (rather than physically) comfortable.

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(6) Cleanliness/tidiness – the cleanliness, neat and tidy appearance of the tangible components of the service package, including the service environment, facilities, goods and contact staff. (7) Comfort – the physical comfort of the service environment and facilities. (8) Commitment – staff’s apparent commitment to their work, including the pride and satisfaction they apparently take in their job, their diligence and thoroughness. (9) Communication – the ability of the service to communicate with the customer in a way he or she will understand. This includes the clarity, completeness and accuracy of both verbal and written information communicated to the customer and the ability to listen to and understand the customer. (10) Competence – the skill, expertise and professionalism with which the service is executed. This includes the carrying out of correct procedures, correct execution of customer instructions, degree of product or service knowledge exhibited by contact staff, the rendering of good, sound advice and the general ability to do a good job. (11) Courtesy – the politeness, respect and propriety shown by the service, usually contact staff, in dealing with the customer and his or her property. This includes the ability of staff to be unobtrusive and uninterfering when appropriate. (12) Flexibility – a willingness and ability on the part of the service worker to amend or alter the nature of the service or product to meet the needs of the customer. (13) Friendliness – the warmth and personal approachability (rather than physical approachability) of the service, particularly of contact staff, including cheerful attitude, the ability to make the customer feel welcome. (14) Functionality – the serviceability and fitness for purpose or “product quality” of service facilities and goods. (15) Integrity – the honesty, justice, fairness and trustworthiness with which customers are treated by the service organization. (16) Reliability – the reliability and consistency of performance of service facilities, goods and staff. This includes punctual service delivery and ability to keep to agreements made with the customer. (17) Responsiveness – speed and timeliness of service delivery. This includes the speed of throughput and the ability of the service to respond promptly to customer service requests, with minimal waiting and queuing time. (18) Security – personal safety of the customer and his or her possessions while participating in or benefiting from the service process. This includes the maintenance of confidentiality. 3.8 SQ8: Technology in delivery of perceived service quality by Joseph et al. (1999) The use of technology in the delivery of banking services is becoming increasingly prevalent as it is being employed to reduce costs and eliminate uncertainties. This research investigates the role that technology plays in Australian banking and its impact on the delivery of perceived service quality. Martilia and James (1977) developed a simple importance/performance technique whose most attractive feature is that the mean importance and performance results can be graphically illustrated on a two-dimensional grid.

Hemmasi et al. (1994) redeveloped the importance-performance grid by drawing the axes based on the overall importance and performance means rather than based on the midpoint of the scale. Arguably, the Hemmasi et al. (1994) grid provides a useful alternative tool for strategy development as it provides a clearer picture of the factors that are critical for resource allocation. The authors use the Hemmasi et al. (1994) importance-performance grid and identified a six-factor model consisting of: (1) convenience/accuracy; (2) feedback/complaint management; (3) efficiency; (4) queue management; (5) accessibility; and (6) customization. 3.9 SQ9: Banking service quality model by Bahia and Nantel (2000) The instruments available for measuring service quality include either scale contextually developed by specific banks to cope with occasional problems or instruments not especially designed for banking service but rather to measure the perceived service quality across a broad spectrum of services. In view of the non-availability of publicly available and standard scale to measure the perceived quality of banking services, the authors propose the banking service quality (BSQ) scale comprising of 31 items spanning six dimensions, namely: (1) effectiveness and assurance; (2) access; (3) price; (4) tangibles; (5) services portfolio; and (6) reliability. 3.10 SQ10: Service quality model by Sureshchander et al. (2001) The criticisms about SERVQUAL in the research literature, made the authors undertake a careful scrutiny of the 22 items of SERVQUAL and it implied that the items at large deal with the element of human interaction/intervention in the service delivery and the rest on the tangible facets of service. The instrument seems to have overlooked some other important factors of service quality, namely: service product or the core service, systematization/standardization of service delivery (the non-human element) and the social responsibility of the service organization. In an effort to conceptualize service quality, Sureshchandar et al. (2001) identified five factors of service quality covering a total of 41 items as critical from the customer’ point of view. These factors are: (1) Core service or service product – the content of a service. (2) Human element of service delivery – aspects such as reliability, responsiveness, assurance, empathy and service recovery, which are part of the human element in service delivery.


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(3) Systematization of service delivery – the process, procedures, systems and the technology that make a service seamless. (4) Tangibles of service – the equipment, signage, appearance of employees and the man-made physical environment surrounding the service, which is commonly known as the “servicescape”. (5) Social responsibility – the ethical behavior of the service provider. 3.11 SQ11: SYSTRA-SQ by Aldaigan and Buttle (2002) The authors’ objective to develop a new scale based on the Gro¨nroos model of service quality. In doing so, the authors undertook a three-phase, four-sample, quantitative study to derive a new 21-item scale comprising four dimensions: (1) Service system quality. This factor is the strongest among the four. It represents the evaluation of service quality that can be clearly attributed to the service organization as a system rather than individuals within the system. It contains a combination of items that are related to both functional and technical performance at an organizational level. The functional quality attributes include listening to customer, ease of availability and accessibility, speed or response and organizational appearance. The technical organizational attributes include quality of advice, flexibility and customized service solutions, promise fulfillment, employee empowerment and customer updating on services. (2) Behavioral service quality (BSQ). This factor represents the evaluation of how the service is performed by employees. It is composed of FSQ/behavioral attributes, such as politeness, courtesy, friendliness and helpfulness of the employees. It also contains the employee’s service attitude. (3) Service transactional accuracy. This TSQ factor focuses on employee and system accuracy. It is derived from the customers’ experience of the frequency of errors in transactions and employees’ mistakes when performing service for customer. This dimension is a measure of how accurate the transaction is as experienced by customers in relation to both the system output and employees output. (4) Machine service quality. This factor focuses on machine and equipment quality. It is related to the reliability of machines as well as their performance in terms of satisfactory output when used by customers. 3.12 SQ12: Automated service quality model by Al-Hawari et al. (2005) Automated service quality has been regained as the factor which determines the success or failure of electronic commerce. The authors claim that the models currently available to measure automated service quality are limited in their focus, encompassing only one electronic channel – the internet – thereby ignoring attributes of the other automated service channels. In relation to the banking sector, research has identified that bank customers tend to use a combination of banking automated service quality. As such, in this research, the authors strive to develop a comprehensive model of banking automated service quality taking into consideration the unique attributes of each delivery channel and other dimensions that have a potential influence on quality issues. They propose five factors as follows:

(1) (2) (3) (4) (5)

ATM service; internet-banking service; telephone-banking service; core service; and customer perception of price.

3.13 SQ13: Service quality scale for banking by Karatepe et al. (2005) Karatepe et al. (2005) developed a 20-item survey instrument to measure bank customers’ perceptions of service quality in Northern Cyprus. The results showed that service quality could be conceptualized and measured as a four-dimensional construct consisting of: (1) service environment (four items); (2) interaction quality (seven items); (3) empathy (five items); and (4) reliability (four items). Interaction quality is found to be the most important dimension of service quality followed by empathy, reliability and service environment. The technology dimension of service quality was initially considered based on the qualitative stage of the study. However, it did not emerge as a viable dimension in the later stages when subjected to empirical criteria. 3.14 SQ14: Customer expectations and perceived service quality by Ehigie (2006) In the attempt to examine how customer expectation, perceived service quality and satisfaction predict loyalty among bank customers in Nigeria, measurement scales were developed to measure the variables of the study using qualitative technique to explore customers’ expectations from bank services. The measures of bank customers’ expectation in Nigeria were found to be: (1) bank workers’ possession of required skill; (2) bank workers possession of knowledge and experience; (3) continuity of service to customer in future years; (4) understand customers’ needs; (5) offering of fast and efficient service; (6) providing physical safety to customer; (7) confidentiality of transactions; (8) positive attitude of staff to customer services; (9) trustworthiness of bank; (10) bank’s good reputation; (11) staff friendliness; (12) keeping people informed; (13) listening to customers;


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(14) introduction of Saturday banking; (15) extended banking closing hours; and (16) insurance cover for customers. The same 16 constructs were used to measure the performance of the customers.

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4. Summary, discussion and conclusion In this section, an attempt has been made to summarize the following: (I) The different service quality models that have been developed for the banking sector and the generic service quality models which have been applied to the banking sector worldwide. (II) The studies using the GAP model in different countries all over the world and the comparison of the results obtained thereof. I General service quality models applicable to banking and the specific service quality models developed for banking A summary of the salient features of the service quality models has been provided in Table I. A common theme emerging from these comparisons is that the meaning of service quality may have some universal aspects as demonstrated by the similarities in the underlying dimensions. Essentially, service quality has some common dimensions across the different models, however, the items involved and their operationalization in different cultural and country contexts within the same banking sector – i.e. for conventional and Islamic systems – may vary. II Results from application of GAP model in different countries Studies have revealed mixed results on: . dimensionality of SERVQUAL; . the order of importance of SERVQUAL dimensions; and . the identification of GAPs in the dimensions. The dimensionality of service quality in different countries with respect to SERVQUAL highlights many differences. The study by Levesque and McDougall (1996) in Canada identified 17 items based on SERVQUAL but categorized under three dimensions – core, relational and labeled features. Tangibles were found to be captured by core and relational factors. Newman and Cowling (1996) in their study in the UK found that reliability comprises of a mixture of both hard and soft quality elements and found a degree of overlap between empathy and assurance. Lasser et al. (2002) in their study in the USA and South America propose that empathy may contain elements of both technical and functional quality. The study by Caruana (2002) in Malta proposes three factors – “people/process” factor (comprising of responsiveness, assurance and empathy), tangibles and reliability. Cui et al. (2003) undertook a study in South Korea for measurement of service quality in banking sector found that: . the weighted SERVQUAL consisted of three dimensions – tangibles, reliability and empathy;

SQ2

Gronroos model (1984)

*Functional quality

SQ1

Parasura man et al (1988)

*Reliability

*Responsiv eness

*Assurance

*Empathy

*Tangibles

Various dimensio ns of SQ

Reliability

*Responsiv eness

*Assurance

*Empathy

*Tangibles

*Willingnes s to correct errors

*Knowledge

*Timely/ prompt service

*Reliability

* Accuracy

Mersha & Adlakha (1992)

SQ3

*Easy access to loan officer

*Tailors finance

*Knows market

*Knows industry

*Knows business

*Gives helpful advice

*Speed of decision

*Access to teller services

*Communic ation

*Credibility

*Staff Conduct

Avkiran (1994)

Ennew, Reed & Binks (1993)

*Deal with one person

SQ5

SQ4

*Service transational accuracy

Aldaigan & Buttle (2002)

SQ11

Mohd. AlHawari et al (2005)

SQ12

*Interaction quality

*Reliability

Karatepe et al (2005)

SQ13

*Continuity of service to customers in future years

Benjamin Osayawe Ehigie (2006)

SQ14

*Trustworthiness

*Competence

*Aesthetics

*Hard aspects

*Comfort *Flexibility

*Access

*Tangibles

*Access

*Servicescapes

*Empathy *Service environment

*Behaivoral service quality *Machine service quality

*Posession of reqd. knowledge & experience

*Security

(continued)

*Extended banking closing hours.

*Listening to customers *Introduction of saturday banking

*Understanding customer needs

*Physical safety *Confidentiality of transaction

*Posession of reqd. skill

*Courtesy

*Accessibili ty

*Keeping people informed

*Efficiency *Queue Mgmt.

*Fast and efficient service

*Communication

*Friendliness *Care

*Availability

*Staff friendliness

*Human element

Sureshc handar et al (2001)

SQ10

*Positive attitude

*Effectiven ess & assurance

*Reliability

Bahia & Nantel (2000)

SQ9

*Helpfulness

*Feedback/ complaint mgmt.

*Convenien ce/ accuracy

Mathew Joseph et al (1999)

SQ8

*Responsivenss

*Reliability *Integrity

*Commitment

Robert Johnston (1997)

SQ7

*Process/ subjective/ soft aspects

Blanchar d& Galloway (1994)

SQ6


97

Table I. Comparison of dimensions proposed by the service quality models in banking

Table I. *Functionality

*Customiza tion

Bahia & Nantel (2000)

SQ9

*Service Portfolio

*Outcome/ Objective aspects

Mathew Joseph et al (1999)

SQ8

*Competi tive charges *Wide range of services

& Galloway (1994)

Robert Johnston (1997)

SQ7

*Price

Avkiran (1994)

Blanchard

SQ6

*Competi tive interest rates

Reed & Binks (1993)

SQ5

*Core service/ service product

handar et al (2001)

Sureshc

SQ10

Corporate image

*Social resp.

*Image

SQ4 Ennew,

Social responsibil ity

*Reasonabl e cost

Mersha & Adlakha (1992)

SQ3

*Systema tization

*Technical quality

Gronroos model (1984)

SQ2

Systematiz ation

Parasuram an et al (1988)

SQ1

*Service system quality

Aldaigan & Buttle (2002)

SQ11

*Phone banking

*Internet banking

*Perception of price *ATM service

*Core service

Mohd. AlHawari et al (2005)

SQ12

Karatepe et al (2005)

SQ13

*Bank's good reputation

*Insurance cover for customers

Benjamin Osayawe Ehigie (2006)

SQ14

98

Technical quality / outcome

Various dimension s of SQ

IMEFM 4,1

.

.

SERVQUAL scale showed only three dimensions – tangibles, empathy and third which includes items of reliability and responsiveness; and original and weighted SERVPERF was acceptable only when the 21 original items were aggregated into five items.

Jabnoun and Tamimi (2003) study in the UAE leads to a 22-item modified scale consisting of three factors – human skills, tangibles and empathy. Beerli et al. (2004) adapted the SERVPERF scale to 20 items and used it for their study in Spain and mention that the dimensionality of the service quality scale varies from industry to industry. Mukherjee and Nath (2005) in their study in India suggest that 25 items (four more than SERVQUAL) were needed to suit the Indian banking context. Also, pattern of loading of each item did not exactly follow the five-dimensional structure of SERVQUAL and had to be reorganized among the five dimensions. Wang et al. (2003) in their study in China found that apart from 21 items over five dimensions in SERVQUAL, other dimensions like product convenience (three items), product availability (three items), overall product quality (three items) and bank reputation (two items) needed to be included. The findings also indicate that not all antecedents contribute equally to quality and their contributions might be subject to variation in different industries and different countries at different times. Angur et al. (1999) findings in India indicate that implications of culture, marketing and service quality in the country-context need to be considered in the service quality instrument. This compilation of literature study reiterates the contention that the dimensionality of SERVQUAL varies with the cultural context even within the banking industry. Hence, a generic instrument for measurement of service quality or even one specifically developed for banking may not be applicable in its original form. Development of the customized scale for measuring the service quality for a particular cultural and country context and at a particular time is warranted. Changes in the order of importance of the SERVQUAL dimensions have been reported in the different studies. The original study of Parasuraman et al. (1988) in the USA found reliability as the most critical dimension followed by assurance, tangibles, responsiveness and last was empathy. A study in Singapore (Kwan and Hee, 1994) rated responsiveness and reliability as most important and tangibles as the least important. In the UK, the study conducted by Dotchin and Oakland (1994) found the dimensions to be important in the following order – assurance, tangibles, reliability, responsiveness and finally empathy. Newman and Cowling (1996) in their study in the UK found reliability, assurance and responsiveness to be the three most critical and tangibles to be least valued by customers. Yavas et al. (1997) find tangibles, responsiveness and empathy to be significant predictors of consumer satisfaction in Turkey. Angur et al. (1999) from their study in India report the following order – reliability and responsiveness were the most important followed by empathy, tangibles and last came assurance. Lasser et al. (2002) found that empathy was found to be significantly and positively related to overall satisfaction in the USA and South America. Newman (2001) found in their study in the UK that responsiveness, empathy and assurance are critical in service marketing provided reliability of service delivery is satisfactory. According to Wang et al.’s study in, 2003 in China, assurance and responsiveness were found to be the two most important drivers of overall service quality and tangibles and reliability to be most significant drivers of overall product quality. In Spain, Beerli et al. (2004) found reliability, responsiveness and assurance to be the most important followed by empathy


99

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and then tangibles. Yavas et al. (2004) in Germany found reliability and responsiveness to be positively related to satisfaction. Tangibles and empathy were found to influence consumer commitment and positive word-of-mouth. Arasli et al. (2005) found in Cyprus that assurance dimension had largest influence on customer satisfaction. Najjar and Bishu (2006) found responsiveness and reliability to be most important and directly related to overall service quality in the USA and Tahir and Abu Bakar (2007) in Malaysia found responsiveness to be most important followed by reliability, tangibles, assurance and empathy. The significantly varying order of importance of the dimensions draws attention to the fact that the importance of the dimensions needs to be assessed for each and every study on service quality pursued in a country and for the specific industry at that time. Even within the banking sector due consideration must be given to whether the banking system is conventional or Islamic. SERVQUAL has been proposed as a useful instrument for diagnostic purposes. It has been found to effectively identify the GAPs in the dimension and thus help the service organization to assess service quality and do the needful to bridge the GAP. Kwan and Hee (1994) in their study in Singapore found the widest GAP in empathy and the smallest GAP in tangibles. Newman and Cowling (1996) in the UK found the biggest GAP for reliability followed by responsiveness. Arasli et al. (2005) found the largest GAP in empathy dimension by using SERVQUAL scale in Cyprus. These results also draw attention to the need to probe more into the service quality dimensionality in the Islamic banking context in view of its growing importance considering that the population of Muslims in the world is expected to reach 2 billion by year 2010 (Lada et al., 2009). 5. Implications, weaknesses and future scope of research From the study of these models, it appears that the key ingredients to service quality improvements are: . clear market and customer focus; . motivated staff; . clear understanding of concepts of service quality and factors affecting the same; . effective implementation, measurement and feedback system; . efficient customer care system; and . effective, problem-free availability of the electronic channels. The study also brings forth the different practical and managerial implications emerging from the results obtained from the various service quality studies. The use of SERVQUAL in the different studies has helped to identify the following issues: . SERVQUAL does not attempt to measure quality of core service. . The dimensionality and the items under each dimension vary with the context and hence the reliability and validity of the instrument needs to be assessed for every study. . The importance of the dimensions varies with the context of the study and hence needs to be assessed in every study.

The study has also identified the future scope for research which is as follows: . The components of service quality and overall service offering should encompass not only the identified construct (e.g. core, relational), but also constructs/items that reflect the service offering, i.e. it should focus on complete service package. . More cross-country and cross-cultural comparative studies will help in discovering the commonalities in the regional and/or cultural contexts and the differences especially in Islamic countries and banking. . More studies can help to investigate the sources that cause such deviation from the original factor structure and the changes in terms of importance and dimensionality of service quality. . Studies on the Islamic banks of GCC region and other Muslim countries and their comparison with the conventional commercial banks would shed light on the similarities and differences and would help conceive the future strategic course of action for banks in the Islamic countries. . More studies on assessment of service quality from the management perspectives would help understand and enhance the concept and implementation of service quality. . Inter-group assessment of service quality in countries with major ethnic/regional groups and consideration of demographic characteristics would help assess service quality from a better perspective. References Aldlaigan, A.H. and Buttle, F.A. (2002), “SYSTRA-SQ: a new measure of bank service quality”, International Journal of Service Industry Management, Vol. 13 No. 4, pp. 362-81. Al-Hawari, M., Hartley, N. and Ward, T. (2005), “Measuring banks’ automated service quality: a confirmatory factor analysis approach”, Marketing Bulletin, Vol. 16 No. 16, pp. 1-19. Angur, M.G., Natarajan, R. and Jahera, J.S. Jr (1999), “Service quality in the banking industry: an assessment in a developing economy”, The International Journal of Bank Marketing, Vol. 17 No. 3, pp. 116-25. Arasli, H., Katircioglu, S.T. and Mehtap-Smadi, S. (2005), “A comparison of service quality in the banking industry: some evidence from Turkish and Greek speaking areas in Cyprus”, The International Journal of Bank Marketing, Vol. 23 Nos 6/7, pp. 508-26. Avkiran, N.K. (1994), “Developing an instrument to measure customer service quality in branch banking”, International Journal of Bank Marketing, Vol. 12 No. 6, pp. 10-18. Bahia, K. and Nantel, J. (2000), “A reliable and valid measurement scale for the perceived service quality of banks”, The International Journal of Bank Marketing, Vol. 18 No. 2, pp. 84-91. Beerli, A., Martin, J.D. and Quintana, A. (2004), “A model of customer loyalty in the retail banking market”, European Journal of Marketing, Vol. 38 Nos 1/2, pp. 253-75. Blanchard, R.F. and Galloway, R.L. (1994), “Quality in retail banking”, International Journal of Service Industry Management, Vol. 5 No. 4, pp. 5-23. Caruana, A. (2002), “Service loyalty: the effects of service quality and the mediating role of customer satisfaction”, European Journal of Marketing, Vol. 36 Nos 7/8, pp. 811-28. Cui, C.C., Lewis, B.R. and Park, W. (2003), “Service quality measurement in the banking sector in South Korea”, International Journal of Bank Marketing, Vol. 21 No. 4, pp. 191-201.


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Dotchin, J.A. and Oakland, J.S. (1994), “Total quality management in services. Part 1: understanding and classifying services”, International Journal of Quality & Reliability Management, Vol. 11 No. 3, pp. 9-26. Ehigie, B.O. (2006), “Correlates of customer loyalty to their bank: a case study in Nigeria”, The International Journal of Bank Marketing, Vol. 24 No. 7, pp. 494-508. Ennew, C.T., Reed, G.V. and Binks, M.R. (1993), “Importance-performance analysis and the measurement of service quality”, European Journal of Marketing, Vol. 27 No. 2, pp. 59-70. Gro¨nroos, C. (1984), “A service quality model and its marketing implications”, European Journal of Marketing, Vol. 18 No. 4, pp. 36-44. Hemmasi, M., Strong, K. and Taylor, S. (1994), “Measuring service quality for planning and analysis in service firms”, Journal of Applied Business Research, Vol. 10 No. 4, pp. 24-34. Jabnoun, N. and Al-Tamimi, H.A.H. (2003), “Measuring perceived service quality at UAE commercial banks”, International Journal of Quality & Reliability Management, Vol. 20 No. 4, pp. 458-72. Johnston, R. (1997), “Identifying the critical determinants of service quality in retail banking: importance and effect”, The International Journal of Bank Marketing, Vol. 15 No. 4, pp. 111-16. Joseph, M., McClure, C. and Joseph, B. (1999), “Service quality in the banking sector: the impact of technology on service delivery”, The International Journal of Bank Marketing, Vol. 17 No. 4, pp. 182-93. Karatepe, O.M., Avci, T. and Tekinkus, M. (2005), “Measuring service quality of banks: scale development and validation”, Journal of Retailing and Consumer Services, Vol. 12 No. 5, pp. 373-83. Kwan, W. and Hee, T.J. (1994), “Measuring service quality in Singapore retail banking: a GAP analysis & segmentation approach”, Singapore Management Review, Vol. 16 No. 2, pp. 1-12. Lada, S., Tanakinjal, G.H. and Amin, H. (2009), “Predicting intention to choose Halal products using theory of reasoned action”, International Journal of Islamic and Middle Eastern Finance and Management, Vol. 2 No. 1, pp. 66-76. Lasser, W.M., Manolis, C. and Winsor, R.D. (2002), “Service quality perspectives and satisfaction in private banking”, Journal of Services Marketing, Vol. 14 No. 3, pp. 244-71. Levesque, T. and McDougall, G.H.G. (1996), “Determinants of customer satisfaction in retail banking”, The International Journal of Bank Marketing, Vol. 14 No. 7, pp. 12-20. Martilla, J.A. and James, J.C. (1977), “Importance-performance analysis”, The Journal of Marketing, Vol. 41 No. 1. Mersha, T. and Adlakha, V. (1992), “Attributes of service quality: the consumers’ perspective”, International Journal of Service Industry Management, Vol. 3 No. 3, pp. 34-45. Mukherjee, A. and Nath, P. (2005), “An empirical assessment of comparative approaches to service quality measurement”, Journal of Services Marketing, Vol. 19 No. 3, pp. 174-84. Najjar, L. and Bishu, R.R. (2006), “Service quality: a case study of a bank”, The Quality Management Journal, Vol. 13 No. 3, pp. 35-44. Newman, K. (2001), “Interrogating SERVQUAL: a critical assessment of service quality measurement in a high street retail bank”, International Journal of Bank Marketing, Vol. 19 No. 3, pp. 126-39. Newman, K. and Cowling, A. (1996), “Service quality in retail banking: the experience of two British clearing banks”, The International Journal of Bank Marketing, Vol. 14 No. 6, pp. 3-11. Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1985), “A conceptual model of service quality and its implications for future research”, Journal of Marketing, Vol. 49 No. 3, pp. 41-50.

Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1988), “SERVQUAL: a multiple item scale for measuring consumer perception of service quality”, Journal of Retailing, Vol. 64 No. 1, pp. 12-37. Sureshchandar, G.S., Rajendran, C. and Kamalanabhan, T.J. (2001), “Customer perceptions of service quality: a critique”, Total Quality Management, Vol. 12 No. 1, pp. 111-24. Tahir, I.M. and Abu Bakar, N.M. (2007), “Service quality GAP and customers’ satisfactions of commercial banks in Malaysia”, International Review of Business Research Papers, Vol. 3 No. 4, pp. 327-36. Wang, Y., Lo, H. and Hui, Y.V. (2003), “The antecedents of service quality and product quality and their influences on bank reputation: evidence from the banking industry in China”, Managing Service Quality, Vol. 13 No. 1, pp. 72-83. Yavas, U., Bilgin, Z. and Shemwell, D.J. (1997), “Service quality in the banking sector in an emerging economy: a consumer survey”, International Journal of Bank Marketing, Vol. 15 No. 6, pp. 217-23. Further reading Baumann, C., Burton, S., Elliott, G. and Kehr, H.M. (2007), “Prediction of attitude and behavioural intentions in retail banking”, The International Journal of Bank Marketing, Vol. 25 No. 2, pp. 102-16. Cronin, J.J. and Taylor, S.A. (1992), “Measuring service quality: a reexamination and extension”, Journal of Marketing, Vol. 6, July, pp. 55-68. Malhotra, N.K., Ulgado, F.M., Agarwal, J., Shainesh, G. and Wu, L. (2005), “Dimensions of service quality in developed and developing economies: multi-country cross-cultural comparisons”, International Marketing Review, Vol. 22 No. 3, pp. 256-78. Parasuraman, A., Berry, L.L. and Zeithaml, V.A. (1991), “Refinement and reassessment of the SERVQUAL scale”, Journal of Retailing, Vol. 67 No. 4, pp. 420-50. Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1994), “Reassessment of expectations as a comparison standard in measuring service quality: implications for further research”, Journal of Marketing, Vol. 58 No. 1, pp. 111-24. Seth, N. and Deshmukh, S.G. (2005), “Service quality models: a review”, The International Journal of Quality & Reliability Management, Vol. 22 No. 9, pp. 913-49. Soteriou, A.C. and Stavrinides, Y. (2000), “An internal customer service quality data envelope analysis model for bank branches”, International Journal of Bank Marketing, Vol. 18 No. 5, pp. 246-52. Yavas, U., Benkenstein, M. and Stuhldreier, U. (2005), “Relationships between service quality and behavioral outcomes: a study of private bank customers in Germany”, International Journal of Bank Marketing, Vol. 22 No. 2, pp. 144-57. Zhu, F.X., Wymer, W.J. and Chen, I. (2002), “IT-based services and service quality in consumer banking”, International Journal of Service Industry Management, Vol. 13 No. 1, pp. 69-90. Corresponding author Jaya Sangeetha can be contacted at: [email protected]

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