a study of impact of service quality on customer satisfaction, …files.gtu.ac.in/phd/2016/richa...
TRANSCRIPT
A Study of Impact of Service Quality on Customer
Satisfaction, Loyalty, Commitment & Retention
in the Indian Banking Sector
A Thesis submitted to Gujarat Technological University
for the Award of
Doctor of Philosophy
In
Management
By
Richa Durgeshbhai Pandit
[119997392026]
GUJARAT TECHNOLOGICAL UNIVERSITY
AHMEDABAD
June - 2016
A Study of Impact of Service Quality on Customer Satisfaction, Loyalty, Commitment & Retention
in the Indian Banking Sector
A Thesis submitted to Gujarat Technological University
for the Award of
Doctor of Philosophy
In
Management
By
Richa Durgeshbhai Pandit
[119997392026]
under supervision of
Dr. Ram Kumar Balyan
GUJARAT TECHNOLOGICAL UNIVERSITY
AHMEDABAD
June - 2016
© [RichaDurgeshbhaiPandit]
i
DECLARATION
I declare that the thesis entitled “A Study of Impact of Service Quality on Customer
Satisfaction, Loyalty, Commitment & Retention in the Indian Banking
Sector”submitted by me for the degree of Doctor of Philosophy is the record of research
work carried out by me during the period from September 2011 to December 2015 under
the supervision of Dr. Ram Kumar Balyan and this has not formed the basis for the
award of any degree, diploma, associateship, fellowship, titles in this or any other
University or other institution of higher learning.
I further declare that the material obtained from other sources has been duly acknowledged
in the thesis. I shall be solely responsible for any plagiarism or other irregularities, if
noticed in the thesis.
Signature of the Research Scholar : …………………………… Date:….………………
Name of Research Scholar: RichaDurgeshbhaiPandit
Place: Ahmedabad
ii
CERTIFICATE
I certify that the work incorporated in the thesis “A Study of Impact of Service Quality
on Customer Satisfaction, Loyalty, Commitment & Retention in the Indian Banking
Sector” submitted by Ms. RichaDurgeshbhaiPanditwas carried out by the candidate
under my supervision/guidance. To the best of my knowledge: (i) the candidate has not
submitted the same research work to any other institution for any degree/diploma,
Associateship, Fellowship or other similar titles (ii) the thesis submitted is a record of
original research work done by the Research Scholar during the period of study under my
supervision, and (iii) the thesis represents independent research work on the part of the
Research Scholar.
Signature of Supervisor: ……………………………… Date: ………………
Name of Supervisor: Dr. Ram Kumar Balyan
Place: Ahmedabad
iii
Originality Report Certificate
It is certified that PhD Thesis titled “A Study of Impact of Service Quality on Customer
Satisfaction, Loyalty, Commitment & Retention in the Indian Banking Sector” by
RichaDurgeshbhaiPandit has been examined by us. We undertake the following:
a. Thesis has significant new work / knowledge as compared already published or are
under consideration to be published elsewhere. No sentence, equation, diagram, table,
paragraph or section has been copied verbatim from previous work unless it is placed
under quotation marks and duly referenced.
b. The work presented is original and own work of the author (i.e. there is no plagiarism).
No ideas, processes, results or words of others have been presented as Author own work.
c. There is no fabrication of data or results which have been compiled / analysed.
d. There is no falsification by manipulating research materials, equipment or processes, or
changing or omitting data or results such that the research is not accurately represented in
the research record.
e. The thesis has been checked using <Turnitin> (copy of originality report attached) and
found within limits as per GTU Plagiarism Policy and instructions issued from time to time
(i.e. permitted similarity index <=25%).
Signature of the Research Scholar : …………………………… Date: ….………
Name of Research Scholar: RichaDurgeshbhaiPandit
Place: Ahmedabad
Signature of Supervisor: ……………………………… Date: ………………
Name of Supervisor: Dr. Ram Kumar Balyan
Place: Ahmedabad
iv
v
PhD THESIS Non-Exclusive License to GUJARAT TECHNOLOGICAL UNIVERSITY
In consideration of being a PhD Research Scholar at GTU and in the interests of the
facilitation of research at GTU and elsewhere, I, RichaDurgeshbhaiPandit having
119997392026 hereby grant a non-exclusive, royalty free and perpetual license to GTU on
the following terms:
a) GTU is permitted to archive, reproduce and distribute my thesis, in whole or in part,
and/or my abstract, in whole or in part ( referred to collectively as the “Work”)
anywhere in the world, for non-commercial purposes, in all forms of media;
b) GTU is permitted to authorize, sub-lease, sub-contract or procure any of the acts
mentioned in paragraph (a);
c) GTU is authorized to submit the Work at any National / International Library, under
the authority of their “Thesis Non-Exclusive License”;
d) The Universal Copyright Notice (©) shall appear on all copies made under the
authority of this license;
e) I undertake to submit my thesis, through my University, to any Library and Archives.
Any abstract submitted with the thesis will be considered to form part of the thesis.
f) I represent that my thesis is my original work, does not infringe any rights of others,
including privacy rights, and that I have the right to make the grant conferred by this
non-exclusive license.
g) If third party copyrighted material was included in my thesis for which, under the
terms of the Copyright Act, written permission from the copyright owners is
required, I have obtained such permission from the copyright owners to do the acts
mentioned in paragraph (a) above for the full term of copyright protection.
h) I retain copyright ownership and moral rights in my thesis, and may deal with the
copyright in my thesis, in any way consistent with rights granted by me to my
University in this non-exclusive license.
vi
i) I further promise to inform any person to whom I may hereafter assign or license my
copyright in my thesis of the rights granted by me to my University in this non-
exclusive license.
j) I am aware of and agree to accept the conditions and regulations of PhD including all
policy matters related to authorship and plagiarism.
Signature of the Research Scholar:
Name of Research Scholar: RichaDurgeshbhaiPandit
Date: ………………… Place: Ahmedabad
Signature of Supervisor:
Name of Supervisor: Dr. Ram Kumar Balyan
Date: ……………….. Place:Ahmedabad
Seal:
Annexure-VII Thesis Approval Form The viva-voce of the PhD Thesis submitted by Shri / Smt. / Kum. .………………………………………………………… (En. No. …………………..…) entitled ………………………………………………………………………………… …………………………………………………………………………………………….………………………………………………………………………………………………… was conducted on …………………….………… (day and date) at Gujarat Technological University. (Please tick any one of the following option)
We recommend that he/she be awarded the Ph.D. Degree. We recommend that the viva-voce be re-conducted after incorporating the following suggestions: (briefly specify the modification suggested by the panel)
The performance of the candidate was unsatisfactory. We recommend that he/she should not be awarded the Ph.D. Degree. (The panel must give justifications for rejecting the research work)
………………………..………… ………………………..………… Name and Signature of Supervisor with Seal 1) External Examiner 1 Name and Signature
………………………..………… ………………………..………… 2) External Examiner 2 Name and Signature 3) External Examiner 3 Name and Signature
vii
viii
ABSTRACT
Today, the banking industry has become highly competitive in India. It is not only focusing
on providing wide range of products to create competitive advantages; but also emphasizes
on the importance of services, particularly in maintaining service quality. Thus, it is clear
that service quality offers a way of achieving success among competing services,
particularly in the case of firms that offer nearly identical services, such as banks, where
establishing service quality may be the only way of differentiating oneself.Service quality
significantly influences customer satisfaction. It is therefore imperative on the part of
bankers to stress upon both service quality and customer satisfaction and retaining valued
customers in banks. Further, a satisfied customer is likely to be committed & loyal to a
bank who will give repeating business to the bank.
800 customers of four selected banks – SBI, PNB, ICICI and HDFC were surveyed
through non probability convenience sampling. After checking reliability of the collected
data, various statistical tests were performed on the collected data. Factors of the service
quality were extracted through exploratory factor analysis and based on that, empirical
model of the service quality was proposed. Validity of the model checked through the
confirmatory factor analysis. After that, association of the factors of service quality with
the customer satisfaction / retention / loyalty and commitment were examined. It has been
found out that customers of the public sector banks are more satisfied in comparison with
the private sector banks.
Than after, impact of the factors of service quality on customer satisfaction / retention /
loyalty and commitment were checked. In this objective also, more impact of service
quality on customer satisfaction / retention / loyalty and commitment is being observed in
public sector banks as compare with the private sector banks. Profiling of the customers of
the selected four banks was also studied. Lastly, banks were ranked on the parameter of the
service quality.
Majorly this thesis has contributed in the area of the service quality and added richness to
the existing body of knowledge pertaining to the factors of service quality by incorporating
new information through qualitative research. Moreover, proposed service quality model
will give more comprehensive insight to the banks in formulating the strategies for
customer services.
ix
Acknowledgement
I wish to express my sincere gratitude to those individuals who have supported me
throughout my journey of the doctoral research. First, my deep appreciation goes to my
supervisor Dr. Ram Kumar Balyan, whose valuable advice has enabled me to complete my
doctoral research in time. The completion of the doctoral work could not have been
possible without flawless support and guidance of the DPC (Doctoral Progress Committee
Members): Dr. Dharmendra Mistry and Dr. Gurpreet Arora. Special thanks to foreign co
supervisor Prof. Dr. PolonaTominc for her helpful insights.
I also acknowledge Honorable Vice Chancellor Dr. Akshai Aggarwal, Dr. RajulGajjar and
Dr. N.M. Bhatt, Dean, Ph.D Section, Mr. J.C.Lilani, I/C Registrar, Ms. Mona Chaurasiya,
Research Coordinator, Mr. DhavalGohil and Staff Members of Ph.D section for their
assistance and support. Very special thanks go to Director of my institute Dr. Arti Trivedi
and my dearest colleague for their continuous support and encouragement.
Lastly, journey of the doctoral research could not have reached to its destination without
the support of the four pillars of my life - My Mom, Dad, Sister and My Husband. This
thesis is dedicated to them for their constant source of love, concern, support and strength.
My In-Laws have also added aid to me throughout this endeavor. I have to give a special
mention to the little angle of my life, my son - Vivan whose unconditional love has always
been a motivation for me.
x
Table of Content
Sr. No Content Pg. No.
Title Page
Declaration i
Certificate ii
Originality Report Certificate iii
Non Exclusive License Certificate v
Thesis Approval Form vii
Abstract viii
Acknowledgement ix
Chapter
1
Introduction 1
1.1 Introduction to the Indian Banking Sector 1
1.2 Definition of Bank 2
1.3 Business Model 3
1.4 History of Indian Banking Sector 5
1.4.1 Post Independence 6
1.4.2 Nationalization 7
1.4.3 Liberalization 8
1.5 Types of Banks 9
1.5.1 Scheduled Banks 9
1.5.2 Commercial Banks 9
1.5.3 Cooperative Banks 10
1.5.4 Urban Co-operative Banks 10
1.5.5 State Co-Operative Banks 10
1.5.6 Foreign Banks 10
1.5.7 Regional Rural Banks 11
1.5.8 Public Sector Banks 11
1.5.9 Private Sector Banks 12
1.5.10 Old Private Sector Banks 12
1.5.11 New Private Sector Banks 12
1.6 Growth of banking industry 13
xi
Sr. No Content Pg. No.
1.7 The growth drivers of the Indian Banking Industry 13
1.7.1 High growth of Indian Economy 13
1.7.2 Rising per capita income 14
1.7.3 New channel – Mobile banking is expected to become the
second largest channel for banking after ATMs
14
1.7.4 Financial Inclusion Program 14
1.8 Service Quality in Banking 15
1.9 Need of studying Service Quality in Banking 16
1.10 Background of the Study 17
1.11 Purpose of the Study 18
1.12 Statement of the Problem 18
1.13 Scope of the Study 19
1.14 Objectives of the Study 19
1.15 Significance of the Study 19
1.16 Structure of the Thesis 20
Chapter
2
Literature Review 22
2.1 Introduction 22
2.2 Service Quality 22
2.2.1 Definition of service quality 23
2.2.2 Characteristics of Service 24
2.3 Models of Service Quality 26
2.3.1 Gronroos's Model 26
2.3.2 Lehtinen and Lehtinen Model 28
2.3.3 SERVQUAL Scale 29
2.3.4 SERVPERF Scale 31
2.4 Service Quality in Banks 32
2.5 Customer Satisfaction 33
2.5.1 Definitions of Customer Satisfaction 33
2.5.2 Measuring Customer Satisfaction 34
2.6 Customer Satisfaction in Banks 39
2.7 Customer Loyalty 40
xii
Sr. No Content Pg. No.
2.7.1 Categories of Customer Loyalty 41
2.7.2 Theoretical framework for the multi-item loyalty scale 43
2.7.3 Customer Loyalty In Banks 45
2.8 Customer Retention 45
2.8.1 Customer Retention in Banks 49
2.9 Customer Commitment 50
2.9.1 Affective commitment 50
2.9.2 Calculative or continuance commitment 51
2.9.3 Normative commitment 51
2.10 Customer Commitment in Banks 56
2.11 Summary of Literature Review 57
2.12 Research Gap 72
2.13 Conceptual Framework 72
Chapter
3
Research Methodology 74
3.1 Introduction 74
3.2 Research Design 75
3.2.1 Exploratory Research Design 75
3.2.2 Descriptive Research Design 76
3.3 Sample Design 76
3.3.1 Sample Unit 76
3.3.2 Sample Technique 77
3.3.3 Sample Size 77
3.4 Sources of Data 78
3.5 Planning of Data Collection 78
3.6 Data Collection Instrument & Scaling Technique 79
3.7 Pilot Study 81
3.7.1 Reliability of the Research Instrument 81
3.8 Confidence Interval Test 82
Chapter
4
Data Analysis 96
4.1 Introduction 96
xiii
Sr. No Content Pg. No.
4.2 Exploratory Factor Analysis (EFA) 97
4.3 Confirmatory Factor Analysis (CFA) 99
4.4 Validity of the scale 101
4.4.1 Construct Validity 101
4.4.2 Convergent Validity 101
4.4.3 Discriminant Validity 103
4.4.4 Nomological Validity 103
4.5 Correlation and Simple Regression 104
4.6 State Bank of India 105
4.6.1 Exploratory Factor Analysis 105
4.6.2 Anti Image Matrices 105
4.6.3 Factor Naming 110
4.6.4 Confirmatory Factor Analysis 111
4.6.5 Pearson Correlation 115
4.6.6 Simple Regression 118
4.6.7 Cross Tabulation 121
4.6.8 Least Square Method 127
4.7 Punjab National Bank 130
4.7.1 Exploratory Factor Analysis 130
4.7.2 Anti Image Matrices 130
4.7.3 Factor Naming 135
4.7.4 Confirmatory Factor Analysis 136
4.7.5 Pearson Correlation 140
4.7.6 Simple Regression 143
4.7.7 Cross Tabulation 146
4.7.8 Least Square Method 152
4.8 ICICI Bank 155
4.8.1 Exploratory Factor Analysis 155
4.8.2 Anti Image Matrices 155
4.8.3 Factor Naming 159
4.8.4 Confirmatory Factor Analysis 160
4.8.5 Pearson Correlation 163
xiv
Sr. No Content Pg. No.
4.8.6 Simple Regression 166
4.8.7 Cross Tabulation 168
4.8.8 Least Square Method 172
4.9 HDFC Bank 175
4.9.1 Exploratory Factor Analysis 175
4.9.2 Anti Image Matrices 176
4.9.3 Factor Naming 179
4.9.4 Confirmatory Factor Analysis 179
4.9.5 Pearson Correlation 183
4.9.6 Simple Regression 185
4.9.7 Cross Tabulation 187
4.9.8 Least Square Method 192
Chapter
5
Discussion of Findings 195
5.1 Findings of research objective 1 195
5.2 Findings of research objective 2 199
5.3 Findings of research objective 3 201
5.4 Findings of research objective 4 203
5.5 Findings of research objective 5 207
Chapter
6
Conclusions, Major Contributions and Scope of Further
Work
208
6.1 Conclusions 204
6.2 Major Contribution 209
6.2.1 Theoretical Implication 209
6.2.2 Managerial Implication 210
6.3 Limitation of the study 211
6.4 Direction for future research 212
Chapter
7
Bibliography 213
List of Publication 230
Appendix Questionnaire 231
xv
List of Abbreviation
Sr. No Abbreviation
1 EFA Exploratory Factor Analysis
2 CFA Confirmatory Factor Analysis
3 RMSEA Root Mean Square Error of Approximation
4 CFI Comparative Fit Index
5 NFI Normed Fit Index
6 GFI Goodness-of-fit
7 AGFI Adjusted Goodness of Fit Index
8 TLI Tucker Lewis Index
9 IFI Incremental Fit Index
10 RFI Relative Fit Index
11 AVE Average Variance Extracted
12 CR Construct Reliability
13 CBE Competency of Bank Employee
14 AS Augmented Service
15 PE Physical Evidence
16 EB Ethos of the Bank
17 ASTS Assortment of the services
18 SP Service Product
19 ISB Interior Signage & Service Ability
20 AP Accomplishing the Promises
xvi
List of Figure
Sr. No Content Pg.No
2.1 The Gronroos’s Model 27
2.2 Customer Loyalty Scale 44
2.3 Research Model 73
4.1 Factor Structure – SBI 112
4.2 Factor Structure – PNB 137
4.3 Factor Structure – ICICI 161
4.4 Factor Structure – HDFC 180
5.1 Research Model 196
xvii
List of Tables
Sr. No Content Pg.No
1.1 Growth of the bank in FY 2011 13
2.1 Difference between goods & services 26
2.2 Summary 57
3.1 Sample Unit 77
3.2 Sample size formula 78
3.3 Variables Identified for Questionnaire 80
3.4 Scaling of the Questionnaire 81
3.5 Reliability Test Result 82
3.6 Confidence Interval Test Result 83
4.1 Factor Loading 99
4.2 KMO and Bartlett's Test – SBI 105
4.3 Correlation Table – SBI 105
4.4 Anti image Table –SBI 106
4.5 Communalities Table –SBI 107
4.6 Total Variance Explained –SBI 108
4.7 Rotated Component Matrix –SBI 109
4.8 Model Fit Indexes –SBI 113
4.9 Convergent Validity –SBI 114
4.10 Discriminant Validity &Nomological Validity –SBI 115
4.11 Summary of Hypothesis Testing – Objective 2(a) –SBI 116
4.12 Summary of Hypothesis Testing – Objective 2(b) –SBI 116
4.13 Summary of Hypothesis Testing – Objective 2(c) –SBI 117
4.14 Summary of Hypothesis Testing – Objective 2(d) –SBI 118
4.15 Summary of Hypothesis Testing – Objective 3(a) –SBI 119
4.16 Summary of Hypothesis Testing – Objective 3(b) –SBI 119
4.17 Summary of Hypothesis Testing – Objective 3(c) –SBI 120
4.18 Summary of Hypothesis Testing – Objective 3(d) –SBI 120
4.19 Cross Tabulation of the demographic variable – Gender –SBI 121
xviii
Sr. No Content Pg.No
4.20 Cross Tabulation of the demographic variable – Age –SBI 122
4.21 Cross Tabulation of the demographic variable – Education –SBI 123
4.22 Cross Tabulation of the demographic variable – Income –SBI 125
4.23 Cross Tabulation of the demographic variable – Occupation –SBI 126
4.24 Ideal Score and Least Scores of Respondents –SBI 127
4.25 Responses of the Respondents –SBI 128
4.26 KMO and Bartlett's Test – PNB 130
4.27 Correlation Table – PNB 130
4.28 Anti image Table –PNB 131
4.29 Communalities Table –PNB 132
4.30 Total Variance Explained –PNB 133
4.31 Rotated Component Matrix –PNB 134
4.32 Model Fit Indexes –PNB 138
4.33 Convergent Validity –PNB 138
4.34 Discriminant Validity &Nomological Validity –PNB 139
4.35 Summary of Hypothesis Testing – Objective 2(a) –PNB 140
4.36 Summary of Hypothesis Testing – Objective 2(b) –PNB 141
4.37 Summary of Hypothesis Testing – Objective 2(c) –PNB 141
4.38 Summary of Hypothesis Testing – Objective 2(d) –PNB 142
4.39 Summary of Hypothesis Testing – Objective 3(a) –PNB 143
4.40 Summary of Hypothesis Testing – Objective 3(b) –PNB 144
4.41 Summary of Hypothesis Testing – Objective 3(c) –PNB 144
4.42 Summary of Hypothesis Testing – Objective 3(d) –PNB 145
4.43 Cross Tabulation of the demographic variable – Gender –PNB 146
4.44 Cross Tabulation of the demographic variable – Age –PNB 147
4.45 Cross Tabulation of the demographic variable – Education –PNB 148
4.46 Cross Tabulation of the demographic variable – Income –PNB 150
4.47 Cross Tabulation of the demographic variable – Occupation –
PNB
151
4.48 Ideal Score and Least Scores of Respondents –PNB 152
4.49 Responses of the Respondents –PNB 153
xix
Sr. No Content Pg.No
4.50 KMO and Bartlett's Test – ICICI 155
4.51 Correlation Table – ICICI 155
4.52 Anti image Table –ICICI 156
4.53 Communalities Table –ICICI 157
4.54 Total Variance Explained –ICICI 158
4.55 Rotated Component Matrix –ICICI 159
4.56 Model Fit Indexes –ICICI 161
4.57 Convergent Validity –ICICI 162
4.58 Discriminant Validity &Nomological Validity –ICICI 163
4.59 Summary of Hypothesis Testing – Objective 2(a) –ICICI 163
4.60 Summary of Hypothesis Testing – Objective 2(b) –ICICI 164
4.61 Summary of Hypothesis Testing – Objective 2(c) –ICICI 165
4.62 Summary of Hypothesis Testing – Objective 2(d) –ICICI 165
4.63 Summary of Hypothesis Testing – Objective 3(a) –ICICI 166
4.64 Summary of Hypothesis Testing – Objective 3(b) –ICICI 167
4.65 Summary of Hypothesis Testing – Objective 3(c) –ICICI 167
4.66 Summary of Hypothesis Testing – Objective 3(d) –ICICI 168
4.67 Cross Tabulation of the demographic variable – Gender –ICICI 168
4.68 Cross Tabulation of the demographic variable – Age –ICICI 169
4.69 Cross Tabulation of the demographic variable – Education –
ICICI
170
4.70 Cross Tabulation of the demographic variable – Income –ICICI 171
4.71 Cross Tabulation of the demographic variable – Occupation –
ICICI
172
4.72 Ideal Score and Least Scores of Respondents –ICICI 173
4.73 Responses of the Respondents –ICICI 173
4.74 KMO and Bartlett's Test – HDFC 175
4.75 Correlation Table – HDFC 175
4.76 Anti image Table –HDFC 176
4.77 Communalities Table –HDFC 177
4.78 Total Variance Explained –HDFC 177
xx
Sr. No Content Pg.No
4.79 Rotated Component Matrix –HDFC 178
4.80 Model Fit Indexes –HDFC 181
4.81 Convergent Validity –HDFC 181
4.82 Discriminant Validity &Nomological Validity –HDFC 182
4.83 Summary of Hypothesis Testing – Objective 2(a) –HDFC 183
4.84 Summary of Hypothesis Testing – Objective 2(b) –HDFC 183
4.85 Summary of Hypothesis Testing – Objective 2(c) –HDFC 184
4.86 Summary of Hypothesis Testing – Objective 2(d) –HDFC 184
4.87 Summary of Hypothesis Testing – Objective 3(a) –HDFC 185
4.88 Summary of Hypothesis Testing – Objective 3(b) –HDFC 186
4.89 Summary of Hypothesis Testing – Objective 3(c) –HDFC 186
4.90 Summary of Hypothesis Testing – Objective 3(d) –HDFC 187
4.91 Cross Tabulation of the demographic variable – Gender –HDFC 188
4.92 Cross Tabulation of the demographic variable – Age –HDFC 188
4.93 Cross Tabulation of the demographic variable – Education –
HDFC
189
4.94 Cross Tabulation of the demographic variable – Income –HDFC 190
4.95 Cross Tabulation of the demographic variable – Occupation –
HDFC
191
4.96 Ideal Score and Least Scores of Respondents –HDFC 192
4.97 Responses of the Respondents –HDFC 192
5.1 Consistency Mapping 198
5.2 Pearson Correlation Value 199
5.3 R Square Value 201
5.4 Consistency Mapping of Research Objective 2 & 3 202
5.5 Summary of the demographic analysis in SBI 203
5.6 Summary of the demographic analysis in PNB 204
5.7 Summary of the demographic analysis in ICICI 205
5.8 Summary of the demographic analysis in HDFC 206
5.9 Ranking of the bank 207
xxi
List of Appendices
Appendix A: [Questionnaire]
Introduction
1
CHAPTER–1
INTRODUCTION
1.1 Introduction to the Indian Banking Sector :
Banking Sector is the backbone of any financial system and economy. Commercial banks
play an important role in the development of underdeveloped/developing economies by
mobilization of resources and their better allocation. Indian Banking System is regulated
by the central bank of the country i.e. Reserve Bank of India (RBI), which was
nationalized in 1949. RBI is the primary regulator for the banking sector and the
government exercises direct and indirect control over banks through RBI to protect the
depositors and to stabilize the banking system. Extensive powers have been conferred on
RBI under the RBI Act, 1934, and Banking Regulations Act, 1949. In 1969 the
government nationalized 14 major banks to break the ownership and control of few leaders
of Banking and industry over the economic power and banking system. This has resulted in
balanced geographical growth of banks in rural areas and small towns, as it accounts for
majority of the population. Government as the owner of the banks decided the agenda for
the banks and directed the flow of the credit .The focus changed from class banking to
social banking. This social transformation process though resulted in unprecedented
expansion of banking and financial system. However the regulated business environment,
poor quality of credit portfolio due to social lending without adequate safeguards against
defaults, thin margins on social lending, disruptive tactics of trade unions, increasing
number of loss making branches due to unmindful branch expansion in rural areas and
other factors resulted in sacrifice of the service quality and the operational productivity and
profitability of these organizations.
The banks still managed to survive due to the regulated business environment which killed
the scope for competition among banks. The Indian banking system has changed a lot over
the last five decades especially in the last 15 years with India taking to the path of free
market economy and globalization with clear commitments under WTO (World Trade
Organization) regime. A journey from private ownership and control of commercial banks
Introduction
2
to government ownership and control by way of nationalization, has come in full circle in
the wake of liberalization and introduction of new players in the shape of Private Sector
Banks and Foreign Banks.
Fresh induction of public stake and corporate governance in government owned banks has
brought the element of stiff competition in the environment with greater adoption of the
new technologies and ideas, renewed perception of service quality along with the high
degree of professional management and marketing concepts in the Indian Banking system.
Currently there are twenty eight public sector banks which account for 87% of the total
bank branches (and 74% of deposits), twenty four private sector banks which account for
12% of the total bank branches (and 20% of deposits) and twenty nine foreign banks
accounting for 0.45% of the branches (and 5.5% of deposits) (Indian Banks’ Association,
2007). The entry of foreign/private banks and various financial sector reforms like
deregulation of interest rates, new norms on asset classification and provisioning, adoption
of Basle Accord on capital adequacy coupled with other policy measures aimed at adopting
best global practices has revolutionized the banking industry in India. The Public Sector
Banks, which still account for the major part of the Indian Banking Industry in terms of
size and reach are facing stiff competition from Private and Foreign Banks as also from the
Non-Banking Financial Institutions. The Foreign Banks which form only 0.26 % of the
total number of branches in India still manage to gather 5% of the total deposits.
The growing competition and highly stressed profits have not only introduced the new
marketing concepts in the Indian banking sector but has also brought the customer
satisfaction to the center of the focus. It has become very important for the banks to retain
their existing customer base as well as to enlarge the same. It is reported that 90% of bank
switching in the Asian Banking market occurs due to pricing, service quality and
inconvenience. Since pricing in Indian banks is regulated it is the service quality delivered
which then becomes important if the banks want to retain and attract customers.
1.2 Definition of Bank:
In general terms, banking is business activity of accepting and safeguarding money owned
by other individuals and entities, and then lending out this money in order to earn a profit.
The institution that is approved to carry out such business activity legally under the
regulation and acts of any given country is known as Bank. A bank is a financial institute
Introduction
3
and a financial mediator that accepts deposits and channels those deposits into lending
activities, either directly or through capital markets. A bank connects customers that have
capital deficits to customers with capital surpluses.
Due to their critical status within the financial system and the economy, generally, banks
are highly regulated in most countries. Most banks operate under a system known as
fractional reserve banking where they hold only a small reserve of the funds deposited and
lend out the rest for profit. It is majorly subject to minimum capital requirements that are
based on an international set of capital standards.
The statutory definition of Banking is:
The meaning of "Banking Business" is as follows:
• receiving the money from the general public through current, deposit, savings or other
similar account and it is repayable on demand or with a period of call or notice of less than
that period;
• paying or collecting checks drawn by or paid in by customers.
With the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit,
direct debit and internet banking, the cheque has lost its dominance in most banking
systems as a payment instrument. Due to this, legal theorists suggest that the cheque based
definition should be extended to take account of financial institutions that offers current
accounts for customers and allow customers to pay and be paid by third parties, even if
they do not pay and collect checks.
1.3 Business Model:
A bank can generate profits through different ways including interest, transaction fees and
financial advice. The foremost method is through charging interest on the capital that is
being lent to the customers. The bank generate revenues from the variation between the
level of interest it offers for deposits and other sources of funds, and the level of interest it
charge in its lending activities.
This distinction is referred to as the spread between the cost of funds and the loan interest
rate. Initially, profitability from lending activities was referred as cyclical and it was more
Introduction
4
dependent on the requirements and strengths of loan customers and the stage of the
economic cycle. Fees and financial guidance comprise of a more steady income stream and
banks have emphasized on these income lines to smooth their financial performance.
Governments and Banks jointly have taken many actions to make sure that Banks remain
profitable with increasingly changing market conditions.
Firstly, Banking Acts has allowed banks to merge with investment and insurance houses.
Integrating banking, investment, and insurance functions has permitted traditional banks to
act in response to increasing consumer needs for "one-stop shopping" by facilitating cross-
selling of products and banks hope that this will increase their profitability.
Banks have also extended the use of risk-based pricing from consumer lending businesses
which are offering higher interest rates to those customers that have higher credit risk and
thus increased chance of default on loans. This facilitates the bank to compensate the
losses from bad loans, lowers the price of loans to those customers who have better credit
histories, and propose them the credit products.
Third, they have increased the methods of payment processing offered to the general public
and corporate clients. These products include debit cards, prepaid cards, smart cards, and
credit cards. Banks make it easier for consumers to conveniently make transactions and
ensure smoother consumption over time.
With easy availability credit, there is also increased risk that consumers will mismanage
their financial resources and end up in accumulating excessive debt. Banks earn money
from different card products via interest payments and fees taken from the consumers and
transaction fees charged to the companies that accept the credit- debit - cards. This has
resulted in making profit and facilitating economic development as a whole.
Introduction
5
1.4 History of Indian Banking Sector:
Banking in India started off in the last decades of the 18th century. The first banks were
The General Bank of India that started in 1786 and Bank of Hindustan, which started in
1770; both are now non-operational. The oldest bank that is still operating in India is the
State Bank of India, which originated in the Bank of Calcutta in June 1806, than soon it
became the Bank of Bengal. This was one of the three presidency banks; the other two
being the Bank of Bombay and the Bank of Madras, all three banks were established under
charters from the British East India Company. For many years the Presidency banks acted
as quasi-central banks, as did their successors. The three banks merged in 1921 and formed
the Imperial Bank of India and after India's independence; it became the State Bank of
India in 1955.
Merchants in Calcutta established the Union Bank in 1839, but it failed in 1840 as a
consequence of the economic crisis. The Allahabad Bank, established in 1865 and still
functioning today, is the oldest Joint Stock bank in India.(Joint Stock Bank: A company
that issues stock and requires shareholders to be held liable for the company's debt) It was
not the first though. That honor belongs to the Bank of Upper India, which was established
in 1863, and which survived until 1913, when it failed, with some of its assets and
liabilities being transferred to the Alliance Bank of Simla.
Foreign banks too started to app, particularly in Calcutta, in the 1860s. The
Comptoird'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay
in 1862; branches in Madras and Pondicherry, then a French colony, followed. HSBC
established itself in Bengal in 1869. Calcutta was the most active trading port in India,
mainly due to the trade of the British Empire, and so became a banking center.
The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in
1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank, established in
Lahore in 1895, which has survived to the present and is now one of the largest banks in
India. Around the turn of the 20th Century, the Indian economy was passing through a
relative period of stability. Around five decades had elapsed since the Indian Mutiny, and
the social, industrial and other infrastructure had improved. Indians had established small
banks, most of which served particular ethnic and religious communities.
Introduction
6
The presidency banks dominated banking in India but there were also some exchange
banks and a number of Indian joint stock banks. All these banks operated in different
segments of the economy. The exchange banks, mostly owned by Europeans, concentrated
on financing foreign trade. Indian joint stock banks were generally undercapitalized and
lacked the experience and maturity to compete with the presidency and exchange banks.
This segmentation let Lord Curzon to observe, "In respect of banking it seems we are
behind the times. We are like some old fashioned sailing ship, divided by solid wooden
bulkheads into separate and cumbersome compartments."
The period between 1906 and 1911, saw the establishment of banks inspired by the
Swadeshi movement. The Swadeshi movement inspired local businessmen and political
figures to found banks of and for the Indian community. A number of banks established
then have survived to the present such as Bank of India, Corporation Bank, Indian Bank,
Bank of Baroda, Canara Bank and Central Bank of India.
The fervour of Swadeshi movement lead to establishing of many private banks in Dakshina
Kannada and Udupi district which were unified earlier and known by the name South
Canara ( South Kanara ) district. Four nationalized banks started in this district and also a
leading private sector bank. Hence undivided Dakshina Kannada district is known as
"Cradle of Indian Banking". During the First World War (1914–1918) through the end of
the Second World War (1939–1945), and two years thereafter until the independence of
India were challenging for Indian banking. The years of the First World War were
turbulent, and it took its toll with banks simply collapsing despite the Indian economy
gaining indirect boost due to war-related economic activities.
1.4.1 Post-Independence:
The partition of India in 1947 adversely impacted the economies of Punjab and West
Bengal, paralyzing banking activities for months. India's independence marked the end of a
regime of the Laissez-faire for the Indian banking. The Government of India initiated
measures to play an active role in the economic life of the nation, and the Industrial Policy
Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted
into greater involvement of the state in different segments of the economy including
banking and finance.
Introduction
7
The major steps to regulate banking included:
• The Reserve Bank of India, India's central banking authority, was established in
April 1935, but was nationalized on January 1, 1949 under the terms of the Reserve
Bank of India (Transfer to Public Ownership) Act, 1948 (RBI, 2005b).
• In 1949, the Banking Regulation Act was enacted which empowered the Reserve
Bank of India (RBI) "to regulate, control, and inspect the banks in India".
• The Banking Regulation Act also provided that no new bank or branch of an existing
bank could be opened without a license from the RBI, and no two banks could have
common directors.
1.4.2 Nationalization:
Despite the provisions, control and regulations of Reserve Bank of India, banks in India
except the State Bank of India or SBI, continued to be owned and operated by private
persons. By the 1960s, the Indian banking industry had become an important tool to
facilitate the development of the Indian economy. At the same time, it had emerged as a
large employer, and a debate had ensued about the nationalization of the banking industry.
Indira Gandhi, then Prime Minister of India, expressed the intention of the Government of
India in the annual conference of the All India Congress Meeting in a paper entitled "Stray
thoughts on Bank Nationalization." The meeting received the paper with enthusiasm.
Thereafter, her move was swift and sudden. The Government of India issued an ordinance
('Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969')) and
nationalized the 14 largest commercial banks with effect from the midnight of July 19,
1969. These banks contained 85 percent of bank deposits in the country.Jayaprakash
Narayan, a national leader of India, described the step as a "masterstroke of political
sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the
Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the
presidential approval on 9 August 1969.
A second dose of nationalization of 6 more commercial banks followed in 1980. The stated
reason for the nationalization was to give the government more control of credit delivery.
With the second dose of nationalization, the Government of India controlled around 91%
of the banking business of India. Later on, in the year 1993, the government merged New
Introduction
8
Bank of India with Punjab National Bank. It was the only merger between nationalized
banks and resulted in the reduction of the number of nationalized banks from 20 to 19.
After this, until the 1990s, the nationalized banks grew at a pace of around 4%, closer to
the average growth rate of the Indian economy.
1.4.3 Liberalization:
In the early 1990s, Narasimha Rao government embarked on a policy of liberalization, and
had approved license to a small number of private banks. These was known as New
Generation tech-savvy banks, and included Global Trust Bank (the first of such new
generation banks to be established), and later it amalgamated with Oriental Bank of
Banking, UTI Bank (since renamed Axis Bank), ICICI Bank and HDFC Bank. This move,
along with the rapid growth in Indian economy and it has revitalized the entire banking
sector in India. The rapid growth in banking was strongly contributed by all the three
sectors of banks, namely, government banks, private banks and foreign banks.
The next stage of the development in the Indian banking has started with establishment
with the proposed relaxation in the norms for Foreign Direct Investment, wherein all
Foreign Investors in banks may be given rights to vote that could exceed the present capital
of 10%, at present it has gone up to 74% with some restrictions. The new policy shuddered
the Indian Banking sector completely. Previously bankers were used to the 4-6-4 method
(Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new waves lead in a
modern outlook and tech-savvy methods of working for traditional banks. This has led to
the retail boom in India. People have not only started demanding more from their banks but
also received more.
Currently, banking in India is generally referred as mature in terms of supply, product
range and reach. Although reach in rural India has still remained a challenge for the private
sector and foreign sector banks. As far as the quality of assets and capital adequacy is
concern, Indian banks are considered to possess clean, strong and transparent balance
sheets relative to other banks in similar economies in its region. The Reserve Bank of India
is an independent body, with minimal pressure from the government. The policy of the
Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate and
this has mostly been true.
Introduction
9
The growth of the Indian economy is expected to be strong for quite some time-especially
in its services sector due the demand for banking services, especially in retail banking,
mortgages and investment services as they are expected to be strong. One may also expect
M&As, takeovers, and asset sales.
In current years critics have cited that the non-government owned banks are very much
aggressive in their loan recovery efforts in connection with housing, vehicle and personal
loans. According to the press reports, the banks' loan recovery efforts have driven
defaulting borrowers to suicide.
1.5 Types of Banks
1.5.1 Scheduled Banks
Scheduled Banks in India are those banks which have been included in the Second
Schedule of Reserve Bank of India (RBI) Act, 1934.RBI has included only those banks in
this schedule which has satisfied the criteria laid down vide section 42 (6) (a) of the Act.
As on 30th June, 1999, there were 300 scheduled banks in India having a total network of
64,918 branches. Scheduled commercial banks in India include State Bank of India and its
associates (7), nationalised banks (19), foreign banks (45), private sector banks (32), co-
operative banks and regional rural banks.
"Scheduled banks in India" means the State Bank of India constituted under the State Bank
of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India
(Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under
section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
(5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the
Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), but does not include
a co-operative bank".
1.5.2 Commercial Banks
A commercial bank (or business bank) is a type of financial institution and intermediary. It
is a bank that lends money and provides transactional, savings, and money market accounts
and that accepts time deposit. Commercial bank being the financial institution performs
Introduction
10
diverse types of functions. It satisfies the financial needs of the sectors such as agriculture,
industry, trade, communication, etc. That means they play very significant role in a process
of economic social needs. The functions performed by banks are changing according to
change in time and recently they are becoming customer centric and widening their
functions.
1.5.3 Cooperative Banks
Cooperative banking is retail and commercial banking organized on a cooperative basis.
Cooperative banking institutions take deposits and lend money in most parts of the world.
Cooperative banking, includes retail banking carried out by credit unions, mutual savings
banks, building societies and cooperatives, as well as commercial banking services
provided by mutual organizations (such as cooperative federations) to cooperative
businesses. There are basically two types of cooperative banks:
(i) Urban Co-Operative Banks
(ii) State Co-Operative Banks.
1.5.4 Urban Co-operative Banks
The term Urban Co-operative Banks (UCBs), though not formally defined, refers to
primary cooperative banks located in urban and semi-urban areas. These banks, till 1996,
were allowed to lend money only for non-agricultural purposes. This distinction does not
hold today. These banks were traditionally centredaround communities, localities work
place groups. They essentially lent to small borrowers and businesses. Today, their scope
of operations has widened considerably.
1.5.5 State Co-Operative Banks
State Co-Operative Banks refers to banks incorporated through state legislature and
wherein state government is a stakeholder to it. The purpose is to address the lending and
borrowing mechanism for the people of the state.
Introduction
11
1.5.6 Foreign Banks
A Bank based in foreign country is known as foreign bank. But if the majority holding of
public listed bank is with Foreign Institutional Investors (FIIs), then also it can be termed
as Foreign Bank.
1.5.7 Regional Rural Banks
The Government of India set up Regional Rural Banks (RRBs) on October 2,
1975.Initially, five RRBs were set up on October 2, 1975 which were sponsored by
Syndicate Bank, State Bank of India, Punjab National Bank, United Commercial Bank and
United Bank of India. Capital share being 50% by the central government, 15% by the
state government and 35% by the scheduled bank. Regional Rural Banks in India s mainly
focused upon the agro sector. Regional rural banks in India penetrated every corner of the
country and extended a helping hand in the growth process of the country.
1.5.8 Public Sector Banks
Public Sector Banks (PSBs) are banks where a majority stake (i.e. more than 50%) is held
by a government. The shares of these banks are listed on stock exchanges. There are a total
of 26 PSBs in India. State Bank of Saurashtra and State Bank of Indore merged with SBI.
The objectives behind nationalization where:
• To break the ownership and control of banks by a few business families,
• To prevent the concentration of wealth and economic power,
• To mobilize savings from masses from all parts of the country,
• To cater to the needs of the priority sectors
The Central Government entered the banking business with the nationalization of the
Imperial Bank of India in 1955. A 60% stake was taken by the Reserve Bank of India and
the new bank was named as the State Bank of India. The seven other state banks became
the subsidiaries of the new bank when nationalized on 19 July 1960. The next major
nationalization of banks took place in 1969 when the government of India, under prime
Introduction
12
minister Indira Gandhi, nationalized an additional 14 major banks. The next round of
nationalization took place in April 1980. The government nationalized six banks.
1.5.9 Private Sector Banks
All those banks where greater parts of stake or equity are held by the private shareholders
and not by government are called "private-sector banks". These are the major players in the
banking sector as well as in expansion of the business activities India. The present private-
sector banks equipped with all kinds of contemporary innovations, monetary tools and
techniques to handle the complexities are a result of the evolutionary process over two
centuries. They have a highly developed organizational structure and are professionally
managed. Thus they have grown faster and stronger since past few years.
1.5.10 Old Private Sector Banks
The banks, which were not nationalized at the time of bank nationalization that took place
during 1969 and 1980 are known to be the old private-sector banks. These were not
nationalized, because of their small size and regional focus.
1.5.11 New Private Sector Banks
The banks, which came in operation after 1991, with the introduction of economic reforms
and financial sector reforms are called "new private-sector banks". Banking regulation act
was amended in 1993, which had permitted the entry of new private-sector banks in the
Indian banking sector. However, there were certain criteria set for the establishment of the
new private-sector banks, some of those criteria being:
• The bank should have a minimum net worth of Rs. 100 crores.
• The promoters holding should be a minimum of 25% of the paid-up capital.
• Within 3 years of the starting of the operations, the bank should offer shares to
public.
1.
In
em
in
fo
in
ba
pr
1.
1.
Th
ec
on
in
cr
re
.6 Grow
Sourc
future
n the last fiv
mployee by
ncome is co
ollowed by
n the busine
anks, in abs
rofit per em
.7 The g
.7.1 High gr
he growth
conomy. Ind
n that path
nfrastructure
redit growth
equirements
wth of ban
TA
ce : http://st
e-prospects-
ve years, pu
y the highes
oncerned, p
pubic bank
ss per empl
solute terms
mployee.
rowth dr
rowth of In
of the ban
dia is one o
h for many
e, industry,
h in the eco
s in the futur
nking indu
ABLE 1.1
ockshastra.m
-and-sector-
ublic sector
t rate – 21.
private bank
ks (21.4%) a
loyee and pr
s, foreign ba
ivers of th
ndian Econ
nking indus
of the fastes
y years to
services an
onomy and
re.
13
ustry:
Growth of
moneywork
-overview/
bank has g
7%, 23% an
ks are ahea
and then by
rofit per em
anks have t
he Indian
nomy
stry is clos
st growing
come. This
nd agricultu
d provide op
3
the bank in
ks4me.com/
rown its de
nd 21.1% r
ad in the r
y foreign ba
mployee has
the highest
n Banking
sely linked
economies
s will be b
ure. This is
pportunities
n FY 2011.
/learn/indian
posits, adva
respectively
race by rep
anks (14.8%
been the hi
business pe
g Industry
with the g
in the worl
backed by
s expected t
s to banks t
.
n-banking-i
ances and b
y. As far as
porting 24.2
%). Though
ighest for pu
er employee
y are:
growth of
ld and is se
the stellar
to boost the
to lend to f
Introduction
industry-
business per
net interest
2% growth,
the growth
ublic sector
e as well as
the overall
et to remain
growth in
e corporate
fulfill these
n
r
t
,
h
r
s
l
n
n
e
e
Introduction
14
1.7.2 Rising per capita income
The rising per capita income will drive the growth of retail credit. Indians have a
conservative outlook towards credit except for housing and other necessities. However,
with an increase in disposable income and increased exposure to a range of products,
consumers have shown a higher willingness to take credit, particularly, young customers.
A study of the customer profiles of different types of banks, reveals that foreign and
private banks share of younger customers is over 60% whereas public banks have only
32% customers under the age of 40. Private Banks also possess a greater share of the
profitable mass affluent segment.
1.7.3 New channel – Mobile banking is expected to become the second largest channel
for banking after ATMs
New channels used to offer banking services will drive the growth of banking industry
exponentially in the future by increasing productivity and acquiring new customers. During
the last decade, banking through ATMs and internet has shown a tremendous growth,
which is still in the growth phase. After ATMs, mobile banking is expected to give another
push to this industry growth in a big way, with the help of new 3G and smart phone
technology (mobile usage has grown tremendously over the years). This can be looked at
as branchless banking and so will also reduce costs as there is no need for physical
infrastructure and human resources. This will help in acquiring new customers, mainly
who live in rural areas (though this will take time due to technology and infrastructure
issues). It is predicted by the industry experts that mobile banking would become the
second largest channel of banking after ATMs.
1.7.4 Financial Inclusion Program
Currently, in India, 41% of the adult population don’t have bank accounts, which indicates
a large untapped market for banking players. Under the Financial Inclusion Program, RBI
is trying to tap this untapped market and the growth potential in rural markets by volume
growth for banks. Financial inclusion is the delivery of banking services at an affordable
cost to the vast sections of disadvantaged and low income groups. The RBI has also taken
many initiatives such as Financial Literacy Program, promoting effective use of
Introduction
15
development communication and using Information and Communication Technology
(ICT) to spread general banking concepts to people in the under-banked areas. All these
initiatives of promoting rural banking are taken with the help of mobile banking, self-help
groups, microfinance institutions, etc. Financial Inclusion, on the one side, helps corporate
in fulfilling their social responsibilities and on the other side it is fueling growth in other
industries and so as a whole economy.
1.8 Service Quality in Banking:
The Indian banking has seen momentous changes in the post independence era. It has
witnessed a remarkable shift in its operating environment during the last decade. Various
reform measures, both qualitative and quantitative, were introduced with an objective to
revitalize Indian banking sector and to meet the future challenges. Every aspect of the
functioning of the Indian banking industry, be it a customer service, resource mobilization,
credit management, asset-liability management, investments, human resource
development, and forex management are undergoing dramatic changes with the reforms
gathering the momentum and speed. Several innovative IT-based services such as
Automated Teller Machines (ATMs), electronic fund transfer (EFT), anywhere-anytime
banking, smart cards, internet banking etc. are no longer alien concepts to Indian banking
customers.
The market has changed drastically and has become largely customer centric. From sellers’
market the banks have been forced to operate in the buyer's market. The change has made
the customer a king. The customer, in future, will continue to demand new and better
products, will switch to new providers quickly, will find information easily, and may even
do more and more of ‘legwork’ personally. All of these factors mean more buying power
for the consumer. The key to success in the changed environment will be one's ability to
reach the client at his doorsteps, and providing products and services in a customized
manner. Thus, with these changes customers' expectations and perceptions of service
quality are bound to change.
Today's customer is not going to settle on anything less than his/her expectations. To
compete, successfully, with each other, banks are using different marketing strategies to
live up to the customers’ expectations and stay ahead in the league. Banks have focused to
develop strategies to differentiate themselves from their competitors and providing their
Introduction
16
customers with high quality banking services and highly technology innovative products.
Due to the rapidly changing environment, service quality and customer satisfaction is
gaining the greater attention of all banking institutions.
Banking institutions are acknowledging that unless customer needs are taken into account
in designing and delivering services, technical superiority will not bring success (Zeithaml
and Bitner 1996). New marketing concepts and strategies are paying greater attention to
identifying customer needs and expectation and offering high service quality to customer.
As argued in literature of service quality, it is probably the effective measurement,
management and improvement of service quality which will enable banking institutions to
achieve a differential advantage over their competitors.
1.9 Need of studying Service Quality in Banking:
Customers play very important role in development of services industry particularly
financial services. Therefore, customer service is an essential in the banking service to
compete in the market driven environment. Measurement of service quality is difficult in
banking sector as compare to the manufacturing sector as services are intangible in nature.
Increasingly, service quality has used as a strategic tool by the various market players to
position themselves effectively in the market.
Service quality has become a critical prerequisite for satisfying and retaining valued
customers in banks. The interest is largely driven by the realization that high service
quality results in customer satisfaction and loyalty with the product or service, greater
willingness to recommend someone else, reduction in complaints and improved customer
retention (Zeithaml et al., 1996). Further, a satisfied customer is likely to be a loyal
customer who will give repeating business to the bank (Heskett et al., 1994). Most
importantly, the cost of retaining current customers by improving product and services is
significantly lower than the cost of winning new customers. Because of the importance of
the service quality and customer satisfaction as a route to competitive advantage and
corporate profitability in banking, it has become difficult to identify a single bank which
has not initiated some kind of service quality improvement drive.
Also, a clear and detailed understanding of the demands of the various market segments is
essential to successfully target new base (Yavas&Yasin, 2001).Undoubtedly, owing to the
belief that delivery of high service quality is a must for attaining customer satisfaction and
Introduction
17
a number of other desirable behavioral outcomes, recent years have witnessed a flurry of
research exploring interrelationships between service quality and customer satisfaction.
This study will expand the research in Indian banking sector. Specifically, the study will
conduct a survey of Indian bank customers to develop theoretically and empirically the
understanding of the relationship between Service Quality, Customer Satisfaction,
retention, loyalty & commitment. This study seeks to evaluate empirically the degree of
effect on service quality on customer satisfaction retention, loyalty & commitment. While
studying the factors affecting service quality, attempts will be made to clarify the
relationship between service quality with customer satisfaction retention, loyalty &
commitment in Indian public and private sector banks.
1.10 Background of the Study:
Major reforms and transformations have happen in Indian Banking Sector in past years
after the privatization and liberalization. Due to fierce competition in the financial market,
bank players have started sensing the importance of the service quality an instrument in
achieving competitive advantage. Banks have started utilizing significant proportion of
their budget on expenditure related to the service performance such as employees training.
It has been studied that once customers’ expectations are met or exceeded than customers
are likely to get satisfied.
Satisfied customers are likely to become loyal to the service firm & give repetitive
business to the firm. This grounded the customer commitment towards the service
provider. As the cost of acquiring new customer is very high and hence it is very much
essential for the banks to retain the customers for longer period of time. For effective
marketing strategy formulation, an information about the customer’s perception of the
service quality is very much required.
Several research has been done in past to check the service quality and this has resulted in
the formulation of service quality models such as SERVQUAL and SERVPERF. But it has
also been studied that, these models are not completely applicable and suitable in Indian
Service Sector. Moreover, the entire service sector is very dynamic and changing from the
time to time. Therefore, periodic research is needed to the study whether the quality of the
service delivered by the banks are meeting the customer expectation or not.
Introduction
18
Plentiful research have been done the field of service marketing in various service industry
across the world. The studies have mainly focused on the markets of the developed
countries and a few Asian markets neglecting less sophisticated Indian markets such as
banking. This has motivated researchers to study an impact of service quality on customer
satisfaction, retention, loyalty and commitment.
1.11 Purpose of the Study:
Service Quality is mostly researched topic that has gained considerable attention from
researchers. Focusing on delivering good service quality has been main focus of the all
service providers and this has helped them to position themselves effectively in market.
The main problem identified in the study was that majority of the banks are not having
systematic mode of evaluating and monitoring the quality of the service offered to the
customer. The purpose of the study is to analyze whether the quality of service offered by
their banks is meeting their expectations or not.
This research tries to get insight about what customer think about the quality of the service
that they receive from their respective banks. Particularly, this research will identify those
factors of the service quality that contribute and influence customer satisfaction, customer
retention, customer loyalty and customer commitment. This research will examine how
selected four banks – State Bank of India, Punjab National Bank, ICICI Bank and HDFC
Bank perform in terms of service quality.
This research will investigate the impact of service quality on customer satisfaction,
customer retention, customer commitment and customer loyalty. Moreover, service quality
will also be studied based on demographic factor such as gender, age, income, occupation
and education. While studying the service quality, this research will guide management of
the banks about the important factors to be considers to improve the overall service quality
performance.
1.12 Statement of the Problem:
A great deal of research has been done on the subject of service quality and its dimension
in the context of banking sector. However, a little effort has been made to link dimensions
of service quality with customer satisfaction, retention, loyalty and commitment in Indian
Banking Sector. It has been found out in the literature that, SERVQUAL is not completely
Introduction
19
applicable in Indian context and hence the major problem of the study was to identify the
factors of service quality in Indian context in banking sectors. Further, problem of the
study was to examine impact of service quality on customer satisfaction, retention, loyalty
and commitment in Indian public and private sector banks.
1.13 Scope of the Study:
The research carried out in the thesis focus on service quality and its impact on customer
satisfaction, retention, loyalty and commitment in four banks: SBI, PNB, ICICI and
HDFC. Four major cities of Gujarat were selected: Ahmedabad, Baroda, Surat and Rajkot.
50 customers from each bank in each city were selected for conducting the research. The
selections of the four banks were done on the basis of market capitalization value in the FY
2011. SPSS 20 and AMOS 20 software were used for analysis of the data. This research
would guide the banks in improving service quality and understating its impact on
customer satisfaction, retention, loyalty and commitment.
1.14 Objectives of the Study:
The following research objectives were used as the basic focus of the investigation.
1. To study the factors contributing to the Service Quality.
2. To find out correlation between service quality, customer satisfaction / Retention /
Commitment & Loyalty
3. To study the impact of service quality on customer satisfaction / Retention /
Commitment & Loyalty.
4. To identify important factors of service quality from the demographic perspective of
customers.
5. To rank the selected banks based on the service quality.
1.15 Significance of the Study:
This study contributes to the body of literature as well as to the bank management. In an
era of globalization service quality has become eminent feature of the banking services.
Determining various literature of service quality, efforts were made to identify the
Introduction
20
important factors of service quality and how it affect the customer satisfaction, retention,
loyalty and commitment in selected four banks. Despite of these, it has not been sufficient
to understand complicated factors of service quality and its impact on customer
satisfaction, retention, loyalty and commitment due to various situation, time and
customers. Due to the intense competition exist in the banking sector, the result of the
study could give some suggestion to the management of the banks pertaining to the service
quality and improvement in it. And hence it will ultimately lead to the customer
satisfaction, retention, loyalty and commitment in the banks.
1.16 Structure of the Thesis:
This thesis comprises of chapters, and the chapters will be settled as following:
Chapter 2:Review of Literature
This chapter starts by describing the concepts of the service quality & how it affects the
customer satisfaction & in turn retention, commitment & loyalty. This chapter has explored
the study carried out with the reference to the Indian banking sector. Lastly this chapter
provides literature review on service quality & four construct of the consumer behavior
and also found out whether, there is any relationship between service quality & customer
satisfaction, retention, loyalty & commitment taking Indian Banking Sector into the
consideration.
Chapter 3: Research Methodology
This chapter includes the research hypothesis. This chapter has identified the suitable
research design and administration of the research. The questionnaire structure, format,
content, translation, the procedures of the data collection and pilot study is being discussed.
Chapter 4: Data Analysis
This chapter provides the detailed result of the analysis. To carry out data analysis, SPSS
package is used & based on the research objectives as well as hypothesis suitable statistical
tools are selected.
Chapter 5: Discussion of Findings,
This chapter provides a summary of the overall study and highlighting its major findings.
Introduction
21
Chapter 6: Conclusion, Major Contribution and Scope of Further work
This chapter provides a summary of the overall study & conclusion. It also provides a
theoretical & practical implication and limitations, and suggesting future opportunities for
further research.
Literature Review
22
CHAPTER–2
LITERATURE REVIEW
2.1 Introduction:
In the past few decades, service quality has received a lot of attention from researchers and
practitioners because of its strong impact on business performance, customer satisfaction,
customer loyalty and retention. Service quality is usually understood as a measure of how
well the level of the delivered services matches customer’s expectations (Santos, 2003).
According to the definition of Gro¨nroos (1984) service quality is “the outcome of an
evaluation process, where the consumer compares his expectations with the service he
perceives he has received”. Furthermore, Parasuraman et al. (1988) defined service quality
as “the overall evaluation of a specific service firm that results from comparing that firm’s
performance with the customers’ general expectations of how firms in that industry should
perform”. Dr. H.S. Sandhu et al (2011), found out in their research that SERVQUAL
instrument cannot be applicable to the Indian life insurance sector and further research is
necessitated to comprehend the service quality within the Indian context in similar sectors.
Majority of the service provider deliver higher level of the services as a part of their
business strategy in order to position themselves ahead in the market competition. Most of
the Indian Banks perform the same function & therefore customers place service quality on
the top in their priority list while choosing a particular bank. Moreover, the banks carry
their business with public money & hence customer expects better service from the bank,
they choose. In such situation, customer select the bank based on the quality service
offered to him. Therefore, banks prosper or decline majorly depend on the quality service
offered to the customer and due to this reason majority of the banks in India have placed
service quality at the top of the list of business strategy.
In a view of the importance of the services and its impact on various variables of consumer
behavior, the literature review begins with overview of the concept of service quality,
customer satisfaction, loyalty, retention & committee. This literature review also provides
theoretical framework for this study and the research objectives to be formed.
Literature Review
23
2.2 Service Quality:
2.2.1 Definition of service quality:
Since decades, service quality has been widely studied by many researchers but there is no
common consensus about the conceptualization of service quality. Different researchers
have focus on the different aspects of the service quality. The most common definition
among the researchers for service quality is that “service quality is the customer’s
perception of service excellence which means quality is defined by the customer’s
impression of the service provided” (Berry et al. 1988; Parasuraman et al. 1985). The main
assumption behind the definition of service quality is that customers build their perception
of service quality based on their past experiences of service performance and therefore the
customer’s perception decides service quality.
There are many other definition for the customer’s perception of the service quality.
Takeuchi and Quelch 1983 have studied that consumer’s attitudes or judgements are
resulting from comparisons by consumers of expectations of service with their perceptions
of actual service performance. (Berry et al. 1988; Gronroos 1982). Berry (1980), along
with Booms and Bitner (1981), argue that, due to the intangible nature of services,
customer use elements associated with the physical environment when evaluating service
quality. Managing the evidence and using the environmental psychology are often seen as
important marketing tools.
Levitt (1981) proposes that customers use appearances to make judgments about realities,
and less tangible a product the more powerful is the effect of packaging in judging that
product. Hostage (1975) for his part, believes that a service firm’s contact personnel
comprise the major determinant of service quality, while Lewis and Booms (1983) propose
that service quality resides in the ability of the service firm to satisfy its customer needs,
i.e. customer satisfaction. Lehtinen and Lehtinen (1982) have defined service quality in the
context of physical quality, interactive quality and corporate (image) quality. According to
them, Physical quality relates to the tangible aspects of the service. Interactive quality
deals with the interactive nature of services and refers to the two-way flow that occurs
between the customer and the service provider, or his/her representative, including both
automated and animated interactions. Corporate quality refers to the image attributed to a
service provider by its current and potential customers, as well as other publics. They also
Literature Review
24
suggest that when compared with the other two quality dimensions, corporate quality
tended to be more stable over time. But the traditional approach for defining service
quality emphasizes that service quality perception is a comparison of consumer
expectations with actual performance (Gronroos 1984; Lewis and Booms 1983;
Parasuraman et al. 1985; Parasuraman et al. 1990). Madu and Madu (2002) defined the 15
dimensions of online service quality: performance, features, structure, aesthetics,
reliability, storage capacity, serviceability, security and system integrity, trust,
responsiveness, product/service differentiation and customization, Web store policies,
reputation, assurance, and empathy.
2.2.2 Characteristics of Service:
The most important and unique feature of services, is that services are processes, not
product. Another important characteristic is that service production & consumption takes
place at the same time and along with the service provider, consumers are also equally
involve in the service process. Due to these characteristics, service firm has no products,
but only interactive processes. The characteristics that differentiate services from
manufacturing in the context of quality have been illustrated by many researchers (Bitran
&Lojo, 1993; Parasuraman, et al., 1993 and Zeithaml, et al., 1996) as follows:
Nature of Products - which are basically intangible in services including a tangible
action. Therefore customer satisfaction in services is not only influenced by objective
measures of performance but also influenced by intangible aspects during the service
performance.
Heterogeneity - It creates another challenge for quality management in services,
because quality in service is not just ensuring conformity to standards, but taking into
account service diversity of customers while the service delivery is taking place. It
also take into account the behaviour and expectations of the customer being served
and the need to customize the service delivery accordingly.
Simultaneity - It means most services are produced and consumed at the same time.
This represents a difficulty in quality management of services because it is not
usually possible to actively monitor all service deliveries that are taking place and the
service cannot be inspected before its consumption.
Perishability - It refers to the fact that services cannot be saved, stored, resold, or
returned because they are performances. A seat on an airplane or in a restaurant, an
Literature Review
25
hour of a lawyers time, a medical/academic advice or telephone line capacity cannot
be reclaimed and used or resold at a later time which is quite in contrast to goods
(Zeithaml,et.al , 1985).
Due to intangibility, heterogeneity, perishability and simultaneous production and
consumption, it has become very difficult to measure the quality of the service. Therefore,
quality is relative & subjective and depends upon perceptions & expectations of the
customers related to the service delivery.
Parasuraman, et.al. (1985) suggested that the criteria used by consumers that are important
in moulding their expectations and perceptions of delivered service fit ten dimensions:
tangibility, reliability, responsiveness, communication, credibility, security, competence,
courtesy; understanding/knowing the customer and access. Subsequent research, analysis
and testing by Parasuraman, et.al. (1988) have condensed these into five dimensions of
service quality:
1. Tangibility : physical facilities, equipment, appearance of personnel
2. Reliability : ability to perform the promised service dependably and
accurately
3. Responsiveness : willingness to help customers and provide prompt service
4. Assurance : knowledge and courtesy of employees and their ability to
convey trust and confidence
5. Empathy : caring individualized attention the company provides to its
customers
Above listed characteristics make service unique & special which has its own
measurements & concepts. Following table summarises the main difference between
services & products:
Literature Review
26
TABLE 2.1 Difference between goods & services
Goods Services Tangible Intangible Homogenous Heterogeneous Production and distribution separated from Consumption
Production, distribution and consumption simultaneous from consumption
Represents a thing Represents an activity or process Core value produced in factory Core value produced in buyer-seller
Interactions Customers do not normally participate in the production process
Customers participate in production process
Can be stored Cannot be stored Transfer of ownership No transfer of ownership Source: Gronroos (2000, p: 47)
2.3 Models of Service Quality:
Since a decade, many researchers have tried to develop various models on service quality
that act as a different construct from the product quality. The main objectives of the service
quality models is to describe factors affecting the service quality in the firm & find out the
solution of the service quality problem and also develop the framework for improving
service quality programs. (Ghobadian, Speller. and Jones, 1994).
2.3.1 Gronroos's Model
Gronroos (1984) developed the service quality model in order to understand how
customers perceive and assess service quality, and also to find out in what way service
quality can be influenced. The Gronroos's model is based on an assumption that perceived
service quality is the outcome of the consumer's comparison between his/her expectations
and perception (the outcome of the evaluation process). Apart from that, this model also
studies that the overall evaluation and perception of service quality highly depends on
three dimensions: technical quality, functional quality and image. The image dimension
answers two questions: what a customer gets from the service company and how a
customer gets this service. So, Gronroos's model tries to study what customers in a service
setting are looking for and how they evaluate it. As a result, the service provider will be
able to control, affect and manage the customer's evaluation in the desired direction
(Gronroos, 1989). Following figure illustrates the Gronroos model of perceiving service
quality.
Literature Review
27
What? How?
FIGURE 2.1 TheGronroos’s Model
Source: Gronroos (1984, p: 40)
In this model, perceived service quality is the results from three dimensions of quality;
technical, functional and image (Gronroos, 2000):
Technical quality or outcome dimension: Technical quality means what the
consumer gets as a result of his/her interactions with a service firm. So, this
dimension represents the physical outcome of the service delivered to customers, e.
g. a room or a bed provided for a guest in a hotel.
Functional quality or the process-related dimension: Functional quality shows
how the customer gets the service, and how he/she experiences the production and
consumption process, i. e. the way the outcome of the service is delivered to the
customer. So, this dimension focuses on employees' performance and their buyer-
seller interactions with customer, i. e. this dimension indicates the psychological
Perceived Service Quality
Functional
Quality
Technical
Quality
Image
Traditional marketing activities (advertising, field selling, pricing); and external influences by traditions, ideology and word of mouth
Perceived
Services
Expected
Services
Literature Review
28
aspect of the service delivered, e. g. the staff's behaviour in a bank, hotel or
restaurant.
Image: This dimension implies the result of the customer's recognition and
perception of the technical and functional quality dimensions. Hence, the firm's
image, which represents one of the quality dimensions, will affect the customer's
perceived service quality. In addition to the technical and functional dimensions,
corporate image can be influenced by other variables such as price, external
communications, physical location, the appearance of the site and the competence
and behavior of service provider's employee(s) (Ghobadiane t al., 1994).
Kang and James (2004) support the Gronroos's model stating that this model provides a
wide illustration of service quality perception through including the main dimensions of
service quality. So, in other words, the technical quality dimension explains service quality
after the service is performed while the functional quality dimension explains service
quality during delivery of the service. Thus, such a model involves all dimensions of
service quality construct.
Finally as a part of the conclusion, it has been derived from the Gronroos’s model that
functional quality is the most important dimension of service quality followed by corporate
image dimension as it is more dependent on functional dimension and word-of-mouth
communication. And corporate image can compensate the problems in both temporary and
overall technical quality dimension.
2.3.2 Lehtinen and Lehtinen Model:
Lehtinen and Lehtinen (1991) proposed another model to give more details on how
customers perceive service quality. The researchers have proposed two approaches to
understand service quality: the first approach is three-dimensional and second is two-
dimensional. The first approach indicates three dimensions of service quality: (1) Physical
quality, (2) interactive quality, and (3) Corporate image.
Physical quality is further classified in two components: physical product components
which basically refer to the goods deliver during the interaction process like food in
restaurant & physical support components provide a framework where service can be
easily produced & deliver. Physical support components if further divided in two
categories in this model: the environment that comprised of physical layout of the service
Literature Review
29
production firm and second category is instrument that includes tools required for
producing & delivering the services like black board & chock stick in education service.
Interactive quality is with reference to the interaction held between customer & service
personnel of the service firm. As per this model, service production can be done by service
provider (interactive person) or by physical equipment (interactive equipment).
Sometimes, interaction also takes place among the customers as well.
Corporate image refers to what current & potential customers perceive about the company.
This is the only dimension of the service quality which can created before consuming or
experiencing the service from any of the service organization. In addition to that, word-of-
mouth has a great influence on corporate image.
The second approach in Lehtinen and Lehtinen's model emphasizes on the service quality
process and its output. Process quality refers to the consumer’s experience of service
production process. Basically it assess the fit exists between the participation of the service
personnel & consumer. The degree participation gets differ from the service to service.
For example, there will be heavier participation of customer at ATM machine as compare
to hair salon.
Output quality deals with the customer’s evaluation of the service process. Evaluation of
service is very difficult on the part of the customer as well as service provider. Service
output is not only measured by the customer but also by any person around them and hence
output quality represents the overall result of the service process.
2.3.3 SERVQUAL Scale:
Parasuraman et al (1985; 1988) developed the SERVQUAL scale based on the gap model
and it was used as an instrument for measuring customers' perceptions of service quality.
Parasuraman et al have identified the ten dimensions of the service quality: reliability,
responsiveness, competence, access, courtesy, communication, credibility, security,
understanding (knowing the customers) and tangibles. These dimensions signify the key
factors or elements which can be used by customers to evaluate service quality.
Ten dimensions of SERVQUAL categorized into two groups of statement: the first group
of statements measures customer’s expectations about the firms and second group of
statements measures customer’s perception of service. Half of the statements are positively
Literature Review
30
formed & half of the statements are negatively formed. Hence, ten dimensions are used as
foundation for developing the SERVQUAL scale.
Later, researchers of SERVQUAL found that some items in scale are overlapping &
convey the same meaning. Due to overlapping, researchers had refined and improved the
scale. Parasuraman et al (1988), had conducted various stages of data collection &
statistical analysis to refine the scale and final set of the service quality includes only five
dimensions; reliability, responsiveness tangibles, assurance and empathy
(Fitzsimmons and Fitzsimmons,2006).
According to the SERVQUAL scale, the outcome for each dimension of customers'
expectations and customers' perceptions are compared to estimate the gap in scores
between the two components. As a result of this comparison, a firm's level of service
quality assessment can be defined, e. g. the larger the gap, the lower the service quality
evaluation, whilst the lower the gap, the larger the evaluation (Hoffman and Bateson,
1997). To sum up, SERVQUAL scale shows the extent to which service performance in
each of the five dimensions of service quality meet the level of the performance customers
expect from the service firm.
The SERVQUAL instrument provides some applications and advantages as stated below
(Parasuraman et al., 1988; Coulthard, 2004):
1. Can be employed in different types of service companies.
2. Offers valuable information about customers' perception of service quality by
measuring them on the key dimensions of the service quality. Thus, the scale offers a
comprehensive framework of five service quality dimensions.
3. Can be used to follow trends in customers' assessment of service quality.
4. Offers an assessment of service quality for each dimension and also an overall
assessment. Apart from that the scale depicts the relative importance of the five
dimensions.
5. It also allows a firm to categorize customers into various segments, as per their
individual degrees of perceiving service quality.
Literature Review
31
Parasuraman et al (1985; 1988) argue that the five dimensions used in the SERVQUAL
scale represent and provide generic instrument and dimensions for measuring service
quality in a variety range of services. Over the past years, the SERVQUAL instrument has
been used widely and extensively for measuring service quality in different contexts and
industries like banking, healthcare, hotels, restaurants retail chains, communication, real
estate, higher education, etc. In addition to that, the SERVQUAL instrument has been used
widely in several cultures and countries including: the USA, UK, China, Honk Kong,
Greece, and so many other countries. The SERVQUAL scale has been imitated and
appreciated well in the service quality literature in the last decades by academics,
researchers and industry people (Buttle, 1996).
2.3.4 SERVPERF Scale:
This scale was established by Cronin and Taylor (1992) to measure service quality as an
alternative approach for measuring this construct. According to the method of measuring
service quality, a performance-based measure of service quality is more valid and reliable
method to measure service quality. Therefore, the SERVPERF scale was developed that
measures only the performance perceptions data. Main assumption of this scale is that
measuring the respondents' expectations is not essential.
In their research, Cronin & Taylor (1992) proved that SERVQUAL is not an adequate
approach for measuring service quality by proposing SERVPERF. In order to act in
response to Parasuraman et al's (1994) criticisms of SERVPERF, Cronin and Taylor (1994)
had reconfirmed the adequacy of the SERVPERF scale for measuring and conceptualizing
service quality after doing another pragmatic study. Brady et al (2002) had adopted the
SERVPERF scale & confirmed the superiority of the scale as more appropriate instrument
for measuring the service quality.
Discussion was carried out among many researchers about whether SERVPERF will
outperform SERVQUAL for measuring service quality or vice versa. To end the
discussion, Carrillat et al (2007) presented result of rigorous meta-analysis study using 17
years of empirical service quality studies. The result signifies the validity of both the scales
for measuring the service quality. Moreover, researchers found that SERVPERF is stronger
than SERVQUAL for service quality measuring with highest correlation coefficient.
Findings of the study also implies that some modification to the extent of the study will
Literature Review
32
increase predictive power of SERVQUAL wherein no changes are required in
SERVPERF. But overall, research proves that both the scales (SERVQUAL &
SERVPERF) are very popular, valid & reliable for measuring service quality.
2.4 Service Quality in Banks:
Koushiki (2013) studied that service quality has strong impact on customer’s purchase
intention. The research was conducted in Indian Banking Sector. It has been found out that
reliability is the most important factor of the service quality followed by employee
behavior, tangibles and convenience. The same author has conducted research in 2014 in
order to study how the different dimension of service quality influence the customer’s
word – of – mouth. The findings of the study revealed four dimensions of service quality in
retail banking, namely, attitude, competence, tangibles and convenience and showed that
the service quality factor attitude is most important in influencing WOM.
According to ShirshenduGanguli, Sanjit Kumar Roy, (2011), four dimensions of service
quality has been identified that has significant impact on customer satisfaction and loyalty.
These dimensions are customer service, technology security and information quality,
technology convenience, and technology usage easiness and reliability.
Anand Sharma et al (2014) found in his study that Customer loyalty is very significant in
creating and retaining competitive advantage in the service industry specifically in sectors
like banking industry in India. This realization has made industry researchers and
academics to pay more and more attention to studyservice quality dimensions and their
impact on customer satisfaction and loyalty. It has also been further discussed in the paper
that, there is an impact of service quality on customer satisfaction and loyalty in public and
private sector banks.
V. Surekha et al (2015) discussed in their paper that a small perceptual difference exists
among the customers regarding overall service quality in public and private sector banks.
The respondents of the public and private sector banks mostly concentrate on the staffs of
the banks for improving customer satisfaction. If banks want to sustain customers on a
long term basis, bankers should work towards 100% customer satisfaction that
automatically foster customer delight.
Literature Review
33
Abdel Fattah Mahmoud Al-Azzam (2015) confirmed interrelationships among service
quality and customer satisfaction in the retail banking sector. It has been indicated in his
paper that tangibility has a positive influence on customer satisfaction. This can be
explicated by customer significance of tangible variables in terms of physical facilities,
equipment and staff performance. Customers can evaluate bank facilities, design,
sufficiency, vision equipment, and the appearance of workers in the bank. Finally, he
concluded that service quality has a significant influence on customer satisfaction.
2.5 Customer Satisfaction:
In today’s era, the change has observed in the market from manufacture based market to
customer based market. Customers have become valuable asset for the company for which
they compete in the market. Customer’s expectation about the products or services has
direct impact on their satisfaction and hence it is very important for an organization to have
knowledge about the customer satisfaction that will help them to improve their quality of
the services offered to the customers. (Chen, 2004).
2.5.1 Definitions of Customer Satisfaction:
As per the previous research, degree of the satisfaction differs from the customer to
customer as per their likeness, expectation, perception or motivation from the particular
product or services. Reichheld, and Sasser (1990) researched 14 businesses and found that
if a business reduces 5% of the customer loss, it will improve 25 – 95% of the income.
Muller (1991) researched that customer satisfaction will become the future key to success
because customer satisfaction directly influences their loyalty & re-purchase decision.
Customer satisfaction is an indicator that customers have used the product or consumed the
services. Following is the definition of the customer satisfaction.
Kotler (1991) defined the customer satisfaction as a customer perception that compares
their pre-purchase expectation with post-purchase perception. According to Oliver (1981),
customer satisfaction is the evaluation a customer makes to a certain exchange, which
reflects the relation of the customer expectation and their real perception to products or the
services they receive. Expectation is the short-term prediction. Customer satisfaction is the
reflection of the service quality. It comes when the customer satisfaction occurs when the
two are equal, or the latter exceed the former (Cronin & Taylor, 1992; Kotler, 1991).
Customer satisfaction is greatly affected by the quality of the product or services.
Literature Review
34
As per the definition of Oliver, 1997 &Zeithaml&Bitner 2000, Customer satisfaction is the
customer’s evaluation of services after purchase as oppose to their expectation. Anderson,
Fornell& Lehmann (1994) mentioned that customer satisfaction is the overall experience
customers have when purchasing & consuming the services. It is accumulative perception
that will influence product quality, service quality & customer re-purchase decisions.
Customer satisfaction & service quality are directly related to each other. Improving
service quality leads to the improvement in customer satisfaction. (Zeithaml&Bitner 1996).
According to the definition of Baker & Crompton (2000), satisfaction is the personal
experience and mentality related the nitration between personal expectation & actual
receive. Ostrom&Iacobuci (1995) mentioned “Satisfaction is the subjective opinion. It is
the benefit that customer get from purchasing products or services.” It is basically
reflection customers make to their previous purchase. If is always exceeds their
expectation their loyalty increases. It provides value to the business.
Satisfaction is a psychological reflection. Satisfaction directly has influence on customer’s
post purchase behavior such as praising, complaining, increasing / decreasing loyalty,
attitude & brand switching.
2.5.2 Measuring Customer Satisfaction:
Caedozo (1965) suggested that using overall measurement to record customer’s response
to different attribute of products & services. As per the research of the Day (1977),
customer satisfaction can be measured by studying the individual part of the services to
learn customer’s real feelings and then add them together to get overall evaluation. Bitner
(1990) said service is intangible & different from product. To measure customer
satisfaction in case of services, he had introduced physical aspect, process management &
personnel to the 4P of marketing mix.
Churchill (1982) summarized the following four concepts:
1. Customer Expectation: Benefits customers expect before purchasing products or
services. It is the expected quality of products or services.
2. Product / Service Quality: Customer’s evaluation after purchase. It is compared
with customer expectation.
Literature Review
35
3. Disparity: The differences of customer expectation and service quality. The
difference will influence the evaluation customers give to the services.
4. Customer satisfaction: when customer expectation equals service / product quality
or vice versa.
Kuo (1999) recognized seven factors influencing customer satisfaction: service, content,
price, convenience, corporate image, equipment, staff and procedure. Huang (1998)
identified five factors influencing customer satisfaction: product, service, staff, overall
performance of the products and closeness to the expectations. Customer satisfaction
basically reflects customer attitude which is not quantified and objective in manner.
Various rating scales are used by many researchers to measure customer satisfaction.
Rating scale methods are as follows:
1. Simple satisfaction scale: From 7 – 1, this scale rates customer satisfaction from
Completely satisfied, Very satisfied, to a Little satisfied 7 Not Satisfied.
2. Mixed Scale: From 7 – 1, this scales rates customer satisfaction from Very
Satisfied to Not satisfied wherein very satisfied & not satisfied are at opposite end
of the scale.
3. Expectation Scale: This scale basically measures the service quality. Measurement
standards are the difference between customer expectation & perception to the real
service received by the customer.
4. Attitude Scale: This scale is use for measuring customer attitude & feelings towards
the services. Rating ranges from 1 – 3 or 5 – 7 from Like, Very much like to Do not
like and dislike very much. Higher the customer rate more satisfied they are.
5. Emotion Scale: This scale measures customer’s emotion towards service. Positive
emotion is result of customer satisfaction & negative shows dissatisfaction.
Yau and his colleagues (2000) developed and validated a measurement of Relationship
Marketing Orientation (RMO) scale & had defined it as “The RMO centers on the creation
and maintenance of relationship between two parties of exchange, the supplier as an
individual and the customer as an individual through the possession of the desire to be
mutually empathic, reciprocal, trusting, and to form bonds.” This scale is basically having
six dimensions: Trust, Bonding, Reciprocity, Empathy, Communication and shared value.
Literature Review
36
Customer satisfaction and purchasing behavior can be described as a cycle. Customer’s
post – purchase perception to product or service have direct influence on their re-purchase
intentions that results in positive word-of-mouth & influencing other people as well.
Service industry faces more difficulty as compare to manufacturing sector in measuring
customer satisfaction & hence service industry more effective system to be design for
assessing customer satisfaction which will help the service firms for improving the quality
of the services offered to the customers.
Customer satisfaction is the degree of the happiness customers have towards the products
or service & it also shows the probability of repurchase intentions. Satisfaction is the
outcome of the comparison between the expectation & actual experience. Organizations
should always try to identify the reasons why customers are not satisfied; it should be
discussed addressed promptly because old customers bring new customers. Unsatisfied
customers will quit & also take potential customers with them.
Every research studies the relationship of the different items with the satisfaction level &
determines the sequence for improvement. The following is a ranking system provided by
Japanese Efficiency Association 1994;
1. Excellent Items: Items have a strong effect on satisfaction. Customers are very
satisfied with them.
2. Problematic Items: Items have strong effect on satisfaction. Currently, customers are
not very satisfied with them.
3. Questionable Items: Items do not have a strong effect on satisfaction and customers
are not very satisfied with them.
4. Mediocre Items: Items that do not have a strong effect on satisfaction and customers
are highly satisfied with them. They do not need any change at present time.
Because of the unique nature of the services, it is very much important to study customer
satisfaction separately in service industry. Whether customer is getting what they are
expecting or are they being underdeliver? According to the Zahorik, Rust (1992), service
fails because of the gap between expectation & perfromance of the services on any of the
five dimensions: tangibles, reliability, responsiveness, assurance or empathy that will
ultimately result in customer dissactisfaction & in order to avoid customer dissatisfaction,
Literature Review
37
management ought to identify customer’s needs & desire in order to design service to serve
them.
Further researchers opined that Satisfaction has long been recognized as an important
model of customer reactions to the service design often incorporate it as a variable. Are
customer’s complain being properly addressed? It has also been highlighted by the
researcher that how customers’ who complain may have more loyalty than those who don’t
and customers whose complain have been successfully remedied may be more loyal still.
In late 1980’s, it was believed that to focus on service quality as toll for increasing or
maintaing market share was not a priority. These belief are not held in high esteem today.
Parasuraman, Zeithaml & Berry (1988), stated that customer satisfaction is directyl linked
with profits & lowering customer defection rate can be profitable to the company & infact
it is more profitable than gaining market share or lowering costs. In addition to this,
researchers also added that the longativity of customer’s relationship favorably influences
profitability. Customers who remain with the firm for periods of years because they are
pleased with the service & more likely to buy additional services & spread positive word-
of-mouth than short term customers.
In fact author says that these long term relationship also provide price insulation allowing
the service provider to charge higher prices and the customer willing to pay those increased
prices to maintain the relationship and obtain the value they believe they are receivening.
But how satisfied customers have to be lift up service provider to this level? Zeithaml,
Berry & Parasuraman (1995) continue in their research that thresholds of the service
appear to affect the consumer behavior. When satisfaction rose above the a certain
threshold, repurchase loyalty climbed rapidly. In contrast, when satisfaction fell below a
threshold, customer loyalty declined with equaly rapidly. So the research continues to
suggest that a positive service experience does affect customer satisfaction & subsequently
retention.
Anderson, Fornell and Rust (1997) examined that what had to surrendered to atain desired
threshold further researchers explained that the firm wants to achieve superior level of the
customer satisfaction needs to devote resources for handling return, rework, warranties &
complaint management & thus by doing so, firm can lower down the costs & improve
Literature Review
38
productivity. Further authors stated that reducing defects leads to greater productivity,
favorable word-of-mouth & price premium.
Andreassen (2001) states that whether superior service recovery efforts leads greater
satisfaction than if nothing had gone wrong. He further explored whether this phenomenon
would turn an indifferent customer to satisfied customer or not and findings of the showed
that customers who had gone through the service recovery phase were no different than
ordinary satisfied customers.
In a research carried out by Zemke in 2002, it was found out that today’s consumers are
savvier than the consumers of past & harder to satisfy. Poor customer service directly
affects satisfaction which in turn affects customer retention. Today’s customers are more
educated & informed. The new customer is more sensitive to disparities in service.
According to the Jones, Taylor, Becherer and Halstead (2003), customers who understand
the service instruction are more satisfied & less likely to switch. This research has
emphasis more on expectations & the role those expectation plays in satisfaction.
Reserachers further add that When expectations are met or exceeded, customers report
higher level of satisfaction. Therefore it is very important step for a service firm in
managing customer satisfaction is creating relaistic expectations. Literature also suggests
that thorough knowledge of use of service will enahnce the knowledge & benefit of the
service and lead to greater satisfaction & reduce switching behavior. Additionally, this
satisfaction lead to advocay through positive word of mouth.
Ranaweera and Prabhu (2003), write that The more satisfied customers are, greater the
retention rate, positive word-of-mouth, & financial benefits to the firm. Mere satisfaction is
not enough. In their research, researchers found out that, there are varying degree of
customer satisfaction & trust is one important key determinant that is having direct impact
on customer satisfaction. Customer satisfaction is also found to be stronger drive of
customer retention. Further authors investigated, importance of service recovery after
service failure & stated that customers are ready to accept apology & compensation offered
by the service provider as a part of service recovery process.
Jones & Farquhar (2003), researcherd on banking industry & acknowledge that perception
of service quality & customer satisfaction have influence on customer loyalty. Service
personnels play key role in customer satisfaction as banking industry is known for having
Literature Review
39
passel of less than satisfied customers due to the hassel of switching to another bank.
Moreover, customer loyalty is also heavily influenced by services offered by the service
personnels of organization. Authors also mention the strong possibility of customer who is
dissatisfied with service they are receiving as being more susceptible to the competition.
Fecikova (2004), states that there are two type of customers, internal (employees) and
external (market place). Quality springs from a satisfied work force. Altenatively,
employee turnover can be traced external customer dissatisfaction due to poor work
product from the disgruntled staff. Customer satisfaction is ultimately reflected by both
internal & external customers simultaneously.
2.6 Customer Satisfaction in Banks:
Vinita Kaura (2013) has studied the effect of service quality on customer satisfaction in
India Public & Private Sector Bank. Three dimensions of the service quality were
discussed in the paper. Dimensions of service quality are employee behavior, tangibility
and information technology. Dimensions of service convenience are decision convenience,
access convenience, transaction convenience, benefit convenience and post‐benefit
convenience. For public sector banks, except tangibility, all antecedents have positive
impact on customer satisfaction. For private sector banks except tangibility and benefit
convenience all antecedents have positive impact on customer satisfaction.
Vinita et al (2014), examined in their study that the extent to which service quality,
perceived price fairness and service convenience (antecedents of customer satisfaction)
influence customer satisfaction for Indian retail banking sector. Dimensions of service
quality are human behaviour, tangibility and information technology. Dimensions of
service convenience are decision convenience, access convenience, transaction
convenience, benefit convenience and post-benefit convenience. Results indicate that
except tangibility, all antecedents of customer satisfaction have positive impact on
customer satisfaction. Human behaviour contributes maximum in explaining customer
satisfaction. This study highlights the importance of service quality, service convenience
and price in satisfying customers.
Kingshuk&Mounita (2014) stated in their study that Customer satisfaction increases the
existing customer loyalty, repurchase process, awareness of the people about the firm,
decrease the price flexibility, the cost of gaining new customers and prevent the customers
Literature Review
40
being affected from competitive enterprise. With better understanding of customers'
perceptions, commercial banks can ascertain the actions required to meet the customers'
needs. Enhancing the customers� experience is now a crucial component of attracting new
customers and retaining the existing customers in order to grow and protect a profitable
business. Customer satisfaction with respect to service quality is an invaluable asset for the
modern organizations, providing unmatched competitive edge.
2.7 Customer Loyalty:
The early literature on loyalty conceptualized the term as a behavior of repeat purchasing
of a particular product/service over time. Churchill (1942) focused on the purchased
sequence in particular brands, while other researchers (e.g. Brody & Cunningham, 1968;
Cunningham, 1956) measured loyalty through the percentage of purchasing contributed to
a given service business; moreover, Farley (1964) stated on random measures like
probability of purchase. Most of the early studies suppose loyalty in terms of repeated
purchases of the same brand mostly.
The factors that measure loyalty are switching, recommendations, repurchase intentions,
and willingness to pay a price premium. (Anderson & Sullivan, 1993). This approach is
widely used but it is not enough to explore the complex pattern of repeat purchases.
Therefore Day (1969) proposed two category of customer loyalty one is the behavioral and
another is the attitudinal loyalty. He argued that the use of solely behavior-based loyalty
measures because these do not discriminate between true loyalty and temporary loyalty.
The important point is that these spuriously loyal buyers do not have any attachment to
brand attributes, and they can be immediately approached by another brand that provides a
better deal.
Jacoby (1971) investigates a conceptual definition of brand loyalty. He researched that the
significance of a conscious evaluation process, leading to loyal behavior, thereby
excluding random repeat purchase. Many researchers emphasised that true customer
loyalty also should include a positive attitude, and in a sense of commitment to the
organization. (Dick & Basu 1994; Ganesh et al. 2000); Oliver (1997) defined the loyalty of
the same commitment to keep re-buying behaviors of consumers preferred products /
services, these consumers do not have much negative impact of market changes.
Literature Review
41
Jones and Sasser (1995), said that there are long-term and short-term customer loyalty. A
long-term loyal customer has a long-term purchase, and will not easily change their choice,
and the short-term loyal customers will immediately change their minds when they have a
better choice of products or services. According to Weiss and Kurland (1997)‘s research,
the length of relationship lead to the asymmetric investments in customers of different
sources, which adversely affected the direction of the relationship. They have further
questioned the issue that the effect of maintaining strong relationships between service
suppliers and customers, and the benefit of the relationship. Though customers & service
providers have long-term relationship but it must be based on balance between giving and
getting but people always tend to forget giving and favor getting.
Oliver (1997) believed that the customer loyalty means that customers may purchase the
product under the environmental impact or the marketing events prompt the transformation
that possibly hidden in customer behavior, but they would not change their commitment of
repeated purchase and further purchase intention with the preferred product/ service. Ha
(1998) showed that pressures and influences from the social environment explain the
consumer‘s pattern of repeated purchases to buy a specific brand. In fact, the social impact
is so mandatory that although the consumers may have a negative attitude towards a brand,
and she/he decides to buy it in order to avoid the criticism of the social environment
2.7.1 Categories of Customer Loyalty:
Gounaris & Stathakopoulos(2004) have categorized customer loyalty in the following four
categories:
Premium loyalty represents the highest level of loyalty since premium loyal consumers
have a favorable attitude towards the brand, they repeatedly purchase it and, also, they
have the approval of their social environment for doing so.
Inertia loyalty on the other hand is much weaker. Although it encompasses a pattern of
repeated purchases, it lacks both affectional and social reinforcement. Habitual or
convenience-seeking behavior can explain the pattern of repeated purchases.
Covetous loyalty is quite different from both premium and inertia loyalty in the sense that
it does not involve purchasing of the brand. However, covetous loyal consumers have
grown positive feelings and affection for the brand. The social environment reinforces this
Literature Review
42
attitude. Such consumers are important for the company because of the income they
indirectly generate through influencing the choices of peers, relatives, and friends and so
on.
No loyalty is no purchase at all, and a complete lack of attachment to the brand. Also no
social influences to be even cognitively loyal to a brand.
Basically, the development of the concept of customer satisfaction is loyalty intentions,
which meansa willingness to repurchase a brand, which is the company primary concern.
Various researches have been carried out emphasising the benefits of the customer loyalty
to service provider.
As per the research of Xu et al. (2006), those benefits consist of (1) Positive word of
mouth; (2) Increases in the number of purchases; (3) Increases in the value of purchases.
Loyal customers can be very helpful to the service firms for improving service quality, as
they provide genuine feedback about the service quality & in a positive way.
A positive word of mouth is defined as informal communications and evaluations between
existing and potential customers regarding the products or services. It is the result of a
customer‘s view of the value received in a transaction or relationship and can be
understood as the customer‘s overall evaluation of the performance (Hennig-Thurau et al.,
2002). As personal communication is considered as a more reliable source than non-
personal information (Zeithaml & Bitner, 1996), word-of-mouth and oral communication
has strong impact on the future of consumer purchasing decisions. Especially in banking
industry, when the service involves high risk for the customers, word-of-mouth
communication could broaden the customer base for the bank (Hennig-Thurau et al.,
2002).
For the banking industry, Bowen and Chen (2001) mentioned that through providing
strong word-of-mouth, create business referrals, provide references, loyalty of customers
will help bank promote its market performance. These loyal customers will help the banks
in raising sales volume by purchasing broader categories of the bank‘s products or by
making frequent purchases. Some banks are only worried about meeting customers‘
expectations, in a high level of customers‘ satisfaction. These banks think that repurchase
will be increased if they satisfy customers‘ needs.
Literature Review
43
However, Jones and Sasser (1995) had proven that customer repurchase does not
necessarily mean that customers are loyal. They might at any time defect and for different
reasons.
Shankar, Smith, & Rangaswamy, (2003) stated that loyalty and commitment strengthen
overall satisfaction and made customers to be tolerant to the disappointing experiences.
From a managerial perspective, it is very essenatial for management who is responsible for
customer retention programs need to provide information on the determinants of customer
loyalty. This is particularly important for managers to know for which customers could
rely heavily on satisfaction as a driver of loyalty. Bitner (1990) shows that satisfaction has
an mediated effect on loyalty by perceived service quality.
According to Jones and Sasser (1995), there were two types customers predominate:
loyalists and mercenaries. Loyalists are very satisfied customers who are willing to buy
back, while mercenaries are mild-satisfied customers who do not have a long-term
commitment and are continuously finding a better deal from another company.
In sum, maintaining customer loyalty in the long-term could be one of most important
strategies for service industry. Steyn (2000) said that, loyalty brings growth in customer
base and generate benefits for an industry. Therefore how to develop the potential
customer value through maintaining higher quality of service and then loyalty of customers
is at the heart of most service industry.
2.7.2 Theoretical framework for the multi-item loyalty scale:
Oliver (1999) hypothesised that there are four phases in the development of customer
loyalty. Each phase has a number of characteristics or dimensions, that act as either
sustainers (attracting the customer to stay) or vulnerabilities (pulling the customer towards
a substitute). The following figure depicts characteristics of customer loyalty development,
there are two mediating factors, sustaining and vulnerability elements. The mediating
factors allow modelling of the continued influence of competitors, advertising, service
failure and other external influences that sustain or make an existing customer’s loyalty
development vulnerable.
According to the author, as As customers progress through the phases of loyalty
development, the sustainers and vulnerability elements change to reflect the degree of
Literature Review
44
involvement. The theory is that once a customer has found a product or service that he or
she enjoys (meeting with expectations of cost, quality and benefits), and continues to use,
he or she becomes less concerned with seeking alternatives and does not respond to
advertising or competitive threats (Oliver, 1999).
FIGURE 2.2 Customer Loyalty Scale
Literature Review
45
2.7.3 Customer Loyalty In Banks:
Rizwan et al (2014) indicated in their paper that service quality, trust and reputation are
positively influences customer’s loyalty. The impact of service quality on customer loyalty
stalks from positive relations between service quality and factors such as reputation and
trust. Improvement in service quality leads to the increase in customer loyalty. Authors
further added that service quality should be given more importance while formulating
strategies for developing customer loyalty.
Sayed and Abdul (2014) researched in their paper that, perceived value and service quality
is important determinants to create the customer satisfaction and trust. The strong positive
correlation of customer satisfaction and customer loyalty means that the bank customers
will recommend the bank to other people. There is a direct relationship between overall
service quality and satisfaction response, the banks should not overlook the importance of
quality, whenever the quality improvement efforts are oriented to meet the
customers’needs.
2.8 Customer Retention:
Reichheld& Sasser (1990) stated that, longer the firm retains the customer, more profit
customer generates. Authors also claimed that higher the retention rates leads to higher net
present value of the customers. This is a result of various factors like effects of the higher
cost of attracting new customers, increased cost of purchases over a period of time,
expanded number of purchases, positive word – of- mouth and mutual understanding
between customers & firm. According to Ahmad &Buttle (2002), Service firms must
improve customer service quality and satisfaction in order to retain customers. Authors
further advocated retention measurement and preventing customer disloyalty by analyzing
complaint and service data and identifying & creating deterrents to customer switching.
Reichheld& Sasser (1996), suggested that in order to succeed in retaining the customers,
firm should adopt the strategies like defining & measuring retention and seeking loyalty by
focusing on the quality of the service. Moreover, strategy should also include changing the
channel of distribution, reducing the number of undesirable customers through filtering,
offering the rewards to service personnel for retaining the customers, using coupons to
distinguish and reward the customer who re-purchase and designing the program to attract
& retain the valued customers.
Literature Review
46
Appiah-Adu (1999) conducted research on increasing the effectiveness of the customer
retention. He recommended that service firms needs to investigate the length & depth of
the relationship through cross-selling. Higher customer retention leads to generate the
higher profits through higher sales, decreased cost for attracting new customers, satisfied
price-sensitive customer and decreasing the cost of customer service. According to the
author, 5% increase in customer retention increased the average customer value by 125%.
Customer retention is the important factor leads to increase profitability & revenue. Boles,
Barksdale & Johnson (1997), proposed that retaining customers is not only cheaper than
attracting the new one but it is also profitable for suppliers & buyers. Authors further
added that companies that retain high percentage of customers can improve their retention
& easily attract the new customers in future. Usually, increased customer retention is
usually associated with higher customer satisfaction. The Harrison company (2003),
defines the customer retention as engaging the customers in a fair and equitable marketing
promises that encourages consolidation and growth of customer relationships for lifetime
and provide the missing piece to the marketing puzzle – RETENTION.
Boles et al (1997) examined the effect of quality of salesperson’s relationship with a
customer on the likelihood of retaining the customer business. They hypnotized that
customer intentions & willingness to continue doing business with the current supplier are
associated with higher level of relationship quality. Research findings indicated that the
quality of salespeople impacts the attitudes and intentions of customers. Customers who
gave high score for their relationships with their sales representative were more likely to
remain customers.
Outstanding service quality leads to the customer retention. According to the research of
Zeithaml (1996), service quality leads to continuing profits, increased expense, payment of
cost and generation of referred customers. Further, author stated that certain behavior
signals that customers are falsifying commitments with the firm. Customers demonstrate
their favorable intentions such as admiring the company, conveying fondness, enhancing
purchasing volume, paying premium readily, making positive comments about the firm to
others and continue buying with the same firm.
Berry &Zeithaml (1988) found the positive and significant link between perceived service
quality of the customers & their intention to refer the firm to the others. Zeithaml (1996),
Literature Review
47
proposed the list of particular indicator of the favorable behavioral intentions and these
indicators are making positive comments about the firm, recommending firm to the others,
paying price premium to the company and remaining loyal to the firm. On the contrary,
inferior service quality leads to unfavorable behavioral intentions that causes customers to
defect from the firms, leading to reduced expenditure, lost customers and increasing the
cost of acquiring the new customers. Author further noted that complaining is perceived as
a mixture of deconstructive responses that arise from discontent & forecast defection.
Tax & Brown (1988), classified complaining behavior into three category: voice responses,
private response (negative word-of-mouth communication) and third-party response
(taking lawful action). Tax & Brown (1998) noted that sometimes customers, who defect
from the firm without explanation later on spread negative word-of-mouth. The propensity
of customers to switch can affect the firm’s market share & profitability. In such situation,
firm needs to understand that customer switch to the competitors because of better or
higher service quality. Customer may only switch because of unsatisfactory service of the
company. It has also been proved in the research of Zeithaml (1996) that improve in
service quality can enhance favorable behavior intentions & reduce unfavorable intentions
amongst the customers.
Barnes &Howlett (1998) presented evidence that service quality is directly related to the
customer retention. Lassar, Manolis and Winsor (2000), explored & confirmed the impact
of service quality on customer satisfaction in banking industry. It is very essential for a
service firm to hire right people as they are the customer’s first impression of organization.
Having wrong people in the customer service can lead to lower sales & decrease in
customer retention. According to Gittell (2002), relationship between service providers &
customers are important for achieving high level of customer satisfaction and customer
retention.
Banking service provider has to understand the consumer and try to influence the
purchasing behavior of the customer. According to Moira (1997), many service providers
use three strategies to minimize the customer defection including discounts, enhanced
services & value added services. Service firms spend numerous resources to attract the
new customers rather than focusing on the retaining the existing one. According to
Pedersen &Nysveen (2001), found that loyal customers reduce marketing cost and raise
entry barriers to the market. Moreover, authors also opined that customers tend to remain
Literature Review
48
with the current service provider when rating customer satisfaction to be very high.
Further it was reported that customer satisfaction & corporate revenue increases 1.3% &
5% respectively, for every 5% increase in employee satisfaction.
Bowen et. al (2001) found that customer satisfaction was significantly related to the
employee satisfaction variables of working climates, colleagues, atmosphere & access to
timely information. As a result, increased satisfaction within the employees of the service
providers can lead to improve service quality, customer satisfaction & retention. Strauss
and Mang (1999) found that cultural differences play significant role in service evaluation.
Researchers have measure the customer evaluation of service provider based on five
dimensions: mutual understanding, provision of extra attention, perceived authenticity in
interaction, competence of service provider and meeting the customer expectation.
Operational environment of the bank have two areas, back-stage and front stage. Back-
stage emphasize on efficiency essential for operations not directly observed by the
customers. Front-stage operations consist of the responsibilities & actions occur at the
moment of truth or when customers directly interact with service staff. Technology-
orientation promotes back-stage activities and people-orientation promotes front-stage
operations. Therefore, banking service business is partly carried out by technology but
mostly through the people.
According to Yavas&Yasin (2001), back-stage operation directly do not affect customer
satisfaction unless & until employees are familiar with the system &/or service. Customer
satisfaction can only being achieved by handling them in a friendly manner. Loyal
customers in banking are defined as those who will stay with the same bank, are likely to
try new products of their bank and willingly recommend their banking service to others.
Thus, customer loyalty is the connection to a company’s products or services above &
beyond that of the competitors in the market place.
In today’s competitive environment, the major challenge in front of the bank is to gain the
new customers & retaining the existing profitable customers. The banking industry is
basically an establishment that involved in admitting demand & other deposits and making
commercial, industrial and customer loans. Currently, banking is one of the key service
industries where customer satisfaction research has increased its importance. The main
reason behind this is growing level of competition. Lassar et al (2000)’s research supported
Literature Review
49
that the banking industry offered a proper setting for comparing models of service quality.
The increased competition has led banking industry to focus on customer satisfaction &
customer retention through improved service quality.
Prior research on bank service provider and customers found that service provider’s morale
is strongly related to the customer satisfaction, customer retention and customer loyalty;
that is when bank customers perceive the front-line service providers to be happy with their
work, these customers are more likely to be satisfied and retain with the bank as per the
research of the Allred (2001). Moreover, author also suggested that in order to maximize
the customer retention in banking, service providers need to pay close attention to the
customer needs & quality of services.
According to Moira (1997), service provider & customer perceptions of service quality are
relevant to the customer retention rates. Author studied two large branches of retail banks.
One retail bank had a higher customer retention rate of 75% and the second had lower
customer retention rate of 60%. The rates were computed by separating all inactive
accounts & including current account holders. Both the banks had similar geographic
locations, size, number of employees and socio-economic profile of customers but the big
difference between these two banks are of the customer retention rate. The research had
identified that customer- employee correlation & practices for conveying service to the
customers are the major reason of having higher retention rate of the customer in one retail
bank.
2.8.1 Customer Retention in Banks:
Muhammed S. Alnsour (2013) discussed the important drivers of relational strategies in
banks: trust, satisfaction, loyalty, commitment, closeness, communication, transparency,
confidentiality, privacy, culture, customer acquisition, and reputation. Strategies proposed
by the researchers in this paper to achieve customer retention include loyalty scheme
programmes, developing product and service quality, continuous contact and two-way
communication, developing the internal customers (human resources) through emphasizing
the important role of internal marketing, and benchmarking with other banks to stay
competitive.
Msoka&Msoka (2014) stated that improve service quality enhance the customer retention
and quality of the service product has significant influence on customer satisfaction. Major
Literature Review
50
indicators of customer retention discussed in the paper are staff kindness, adequate and
timely information, complaints handling and better prices of banks products and services.
Emmah et al (2015) stipulate in their study that Retaining customers is key in giving a
competitive edge in the banking industry. Banks must identify factors that they need to
improve on so as to increase customer retention.Banks need to come up with ways of
rewarding the sales force for retaining customers. Organizations should endeavor to create
value for their customers. For the banks to gain a sustainable competitive advantage, bank
need to extend the quality of their services beyond the core services.
2.9 Customer Commitment:
The famous motivation theory which proposed by Maslow (1943) is the satisfaction of
needs that the origins of the conceptualization of commitment. This paper explores the
meaning of commitment in banking services with particular reference to the relationship of
bank staff vs. their clients and the relationship of bank staff vs. organization. Commitment
has also been closely related to the need for social belonging.
Garbarino& Johnson (1999) have emphasized that commitment is an important component
of successful relationship because it gives rise to mediate behaviors. It will help build a
long-term relationship between the service parties. Commitment is effective to influence
investors‘ decisions that seek to establish and maintain long-term, mutually beneficial
relationships.
Beatty, Homer and Kahle (1988) conducted a research on the distinct constructs of
commitment, in order to state that commitment in the buyer-seller relationship, directly
generate loyalty among customers. In this research, authors had proposed three different
types of commitment, that is, affective commitment, calculative commitment and
normative commitment.
2.9.1 Affective commitment:
According to Allen & Meyer (1990), affective commitment can be defined as a party‘s
willingness to maintain certain relationship. Instead of utility benefit, people choose to
maintain such relationship out of the own sake of this relationship (e.g. the pleasure or the
sense of belonging derived from such relationship). Further authors described that affective
Literature Review
51
commitment is the relative strength of an individual’s identification with and involvement
in a particular organization. Moreover, authors said that since affective commitment is
linked with productive behavior aimed at contributing meaningfully to the organization, it
is often seen as the most valuable part for building commitment for an organization.
Moreover, Jaros, Jermier, Koehler, &Sincich (1993) referred affective dimension as a bond
to an organization as an affective attachment that includes feelings like: affection, warmth,
belongingness, loyalty, fondness, pleasure, and so on.
2.9.2 Calculative or continuance commitment:
Unlike affective commitment, the reason of calculative or continuance commitment is the
review of switching costs of leaving the original counterpart in a relationship. If the
calculation of costs and benefits of available alternatives or substitutes of previous choice
show the higher gains for customer, then they have the higher possibility to maintain a
relationship (Allen and Meyer, 1990). This implies that customers will calculate the benefit
of stay and deduct the cost of leaving, if the result is plus, then the customers will stay in
the original choice as probably. Finally, according to the researcher’s continuance
commitment involves profit associated with continued participation and a ‘cost’ associated
with leaving.
Meyer and Allen,(1990) have extended continuance commitment to further two
dimensions: high sacrifice and low alternatives. The high sacrifice means the personal cost
of discarding and losing an investment in an organization, and the low alternatives means
there are few existing alternatives feasible for the personal individual.
2.9.3 Normative commitment:
Normative commitment is referred as the moral obligation generated from a relationship
(Allen and Meyer, 1990). Authors further defined normative commitment as the
internalized normative pressure to act in a way, which meets organizational goals and
interests. This has been studied extensively & referred as emotional bond between an
employer and employee. In another word, it can be described as the degree to which an
individual feels psychologically attached to an employing firm through internalization of
its goals, values and missions.
Literature Review
52
Allen and Meyer (1990) have explained three different dimensions of commitment:
Affective commitment (desire), moral commitment (perceived obligation) and technical-
economical commitment (perceived cost-benefit). Meyer and Herscovitch (2001) defined
the difference between the moral and affective dimensions of commitment as the moral
commitment being in the rational moral perception and affective commitment as being in
the sphere of desire and feelings. For human behaviors, judgments and feelings can be seen
differently, but still linked together as they are human behaviors that cannot be separated
and only distinguished as mind-sets constructs.
Another aspect of commitment is the focus (or foci) of commitment. Foci of commitment
are the individuals or groups to whom a person is attached (Reichers 1985). People could
be attached to organizations, unions or occupations (entities)-Attitudinal commitment or to
some courses of action (e.g. continuing membership, goals or policies) -Behavioral
commitment conclusively, commitment is described including both aspects (Meyer and
Allen, 1990).
An organization is comprised of various components such as the profession, managers,
work groups and customers. Each component has unique role to play role and keeps its
own goals. If the customers do not receive good service quality from employees than the
commitment of employee towards organization cannot bring benefit for the organization.
Therefore, dual foci of commitment’ is necessary to be emphasized on, added the customer
commitment in the employee commitment (Reichers (1985). According to the research of
Bremmels (1995) and Becker&Billing (1993), Dual foci of commitment’ could be referred
as a distinctive construct, keeping stronger power in explaining commitment than the
single foci construct. In addition, a Dual focus of commitment has important implications
for the relationship between an employee and customer. For example, if an employee is
committed to the organization but not the customer, then the stuff may serve customer just
out of organizational rules, and eventually impact negatively on the service quality
perceived by the customer. Therefore author emphasized that employee commitment is
negatively related to the customer perceptions of service quality.
In this study, role of organizational commitment is also been examined because in service
industry, service personnel plays very important role in providing good quality service to
the customers as they are the one who are in the direct contact with the customers &
actively involved in the service delivery process. Meyer and Herscovitch (2001) present a
Literature Review
53
definition of commitment in the workplace basically, it is a force that binds an individual
to a course of action of relevance to one or more aims. According to Porter, Steers,
Mowday&boulian research (1974), organizational commitment was defined as an
individual‘s (1) belief in and acceptance of organizational goals and values, (2) willingness
to exert effort toward organizational goal accomplishment, and (3) strong desire to
maintain organizational membership. Morrow (1983) is of an opinion that definitions
should be limited to an employee‘s compliance (submit driven by reward and punishment),
identification (a desire for identify), and internalization (individual value compact with
organizational goal and value). So, Reichers (1985) stated that organizational commitment
should be viewed as a union of various groups and, therefore, organizational commitment
can be accurately understood as a collection of multiple commitments to various groups
that comprise the organization.
Meyer and Allen (1997) have proposed three main antecedent groups of commitment:
(1) Organizational variables, such as the nature of a job, job design, human resource
policies, communication and participation policies, or manager behaviors.
(2) Personal variables, such as age, gender, tenure, job expectations, job values, kinship
responsibilities, affectivity and motivation toward work.
(3) Environmental variables like job opportunities.
It is necessary to examine the reason why customer choose particular service provider. As
per the commitment theory of relationship marketing the reason for successful relationship
development with a particular service firm is due to the commitment and trust so, building
commitment amongst to customer for a bank is very essential for establishing long-term
relationship. As per the research of Morgan and Hunt (1994), organization needs to
promote commitment in order to develop a cooperative network of customer relationships.
Moreover, authors recommend that market relationships are described as the power of one
partner over another. They suggest that since members in a relationship are compelled to
do and they want to do so. The coercive power of commitment gives fulfillment between
partners.
According to Bessant (2005), banking sector is now a fast growing industry with its GDP
in UK generating twice more than before. The origin of professions is that of groups of
people that are joined together to practice their occupation with training that is specifically
designed to them under the rigorous ethical and knowledge standard basis. Hence, the
Literature Review
54
result of relationships is being based on implicit commitments between the two parties. It
has also been notices that the banking professionals service firms are increasingly being
noticed as excellent examples of relationships where the two parties show the relationship
between commitment and trust evidently.
Sheth and Sobel (2000), describe the attributes of successful banking professionals as: The
two foundational attributes for any banking professional who aspires to serve clients are
selfless independence and empathy - they (successful banking professionals) are dedicated,
loyal and focus on their client’s agenda, not their own.
Maister (1997) stated that there are not many research conducted into commitment within
the banking profession but he provides some insights about the attributes of a successful
banking professional. The emphasis is on the importance of values and passion for client
assistance. Client is the judge of banking professionalism. As per the researcher, banking
professionals should possess the intentions such as:
Successful (banking professional) firms are clearly differentiated by a strict adherence to
values, i.e. to banking professionalism…New business will be won only to the extent that
the client believes that the banking professional is interested, cares and is trying to
help…Believe passionately in what you do, and never knowingly compromise your
standards and values. Act like a true banking professional, aiming for true excellence, and
the money will follow.
Potentially banking staff is a great example of commitment amongst the professions
because of the nature of banking service. Banking services have very specific obligations
to be fulfilled by the banking staff with competence of duties and care. Thus banking
services usually requires the banking staff to learn and acquire knowledge of their clients
& competence to offer them best service over & above the industry define standards.
Before summing the review of literature on commitment, it is very essential to discuss the
nature of commitment in service industry. Porter et al. (1974) described the important
distinction between attitudinal and behavioral commitment as:
Attitudinal commitment emphasized on the processes by which people think about their
relationship with the organization … behavioral commitment, on the other hand, relates to
Literature Review
55
the process by which individuals’ become locked into a certain organization and how they
deal with the problem.
The concept of service profit chain is proposed by Heskett, Jones, Sasser and Schlesinger
(1994) the constructs that connects the models – management practice, employee attitude,
customer behavior and business performance together but this model does not involve the
commitment behavior as a construct. However, it suggests that employee productivity
decreases costs and increased customer perceived value for service. Thus the connection
between customer satisfaction and retention is linked. This signifies the importance of
banking professionals as they have a great knowledge of their customers & they will be
able to provide a better customer service, in turn, the customers will be more satisfied with
the service, thus sends positive feedbacks back to the bank employees. This is rather
significant in terms of understanding commitment, as productivity and retention are crucial
factors related to commitment. The twenty-nine banking professional service firms sees the
link between the employees ‘commitments and financial performance.
Following five statuses explore the meaning of commitment in banking industry with
reference to the relationship between banking professionals and related clients:
Firstly, according to (Beaton and Beaton, 1995), the relationships between banking
professionals and their clients are often long-term, dedicated and participative. These key
points are often associated with high commitment relationships Thus a banking
professional tends to perform superb jobs for their clients with much commitment.
Secondly, banking professionals should have competences & knowledge that are strongly
demanded and the services delivered are usually intangible with high complexity.
Sometimes the customers also have enough knowledge to support their bank professionals
to perform the service delivery process. At the same time, sometimes the technology
quality is not easy to be identified by customers, the behavior of banking professional does
affect the customer‘s judgment for the value of service Hence the method of service by the
banking professional is utterly important. The commitment behavior of banking
professional helps to determine a client‘s perception of service quality (Freeman and Dart,
1993).
Third, the characteristics of these banking professionals and their organizations are
particularly related to examining commitment. For example, in partnership firm, equity
Literature Review
56
partners provide a financial investment to the firm & become co-owner of the firm. In such
case, the partner needs to be stable and stays long-term in the organization, and sometimes
participates in strategic decision making. Thus making them more likely to be committed
to the organization.
Maister (1997) indicates the bank staff is becoming more committed to selected clients,
fulfilling many vital roles as a business partner and advisor. The strategic roles fulfilled by
advisors results in the client’s tendency to choose and remain with to build long-term
relationships with the banks. He further added that, there is also a continuous trend towards
specialization by banking professionals in particular domains such as specialist financial
service. Both banking staff and clients also invest time and mutual commitments especially
when large organizations need specific advices. According to (Wallace, 1995), Investments
added may result from the change in service delivery process. For example, banks invest in
computer systems linked to the client’ systems, and enabling them to produce and
exchange documentation that conforms to their client’s systems. This requires an
investment of resources to their client relationships.
Fifth, with little research carried on the commitment of the relationship between banking
professionals and clients, it is surprising to take into consideration that the rapid growth of
banking professional services within the economy (Frow, 2007). Work in this area has
largely focused on conflict of commitment between the relationships held by the banking
professional internally within the organization and externally within the profession
(Wallace, 1995). Thus additional research is essential for the examination of the process
that underlines successful relationships within banking professional services. (Frow, 2007).
As per Buttle& Burton (2002), there is a positive relationship between loyalty and
satisfaction; satisfaction and commitment (Fornell, 1992); commitment and retention
(Bolemer&Oderkerken-Schroder, 2003;), However, there has been no evidence for which
variables that will have greater impact of service quality.
2.10 Customer Commitment in Banks:
Mohd. Al Hawari (2011) stated in his paper that automated factors have a direct and
positive influence on customer delight, which in turn has a direct influence on both
customer trust and customer commitment. Further, he added that customer commitment is
a predictor of strong customer- bank relationship and ultimately helps in enhancing
Literature Review
57
customer delight. This paper significantly shows the importance of automated service
quality in gaining customers' commitment in retail banking context.
Yu-TeTu et al (2014) stipulate in their research that committed customers have a more
positive impression of their relationship with the company and indicate strong intentions to
remain in the relationship. Customer commitment is a factor that also leads to the customer
loyalty.
RahmatMadjid (2015) stated in his paper that customer trust and commitment can provide
real of contributions on customer satisfaction. This means better customer trust and
commitment, the higher the customer satisfaction. Frequent bank visit is the most
important indicator of the customer commitment. Relationship quality and service quality
are antecedent of the customer commitment.
2.11 Summary of Literature Review:
TABLE 2.2 Summary
Sr. No
Author Year Journal Title of the Paper Key Findings
Service Quality 1 Hostage 1975 Harvard
Business Review
Quality Control in a Service Business
Five dimensions of service quality discussed in this paper.
2 Booms &Bitner 1981 Journal of Marketing
Marketing Strategies and Organisation Structures for Services Firms
This paper outlines the importance of the physical cues in service deliverables.
3 Gronroos, 1984 European Journal of Marketing
A service quality model and its marketing implications
Service quality model in the context of technical & functional quality discussed.
4 Parasuraman, zeithaml& berry
1985 Journal of Marketing
“A Conceptual Model of Service Quality and Its Implications for Future Research,
GAP Model
5 Lehtinen and Lehtinen 1991 The Service Industrial Journal
Two Approaches to Service Quality Dimensions
Model developed in this paper that emphasized mainly on three dimensions of service quality – Physical; interactive & corporate image
6 Zahorik& Rust 1992 Advances in service marketing and management
Modeling the impact of service quality on profitability
In this paper authors have discuss return on quality approach wherein they have proposed that manager should consider financial impact of service quality
Literature Review
58
Sr. No
Author Year Journal Title of the Paper Key Findings
before spending heavily on service quality.
7 Cronin & Taylor 1994 Journal of Marketing
SERVPERF versus SERVQUAL: Reconciling Performance-Based and Perceptions-Minus-Expectations Measurement of Service Quality
SERVPERF Model
8 Zeithaml, Parasuraman, Berry
1994 Journal of Retailing
Alternative Scales for Measuring Service Quality: A Comparative Assessment Based on Psychometric and Diagnostic Criteria
In this paper, authors have develop three column scale for measuring service quality but practically it is not more feasible use alternative scale. The major finding of the study is that there is considerable inter dimensional overlap among responsiveness, empathy & assurance.
9 Zeithaml, Parasuraman, Berry
1996 Journal of Marketing
The Behavioural Consequences of Service Quality
SERVQUAL Model & also mention that service quality & customer satisfaction is directly related to each other.
10 Moira, C. 1997 Management Decision
Modeling the impact of customer-employee relationship on customer retention rates in a major UK retail bank
The relationship quality of the employees with the customer helps firm for developing good relationship with the customer for longer period of time. Commitment comes out to be the strongest dimension in thi.
11 Barnes &Howlett 1998 International Journal of Bank Marketing
Predictors of equity in relationships between financial services providers and retail customers
Research reveals that dimensions of service quality affect customer retention but in financial services, it needs to be explored further.
12 Gronroos, 2000 Book by John Wiley & Sons, UK.
Service Management and Marketing: a Customer Relationship Management Approach,
Difference between goods & services discussed along with it, author has discussed characteristics of the services in detail.
13 Yavas, U. &Yasin 2001 The Journal of Service Marketing
Enhancing organizational performance in Banks: A systematic approach
Service quality is the factor which plays important role in enhancing organizational performance. This paper demonstrate that service quality enhance employee’s productivity result in
Literature Review
59
Sr. No
Author Year Journal Title of the Paper Key Findings
responding promptly to customer demands which in turn reduce complaints and improving customer satisfaction.
14 Madu&Madu 2002 International Journal of Quality & Reliability Management
Dimensions of e-quality”,
This paper has found out that other than the five traditional dimension of service quality, there are few more aspects like security, web policies, system integrity should also be incorporated while measuring service quality.
15 Rizal Ahmad, Francis Buttle,
2002 Marketing Intelligence & Planning
Customer retention management: a reflection of theory and practice
Authors have confirmed that relationship marketing in the context of services should be considered for developing retention strategies.
16 Jones & Farquhar 2003 Journal of financial services marketing
Contact management & customer loyalty
Author stated that customer’s perception of service quality have influence on customer loyalty.
17 Rangaswamy, A 2003 International Journal of Research in Marketing
Customer satisfaction and loyalty in online and offline environments.
Service quality has individual impact on customer loyalty & commitment & jointly loyalty & commitment affecting customer satisfaction.
18 Bloemer&Oderkerken-Schroder
2003 Australasian Marketing Journal
Antecedents and consequences of affective commitment.
This paper found that to develop loyalty among customer, key factors are commitment & satisfaction. But still impact of service quality on commitment is yet to be explored.
19 Santos, J 2003 Managing Service Quality (MCB UP Ltd)
E-service quality: a model of virtual service quality dimensions
Author has proposed some dimension of e-service quality such as reliability, efficiency, support, communication, security, and incentives
20 Mushtaq A Bhat 2005 The Journal of Business Perspective
SERVICE QUALITY PERCEPTIONS IN BANKS: A COMPARATIVE ANALYSIS ; VISION
The major findings of the study is that Indian consumers perceive that service quality of all the banks in India is below their expectation & hence dimensions of Service quality needs to investigated in depth again in the context of all the sectors of Indian Banking
21 Mushtaq A Bhat 2005 Journal of CORELATES OF The major findings of this
Literature Review
60
Sr. No
Author Year Journal Title of the Paper Key Findings
Services Research
SERVICE QUALITY IN BANKS: AN EMPIRICAL INVESTIGATION
paper are that understanding of the service quality gets differ among various demographic variable.
22 Monica Bedi 2010 Journal of Services Research
An integrated framework for service quality, customer satisfaction and behavioral responses in Indian banking industry— a comparison of public and private sector banks
This study has found out significant impact of service quality on customer satisfaction in private & public sector bank but the degree to which service quality affects customer satisfaction is not yet explored.
23 IliasSantouridis and Panagiotis Trivellas
2010 The TQM Jouranl
Investigating the impact of service quality and customer satisfaction on customer loyalty in mobile telephony in Greece
Customer service, pricing structure and billing system are the service quality dimensions that have the more significant positive influence on customer satisfaction, which in turn has a significant positive impact on customer loyalty. The mediation role of customer satisfaction on the service quality and customer loyalty relationship has also been confirmed.
24 H.S Sandhu & Naresh Nagpal
2011 International Business Research
Measuring Life Insurance Service Quality: An Empirical Assessment of SERVQUAL Instrument
Evidently, SERVQUAL instrument cannot be applicable to the Indian life insurance sector and further research is necessitated to comprehend the service quality within the Indian context.
25 ShirshenduGanguli&Sanjit Kumar Roy
2011 International Journal of Bank Marketing
Generic technology‐based service quality dimensions in banking: Impact on customer satisfaction and loyalty
A customer service , reliability and technology usage easiness has significant impact on customer satisfaction and loyalty
26 Krishna A. Goyal, & Vijay Joshi
2012 International Journal of Business Research and Management
Indian Banking Industry: Challenges And Opportunities
General sentiments, challenges & opportunities discussed in this paper giving more emphasis on marketing strategies in context of services order to get sustainable competitive edge over the intense competition from national and global banks.
27 Koushiki Choudhury 2013 International Journal of
Service quality and customers’
This paper highlighted the fact that service quality in
Literature Review
61
Sr. No
Author Year Journal Title of the Paper Key Findings
Bank Marketing
purchase intentions: an empirical study of the Indian banking sector
the retail banking has significant impact on the purchase intention of the customers. The important factors are reliability, employee behavior, tangibles and convenience.
28 Anand Sharma, Ashish Gupta, Sandeep Kumar Bharti
2014 Int. J. of Trade and Commerce- IIARTC,
Factors Determining Service Quality Aspects of Banking Sector in India
Impact of service quality on customer satisfaction and loyalty is confirmed in this paper.
29 V. Surekha, S. Anitha& S. Kaleeswari
2015 International Journal in Commerce, IT & Social Sciences
Impact of e - banking on service quality of public and private sector banks
This paper focus on the bank employees as an important parameter in delivering good quality service to the customer.
30 Abdel Fattah Mahmoud Al-Azzam
2015 European Journal of Business and Management
The Impact of Service Quality Dimensions on Customer Satisfaction: A Field Study of Arab Bank in Irbid City, Jordan
Influence of tangibility on customer satisfaction is discussed in this paper.
Customersatisfaction31 Churchill & Carol 1982 Journal of
Marketing Research
An investigation into determinants of consumer satisfaction
Customer satisfaction and purchasing behavior cycle
32 Reichheld& Sasser 1990 Journal of Marketing Research
A model of customer satisfaction with service encounter involving failure & recovery
Customer’s react strongly to service failure & it is essential for service firm to have effective service recovery strategy because findings of the paper suggest that customer satisfaction is highly depend upon customer’s evaluation of service recovery in case of service failure.
33 Muller, Wolfgang 1991 European Management Journal
Gaining competitive advantage through customer satisfaction
Author has depicted importance of satisfaction in highly competitive market of Europe. He has also mention that service quality is the key driver of customer satisfaction.
34 Zahorik& Rust 1992 A review. Advances in service marketing and management
Modeling the impact of service quality on profitability
This paper has provide insight that five determinants of service quality have greater impact on customer satisfaction in the retail banking market of USA.
35 Fornell 1992 Journal of Marketing
A National customer
In this study, quality was important parameter in
Literature Review
62
Sr. No
Author Year Journal Title of the Paper Key Findings
satisfaction barometer: The Swedish experience
measuring customer satisfaction. Satisfaction found to be lower in the heterogeneous industries. The same results needs to be investigated in the context of India as services are heterogeneous in nature.
36 Anderson & Sullivan 1993 Marketing Science
The antecedents and consequences of customer satisfaction for firms
The major findings of the study is that quality which falls short of expectations has a greater impact on satisfaction and repurchase intentions than quality which exceeds expectations
37 Garbarino& Johnson 1999 Journal of Marketing
The different roles of satisfaction, trust and commitment in customer relationships
As per this paper, customer satisfaction gets differ in their relationship with the firm on a continuum from transactional to highly relational bonds. Customer satisfaction is a primary construct towards customer commitment.
38 Baker & Crompton 2000 Annals of Tourism Research
Satisfaction & Behavioral Intentions.
According to the paper, quality is the important attribute of the service & satisfaction is referred as customer’s emotional state. perceived quality would have a stronger effect on satisfaction
39 Yau el.al 2000 European Journal of Marketing
Is relationship marketing for everyone
RMO Scale.
40 Jones, Henry and Fraquhar 2003 Contact management & customer loyalty
Journal of financial services marketing
This paper has explored the theories of contact management wherein customers interact with bank’s point of contact person on the front desk. The major finding of the study conclude that banks needs to manage the service quality in contact management as it has direct impact on customer satisfaction.
41 Chen 2004 Master Dissertation, Yi-Shou University, Kaohsuing, Taiwan
A Study of customer satisfaction and Behavioral Intentions of Service Quality for Fixed Network Communication
This study has emphasized on need of study of the service quality & customer satisfaction in the context of telecommunication. With the use of SERVQUAL, author has indicated that service quality is the key driver of customer satisfaction.
Literature Review
63
Sr. No
Author Year Journal Title of the Paper Key Findings
42 Fecikova, 2004 TQM magazine. Vol 16 (1),
An index method of satisfaction
This paper have depicted the importance of customer satisfaction in commercial and public service organizations. Companies success depends upon the customer retention which can come through customer satisfaction & service quality extent great help in managing the customer satisfaction.
43 Vinita Kaura 2013 International Journal of Bank Marketing
Antecedents of customer satisfaction: a study of Indian public and private sector banks
It has been stipulated in the paper that there are three dimension of the service quality that has an effect on customer satisfaction – employee behavior, tangibility and information technology.
44 Vinita Kaura, Chalasani S., Sourabh Sharma
2014 Management and Labour Studies
Impact of Service Quality, Service Convenience and Perceived Price Fairness on Customer Satisfaction in Indian Retail Banking Sector
Importance of service quality discussed in this paper. Human behavior, tangibility and information technology are the dimension of service quality significantly contributing to the customer satisfaction.
45 Kingshuk&Mounita 2014 A Journal of Humanities & Social Science
Service Quality and Customer Satisfaction in Commercial Banks: An Empirical Study
Author stated in their paper that Customer satisfaction increases the existing customer loyalty, repurchase process, awareness of the people about the firm and decrease the price flexibility
CustomerLoyalty46 Day 1969 Journal of
Advertising Research,
A two.-dimensional concept of brand loyalty
Author has discussed two categories of customer loyalty – Attitudinal loyalty & behavioral loyalty
47 Jacoby 1971 Proceedings of the 89th Annual Convention of the American Psychological Association
Brand loyalty: A conceptual definition
In this paper, author has distinguished brand loyalty from repeat purchase. Brand loyalty is a broader aspect that includes repeat purchase as well but it has to be viewed as a broader term.
48 Dick &Basu 1994 . Journal of the Academy of Marketing Science
Customer loyalty: Towards an integrated conceptual framework
Customer loyalty is viewed as the strength of the relationship between an individual's relative attitude and repeat patronage. The relationship is seen as mediated by social norms and situational factors.
Literature Review
64
Sr. No
Author Year Journal Title of the Paper Key Findings
Cognitive, affective, and conative antecedents of relative attitude are identified as contributing to loyalty, along with motivational, perceptual, and behavioral consequences
49 Jones & Sasser 1995 Harvard Business Review
Why satisfied customers defect
In this paper, authors have viewed customer loyalty in the category of short term & long term. Authors further added that customer loyalty is the feelings of an attachment or affection for company’s people, product or services. These feelings manifest themselves in terms of purchasing from the firm. The ultimate measure of the loyalty is the share of the purchase.
50 Ha, C 1998 Journal of Product and Brand Management
The theory of reasoned action applied to customer loyalty
As per the paper, attitudes towards the purchase and subjective norm like quality of product or services leads to the maximum unit brand loyalty.
51 Oliver 1999 Journal of Marketing
Whence consumer loyalty
As per the author, loyalty emerges as a combination of perceived product superiority, personal fortitude, social bonding, and their synergistic effects. As each fails to be attained or is by individual firms that serve consumer markets, the potential for loyalty erodes. Multi – Item loyalty Scale
52 Steyn 2000 Management Today
Making customer loyalty real: Lessons from leading manufacturers
According to the author, unlike manufacturing industries, quality of service plays important role in managing customer loyalty.
53 Pedersen, E. P. &Nysveen 2001 The International Journal of Bank Marketing
Shopbot banking: An exploratory study of customer loyalty effects
Agent technology has been applied to design new services simplifying product and merchant broker is termed “shopbots”. Findings of the study shows that cognitive loyalty depends upon customers’ past switching behavior. Further it has been added that strong forms of loyalty developed in long-term on the basis of the service quality will not be affected
Literature Review
65
Sr. No
Author Year Journal Title of the Paper Key Findings
by shopbots. 54 Bowen & Chen 2001 International
Journal of Contemporary Hospitality Management
The relationship between customer loyalty and customer satisfaction
It has been found out that word of mouth, customer commitment is highly associated with customer loyalty. But there are no or little evidence for linear relationship between customer satisfaction & customer loyalty.
55 Hennig-Thurau, Gwinner, Gremler
2002 Journal of Service Research
Understanding relationship marketing outcomes: An integration of relational benefits and relationship quality
According to the author, it is very important to develop and maintain enduring relationships with customers of service businesses. Customer loyalty is the approach that focuses on the benefits consumers receive apart from the core service.
56 Gounaris, S. and Stathakopoulos
2004 Brand Management
Antecedents and consequences of brand loyalty: An empirical study
Author has proposed four types of loyalty: (premium loyalty, inertia loyalty, covetous loyalty and no loyalty) related to four types of consumer behavior (word-of-mouth communication, buy alternative brand, go to different store and buy nothing)
57 Xu, Y.Z.; Goedegebuure, R. & Van der Heijden
2006 Journal of Relationship Marketing
Customer perception, customer satisfaction, and customer loyalty within Chinese securities business: Towards a mediation model for predicting customer behavior
This study proposed link between customer perceived service value to customer loyalty. Customer perceived service quality has a significant effect upon loyalty in terms of positive word of mouth, willingness to pay more and to stay with the business.
58 Christopher Lovelock, JochenWirtz&Jayanta Chatterjee
2011 Pearson Education Inc
Book on Service Marketing – People, Technology, Strategy
Wheel of loyalty
59 Rizwan Ali, Gao Leifu and Ramiz Rehman
2014 International Journal of Learning & Development
Factors Influencing Customer Loyalty of Banking Industry: Empirical Evidence from Pakistan
This study confirms The impact of service quality on customer loyalty stalks from positive relations between service quality and factors such as reputation and trust. Improvement in service quality leads to the increase in customer loyalty.
60 Syed Usman Ali Gillani 2014 International Customer Loyalty A strong and positive
Literature Review
66
Sr. No
Author Year Journal Title of the Paper Key Findings
and Abdul Ghafoor Awan Journal of Accounting and Financial Reporting
in Financial Sector: A case study of Commercial Banks in Southern Punjab
association is established between customer satisfaction and customer loyalty in this paper.
CustomerRetention61 Tax & Brown 1988 Management
Review Recovering and Learning from Service Failure
According to the author, Many companies consider investments in complaint handling as means of increasing customer retention. Retention has direct association with complaint handling.
62 Reichheld F.F and Sasser W.E
1990 Journal of Marketing Research
A model of customer satisfaction with service encounter involving failure & recovery
Customer retention has a powerful impact on the bottom line. It can have more to do with a service company’s profits than scale, market share, unit costs, and many other factors usually associated with competitive advantage. As a customer’s relationship with the company lengthens, profits rise. Companies can boost profits by almost 100% by retaining just 5% more of their customers.
63 Reichheld 1996 Harvard Business School Press
The loyalty effect, Boston
In this paper, author has shown loyalty as economic necessity. Further, author has emphasized that acquiring customer is more expensive than retaining the existing one. If customer stick to the firm & make repeat purchase than firm can easily maintain profitability for the long term.
64 Boles, Barksdale, & Johnson,
1997 The Journal of Business & Industrial Marketing
Business relationship: An examination of effects of buyer- salesperson relationship on customer retention and willingness to refer and recommend
Buyer-salesperson relationships were more likely to generate recommendations and referrals from customers. Author further suggested that a salesperson’s efforts to build relationships are rewarded by greater customer retention and increased business through referrals and recommendations.
65 Moira 1997 MCB UP Ltd Modeling the impact of customer-
This paper reveals that employee and customer perceptions of service
Literature Review
67
Sr. No
Author Year Journal Title of the Paper Key Findings
employee relationship on customer retention rates in a major UK retail bank
quality are related to customer retention rates.
66 Banrnes&Howlett 1998 The International Journal of Bank Marketing
Predictor of equity in relationship between financial service providers and retail customers
As per the author, there is a little investigation made in the field of financial services with respect to relationship marketing. Findings of the paper reveals that service quality is important component of relationship marketing.
67 Appiah – Adu 1999 The Service Industry Journal
Marketing effectiveness and customer retention in service sector
Author recommended that customer retention is significantly associated with marketing effectiveness in service industry. Marketing effectiveness is an attempt to satisfy the customer & than after maintaining long term relationship with them.
68 Lassar, Manolis, & Winsor
2000 The International Journal of Bank Marketing
Service quality perspectives and satisfaction in private banking
This paper has examined effect of service quality on relationship marketing. The findings of the paper, explore that fact that service quality is define with reference to the ability of sales person’s ability to satisfy & retain the customer.
69 Gittell 2002 Journal of Service Research
Relationship between service providers and their impact on customers
Author has examined the relationship between service provider & customer and identify that it is very important for achieving customer outcomes like loyalty, satisfaction as well as retention. Further author has identify that stronger the provider-customer relationship directly increase customer retention with the firm.
70 Ranaweera, Chatura, Praghu, Jaideep
2003 Journal of Targeting, Measurement and Analysis for Marketing
On the relative importance of customer satisfaction and trust as a determinants of Customer retention and positive word of mouth.
Author has examine the relationship between trust, word-of-mouth & customer retention. The major outcome of the paper is that trust & positive word-of-mouth is strongly associated with customer retention & it can only been achieve by offering good quality service to the customer.
71 Muhammed S. Alnsour 2013 International How to Retain a Drivers of relational
Literature Review
68
Sr. No
Author Year Journal Title of the Paper Key Findings
Journal of Marketing Studies
Bank Customer: A Qualitative Study of Jordanian Banks Relational Strategies
strategies such as trust, satisfaction, loyalty, commitment, closeness, communication, transparency, confidentiality, privacy, culture, customer acquisition, and reputation identified in this paper.
72 Msoka&Msoka 2014 Journal of Finance and Bank Management
Determinants of Customer Retention in Commercial Banks in Tanzania
The major finding of the paper is that improve service quality enhance the customer retention and quality of the service product has significant influence on customer satisfaction.
73 Emmah 2015 International Journal of Business and Management
Effectiveness of Customer Retention Strategies: A Case of Commercial Banks, Kenya
Customer retention was identified as strategic tool in this paper. Further, it has also been discussed in the paper that For the banks to gain a sustainable competitive advantage, bank need to extend the quality of their services beyond the core services.
CustomerCommitment74 Reichers 1985 Academy of
Management Review
A review and reconceptualisation of organizational commitment
In this paper author argued that a global conception of organizational commitment needs to be reviewed on a macro level. He further added that a multiple commitments approach has to be more precise and meaningful and employees experience several different commitments adds value to the service offered to customer.
75 Beatty, Homer &Kahle 1988 Journal of Business Research
The involvement-commitment model: Theory and implications
Author has proposed commitment model wherein they have discussed about affective commitment, calculative commitment and normative commitment
76 Allen & Meyer, 1990 Journal of Occupational Psychology
The measurement of antecedents of affective, continuous and normative commitment to the organization
Author has discussed affective, normative & continues commitment in detail wherein they have define it in general term as willingness of individual of being associated with one organization for certain period in time.
77 Becker & Billings 1993 Journal of Organizational
Profiles of commitment: An
Author has indicated that Foci of commitment are the
Literature Review
69
Sr. No
Author Year Journal Title of the Paper Key Findings
Behavior empirical test individuals and groups to whom an employee is attached, and bases of commitment are the motives engendering attachment. Based on this four profiles of the commitment is discussed: (1) The Locally Committed (employees who are attached to their supervisor and work group), (2) the Globally Committed (who are attached to top management and the organization), (3) the Committed (who are attached to both local and global foci), and (4) the Uncommitted (who are attached to neither local nor global foci). This profiles has impact on employees performance in service delivery process.
78 Morgan & Hunt 1994 Journal of Marketing
The commitment-trust theory of relationship Marketing
In this paper, it has found that successful relationship marketing requires relationship commitment. Relationship commitment is very essential in order to compete at global level in service industry.
79 Beaton & Beaton 1995 Journal of Marketing Management
Marrying service providers and their clients: A relationship approach to services management
This paper highlights growing recognition of commitment as a predictor of successful long‐term relationships between service providers and their clients. Components of commitment are service values and investment & alternatives of services. Commitment incorporates and overtakes quality and value as the primary concern of service managers
80 Maister 1997 New York: The Free Press
True professionalism
In this book, author has discusses the role of commitment among different professionals. He further added that little research is conducted on role of commitment in banking industry. He has emphasized on certain attributes that banking professional must possessed : Strong value system,
Literature Review
70
Sr. No
Author Year Journal Title of the Paper Key Findings
knowledge, care, competence to understand the client’ s requirement which is somewhere overlapping with the dimension of service quality & hence direct relationship between service quality & client-customer commitment is proven but it required further research to be conducted in the context of banking industry.
81 Sheth& Sobel 2000 New York: Simon & Schuster
Clients for life - how great professionals develop breakthrough relationships
As per the author, Marketing is undergoing a paradigmatic shift from the exchange of goods, to providing a service and due to this service organizations have started focusing on having global account management teams who aspire to serve the customer with selfless independence and empathy which are the key dimensions of service quality.
82 Meyer &Herscovitch 2001 Human Resource Management Review
Commitment in the workplace: Toward a general model
According to this author, it is recognized now a day that employees can develop multiple work-relevant commitments, and that commitment itself is a multidimensional construct. Author further added that Commitment is a force that binds an individual to a course of action of relevance to a target and this is very essential in service industry as service personnel plays very important role in offering good service to the customer.
83 Bloemer, J. &Oderkerken-Schroder
2003 Australasian Marketing Journal
Antecedents and consequences of affective commitment
Findings of the paper is that affective commitment has impact on loyalty in terms of word of mouth, purchase intention, price insensitivity and complaining. Affective commitment is a key determinant of word of mouth, purchase intention and price sensitivity.
84 Bessant 2005 Book : Innovation in professional
New Directions Author has specifically taken the reference of banking sector of UK to
Literature Review
71
Sr. No
Author Year Journal Title of the Paper Key Findings
services discussed commitment. Banking is a group of professional work together to serve the customer. This is an excellent example of commitment between employee & customer.
85 Frow 2007 Journal of Marketing Management
The meaning of commitment in professional service relationships: a study of the meaning of commitment used by lawyers and their clients
As per the author, conceptualization of commitment from psychology and organizational behavior literatures, cannot be used without considering the market-based context in which it is used. There is requirement for in depth research of commitment in the context of marketing relationship. The findings show that the meaning of commitment used in professional relationships may be more complex than its traditional conceptualization and should be extended to include at least three additional components including: 'partnership commitment', 'impression management commitment' and 'personal commitment.
86 Mohd. Al Hawari 2011 Asia Pacific Journal of Marketing and Logistics
Automated service quality as a predictor of customers' commitment: A practical study within the UAE retail banking context
Customer commitment has identified as an important predictor of strong customer- bank relationship and ultimately helps in enhancing customer delight in this paper.
87 Yu-TeTu 2014 Journal of Education and Vocational Research
Customer Commitment as a Mediating Variable between Corporate Brand Image and Customer Loyalty
Major finding of the study is that Customer commitment is a factor that leads to the customer loyalty.
88 RahmatMadjid 2015 International Journal Of Engineering And Science
Explaining Customer Satisfaction with Experience, Customer Trust and Commitment in Syariah Banks Kendari City
Frequent bank visit is found out to be more important indicator of the customer commitment. Relationship quality and service quality are antecedent of the customer commitment.
Literature Review
72
2.12 Research Gap:
After review various literatures on service quality, it can be concluded that delivery of high
service quality is a must for attaining customer satisfaction and a number of other desirable
behavioral outcomes. Zeithaml&Bitner (1996) state that Customer satisfaction & service
quality is directly related to each other. Improving service quality leads to the improvement
in customer satisfaction. They have further added that positive service experience does
affect customer satisfaction & subsequently retention. Zemke (2002), study that Poor
customer service directly affects satisfaction which in turn affects customer retention.
Ranaweera and Prabhu (2003), write that Customer satisfaction is found to be stronger
drive of customer retention. Jones & Farquhar (2003), have carried out their study on
banking sector & state that perception of service quality & customer satisfaction have
influence on customer loyalty. Shankar, Smith, & Rangaswamy, (2003) state that
satisfaction has an mediated effect on loyalty by perceived service quality & opine that
loyalty and commitment strengthen overall satisfaction.According to Ahmad & Buttle
(2002), Service firms must improve customer service quality and satisfaction in order to
retain customers. Barnes &Howlett (1998) study that service quality is directly related to
the customer retention. Lassar, Manolis and Winsor (2000), explored the impact of service
quality on customer satisfaction in banking industry. As per Buttle & Burton (2002), there
is a positive relationship between loyalty and satisfaction; satisfaction and commitment
(Fornell, 1992); commitment and retention (Bolemer & Oderkerken-Schroder, 2003;).
However, in the various literature reviewed, overall service quality has been studied but
there has been no evidence for which factors of service quality that will have greater
association and impact on customer satisfaction, retention, loyalty and commitment in the
context of Indian Banking Sector and this has become the research gap for the study.
2.13 Conceptual Framework:
Impact of service quality on customer satisfaction, retention, loyalty and commitment has
studied in the Indian Banking Sector. Literature review has laid down the foundation for
developing the conceptual framework. After narrowing down the scope of literature
review, variables of service quality, customer satisfaction, retention, loyalty and
commitment were identified. A structured questionnaire was developed with the identified
variables of service quality, customer satisfaction, retention, loyalty and commitment. The
empirical investigation involves developing & testing the factor structure of service quality
Literature Review
73
with the use of exploratory and confirmatory factor analysis. With the use of correlation
and simple regression, association and impact of service quality on customer satisfaction,
retention, loyalty and commitment were examined.
FIGURE 2.3 Research Model
Service Quality
1. Competency of bank employees
2. Augmented Service
3. Physical Evidence
4. Ethos of the bank
5. Assortment of Service
6. Service Product
7. Interior Signage & Service ability
8. Accomplishing
Customer Satisfaction
Customer Commitment
Customer Loyalty
Customer Retention
Research Methodology
74
CHAPTER–3
RESEARCH METHODOLOGY
3.1 Introduction:
This chapter gives a methodological foundation that address research questions and
hypothesis for understanding a relationship between service quality and customer
satisfaction, customer retention, customer loyalty and customer commitment in selected
four banks (State Bank of India, Punjab National Bank, ICICI Bank and HDFC Bank). The
research question and hypothesis evolved from the research gap identified in literature
review. This chapter includes description of selected research design, sampling method,
sample size, questionnaire design and analysis of pilot testing. Five research objectives
were identified for the study in Chapter One and they are reiterated again as follows:
The following research objectives were used as the basic focus of the investigation.
1. To study the factors contributing to the Service Quality.
2. To find out correlation between service quality, customer
satisfaction/Retention/Commitment & Loyalty
3. To study the impact of service quality on customer
satisfaction/Retention/Commitment & Loyalty.
4. To identify important factors of service quality from the demographic perspective of
customers.
5. To rank the selected banks based on the service quality.
Research Methodology
75
3.2 Research Design:
Research Design can be defined as the systematic planning of research to permit valid
conclusion. (Reis & Judd, 2000, p. 17). It engrosses the specifications of the population to
be studied, the treatment to be administered, and the dependent variables to be measured.
Polit, Hungler, & Beck, 2001, define a research design as “the overall plan for collecting
and analysing data including specifications for enhancing the internal and external validity
of the study”.
Burns & Grove, 2009 define a research design as “a blueprint for conducting a study with
maximum control over factors that may interfere with the validity of the findings”.
Parahoo, 2006 describes a research design as “a plan that describes how, when and where
data are to be collected and analysed”. Polit& Beck, 2012 define a research design as “the
researcher’s overall for answering the research question or testing the research hypothesis”.
Research design is basically master plan of a research that focuses on how the study is to
be conducted. It point out all of the major parts of the research study such as the samples or
groups, measures, treatments or programs, etc and work together in order to address the
research questions. Research design most fundamentally affects the internal validity of
research, that is, the ability to draw conclusions about what actually causes any observable
differences in a dependent measure. Research design is inextricably linked to data analysis
(Miller &Salkind, 2002).
3.2.1 Exploratory Research Design:
According to Malhotra & Das (2005), exploratory research is defined as a research use to
explore or search through a problem or situation to provide insights and understanding.
Exploratory research is meaningful in any situation where the researcher does not have
enough understanding to proceed with the research project. Exploratory research is
characterized by flexibility and versatility with respect to the methods because formal
research protocols and procedures are not employed. It rarely involves structured
questionnaires, large samples, and probability sampling plans. In this research, researchers
are alert to new ideas and insights as they proceed. Once a new idea or insight is
discovered, they may redirect their exploration in that direction. That new direction is
pursued until its possibilities are exhausted or another direction is found. For this reason,
Research Methodology
76
the focus of the investigation may shift constantly as new insights are discovered. Thus, the
creativity and ingenuity of the researcher plays a major role in exploratory research.
3.2.2 Descriptive Research Design:
Malhotra and Das (2005) stipulates that Descriptive Research design describe the
characteristics of relevant group. They further added that this research design is more
appropriate in estimating the percentage of units in a specified population showing certain
behavior, determining the perception of product characteristics, degree of association
between various marketing variables and making specific predictions. A major difference
between exploratory and descriptive research is that descriptive research is characterized
by the prior formulation of specific hypotheses. So the information is clearly defined.
Descriptive research is preplanned and well structured. It is based on the large sample size.
The research design selected for the study is Descriptive Research Design.
3.3 Sample Design:
A sample is taken from the population and then survey is conducted. A sample is a part of
the population which is studied in order to make inferences about the whole population. If
the sample is adequate it will have the same characteristics of the population (Zikmund,
2003) and the findings are usually used to make conclusions about the population. So, a
good sample is minuscule version of the population. A sample design involves the
following:
• Sample Unit
• Sample Technique
• Sample Size
3.3.1 Sample Unit:
The purpose of the study is to study an impact of service quality on customer satisfaction,
customer retention, customer loyalty and customer commitment. Moreover, study focuses
on Gujarat State Only and hence four major cities in selected four banks – State Bank of
India, Punjab National Bank, ICICI Bank and HDFC Bank were taken as a sample unit. So
account holder of each bank serves as respondent. These four banks are top for among
Research Methodology
77
NSE 50 (S & P CNX Nifty, 2011) which has average market capitalization of 5 billion
rupees or more in the last six months of Financial Year 2011. Out of Gujarat –
Ahmedabad, Rajkot, Baroda and Surat are being considered for conducting survey. So
respondents are from the selected four banks and from selected four cities of Gujarat.
TABLE 3.1 Sample Unit
Top Two Public Sector Bank Top Two Private Sector Bank State Bank of India ICICI Bank Punjab National Bank HDFC Bank
Source: data retrieved from moneycontrol.com
3.3.2 Sample Technique:
Sample techniques are used for selecting sample from population by reducing the no. of
respondents in manageable size. Sample technique is broadly classified as non-probability
and probability sampling. Non Probability sampling technique is selected for the study.
Because according to Malhotra & Das (2005), in this technique researcher can decide what
elements to include in the sample. This technique also gives good estimation of the
population characteristics.
Further, convenience sampling is used as a part of Non-Probability Sampling. As per the
Malhotra and Das (2005), Convenience Sampling attempts to obtain a sample of
convenient elements. Respondents are selected as they happen to be at the right place at the
right time. In this study also respondents are selected based on the convenience of the
researcher.
3.3.3 Sample Size:
Sample size has an effect on how the sample findings accurately represent the population
(Burns & Bush, 2010). The larger the sample is, the more likely that the generalizations are
an accurate reflection of the population (Saunders, Lewis & Thornhill,2009) In general,
there has been an understanding among authors of statistical books that the larger the
sample the more appropriate for the use of various statistical analysis (Pallant, 2007).
Following table represents the determination of the sample size use for conducting the
survey.
Research Methodology
78
TABLE 3.2 Sample Size Formula
Sr. No.
Parameter Interpretation
1 Standard Deviation σ Standard Deviation: Here five point Likert scale is used in questionnaire so range = 6σ (5-1) = 6σ σ = 4/6 = 0.67
2 Level of Confidence at 95% In a normal distribution, approximately 95% of the sample values are within two standard deviations of the true population value (e.g., mean).
3 Level of Precisionat ± 5% The level of precision, sometimes called sampling error, is the range in which the true value of the population is estimated to be. It is denoted as e.
4 Sample Size Formulation N = Z2 σ2 = (1.96)2 (0.67)2 e2 (0.05)2 = 676 = (Taken as 800)
Source: RajendraNargundkar (2010), Marketing Research.
3.4 Sources of Data
Sources of data are categorized as Primary Data and secondary data. According to
Malhotra and Das (2009), Primary Data are originated by a researcher for the specific
purpose of addressing the problem at hand. Primary data is collected through marketing
research. Secondary data is obtain from marketing journals, books, websites and published
& unpublished thesis work.
3.5 Planning of Data Collection
Data collection is carried out through Survey Method. Malhotra and Das (2009) define
Survey Method as a methodology of obtaining information based on questioning
respondents. In this study, respondents are asked various questions on service quality of
their respective banks and regarding their satisfaction, loyalty, retention and commitment
towards their bank. Questioning in the study is done in a structured way and hence it is also
called as structured data collection method in which formal questionnaire having questions
prearranged in order is used.
200 respondents of each city – Ahmedabad, Surat, Rajkot and Baroda were contacted
during the data collection stage. Out of 200, 50 respondents of each bank – State Bank of
India, Punjab National Bank, ICICI Bank and HDFC Bank were contacted with structured
questionnaire. Banking customers were given questionnaire while they were waiting in
Research Methodology
79
queue. Some of the customers had filled the questionnaire after they had finished their
banking transaction. This has allowed sufficient time to the customer without interfering in
their banking activities. Asking customer to complete a questionnaire in the bank provides
them a chance to pay attention to dimensions while answering the questionnaire, this also
eliminates problems with customers trying to recall their experience. (Burn & Bush,2009).
Some of the respondents were also contacted through e-mail.
3.6 Data Collection Instrument & Scaling Technique
Questionnaire is a structured technique for data collection that consists of a series of
questions, written or verbal that a respondent answer. Questions in questionnaire are the
key to the survey research so they must be developed with caution and to be vital to the
survey. (Malhotra & Das, 2009). It is bad to use open-ended questions in self-completion
surveys because answers would be inadequate and be very typical. One main advantage of
using close-ended questions in a questionnaire is that they are pre-coded. This kind of
questions suits self-completion questionnaires because they save the respondent’s time
writing in the answers (Hague et al., 2004). So, the questions uses in the questionnaire of
this study are close-ended and respondents are asked to choose the option to show their
level agreement.
In this study, the structured questionnaire focused on measuring service quality, customer
satisfaction, customer retention, customer loyalty, customer commitment and demographic
variables. Questionnaire consist of the five sections that measure service quality, customer
satisfaction, customer retention, customer loyalty, customer commitment respectively. The
questionnaire ends with getting the demographic details of the respondents.
The researcher has used 5 point Likert Scale for the study instead of 7 point Likert Scale.
Because according to Prayag (2007), 5 point scales reduce the level of frustration among
respondents, and increases the rate and quality of the responses. Malhotra and Das (2009)
added that it is very easy to construct and administer. Moreover, respondents readily
understand how to use scale and this scale is more suitable for mail and personal interview.
So, all the statements are developed on 5 point Likert Scale so as to get normal spread of
observations.
Research Methodology
80
TABLE 3.3 Variables Identified for Questionnaire
Authors Variables identified Section in Questionnaire
Booms and Bitner (1981), Tangible Cues
Service Quality
Hostage (1975) Service firm’s contact persons & their personalize services
Lehtinen and Lehtinen (1982) Corporate Image, Ethics & Value System in the bank. (Gronroos, 2000): Technical outcome Madu and Madu (2002) Bank’s security policies & online services Lehtinen and Lehtinen (1982) Service products (Gronroos, 2000): Functional Outcome Parasuraman, zeithaml& berry (1985) SERVQUAL Zahorik, Rust (1992), Pricing policies Parasuraman, Zeithaml& Berry (1988), Value added services Reichheld& Sasser (1996) offerings like rewards, Lehmann (1994) Customer Expectation Customer
Satisfaction Andreassen (2001) Service recovery Zeithaml (1996) Positive comments about the bank, recommending
firm to the others, paying price premium Customer Retention
Moira (1997) employee correlation Oliver (1999) Multi-item scale for measuring customer loyalty Customer
Loyalty Garbarino& Johnson (1999) Long-term, mutually beneficial relationships.
Customer Commitment
Allen & Meyer (1990), willingness to maintain certain relationship, affection, warmth, belongingness, loyalty, fondness, pleasure, switching cost,
(Beaton and Beaton, 1995 Committed behavior of banking professionals,
Developed by Researcher
For measuring service quality, partial SERVQUAL by Parasuraman, zeithaml& berry
(1985) was adopted. In addition to that Gronroos, (2000) and Lehtinen (1982) models were
used to identify more variables for measuring service quality. Few more researchers’
literature work was referred and then 37 items were finalized to measure service quality.
Oliver (1999)’s multi – item scale of 7 items was adopted to determine customer loyalty.
As mention in the above table, research work of various researchers were taken into the
consideration to develop questionnaire having 11 items for measuring customer
satisfaction, 8 items for measuring customer retention and 7 items for measuring customer
commitment respectively. All the items were evaluated on 5 point Likert Scale ranging
from 1 (= strongly disagree) to 5 (= strongly agree). The diagrammatic rating scale used in
the questionnaire is as follows:
Research Methodology
81
TABLE 3.4 Scaling of the Questionnaire
Strongly disagree 1
Disagree 2
Neither disagree nor agree 3
Agree 4
Strongly agree 5
After reviewing the literature and variables of questionnaire, service quality is identified as
independent variable whose impact is to be studied on four dependent variables customer
satisfaction, customer retention, customer loyalty, customer commitment respectively.
3.7 Pilot Study:
A pilot study was carried out prior to the data collection stage. Malhotra and Das (2009),
refers pilot study as a testing of questionnaire on a small sample of respondent to identify
and eliminate potential problem. The appropriateness of the questions of the questionnaire
was tested including question content, wording, sequence, form and layout. The pilot study
was carried out in Ahmedabad city. Survey of 100 respondents was conducted in pilot
study. With the use of Cronbach Alpha and confidence interval test, reliability of the
questionnaire was checked.
3.7.1 Reliability of the Research Instrument:
Reliability test was conducted during the scale development process so as to identify the
consistence of the scale and if required to purify the scale. Reliability is an indication of
how consistent the findings are based on the method of data collection and analysis.
Furthermore, reliability is more important when the questionnaire is a Likert-type because
there are many variables testing the concept. (Saunders, Lewis & Thornhill, 2007).
In the words of Freeman (1965) “The term reliability has two closely related but somewhat
different connotations in psychological testing. First, it refers to the extent to which a test
is internally consistent, that is, consistency of results obtained throughout the test when
administered once. In other words, how accurately is the test measuring a particular item?
Second, reliability refers to the extent to which a measuring device yields consistent results
upon testing and retesting.
Usually, the Cronbach’s alpha is used to measure the reliability of the instrument.
Cronbach’s alpha estimate tells us how highly the items in the questionnaire are
interrelated. (Pallant, 2007). The Cronbach alpha coefficient ranges from 0 to 1 with a
Research Methodology
82
minimum of 0.6 while other studies suggest that anything above 0.7 suggest high levels of
internal reliability (Hair et al., 2006). Nunnally (1978) suggested that an alpha value of 0.7
is acceptable.
TABLE 3.5 Reliability Test Result
Variable No. of Items Cronbach's Alpha Service Quality 37 0.941 Customer Satisfaction 11 0.838 Customer Retention 8 0.866 Customer Loyalty 7 0.864 Customer Commitment 7 0.831
In this study, researchers has used SPSS version 20.0 for testing reliability through
Cronbach alpha coefficient. Aplha value of 0.7 is used as minimal accepted level as
suggested by Nunnally (1978). Internal reliabilities were computed for 37 items of Service
Quality, 11 items of customer satisfaction, 8 items of customer retention, 7 items of
customer loyalty and 7 items of customer commitment and Cronbach Alpha value obtained
for service quality is 0.941, customer satisfaction is 0.838, customer retention is 0.866,
customer loyalty is 0.864 and customer commitment is 0.831 respectively. This result
shows that the research instrument appears to be highly reliable for measuring impact of
service quality on customer satisfaction, customer retention, customer loyalty and customer
commitment.
3.8 Confidence Interval Test:
Statistical inference is the process of using sample results to draw conclusions about the
characteristics of a population. (Richard Lavina& David Rubin, 1998). It means that, based
on the sample proportion of respondents, who agree with the statement, the proportion of
all bank customers that agree with the statement is estimated. To, measure with how much
confidence respondents have answered in the questionnaire is calculated statistically with
the use of the following formula. (Sulaiman&Balakrishnan, 2011)
Standard Error of Proportion (S.E) = √PQ/N
P = No. of Respondents that have agreed with the statement
Q = No. of Respondents that have disagreed with the statement
Research Methodology
83
N = Sample Size
Here, confidence level is set as 95%.
Results of the confidence interval test for all the statements of service quality, customer
satisfaction, retention, loyalty and commitment on five point Likert scale is as follows:
TABLE 3.6 Confidence Interval Test Result
Y N TOTAL P Q S.E.
95% confidence level lower
bound
95% confidence
level upper bound
Interpretation
S1 60 14 74 0.81 0.19 0.0392 0.73 0.89 It can be estimated with 95% confidence, that between 73% and 89% of the bank customers agree that bank has a visually attractive physical facility.
S2 65 16 81 0.80 0.20 0.0398 0.72 0.88 It can be estimated with 95% confidence, that between 72% and 88% of the bank customers agree that Bank is having modern looking and comfortable waiting.
S3 46 19 65 0.71 0.29 0.0455 0.62 0.80 It can be estimated with 95% confidence, that between 62% and 80% of the bank customers agree that TV and music system in waiting area reduces anxiety.
S4 67 15 82 0.82 0.18 0.0387 0.74 0.89 It can be estimated with 95% confidence, that between 74% and 89% of the bank customers agree that Token system at the bank makes waiting line more organize.
S5 67 9 76 0.88 0.12 0.0323 0.82 0.94 It can be estimated with 95% confidence, that between 82% and 94% of the bank customers agree that Cleanliness is properly maintained at the bank.
Research Methodology
84
Y N TOTAL P Q S.E.
95% confidence level lower
bound
95% confidence
level upper bound
Interpretation
S6 69 5 74 0.93 0.07 0.0251 0.88 0.98 It can be estimated with 95% confidence, that between 88% and 98% of the bank customers agree that Materials like pamphlets, brochure provides detail information about bank’s various services.
S7 58 15 73 0.79 0.21 0.0404 0.72 0.87 It can be estimated with 95% confidence, that between 72% and 87% of the bank customers agree that Materials at the bank are visually appealing ranges.
S8 57 13 70 0.81 0.19 0.0389 0.74 0.89 It can be estimated with 95% confidence, that between 74% and 89% of the bank customers agree that Employees of the bank are very attentive & provide individual attention.
S9 64 12 76 0.84 0.16 0.0365 0.77 0.91 It can be estimated with 95% confidence, that between 77% and 91% of the bank customers agree that Employees of the bank have knowledge about the all the different kind services offered by the bank.
S10 42 18 60 0.70 0.30 0.0458 0.61 0.79 It can be estimated with 95% confidence, that between 61% and 79% of the bank customers agree that Employees of the bank are having high level of the competency.
Research Methodology
85
Y N TOTAL P Q S.E.
95% confidence level lower
bound
95% confidence
level upper bound
Interpretation
S11 68 15 83 0.82 0.18 0.0385 0.74 0.89 It can be estimated with 95% confidence, that between 74% and 89% of the bank customers agree that Employees of the bank are very customer friendly & listen to the customer very carefully.
S12 58 13 71 0.82 0.18 0.0387 0.74 0.89 It can be estimated with 95% confidence, that between 74% and 89% of the bank customers agree that Employees of the bank understand customer need.
S13 38 15 53 0.72 0.28 0.0450 0.63 0.81 It can be estimated with 95% confidence, that between 63% and 81% of the bank customers agree that Employees of the bank are never too busy to respond to customer ‘s request.
S14 50 21 71 0.70 0.30 0.0456 0.61 0.79 It can be estimated with 95% confidence, that between 61% and 79% of the bank customers agree that Employees of the bank provide prompt service.
S15 50 20 70 0.71 0.29 0.0452 0.63 0.80 It can be estimated with 95% confidence, that between 63% and 80% of the bank customers agree that Every employees of the bank are easily accessible by the customer.
S16 56 25 81 0.69 0.31 0.0462 0.60 0.78 It can be estimated with 95% confidence, that between 60% and 78% of the bank customers agree that When bank promises to do something, they do it in certain time.
Research Methodology
86
Y N TOTAL P Q S.E.
95% confidence level lower
bound
95% confidence
level upper bound
Interpretation
S17 57 16 73 0.78 0.22 0.0414 0.70 0.86 It can be estimated with 95% confidence, that between 70% and 86% of the bank customers agree that When customers have any problem, bank shows sincere interest in solving it.
S18 60 15 75 0.80 0.20 0.0400 0.72 0.88 It can be estimated with 95% confidence, that between 72% and 88% of the bank customers agree that Bank performs the service right the first time.
S19 53 17 70 0.76 0.24 0.0429 0.67 0.84 It can be estimated with 95% confidence, that between 67% and 84% of the bank customers agree that Bank provides the service at the time they promise to do so.
S20 64 15 79 0.81 0.19 0.0392 0.73 0.89 It can be estimated with 95% confidence, that between 73% and 89% of the bank customers agree that Bank insists on the error free record.
S21 60 10 70 0.86 0.14 0.0350 0.79 0.93 It can be estimated with 95% confidence, that between 79% and 93% of the bank customers agree that they have selected bank because bank is having strong brand name in the market.
S22 81 5 86 0.94 0.06 0.0234 0.90 0.99 It can be estimated with 95% confidence, that between 90% and 99% of the bank customers agree that bank is ethically managed by the management.
Research Methodology
87
Y N TOTAL P Q S.E.
95% confidence level lower
bound
95% confidence
level upper bound
Interpretation
S23 75 5 80 0.94 0.06 0.0242 0.89 0.98 It can be estimated with 95% confidence, that between 89% and 98% of the bank customers agree that Products of the bank like Fixed Deposit, Certificates are of a good quality.
S24 45 19 64 0.70 0.30 0.0457 0.61 0.79 It can be estimated with 95% confidence, that between 61% and 79% of the bank customers agree that Bank maintain confidentially while sending online user id and password.
S25 52 22 74 0.70 0.30 0.0457 0.61 0.79 It can be estimated with 95% confidence, that between 61% and 79% of the bank customers agree that Bank offers locker facility at reasonable price with no hidden charges.
S26 61 10 71 0.86 0.14 0.0348 0.79 0.93 It can be estimated with 95% confidence, that between 79% and 93% of the bank customers agree that Bank is having strong security system in the bank premises.
S27 64 14 78 0.82 0.18 0.0384 0.75 0.90 It can be estimated with 95% confidence, that between 75% and 90% of the bank customers agree that Bank offers variety of the financial product like mutual fund, insurance policies other than traditional banking product.
S28 63 18 81 0.78 0.22 0.0416 0.70 0.86 It can be estimated with 95% confidence, that between 70% and 86% of the bank customers agree that Bank always ensure proper functioning of ATM machine.
Research Methodology
88
Y N TOTAL P Q S.E.
95% confidence level lower
bound
95% confidence
level upper bound
Interpretation
S29 45 19 64 0.70 0.30 0.0457 0.61 0.79 It can be estimated with 95% confidence, that between 61% and 79% of the bank customers agree that Bank never faces shortage of locker at every branch.
S30 62 17 79 0.78 0.22 0.0411 0.70 0.87 It can be estimated with 95% confidence, that between 70% and 87% of the bank customers agree that Bank is having well managed web policies for secure online banking.
S31 65 12 77 0.84 0.16 0.0363 0.77 0.92 It can be estimated with 95% confidence, that between 77% and 92% of the bank customers agree that Bank always maintain transparency while communicating prices.
S32 66 14 80 0.83 0.18 0.0380 0.75 0.90 It can be estimated with 95% confidence, that between 75% and 90% of the bank customers agree that There are no hidden charges taken by bank.
S33 70 13 83 0.84 0.16 0.0363 0.77 0.91 It can be estimated with 95% confidence, that between 77% and 91% of the bank customers agree that Bank is having convenient operating hours.
S34 51 18 69 0.74 0.26 0.0439 0.65 0.83 It can be estimated with 95% confidence, that between 65% and 83% of the bank customers agree that Bank offers 24*7 customer care services.
Research Methodology
89
Y N TOTAL P Q S.E.
95% confidence level lower
bound
95% confidence
level upper bound
Interpretation
S35 56 9 65 0.86 0.14 0.0345 0.79 0.93 It can be estimated with 95% confidence, that between 79% and 93% of the bank customers agree that Bank strictly follows RBI regulations & also informs customers about the same.
S36 74 10 84 0.88 0.12 0.0324 0.82 0.94 It can be estimated with 95% confidence, that between 82% and 94% of the bank customers agree that It is secure to use online banking.
S37 78 9 87 0.90 0.10 0.0305 0.84 0.96 It can be estimated with 95% confidence, that between 84% and 96% of the bank customers agree that Bank does regular upgradation in its technology ranges from 0.84 to 0.96.
S38 75 9 84 0.89 0.11 0.0309 0.83 0.95 It can be estimated with 95% confidence, that between 83% and 95% of the bank customers agree that they have selected the right bank.
S39 51 13 64 0.80 0.20 0.0402 0.72 0.88 It can be estimated with 95% confidence, that between 72% and 88% of the bank customers agree that Bank always exceed in their expectation while offering the services.
S40 71 6 77 0.92 0.08 0.0268 0.87 0.97 It can be estimated with 95% confidence, that between 87% and 97% of the bank customers agree that Bank’s service exactly meets their requirement.
Research Methodology
90
Y N TOTAL P Q S.E.
95% confidence level lower
bound
95% confidence
level upper bound
Interpretation
S41 45 20 65 0.69 0.31 0.0462 0.60 0.78 It can be estimated with 95% confidence, that between 60% and 78% of the bank customers agree that they feel good that branch manager knows them personally.
S42 52 18 70 0.74 0.26 0.0437 0.66 0.83 It can be estimated with 95% confidence, that between 66% and 83% of the bank customers agree that they feel happy after every visit of the bank.
S43 50 22 72 0.69 0.31 0.0461 0.60 0.78 It can be estimated with 95% confidence, that between 60% and 78% of the bank customers agree that Bank is having strong mechanism in case of service failure.
S44 45 20 65 0.69 0.31 0.0462 0.60 0.78 It can be estimated with 95% confidence, that between 60% and 78% of the bank customers agree that Bank offers compensation in case of service failure.
S45 52 20 72 0.72 0.28 0.0448 0.63 0.81 It can be estimated with 95% confidence, that between 63% and 81% of the bank customers agree that Bank apologizes if they fail to serve on time.
S46 45 19 64 0.70 0.30 0.0457 0.61 0.79 It can be estimated with 95% confidence, that between 61% and 79% of the bank customers agree that Bank always takes care of their special requirement.
Research Methodology
91
Y N TOTAL P Q S.E.
95% confidence level lower
bound
95% confidence
level upper bound
Interpretation
S47 83 7 90 0.92 0.08 0.0268 0.87 0.97 It can be estimated with 95% confidence, that between 87% and 97% of the bank customers agree that Bank is having many no. of the branches.
S48 81 11 92 0.88 0.12 0.0324 0.82 0.94 It can be estimated with 95% confidence, that between 82% and 94% of the bank customers agree that Location of bank is very convenient to commute.
S49 61 15 76 0.80 0.20 0.0398 0.72 0.88 It can be estimated with 95% confidence, that between 72% and 88% of the bank customers agree that they say positive things about the bank to other people as they would like to have long-term association with the bank.
S50 46 17 63 0.73 0.27 0.0444 0.64 0.82 It can be estimated with 95% confidence, that between 64% and 82% of the bank customers agree that as bank is having attractive rewards system due to which they will stay with the bank for longer period of time ranges.
S51 62 13 75 0.83 0.17 0.0379 0.75 0.90 It can be estimated with 95% confidence, that between 75% and 90% of the bank customers agree that they consider bank as their first choice whenever they purchase banking service.
Research Methodology
92
Y N TOTAL P Q S.E.
95% confidence level lower
bound
95% confidence
level upper bound
Interpretation
S52 64 9 73 0.88 0.12 0.0329 0.81 0.94 It can be estimated with 95% confidence, that between 81% and 94% of the bank customers agree that they will purchase more services of the bank in the future.
S53 46 21 67 0.69 0.31 0.0464 0.60 0.78 It can be estimated with 95% confidence, that between 60% and 78% of the bank customers agree that Even if bank increases its price, they will continue with the bank.
S54 54 17 71 0.76 0.24 0.0427 0.68 0.84 It can be estimated with 95% confidence, that between 68% and 84% of the bank customers agree that they are ready to continue with the bank despite of the lucrative offers of the competitors due to the benefits they are receiving from the bank.
S55 61 12 73 0.84 0.16 0.0371 0.76 0.91 It can be estimated with 95% confidence, that between 76% and 91% of the bank customers agree that they will complain to the bank employees if they experience any problem in the bank service but they will not switch to the other bank.
S56 63 11 74 0.85 0.15 0.0356 0.78 0.92 It can be estimated with 95% confidence, that between 78% and 92% of the bank customers agree that they will continue with the bank due to high integrity maintain by the bank.
Research Methodology
93
Y N TOTAL P Q S.E.
95% confidence level lower
bound
95% confidence
level upper bound
Interpretation
S57 63 14 77 0.82 0.18 0.0386 0.74 0.89 It can be estimated with 95% confidence, that between 74% and 89% of the bank customers agree that they always recommend my bank to others.
S58 73 7 80 0.91 0.09 0.0283 0.86 0.97 It can be estimated with 95% confidence, that between 86% and 97% of the bank customers agree that they get best value for money from the bank.
S59 53 13 66 0.80 0.20 0.0398 0.73 0.88 It can be estimated with 95% confidence, that between 73% and 88% of the bank customers agree that they are never interested in the various service offerings of the competitors.
S60 50 19 69 0.72 0.28 0.0447 0.64 0.81 It can be estimated with 95% confidence, that between 64% and 81% of the bank customers agree that they would not prefer to switch to the other bank.
S61 45 20 65 0.69 0.31 0.0462 0.60 0.78 It can be estimated with 95% confidence, that between 60% and 78% of the bank customers agree that they are having personal emotions attached with the bank.
S62 76 6 82 0.93 0.07 0.0260 0.88 0.98 It can be estimated with 95% confidence, that between 88% and 98% of the bank customers agree that Overall they are very happy with their bank.
Research Methodology
94
Y N TOTAL P Q S.E.
95% confidence level lower
bound
95% confidence
level upper bound
Interpretation
S63 76 8 84 0.90 0.10 0.0294 0.85 0.96 It can be estimated with 95% confidence, that between 85% and 96% of the bank customers agree that that they consider themselves loyal to the bank.
S64 46 20 66 0.70 0.30 0.0460 0.61 0.79 It can be estimated with 95% confidence, that between 61% and 79% of the bank customers agree that that It is unethical for them to switch to the other bank.
S65 50 19 69 0.72 0.28 0.0447 0.64 0.81 It can be estimated with 95% confidence, that between 64% and 81% of the bank customers agree that that It means lot to them to belong to the bank.
S66 59 13 72 0.82 0.18 0.0385 0.74 0.89 It can be estimated with 95% confidence, that between 74% and 89% of the bank customers agree that that they have interpersonal relationship with the bank due the customization offered to them.
S67 40 17 57 0.70 0.30 0.0457 0.61 0.79 It can be estimated with 95% confidence, that between 61% and 79% of the bank customers agree that that they will have to make few sacrifices if they switch to the other bank.
S68 58 15 73 0.79 0.21 0.0404 0.72 0.87 It can be estimated with 95% confidence, that between 72% and 87% of the bank customers agree that that they feel proud of being associated with the bank.
Research Methodology
95
Y N TOTAL P Q S.E.
95% confidence level lower
bound
95% confidence
level upper bound
Interpretation
S69 55 12 67 0.82 0.18 0.0383 0.75 0.90 It can be estimated with 95% confidence, that between 75% and 90% of the bank customers agree that that Strong sense obligation stops them to switch to the other bank.
S70 66 11 77 0.86 0.14 0.0350 0.79 0.93 It can be estimated with 95% confidence, that between 79% and 93% of the bank customers agree that that they owe a great deal to the bank.
Above table reveled that fact that majority of the respondents have given their response in
the confidence level range of 61 % to 99 %. This results also validates the research
instrument and hence based on these two statistical evidences data collection of 800
respondents were conducted.
Data Analysis
96
CHAPTER–4
DATA ANALYSIS
4.1 Introduction:
After the Pilot Testing, data collection of 800 respondents was carried out. Than researcher
ensue to the data processing and data analysis. According to the Gromme (1998), Data
processing concerns activities and technologies which prepare the collected data for
analysis: data checking, entry, coding, and editing. Data analysis concerns activities and
technologies which provide statistical insight in the collected data: weighting, tabulations,
and response analysis (Gromme, 1998).
In this chapter, researcher has used AMOS 18 and SPSS 20 to perform various statistical
techniques to analysis the data. Data were first coded in excel sheet and exported to
Statistical Software for further analysis. Tools selected for analysis are Exploratory factor
analysis, Confirmatory factor analysis, Correlation, Simple Regression and Cross
Tabulation. For reducing and summarizing the data, bank wise exploratory factor analysis
was performed in which principle component method with varimax rotation was selected.
After extracting the factors, structure of factors was prepared for all the four banks
separately whose validity and reliability was checked through confirmatory factor analysis.
Bank wise, Correlation was applied to assess relationship between the factors of service
quality derived and confirmed through exploratory and confirmatory factor analysis and
customer satisfaction, retention, loyalty and commitment. Impact of factors of service
quality on customer satisfaction, retention, loyalty and commitment was assessed with the
use of simple regression. Customer’s perception towards the service quality based on
demographic variables like gender, age, income, occupation and education was examined
through cross tabulation. Throughout the analysis, acceptance and rejection of hypotheses
was done at the confidence level at 95%. (of 5% of level of significance).
Data Analysis
97
4.2 Exploratory Factor Analysis (EFA):
According to Kinnear and Gray (2010) the purpose of exploratory factor analysis is to find
the independent factors that explain the correlations. In this case, items are usually reduced
to common interrelated and meaningful dimensions with a very small amount of
information loss explaining as much as possible variance of original items. According to
Cooper and Schindler (2008) factor analysis is a technique used for specific computational
techniques. These factors, also called latent variables, often aim to measure things that are
usually hard to measure directly, such as attitudes and feelings. This is a way to explain the
relationships among variables by combining them into smaller number factors (Zikmund,
2003; Coakes and Steed, 2001).
To identify the latent variables, factor analysis is the most effective statistical technique.
According to Gilbert and Veloutsou (2004) this technique has been adopted by almost one
sixth of the authors of journal articles over the past thirty years. Due to this reason,
exploratory factor analysis was selected to study the service quality of all four banks.
Appropriateness and suitability of the data is assessed by the Kaiser-Meyer-Olkin (KMO)
and Bartlett’s Test of Sphericity. Higher KMO value signifies higher correlation among
the variables. According to Kaiser and Rice (1974), KMO value greater than 0.6 can be
considered as adequate. KMO measures the sample adequacy criteria wherein low
correlation value of variables indicates that they are not fit to be member of any of the
factor.
Bartlett’s Test of Sphericity tests the correlation among the variables (Hair, 2006). A
statistically significant Bartlett’s Test of Sphericity (Sig. < 0.05) indicates that significant
correlations exist among the variables.
The most common factor analysis technique to extract factor is Principle Component
Analysis (Kinnear & Gray, 2010; Cooper & Schindler, 2008). In this technique,
correlations of different variables are referred to study the relationship between them and
grouping them into a small number of factors having common themes. The calculations
will lead to factor scores which explain a maximum possible share of the variance, while
factors obtained will be orthogonal and in terms of the number, will be equal to no more
than the number of original variables. Mathematical technique for simplifying the
interpretation of factors is called factor rotation (Zikmund et al., 2010). Varimax rotation
Data Analysis
98
was favoured since it minimized the correlation across factors and maximized within the
factors. After rotation, factors remain uncorrelated (as opposite to oblique rotation, where
factors are correlated after rotation). This helped to yield ‘clear’ factors (Nunnally, 1978).
Hair (2006), stated that Anti-image correlation matrix represents partial correlation among
variables and the degree to which the factor explain each other in the results. The diagonal
contains measures of sampling adequacy for each variable (higher than 0.05), and the off-
diagonal values show negative value for the partial correlation among variables (close to
zero).
Variance is another important component of factor analysis. According to Hair (2006),
variance is a value (the square of the standard deviation) that represents the total amount of
dispersion of values for a single variable about its mean. When a variable is correlated with
another variable, it basically shares variance with the other variable. Thus it is important to
understand how much a variable’s variance is shared with the other variables. Hair (2006)
defines communalities as the total amount of variance an original variables shares with all
other variables included in analysis. Communalities values of the items greater than 0.5 is
considered for further analysis. Communalities show which part of the variance of each
variable is explained by a given number of factors.
For interpreting the factor interpretation, Hair (2006), suggests to refer to the factor
loadings. Factor Loadings are the correlation of each variable and the factor. Loadings
indicate the degree of correspondence between the variable and the factor, with higher
loadings making the variable representative of the factor. Factor loading of ± 0.30 to ±
0.40 are minimally acceptable, values greater than ± 0.50 are generally considered
necessary for practical significance. Following table represents guidelines for identifying
significant factor loadings based on sample size.
Data Analysis
99
TABLE 4.1 Factor Loading
Factor Loading Sample size needed for significance level of 5%
0.30 350
0.35 250 0.40 200 0.45 150 0.50 120 0.55 100 0.60 85 0.65 70 0.70 60 0.75 50
Source: Hair (2006)
Sometimes, one variable is having significant loading in several factors. Such variable is
found to have more than one significant loading is termed as Cross-Loading. Such type of
the variables should be eliminated from the analysis so as to simplify the factor structure.
(Hair, 2006). According to the Hair (2006), there is no specific rule in selecting the rotation
method, therefore, the VARIMAX rotation method selected while performing the
exploratory factor analysis. Principal Component Factor Analysis method is adopted for
while performing the factor analysis. The objective for the selection of this method is to
summarize most of the original information (variance) in a minimum number of factors for
prediction purposes. With component analysis each variable contributes a value of 1 to the
total eigen value. Thus, only the factors having eigen values greater than 1 are considered
significant. (Hair, 2006).
4.3 Confirmatory Factor Analysis (CFA):
The Confirmatory Factor Analysis process determines whether the hypothesized structure
provides a good fit to the data, or in other words, that a relationship between the observed
variables and their underlying latent, or unobserved, constructs exist (Child, 1990). The
CFA would also verify that all items are properly aligned with the correct facets within the
general construct being measured. Exploratory Factor Analysis extracts the factors from
the set of variables and provides the factor structure. CFA is used to test the extent to
which factor structure derived from the EFA represents the actual data. According to Hair
(2006), CFA is used to provide a confirmatory test of Measurement Theory. A
Measurement Theory specifies how measured variables logically and systematically
represents the constructs involved in a theoretical model.
Data Analysis
100
While using CFA, many different fit statistics are used to determine the model fit for the
data. There are various indexes that are used for assess Model Fit. The first is the Chi-
Square Test with degrees of freedom (<2). According to Hu &Bentler (1999), the chi-
square test indicates the amount of difference between expected and observed covariance
matrices. A chi-square value close to zero and a chi-square p-value greater than 0.05
indicate that there is little difference between the expected and observed covariance
matrices, which is an indicator of good fit.
The Root Mean Square Error of Approximation (RMSEA) is related to the residuals in the
model. RMSEA values range from zero to one with a smaller RMSEA value indicating
better model fit. Good model fit is typically indicated by an RMSEA value of 0.06 or less
(Hu &Bentler, 1999), but a value of 0.08 or less is often considered acceptable (Browne
&Cudeck, 1993).
The Comparative Fit Index (CFI) is an incremental fit index, which assesses overall
improvement of a proposed model over an independence model where the observed
variables are uncorrelated (Byrne, 2006). CFI values range from zero to one with a larger
value indicating better model fit. Acceptable model fit is indicated by a CFI value of 0.90
or greater (Hu &Bentler, 1999). The Normed Fit Index (NFI) is another common indicator
to measure model fit. For this indicator larger values specifies better model fit and value
above 0.90 is considered acceptable (Hu &Bentler, 1999).
Hair (2006), describes Goodness-of-fit as another indicator that produces fit statistics. GFI
values greater than 0.90 are considered good. Next important indicator is Adjusted
Goodness of Fit Index (AGFI) that takes into account differing degrees of model
complexity. AGFI values are typically lower than GFI values in proportion to model fit.
AGFI values greater than 0.90 are considered good. Tucker Lewis Index (TLI) is
conceptually similar to NFI but varies in that it is actually a comparison of the normed chi-
square values for the specified model, which to some degree takes into account model
complexity. Typically, model is considered good having TLI values higher than 0.90.
Incremental Fit Index assess how well the estimated model fits relative to some baseline
model in which it is assumed that all observed variables are uncorrelated. IFI value above
0.90 is considered good and last indicator is RFI that is known as Relative Fit Index whose
value greater than 0.90 is also considered as a good fit for model (Bollen, 1986).
Data Analysis
101
4.4 Validity of the scale:
According to Zikmund and Babin (2010) validity is the accuracy of a measure or the extent
to which a score truthfully represents a concept. In other words, Validity is concerned with
the test being capable of testing what it was designed for, which is not as simple as it
seems (Hair, 2006). There are four different types of validity that assess the accuracy of an
instrument: Content Validity, Construct Validity, Convergent Validity, Discriminant
Validity and Nomological Validity.
4.4.1 Construct Validity
This is one of the most important validity. Construct validity is the assessment of the
degree to which an operationalisation correctly measures its targeted variables (Bagozzi,
Youjae and Phillips (1991). Further authors added that “without assessing construct
validity one cannot estimate and correct for confounding influences of random error and
method variance, and the results of the theory testing may be ambiguous.” Hair (2006),
stated that Construct validity provides confidence that the item measures taken from a
sample represents the actual true score that exists in the population.
4.4.2 Convergent Validity
The items that are indicators of a specific construct should converge or share a high
proportion of variance in common is known as Convergent Validity (Hair,2006). Anderson
and Gerbing, (1991) advocate that convergent validity is tested by determining whether the
items in a scale converge or load together on a single construct in the measurement model.
In other words, convergent validity is the degree of convergence seen when two attempts
are made to measure the same construct through maximally different methods. If there is
no convergence, either the theory used in the study needs to be analyzed, or the
purification of measure needs to be implemented by eliminating the items. To have
convergent validity, the scores for the category ‘excellent’ must be higher than the
category ‘very good’ for each of the dimensions. The scores for the category ‘good’ must
also be higher than the scores for the category ‘poor’ and so on. (Aldlaigan&Buttle, 2002)
Data Analysis
102
Convergent validity can be established using the following approaches:
Factor Loading: The size of the factor loading is important consideration. In case of high
convergent validity, high loading on the factor would indicate that they converge on a
common point on their latent construct. A rule of thumb is that standardized loading
estimates should be 0.5 or higher, and 0.7 or higher. The reason of this rule of thumb is
that, the square of standardized factor loading represents how much variation in an item is
explained by the latent factor and is termed the Variance Extracted of the item. (Hair,
2006)
Average Variance Extracted (AVE): In CFA, the Average Variance Extracted (AVE) is
calculated as the mean variance extracted for the items loadings on a construct and is a
summary indicator of convergence. The value is calculated as follows:
In the formula above the λ represents the standardized factor loading and i is the number of
items. So, for n items, AVE is computed as the sum of the squared standardized factor
loadings divided by the number of items, as shown above (Fornell and Larcker
(1981).Fornell and Larcker (1981) suggested that adequately convergent should have
measures that contain more than 50% explained or common variance in the factor analytic
sense. An AVE measure should be computed for each latent construct in a measurement
model.
Reliability: Reliability is also an indicator of Convergent Validity. Coefficient alpha
remains a commonly applied estimate although it may understate reliability. Construct
Reliability (CR) value is computed with the following formula:
It is computed from the squared sum of factor loadings (λ i) for each construct and the sum
of the error variance terms for a construct ( i). The rule of thumb for reliability estimate
is that 0.7 or higher suggests good reliability. Reliability between 0.6 and 0.7 may be
nAVE
n
ii
1
2
n
i
n
iii
n
ii
CR
1 1
2
1
2
)()(
)(
Data Analysis
103
acceptable, provided that other indicator of a model’s construct validity are good (Hair,
2006).
4.4.3 Discriminant Validity:
Discriminant validity shows that the measure is unique in some way. Discriminant validity
gauges the extent to which measures of two different constructs are comparatively
distinctive from each other. (Campbell and Fiske, 1959). Discriminant validity assesses the
degree to which a concept and its indicators differ from another concept and its indicators.
It means that items from one scale should not load or converge too closely with items from
a different scale and that different latent variables which correlate too highly may indeed
be measuring the same construct rather than different constructs (Garver and Mentzer,
1999). According to Fornell and Larcker, (1981), Shared variance is the amount of
variance that a variable (construct) is able to explain in another variable (construct). It is
represented by the square of the correlation between any two variables (constructs).
Further, authors presented method for assessing the discriminant validity of two or more
factors. Here, a researcher compares the AVE of each construct with the shared variance
between constructs. If the AVE for each construct is greater than its shared variance with
any other construct, discriminant validity is supported.
4.4.4 Nomological Validity
Nomological validity has been defined as the degree to which predictions from a formal
theoretical network containing the concept under scrutiny are confirmed (Campbell, 1960).
It assesses the degree to which constructs that are theoretically related are empirically
related (i.e., their measures correlate significantly in the predicted direction).This validity
is tested by examining whether the positive correlation exists among the constructs or not
and whether the correlation among the constructs in a measurement theory makes sense.
(Hair,2006). As per Bhattacherjee (2002), nomological validity examines the predictive
ability of the measurement scale (focal scale) within the nomological network of
antecedent and consequent variables, i.e., it is a measure of theoretical correspondence
between the theory and the construct within the theory. The measure should behave as
expected with other constructs to which it is theoretically related, i.e., it should display
nomological validity. (Peter 1981)
Data Analysis
104
4.5 Correlation and Simple Regression:
Correlation is the most widely used statistic that summarizes the strength of association
between two variables. As it was originally proposed by Karl Pearson and hence it is
known as the Pearson Correlation Co-efficient (r). It is also referred as Simple Correlation
or Bivariate Correlation. The correlation r value describes both a magnitude and a
direction of either positive or negative. It may take on a range of values from -1 to 0 to +1,
where the values are absolute and non dimensional with no units involved. A correlation
coefficient of zero indicates that no association exists between the measured variables. The
closer the r coefficient approaches ± 1, regardless of the direction, the stronger is the
existing association indicating a more linear relationship between the two variables. The
correlation coefficients (in absolute value) which are ≤ 0.35 are generally considered to
represent low or weak correlations, 0.36 to 0.67 modest or moderate correlations, and 0.68
to 1.0 strong or high correlations with r coefficients ≥ 0.90 very high correlations. (Richard
Taylor, 1990)
Regression analysis allows the prediction or estimation of the value of one variable (the
criterion, dependent, or predicted variable; traditionally called as Y) from one or more
predictor variables (called X). Simple regression estimates the extent to which the
predicted variable changes as a single predictor variable changes. According to the
RajendraNargundkar (2010), regression equation is judged for its usefulness based on:
1. The overall F-test for the model. If this is significant at 95 per cent confidence level, it
indicates that the model is good overall. This shows up as a p- value of less than 0.05 on
the ANOVA table in the regression output.
2. To decide whether the explanatory variable in the model is a significant or not than
significance value should be referred. If the p- value is less than 0.05, it indicates that the
concerned variable is significant in the model.
3. The R2 value (coefficient of determination and adjusted coefficient of determination) of
a model infers what percentage of the variation in the dependent variable is explained by
all independent variables in model.
Data Analysis
105
Bank Wise Analysis
4.6 State Bank of India:
Objective 1: To study the factors contributing to Service Quality
4.6.1 Exploratory Factor Analysis
TABLE 4.2 KMO and Bartlett's Test - SBI
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .904
Bartlett's Test of Sphericity Approx. Chi-Square 2267.153 Df 276 Sig. .000
Significance value of Bartlett’s Test of Sphericity is 0.00 that is less than 0.05 which
stipulates that data is multivariate normal and acceptable for factor analysis. Moreover,
KMO value is 0.904 that indicates that data set considered to be highly suitable for factor
analysis.
TABLE 4.3 Correlation Table - SBI
Table Correlation Matrixa
a. Determinant = 0.00066
The determinant of the Correlation Matrix is 0.0006 that is higher than the 0.00001 and
hence no multicollinearity is observed in the data
4.6.2 Anti Image Matrices
Table 4.4 represents correlation values of 24 factors of service quality of SBI. Diagonal
values of the all the factors depict in the second half of the table measure the sampling
adequacy. As all the variables are having partial correlation values higher than the 0.5 and
hence it can be interpreting that all the 24 factors of service quality have practical and
statistical significance and data is suitable for performing factor analysis.
Data Analysis
106
TABLE :4.4 Anti image Table - SBI
Data Analysis
107
TABLE 4.5 Communalities Table - SBI
Sr. No
Variables Initial Extraction
3 Banks have TV & music system in the waiting area that reduces anxiety while waiting.
1.000 .744
4 Token system at the bank makes waiting line more organize 1.000 .693
5 Cleanliness is properly maintained at the bank. 1.000 .709
6 Materials like pamphlets, brochure provides detail information about bank’s various services.
1.000 .743
7 Materials at the bank are visually appealing. 1.000 .676
8 Employees of the bank are very attentive & provide individual attention. 1.000 .551
10 Employees of the bank are having high level of the competency. 1.000 .690
11 Employees of the bank are very customer friendly & listen to me very carefully. 1.000 .650
12 Employees of the bank understand your need. 1.000 .651
13 Employees of the bank are never too busy to respond to customer ‘s request. 1.000 .600
14 Employees of the bank provide me prompt service. 1.000 .651
15 Every employees of the bank are easily accessible by the customer. 1.000 .615
16 When bank promises to do something, they do it in certain time. 1.000 .596
17 When customers have any problem, bank shows sincere interest in solving it. 1.000 .620
21 I have selected bank because bank is having strong brand name in the market. 1.000 .750
22 I believe that bank is ethically managed by the management. 1.000 .702
25 Bank offers locker facility at reasonable price with no hidden charges. 1.000 .512
27 Bank offers me variety of the financial product like mutual fund, insurance policies other than traditional banking product.
1.000 .649
29 Bank never faces shortage of locker at every branch. 1.000 .791
30 Bank is having well managed web policies for secure online banking. 1.000 .691
31 Bank always maintain transparency while communicating prices to me. 1.000 .656
32 There are no hidden charges taken by bank while servicing me. 1.000 .563
36 I feel secure while using bank’s technical services such as NEFT, RTGS, Online Banking Etc.
1.000 .647
37 Bank does regular upgradation in its technology. 1.000 .593
Extraction Method: Principal Component Analysis.
Table 4.5 shows the communalities values of all the 24 factor of service quality. Here all
the values are above 0.5 which suggest that the data set was appropriate for further
analysis.
Data Analysis
108
TABLE 4.6 Total Variance Explained - SBI
Component Initial Eigenvalues
Extraction Sums of Squared Loadings
Rotation Sums of Squared Loadings
Total% of
Variance Cumulative
% Total
% of Variance
Cumulative %
Total % of
Variance Cumulative
%
1 9.079 37.827 37.827 9.079 37.827 37.827 4.938 20.575 20.575
2 1.903 7.931 45.758 1.903 7.931 45.758 3.598 14.992 35.567
3 1.356 5.649 51.407 1.356 5.649 51.407 2.447 10.194 45.762
4 1.237 5.152 56.560 1.237 5.152 56.560 1.640 6.834 52.596
5 1.146 4.774 61.334 1.146 4.774 61.334 1.621 6.752 59.348
6 1.026 4.273 65.607 1.026 4.273 65.607 1.502 6.258 65.607
7 .826 3.442 69.049
8 .707 2.946 71.995
9 .675 2.813 74.808
10 .633 2.637 77.445
11 .609 2.538 79.983
12 .551 2.298 82.280
13 .505 2.103 84.383
14 .496 2.066 86.449
15 .458 1.910 88.359
16 .422 1.760 90.119
17 .393 1.639 91.758
18 .357 1.490 93.247
19 .347 1.446 94.694
20 .336 1.400 96.094
21 .274 1.141 97.235
22 .246 1.026 98.261
23 .219 .911 99.172
24 .199 .828 100.000
Extraction Method: Principal Component Analysis.
All the 24 factors in Table 4.6 accounted for 65.607 percent of the variance. Total variance
explained (65.607 percent) by these 24 components exceeds the 60 percent threshold
commonly used in social sciences. (Hair, 2006).
Data Analysis
109
TABLE 4.7 Rotated Component Matrixa- SBI
Sr. No Variables Component
1 2 3 4 5 6
3 Banks have TV & music system in the waiting area that reduces anxiety while waiting.
.133 .079 .173 .082 .820 .102
4 Token system at the bank makes waiting line more organize .270 .095 .134 .048 .768 -.040
5 Cleanliness is properly maintained at the bank. .200 .213 .726 .244 .194 -.003
6 Materials like pamphlets, brochure provides detail information about bank’s various services.
.221 .111 .815 .055 .120 .019
7 Materials at the bank are visually appealing. .388 .050 .719 .004 .078 .027
8 Employees of the bank are very attentive & provide individual attention.
.588 .291 .295 -.060 .166 .049
10 Employees of the bank are having high level of the competency.
.626 .209 .344 .201 .131 .280
11 Employees of the bank are very customer friendly & listen to me very carefully.
.716 .264 .164 .112 .161 .041
12 Employees of the bank understand your need. .703 .210 .272 .133 .112 .093
13 Employees of the bank are never too busy to respond to customer ‘s request.
.671 .106 .230 .099 .053 .269
14 Employees of the bank provide me prompt service. .736 .272 .113 .063 -.049 -.127
15 Every employees of the bank are easily accessible by the customer.
.726 .150 -.026 .150 .194 .068
16 When bank promises to do something, they do it in certain time.
.636 .271 .251 .146 .178 -.038
17 When customers have any problem, bank shows sincere interest in solving it.
.637 .338 .172 .219 .125 -.082
21 I have selected bank because bank is having strong brand name in the market.
.189 .120 .047 .824 .117 .070
22 I believe that bank is ethically managed by the management.
.210 .254 .175 .749 .011 -.028
25 Bank offers locker facility at reasonable price with no hidden charges.
.180 .653 -.006 .218 .045 .064
27 Bank offers me variety of the financial product like mutual fund, insurance policies other than traditional banking product.
.068 .317 .241 .187 -.052 .670
29 Bank never faces shortage of locker at every branch. .059 .104 -.129 -.089 .091 .862
30 Bank is having well managed web policies for secure online banking.
.331 .722 .042 .076 .165 .162
31 Bank always maintain transparency while communicating prices to me.
.351 .672 .163 -.001 -.149 .177
32 There are no hidden charges taken by bank while servicing me.
.348 .618 .130 .203 -.029 -.038
36 I feel secure while using bank’s technical services such as NEFT, RTGS, Online Banking Etc.
.134 .773 .069 .091 .104 .087
37 Bank does regular upgradation in its technology. .205 .645 .262 .035 .197 .165
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 7 iterations.
Data Analysis
110
Rotated component matrix table represent the strength of relationship between the item and
factor and membership of the item under one factor. Here the membership of the item in
factor is determines by identifying the highest loading in one factor. The loading values
ranges between the 0 and 1. Value close to 1 indicated the highest factor loading. Another
important thing is that while determining the factor membership, negative sign of the factor
is being ignored. Generally factor loading higher than 0.5 is acceptable but as per the Hair
(2006), for sample size of 200 factor loading of 0.40 is acceptable. 200 respondents of SBI
were surveyed and hence 0.40 is considered as acceptable factor loading.
4.6.3 Factor Naming:
Once the factors extracted than the next step is to interpret and name the factors. Factor
naming is done based on the membership of various items in various factors as follows:
Factor 1 Competency of Bank Employee
The first factor is a linear combination of item 8, 10, 11, 12, 13, 14, 15, 16 and 17. All the
items are pertaining to the bank employees’ attentiveness, their ability to understand the
customer needs, promptness in services, problem solving and their easy accessibility.
Considering these items factor 1 is named as Competency of the Bank Employee.
Factor 2 Augmented Services
Second factor is a linear combination of item 25, 30, 31, 32, 36 and 37. This factor is a
combination of the items that represent banking products and facilities like bank’s locker
service, online services like NEFT & RTGS as well as bank’s pricing and web policies and
hence this factor is named as Augmented Services.
Factor 3 Physical Evidence
This factor is a linear combination of item 5, 6 and 7. These items comprises of cleanliness
in the bank’s premises and bank’s various materials like pamphlets, brochures etc. As per
the literature of service quality, all these items are a part of Physical Evidence.
Factor 4 Ethos of the bank.
This factor is a linear combination of item 21 and 22 only. Item 21 is of bank’s brand name
in the market where as item 22 signifies ethical management. These items epitomize the
Data Analysis
111
philosophy of the bank so far as ethics are concern and it results in creating a good brand
name in the market.
Factor 5 Assortment of services.
This factor is linear combination of item 3 and 4 only. Item 3 represents bank’s waiting
area with TV & music. Item 4 consists of the token system available at the bank. Bank
offers variety of the services to its customers. Token system and TV & music system in
waiting area reduce anxiety of waiting in the bank premises. So factor is named as
Assortment of services.
Factor 6 Service Product.
The last factor is linear combination of item 27 and 29 that represent availability of various
bank’s products such as mutual fund, insurance policies and locker facility. As the items
grouped in this factor represent the various banking product through which bank offer
services to its customers and hence this factor is named as service product.
4.6.4 Confirmatory Factor Analysis:
Total six factors are extracted in Exploratory Factor Analysis and based on it following
factor structure is developed. Confirmatory factor analysis is used to verify and confirmed
thisstructure. In the following structure, Competency of Bank Employee (CBE),
Augmented Service (AS), Physical Evidence (PE), Ethos of the Bank (EB), Assortment of
the services (ASTS) and Service Product (SP) are the observed variables and service
quality is latent variables in the following factor structure. Validity of the factor structure is
determined through Convergent Validity, Discriminant Validity and Nomological Validity.
Data Analysis
112
FIGURE 4.1 Factor Structure - SBI
E1
E2
E3
E4
E5
E6
E7
E8
E9
E10
E11
E12
E13
E14
E15
E16
E17
E18
E19
E20
E21
E22
E23
E24
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
cbe1
cbe2
cbe3
cbe4
cbe5
cbe6
cbe7
cbe8
cbe9
as1
as2
as3
as4
as5
as6
pe1
pe2
pe3
eb1
eb2
asts1
asts2
sp1
sp2
cbe
as
pe
eb
asts
sp
r1
r2
r3
r4
r5
r6
sq
1
1
1
1
1
1
1
1 1
1
1
1
1
Data Analysis
113
TABLE4.8 Model Fit Indexes - SBI
Ratio of Chi-square to degrees of freedom (CMIN/DF) 1.627 Goodness-of-fit index (GFI) 0.906 Adjusted GFI (AGFI) 0.896 Normed fit index (NFI) 0.931 Tucker-Lewis Index (TLI) 0.917 Incremental Fit Index (IFI) 0.927 Relative Fit Index (RFI) 0.911 Comparative Fit Index (CFI) 0.926 Root Mean Square Error of Approximation (RMSEA) 0.056
Fit statistics depicted in the above table determine the model fit data. The first is Chi-
square to degrees of freedom whose value is higher than 0.05 showing the little difference
between the expected and observed covariance matrices, which is one indicator of good fit.
Next indicator is Goodness-of-fit index (GFI) and Adjusted GFI (AGFI). GFI is higher
than 0.9 and AGFI is close to 0.9 indicating good model fit. Tucker-Lewis Index (TLI),
Incremental Fit Index (IFI) and Relative Fit Index (RFI) values are higher than 0.9
signifies the model is fit for the data. The Comparative Fit Index (CFI) is an incremental fit
index, which assesses overall improvement of a proposed model and in the above model,
CFI value is higher than 0.90 showing a good model fit. The last indicator is Root Mean
Square Error of Approximation (RMSEA) that is related to residuals in the model. Good
model fit is typically indicated by an RMSEA value of 0.06 or less and RMSEA value of
the data is under the acceptable range and hence it can be interpreted that model is fit for
the data.
Data Analysis
114
TABLE 4.9 Convergent Validity- SBI
Constructs Items Item
Loadings t-values
Composite Reliability
(CR) AVE
Competency of Bank Employee (CBE)
CBE1 0.682
0.945
0.531
CBE2 0.787 10.133 CBE3 0.686 10.113 CBE4 0.687 10.124 CBE5 0.774 8.799 CBE6 0.695 9.045 CBE7 0.764 8.676 CBE8 0.736 9.532 CBE9 0.739 9.572
Augmented Services (AS) AS1 0.785
0.930
0.563
AS2 0.808 8.281 AS3 0.734 7.822 AS4 0.690 7.516 AS5 0.691 7.519 AS6 0.786 7.487
Physical Evidence (PE) PE1 0.771 0.869
0.560 PE2 0.756 9.602
PE3 0.719 9.233 Ethos of the Bank (EB) EB1 0.745
0.824
0.571 EB2 0.767 5.821 Assortment of Services (ASTS1) ASTS1 0.744
0.814 0.556
ASTS2 0.748 5.216 Service Product (SP) SP1 1.00 0.842 0.651
SP2 0.551 1.984
Item Loadings of all the six factors are 0.5 or higher signifies that these factors converge
on a common point on Latent Variable – Service Quality. t- Value also known as Critical
Ration of all the observed variables is higher than 1.96 at a significant level of 0.05
confirms the convergent validity. Composite Reliabilities is another indicator of
convergent validity. Composite reliability of all the observed variables are higher than 0.7
indicated good reliability of the factor structure. Last component of convergent validity is
Average Variance Extracted (AVE). AVE calculated for all the six constructs is higher
than 0.50 indicating that more than half the variance of the service quality is explained by
each construct. Item Loading, t-value, construct reliability and AVE confirms the
convergent validity of the factor structure.
Research Methodology
115
TABLE 4.10 Discriminant Validity & Nomological Validity - SBI
Average AVE of Two Construct
Square Correlation
CBE <--> AS 0.593 .536 CBE <--> PE 0.574 .506 CBE <--> EB 0.580 .574 CBE <--> ASTS 0.572 .569
CBE <--> SP 0.620 .349
AS <--> PE 0.579 .496 AS <--> EB 0.584 .561 AS <--> ASTS 0.577 .378 AS <--> SP 0.624 .466 PE <--> EB 0.565 .487 PE <--> ASTS 0.558 .548 PE <--> SP 0.605 .313 EB <--> ASTS 0.563 .333 EB <--> SP 0.611 .290 ASTS <--> SP 0.603 .168
Discriminant Validity is the extent to which a construct is truly distinct from the other
construct. Average AVE of the two construct must exceed the square of their correlation to
satisfy the Discrimiant Validity Test (Hair,2006). Values depicted in the above table for all
the constructs, satisfy the condition and hence it can be concluded that discriminant
validity of the factor structure is confirmed. According to Hair (2006), nomological
validity is tested by examining the correlation between the construct in the measurement
model. The correlation values shows that constructs are positively related to each other and
support the nomological validity of the model.
Objective 2: To find out correlation between service quality, customer satisfaction /
Retention / Commitment & Loyalty
4.6.5 Pearson Correlation:
Factor structure of service quality in State Bank of India is confirmed through Exploratory
Factor Analysis and Confirmatory Factor Analysis. Total six factor of the service quality
are derived. To fulfill above stated objective, Pearson Correlation test was performed
between the six factors of service quality and customer satisfaction / retention /
commitment & loyalty. Hypothesis of this objective is as follows:
Data Analysis
116
TABLE 4.11 Summary of Hypothesis Testing – Objective 2(a) - SBI
Correlation co-efficient value is positive that indicates that all the six factors of the service
quality are positively associated with the customer satisfaction. Moreover, significance
value of all the six factors is 0.00 that is less than 0.05 and hence null hypothesis is not
accepted for all the six factors. Co-efficient values for all the six factors are in the range of
0.36 to 0.67 (Richard Taylor, 1990) that represents modest or moderate correlation
between service quality and customer satisfaction. Level of association between customer
satisfaction and factor 1 is 64.2%, factor 2 is 59.4%, factor 3 is 50.1%, factor 4 is 37.1%,
factor 5 is 40.6% and factor 6 is 43.7% respectively.
TABLE 4.12 Summary of Hypothesis Testing – Objective 2 (b) -SBI
Sub objective II (a): To find out correlation between Service Quality and Customer Satisfaction.
Hypothesis Pearson
Correlation Coefficient
Significance Value
Result
H1(a): There is an association between Customer Satisfaction and Competency of bank employee.
0.642 0.00 Accepted
H2 (a): There is an association between Customer Satisfaction and Augmented Services.
0.594 0.00 Accepted
H3 (a): There is an association between Customer Satisfaction and Physical Evidence.
0.501 0.00 Accepted
H4 (a): There is an association between Customer Satisfaction and Ethos of the Bank.
0.371 0.00 Accepted
H5 (a): There is an association between Customer Satisfaction and Assortment of Services.
0.406 0.00 Accepted
H6 (a): There is an association between Customer Satisfaction and Service Product.
0.437 0.00 Accepted
Sub objective II (b): To find out correlation between Service Quality and Customer Retention.
Hypothesis Pearson
Correlation Coefficient
Significance Value
Result
H1 (b): There is an association between Customer Retention and Competency of bank employee.
0.458 0.00 Accepted
H2 (b): There is an association between Customer Retention and Augmented Services.
0.404 0.00 Accepted
H3 (b): There is an association between Customer Retention and Physical Evidence.
0.250 0.00 Accepted
H4 (b): There is an association between Customer Retention and Ethos of the Bank.
0.458 0.00 Accepted
H5 (b): There is an association between Customer Retention and Assortment of Services.
0.297 0.00 Accepted
H6 (b): There is an association between Customer Retention and Service Product.
0.376 0.00 Accepted
Data Analysis
117
Significance value of all the six factors is 0.00 that is less than 0.05 and hence null
hypothesis is not accepted for all the six factors. Co-efficient values of the factor –
Physical Evidence is 0.250 and the factor – Assortment of Services is 0.297. According to
Richard Taylor (1990), if the correlation value is ≤ 0.35, it represents low or weak
correlation. Therefore these two factors of service quality are not considered for the
regression analysis. Remaining four factors’ co-efficient values is in the range of 0.36 to
0.67 (Richard Taylor, 1990) depicts the moderate correlation between service quality and
customer retention.
TABLE 4.13 Summary of Hypothesis Testing – Objective 2 (c) - SBI
Correlation co-efficient values of the factors of service quality depicted in the table 4.13 is
having positive sign but the factor Physical Evidence, Ethos of the Bank and Assortment of
the service’s Pearson values are less than 0.35 so it can be interpreted that these three
factors are having low or weak correlation with the customer loyalty. Whereas remaining
three factors are having r values in the range of 0.36 to 0.67 illustrating that Competency
Of bank employee, Service Product and Augmented Services have moderate correlation
with customer loyalty. All the factors significance values (0.00) are less than 0.05 therefore
null hypotheses is not accepted.
Sub objective II (c): To find out correlation between Service Quality and Customer Loyalty.
Hypothesis Pearson
Correlation Coefficient
Significance Value
Result
H1 (c): There is an association between Customer Loyalty and Competency of bank employee.
0.371 0.00 Accepted
H2 (c): There is an association between Customer Loyalty and Augmented Services.
0.370 0.00 Accepted
H3 (c): There is an association between Customer Loyalty and Physical Evidence.
0.305 0.00 Accepted
H4 (c): There is an association between Customer Loyalty and Ethos of the Bank.
0.270 0.00 Accepted
H5 (c): There is an association between Customer Loyalty and Assortment of Services.
0.210 0.00 Accepted
H6 (c): There is an association between Customer Loyalty and Service Product.
0.378 0.00 Accepted
Data Analysis
118
TABLE 4.14 Summary of Hypothesis Testing – Objective 2 (d) - SBI
Correlation co-efficient values of the factors of service quality depicted in the table 4.14 is
having positive sign but the factor Physical Evidence, Ethos of the Bank and Assortment of
Services’ Pearson values are less than 0.35 so it can be interpreted that these three factors
are having low or weak correlation with the customer commitment. Whereas remaining
three factors are having r values in the range of 0.36 to 0.67 illustrating that Competency
Of bank employee, Service Product and Augmented Services have moderate correlation
with customer commitment. All the factors significance values (0.00) are less than 0.05
therefore null hypotheses is not accepted.
Objective 3: To study the impact of service quality on customer satisfaction /
Retention / Commitment & Loyalty.
4.6.6 Simple Regression
The result of correlation analysis has identified the factors of service quality that has
positive and moderate association with the customer satisfaction, retention, loyalty and
commitment. Simple regression analysis was carried out to find out the impact of factors of
service quality on customer satisfaction, retention, loyalty and commitment.
Sub objective II (d): To find out correlation between Service Quality and Customer Commitment.
Hypothesis Pearson
Correlation Coefficient
Significance Value
Result
H1 (d): There is an association between Customer Commitment and Competency of bank employee.
0.391 0.00 Accepted
H2 (d): There is an association between Customer Commitment and Augmented Services.
0.372 0.00 Accepted
H3 (d): There is an association between Customer Commitment and Physical Evidence.
0.273 0.00 Accepted
H4 (d): There is an association between Customer Commitment and Ethos of the Bank.
0.307 0.00 Accepted
H5 (d): There is an association between Customer Commitment and Assortment of Services.
0.250 0.00 Accepted
H6 (d): There is an association between Customer Commitment and Service Product.
0.372 0.00 Accepted
Data Analysis
119
TABLE 4.15 Summary of Hypothesis Testing – Objective 3 (a) - SBI
Table 4.15 exhibits that ANOVA values of all the six factors are 0.00 less than 0.05 at 95
per cent confidence level which indicate that model is overall good. Another parameter is
significance value. Significance values of all the six factors (0.00) are less than 0.05 that
signifies that variables in the model are significant. Therefore null hypotheses are not
accepted for all the six factors. R2 value of the factor 1(Competency of bank employee)
shows that 41.2% of variation in customer satisfaction is explained by this factor. Factor 2
(Augmented Services) explain 35.2%, factor 3 (Physical Evidence) explain 25.1%, factor 4
(Ethos of the Bank) explain 13.8%, factor 5 (Assortment of Services) explain 16.5% and
factor 6 (Service Product) explain 19.1% of variation in customer satisfaction respectively.
TABLE 4.16 Summary of Hypothesis Testing – Objective 3 (b) - SBI
Sub objective III (a): To study the impact of Service Quality on Customer Satisfaction.
Hypothesis Significance
Value R Square
Value ANOVA
Value Result
H1 (a): There is a significant impact of Competency of bank employee on Customer Satisfaction.
0.00 0.412 0.00 Accepted
H2 (a): There is a significant impact of Augmented Services on Customer Satisfaction.
0.00 0.352 0.00 Accepted
H3 (a): There is a significant impact of Physical Evidence on Customer Satisfaction.
0.00 0.251 0.00 Accepted
H4 (a): There is a significant impact of Ethos of the Bank on Customer Satisfaction
0.00 0.138 0.00 Accepted
H5 (a): There is a significant impact of Assortment of Services on Customer Satisfaction.
0.00 0.165 0.00 Accepted
H6 (a): There is a significant impact of Service Product on Customer Satisfaction.
0.00 0.191 0.00 Accepted
Sub objective III (b): To study the impact of Service Quality on Customer Retention.
Hypothesis Significance
Value R Square
Value ANOVA
Value Result
H1 (b): There is a significant impact of Competency of bank employee on Customer Retention.
0.00 0.066 0.00 Accepted
H2 (b): There is a significant impact of Augmented Services on Customer Retention.
0.00 0.042 0.00 Accepted
H3 (b): There is a significant impact of Ethos of the Bank on Customer Retention
0.00 0.066 0.00 Accepted
H4 (b): There is a significant impact of Service Product on Customer Retention.
0.00 0.071 0.00 Accepted
Data Analysis
120
Correlation analysis stipulates that factors depicted in the table 4.16 are having moderate
association with the customer retention and hence these four factors of service quality are
considered for regression analysis. ANOVA values of all the four factors imply that model
is overall good. Significance value shows that variables in the regression model are
significant and hence null hypotheses of all the four factors are not accepted. R2 value of
four factors are 6.6%, 4.2%, 6.6% and 7.1% respectively that explain the variation in the
customer retention by these factors.
TABLE 4.17 Summary of Hypothesis Testing – Objective 3 (c) - SBI
Only above mention three factors are found to be associated with customer loyalty that is
considered for regression analysis. ANOVA values imply that model is overall good. As
per the significance value of all the three factors, null hypothesis is not accepted. It also
signifies that variables of the regression are significant. Factor 1 (Competency Of bank
employee)’s R2 value is 11.6% followed by 12.3 % and 7.7% for factor 2 (Augmented
Services) and factor 3(Service Product) respectively. This explains variation in customer
loyalty by all these three factors of service quality.
TABLE 4.18 Summary of Hypothesis Testing – Objective 3 (d) - SBI
Sub objective III (c): To study the impact of Service Quality on Customer Loyalty.
Hypothesis Significance
Value
R Square Value
ANOVA Value
Result
H1 (c): There is a significant impact of Competency of bank employee on Customer Loyalty.
0.00 0.116 0.00 Accepted
H2 (c): There is a significant impact of Augmented Services on Customer Loyalty.
0.00 0.123 0.00 Accepted
H3 (c): There is a significant impact of Service Product on Customer Loyalty.
0.00 0.077 0.00 Accepted
Sub objective III (d): To study the impact of Service Quality on Customer Commitment. Hypothesis Significance
Value R Square
Value ANOVA
Value Result
H1 (d): There is a significant impact of Competency of bank employee on Customer Commitment.
0.00 0.085 0.00 Accepted
H2 (d): There is a significant impact of Augmented Services on Customer Commitment.
0.00 0.131 0.00 Accepted
H3 (d): There is a significant impact of Service Product on Customer Commitment.
0.00 0.131 0.00 Accepted
Data Analysis
121
Only above mention three factors are found to be moderately associated with customer
commitment that is considered for regression analysis. ANOVA values imply that model is
overall good. As per the significance value of all the three factors, null hypothesis is not
accepted. It also signifies that variables of the regression are significant. Factor 1
(Competency Of bank employee)’s R2 value is 8.5% followed by 13.1 % and 13.1% for
factor 2 (Augmented Services) and factor 3(Service Product) respectively. This explains
variation in customer commitment by all these three factors of service quality.
Objective 4: To identify important factors of service quality from the demographic
perspective of customers.
4.6.7 Cross Tabulation
With the use of Exploratory Factor Analysis following six factor of service quality
extracted. Factor structure of the six factors was confirmed through Confirmatory Factor
Analysis. Customer’s perceptions towards these six factors were examined with the use of
Cross Tabulation.
TABLE 4.19 Cross Tabulation of the demographic variable – Gender - SBI
Sr. No
Factor of Service Quality Gender Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
1 Competency of Bank Employee
Male 1 16 28 52 21 Female 2 5 28 37 10
2 Augmented Services Male 3 9 15 40 51 Female 1 3 21 44 13
3 Physical Evidence Male 7 19 23 45 24 Female 2 5 22 39 14
4 Ethos of the Bank Male 13 19 20 44 22 Female 2 6 23 38 13
5 Assortment of Services Male 8 20 22 54 14 Female 6 8 30 31 7
6 Service Product Male 4 14 38 51 9 Female 5 7 20 48 4
Out of 200 respondents, 52 males and 37 females agree with the fact that employees of
State Bank of India are competent. 40 males and 44 females agree that the bank provides
better service & with good quality. 45 males and 39 females believe that bank is having
good & attractive physical evidence. 44 males and 38 female believe that SBI’s philosophy
is good and it results into good culture within the bank. 54 male and 31 female agree that
Data Analysis
122
bank is having various services to be offered to customer. 51 male and 48 female are of an
opinion that the service product of the SBI is good.
TABLE 4.20 Cross Tabulation of the demographic variable – Age - SBI
Sr. No
Factor of Service Quality Age Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
1 Competency of Bank Employee
18-24 2 8 11 11 4 25-34 0 7 15 28 10 35-44 1 2 6 37 3 45-55 0 3 8 9 6 55-65 0 5 5 8 8
Over 65 0 0 1 2 0 2 Augmented Services 18-24 2 4 15 30 11
25-34 1 3 10 27 23 35-44 0 1 3 12 7 45-55 1 2 4 8 11 55-65 0 2 3 5 12
Over 65 0 0 1 2 0 3 Physical Evidence 18-24 2 6 16 35 3
25-34 0 3 14 28 19 35-44 1 0 6 11 5 45-55 1 2 6 12 5 55-65 0 1 3 12 6
Over 65 0 0 0 2 1
4 Ethos of the Bank 18-24 1 8 16 31 6 25-34 1 3 12 33 15 35-44 1 2 8 10 2 45-55 0 2 4 15 5 55-65 0 0 3 12 7
Over 65 0 0 0 2 1 5 Assortment of Services 18-24 7 6 18 27 4
25-34 1 14 11 29 9 35-44 2 3 7 10 1 45-55 2 4 7 9 4 55-65 0 1 7 11 3
Over 65 0 0 1 1 1 6 Service Product 18-24 1 2 22 35 2
25-34 3 7 19 30 5 35-44 0 1 7 12 3 45-55 0 4 6 14 2 55-65 1 6 3 10 2
Over 65 0 1 0 2 0
Out of 200 respondents, 37 respondents falling in the age group of 35 – 44 years, opines
that SBI is having competent staff to deliver services to customers. Respondents of an age
group 18-24 agree with the factor that bank offers augmented services. Respondents of the
same age group (18-24) also believe that bank’s material is good and maintain cleanliness
in the bank premises. Respondents represent the age category of 25-34 are having opinion
Data Analysis
123
that bank is having a good brand name in the market and bank is ethically managed.
Further, 18-24 age groups’ respondents think that bank offers variety of services and
service products.
TABLE 4.21 Cross Tabulation of the demographic variable – Education - SBI
Sr. No
Factor of Service Quality
Education Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
1 Competency of bank employee
Secondary School
0 1 1 1 1
Higher Secondary School
0 3 2 6 3
Graduate degree 3 10 22 46 15 Postgraduate degree
0 6 14 36 6
Professional qualifications
0 1 7 9 7
2 Augmented Services Secondary School
0 1 1 0 2
Higher Secondary School
1 1 1 3 8
Graduate degree 1 8 19 39 30 Postgraduate degree
0 1 11 33 17
Professional qualifications
1 1 4
9 8
3 Physical Evidence Secondary School
0 0 2 1 1
Higher Secondary School
0 2 1 7 4
Graduate degree 2 8 20 30 16 Postgraduate degree
1 2 16 50 13
Professional qualifications
1 0 6 12 5
4 Ethos of the Bank Secondary School
0 0 1 2 1
Higher Secondary School
1 1 1 8 3
Graduate degree 1 11 19 11 17 Postgraduate degree
1 2 16 34 9
Professional qualifications
0 1 6 48 6
Data Analysis
124
Sr. No
Factor of Service Quality
Education Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
5 Assortment of Services
Secondary School
0 0 2 1 1
Higher Secondary School
2 1 0 10 1
Graduate degree 7 15 24 40 10 Postgraduate degree
2 7 20 27 6
Professional qualifications
1 5 6 9 3
6 Service Product Secondary School
0 0 2 2 0
Higher Secondary School
0 2 3 7 2
Graduate degree 2 10 30 36 8 Postgraduate degree
2 5 16 46 3
Professional qualifications
1 4 11 7 1
Education is another demographic variable that is use to examined the perception of
customer towards the service offered by the State Bank of India. Majority of customer
surveyed are graduate (46) who believe that State Bank of India has competent employees
and bank offers better service and wide variety of services. 50 respondents are post
graduate who think that physical evidence that includes materials used by banks and
cleanliness in premises is very good. 48 respondents are professionally qualified and
having opinion that bank exercise ethics while managing the firm and due to it, SBI is
having good brand name in the market. Further, 40 graduate respondents and 46 post
graduate respondents agree with the factors that bank’s service products are very good and
bank is having bundle of services to be offered.
Data Analysis
125
TABLE 4.22 Cross Tabulation of the demographic variable – Income - SBI
Sr. No.
Factor of Service Quality
Income in Rs. Strongly Disagree
Disagree Neither
Agree Nor Disagree
Agree Strongly
Agree
1 Competency of bank employee
0-10000 1 5 12 20 3 10000-20000 0 7 14 15 10 20000-30000 1 4 5 14 5 30000-40000 1 3 8 30 4 40000-50000 0 1 2 8 1 Above 50000 0 1 5 12 8
2 Augmented Services 0-10000 2 1 13 8 5 10000-20000 0 1 7 15 15 20000-30000 0 6 7 28 15 30000-40000 2 2 4 10 12 40000-50000 0 1 1 11 2 Above 50000 0 1 4 12 15
3 Physical Evidence 0-10000 0 1 0 3 0 10000-20000 1 1 15 21 3 20000-30000 1 3 12 26 7 30000-40000 0 2 4 19 18 40000-50000 2 3 6 15 15 Above 50000 0 2 2 11 7
4 Ethos of the Bank 0-10000 1 6 11 20 4 10000-20000 1 1 15 16 10 20000-30000 0 4 7 16 8 30000-40000 1 3 5 30 5 40000-50000 0 1 2 5 2 Above 50000 0 0 3 16 7
5 Assortment of Services
0-10000 5 6 11 17 3 10000-20000 3 7 14 22 4 20000-30000 2 5 6 18 4 30000-40000 2 4 7 19 5 40000-50000 0 0 7 3 0 Above 50000 0 6 7 8 5
6 Service Product 0-10000 1 2 13 24 2 10000-20000 1 3 13 28 5 20000-30000 2 3 10 19 1 30000-40000 0 9 10 15 3 40000-50000 0 1 5 3 1 Above 50000 1 3 6 14 2
Competency of bank employee – factor is considered good by the respondents (30) having
the income in the range of Rs.30000 – 40000. Further they also think that bank is managed
ethically and brand name of the bank in the market is also good. Respondents having the
income between Rs. 20000 and Rs. 30000 deem that service product and pricing policy of
the bank is good. They also believe that cleanliness is properly maintained in the bank and
material of the bank is also good. Last two factors are mostly considered by the
respondents having income in the category of Rs.10000 – 20000. According to them,
tangible cues of the bank and service offering of the bank are good.
Data Analysis
126
TABLE 4.23 Cross Tabulation of the demographic variable – Occupation - SBI
Sr. No.
Factor of Service Quality
Income in Rs. Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
1 Competency of bank employee
Businessman 0 2 1 3 2 Professional 0 1 6 8 4 Govt. Service 1 2 12 23 15 Private Service 2 9 18 41 6 Housewife 0 1 1 3 1 Student 0 5 6 18 1 Retired 0 1 2 3 2
2 Augmented Services Businessman 0 1 0 3 4 Professional 0 1 5 8 5 Govt. Service 0 2 5 17 29 Private Service 3 5 14 34 20 Housewife 0 0 1 4 1 Student 1 2 9 16 2 Retired 0 1 2 2 3
3 Physical Evidence Businessman 0 0 0 6 6 Professional 1 1 2 10 7 Govt. Service 1 1 4 22 28 Private Service 1 7 12 38 9 Housewife 0 0 1 3 3 Student 0 2 4 19 7 Retired 0 0 0 3 2
4 Ethos of the bank Businessman 0 1 2 3 2 Professional 0 1 6 42 3 Govt. Service 1 2 8 31 11 Private Service 2 5 14 9 13 Housewife 0 0 0 5 1 Student 0 6 11 11 2 Retired 0 0 2 2 4
5 Assortment of services Businessman 0 3 3 2 0 Professional 4 3 4 5 3 Govt. Service 2 6 10 35 8 Private Service 3 13 17 27 8 Housewife 0 0 2 3 1 Student 3 3 9 15 0 Retired 0 0 7 0 1
6 Service Product Businessman 0 0 2 39 0 Professional 0 0 5 14 0 Govt. Service 2 9 12 24 6 Private Service 2 8 20 6 7 Housewife 0 1 0 5 0 Student 1 2 10 16 1 Retired 0 1 4 3 0
State Bank Employees are competent – this is mostly believed by those respondents (41)
who are doing job in the private sector. They also believe that bank offers augmented
services. The same respondents also opine that bank is having attractive physical evidence.
42 respondents who are professional think that ethos of SBI is good. 35 respondents who
Data Analysis
127
are government job holder consider that SBI is having variety of services to offer. 39
businessmen think that the service product of the state bank is good.
Objective 5: To rank the SBI based on the service quality
4.6.8 Least Square Method
It describes the calculation of the respondent’s perception’s towards service quality
through ideal and least scores. Ideal scores are calculated by multiplying the number of
respondents in each category with (+3) and product with total number of criteria. Least
scores calculated by multiplying the number of respondents in each category with (-1) and
the product with number of criteria in the questionnaires
TABLE 4.24 Ideal Score and Least Scores of Respondents - SBI
Category Equation Ideal Score Equation Least Score Service Quality in SBI, 200 × 3 × 37 22200 200 × -1 × 37 -7400
The results of the study are as under. The tables are formed on the basis of the questions of
service quality contained in the questionnaire.
Data Analysis
128
TABLE 4.25 Responses of the Respondents - SBI
No Criterias of Service Quality Completely
Agree Agree Neutral Disagree
Completely Disagree
Score
+3 +2 +1 0 -1 1 Bank’s physical facility is
visually attractive 31 133 21 7 8 372
2 Bank is having modern looking and comfortable waiting area
49 104 22 21 4 373
3 Banks have TV & music system in the waiting area that reduces anxiety while waiting
33 78 30 41 18 267
4 Token system at the bank makes waiting line more organize
52 101 14 25 8 364
5 Cleanliness is properly maintained at the bank.
71 102 14 10 3 428
6 Materials like pamphlets, brochure provides detail information about bank’s various services.
40 126 17 13 4 385
7 Materials at the bank are visually appealing.
37 115 28 15 5 364
8 Employees of the bank are very attentive & provide individual attention.
55 78 41 21 5 357
9 Employees of the bank have knowledge about the all the different kind services offered by the bank.
61 89 30 18 2 389
10 Employees of the bank are having high level of the competency.
53 70 46 21 10 335
11 Employees of the bank are very customer friendly & listen to me very carefully.
62 89 27 17 5 386
12 Employees of the bank understand your need.
55 91 35 16 3 379
13 Employees of the bank are never too busy to respond to customer ‘s request.
48 83 31 34 4 337
14 Employees of the bank provide me prompt service.
49 98 29 20 4 368
15 Every employees of the bank are easily accessible by the customer.
59 89 30 21 1 384
16 When bank promises to do something, they do it in certain time.
52 95 35 13 5 376
17 When customers have any problem, bank shows sincere interest in solving it.
61 91 31 15 2 394
18 Bank performs the service right the first time.
45 95 40 18 2 363
19 Bank provides the service at the time they promise to do so.
61 93 31 13 2 398
Data Analysis
129
No Criterias of Service Quality Completely
Agree Agree Neutral Disagree
Completely Disagree
Score
20 Bank insists on the error free record.
52 91 33 22 2 369
21 I have selected bank because bank is having strong brand name in the market.
83 67 23 21 6 400
22 I believe that bank is ethically managed by the management.
48 109 33 7 3 392
23 Products of the bank like Fixed Deposit, Certificates are of a good quality.
78 95 20 5 2 442
24 Bank maintain confidentially while sending me online user id and password.
86 90 19 4 1 456
25 Bank offers locker facility at reasonable price with no hidden charges.
52 84 45 10 9 360
26 Bank is having strong security system in the bank premises.
59 104 27 8 2 410
27 Bank offers me variety of the financial product like mutual fund, insurance policies other than traditional banking product.
36 112 37 13 2 367
28 Bank always ensure proper functioning of ATM machine.
58 91 19 21 11 364
29 Bank never faces shortage of locker at every branch.
33 61 64 33 9 276
30 Bank is having well managed web policies for secure online banking.
64 86 30 19 1 393
31 Bank always maintain transparency while communicating prices to me.
72 84 29 11 4 409
32 There are no hidden charges taken by bank while servicing me.
74 80 28 14 4 406
33 Bank is having convenient operating hours.
50 106 31 10 3 178
34 Bank offers me 24*7 customer care services.
53 92 35 14 6 351
35 Bank strictly follows RBI regulations & also informs me about the same.
78 88 25 7 2 433
36 I feel secure while using bank’s technical services such as NEFT, RTGS, Online Banking Etc.
77 82 33 6 2 426
37 Bank does regular upgradation in its technology.
71 94 21 12 2 420
Total Score (+)13871 (62.48%)
Ideal Score (+)22200 Least Score -7400
Source: Field Survey
Data Analysis
130
Table 4.25 reveals the overall opinion of the customers with the service quality of SBI.
Here no negative score is being observed in the table. The level of service quality is found
to be 62.48% of ideal score that shows that service quality of SBI is overall considered
good.
4.7 Punjab National Bank:
Objective 1: To study the factors contributing to Service Quality
4.7.1 Exploratory Factor Analysis
TABLE 4.26 KMO and Bartlett's Test - PNB
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .908
Bartlett's Test of Sphericity Approx. Chi-Square 4168.630 Df 666 Sig. .000
KMO value of the data set is 0.908, this signifies that higher correlation exist among the
variables. Further, significant value of Bartlett’s Test of Sphericity is lesser than 0.05
indicating that sufficient correlation exists among the variables and hence further analysis
can be carried out on the data set.
TABLE 4.27 Table Correlation Matrix - PNB
Table Correlation Matrixa
a. Determinant = 0.000213
The determinant of the Correlation Matrix is 0.0002 that is higher than the 0.00001 and
therefore no multicollinearity is observed in the data.
4.7.2 Anti Image Matrices
Table 4.28 exhibits correlation values of 24 factors of service quality of PNB. Second part
of the table shows Diagonal values of the all the factors of service quality. As all the
variables are having this values higher than the 0.5, therefore it can be interpreting that all
the 24 factors of service quality have practical and statistical significance and data is
suitable for performing factor analysis.
Data Analysis
131
TABLE 4.28 Anti Image Table - PNB
Data Analysis
132
TABLE 4.29 Communalities Table - PNB
Sr. No
Variables Initial Extraction
1 Bank’s physical facility is visually attractive. 1.000 .759
2 Bank is having modern looking and comfortable waiting area. 1.000 .784
5 Cleanliness is properly maintained at the bank. 1.000 .703
6 Materials like pamphlets, brochure provides detail information about bank’s various services.
1.000 .601
8 Employees of the bank are very attentive & provide individual attention. 1.000 .696
9 Employees of the bank have knowledge about the all the different kind services offered by the bank.
1.000 .729
10 Employees of the bank are having high level of the competency. 1.000 .658
11 Employees of the bank are very customer friendly & listen to me very carefully.
1.000 .702
12 Employees of the bank understand your need. 1.000 .676
13 Employees of the bank are never too busy to respond to customer ‘s request.
1.000 .641
15 Every employees of the bank are easily accessible by the customer. 1.000 .641
16 When bank promises to do something, they do it in certain time. 1.000 .721
17 When customers have any problem, bank shows sincere interest in solving it.
1.000 .656
18 Bank performs the service right the first time. 1.000 .717
19 Bank provides the service at the time they promise to do so. 1.000 .625
22 I believe that bank is ethically managed by the management. 1.000 .694
23 Products of the bank like Fixed Deposit, Certificates are of a good quality. 1.000 .594
24 Bank maintain confidentially while sending me online user id and password.
1.000 .705
27 Bank offers me variety of the financial product like mutual fund, insurance policies other than traditional banking product.
1.000 .626
29 Bank never faces shortage of locker at every branch. 1.000 .693
31 Bank always maintain transparency while communicating prices to me. 1.000 .633
34 Bank offers me 24*7 customer care services. 1.000 .609
35 Bank strictly follows RBI regulations & also informs me about the same. 1.000 .697
37 Bank does regular upgradation in its technology. 1.000 .561
Extraction Method: Principal Component Analysis.
Communalities values depicted in the table 4.29 for all the 24 variables of service quality
are higher than 0.5 and therefore data set were appropriate for further analysis.
Data Analysis
133
TABLE 4.30 Total Variance Explained - PNB
Component Initial Eigenvalues
Extraction Sums of Squared Loadings
Rotation Sums of Squared Loadings
Total% of
Variance Cumulative
% Total
% of Variance
Cumulative %
Total % of
Variance Cumulative
%
1 9.396 39.150 39.150 9.396 39.150 39.150 4.335 18.064 18.064
2 1.791 7.464 46.614 1.791 7.464 46.614 2.776 11.568 29.631
3 1.500 6.251 52.864 1.500 6.251 52.864 2.676 11.149 40.780
4 1.216 5.067 57.931 1.216 5.067 57.931 2.290 9.540 50.320
5 1.155 4.814 62.745 1.155 4.814 62.745 2.133 8.889 59.209
6 1.064 4.435 67.180 1.064 4.435 67.180 1.913 7.971 67.180
7 .801 3.338 70.517
8 .751 3.130 73.647
9 .674 2.807 76.453
10 .668 2.783 79.237
11 .593 2.470 81.707
12 .524 2.183 83.890
13 .468 1.948 85.838
14 .455 1.897 87.735
15 .430 1.790 89.525
16 .365 1.519 91.045
17 .358 1.492 92.537
18 .327 1.364 93.901
19 .299 1.246 95.147
20 .290 1.207 96.354
21 .273 1.138 97.491
22 .263 1.096 98.587
23 .203 .845 99.432
24 .136 .568 100.000
Extraction Method: Principal Component Analysis.
Here, 24 variables of service quality explained 67.18 % of variance that is higher than the
threshold value of 60%.
Data Analysis
134
TABLE 4.31 Rotated Component Matrixa- PNB
Sr. No. Variables Component
1 2 3 4 5 6
1 Bank’s physical facility is visually attractive. .205 .733 .278 -.117 .118 .272
2 Bank is having modern looking and comfortable waiting area.
.266 .805 .037 -.059 .167 .177
5 Cleanliness is properly maintained at the bank. .289 .712 .089 .313 .083 .000
6 Materials like pamphlets, brochure provides detail information about bank’s various services.
.295 .581 .199 .367 -.043 -.018
8 Employees of the bank are very attentive & provide individual attention.
.762 .215 .169 .163 .098 .069
9 Employees of the bank have knowledge about the all the different kind services offered by the bank.
.726 .191 .091 .185 .351 .006
10 Employees of the bank are having high level of the competency.
.722 .169 .139 .184 .109 .208
11 Employees of the bank are very customer friendly & listen to me very carefully.
.764 .219 .140 .069 .200 .077
12 Employees of the bank understand your need. .707 .174 .298 .189 .099 .110
13 Employees of the bank are never too busy to respond to customer‘s request.
.645 .139 .375 .044 -.074 .239
15 Every employees of the bank are easily accessible by the customer.
.574 .318 .384 .200 -.008 .149
16 When bank promises to do something, they do it in certain time.
.269 .286 .699 .166 .195 -.112
17 When customers have any problem, bank shows sincere interest in solving it.
.348 .265 .634 .160 .157 .115
18 Bank performs the service right the first time. .202 -.011 .778 .039 .123 .232
19 Bank provides the service at the time they promise to do so.
.212 .094 .641 .343 .170 .117
22 I believe that bank is ethically managed by the management.
.065 .101 .178 -.033 .788 .159
23 Products of the bank like Fixed Deposit, Certificates are of a good quality.
.175 .354 .144 .225 .591 .131
24 Bank maintain confidentially while sending me online user id and password.
.243 .075 .127 .693 .155 .347
27 Bank offers me variety of the financial product like mutual fund, insurance policies other than traditional banking product.
.130 .232 .088 .044 .355 .648
29 Bank never faces shortage of locker at every branch. .126 .012 .147 .233 -.036 .775
31 Bank always maintain transparency while communicating prices to me.
.225 -.090 .136 .350 .656 .051
34 Bank offers me 24*7 customer care services. .275 .108 .194 .622 -.038 .308
35 Bank strictly follows RBI regulations & also informs me about the same.
.109 .082 .179 .741 .312 .010
37 Bank does regular upgradation in its technology. .218 .230 .064 .211 .352 .537
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 8 iterations.
Data Analysis
135
Rotated component matrix table represent the strength of relationship between the item &
factor and membership of the item under one factor. Here the membership of the item in
factor is determined by identifying the highest loading in one factor. The loading values
ranges between the 0 and 1. Value close to 1 indicated the highest factor loading. Another
important thing is that while determining the factor membership, negative sign of the factor
is being ignored. Generally factor loading higher than 0.5 is acceptable but as per the Hair
(2006), for sample size of 200 factor loading of 0.40 is acceptable. 200 respondents of
PNB were surveyed and hence 0.40 is considered as acceptable factor loading.
4.7.3 Factor Naming:
After extracting the factors, factors are given name based on the grouping of the various
items in each factor as follows:
Factor 1 Competency of Bank Employee
This factor is linear combination of items 8, 9, 10, 11, 12, 13 and 15. All these items
represent bank employees’ customer orientation, their competency, their ability to
understand the need of customers as well as easy accessibility of bank employees.
Considering these all these items together, this factor is named as competency of bank
employee. The similar factor extracted for the State Bank of India also.
Factor 2 Interior signage & service ability
This factor is linear combination of items 1, 2, 5 and 6. These items comprise of bank’s
internal environment, cleanliness and materials like brochure and pamphlets. As all these
items are pertaining to the bank’s interior signage and it plays significant role in facilitating
the service to the customers and hence this factor is name as Interior signage and service
ability.
Factor 3 Accomplishing the Promises
This factor is a combination of items 16, 17, 18 and 19. These items are pertaining to the
fulfilling the promise in time, promptness in solving the problem and performing the right
service at the right time. Group of these items are named as accomplishing the promises.
Data Analysis
136
Factor 4 Assortment of Service
As this factor is a group of item 24, 34 and 35, so it represents the variables like
maintaining confidentiality, customer care service and adhering RBI regulations. Apart
from the plain vanilla banking service, service of PNB includes the above mention services
represented in the item 24, 34 and 35. Deeming this, factor name assortment of service is
given to this factor. The similar name was given to the factor obtained in the SBI but the
items loaded under that factor were different. However, the name given to this factor
represents both the banks.
Factor 5 Augmented Services
Augmented services name is given to the factor as it symbolizes the items 22, 23 and 31.
These items are related to bank’s ethical management, banking product like certificates &
fixed deposit and pricing policies of the bank. Like SBI, respondents of PNB also opine
that, service of PNB has improved over a period of time and hence this factor also carries
the similar name: Augmented Services.
Factor 6 Service Product
Like SBI, this factor is also linear combination of item 27, 29 and 37. These items
represent the various products through which bank offers services to its customers. As the
similar items loaded under this factor also and hence this factors bear the same name:
Service Product.
4.7.4 Confirmatory Factor Analysis:
After using Exploratory Factor Analysis, total six factors are extracted and with the use of
that factors following factor structure developed. This factor structure is confirmed through
Confirmatory Factor Analysis. In this factor structure, latent variable is service quality and
observed variables are Competency of Bank Employee (CBE), Interior Signage & Service
Ability (ISB), Accomplishing the Promises (AP), Assortment of Service (ASTS),
Augmented Service (AS), and Service Product (SP). Convergent Validity, Discriminant
Validity and Nomological Validity are used to validate the factor structure.
Data Analysis
137
FIGURE 4.2Factor Structure - PNB
E1
E2
E3
E4
E5
E6
E7
E8
E9
E10
E11
E12
E13
E14
E15
E18
E20
E21
E22
E23
E24
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
cbe1
cbe2
cbe3
cbe4
cbe5
cbe6
abe7
isb1
isb2
isb3
isb4
ap1
ap2
ap3
ap4
asts3
as2
as3
sp1
sp2
sp3
cbe
isb
ap
asts
as
sp
r1
r2
r3
r4
r5
r6
sq
1
1
1
1
1
11
1
1
1
1
1
1
E16 1
asts1
E17 asts2
1
E19 1 as1
Data Analysis
138
TABLE 4.32 Model Fit Indexes- PNB
Ratio of Chi-square to degrees of freedom (CMIN/DF) 2.238 Goodness-of-fit index (GFI) 0.963 Adjusted GFI (AGFI) 0.904 Normed fit index (NFI) 0.928 Tucker-Lewis Index (TLI) 0.953 Incremental Fit Index (IFI) 0.971 Relative Fit Index (RFI) 0.962 Comparative Fit Index (CFI) 0.969 Root Mean Square Error of Approximation (RMSEA) 0.051
Model fit is decided by the various Model Fix Indexes. First index is Chi-square to degrees
of freedom depicting difference between the expected and observed covariance matrices.
The value is higher than 0.05 indicated a good model fit. The values of Goodness-of-fit
index (GFI), Adjusted GFI (AGFI), Tucker-Lewis Index (TLI), Incremental Fit Index (IFI)
and Relative Fit Index (RFI) are higher than 0.9 signifies a good model fit. 0.969 CFI
value indicates a good model fit. Root Mean Square Error of Approximation (RMSEA)
that is related to residuals in the model and RMSEA value is less than 0.06 indicates a
good model fit.
TABLE 4.33 Convergent Validity - PNB
Constructs Items Item Loadings
t-values
Composite Reliability
(CR)
AVE
Competency Of Bank Employee (CBE) CBE1 .781
0.943
0.576
CBE2 .758 11.355 CBE3 .758 11.351 CBE4 .776 11.676 CBE5 .792 11.986 CBE6 .697 10.256 CBE7 .747 11.146
Interior Signage & Service Ability (ISB) ISB1 .823 0.887
0.546 ISB2 .852 12.516
ISB3 .673 9.746 ISB4 .573 8.086
Accomplishing The Promises (AP) AP1 .742 0.883
0.526 AP2 .796 10.428
AP3 .653 8.623 AP4 .705 9.310
Assortment of Services (ASTS)
ASTS1 .757 0.862
0.546 ASTS2 .710 8.573
ASTS3 .749 7.988 Augmented Services AS1 .621
0.841 0.511
AS2 .738 7.048 AS3 .778 6.038
Service Product (SP) SP1 .772 0.863
0.548 SP2 .719 5.927 SP3 .729 7.441
Data Analysis
139
Item loadings of all the factors are higher than 0.05 shows that these factors converge on a
common point on Latent Variable – Service Quality. T-value (Critical Ratio) of all the six
observed variables are higher than 1.96 at 0.05 significance level show the convergent
validity. Convergent validity is also confirmed by Composite Reliability. Composite
Reliabilities values depicted in the above table confirms the reliability of the factor
structure as the values of all the observed variables are higher than 0.7. Average Variance
Extracted (AVE) calculated for all the six constructs is higher than 0.50 indicating that
more than half the variance of the service quality is explained by each construct. This last
factor confirms the convergent validity.
TABLE 4.34 Discriminant Validity &Nomological Validity - PNB
Average AVE of Two Construct
Estimate
CBE <--> ISB 0.560 .558 CBE <--> AP 0.550 .541 CBE <--> ASTS 0.560 .551 CBE <--> AS 0.543 .534 CBE <--> SP 0.561 .502 ISB <--> AP 0.535 .528 ISB <--> ASTS 0.545 .416 ISB <--> AS 0.528 .522 ISB <--> SP 0.546 .543 AP <--> ASTS 0.536 .534 AP <--> AS 0.518 .514 AP <--> SP 0.537 .529 ASTS <--> AS 0.528 .524 ASTS <--> SP 0.547 .512 AS <--> SP 0.529 .523
Discriminant validity is determined by average of AVE. Average AVE of the two construct
must exceed the square of their correlation to satisfy the Discrimiant Validity Test
(Hair,2006). In the above table, average AVE of two construct exceed the square of the
correlation proves the Discriminant Validity. According to Hair (2006), nomological
validity is tested by examining the correlation between the construct in the measurement
model. The correlation values shows that constructs are positively related to each other and
support the nomological validity of the model.
Data Analysis
140
Objective 2: To find out correlation between service quality, customer satisfaction /
Retention / Commitment & Loyalty
4.7.5 Pearson Correlation:
Factors were extracted through Exploratory Factor Analysis and factor structure was
developed. This factor structure was confirmed through Confirmatory Factor Analysis.
Once the facture structure was confirmed than after, Pearson Correlation Test was applied
in order to identify the association between the factors of the service quality extracted
through the factor analysis and customer satisfaction, retention, loyalty and commitment.
TABLE 4.35 Summary of Hypothesis Testing – Objective 2(a) - PNB
Here the Pearson Correlation Values of all the factors of service quality are positive that
indicates that the factors of service quality have positive association with the customer
satisfaction. Moreover, Pearson Correlation Values are significant at 95 percent confidence
level as the significance value of all the factors of service quality is less than 0.05.
Therefore null hypothesis is not accepted. Further, there is a 62.5% of association was
found out between factor 1 (Competency of Bank Employee) and customer satisfaction,
followed by 51.3% of association of factor 2 (Interior signage & service ability), 54.1% of
association of factor 3 (Accomplishing The Promises), 65.4% of association of factor 4
(Assortment of services), 55.7% of association of factor 5(Augmented Services) and 60.8%
of association of factor 6 (Service Product) with the customer satisfaction.
Sub objective II (a): To find out correlation between Service Quality and Customer Satisfaction.
Hypothesis Pearson
Correlation Coefficient
Significance Value
Result
H1 (a): There is an association between Customer Satisfaction and Competency of Bank Employee.
0.625 0.00 Accepted
H2 (a): There is an association between Customer Satisfaction and Interior signage & service ability.
0.513 0.00 Accepted
H3 (a): There is an association between Customer Satisfaction and Accomplishing the promises.
0.541 0.00 Accepted
H4 (a): There is an association between Customer Satisfaction and Assortment of services.
0.654 0.00 Accepted
H5 (a): There is an association between Customer Satisfaction and Augmented Services.
0.557 0.00 Accepted
H6 (a): There is an association between Customer Satisfaction and Service Product.
0.608 0.00 Accepted
Data Analysis
141
TABLE 4.36 Summary of Hypothesis Testing – Objective 2(b) - PNB
Positive correlation values are exhibited in the table 4.36 at 95 per cent confidence level
and all these values are very much significant as p value (significant values) are less than α
value (0.05) for all the factor of service quality. So, null hypothesis is not accepted.
Moderate association is being observed among all the factors of service quality and
customer retention. Level of association with customer retention of factor 1 (Competency
of Bank Employee) is 41.4%, factor 2 (Interior signage & service ability) is 44.4%, factor
3 (Accomplishing the Promises) is 39.3 %, factor 4 (Assortment of services) is 45.4%,
factor 5 (Augmented Services) is 37.7% and factor 6 (Service Product) is 49.4%
respectively.
TABLE 4.37 Summary of Hypothesis Testing – Objective 2(c) - PNB
Sub objective II (b): To find out correlation between Service Quality and Customer Retention.
Hypothesis Pearson
Correlation Coefficient
Significance Value
Result
H1 (b): There is an association between Customer Retention and Competency of Bank Employee.
0.414 0.00 Accepted
H2 (b): There is an association between Customer Retention and Interior signage & service ability.
0.444 0.00 Accepted
H3 (b): There is an association between Customer Retention and Accomplishing the promises.
0.393 0.00 Accepted
H4 (b): There is an association between Customer Retention and Assortment of services.
0.454 0.00 Accepted
H5 (b): There is an association between Customer Retention and Augmented Services.
0.377 0.00 Accepted
H6 (b): There is an association between Customer Retention and Service Product.
0.494 0.00 Accepted
Sub objective II (c): To find out correlation between Service Quality and Customer Loyalty.
Hypothesis Pearson
Correlation Coefficient
Significance Value
Result
H1 (c): There is an association between Customer Loyalty and Competency of Bank Employee.
0.424 0.00 Accepted
H2 (c): There is an association between Customer Loyalty and Interior signage & service ability.
0.521 0.00 Accepted
H3 (c): There is an association between Customer Loyalty and Accomplishing the promises.
0.413 0.00 Accepted
H4 (c): There is an association between Customer Loyalty and Assortment of services.
0.447 0.00 Accepted
H5 (c): There is an association between Customer Loyalty and Augmented Services.
0.361 0.00 Accepted
H6 (c): There is an association between Customer Loyalty and Service Product.
0.557 0.00 Accepted
Data Analysis
142
It can be interpreted from the table 4.37 that positive and moderate correlation exists
among all the variables of the service quality and customer loyalty as the level of an
association of all the six factors of the service quality is found to be 42.4% (factor1 -
Competency Of Bank Employee), 52.1% (factor2 - Interior signage & service ability),
41.3% (factor3 - Accomplishing The Promises), 44.7% (factor4 - Assortment of services),
36.1% (factor5- Augmented Services) and 55.7% (factor 6 - Service Product) respectively.
Here, in this table, significant values of all the six factors of service quality are significant
(0.00) at 95 per cent confidence level so null hypothesis for all the six factors are not
accepted.
TABLE 4.38 Summary of Hypothesis Testing – Objective 2(d) - PNB
P values (0.00) of all the factors of service quality are less than α value (0.05) at 95 per
cent confidence level so null hypothesis is not accepted for this objective. Association
between customer commitment and factor 1 is reported as 37.5%, followed by 36% of
factor 2, 49.4 % of factor3, 46.6% of factor4, 36% of factor5 and 43.4% of factor6 of
service quality. Overall moderate association has been found out between the service
quality and customer commitment.
Sub objective II (d): To find out correlation between Service Quality and Customer Commitment.
Hypothesis Pearson
Correlation Coefficient
Significance Value
Result
H1 (d): There is an association between Customer Commitment and Competency of Bank Employee.
0.375 0.00 Accepted
H2 (d): There is an association between Customer Commitment and Interior signage & service ability.
0.360 0.00 Accepted
H3 (d): There is an association between Customer Commitment and Accomplishing the promises.
0.494 0.00 Accepted
H4 (d): There is an association between Customer Commitment and Assortment of services.
0.466 0.00 Accepted
H5 (d): There is an association between Customer Commitment and Augmented Services.
0.360 0.00 Accepted
H6 (d): There is an association between Customer Commitment and Service Product.
0.434 0.00 Accepted
Data Analysis
143
Objective 3: To study the impact of service quality on customer satisfaction /
Retention / Commitment & Loyalty.
4.7.6 Simple Regression:
The result of correlation analysis has identified the factors of service quality that has
positive and moderate association with the customer satisfaction, retention, loyalty and
commitment. Than after simple regression analysis was carried out to find out the impact
of factors of service quality on customer satisfaction, retention, loyalty and commitment.
TABLE 4.39 Summary of Hypothesis Testing – Objective 3 (a) - PNB
ANOVA values for all the factors of service quality (0.00) is less than 0.05 at 95 per cent
confidence level indicate that the regression model is overall good. Further, significance
values of all the factors are also 0.00 that are less than 0.05 indicated that the variables are
significant in the model and null hypothesis for all the factors of service quality is not
accepted. R2 Value of factor - Competency of bank employee is 0.391 which stipulates that
39.1% of variance in customer satisfaction can be explained by this factor. Variance in
customer satisfaction caused by factor 2 is 26.3%, factor3 is 29.2%, factor4 is 42.7%,
factor5 is 31% and factor6 is 37% respectively.
Sub objective III (a): To study the impact of Service Quality on Customer Satisfaction.
Hypothesis Significance
Value
R Square Value
ANOVA Value
Result
H1 (a): There is a significant impact of Competency of Bank Employees on Customer Satisfaction.
0.00 0.391 0.00 Accepted
H2 (a): There is a significant impact of Interior signage & service ability on Customer Satisfaction.
0.00 0.263 0.00 Accepted
H3 (a): There is a significant impact of Accomplishing the promises on Customer Satisfaction.
0.00 0.292 0.00 Accepted
H4 (a): There is a significant impact of Assortment of services on Customer Satisfaction.
0.00 0.427 0.00 Accepted
H5 (a): There is a significant impact of Augmented Services on Customer Satisfaction.
0.00 0.310 0.00 Accepted
H6 (a): There is a significant impact of Service Product on Customer Satisfaction.
0.00 0.370 0.00 Accepted
Data Analysis
144
TABLE 4.40 Summary of Hypothesis Testing – Objective 3 (b) - PNB
For the dependent variable customer retention, R2 Value of the factor 1 is 17.1%, factor 2 is
19.7%, factor 3 is 15.4%, factor 4 is 20.6%, factor 5 is 12.8% and factor 6 is 17.1%. R2
Value explains the variance in customer retention due to the six factors of service quality.
All these values are significant 95 per cent confidence level as p values of all the six
factors of service quality are less than the 0.05. Therefore null hypothesis of all the six
factors of service quality are not accepted. ANOVA values (0.00) are also less than α value
(0.05) indicates that regression model is good and the variables in the model are
significant.
TABLE 4.41 Summary of Hypothesis Testing – Objective 3 (c) - PNB
Sub objective III (b): To study the impact of Service Quality on Customer Retention.
Hypothesis Significance
Value
R Square Value
ANOVA Value
Result
H1 (b): There is a significant impact of Competency of Bank Employees on Customer Retention.
0.00 0.171 0.00 Accepted
H2 (b): There is a significant impact of Interior signage & service ability on Customer Retention.
0.00 0.197 0.00 Accepted
H3 (b): There is a significant impact of Accomplishing the promises on Customer Retention.
0.00 0.154 0.00 Accepted
H4 (b): There is a significant impact of Assortment of services on Customer Retention.
0.00 0.206 0.00 Accepted
H5 (b): There is a significant impact of Augmented Services on Customer Retention.
0.00 0.128 0.00 Accepted
H6 (b): There is a significant impact of Service Product on Customer Retention.
0.00 0.171 0.00 Accepted
Sub objective III (c): To study the impact of Service Quality on Customer Loyalty.
Hypothesis Significance
Value
R Square Value
ANOVA Value
Result
H1 (c): There is a significant impact of Competency of Bank Employees on Customer Loyalty.
0.00 0.180 0.00 Accepted
H2 (c): There is a significant impact of Interior signage & service ability on Customer Loyalty.
0.00 0.272 0.00 Accepted
H3 (c): There is a significant impact of Accomplishing the promises on Customer Loyalty.
0.00 0.170 0.00 Accepted
H4 (c): There is a significant impact of Assortment of services on Customer Loyalty.
0.00 0.200 0.00 Accepted
H5 (c): There is a significant impact of Augmented Services on Customer Loyalty.
0.00 0.130 0.00 Accepted
H6 (c): There is a significant impact of Service Product on Customer Loyalty.
0.00 0.310 0.00 Accepted
Data Analysis
145
The significance value (0.00) of the six factors of service quality at 95 per cent confidence
level indicates that variables in the regression model are significant and hence null
hypothesis of all the six factors of service quality is not accepted. ANOVA values of all the
factors (0.00) also signify that overall regression model is good. The variance in customer
loyalty is explained factor 1 (Competency of Bank Employee) is 18%, factor 2 (Interior
signage & service ability) is 27.2%, factor 3 (Accomplishing the Promises) is 17%, factor
4 (Assortment of services) is 20%, factor 5 (Augmented Services) is 13% and factor 6
(Service Product) is 31% respectively.
TABLE 4.42 Summary of Hypothesis Testing – Objective 3 (d) - PNB
ANOVA value (0.00) of all the factors of service quality is below 0.05 infers that
regression model is good. Significant value of all the factors of service quality is also less
than 0.05 at 95 per cent confidence level indicating that variables in the regression model is
significant. So, null hypothesis of all the factors of service quality is not accepted. Further,
all the factors of service quality contribute 12.6%, 13%, 24.4%, 21.7%, 13% and 18.8% of
variance in the dependent variable customer commitment correspondingly.
Sub objective III (d): To study the impact of Service Quality on Customer Commitment.
Hypothesis Significance
Value
R Square Value
ANOVA Value
Result
H1 (d): There is a significant impact of Competency of Bank Employees on Customer Commitment.
0.00 0.126 0.00 Accepted
H2 (d): There is a significant impact of Interior signage & service ability on Customer Commitment.
0.00 0.130 0.00 Accepted
H3 (d): There is a significant impact of Accomplishing the promises on Customer Commitment.
0.00 0.244 0.00 Accepted
H4 (d): There is a significant impact of Assortment of services on Customer Commitment.
0.00 0.217 0.00 Accepted
H5 (d): There is a significant impact of Augmented Services on Customer Commitment.
0.00 0.130 0.00 Accepted
H6 (d): There is a significant impact of Service Product on Customer Commitment.
0.00 0.188 0.00 Accepted
Data Analysis
146
Objective 4: To identify important factors of service quality from the demographic
perspective of customers.
4.7.7 Cross Tabulation:
With the use of Exploratory Factor Analysis following six factor of service quality
extracted. Factor structure of the six factors was confirmed through Confirmatory Factor
Analysis. Customer’s perceptions towards these six factors were examined with the use of
Cross Tabulation based on the demographic variables like Gender, Age, Occupation,
Income and Education.
TABLE 4.43 Cross Tabulation of the demographic variable – Gender - PNB
Sr. No. Factor of Service
Quality Gender
Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
1 Competency of Bank Employees
Male 1 19 11 61 20 Female 7 12 11 42 16
2 Interior signage & service ability
Male 0 10 35 47 20 Female 3 8 28 43 6
3 Accomplishing the promises
Male 1 18 24 45 24 Female 2 9 25 33 19
4 Assortment of services
Male 3 14 24 44 23 Female 1 11 18 24 38
5 Augmented Services
Male 0 9 34 43 26 Female 2 6 26 38 16
6 Service Product Male 0 22 24 44 22 Female 1 11 23 27 26
200 respondents of PNB were surveyed. Total six factors were extracted in Exploratory
Factor Analysis. So far as, First factor is concerned, total 61 males and 42 female think that
Bank Employee of PNB are very competent in offering quality service to the customers. 47
males and 43 females opine that interior signage of the bank is very good and it results in
delivery of good services. 45 male and 33 female believe that bank is very good at
fulfilling its promises. 44 male and 24 female believe that the bank offers variety of the
service to its customers. 43 male and 38 female are having opinion that bank is managed
ethically and offer amplified services. Lastly, 44 male and 27 female deem that overall
service product of the bank is good.
Data Analysis
147
TABLE 4.44 Cross Tabulation of the demographic variable – Age - PNB
Sr. No.
Factor of Service Quality Age Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
1 Competency of Bank Employees
18-24 0 3 5 20 9 25-34 2 8 14 29 11 35-44 4 9 11 16 10 45-55 1 9 4 8 5 55-65 1 1 2 5 6
Over 65 0 1 0 3 3 2 Interior signage & service
ability 18-24 0 1 11 18 7 25-34 1 8 9 38 8 35-44 1 5 11 25 8 45-55 1 2 9 13 2 55-65 0 1 1 13 0
Over 65 0 1 3 2 1 3 Accomplishing the
promises 18-24 0 4 9 11 13 25-34 2 7 21 23 12 35-44 2 9 15 12 12 45-55 0 5 8 9 5 55-65 0 2 5 4 4
Over 65 0 0 1 3 3 4 Assortment of services 18-24 0 1 9 13 14
25-34 2 7 15 16 12 35-44 2 10 7 28 15 45-55 0 3 4 13 7 55-65 0 2 2 7 4
Over 65 0 2 0 2 3 5 Augmented Services 18-24 0 3 7 20 7
25-34 0 3 21 12 10 35-44 1 6 8 21 14 45-55 0 2 6 30 7 55-65 1 0 2 8 4
Over 65 0 0 3 0 3 6 Service Product 18-24 0 4 6 25 2
25-34 0 11 15 32 6 35-44 1 8 11 21 9 45-55 0 6 12 9 0 55-65 0 3 1 9 2
Over 65 0 1 2 3 1
PNB is very good at Factor 1 – (Competency of Bank Employee) is opined by the
respondents of the age group of 25-34. The same age group respondents also believe that
signage used by the bank for interior of the branch is very attractive and contribute
significantly for delivering good services and bank is very good in accomplishing its
promises as well. Respondents falling in age group of 35 – 44 think that bank offers
bundle of services. 30 respondents from the age group of 45-55 opine that bank follows
ethics and provide better services to its customers. 32 respondents representing the age
group of 25-34 think that bank is very good at offering various service products such as
mutual fund, insurance polices etc.
Data Analysis
148
TABLE 4.45 Cross Tabulation of the demographic variable – Education - PNB
Sr. No.
Factor of Service Quality
Education Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
1 Competency of Bank Employees
Secondary School
0 0 1 4 0
Higher Secondary School
1 8 6 9 4
Graduate degree
3 13 13 24 26
Postgraduate degree
3 3 10 35 10
Professional qualifications
2 6 6 9 4
2 Interior signage & service ability
Secondary School
3 3 6 12 1
Higher Secondary School
0 5 9 8 3
Graduate degree
3 7 16 39 11
Postgraduate degree
0 4 12 29 7
Professional qualifications
0 2 6 10 4
3 Accomplishing the promises
Secondary School
0 1 4 1 0
Higher Secondary School
0 5 15 5 3
Graduate degree
0 11 18 21 29
Postgraduate degree
0 7 16 25 13
Professional qualifications
3 3 6 10 4
4 Assortment of services
Secondary School
0 0 2 0 4
Higher Secondary School
3 9 8 5 3
Graduate degree
0 8 16 7 30
Postgraduate degree
1 5 21 18 16
Professional qualifications
0 3 11 25 5
Data Analysis
149
Sr. No.
Factor of Service Quality
Education Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
5 Augmented Services
Secondary School
0 1 2 0 3
Higher Secondary School
0 4 10 10 4
Graduate degree
1 5 15 33 25
Postgraduate degree
1 4 13 34 9
Professional qualifications
0 1 11 10 4
6 Service Product Secondary School
0 1 1 4 0
Higher Secondary School
0 10 5 10 3
Graduate degree
0 13 13 43 10
Postgraduate degree
0 8 17 31 5
Professional qualifications
1 1 11 11 2
Majority of the respondents (35) are postgraduate who believe that bank employees are
very competent in performing their duties and fulfill their promise timely. 39 respondents
having the graduate degree consider the interior of the bank very attractive and also having
opinion that service product of the bank is good. Majority of the customers’ are
professional and think that bank’s service is of wide variety and meet all their needs. 33
graduate and 34 post graduate opine that bank is ethically managed and offer better
services.
Data Analysis
150
TABLE 4.46 Cross Tabulation of the demographic variable – Income - PNB
Sr. No.
Factor of Service Quality Income in Rs. Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
1 Competency of Bank Employees
0-10000 2 3 12 18 4 10000-20000 2 8 9 16 11 20000-30000 3 6 6 19 6 30000-40000 1 4 5 21 6 40000-50000 0 3 1 10 3 Above 50000 1 7 3 5 5
2 Interior signage & service ability
0-10000 0 5 9 21 5 10000-20000 1 6 11 21 8 20000-30000 1 4 11 33 4 30000-40000 1 3 2 11 5 40000-50000 2 0 7 8 0 Above 50000 2 0 4 11 4
3 Accomplishing the promises
0-10000 0 10 6 11 8 10000-20000 1 8 15 12 14 20000-30000 0 3 13 27 8 30000-40000 1 3 5 9 8 40000-50000 0 3 6 6 3 Above 50000 1 0 4 7 8
4 Assortment of services 0-10000 1 5 9 11 14 10000-20000 2 11 10 14 13 20000-30000 1 7 7 21 10 30000-40000 0 1 8 9 8 40000-50000 0 1 8 4 4 Above 50000 0 0 4 11 6
5 Augmented Services 0-10000 1 4 12 20 8 10000-20000 0 7 10 23 10 20000-30000 0 1 9 19 12 30000-40000 1 1 8 8 8 40000-50000 0 1 7 8 1 Above 50000 0 0 5 8 7
6 Service Product 0-10000 0 9 8 18 5 10000-20000 1 15 9 19 3 20000-30000 0 5 9 18 6 30000-40000 0 2 8 12 4 40000-50000 0 0 2 25 1 Above 50000 0 2 11 7 1
Majority of the respondents are having an income in the range of Rs. 30000 – 40000 and
they have shown agreement to the factor 1 that Competency of the bank employees is very
good. Respondents having income in the category of Rs. 20000 – 30000 opine that interior
signage of the bank is good and it plays an important role in offering quality service to the
customers. Further they also believe that bank offers wide variety of services and
employees of the bank are very good at accomplishing the promises. Respondents’ income
is between Rs.10000 – 20000 believe that bank ethically strong and offer better services.
Factor 6 (Service Product) is considered as a good factor for the PNB bank by the
respondents whose income is in the range of Rs. 40000 – 50000.
Data Analysis
151
TABLE 4.47 Cross Tabulation of the demographic variable – Occupation - PNB
Sr. No
Factor of Service Quality
Income in Rs. Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
1 Competency of Bank Employees
Businessman 1 3 5 3 2 Professional 4 7 10 13 2 Govt. Service 2 6 12 10 13 Private Service 0 14 15 26 15 Housewife 1 0 8 4 2 Student 0 0 3 10 1 Retired 0 1 2 4 1
2 Interior signage & service ability
Businessman 1 1 2 7 3 Professional 0 4 6 20 6 Govt. Service 2 4 7 16 14 Private Service 0 5 19 23 18 Housewife 0 2 5 4 4 Student 0 1 2 7 6 Retired 0 1 3 6 1
3 Accomplishing the promises
Businessman 1 1 4 7 1 Professional 1 6 17 10 2 Govt. Service 0 7 10 13 20 Private Service 1 9 18 17 13 Housewife 0 3 5 5 2 Student 0 1 3 6 6 Retired 0 0 2 4 5
4 Assortment of services Businessman 1 1 2 6 4 Professional 2 9 8 26 5 Govt. Service 1 3 12 11 16 Private Service 0 7 15 12 19 Housewife 0 3 3 5 4 Student 0 0 3 3 8 Retired 0 2 3 1 5
5 Augmented Services Businessman 0 1 1 40 4 Professional 0 4 8 19 5 Govt. Service 0 2 4 24 13 Private Service 0 6 6 3 13 Housewife 2 0 2 8 2 Student 0 1 3 9 4 Retired 0 1 3 8 4
6 Service Product Businessman 0 2 4 7 1 Professional 1 7 12 16 0 Govt. Service 0 6 13 17 7 Private Service 0 13 8 37 7 Housewife 0 2 3 6 4 Student 0 1 4 11 0 Retired 0 2 3 5 1
The last demographic variable is occupation. Majority of the private service employees
consider that PNB is very good at factor 1 that represents the competency of the bank
employee and factor 2 that signifies the interior signage of the bank. Majority of the
government employees strongly agree with the factor 3 that PNB is very good in
Data Analysis
152
accomplishing the promises. 26 professional believe that PNB is having a variety of the
service to be offered to its customers. Businessmen are the majority of the respondents
who thinks that bank offers augmented services. Again, respondents working in the private
sector opine that service product of the bank is good.
Objective 5: To study service quality of PNB
4.7.8 Least Square Method
Table 4.47 depicts the calculation of the respondent’s perceptions towards service quality
through ideal and least scores. Ideal scores are calculated by multiplying the number of
respondents in each category with (+3) and product with total number of criteria. Least
scores calculated by multiplying the number of respondents in each category with (-1) and
the product with number of criteria in the questionnaires.
TABLE 4.48Ideal Score and Least Scores of Respondents- PNB
Category Equation Ideal Score Equation Least Score Service Quality in PNB, 200 × 3 × 37 22200 200 × -1 × 37 -7400
The results of the study are as under. The tables are formed on the basis of the questions of
service quality contained in the questionnaire.
Data Analysis
153
TABLE 4.49Responses of the Respondents- PNB
No Criterias of Service Quality Completely
Agree Agree Neutral Disagree
Completely Disagree
Score
+3 +2 +1 0 -1 1 Bank’s physical facility is
visually attractive 32 119 28 14 7 355
2 Bank is having modern
looking and comfortable waiting area
42 101 25 28 4 349
3 Banks have TV & music system in the waiting area that reduces anxiety while waiting
34 72 33 50 11 268
4 Token system at the bank makes waiting line more organize
44 92 32 27 5 343
5 Cleanliness is properly maintained at the bank.
66 86 31 13 4 397
6 Materials like pamphlets,
brochure provides detail information about bank’s various services.
55 91 35 16 3 379
7 Materials at the bank are visually appealing.
34 92 53 20 1 338
8 Employees of the bank are
very attentive & provide individual attention.
50 74 51 21 4 345
9 Employees of the bank have knowledge about the all the different kind services offered by the bank.
54 83 38 19 6 360
10 Employees of the bank are having high level of the competency.
42 73 50 31 4 318
11 Employees of the bank are very customer friendly & listen to me very carefully.
47 85 45 15 8 348
12 Employees of the bank understand your need.
41 88 52 14 5 346
13 Employees of the bank are
never too busy to respond to customer‘s request.
35 60 63 34 8 280
14 Employees of the bank provide me prompt service.
34 83 56 24 3 321
15 Every employees of the bank
are easily accessible by the customer.
39 85 36 33 7 316
16 When bank promises to do something, they do it in certain time.
40 80 51 21 8 323
17 When customers have any problem, bank shows sincere interest in solving it.
49 83 47 18 3 357
18 Bank performs the service right the first time.
37 89 51 19 5 335
19 Bank provides the service at
the time they promise to do so.
49 80 45 23 3 349
Data Analysis
154
No Criterias of Service Quality Completely
Agree Agree Neutral Disagree
Completely Disagree
Score
20 Bank insists on the error free record.
48 70 49 29 4 329
21 I have selected bank because
bank is having strong brand name in the market.
55 74 43 25 3 353
22 I believe that bank is ethically managed by the management.
53 100 34 10 3 390
23 Products of the bank like Fixed Deposit, Certificates are of a good quality.
78 77 34 8 3 419
24 Bank maintain confidentially while sending me online user id and password.
68 66 44 11 11 369
25 Bank offers locker facility at reasonable price with no hidden charges.
31 66 66 25 12 279
26 Bank is having strong security system in the bank premises.
67 79 31 16 7 383
27 Bank offers me variety of the financial product like mutual fund, insurance policies other than traditional banking product.
38 87 53 19 3 338
28 Bank always ensure proper functioning of ATM machine.
53 85 36 17 9 356
29 Bank never faces shortage of locker at every branch.
25 54 68 34 19 232
30 Bank is having well managed
web policies for secure online banking.
53 78 47 20 2 360
31 Bank always maintain transparency while communicating prices to me.
48 83 47 17 5 352
32 There are no hidden charges taken by bank while servicing me.
58 73 40 21 8 352
33 Bank is having convenient operating hours.
44 92 36 21 7 345
34 Bank offers me 24*7
customer care services. 50 80 41 20 9
342
35 Bank strictly follows RBI regulations & also informs me about the same.
56 89 41 11 3 384
36 I feel secure while using bank’s technical services such as NEFT, RTGS, Online Banking Etc.
66 82 38 14 0 400
37 Bank does regular upgradation in its technology.
59 89 34 15 3 386
Total Score (+) 12796
(57.63%) Ideal Score (+)22200 Least Score -7400
Source: Field Survey
Data Analysis
155
Customer opinion about the service quality of the Punjab National Bank is depicted in the
table 4.48. Negative score is not observed in the table 4.48. The level of service quality is
found to be 57.63% of ideal score that signifying that service quality of PNB is considered
good.
4.8 ICICI Bank
Objective 1: To study the factors contributing to Service Quality
4.8.1 Exploratory Factor Analysis
TABLE 4.50KMO and Bartlett's Test - ICICI
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .916
Bartlett's Test of Sphericity Approx. Chi-Square 3810.763 Df 666 Sig. .000
Significance Value of Bartlett’s Test of Sphericity (0.00) is lesser than 0.05 that infers that
correlation exists among the variables. Moreover, KMO value is 0.916 indicates that much
higher correlation exists among the variables and hence further analysis can be carried out
on the data set.
TABLE 4.51Correlation Matrixa- ICICI
Correlation Matrixa
a. Determinant = .006
The determinant of the Correlation Matrix is 0.006 that is higher than the 0.00001 and
therefore no multicollinearity is observed in the data.
4.8.2 Anti Image Matrices
The table 4.51 exhibits correlation values of 13 factors of service quality of ICICI Bank.
Diagonal values of the all the 13 factors of service quality is depicted in the second part of
the table. As all the variables are having values higher than the 0.5, therefore it can be
interpreting that all the 13 factors of service quality have practical and statistical
significance and data is suitable for performing factor analysis.
Data Analysis
156
TABLE 4.52 Anti Image Matrices - ICICI
Anti-image Matrices
VAR1 VAR2 VAR10 VAR11 VAR12 VAR13 VAR14 VAR15 VAR17 VAR21 VAR22 VAR23 VAR34
Anti-image Covariance
VAR1 .480 -.296 -.077 -.046 .070 -.006 .029 -.015 -.022 .011 .024 -.055 -.028
VAR2 -.296 .424 .083 .071 -.113 -.011 -.077 -.009 -.003 .017 -.110 .045 -.007
VAR10 -.077 .083 .457 -.141 -.066 -.089 -.076 -.010 -.052 .029 -.075 -.032 -.016
VAR11 -.046 .071 -.141 .495 -.108 .008 -.102 -.012 -.033 -.037 -.025 .076 -.080
VAR12 .070 -.113 -.066 -.108 .419 -.141 .063 -.044 -.151 -.078 .011 -.049 .061
VAR13 -.006 -.011 -.089 .008 -.141 .529 -.077 -.094 .053 -.016 -.028 .059 -.077
VAR14 .029 -.077 -.076 -.102 .063 -.077 .444 -.170 -.048 -.103 .054 -.120 .100
VAR15 -.015 -.009 -.010 -.012 -.044 -.094 -.170 .532 -.080 .097 .032 -.025 -.120
VAR17 -.022 -.003 -.052 -.033 -.151 .053 -.048 -.080 .600 -.023 -.041 .016 .000
VAR21 .011 .017 .029 -.037 -.078 -.016 -.103 .097 -.023 .626 -.183 -.089 -.151
VAR22 .024 -.110 -.075 -.025 .011 -.028 .054 .032 -.041 -.183 .653 -.169 .058
VAR23 -.055 .045 -.032 .076 -.049 .059 -.120 -.025 .016 -.089 -.169 .692 -.116
VAR34 -.028 -.007 -.016 -.080 .061 -.077 .100 -.120 .000 -.151 .058 -.116 .801
Anti-image Correlation
VAR1 .694a -.655 -.165 -.095 .156 -.012 .062 -.031 -.040 .020 .043 -.096 -.046
VAR2 -.655 .664a .188 .156 -.268 -.024 -.178 -.018 -.006 .033 -.208 .083 -.012
VAR10 -.165 .188 .890a -.297 -.150 -.182 -.168 -.020 -.100 .055 -.136 -.057 -.027
VAR11 -.095 .156 -.297 .878a -.237 .016 -.217 -.023 -.060 -.067 -.044 .131 -.126
VAR12 .156 -.268 -.150 -.237 .841a -.300 .146 -.093 -.301 -.153 .020 -.092 .106
VAR13 -.012 -.024 -.182 .016 -.300 .898a -.160 -.177 .095 -.028 -.048 .097 -.119
VAR14 .062 -.178 -.168 -.217 .146 -.160 .840a -.350 -.093 -.195 .099 -.217 .168
VAR15 -.031 -.018 -.020 -.023 -.093 -.177 -.350 .874a -.142 .168 .055 -.040 -.184
VAR17 -.040 -.006 -.100 -.060 -.301 .095 -.093 -.142 .917a -.037 -.066 .025 -.001
VAR21 .020 .033 .055 -.067 -.153 -.028 -.195 .168 -.037 .838a -.286 -.135 -.213
VAR22 .043 -.208 -.136 -.044 .020 -.048 .099 .055 -.066 -.286 .826a -.252 .081
VAR23 -.096 .083 -.057 .131 -.092 .097 -.217 -.040 .025 -.135 -.252 .832a -.156
VAR34 -.046 -.012 -.027 -.126 .106 -.119 .168 -.184 -.001 -.213 .081 -.156 .759a
a. Measures of Sampling Adequacy(MSA)
Data Analysis
157
TABLE 4.53Communalities Table - ICICI
Sr. No
Variables Initial Extraction
1 Bank’s physical facility is visually attractive. 1.000 .793
2 Bank is having modern looking and comfortable waiting area. 1.000 .854
10 Employees of the bank are having high level of the competency. 1.000 .631
11 Employees of the bank are very customer friendly & listen to me very carefully.
1.000 .613
12 Employees of the bank understand your need. 1.000 .608
13 Employees of the bank are never too busy to respond to Customer‘s request.
1.000 .561
14 Employees of the bank provide me prompt service. 1.000 .586
15 Every employees of the bank are easily accessible by the customer. 1.000 .579
17 When customers have any problem, bank shows sincere interest in solving it.
1.000 .674
21 I have selected bank because bank is having strong brand name in the market.
1.000 .644
22 I believe that bank is ethically managed by the management. 1.000 .605
23 Products of the bank like Fixed Deposit, Certificates are of a good quality.
1.000 .549
34 Bank offers me 24*7 customer care services. 1.000 .527
Extraction Method: Principal Component Analysis.
Communalities values depicted in the table 4.52 for all the 13 variables of service quality
are higher than 0.5 and therefore data set was appropriate for further analysis.
Data Analysis
158
TABLE 4.54 Total Variance Explained- ICICI
Total Variance Explained
Component Initial Eigenvalues
Extraction Sums of Squared Loadings
Rotation Sums of Squared Loadings
Total% of
Variance Cumulative
% Total
% of Variance
Cumulative%
Total % of
Variance Cumulative
%
1 5.180 39.844 39.844 5.180 39.844 39.844 3.805 29.269 29.269
2 1.349 10.378 50.222 1.349 10.378 50.222 2.130 16.388 45.656
3 1.195 9.191 59.412 1.195 9.191 59.412 1.788 13.756 59.412
4 .944 7.259 66.671
5 .761 5.851 72.522
6 .636 4.890 77.412
7 .616 4.738 82.150
8 .562 4.327 86.477
9 .500 3.845 90.322
10 .398 3.061 93.383
11 .339 2.607 95.991
12 .310 2.388 98.378
13 .211 1.622 100.000
Extraction Method: Principal Component Analysis.
Here, 13 variables of service quality explained 59.41 % of variance that is equal to the
threshold value of 60% and hence further analysis was carried out.
Data Analysis
159
TABLE 4.55Rotated Component Matrixa- ICICI
Rotated Component Matrixa
Sr. No. Variables Component
1 2 3
1 Bank’s physical facility is visually attractive. .200 .111 .860
2 Bank is having modern looking and comfortable waiting area. .193 .142 .893
10 Employees of the bank are having high level of the competency. .745 .271 .054
11 Employees of the bank are very customer friendly & listen to me very carefully.
.748 .228 -.025
12 Employees of the bank understand your need. .705 .268 .198
13 Employees of the bank are never too busy to respond to Customer‘s request.
.715 .162 .154
14 Employees of the bank provide me prompt service. .699 .251 .185
15 Every employees of the bank are easily accessible by the customer.
.737 .033 .186
17 When customers have any problem, bank shows sincere interest in solving it.
.637 .196 .171
21 I have selected bank because bank is having strong brand name in the market.
.248 .763 .011
22 I believe that bank is ethically managed by the management. .119 .721 .266
23 Products of the bank like Fixed Deposit, Certificates are of a good quality.
.163 .712 .126
34 Bank offers me 24*7 customer care services. .253 .403 -.018
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 5 iterations.
Rotated component matrix table shows the strength of relationship between the item &
factor and membership of the item under one factor. Here the membership of the item in
factor is determined by identifying the highest loading in one factor. The loading values
ranges between the 0 and 1. Value close to 1 indicated the highest factor loading. Another
important thing is that while determining the factor membership, negative sign of the factor
is being ignored. Generally factor loading higher than 0.5 is acceptable but as per the Hair
(2006), for sample size of 200 factor loading of 0.40 is acceptable. 200 respondents of
ICICI were surveyed and hence 0.40 is considered as acceptable factor loading.
4.8.3 Factor Naming:
Factors are given name once all the factors are extracted following the above mention steps
of Exploratory Factor Analysis.
Data Analysis
160
Factor 1 Competency of Bank Employee
The same factor extracted in the SBI and PNB banks and hence the similar naming –
Competency of Bank Employee is given to this factor as it is a linear combination of item
10, 11, 12, 13, 14, 15 and 17. All these items measure proficiency of the bank employee in
understanding customer needs and problem and accordingly offering them prompt service
that match their customer expectation.
Factor 2 Ethos of the Bank
Factor 2 is name as ethos of the bank as it represents items 21, 22, 23 and 34. These items
signify the branding and ethical management of the bank and bank’s philosophy in offering
services and service products to the customers.
Factor 3 Physical Evidence
This factor comprises of the item 1 & 2 that represent bank’s physical facility and modern
looking interior. Therefore, this factor is named as Physical Evidence.
4.8.4 Confirmatory Factor:
Using Exploratory Factor Analysis, three factors are extracted and following factor
structure developed. This factor structure is confirmed through Confirmatory Factor
Analysis. In this factor structure, latent variable is service quality and observed variables
are Competency of bank Employee (CBE), Ethos of the bank (EB) and Physical Evidence
(PE). Convergent Validity, Discriminant Validity and Nomological Validity are used to
validate the factor structure.
Data Analysis
161
FIGURE 4.3Factor Structure - ICICI
TABLE 4.56Model Fit Indexes- ICICI
Ratio of Chi-square to degrees of freedom (CMIN/DF) 2.132 Goodness-of-fit index (GFI) 0.913 Adjusted GFI (AGFI) 0.893 Normed fit index (NFI) 0.971 Tucker-Lewis Index (TLI) 0.907 Incremental Fit Index (IFI) 0.927 Relative Fit Index (RFI) 0.938 Comparative Fit Index (CFI) 0.926 Root Mean Square Error of Approximation (RMSEA) 0.055
E1
E2
E3
E4
E5
E6
E7
E8
E9
E10
E11
E12
E13
1
1
1
1
11
1
1
1
1
1
1
1
cbe1
cbe2
cbe3
cbe4
cbe5
cbe6
cbe7
eb1
eb2
eb3
eb4
pe1
pe2
cbe
eb
pe
r2
r3
sq
1
11
11
r1
1
1
Data Analysis
162
Fit statistics determine the model fit. The first fit statistics is Chi-square to degrees of
freedom and CMIN value is higher than 0.05 as shown in the table 4.55 indicating good fit.
Goodness-of-fit index (GFI) is higher than 0.9 whereas Adjusted GFI (AGFI) value is
close to 0.9 showing a good fit. Tucker-Lewis Index (TLI), Incremental Fit Index (IFI) and
Relative Fit Index (RFI) values are higher than 0.9 signifies the model is fit for the data.
The Comparative Fit Index (CFI) value depicted in the table 4.55 signifies good model fit
as CFI value is higher than 0.9. The last indicator is Root Mean Square Error of
Approximation (RMSEA). As RMSEA value is lesser than 0.06 indicates a good model fit.
TABLE 4.57Convergent Validity- ICICI
Constructs Items Item Loadings t-values Composite Reliability
(CR) AVE
Competency of bank Employee (CBE)
CBE1 .754
0.927
0.516
CBE2 .711 9.833 CBE3 .751 10.424 CBE4 .695 9.593 CBE5 .722 9.993 CBE6 .655 9.010 CBE7 .739 8.774
Ethos of the Bank (EB)
EB1 .682 0.882
0.523 EB2 .730 6.675
EB3 .796 6.434 EB4 .681 4.440
Physical Evidence (PE)
PE1 .804 0.890
0.68 PE2 .856 6.851
Three factors extracted in Exploratory Factor Analysis. Item loading of all the three
observed variables is higher than 0.5 indicating that these factors converge on a common
point on a latent variable – Service Quality. Critical Ratio is signifies as t-values in the
table 4.56. T-values of all the observed variables are higher than 1.96 at significant level of
0.5 validates Convergent Validity. Another indicator of convergent validity is Composite
Reliability. Values of Composite Reliability depicted in the table 4.56 are higher than 0.7
showing a good reliability of the factor structure. Last component of Convergent Validity
is AVE (Average Variance Extracted). AVE calculated for all the three constructs is higher
than 0.50 indicating that more than half the variance of the service quality is explained
each construct. Considering all the components, convergent validity of the factor structure
is confirmed.
Data Analysis
163
TABLE 4.58Discriminant Validity &Nomological Validity- ICICI
Average AVE of Two Construct
Estimate
CBE <--> EB 0.519 .511 EB <--> PE 0.601 .434 CBE <--> PE 0.598 .468
Discriminant Validity is the extent to which a construct is truly distinct from the other
construct. Average AVE of the two construct must exceed the square of their correlation to
satisfy the Discrimiant Validity Test (Hair,2006). Discriminant Validity of the Factor
Structure is confirms as values depicted in the table 4.57 satisfy the condition. According
to Hair (2006), nomological validity is tested by examining the correlation between the
construct in the measurement model. The correlation values shows that constructs are
positively related to each other and support the nomological validity of the model.
Objective 2: To find out correlation between service quality, customer satisfaction /
Retention / Commitment & Loyalty
4.8.5 Pearson Correlation:
Total three factors extracted in Exploratory Factor Analysis and factor structure was
devised. This factor structure was confirmed through Confirmatory Factor Analysis. To
study an association between the factors of service quality and customer satisfaction,
retention, loyalty and commitment, Pearson Correlation Test was applied.
TABLE 4.59 Summary of Hypothesis Testing – Objective 2(a)- ICICI
Sub objective II (a): To find out correlation between Service Quality and Customer Satisfaction.
Hypothesis Pearson
Correlation Coefficient
Significance Value
Result
H1 (a): There is an association between Customer Satisfaction and Competency of bank employee.
0.594 0.00 Accepted
H2 (a): There is an association between Customer Satisfaction and Ethos of the Bank.
0.598 0.00 Accepted
H3 (a): There is an association between Customer Satisfaction and Physical Evidence.
0.374 0.00 Accepted
Data Analysis
164
Pearson Correlation Value of all the three factors of service quality indicating the positive
and moderate association with the customer satisfaction at 95 per cent confidence level.
Further the significant value is also less than 0.05 and hence null hypothesis of all the three
factors of service quality is not accepted. Level of association between customer
satisfaction and factor 1 (Competency of bank employee) is 59.4%, followed by factor2
(Ethos of the bank) is 59.8% and factor 3 (Physical Evidence) is 37.4%.
TABLE 4.60 Summary of Hypothesis Testing – Objective 2(b)- ICICI
Pearson Correlation Values depicted in the table 4.59 indicates positive association
between customer retention and service quality factors. Coefficient values are significant
(0.00) at 95 per cent confidence level. Therefore, null hypothesis is not accepted. Here
moderate association is being observed between customer retention and factor -1
(Competency of bank employee) & factor -2 (Ethos of the Bank) with 39.3% and 40.2%
respectively. Whereas Physical evidence is having weak correlation with customer
retention at 34.9% level of association.
Sub objective II (b): To find out correlation between Service Quality and Customer Retention.
Hypothesis Pearson
Correlation Coefficient
Significance Value
Result
H1 (b): There is an association between Customer Retention and Competency of bank employee.
0.393 0.00 Accepted
H2 (b): There is an association between Customer Retention and Ethos of the Bank.
0.402 0.00 Accepted
H3 (b): There is an association between Customer Retention and Physical Evidence.
0.349 0.00 Accepted
Data Analysis
165
TABLE 4.61 Summary of Hypothesis Testing – Objective 2(c)- ICICI
Positive correlation values are exhibited in the table 4.60 at 95 per cent confidence level
and all these values are very much significant as p value (significant values) are less than α
value (0.05) for all the factor of service quality. So, null hypothesis is not accepted.
Moderate association is being observed between the two factors of service quality and
customer loyalty. Level of association with customer loyalty of factor 1 (Competency of
Bank Employee) is 39.4%, and factor 2 (Ethos of the Bank) is 44.1%, A weak association
exist between the customer loyalty and Physical Evidence at 26.2%.
TABLE 4.62 Summary of Hypothesis Testing – Objective 2(d)- ICICI
Pearson Correlation Value of factor 1 (Competency of bank employee) indicates 38% of
association with customer commitment, followed by factor 2 (Ethos of the Bank) with
41.5% of association but weak correlation is found out between customer commitment and
factor 3 (Physical Evidence) at 18.2%. All these values are significant (0.00) at 95 per cent
confidence level so null hypothesis of all the three factors of service quality is not
accepted.
Sub objective II (c): To find out correlation between Service Quality and Customer Loyalty.
Hypothesis Pearson
Correlation Coefficient
Significance Value
Result
H1 (c): There is an association between Customer Loyalty and Competency of bank employee.
0.394 0.00 Accepted
H2 (c): There is an association between Customer Loyalty and Ethos of the Bank.
0.441 0.00 Accepted
H3 (c): There is an association between Customer Loyalty and Physical Evidence.
0.262 0.00 Accepted
Sub objective II (d): To find out correlation between Service Quality and Customer Commitment.
Hypothesis Pearson
Correlation Coefficient
Significance Value
Result
H1 (d): There is an association between Customer Commitment and Competency of bank employee.
0.380 0.00 Accepted
H2 (d): There is an association between Customer Commitment and Ethos of the Bank.
0.415 0.00 Accepted
H3 (d): There is an association between Customer Commitment and Physical Evidence.
0.182 0.00 Accepted
Data Analysis
166
Objective 3: To study the impact of service quality on customer satisfaction /
retention / commitment & loyalty.
4.8.6 Simple Regression
Correlation analysis shows that not all the three factors of service quality are moderately
associated with customer satisfaction / retention / commitment & loyalty. Some factors of
service quality have weak correlation with the customer satisfaction / retention /
commitment & loyalty and hence those factors are not considered for Regression Analysis
to study its impact on the service quality.
TABLE 4.63 Summary of Hypothesis Testing – Objective 3 (a)- ICICI
ANOVA values of all the service quality factors are significant at 95 per cent confidence
level indicating that model is good. Moreover, significance values are also lesser than 0.05
signifies that variables in the model are significant. Thus, null hypothesis of all the factors
of service quality is not accepted. Variance in customer satisfaction explained by factor 1
(Competency of bank employee) is 35.3%, followed by factor 2 (Ethos of the bank) is
35.8% and factor 3 (Physical Evidence) is 13.2%.
Sub objective III (a): To study the impact of Service Quality on Customer Satisfaction.
Hypothesis Significance
Value
R Square Value
ANOVA Value
Result
H1 (a): There is a significant impact of Competency of Bank Employees on Customer Satisfaction.
0.00 0.353 0.00 Accepted
H2 (a): There is a significant impact of Ethos of the bank on Customer Satisfaction.
0.00 0.358 0.00 Accepted
H3 (a): There is a significant impact of Physical Evidence on Customer Satisfaction.
0.00 0.132 0.00 Accepted
Data Analysis
167
TABLE 4.64 Summary of Hypothesis Testing – Objective 3 (b)- ICICI
Only two factors of service quality depicted in table4.63 have moderate association with
the customer retention. R2 Value of factor 1 (Competency of bank employee) indicates
11.1% variance in customer retention whereas factor 2 (Ethos of the bank) explain 16.2%
of variance in customer retention. All these values of service quality factors are significant
at 95 per cent confidence level indicating the significance of the variables in regression
model whereas ANOVA values indicating that model is good as it is lesser than 0.05.
Therefore null hypothesis is not accepted for all the factors of service quality.
TABLE 4.65 Summary of Hypothesis Testing – Objective 3 (c)- ICICI
ANOVA value for above two factors of service quality (0.00) is less than 0.05 at 95 per
cent confidence level indicates that the regression model is overall good. Further,
significance values of those two the factors are also 0.00 that are less than 0.05 indicated
that the variables are significant in the model and null hypothesis for above two factors of
service quality is not accepted. R2 Value of factor1 - Competency of bank employee is
0.093 which implies that 9.3% of variance in customer loyalty can be explained by this
factor. Variance in customer loyalty caused by factor 2 – Ethos of the bank is 19.5%.
Sub objective III (b): To study the impact of Service Quality on Customer Retention.
Hypothesis Significance
Value
R Square Value
ANOVA Value
Result
H1 (b): There is a significant impact of Competency of Bank Employees on Customer Retention.
0.00 0.111 0.00 Accepted
H2 (b): There is a significant impact of Ethos of the bank on Customer Retention.
0.00 0.162 0.00 Accepted
Sub objective III (c): To study the impact of Service Quality on Customer Loyalty.
Hypothesis Significance
Value R Square
Value ANOVA
Value Result
H1 (c): There is a significant impact of Competency of Bank Employees on Customer Loyalty.
0.00 0.093 0.00 Accepted
H2 (c): There is a significant impact of Ethos of the bank on Customer Loyalty.
0.00 0.195 0.00 Accepted
Data Analysis
168
TABLE 4.66 Summary of Hypothesis Testing – Objective 3 (d)- ICICI
R2 Value of factor -1 (Competency of bank employee) is 0.109 explaining 10.9% of
variance in customer commitment and factor -2 (Ethos of the bank) is 0.172 explaining
17.2% of variance in customer commitment. As these values are lesser than 0.05 at 95 per
cent confidence level and hence variables are significant in the regression model. Further
ANOVA values are also lesser than 0.05 shows that the regression model is good. Thus,
null hypothesis of factor 1 and factor 2 are not accepted.
Objective 4: To identify important factors of service quality from the demographic
perspective of customers.
4.8.7 Cross Tabulation
Total three factors extracted in Exploratory Factor Analysis and Factor Structure was
developed. The factor structure was confirmed through Confirmatory Factor Analysis.
Customer Perception was examined based on the following demographic variables.
TABLE 4.67 Cross Tabulation of the demographic variable – Gender- ICICI
Sr. No.
Factor of Service Quality
Gender Strongly Disagree
Disagree Neither
Agree Nor Disagree
Agree Strongly
Agree
1 Competency of bankemployee
Male 2 10 25 43 39 Female 0 9 16 40 16
2 Ethos of the bank Male 4 16 36 51 14 Female 5 11 18 33 12
3 Physical Evidence
Male 1 9 27 49 33 Female 5 4 22 37 13
Total 43 male and 40 female has given an opinion that competency of ICICI bank
employee is good. 51 male and 33 female opine that service quality of ICICI bank is good.
Moreover, bank is having good brand name in the market and bank is managed ethically.
49 male and 37 female consider that physical evidence of the bank is good.
Sub objective III (d): To study the impact of Service Quality on Customer Commitment.
Hypothesis Significance
Value R Square
Value ANOVA
Value Result
H1 (d): There is a significant impact of Competency of Bank Employees on Customer Commitment.
0.00 0.109 0.00 Accepted
H2 (d): There is a significant impact of Ethos of the bank on Customer Commitment.
0.00 0.172 0.00 Accepted
Data Analysis
169
TABLE 4.68 Cross Tabulation of the demographic variable – Age- ICICI
Sr. No.
Factor of Service Quality
Age Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
1 Competency of bank employee
18-24 1 3 10 22 4 25-34 3 7 20 30 11 35-44 1 2 11 20 7 45-55 0 4 5 8 9 55-65 0 0 2 3 14
Over 65 0 0 3 0 0 2 Ethos of the bank
18-24 0 3 13 17 7 25-34 1 6 19 28 17 35-44 1 0 15 19 6 45-55 0 0 5 15 6 55-65 0 0 1 10 8
Over 65 0 0 1 2 0 3 Physical
Evidence 18-24 2 3 9 23 3 25-34 1 7 10 25 9 35-44 2 1 8 36 5 45-55 1 1 9 10 5 55-65 0 1 8 6 4
Over 65 0 0 0 10 1
Factor 1 is considered mostly by the respondents of age group of 25-34. According to
them, ICICI bank employees’ competency is good. Further, the same age group also
believes that service quality of the bank is good, bank is having a good name in the market
and bank is managed ethically. Respondents represent the age group of 35 – 44 think that
physical evidence of the bank is good.
Data Analysis
170
TABLE 4.69 Cross Tabulation of the demographic variable – Education- ICICI
Sr. No.
Factor of Service Quality
Education Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
1 Competency of bank employee
Secondary School
0 0 2 0 1
Higher Secondary School
1 2 7 4 3
Graduate degree
2 8 26 35 23
Postgraduate degree
2 4 22 23 13
Professional qualifications
0 2 7 8 5
2 Ethos of the bank
Secondary School
1 1 1 1 1
Higher Secondary School
1 1 2 11 4
Graduate degree
2 7 20 27 22
Postgraduate degree
0 1 17 37 19
Professional qualifications
2 1 3 15 3
3 Physical Evidence
Secondary School
0 0 0 2 1
Higher Secondary School
1 1 4 9 2
Graduate degree
2 4 27 48 13
Postgraduate degree
3 8 12 33 8
Professional qualifications
0 0 6 13 3
Majority of the respondents who believe that the competency of the bank employee is good
are having graduate degree. Further, they also believe that physical evidence of the bank is
good. Majority of the respondents who are having post graduate degree consider the
service quality of the bank good. They also believe that bank is ethically managed and
having a good brand name in the market.
Data Analysis
171
TABLE 4.70 Cross Tabulation of the demographic variable – Income- ICICI
Sr. No.
Factor of Service Quality
Income in Rs. Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
1 Competency of bank employee
0-10000 2 3 10 12 5 10000-20000 0 6 10 15 8 20000-30000 2 3 8 13 6 30000-40000 1 1 10 28 8 40000-50000 1 0 4 6 6 Above 50000 1 3 5 12 12
2 Ethos of the bank
0-10000 1 4 9 9 3 10000-20000 3 6 8 13 8 20000-30000 1 4 6 23 2 30000-40000 1 3 8 35 4 40000-50000 0 3 3 8 3 Above 50000 1 4 7 14 6
3 Physical Evidence
0-10000 1 3 7 19 5 10000-20000 3 1 16 15 4 20000-30000 2 3 4 19 4 30000-40000 1 5 9 16 8 40000-50000 0 1 5 26 1 Above 50000 0 0 7 10 5
Respondents having income in the category of Rs. 30000 – 40000 opine that the ICICI
bank is having competent employees. Further the respondents having the same income also
believes that philosophy of the bank is very good and bank is ethically managed.
Respondents having income between Rs. 40000 and 50000 have agreement on the factor 3
and deem that bank’s physical environment is good.
Data Analysis
172
TABLE 4.71 Cross Tabulation of the demographic variable – Occupation- ICICI
Sr. No. Factor of Service
Quality Occupation
Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
1 Competency of bank employee
Businessman 1 2 2 8 4 Professional 2 2 7 16 6 Govt. Service 1 2 9 13 17 Private Service 1 7 20 41 8 Housewife 0 1 5 2 2 Student 0 2 3 7 1 Retired 0 0 0 1 7
2 Ethos of the bank
Businessman 1 3 5 6 1 Professional 2 2 7 34 2 Govt. Service 1 2 10 23 7 Private Service 2 5 18 15 16 Housewife 0 0 7 2 8 Student 0 3 4 6 1 Retired 0 0 2 4 1
3 Physical Evidence
Businessman 0 0 4 39 0 Professional 1 2 8 13 7 Govt. Service 1 3 9 18 11 Private Service 2 7 13 15 8 Housewife 1 0 3 7 3 Student 1 1 5 6 0 Retired 0 0 4 7 1
Respondents having favorable view towards the factor 1 are doing the job in the private
sector and believe that bank employees a very competent in delivering the service.
Majority of the professionals opine that the ethos of the bank is good. They also feel that
bank provide a good quality service. Majority of the businessmen think that physical
evidence of the ICIC bank is good.
Objective 5: To study service quality of ICICI
4.8.8 Least Square Method
Table 4.70 depicts the calculation of the respondent’s perceptions towards service quality
through ideal and least scores. Ideal scores are calculated by multiplying the number of
respondents in each category with (+3) and product with total number of criteria. Least
scores calculated by multiplying the number of respondents in each category with (-1) and
the product with number of criteria in the questionnaires.
Data Analysis
173
TABLE 4.72Ideal Score and Least Scores of Respondents- ICICI
Category Equation Ideal Score Equation Least Score Service Quality in ICICI, 200 × 3 × 37 22200 200 × -1 × 37 -7400
The results of the study are as under. The tables are formed on the basis of the questions of
service quality contained in the questionnaire.
TABLE 4.73Responses of the Respondents- ICICI
No Criterias of Service Quality Completely
Agree Agree Neutral Disagree
Completely Disagree
Score
+3 +2 +1 0 -1 1 Bank’s physical facility is
visually attractive 37 112 33 12 6 362
2 Bank is having modern looking and comfortable waiting area
38 112 33 16 1 370
3 Banks have TV & music system in the waiting area that reduces anxiety while waiting
32 70 53 38 7 282
4 Token system at the bank makes waiting line more organize
37 110 37 14 2 366
5 Cleanliness is properly maintained at the bank.
54 109 28 9 0 408
6 Materials like pamphlets,
brochure provides detail information about bank’s various services.
39 113 31 12 5 369
7 Materials at the bank are visually appealing.
33 111 41 14 1 361
8 Employees of the bank are
very attentive & provide individual attention.
47 86 52 11 4 361
9 Employees of the bank have knowledge about the all the different kind services offered by the bank.
58 91 30 15 6 380
10 Employees of the bank are having high level of the competency.
47 67 67 16 3 339
11 Employees of the bank are very customer friendly & listen to me very carefully.
59 88 34 13 6 381
12 Employees of the bank understand your need.
48 97 39 15 1 376
13 Employees of the bank are
never too busy to respond to customer ‘s request.
44 81 48 24 3 339
14 Employees of the bank provide me prompt service.
47 87 45 17 4 356
15 Every employees of the bank
are easily accessible by the 45 85 42 24 4
343
Data Analysis
174
No Criterias of Service Quality Completely
Agree Agree Neutral Disagree
Completely Disagree
Score
customer. 16 When bank promises to do
something, they do it in certain time.
53 87 33 21 6 360
17 When customers have any problem, bank shows sincere interest in solving it.
63 76 46 12 3 384
18 Bank performs the service right the first time.
38 100 35 19 8 341
19 Bank provides the service at
the time they promise to do so.
57 85 38 16 4 375
20 Bank insists on the error free record.
48 87 43 20 2 359
21 I have selected bank because
bank is having strong brand name in the market.
52 76 46 17 9 345
22 I believe that bank is ethically managed by the management.
54 90 45 10 1 386
23 Products of the bank like Fixed Deposit, Certificates are of a good quality.
68 85 38 7 2 410
24 Bank maintain confidentially while sending me online user id and password.
80 70 35 11 4 411
25 Bank offers locker facility at reasonable price with no hidden charges.
49 54 64 19 14 305
26 Bank is having strong security system in the bank premises.
70 79 34 13 4 398
27 Bank offers me variety of the financial product like mutual fund, insurance policies other than traditional banking product.
44 99 46 8 3 373
28 Bank always ensure proper functioning of ATM machine.
55 89 30 20 6 367
29 Bank never faces shortage of locker at every branch.
19 55 86 29 11 242
30 Bank is having well managed
web policies for secure online banking.
65 87 37 10 1 405
31 Bank always maintain transparency while communicating prices to me.
53 77 48 18 4 357
32 There are no hidden charges taken by bank while servicing me.
56 87 29 24 4 367
33 Bank is having convenient operating hours.
45 114 31 8 2 392
34 Bank offers me 24*7
customer care services. 34 107 40 16 3
353
35 Bank strictly follows RBI regulations & also informs
64 78 42 13 3 387
Data Analysis
175
No Criterias of Service Quality Completely
Agree Agree Neutral Disagree
Completely Disagree
Score
me about the same. 36 I feel secure while using
bank’s technical services such as NEFT, RTGS, Online Banking Etc.
77 82 32 8 1 426
37 Bank does regular upgradation in its technology.
81 74 33 11 1 423
Total Score (+) 13559 (61.07%)
Ideal Score (+)22200 Least Score -7400 Source: Field Survey
Customer opinion about the service quality of the ICICI Bank is depicted in the table 4.71.
No Negative score is observed in the table 4.71. The level of service quality is found to be
61.07% of ideal score that signifying that service quality of ICICI is considered good.
4.9 HDFC Bank:
Objective 1: To study the factors contributing to Service Quality
4.9.1 Exploratory Factor Analysis
TABLE 4.74KMO and Bartlett's Test - HDFC
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .898
Bartlett's Test of Sphericity Approx. Chi-Square 3559.447
Df 666
Sig. .000
KMO values depicted in the above table are 0.898 showing much higher correlation among
the variables. Further, significance Value of Bartlett’s Test of Sphericity (0.00) is lesser
than 0.05 indicates that correlation exists among the variables.
TABLE 4.75Correlation Matrixa- HDFC
Correlation Matrixa
a. Determinant = .033
No multicollinearity is observed in the data as Correlation Matrix is 0.033 that is higher
than the 0.00001.
Data Analysis
176
4.9.2 Anti Image Matrices
Correlation values of 11 factors of service quality of HDFC Bank depicted in the table
4.74. Diagonal values of the all the 11 factors of service quality exhibited in the second
part of the table. As all the variables are having values higher than the 0.5, therefore it can
be interpreting that all the 11 factors of service quality have practical and statistical
significance and data is suitable for performing factor analysis.
TABLE 4.76 Anti Image Matrice- HDFC
VAR1 VAR2 VAR6 VAR11 VAR15 VAR17 VAR22 VAR30 VAR31 VAR36 VAR37
Anti-image Covariance
VAR1 .569 -.260 .031 -.044 -.062 .046 -.078 -.021 -.005 -.021 -.029
VAR2 -.260 .504 -.003 -.055 -.004 -.074 -.091 -.018 -.064 .028 -.067
VAR6 .031 -.003 .694 -.302 .019 .038 .014 -.095 .030 -.006 -.062
VAR11 -.044 -.055 -.302 .580 -.065 -.135 .000 .111 -.055 -.005 -.054
VAR15 -.062 -.004 .019 -.065 .649 -.252 -.020 -.047 .021 -.022 -.045
VAR17 .046 -.074 .038 -.135 -.252 .605 -.049 -.117 .016 .066 .003
VAR22 -.078 -.091 .014 .000 -.020 -.049 .719 -.052 -.104 -.033 -.025
VAR30 -.021 -.018 -.095 .111 -.047 -.117 -.052 .522 -.140 -.208 -.048
VAR31 -.005 -.064 .030 -.055 .021 .016 -.104 -.140 .662 -.094 -.060
VAR36 -.021 .028 -.006 -.005 -.022 .066 -.033 -.208 -.094 .586 -.167
VAR37 -.029 -.067 -.062 -.054 -.045 .003 -.025 -.048 -.060 -.167 .639
Anti-image Correlation
VAR1 .805a -.486 .049 -.076 -.101 .078 -.123 -.039 -.008 -.037 -.049
VAR2 -.486 .820a -.005 -.101 -.006 -.135 -.150 -.034 -.110 .051 -.118
VAR6 .049 -.005 .686a -.476 .028 .059 .020 -.158 .045 -.009 -.094
VAR11 -.076 -.101 -.476 .723a -.106 -.229 -.002 .202 -.089 -.009 -.089
VAR15 -.101 -.006 .028 -.106 .831a -.402 -.029 -.081 .032 -.036 -.069
VAR17 .078 -.135 .059 -.229 -.402 .764a -.075 -.209 .025 .110 .005
VAR22 -.123 -.150 .020 -.002 -.029 -.075 .926a -.085 -.151 -.051 -.036
VAR30 -.039 -.034 -.158 .202 -.081 -.209 -.085 .804a -.239 -.376 -.084
VAR31 -.008 -.110 .045 -.089 .032 .025 -.151 -.239 .890a -.151 -.092
VAR36 -.037 .051 -.009 -.009 -.036 .110 -.051 -.376 -.151 .806a -.273
VAR37 -.049 -.118 -.094 -.089 -.069 .005 -.036 -.084 -.092 -.273 .905a
a. Measures of Sampling Adequacy(MSA)
Data Analysis
177
TABLE 4.77Communalities Table - HDFC
Sr. No.
Variables Initial Extraction
1 Bank’s physical facility is visually attractive. 1.000 .565
2 Bank is having modern looking and comfortable waiting area 1.000 .632
6 Materials like pamphlets, brochure provides detail information about bank’s various services.
1.000 .760
11 Employees of the bank are very customer friendly & listen to me very carefully.
1.000 .735
15 Every employees of the bank are easily accessible by the customer. 1.000 .505
17 When customers have any problem, bank shows sincere interest in solving it.
1.000 .543
22 I believe that bank is ethically managed by the management. 1.000 .571
30 Bank is having well managed web policies for secure online banking. 1.000 .629
31 Bank always maintain transparency while communicating prices to me. 1.000 .536
36 I feel secure while using bank’s technical services such as NEFT, RTGS, Online Banking Etc.
1.000 .700
37 Bank does regular upgradation in its technology. 1.000 .536
Extraction Method: Principal Component Analysis.
Communalities values of all 11 factors of service quality are higher than 0.5 indicating that
data set was appropriate for further analysis.
TABLE 4.78 Total Variance Explained - HDFC
Component Initial Eigenvalues
Extraction Sums of Squared Loadings
Rotation Sums of Squared Loadings
Total% of
Variance Cumulative
% Total
% of Variance
Cumulative %
Total % of
Variance Cumulative
%
1 4.123 37.483 37.483 4.123 37.483 37.483 2.510 22.815 22.815
2 1.364 12.401 49.885 1.364 12.401 49.885 2.481 22.556 45.371
3 1.114 10.124 60.009 1.114 10.124 60.009 1.610 14.638 60.009
4 .978 8.889 68.898
5 .685 6.226 75.124
6 .587 5.340 80.464
7 .559 5.084 85.547
8 .480 4.364 89.911
9 .442 4.023 93.934
10 .346 3.146 97.079
11 .321 2.921 100.000
Extraction Method: Principal Component Analysis.
As per the table 4.76, 11 variables of service quality explained 60% of the variance. This is
equal to the threshold value of 60% and hence further analysis was carried out.
Data Analysis
178
TABLE 4.79Rotated Component Matrixa- HDFC
Sr. No.
Variables Component
1 2 3
1 Bank’s physical facility is visually attractive. .275 .699 -.019
2 Bank is having modern looking and comfortable waiting area .289 .736 .081
6 Materials like pamphlets, brochure provides detail information about bank’s various services.
.210 -.011 .846
11 Employees of the bank are very customer friendly & listen to me very carefully.
.048 .361 .776
15 Every employees of the bank are easily accessible by the customer.
.093 .641 .275
17 When customers have any problem, bank shows sincere interest in solving it.
.035 .660 .325
22 I believe that bank is ethically managed by the management. .413 .343 -.076
30 Bank is having well managed web policies for secure online banking.
.748 .248 .088
31 Bank always maintain transparency while communicating prices to me.
.689 .246 .035
6 I feel secure while using bank’s technical services such as NEFT, RTGS, Online Banking Etc.
.831 .040 .092
37 Bank does regular upgradation in its technology. .633 .234 .285
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 6 iterations.
Relationship between the item & factor and membership of the item under one factor is
exhibited in the Rotated component matrix table. The membership of the item in factor is
determined by identifying the highest loading in one factor. The loading values ranges
between the 0 and 1. Value close to 1 indicated the highest factor loading. Another
important thing is that while determining the factor membership, negative sign of the factor
is being ignored. Generally factor loading higher than 0.5 is acceptable but as per the Hair
(2006), for sample size of 200 factor loading of 0.40 is acceptable. 200 respondents of
HDFC were surveyed and hence 0.40 is considered as acceptable factor loading.
Data Analysis
179
4.9.3 Factor Naming
Factors are given name once all the factors are extracted following the above mention steps
of Exploratory Factor Analysis.
Factor 1 Augmented Service
This factor is linear combination of item 22, 30, 31, 36 and 37. These items are pertaining
to the ethics of the bank, bank policies pertaining to the technical services and pricing
policies. Considering these items, this factor is named as augmented service.
Factor 2 Interior signage & service ability
Item 1, 2, 15 and 17 form this factor that is named as interior signage & service ability.
These items are pertaining to the bank’s physical activities and internal facility. Item 15
and 17 are related to the bank employees’ capability of delivering the services.
Factor 3 Assortment of services
This factor comprises of the item 6 & 11 that represent bank’s product & service and
accordingly it is named as assortment of services.
4.9.4 Confirmatory Factor Analysis:
Three factors extracted using Exploratory Factor Analysis and following factor structure
developed. This factor structure is confirmed through Confirmatory Factor Analysis. In
this factor structure, latent variable is service quality and observed variables are
Augmented Service (AS), Interior signage & service ability (ISA) and Assortment of
service (ASTS). Convergent Validity, Discriminant Validity and Nomological Validity are
used to validate the factor structure.
Data Analysis
180
FIGURE 4.4 Factor Structure - HDFC
E1
E2
E3
E4
E5
E6
E7
E8
E9
E10
E11
1
1
1
1
1
1
1
1
1
1
as1
as2
as3
as4
as5
isa1
isa2
isa3
isa4
asts1
asts2
as
isa
asts
r2
r3
sq
1
11
11
r1
11
Data Analysis
181
TABLE 4.80 Model Fit Indexes- HDFC
Ratio of Chi-square to degrees of freedom (CMIN/DF) 2.736 Goodness-of-fit index (GFI) 0.943 Adjusted GFI (AGFI) 0.903 Normed fit index (NFI) 0.935 Tucker-Lewis Index (TLI) 0.948 Incremental Fit Index (IFI) 0.969 Relative Fit Index (RFI) 0.979 Comparative Fit Index (CFI) 0.986 Root Mean Square Error of Approximation (RMSEA) 0.043
Fit statistics determine the model fit. The first fit statistics is Chi-square to degrees of
freedom and CMIN value is higher than 0.05 as shown in the table 4.78 indicating good fit.
Goodness-of-fit index (GFI) and Adjusted GFI (AGFI) values are higher than 0.9 showing
a good fit. Tucker-Lewis Index (TLI), Incremental Fit Index (IFI) and Relative Fit Index
(RFI) values are higher than 0.9 signifies the model is fit for the data. The Comparative Fit
Index (CFI) value also signifies good model fit as CFI value is higher than 0.9. The last
indicator is Root Mean Square Error of Approximation (RMSEA). As RMSEA value is
lesser than 0.06 indicates a good model fit.
TABLE 4.81 Convergent Validity- HDFC
Constructs Items Item Loadings t-values Composite Reliability
(CR) AVE
Augmented Service (AS)
AS1 .736 0.905 0.526 AS2 .735 6.701 AS3 .743 6.260 AS4 .677 6.439 AS5 .734 6.212
Interior signage & service ability (ISA)
ISA1 .681 0.890 0.539 ISA2 .760 8.324 ISA3 .747 6.510 ISA4 .748 6.516
Assortment of service (ASTS)
ASTS1 .538 0.816 0.604 ASTS2 .959 4.034
Three factors depicted in the table 4.79 are extracted in Exploratory Factor Analysis. Item
loading of all the three observed variables is higher than 0.5 indicating that these factors
converge on a common point on a latent variable – Service Quality. Critical Ratio (t-
values) of all the observed variables are higher than 1.96 at significant level of 0.5
validates Convergent Validity. Values of Composite Reliability calculated are higher than
0.7 showing a good reliability of the factor structure. Last component is AVE (Average
Data Analysis
182
Variance Extracted). AVE calculated for all the three constructs is higher than 0.50
indicating that more than half the variance of the service quality is explained each
construct. Considering all the components, convergent validity of the factor structure is
confirmed.
TABLE 4.82 Discriminant Validity &Nomological Validity- HDFC
Average AVE of Two Construct
Estimate
as <--> isa 0.532 .527 as <--> asts 0.571 .523 isa <--> asts 0.565 .315
Discriminant Validity is the extent to which a construct is truly distinct from the other
construct. Average AVE of the two construct must exceed the square of their correlation to
satisfy the Discrimiant Validity Test (Hair,2006). Discriminant Validity of the Factor
Structure is confirms as values depicted in the table 4.80 satisfy the condition. According
to Hair (2006), nomological validity is tested by examining the correlation between the
construct in the measurement model. The correlation values shows that constructs are
positively related to each other and support the nomological validity of the model.
Data Analysis
183
Objective 2: To find out correlation between service quality, customer satisfaction /
Retention / Commitment & Loyalty
4.9.5 Pearson Correlation:
Factor Structure was developed through Exploratory Factor Analysis and the same is
confirmed through Confirmatory Factor Analysis. Three factors of service quality were
extracted and their correlation with customer satisfaction / retention / commitment &
loyalty was determined through Pearson Correlation. Hypothesis for the same is as
follows:
TABLE 4.83 Summary of Hypothesis Testing – Objective 2(a)- HDFC
Positive correlation co-efficient shows that the three factors of service quality are
positively related to the customer satisfaction. Significance values (0.00) of all the three
factors of service quality are less than 0.05 so, null hypotheses is not accepted. Moderate
correlation is observed between customer satisfaction and the factors of service quality
with 56.3% for factor 1 (Augmented Service), 58.8% for factor 2 (Interior signage &
service ability) and 45.2% for factor 3 (Assortment of service).
TABLE 4.84 Summary of Hypothesis Testing – Objective 2(b) - HDFC
Sub objective II (a): To find out correlation between Service Quality and Customer Satisfaction.
Hypothesis Pearson
Correlation Coefficient
Significance Value
Result
H1 (a): There is an association between Customer Satisfaction and Augmented Services.
0.563 0.00 Accepted
H2 (a): There is an association between Customer Satisfaction and Interior signage & service ability.
0.588 0.00 Accepted
H3 (a): There is an association between Customer Satisfaction and Assortment of service.
0.452 0.00 Accepted
Sub objective II (b): To find out correlation between Service Quality and Customer Retention.
Hypothesis Pearson
Correlation Coefficient
Significance Value
Result
H1 (b): There is an association between Customer Retention and Augmented Services.
0.425 0.00 Accepted
H2 (b): There is an association between Customer Retention and Interior signage & service ability.
0.438 0.00 Accepted
H3 (b): There is an association between Customer Retention and Assortment of service.
0.375 0.00 Accepted
Data Analysis
184
Significance value of three factors of service quality is 0.00 that is less than 0.05 and hence
null hypothesis is not accepted for all the three factors of service quality. Co-efficient
values of the three factors of service quality are positive indicating the positive association
with customer retention. Percentage of association is 42.5% of factor 1, 43.8% of factor 2
and 37.5% of factor 3 respectively.
TABLE 4.85 Summary of Hypothesis Testing – Objective 2(c)- HDFC
Positive association is examined between customer loyalty and three factors of service
quality. These values are significant (0.00) at 95 per cent confidence level. Therefore, null
hypothesis is not accepted. Pearson Correlation Values of factor 1 demonstrates 46.5% of
association with customer loyalty, followed by 40.6% of association of factor 2 and 36.1%
of association of factor 3.
TABLE 4.86 Summary of Hypothesis Testing – Objective 2(d)- HDFC
Correlation co-efficient values of the factors of service quality depicted in the table 4.84 is
having positive sign indicating positive association. All the factors significance values
(0.00) are less than 0.05 therefore null hypotheses is not accepted. Factor 1 is associated
with customer commitment by 37.4%, followed by factor 2 with 38.8% and factor 3 with
37.7%.
Sub objective II (c): To find out correlation between Service Quality and Customer Loyalty.
Hypothesis Pearson
Correlation Coefficient
Significance Value
Result
H1 (c): There is an association between Customer Loyalty and Augmented Services.
0.465 0.00 Accepted
H2 (c): There is an association between Customer Loyalty and Interior signage & service ability.
0.406 0.00 Accepted
H3 (c): There is an association between Customer Loyalty and Assortment of service.
0.361 0.00 Accepted
Sub objective II (d): To find out correlation between Service Quality and Customer Commitment.
Hypothesis Pearson
Correlation Coefficient
Significance Value
Result
H1 (d): There is an association between Customer Commitment and Augmented Services.
0.374 0.00 Accepted
H2 (d): There is an association between Customer Commitment and Interior signage & service ability.
0.388 0.00 Accepted
H3 (d): There is an association between Customer Commitment and Assortment of service.
0.377 0.00 Accepted
Data Analysis
185
Objective 3: To study the impact of service quality on customer satisfaction /
retention / commitment & loyalty.
4.9.6 Simple Regression
The result of correlation analysis has identified the factors of service quality that has
positive and moderate association with the customer satisfaction, retention, loyalty and
commitment. Than after simple regression analysis was carried out to find out the impact
of factors of service quality on customer satisfaction, retention, loyalty and commitment.
TABLE 4.87 Summary of Hypothesis Testing – Objective 3 (a)- HDFC
Regression model is good and this has been indicated by ANOVA values of three factors
of service quality at 95 per cent confidence level. Significance values illustrate that
variables in the regression model are significant. So, null hypothesis of all the three factors
of service quality are not accepted. R2 value of the factor 1 (Augmented Service) shows
that 31.7% of variation in customer satisfaction is explained by this factor. Factor 2
(Interior signage & service ability) explain 34.6%, and factor 3 (Assortment of service)
explain 20.5%, of variation in customer satisfaction respectively.
Sub objective III (a): To study the impact of Service Quality on Customer Satisfaction.
Hypothesis Significance
Value
R Square Value
ANOVA Value
Result
H1 (a): There is a significant impact of Augmented Service of the bank on Customer Satisfaction.
0.00 0.317 0.00 Accepted
H2 (a): There is a significant impact of Interior signage & service ability on Customer Satisfaction.
0.00 0.346 0.00 Accepted
H3 (a): There is a significant impact of Assortment of service on Customer Satisfaction.
0.00 0.205 0.00 Accepted
Data Analysis
186
TABLE 4.88 Summary of Hypothesis Testing – Objective 3 (b)- HDFC
ANOVA values of regression model imply that model is overall good. Significance value
(0.00) shows that variables in the regression model are significant at 95 per cent
confidence level and hence null hypotheses of all the three factors are not accepted. R2
values of three factors are 18.1%, 19.2% and 10% respectively that explain the variation in
the customer retention by these factors.
TABLE 4.89 Summary of Hypothesis Testing – Objective 3 (c)- HDFC
As per the correlation analysis, all the three factors of service quality are moderately
associated with customer loyalty and hence regression analysis carried out between the
three factors of service quality and customer loyalty. ANOVA values signify that model is
overall good. As per the significance value (0.00) of all the three factors, null hypothesis is
not accepted. It also signifies that variables of the regression are significant. R2 value of
Factor 1 (Augmented Service) is 21.7% followed by 16.4 % and 6.8% for factor 2 (Interior
signage & service ability) and factor 3(Assortment of service) respectively. This explains
variation in customer loyalty by all these three factors of service quality.
Sub objective III (b): To study the impact of Service Quality on Customer Retention.
Hypothesis Significance
Value
R Square Value
ANOVA Value
Result
H1 (b): There is a significant impact of Augmented Service of the bank on Customer Retention.
0.00 0.181 0.00 Accepted
H2 (b): There is a significant impact of Interior signage & service ability on Customer Retention.
0.00 0.192 0.00 Accepted
H3 (b): There is a significant impact of Assortment of service on Customer Retention.
0.00 0.100 0.00 Accepted
Sub objective III (c): To study the impact of Service Quality on Customer Loyalty.
Hypothesis Significance
Value
R Square Value
ANOVA Value
Result
H1 (c): There is a significant impact of Augmented Service of the bank on Customer Loyalty.
0.00 0.217 0.00 Accepted
H2 (c): There is a significant impact of Interior signage & service ability on Customer Loyalty.
0.00 0.164 0.00 Accepted
H3 (c): There is a significant impact of Assortment of service on Customer Loyalty.
0.00 0.068 0.00 Accepted
Data Analysis
187
TABLE 4.90 Summary of Hypothesis Testing – Objective 3 (d) - HDFC
As the significance value of all the three factors are less than 0.05 at 95 per cent confidence
level, so null hypotheses of all the three factors are not accepted. It also signifies that
variables of the regression are significant. ANOVA values imply that model is overall
good. R2 value explain the variation in customer commitment. Factor 1 (Augmented
Service) leads to 14% variation in customer commitment followed by factor 2 (Interior
signage & service ability) causing 15.1% and factor 3 (Assortment of service) causing
5.6% variation in customer commitment.
Objective 4: To identify important factors of service quality from the demographic
perspective of customers.
4.9.7 Cross Tabulation
Customer’s perception towards the service quality was examined through cross tabulation
base on the demographic variables like Gender, Age, Occupation, Income and Education.
Three factors extracted in Exploratory Factor Analysis and Confirmed through
Confirmatory Factor Analysis were consider while studying the customer perception.
Sub objective III (d): To study the impact of Service Quality on Customer Commitment. Hypothesis Significance
Value R
Square Value
ANOVA Value
Result
H1 (d): There is a significant impact of Augmented Service of the bank on Customer Commitment.
0.00 0.140 0.00 Accepted
H2 (d): There is a significant impact of Interior signage & service ability on Customer Commitment.
0.00 0.151 0.00 Accepted
H3 (d): There is a significant impact of Assortment of service on Customer Commitment.
0.00 0.056 0.00 Accepted
Data Analysis
188
TABLE 4.91 Cross Tabulation of the demographic variable – Gender- HDFC
Sr. No
Factor of Service Quality
Gender Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
1 Augmented Service Male 1 3 16 63 24 Female 0 2 18 54 19
2 Interior signage & service ability
Male 1 3 22 60 21 Female 1 1 25 43 21
3 Assortment of service
Male 0 4 16 59 28 Female 2 1 12 32 44
63 males and 54 females believe that HDFC bank is managed ethically and offers
augmented services. 60 males and 43 females perceive that bank is having good interior
signage and it enhance bank’s ability to deliver a good service. Further 59 males and 32
females have shown their agreement towards the factor 3 that signifies the fact that bank’s
various products are of a good quality and bank offers good quality service as well.
TABLE 4.92 Cross Tabulation of the demographic variable – Age- HDFC
Sr. No
Factor of Service Quality
Age Strongly Disagree
Disagree Neither
Agree Nor Disagree
Agree Strongly
Agree
1 Augmented Service
18-24 0 1 4 30 4 25-34 0 3 15 51 17 35-44 0 1 6 19 6 45-55 1 0 3 11 12 55-65 0 0 3 6 3
Over 65 0 0 0 0 1 2
Interior signage & service ability
18-24 0 0 10 20 9 25-34 1 1 18 50 16 35-44 1 1 8 17 5 45-55 0 2 8 8 9 55-65 0 0 3 8 4
Over 65 0 0 0 1 0 3 Assortment of service 18-24 1 0 6 13 19
25-34 0 2 12 15 26 35-44 1 2 2 46 12 45-55 0 1 4 10 12 55-65 0 0 4 7 4
Over 65 0 0 0 1 0
Majority of the respondents are from the age category of 25-34 perceive that bank offers
services in better manner over a period of time. The same age group respondents also
believe that bank is having a good interior signage and offers good services. Respondents
of age group 35-44 think that bank offers variety of the services.
Data Analysis
189
TABLE 4.93 Cross Tabulation of the demographic variable – Education- HDFC
Sr. No.
Factor of Service Quality
Education Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
1 Augmented Service
Secondary School 3 3 0 5 1 Higher Secondary School
1 3 2 8 4
Graduate degree 6 1 13 30 17 Postgraduate degree
1 2 15 47 17
Professional qualifications
0 2 4 11 4
2 Interior signage & service ability
Secondary School 1 2 1 4 1 Higher Secondary School
1 2 5 9 0
Graduate degree 1 2 18 36 19 Postgraduate degree
1 1 20 44 16
Professional qualifications
0 1 3 10 7
3 Assortment of service
Secondary School 1 1 1 2 3 Higher Secondary School
1 1 4 4 6
Graduate degree 1 2 9 41 31 Postgraduate degree
1 2 12 30 26
Professional qualifications
0 1 2 11 7
Education is another demographic variable that is use to examined the perception of
customer towards the service offered by the HDFC. Majority of customer surveyed are
post graduate who perceive that HDFC offers services in improved manner. The same
respondents also think that bank is having good interior signage and due to it, bank
manages to offer good quality service. Factor 3 is mainly considered by the respondents
who are graduates and believe that banking product of HDFC is of a good quality and bank
also provides variety of services.
Data Analysis
190
TABLE 4.94 Cross Tabulation of the demographic variable – Income- HDFC
Sr. No.
Factor of Service Quality
Income in Rs. Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
1 Augmented Service
0-10000 0 3 6 20 4 10000-20000 1 0 6 18 8 20000-30000 0 1 9 22 12 30000-40000 0 1 7 35 7 40000-50000 0 0 4 13 2 Above 50000 0 0 2 9 10
2 Interior signage & service ability
0-10000 2 1 9 25 5 10000-20000 0 1 9 16 7 20000-30000 0 1 10 31 8 30000-40000 0 0 8 16 11 40000-50000 0 0 4 10 5 Above 50000 0 1 7 6 7
3 Assortment of service
0-10000 3 2 9 13 13 10000-20000 4 1 3 12 25 20000-30000 5 2 8 14 12 30000-40000 2 0 3 16 13 40000-50000 5 0 3 10 1 Above 50000 0 0 2 10 9
Factor 1 is mainly considered by the respondents having income in the category of Rs.
30000 – 40000. They think that bank offers augmented services. Respondents having an
income in the category of Rs. 20000 – 30000 believe that interior signage of the bank is
good and HDFC is having very well defined service delivery procedure. Lastly,
Respondents having income in the category of Rs. 10000 – 20000 strongly believe that
HDFC offers various services and products to its customers.
Data Analysis
191
TABLE 4.95 Cross Tabulation of the demographic variable – Occupation- HDFC
Sr. No.
Factor of Service Quality
Income in Rs. Strongly Disagree
Disagree
Neither Agree Nor
Disagree
Agree Strongly
Agree
1 Augmented Service
Businessman 0 0 2 11 5 Professional 1 2 4 23 9 Govt. Service 0 0 6 15 8 Private Service 0 2 15 47 15 Housewife 0 2 1 11 5 Student 0 1 5 8 0 Retired 0 0 1 2 1
2 Interior signage & service ability
Businessman 0 1 5 9 3 Professional 2 2 8 43 8 Govt. Service 0 0 8 12 9 Private Service 0 1 20 19 15 Housewife 0 0 4 9 4 Student 0 0 1 9 4 Retired 0 0 1 3 0
3 Assortment of service Businessman 0 0 1 38 8 Professional 0 3 8 17 11 Govt. Service 1 0 4 12 12 Private Service 0 2 8 9 31 Housewife 1 0 2 9 5 Student 0 0 4 4 6 Retired 0 0 1 3 0
Majority of the respondents are doing job in private sector and they are having an opinion
that HDFC undertakes all the e-Banking activities in a very well manner. So far as factor 2
is concern, majority of the respondents are professional perceive that bank’s interior
signage is good and it enables the bank to offer qualitative service to its customers.
Majority of the businessman consider the bank offers wide range of services and service
products.
Data Analysis
192
Objective 5: To study service quality of HDFC
4.9.8 Least Square Method
Table 4.94 depicts the calculation of the respondent’s perceptions towards service quality
through ideal and least scores. Ideal scores are calculated by multiplying the number of
respondents in each category with (+3) and product with total number of criteria. Least
scores calculated by multiplying the number of respondents in each category with (-1) and
the product with number of criteria in the questionnaires
TABLE 4.96Ideal Score and Least Scores of Respondents- HDFC
Category Equation Ideal Score Equation Least Score Service Quality in HDFC, 200 × 3 × 37 22200 200 × -1 × 37 -7400
The results of the study are as under. The tables are formed on the basis of the questions of
service quality contained in the questionnaire.
TABLE 4.97Responses of the Respondents- HDFC
No Criterias of Service
Quality Completely
Agree Agree Neutral Disagree
Completely Disagree
Score
+3 +2 +1 0 -1 1 Bank’s physical facility is
visually attractive 44 104 40 6 6 374
2 Bank is having modern
looking and comfortable waiting area
56 88 39 9 8 375
3 Banks have TV & music system in the waiting area that reduces anxiety while waiting
25 74 38 42 21 240
4 Token system at the bank makes waiting line more organize
43 99 33 20 5 355
5 Cleanliness is properly maintained at the bank.
67 93 28 8 4 411
6 Materials like pamphlets,
brochure provides detail information about bank’s various services.
50 98 43 7 2 387
7 Materials at the bank are visually appealing.
47 88 52 9 4 365
8 Employees of the bank are
very attentive & provide individual attention.
61 78 38 20 3 374
9 Employees of the bank have knowledge about the
61 82 41 8 8 380
Data Analysis
193
No Criterias of Service
Quality Completely
Agree Agree Neutral Disagree
Completely Disagree
Score
all the different kind services offered by the bank.
10 Employees of the bank are having high level of the competency.
41 87 52 17 3 346
11 Employees of the bank are very customer friendly & listen to me very carefully.
65 82 35 10 8 386
12 Employees of the bank understand your need.
48 89 43 13 7 358
13 Employees of the bank are
never too busy to respond to customer ‘s request.
37 94 42 20 7 334
14 Employees of the bank provide me prompt service.
44 89 48 16 3 355
15 Every employees of the
bank are easily accessible by the customer.
41 75 55 23 6 322
16 When bank promises to do something, they do it in certain time.
36 82 50 23 9 313
17 When customers have any problem, bank shows sincere interest in solving it.
47 89 44 13 7 356
18 Bank performs the service right the first time.
38 87 51 16 8 331
19 Bank provides the service
at the time they promise to do so.
44 95 45 11 5 362
20 Bank insists on the error free record.
42 80 47 28 3 330
21 I have selected bank
because bank is having strong brand name in the market.
47 87 52 11 3 364
22 I believe that bank is ethically managed by the management.
57 97 36 7 3 398
23 Products of the bank like Fixed Deposit, Certificates are of a good quality.
68 78 47 4 3 404
24 Bank maintain confidentially while sending me online user id and password.
73 79 31 9 8 400
25 Bank offers locker facility at reasonable price with no hidden charges.
29 70 50 35 16 261
26 Bank is having strong security system in the bank premises.
62 86 35 9 8 385
27 Bank offers me variety of the financial product like
45 90 49 10 6 358
Data Analysis
194
No Criterias of Service
Quality Completely
Agree Agree Neutral Disagree
Completely Disagree
Score
mutual fund, insurance policies other than traditional banking product.
28 Bank always ensure proper functioning of ATM machine.
55 87 39 5 14 364
29 Bank never faces shortage of locker at every branch.
25 51 76 27 21 232
30 Bank is having well
managed web policies for secure online banking.
54 92 41 6 7 380
31 Bank always maintain transparency while communicating prices to me.
42 93 49 13 3 358
32 There are no hidden charges taken by bank while servicing me.
38 87 44 24 7 325
33 Bank is having convenient operating hours.
43 100 31 18 8 352
34 Bank offers me 24*7
customer care services. 49 74 49 17 11
333
35 Bank strictly follows RBI regulations & also informs me about the same.
58 82 35 15 10 363
36 I feel secure while using bank’s technical services such as NEFT, RTGS, Online Banking Etc.
68 87 33 9 3 408
37 Bank does regular upgradation in its technology.
78 77 32 8 5 415
Total Score (+) 13154 (59.25%)
Ideal Score (+)22200 Least Score -7400
Source: Field Survey
Customer opinion about the service quality of the HDFC Bank is depicted in the table 4.95.
No Negative score is observed in the table 4.95. The level of service quality is found to be
59.25% of ideal score that signifying that service quality of HDFC is considered good.
Discussion of Findings
195
CHAPTER–5
DISCUSSION OF FINDINGS
This chapter summarizes the research procedure and presents a background of the research.
The findings discussed in this chapter are in the context of the five research objectives
established for the study. The findings are drawn based on the statistical analysis
performed in the previous chapter of data analysis for all the four banks taken for the
study.
5.1 Findings of research objective 1: To study the factors contributing to
the service quality :
Based on the Literature Review, variables were identified to establish the questionnaire for
measuring the service quality. The scale was purified through reliability analysis and then
after exploratory factor analysis was performed to extract the factors and developed the
factor structure. Factor structure was confirmed through the confirmatory factor analysis.
For both the public sector banks – SBI and PNB, total six factors extracted where as in
case of private sector bank – ICICI and HDFC, total three factors extracted and all the
factors for all four banks are analogous except one factor which is very much unique in
nature. The factor structure developed for all the four banks confirm the research model
proposed in the conceptual framework as depicted in the figure 5.1.
Discussion of Findings
196
.
FIGURE 5.1 Research Model
First factor of the service quality comprises of the highest no of the items illustrating the
fact that the bank employees of the banks are very good at understanding the needs of the
customers and delivering the service accordingly. Moreover, it has also been found out
that despite of being employees of banks fulfill the promise in the stipulated time and take
keen interest in solving the problems of the customers. All these factors contribute to the
competency of the SBI bank employees. This factor represents reliability and
responsiveness dimension of service quality as proposed by Parasuraman, et.al. (1985).
Augmented Services is the another factor having the 6 variables grouped in it. Service
Product includes the basic banking product like Locker as well as e-banking product such
as NEFT, RTGS etc is being offered by the bank in improved manner. It has been found
out that respondents mostly like to avail the locker facilities of the banks only because
there are no hidden charges associated with this service. Another component of this factor
is pricing policies. The research reveals the fact that banks always maintain the
transparency in communicating the prices of its various offline and online services to its
customers. Similar study was carried out by ShirshenduGanguli, Sanjit Kumar Roy,
(2011) in which author has discussed analogous factor in name of customer service,
Service Quality
1. Competency of bank employees
2. Augmented Service
3. Physical Evidence
4. Ethos of the bank
5. Assortment of Service
6. Service Product
7. Interior Signage & Service ability
8. Accomplishing the promise
Customer Satisfaction
Customer Commitment
Customer Loyalty
Customer Retention
Discussion of Findings
197
technology security and information quality, technology convenience, and technology
usage easiness and reliability.
The third factor highlights the fact that bank’s physical evidence is always found to be
clean and its material like brochure and pamphlets are visually appealing.Koushiki (2013)
has mention the importance of tangibility as an important parameters of service quality in
Indian Banking Sector. Forth factor also offer another major finding that SBI is considered
as most ethically managed and strongly branded bank in the Indian Banking Sector due the
good ethos of the bank. This factor is similar to the study of Gronroos (2000) wherein the
researcher has also highlighted the importance of the firm’s image as important dimension
of service quality.
Next factor is assortment of service and it composed of the variables like TV, music and
token system at the bank. This factor depict the fact that other than basic banking service,
SBI has bundle of the services to offer to its customer such as token system that reduce
anxiety of customer in waiting area. Moreover, TV and music system in the premise of the
banks play very important role in engaging the customers waiting in the waiting area.
Services marketing theories by Parasuraman (1988) define tangibility as physical facilities
and equipments and the factor extracted here resembles the tangibility as define by
researcher. The factor extracted in the study also focuses on the availability of TV, music
system and token system of banks.
Another factor is service product. Besides the traditional banking service, this factor
includes other financial products such as mutual fund, insurance etc. Therefore, service
product name is given to this factor. SBI is found to be the one among the four banks,
which is good at offering variety of the services and financial products. Abdel Fattah
Mahmoud Al-Azzam (2015) stipulates in paper that Customers can evaluate bank facilities
on the parameters such as service product design, sufficiency, vision equipment, and the
appearance of workers in the bank.
Next factor is interior signage & service ability. In this factor, it has been found out that
bank a premise is very modern looking and visually appealing. This factor is analogous to
the first dimension of the service quality proposed by Lehtinen and Lehtinen (1991).
Researchers have named this dimension as physical quality that includes physical layout of
the service firm and tools required for producing and delivering the services. The second
Discussion of Findings
198
factor also communicates the similar fact about the bank’s premises and tolls such as
pamphlets and brochure use to communicate the various banking services. Therefore,
interior signage plays very important role enabling the employees of the bank to deliver
good quality service to its customers.
Accomplishing the promises is the only factor extracted in PNB. The quintessence of this
factor is conveyed through bank’s ability in fulfilling the promise at the right time as well
as bank employees sincerity in understanding and solving the customer problems. Forth
factor stressed upon the range of the services offered by the bank. As a part of this factor it
has been found out that bank services focuses on the maintaining the confidentiality,
offering 24*7 customer care service and strictly adhering the banking regulation of RBI.
This represents reliability of the dimension of service quality proposed by Parasuraman,
et.al. (1988).
Last factor is ethos of the bank. Study revealed the fact that ICICI bank is having a strong
brand name in the market and service products of the bank such as FD & certificates issued
by them are of the good quality and bank always offers 24*7 customer care services. All
these elements depict that bank employ a good ethos in managing it. This factor is similar
to the study of Gronroos (2000) wherein the researcher has also highlighted the importance
of the firm’s image as important dimension of service quality. Ghobadian et al., 1994 have
also stated in their research that in addition to the technical and functional dimensions,
corporate image can be influenced by other variables such as price, external
communications, physical location, appearance of the site and competence and behavior of
service provider's employee(s)
TABLE 5.1 Consistency Mapping
Sr. No Factors of Service Quality Consistency with the previous research 1 Competency of bank employees Parasuraman, et.al. (1985). 2 Augmented service ShirshenduGanguli, Sanjit Kumar Roy, (2011) 3 Physical evidence Koushiki (2013) &Gronroos (2000) 4 Assortment of service Parasuraman, et.al. (1988). 5 Service product Abdel Fattah Mahmoud Al-Azzam (2015) 6 Interior signage & service ability Lehtinen and Lehtinen (1991) 7 Accomplishing the promises Parasuraman, et.al. (1988). 8 Ethos of the bank Gronroos (2000) &Ghobadian et al., (1994)
Discussion of Findings
199
5.2 Findings of research objective 2: To find out correlation between
service quality, customer satisfaction / retention / commitment
&loyalty :
This research objective was satisfied through Pearson Correlation between the factors of
service quality and customer satisfaction / retention / commitment & loyalty for all the four
Banks.
TABLE 5.2 Pearson Correlation Value
Customer Satisfaction Customer Retention Customer Loyalty Customer Commitment Competency Of bank
employee
SBI: 0.642 / PNB: 0.625 ICICI: 0.594
Competency Of bank employee
SBI:0.458 / PNB: 0.414 ICICI: 0.393/
Competency Of bank employee
SBI: 0.371 / PNB: 0.424 ICICI: 0.394
Competency Of bank employee
SBI: 0.391 / PNB: 0.375 ICICI: 0.380
Augmented Service
SBI: 0.594 / PNB: 0.557 HDFC: 0.563
Augmented Service SBI:0.404 / PNB: 0.377 HDFC: 0.425
Augmented Service
SBI: 0.370 / PNB: 0.361 HDFC:0.465
Augmented Service
SBI: 0.372 / PNB: 0.360 HDFC: 0.374
Physical Evidence
SBI :0.501/ICICI: 0.374
Physical Evidence SBI :0.250 / ICICI: 0.349
Physical Evidence
SBI :0.305 / ICICI: 0.262
Physical Evidence
SBI: 0.273 / ICICI:0.182
Ethos of the bank
SBI :0.371/ICICI: 0.59
Ethos of the bank
SBI :0.458/ICICI: 0.402
Ethos of the bank
SBI :0.270 /ICICI: 0.441
Ethos of the bank
SBI : 0.307 / ICICI: 0.415
Assortment of services SBI: 0.406 / PNB: 0.654 HDFC: 0.452
Assortment of services SBI: 0.297 / PNB: 0.454 HDFC: 0.375
Assortment of services
SBI: 0.210 / PNB: 0.447 HDFC:0.361
Assortment of services
SBI: 0.250 / PNB: 0.466 HDFC: 0.377
Service Product
SBI: 0.437 / PNB: 0.608
Service Product
SBI: 0.376 / PNB: 0.494
Service Product
SBI: 0.378 / PNB: 0.557
Service Product
SBI: 0.372 / PNB: 0.434
Interior signage & service ability
PNB:0.513/ HDFC:0.588
Interior signage & service ability
PNB:0.444/HDFC: 0.438
Interior signage & service ability
PNB: 0.521/HDFC:0.406
Interior signage & service ability
PNB:0.360 / HDFC:0.388
Accomplishing the promise
PNB: 0.541
Accomplishing the promise
PNB: 0.393
Accomplishing the promise PNB: 0.413
Accomplishing the promise PNB: 0.494
Moderate and positive correlation has been found out between the factors of service quality
and customer satisfaction, retention, loyalty and commitment. Competency of the bank
employees, Assortment of service and Service product are having higher correlation. These
factors lead to the higher satisfaction as compare to the other factors of service quality. Out
of the eight factors of service quality, three factors - Competency of the bank employees,
Discussion of Findings
200
Augmented Service and Physical Evidence are having higher correlation values in SBI.
This leads to the finding that customers of SBI are more satisfied with the bank service in
comparison with the other three banks. Similarly, PNB is also having three prominent
factors of service quality as depicted in table 5.2. Therefore, it can be inferred that
customers of public sector banks – SBI and PNB are more satisfied as compare to the
private sector banks.
Competency of the bank employee, Ethos of the bank, Assortment of services are the
factors associated with the customer retention similarly as these factors are having similar
correlation values. These are the most prominent factors of the service quality in public
sector banks for retaining customers. Service product is the most important factors of the
service quality for PNB along with the Interior Signage & Service Ability and
accomplishing the promises that indicates higher customer retention in the PNB.
Major reasons for the customer loyalty towards the bank are competency of the bank
employee, augmented service, ethos of the bank, assortment of the bank and service
product. PNB is found to better service provider in comparison with other three banks on
the stated four factors of the service quality. By and large, customers of the public sector
banks are found to more loyal towards their bank in comparison with the private sector
bank. Key factors of the service quality contributing to the customer commitment are ethos
of the bank, assortment of services, service product and competency of the bank employee.
This is an indication of the finding that customer commitment is also high in public sector
bank as compare to the private sector bank.
Commitment level is found to be similar in PNB and SBI. Therefore the major result of the
objective shed light on the fact that customers of public sector bank are more satisfied,
more loyal and more committed to the bank as compare to the private sector banks.
Likewise, customer retention is also high in public sector bank in comparison with the
private sector bank.
Discussion of Findings
201
5.3 Findings related to the research objective 3: To study the impact of
service quality on customer satisfaction / retention / commitment
&loyalty :
To fulfill this objective, simple regression analysis test was performed between the factors
of service quality and customer satisfaction / retention / commitment & loyalty for all the
four banks.
TABLE 5.3 R Square Value
Customer Satisfaction Customer Retention Customer Loyalty Customer Commitment Competency Of bank
employee
SBI: 0.412 / PNB: 0.391 ICICI: 0.353
Competency Of bank employee
SBI: 0.066 / PNB: 0.171 ICICI: 0.111
Competency Of bank employee
SBI: 0.116 / PNB: 0.180 ICICI:0.093
Competency Of bank employee
SBI: 0.085 / PNB: 0.126 ICICI:0.109
Augmented Service
SBI: 0.352 / PNB: 0.310 HDFC: 0.317
Augmented Service
SBI: 0.042 / PNB: 0.128 HDFC:0.181
Augmented Service
SBI: 0.123 / PNB: 0.130 HDFC:0.217
Augmented Service
SBI: 0.131 / PNB: 0.130 HDFC: 0.140
Physical Evidence
SBI:0.251/ICICI: 0.132
Physical Evidence
--------------
Physical Evidence
--------------
Physical Evidence
--------------
Ethos of the bank
SBI:0.138 /ICICI:0.358
Ethos of the bank SBI:0.066 / ICICI: 0.162
Ethos of the bank ICICI: 0.195
Ethos of the bank ICICI: 0.172
Assortment of services
SBI: 0.165 / PNB: 0.427 HDFC: 0.205
Assortment of services PNB: 0.206 / HDFC:0.100
Assortment of services PNB: 0.200 /HDFC:0.068
Assortment of services PNB: 0.217 / HDFC:0.056
Service Product
SBI: 0.191 / PNB: 0.370
Service Product SBI: 0.071 / PNB: 0.171
Service Product SBI: 0.077 / PNB: 0.310
Service Product SBI: 0.131 / PNB: 0.188
Interior signage & service ability
PNB: 0.263/HDFC:0.346
Interior signage & service ability
PNB: 0.197/HDFC:0.192
Interior signage & service ability
PNB: 0.272/HDFC:0.164
Interior signage & service ability
PNB: 0.130/HDFC:0.151
Accomplishing the promise PNB: 0.292
Accomplishing the promise PNB: 0.154
Accomplishing the promise PNB: 0.170
Accomplishing the promise PNB: 0.244
In this objective, an attempt is made to examine to variation caused by service quality
factors in customer satisfaction, retention, loyalty and commitment. Important factors of
the service quality impacting the customer satisfaction are competency of the bank
employee, assortment of service, augmented service, and ethos of the bank and service
product. This result is in the consistency with the finding 2 leading to the indication impact
Discussion of Findings
202
of service quality on customer satisfaction is higher in SBI as compare to the other three
bank.
Augmented service, assortment of the services, service product and interior signage &
service ability are the most influencing factors of the service quality on customer retention.
This result is also in consistent with the result of the findings 2 showing the fact that these
are the most dominant factors in PNB that impact greatly on customer retention.
Influential factors of service quality are augmented service, assortment of service, service
product and interior signage & service ability. These factors impact customer loyalty
significantly in comparison with the other factors of service quality. Significant impact of
service quality on customer loyalty is found in PNB in comparison with the other banks.
Lastly, important service quality factors of service quality impacting customer
commitment are augmented service, assortment of the service, service product and interior
signage & service ability. PNB customers are more committed in comparison with the
other banks customers because of the impact of service quality on customer commitment.
The major highlights of this objective is in consistence with the result of the findings 2
inferring that impact of service quality is more public sector bank in comparison with the
private sector banks.
TABLE 5.4 Consistency Mapping of Research Objective 2 & 3
Sr. No Research Objective 2 Research Objective 3 1 Customer Satisfaction is higher in SBI. Impact of Factor of Service Quality on
Customer Satisfaction is higher in SBI. 2 Customer Retention is higher in PNB. Factors of service quality impacting customer
retention are higher in PNB. 3 Customers of PNB are more loyal as
compare with other three banks. Impact of factors of service quality on customer loyalty is higher in PNB.
4 Customer commitment is similar in PNB & SBI.
Impact of factors of service quality on customer commitment is higher in PNB.
Discussion of Findings
203
5.4 Findings related to the research objective 4:To identify important
factors of service quality from the demographic perspective of
customers :
TABLE 5.5Summary of the demographic analysis in SBI
Factors of Service Quality
Gender Age Education Income Occupation
Competency of bank employee
Male 35-44 Graduate 30000-40000 Private Service
Augmented Services Female 18-24 Graduate 20000-30000 Private Service Physical Evidence Male 18-24 Postgraduate 20000-30000 Private Service Ethos of the Bank Male 25-34 Professional 30000-40000 Professional Assortment of Services
Male 25-34 Graduate 10000-20000 Govt. Service
Service Product Female 18-24 Postgraduate 10000-20000 Businessman
Based on the demographic analysis, it has been found out that males consider competency
of the bank employees, physical evidence, ethos of the bank, and assortment of services are
important parameter in judging the bank’s service quality and the rest of the two factors are
considered by females. Respondents’ categories in the strata of 18-24 years of age,
perceive that service quality of bank is good. This perception is based on the factors –
augmented services, physical evidence and service product of the bank. Whereas
customers classifies in the age group of 25-34 perceive good service quality of the bank
considering ethos of the bank and assortment of services. Lastly, respondents having age
between 35 and 44 perceive that bank’s employees are competent enough to give good
service quality.
So far as education is concern, majority of the respondents are graduates who have a good
perception about the bank. They have built their perception based on the good competency
of the bank employees, augmented service of the bank and assortment of services.
Respondents who are post graduate, have rated bank as a good service provider deeming
bank’s service product & physical evidence. Respondents who are professionals believe
that ethos of the bank is good. Customers stratified in the income group of Rs. 30000 –
40000 have rated bank’s service quality based on the dimension – bank employees’
competency and ethos of the bank, where as customer having income of Rs.20000 – 30000
have considered augmented service of the bank and bank’s physical evidence. Based on
these factors, good perception towards the bank’s service quality is built among the
Discussion of Findings
204
customers. Lastly, customers earning between Rs.10000 and 20000 rated the bank based
of the two service quality dimensions – assortment of service and its service product.
Respondents having different occupation have judged their opinion about the bank’s
service quality based on the different dimension of the service quality. Customers who are
private employees have considered bank employees’ competency, augmented service and
physical evidence of the bank. Professionals have considered ethos of the bank as an
important factor of service quality, businessmen have considered bank’s service product
and government employees’ have considered assortment service of the bank and based on
it, they have perceive state bank of India as a good service provider.
TABLE 5.6Summary of the demographic analysis in PNB
Factors of Service Quality
Gender Age Education Income Occupation
Competency of Bank Employees
Male 25-34 Postgraduate 30000-40000 Private Service
Interior signage & service ability
Male 25-34 Graduate 20000-30000 Private Service
Accomplishing The Promises
Male 25-34 Graduate 20000-30000 Govt. Service
Assortment of services
Male 35-44 Graduate 20000-30000 Professionals
Augmented Services Male 45-55 Postgraduate 10000-20000 Businessman Service Product Male 25-34 Graduate 40000-50000 Private Service
Out of 200 respondents surveyed, majority of them are male who have perceived PNB as a
good service provider in the Indian banking sector. So far as age is concern, customers
categorized in the group of 25-34 have considered four factors (competency of bank
employee, interior signage & service ability, accomplishing the promises and service
products) of the service quality and rated PNB a good service provider in the public sector
banking. For the customers having age between 35 and 44 have given importance to the
factor – assortment of services, whereas customer in the age bracket of 45 – 55 believe that
bank offer improved service all the time. Considering these factors, customer have form
positive perception regarding the service of the bank.
Majority of the customers surveyed are either graduate or postgraduate. Customers having
graduate degree perceive PNB as a good service provider based on the four dimensions of
the service quality that are interior signage & service ability, accomplishing the promise,
assortment of service and service product. On the other hand, post graduate customers
Discussion of Findings
205
believe that PNB is very good in offering augmented services. Moreover, they also
perceive that competency of the bank employees is good and hence overall service quality
of the bank is good.
Customers are categorized in the four income groups who have responded in the research.
First strata is Rs. 20000-30000. Respondents having income in these strata perceive
positively about the bank’s service quality based on the factors such as interior signage &
service ability, accomplishing the promises and assortment of services. Customers having
income between Rs.30000 – 40000 feels that employee of this bank are very competitive
and provide good service. Due importance is given to the bank’s service product by the
customers having income between Rs.40000 – 50000. Lastly, respondents earning between
Rs.10000 and 20000 thinks that bank is managed ethically and always impart better
service.
So far as occupation is concern, majority of the respondents are private service employees
and they have opine about the bank’s service quality based on the three parameters –
competency of the bank employees, interior signage & service ability and service product.
Government employees deem that bank fulfill its promises and hence rated it as a good
service provider. Professionals opine that bank offer variety of services and businessmen
thinks that bank practices ethics in its operation and offer a improved service to its
customers.
TABLE 5.7Summary of the demographic analysis in ICICI
Factors of Service Quality Gender Age Education Income Occupation Competency of bankemployee Male 25-34 Graduate 30000-40000 Private Service Ethos of the bank Male 25-34 Postgraduate 30000-40000 Professionals PhysicalEvidence Male 35-44 Graduate 40000-50000 Businessmen
Three factors were extracted in exploratory factor analysis and customers’ perception was
studied based on these factors. Like PNB, for this bank also majority of the respondents
surveyed were males and they have perceived that the service of ICICI bank is good based
on the above stated three factors. Customers’ surveyed were in the age group of 25-34 and
they believed that the employees of ICICI bank are competent, and ethos of the bank is
good. Considering these factors, they perceive positively about the bank’s service quality.
Customers’ falls in the age group of 35 and 44 perceived that physical evidence in the bank
is good and it makes a service experience unique. Graduate customers have considered
Discussion of Findings
206
physical evidence and bank employees’ competency as an important factors and based on
it, they have rated service of ICICI. Whereas postgraduate customers’ have considered the
factor that stress upon the philosophy of the bank.
So far as income is concern, customers having income in the category of Rs. 30000-40000
have rated bank on the basis of two service quality factors – competency of bank
employees and ethos of the bank. Physical evidence is an important factor for the
customers, who are earning between Rs. 40000 and 50000. Lastly, private employees have
considered bank employees’ competency, professionals have considered that bank is
having a good philosophy and businessmen have considered physical evidence while
perceiving about the service quality of the bank.
TABLE 5.8Summary of the demographic analysis in HDFC
Factors of Service Quality Gender Age Education Income Occupation Augmented Service Male 25-34 Postgraduate 30000-40000 Private Service Interior signage & service ability
Male 25-34 Postgraduate 20000-30000 Professionals
Assortment of service Male 35-44 Graduate 10000-20000 Businessmen
Like PNB and ICICI, for this bank also majority of the respondents are males who have
rated bank’s service quality on the basis of the three factors extracted in the factor analysis.
Only one factor – assortment of service is considered by the customers having age in the
category of 35 – 44. Whereas the customers have age in the group of 25-34 have given
more weightage to the two factors – augmented service and interior signage & service
ability. Customers surveyed are either graduate or postgraduate by education.
Postgraduate respondents deem that bank offers augmented services. They also believe that
interior signage of the bank is good and it enables better service delivery to the customers.
Graduate opine that bank offers variety of services to its customers. Customers earning
between Rs.30000 and 40000, have rated bank on the factor named as augmented services
of the bank. Interior signage & service ability is the factor considered by the respondents
having income in the category of Rs.20000 – 30000. Lastly, respondents earning between
Rs.10000 and 20000, believe that bank offers widespread of services to the customers.
Customers having different occupation, have diverse parameters for forming their
perception about the bank’s service quality. Private employees feel that bank is very good
in bestowing improved services. Professionals deem that interior signage of the bank is
Discussion of Findings
207
very good and bank is able to provide better services all the time. Lastly, businessmen
perceive that bank is having range of the services and service product to be offered.
5.5 Findings related to the research objective 5: To rank the selected
banks based on the service quality :
TABLE 5.9 Ranking of the bank
Rank Bank Total Score Total Score in % 1 State Bank of India (SBI) (+)13871 62.48 2 ICICI Bank (+)13559 61.07 3 HDFC Bank (+)13154 59.25 4 Punjab National Bank(PNB) (+)12796 57.63
Table 5.5 illustrates the result of ideal and least score. As mention in it, SBI ranks first with
62.48% of the total score, so far as customer perception towards the service quality of the
bank is concern. It is being followed by ICICI, HDFC and PNB with the total score
depicted in the above table. As the total score values for four banks are positive and hence
it can be interpreted that customers have positive perception towards the services of all the
four banks. Minute difference is highlighted in the total score values of SBI and ICICI
bank. This result shed a light on the fact that customers perceive that the service quality of
both banks are similar but PNB stands last so far as customer’s opinion about its quality of
the service is concern.
Conclusions, Major Contributions and Scope of Further Work
208
CHAPTER–6
CONCLUSIONS, MAJOR CONTRIBUTIONS AND SCOPE OF FURTHER WORK
6.1 Conclusions :
Service quality and its dimension were studied by different authors since years. But direct
relationship between service quality and customer satisfaction, retention, loyalty and
commitment were not studied. In this doctoral research, an attempt was made to establish
bridges between the factors of service quality and customer satisfaction, retention, loyalty
and commitment in Indian Banking Sector. For the purpose of research, four banks (SBI,
PNB, ICICI, HDFC) were selected based on the basis of market capitalization. Firstly,
various factors were extracted for all the four banks separately and an empirical model of
service quality was developed based on it. Confirmatory Factor Analysis was used to
validate the model.
Data was collected from the customers of four banks and hypothesized relation was
established between the factors of service quality and customer satisfaction, retention,
loyalty and commitment. The result of the analysis stipulates that not all the factors of
service quality contribute to satisfy the customer, retain them and make them loyal &
committed to the bank. In the chapter of the findings major contributing factors of service
quality and its impact of customer satisfaction, retention, loyalty and commitment were
discussed.
Demographics of the customers were also taken into the consideration for the purpose of
study. How demographic variables has impacted in forming the perception of the
customers were discussed and lastly, through statistics, overall service quality of all the
four banks were identified and banks were given rank based on it. This chapter includes
implication of the study, limitation of the study and recommended directions for future
research.
Conclusions, Major Contributions and Scope of Further Work
209
6.2 Major Contribution :
6.2.1 Theoretical Implication
Based on the research objectives, constructs studied – service quality, customer
satisfaction, retention, loyalty and commitment has contributed to the theory as follows:
The major contribution of this research is in the area of understanding the factors of
service quality pertaining to the Indian Banking Sector. Theoretically, this research
has contributed to the existing body of knowledge pertaining to the factors of service
quality by incorporating new information through qualitative research. An empirical
model of service quality has developed and it has added richness to the service
quality constructs studied so far in the context of Indian Banking Sector.
Various literatures have shed a light on the relationship between service quality and
customer satisfaction, retention, loyalty and commitment. However, there was lack
of study on identifying the factors of service quality and its impact on customer
satisfaction, retention, loyalty and commitment in the context of service quality.
With empirical models of service quality developed for all the four banks provide
more an inclusive picture of service quality. Utilizing this model has helped the
researcher in studying its relationship with customer satisfaction, retention, loyalty
and commitment.
With an advent of twenty first century, the world economy is changing rapidly and it
has a deep impact on our economy also. In the past years, radical changes have been
observed such as new licensing policies for operating in Indian Banking Sector. This
will allow new players to explore the opportunities offered by banking sector in
India. Therefore, it was essential to study the service quality model in the context
demographic variables of the customers. Consequently, this thesis contributes to the
body of knowledge that how customers perceive towards the service quality of the
Indian banks based on their demographics.
Conclusions, Major Contributions and Scope of Further Work
210
6.2.2 Managerial Implication
As our economy is dominated by the service sectors & banking has been one of the leading
contributing industry and hence service quality is a key instrument for the banking players
to differentiate themselves from others. This indicates the importance of the service quality
as an important construct for banks. Higher service quality facilitates the bank in satisfying
the customers, retaining them and making them loyal & committed to the bank. So this
study has the following implication for banks:
It is very much essential for the service providers in the banks to understand the role
and importance of the service quality. This thesis reveals the fact that, employees of
the bank are the key contributor in offering good service quality as they are the
representatives of the bank. So it is recommended to the banks to design
comprehensive training programme for employees in dealing with the customers by
being prompt in offering the service and solving the problems, pleasing and
courteous while communicating with them. With the use of empirical model of
service quality developed in the thesis, banks will be able to identify which factors of
service quality best accommodates them.
Physical evidence & Interior Signage have also emerged as another important factors
in attracting, satisfying and retaining the customers. So, it is strongly recommended
to the service provider to pay more attention in getting out of the brick and mortal
layout of the bank and give modern look to the bank. This will make services more
effective. It is very much difficult to differentiate the service in banking. Thus
focusing on the these factors, bank will be able to create its unique position in the
mind of customers. As banks are majorly govern by Reserve Bank of India but banks
are given autonomy to decide on the service products such interest on the loans and
fixed deposites. Considering these factors, bank can distinguish itself very well from
others.
Studying the factors of service quality will help the service providers to better
understand how customers have perceived about the service quality of all the four
banks and how it has impacted on customer satisfaction, retention, loyalty and
commitment. Thus service provider can formulate the strategy according and make
necessary changes in the certain factors of the service quality in order to satisfied the
customer and retain them with the bank as well as make them committed and loyal to
the bank. Almost analogous factors have been extracted in all the four banks except
Conclusions, Major Contributions and Scope of Further Work
211
one factor (Accomplishing of promises) of PNB that depicts unique of that factor.
Therefore, this factor structure of service quality is valid for the public & private
sector banks of India.
The major finding shed the light on the fact that customers of public sector banks are
more satisfied, loyal and committed to the bank. Customer retention is also higher in
public sector bank. Thus, the factor structure of the service quality can help the
private sector players to formulate strategy based on the factors identified and
validated the proposed research model.
Demographics analysis has presented comprehensive picture of the customer profile.
This will help the bank to focus more on certain segment of the customers and offer
them the services focusing more on the factors preferred by them. Lastly based on
the ranking given by the customers, bank can use the service result to formulate or
redesign its policies in order to improve the service quality.
6.3 Limitation of the study :
Although the findings of the study contribute to the body of knowledge, there are certain
limitations of the study as follows:
Banking sector was chosen for the purpose of the study in Gujarat. The study has
focused on the customers of the four major cities of Gujarat and they were from the
four banks – SBI, PNB, ICICI and HDFC and this restricts the generalization of the
study.
An empirical model of the service quality developed in the thesis contains the factors
pertaining to the four banks taken for the purpose of the study. There may be several
other factors of service quality that may have impact on customer satisfaction,
retention, loyalty and commitment and hence this lead to another limitation of the
study.
Respondents’ error may subsist in the study (Malhotra & Das (2005). Respondents’
may not be able to fill out the entire questionnaire due to certain reasons.
As rapid changes are observed in the banking sector and this may led to the change
in the customer’s perception about the service quality of the bank. Shift in the
customer perception also occur due to change in the variables such as age, income
and occupation and hence this research can be replicated in the future.
Conclusions, Major Contributions and Scope of Further Work
212
6.4 Direction for future research :
Four major cities of Gujarat were taken for the study. The service quality model
build with the factors in the thesis can be use to study service quality in the rural
banking.
As generalization was one of the limitations of the study, therefore the similar study
can be imitated in other geographic area of the country at a larger scale.
The study has focused on the general services offered by the bank. Future research
may be conducted in the different types of the banking services such as corporate
banking, international banking, and government banking to see whether the empirical
model of the service quality developed in the study is consistent in the different
services.
Only public sector and private sector banks were taken for the purpose of study. The
service quality model can also be examined in other sectors of banks such as foreign
banks, cooperative banks, scheduled banks etc.
Bibliography
213
CHAPTER–7
BIBLIOGRAPHY
Abdel Fattah Mahmoud Al-Azzam (2015), “The Impact of Service Quality Dimensions on
Customer Satisfaction: A Field Study of Arab Bank in Irbid City, Jordan”, European
Journal of Business and Management, Vol.7, No.15, pp. 45 – 53.
Achen, C. H. (1982), Interpreting and using regression. Beverly Hills:Sage.
Ahmad, R. &Buttle, F. (2002)., Customer retention management : A reflection of theory
and practice, Marketing Intelligence & Planning, 20(3), 149-161.
Aldlaigan, A. &Buttle, F. (2002), “Systra-SQ: a new measure of bank service quality’',
International Journal of Service Industry Management, Vol. 13 No. 4, pp. 362-381.
Allen, N. J. & Meyer, J. P. (1990). The measurement of antecedents of affective,
continuous and normative commitment to the organization. Journal of Occupational
Psychology, 63, 1–18.
Allred, T. A. (2001)., Employee evaluation of service quality at banks and credit union,
The International Journal of Bank Marketing, 19 (4/5), 179-185.
Anand Sharma, Ashish Gupta, Sandeep Kumar Bharti (2014) “Factors Determining
Service Quality Aspects of Banking Sector in India (With Special Reference to Delhi
NCR- A Pilot Study)” Int. J. of Trade and Commerce- IIARTC, Vol. 3, No. 1, pp. 55-62
Andreassen, Tor Wallin (2001), From disgust to delight : Do customer hold a Grudge,
Journal of service research, 4(August) 1 , 39-49.
Anderson, Eugene W, Fornell, Claes, Rust, Ronald T (1997), Customer satisfaction,
productivity and profitability: Difference between Goods & Services. Marketing Science,
16 (Spring) 2, 123-145.
Anderson, E.W. & Sullivan, M.W. (1993). The antecedents and consequences of customer
satisfaction for firms. Marketing Science, 12 (2), 125-143.
Bibliography
214
Anderson, E.W. ,Fornell C., & Lehmann D.R. (1994). Customer Satisfaction, Market
Share & Profitability: Findings from Sweden, Journal of marketing, 58, July, 53 – 66.
Anderson, J.C. and Gerbing, D.W. (1991), “Predicting the performance of measures in a
confirmatory factor analysis with a pre-test assessment of their substantive validities”,
Journal of Applied Psychology, Vol. 76 No. 5, pp. 732-740.
Appiah – Adu, K.(1999). Marketing effectiveness and customer retention in service sector,
The Service Industry Journal, 19(3), 26-34.
Baker , D. A. & Crompton, J. L. (2000), Quality Satisfaction & Behavioral Intentions.
Annals of Tourism Research, 27 (3), 785 – 804.
Banking Sector Developments in India retrieved from
http://www.eSocialSciences.com/data/articles/Document11012007140.3929102.pdf
Banrnes, J. G., &Howlett, D M. (1998), Predictor of equity in relationship between
financial service providers and retail customers, The International Journal of Bank
Marketing, 16(1), 15-23.
Bagozzi, R.P., Youjae, Y. and Phillips, L.W. (1991), “Assessing construct validity in
organisational research”, Administrative Science Quarterly, Vol. 36 No. 3, pp. 421-458.
Beatty, S., Homer, P., &Kahle, L.R. (1988). The involvement-commitment model: Theory
and implications. Journal of Business Research, 16 (2), 149-167.
Beaton, M. & Beaton, D. (1995). Marrying service providers and their clients: A
relationship approach to services management. Journal of Marketing Management, 11, 55-
70.
Becker, T.E. & Billings, R.S. (1993). Profiles of commitment: An empirical test. Journal of
Organizational Behavior, 14, 177-190.
Berry, L.L. (1980) “Services Marketing is Different,” Business, Vol. 30, (May–June), pp.
8-30
Berry, L.L., Parasuraman, A., and Zeithaml, V.A. (1988), “The Service Quality Puzzle,”
Business Horizon, 31(5), 35-43.
Bibliography
215
Bhattacherjee, A (2002), “Individual Trust in Online Firms: Scale Development and Initial
Test”, Journal of Management Information System, 19(1), 211-241.
Bessant, J. (2005). Innovation in professional services. New Directions, 6, 3-4.
Bitner, M. J. (1990). Evaluation of service encounters: The effect of physical surrounding
& employees response. Journal of Marketing, 54, 69 – 82.
Bitner, M.J..&Lojo, H. (1993) ‘A Framework for Analysing Service Operations’, European
Management Journal, 11:3, 271-282.
Bloemer, J. &Oderkerken-Schroder, G. (2003). Antecedents and consequences of affective
commitment. Australasian Marketing Journal, 11(3), 33-43.
Booms, B.H. and Bitner M.J. (1981), “Marketing Strategies and Organisation Structures
for Services Firms”, in Zeithaml V.A. Panasuraman A, and Berry L.L (1985) “Problems
and Strategies in Service Marketing,” Journal of Marketing, Vol., 49, No. 2 pp.33-46.
Boles, J. S. Barksdale, H. C., & Johnson, J. T. (1997), Business relationship: An
examination of effects of buyer- salesperson relationship on customer retention and
willingness to refer and recommend, The Journal of Business & Industrial Marketing,
12(3/4), 253-264.
Bollen, K. A. (1989b). Structural equations with latent variables. New York: Wiley
Brady, M., Cronin, J. and Brand, R. (2002) "Performance-Only Measurement of Service
Quality; A Replication and Extension", Journal of Business Research, Vol. 55, No. 1, pp.
17-31.
Bremmels, B. (1995). Dual commitment – Unique construct of epiphenomenon. Labor
Research, 16(4), 401-422.
Brody, R. P. & S. M. Cunningham. (1968). Personality variables and the consumer
decision process. Journal of Marketing Research, 5 (1), 50-57.
Browne, M. W., &Cudeck, R. (1993). Alternative ways of assessing model fit. In K. A.
Bollen& J. S. Long (Eds.), Testing structural equation models (pp. 136–162). Newbury
Park, CA: Sage Publications.
Bibliography
216
Bowen, J. T., & Chen, S. L. (2001). The relationship between customer loyalty and
customer satisfaction. International Journal of Contemporary Hospitality Management,
13(5), 213-217.
Buttle, F. (1996) "SERVQUAL: Review, Critique, Research Agenda7', European Journal
of Marketing, Vol. 30, No. 1, pp. 8-32.
Buttle, F. & Burton, J. (2002). Does service failure influence customer loyalty? Journal of
consumer behavior, 1(3), 217-227.
Burns, N., & Grove, S. K. (2009). The practice of nursing research�: appraisal, synthesis,
and generation of evidence. St. Louis, Mo: Saunders Elsevier.
Burns, A. & Bush, R. (2010), Marketing Research, 6th edn. Boston: Pearson.
Byrne, B. M. (2006). Structural equation modeling with EQS: Basic concepts, applications,
and programming (2nd ed.). Mahwah, NJ: Erlbaum
Campbell, D.T. & Fiske, D.W. (1959), “Convergent and discriminant validation by the
multitrait-multimethod matrix”, Psychological Bulletin, Vol. 56, No. 1, pp. 81-105.
Campbell, D.T. (1960), “Recommendations for APA Standards Regarding Construct, Trait
and Discriminant Validity,” American Psychologist, 15, 546-53.
Carrillat, F., Jaramillo, F, and Mulki, J. (2007) "The Validity of the SERVQUAL and
SERVPERF Scales", International Journal of Service Industry Management, Vol. 18, No.
5, pp. 472-490.
Cardozo, R.N. (1965). An experimental study of customer effort, expectation, and
satisfaction, Journal of Marketing Research, 2, 244 – 249.
Chen C. T. (2004), “A Study of customer satisfaction and Behavioral Intentions of Service
Quality for Fixed Network Communication – An example of Chunghwa Telecom
Company Kaohsiung.”, Master Dissertation, Yi-Shou University, Kaohsuing, Taiwan.
Child, D. (1990). The essentials of factor analysis, second edition. London: Cassel
Educational Limited.
Churchill, H. (1942). How to measure brand loyalty. Advertising and Selling, 35, 24.
Bibliography
217
Churchill, G.A. & Carol, S., (1982), An investigation into determinants of consumer
satisfaction. Journal of Marketing Research, 19, 491-504.
Cronin, J. and Taylor, S. (1992) "Measuring Service Quality: A Reexamination and
Extension', Journal of Marketing, Vol. 56, No. 3, pp. 55-68.
Cronin, J. and Taylor, S. (1994) "SERVPERF versus SERVQUAL: Reconciling
Performance-Based and Perceptions-Minus-Expectations Measurement of Service
Quality", Journal of Marketing, Vol. 58 , No. 1, pp. 125-131 .
Christopher Lovelock, JochenWirtz&Jayanta Chatterjee, “Service Marketing – People,
Technology, Strategy”, 7th ed, Pearson Education Inc. pp. 355 - 356
Coulthard, L. J. (2004) "Measuring Service Quality: A Review and Critique of Research
Using SERVQUAL", International Journal of Marketing Research, Vol. 46, No. 4, pp.
479-497.
Cooper, D. & Schindler, P. (2008), Business Research Methods, 10th edn, Boston:
McGraw- Hill International Edition.
Cunningham, R.M. (1956), Brand loyalty: what, where, how much? Harvard Business
Review, 34, 116-128.
Day, G.S. (1969). A two-dimensional concept of brand loyalty. Journal of Advertising
Research, 9 (3), 29-35.
Day, R.L. (1977). Extending the concept of Consumer Satisfaction. Advances in Consumer
Research, 4, 149-154.
Dick, A.S., &Basu, K. (1994). Customer loyalty: Towards an integrated conceptual
framework . Journal of the Academy of Marketing Science, 22 (2), 99-113.
Dr. Krishna A. Goyal, Vijay Joshi (2012) "Indian Banking Industry: Challenges And
Opportunities", International Journal of Business Research and Management, Vol. 3, Issue
1, Pg. 18 - 28.
Bibliography
218
EmmahKemuntoMecha, Ogutu Martin and SixtusMomanyiOndieki (2015), “Effectiveness
of Customer Retention Strategies: A Case of Commercial Banks, Kenya”, International
Journal of Business and Management, Vol. 10, No. 10, pp 270 – 275.
Farley, J. U. (1964). Why does brand loyalty vary over products? Journal of Marketing
Research, 1, 9-14.
Fecikova, Ingrid (2004). An index method of satisfaction. TQM magazine. Vol 16 (1), 57-
66.
Fitzsimmons, J. and Fitzsimmons, M. (2006) Service Edition: Operations, Strategy,
Information Technology, Fifth Edition, McGraw-Hill, USA.
Fornell, C. (1992). A National customer satisfaction barometer: The Swedish experience.
Journal of Marketing, 56(1), 6-21.
Fornell, Claes and David F. Larker (1981), "Evaluating Structural Equation Models with
Unobservable Variables and Measurement Error," Journal of Marketing Research, 18
(February), 39-50.
Freeman, F.S. (1965), Theory and Practice of Psychological Testing, New Delhi: Oxford
and IBH Publishing Co., Indian edition.
Freeman, K.D. & Dart, J. (1993). Measuring the perceived quality of professional business
services. Journal of Professional Services Marketing, 9(1), 27-40.
Frow, P. (2007). The meaning of commitment in professional service relationships: a study
of the meaning of commitment used by lawyers and their clients. Journal of Marketing
Management, 23(3/4), 243-265.
Ganesh, J., Arnold, M.J. & Reynolds, K.E. (2000). Understanding the customer base of
service providers: An examination of the differences between switchers and stayers.
Journal of Marketing, 64(3), 65–87.
Garbarino, E. & Johnson, M. (1999). The different roles of satisfaction, trust and
commitment in customer relationships. Journal of Marketing, 63, 70-87.
Bibliography
219
Garver, M.S. and Mentzer, J.T. (1999), “Logistic research methods: employing structural
equation modeling to test for construct validity”, Journal of Business Logistics, Vol. 20
No.1, pp. 33-57.
GhobadianA, ., Speller,S . andJones,M . (1994) "Service Quality: Concepts and Models",
International Journal of Quality & Reliability Management, Vol. 11, No. 9. pp. 43- 66.
Gi-Du Kang and Jeffrey James (2004), “Service quality dimensions: an examination of
Gro¨ nroos’s service quality model”, Managing Service Quality, Volume 14 • Number 4 •
2004 • pp. 266–277 in Emerald Group Publishing Limited
Gittell, J. H. (2002), Relationship between service providers and their impact on
customers, Journal of Service Research, 4(4), 299-311.
Gilbert, G., Veloutsou, C., Goode, M. &Moutinho, L. (2004), “Measuring customer
satisfaction in the fast food industry: a cross-national approach”, Journal of Services
Marketing, Vol. 18 No.5, pp. 371-383.
Gromme, N. (1998), Data processing and analysis, In McDonald, C. and Vangelder, P.
(eds). 4th edition, pp.389-416, Amsterdam: ESOMAR.
Gounaris, S. and Stathakopoulos, V. (2004). Antecedents and consequences of brand
loyalty: An empirical study. Brand Management, 11(4), 283-306.
Gronroos, C. (1982), “Strategic Management and Marketing in the Services Sector,” In
Parasuraman A., Zeithaml V.A. and Berry L.L. (1985).
Gro¨nroos, C. (1984), “A service quality model and its marketing implications”, European
Journal of Marketing, Vol. 18 No. 4, pp. 36-44.
Gronroos, C. (1989) "Service Quality: The Six Criteria of Good Perceived Service
Quality", Review of Business, Vol. 9, No. 3, pp. 10-13.
Gronroos, C. (2000) Service Management and Marketing: a Customer Relationship
Management Approach, John Wiley & Sons, UK.
Bibliography
220
Growth in Banking Sector in India retrieved from
http://stockshastra.moneyworks4me.com/learn/indian-banking-industry-future prospects-
and-sector-overview/ accessed on October 31, 2012.
Ha, C. (1998). The theory of reasoned action applied to customer loyalty. Journal of
Product and Brand Management, 7(1), 51-61.
Hague, P.N. (2004), Market research in practice: a guide to the basics, (Electronic
resource) available at: http://site.ebrary.com/lib/uon/Top?id=10084442&layout=document
Hair J.F, Black W.C., Babin B.J., Anderson R.E. and Tatham R.L. (2006), Multivariate
Data Analysis (6th ed.), Upper Sadle River, New Jersey: Prentice Hall.
Hennig-Thurau, T., Gwinner, K.P. &Gremler, D.D. (2002). Understanding relationship
marketing outcomes: An integration of relational benefits and relationship quality. Journal
of Service Research, 4 (3), 230-247.
Heskett, J. L., Jones, T.O., Loveman, G. W., Sasser, W.E. & Schlesinger, L.A. (1994).
Putting the service profit chain to work. Harvard Business Review, 72, 164-74.
History of Banking Sector in India and types of banks retrieved from
http://shodhganga.inflibnet.ac.in/bitstream/10603/2031/10/10_chapter%201.pdf
Hoffman, K. and Bateson, J. E. (1997) Essentials of Service Marketing, First Edition,
Dryden Press, USA.
Hostage, G.M. (1975), “Quality Control in a Service Business,” Harvard Business Review,
July–August, 98-106.
H.S Sandhu, Naresh Nagpal& Ms. NeetuBala (2011), “ Measuring Life Insurance Service
Quality: An Empirical Assessment of SERVQUAL Instrument”, International Business
Research, Vol. 4, No. 4; October 2011, 176-190.
Huang , M. C. (1998). An empirical study on the model of the relationship value-loyalty
for the banking industry, Master Dissertation, National YunLinUniversit of science &
technology , Yunlin, Taiwan.
Bibliography
221
Hu, L. &Bentler, P. M. (1999). Cutoff criteria for fit indexes in covariance structure
analysis: Conventional criteria versus new alternatives. Structural Equation Modeling,
6(1), 1-55.
IliasSantouridis and Panagiotis Trivellas; Investigating the impact of service quality and
customer satisfaction on customer loyalty in mobile telephony in Greece; The TQM
Journal; Vol. 22 No. 3, 2010 ; pp. 330-343 ; Emerald Group Publishing Limited 1754-2731
Lassar, W., Manolis, C., & Winsor, R. (2000), Service quality perspectives and satisfaction
in private banking, The International Journal of Bank Marketing, 18(4).
Jacoby, J. (1971). Brand loyalty: A conceptual definition. Proceedings of the 89th Annual
Convention of the American Psychological Association, 6, 655-656.
Japan Efficiency Association (1994). The tactics customer satisfaction measures, China
Productivity Centre, Taipei, 13.
Jaros, S. J., Jermier, J. M., Koehler, J. W. &Sincich, T. (1993). Effects of continuance,
affective, and moral commitment on the withdrawal process: An evaluation of eight
structural equation models. Academy of Management Journal 36(5), 951–955.
Jones, Henry and Fraquhar (2003). Contact management & customer loyalty. Journal of
financial services marketing 8 (August) 1, 71-78.
Jones, Michael A., Taylor, Valarie A, Becherer, Richard C., Halstead and Diane (2003),
The impact of instruction understanding on satisfaction and switching intentions. Journal
of customer satisfaction, dissatisfaction and complaining behavior, 10-18.
Jones, T. O. &Sasser,W. E. Jr. (1995). Why satisfied customers defect. Harvard Business
Review, November- December, 88-99.
Kang, G. and James, J. (2004) "Service Quality Dimensions: An Examination of
Gronroos's Service Quality Model", Managing Service Quality, Vol. 14, No. 4,266-277.
Kaiser, H.F. and Rice, J. (1974), “Little Jiffy Mark IV”, Educational and Psychological
Measurements, Vol. 34 No. 1, pp. 111-17.
Bibliography
222
Kinnear, P. & Gray, C. (2010), PASW 17 Statistics Made Simple, New York: Pyschology
Press.
KingshukAdhikari and MounitaNath (2014), “Service Quality and Customer Satisfaction
in Commercial Banks: An Empirical Study”, A Journal of Humanities & Social Science,
Volume-II, Issue-III, pp. 115 – 124.
Kotler, P. (1991), Marketing Management: Analysis, Planning, Implementation & Control
(7th ed.). New York : Prentice – Hall.
KoushikiChoudhury , (2013) "Service quality and customers’ purchase intentions: an
empirical study of the Indian banking sector", International Journal of Bank Marketing,
Vol. 31 Iss: 7, pp.529 – 543
KoushikiChoudhury , (2014) "Service quality and word of mouth: a study of the banking
sector", International Journal of Bank Marketing, Vol. 32 Iss: 7, pp.612 - 627
Kuo, T. P. (1999). The study of consumer satisfaction measurement model of service
industry, Unpublished master dissertation, National Sun Yet-Sen University, Kaohsiung,
Taiwan.
Lehtinen, J.R. and lehtinen, U. (1982), “Service quality: a study of quality dimensions”,
unpublished Working Paper, Service Management Institute, Helsinki.
Lehtinen, U. and Lehtinen, J. (1991) "Two Approaches to Service Quality Dimensions",
The Service Industrial Journal, Vol. 11. No. 3, pp. 287-303.
Levitt, T. (1981), “Marketing Intangible Products and Product Intangibles,” Harvard
Business Review, May–June, pp. 94- 102.
Lewis, R.C. and Booms, B.H. (1983), “The Marketing Aspect of Service Quality” in
Lewis, B.R. (1981) “Service Quality: An International Comparison of Bank Customers
Expectations and Perceptions,” Journal of Marketing Management, Vo. 7, pp. 47-62.
Madu, C.N. and Madu, A.A. (2002), “Dimensions of e-quality”, International Journal of
Quality & Reliability Management, Vol. 19 No. 3, pp. 246-58.
Bibliography
223
Malhotra and Dash (2009), “Marketing Research – An Applied Orientation”, 5th Edition,
Pearson Education Inc.
Maister, D. (1997), True professionalism, New York: The Free Press.
Maslow, A.H. (1943). A theory of human motivation. Psychological Review, 50, 370-396
Meyer, J. P. &Herscovitch, L. (2001). Commitment in the workplace: Toward a general
model. Human Resource Management Review. 11(3), 299–326.
Meyer, J. P. & Allen, N.J. (1997), Commitment in the workplace: Theory, research and
application, London: Sage.
Miller, D. C., &Salkind, N. J. (2002). Handbook of Research Design and Social
Measurement. SAGE.
Moira, C. (1997), Modeling the impact of customer-employee relationship on customer
retention rates in a major UK retail bank, Management Decision, 35(4), 293-301.
Monica Bedi (2010), An integrated framework for service quality, customer satisfaction
and behavioral responses in Indian banking industry— a comparison of public and private
sector banks, Journal of Services Research, Volume 10, Number 1.
Morgan, R. M., & Hunt, S. D. (1994). The commitment-trust theory of relationship
Marketing. Journal of Marketing, 58(2), 20-38.
Morrow, P.C. (1983), Concept redundancy in organizational research: The case of work
commitment, Academy of Management Review, 8(3), 486-500.
MohD Al-Hawari (2011), “Automated service quality as a predictor of customers'
commitment: A practical study within the UAE retail banking context”, Asia Pacific
Journal of Marketing and Logistics, Vol. 23 (3), pp. 346 – 366.
Msoka Caroline M and Msoka Elizabeth M (2014), “Determinants of Customer Retention
in Commercial Banks in Tanzania”, Journal of Finance and Bank Management, Vol. 2, No.
1, pp. 09-30
Muller, Wolfgang (1991), “Gaining competitive advantage through customer satisfaction”,
European Management Journal, 9 (2), June, 201 – 211.
Bibliography
224
Mushtaq A Bhat ; SERVICE QUALITY PERCEPTIONS IN BANKS: A
COMPARATIVE ANALYSIS ; VISION—The Journal of Business Perspective l Vol. 9 l
No. 1 l January–March 2005
Mushtaq A. Bhat; CORELATES OF SERVICE QUALITY IN BANKS: AN EMPIRICAL
INVESTIGATION , Journal of Services Research, Volume 5, Number 1 (April-September,
2005)
Muhammed S. Alnsour (2013), “How to Retain a Bank Customer: A Qualitative Study of
Jordanian Banks Relational Strategies”, International Journal of Marketing Studies; Vol. 5,
No. 4, pp. 123 – 131.
Nunnally, J.C. (1978), Psychometric Theory, 2nd ed., McGraw-Hill Book Company, New
York, NY.
Oliver , R. L. (1981). Measurement and evaluation of satisfaction process in retail setting,
Journal of Retailing, 57 (3), 18-48.
Oliver , R. L. (1997). Satisfaction : A behavioral perspective on the consumer. Boston:
McGraw –Hill.
Oliver, R.L. (1999), “Whence consumer loyalty?”, Journal of Marketing, Vol. 63 No. 5,
pp. 33-44.
Ostrom, A. &Iacobuci (1995), Consumers trade-off & evaluation of services. Journal of
Marketing, 59, 17-28.
Parasuraman, A., Berry, L. and Zeithaml, V. (1985), “A Conceptual Model of Service
Quality and Its Implications for Future Research,” Journal of Marketing, Vol. 49, Fall, 41-
50.
Parasuraman, A., Berry, L.L. and Zeithaml, V.A. (1988), “SERVQUAL: A multiple-item
scale for measuring consumer perceptions of service quality”, Journal of Retailing, Vol. 64
No. 1,pp. 12-40.
Parasuraman, A., Berry, L. and Zeithaml, V.A. (1990), “Guidelines for Conducting Service
Quality Research”, Marketing Research (December), 34-44.
Bibliography
225
Parasuraman, A., Berry, L. and Zeithaml, V. (1993) ‘Research Note: More On Improving
SQ Measurement’, Journal Of Retailing, 69: Spring, 140-147.
Parasuraman A., Zeithaml, V. and Berry, L. (1994) "Alternative Scales for Measuring
Service Quality: A Comparative Assessment Based on Psychometric and Diagnostic
Criteria”, Journal of Retailing, Vol. 70, No. 3, pp. 201-230.
Parahoo, K. (2006). Nursing research�: principles, process, and issues. Basingstoke,
Hampshire, [England]; New York: Palgrave Macmillan.
Pallant, J. (2007), SPSS Survival manual: A Step by Step Guide to Data Analysis using
SPSS
for Windows, 3rd edn. Berkshire: McGraw Hill: Open University Press.
Pedersen, E. P. &Nysveen, H. (2001), Shopbot banking: An exploratory study of customer
loyalty effects. , The International Journal of Bank Marketing, 19 (4/5), 146-155.
Peter Rose (1998) "Global Banking Industry", Information & Management, Vol. 34, Pg
24–41
Peter, J P (1981), “Construct Validity: A Review of Basic Issues and Marketing Practices”,
Journal of Marketing Research, 18(2), 133-145.
Polit, D. F., & Beck, C. T. (2012). Nursing research�: generating and assessing evidence
for nursing practice. Philadelphia: Wolters Kluwer Health/Lippincott Williams & Wilkins.
Polit, D. F., Hungler, B. P., & Beck, C. T. (2001). Essentials of nursing research�:
methods, appraisal and utilization. Philadelphia: Lippincott.
Porter, L., Steers, R., Mowday, R. &Boulian, P. (1974). Organizational commitment, job
satisfaction and turnover among psychiatric technicians. Journal of Applied Psychology,
59(5), 603-609
Prayag, G. (2007), “Assessing international tourists’ perceptions of service quality at Air
Mauritius”, International Journal of Quality & Reliability Management, Vol. 24 No. 5.
Bibliography
226
Ranaweera, Chatura, Praghu, Jaideep (2003). On the relative importance of customer
satisfaction and trust as a determinants of Customer retention and positive word of mouth.
Journal of Targating, measurement and analysis for Marketing 12 (September) 1, 82-90.
RajendraNargudkar (2010), “Marketing Research”, 3rd Edition, Tata Mcgraw Hill
Education Pvt. Ltd.
RahmatMadjid (2015), “Explaining Customer Satisfaction with Experience, Customer
Trust and Commitment in Syariah Banks Kendari City”, The International Journal Of
Engineering And Science, Vol. 4, Issue 4, pp. 51-59.
Reichheld F.F and Sasser W.E. (1990), “A model of customer satisfaction with service
encounter involving failure & recovery”, Journal of Marketing Research, 36 (8), 356 –
372.
Reichheld, F. F. (1996), The loyalty effect, Boston, MA; Harvard Business School Press.
Reichers, A.E. (1985). A review and reconceptualisation of organizational commitment.
Academy of Management Review, 10, 465-476.
Reis, H. T., & Judd, C. M. (2000). Handbook of Research Methods in Social and
Personality Psychology. Cambridge University Press.
Richard Taylor. (1990), “ Interpretation of the Correlation Coefficient: A Basic Review”,
Journal of Diagnostic Medical Sonography, Vol.6 No.1, pp. 35-39.
Richard Lavin & David Rubin, (1998), “Statistics for Management”, 7th Edition, Pearson
Education Inc., pp.302.
Rizwan Ali, GaoLeifu and Ramiz Rehman (2014), “Factors Influencing Customer Loyalty
of Banking Industry: Empirical Evidence from Pakistan”, International Journal of Learning
& Development, Vol. 4, No. 2, pp. 9 – 26.
Santos, J. (2003), “E-service quality: a model of virtual service quality dimensions”,
Managing Service Quality, Vol. 13 No. 3, pp. 233-46.
Saurabh Kumar Choudhary (2012) "Trends in the Global Banking Industry : Key business
and technology trends and their implications", Capgemini, 2012 Banking Edition.
Bibliography
227
Saunders, M., Lewis, P. & Thornhill, A. (2007), Research Methods for Business students,
4thedn. London: Prentice Hall.
Saunders, M., Lewis, P. & Thornhill, A. (2009), Research Methods for Business students,
5thedn. Essex: Pearson Education Limited
Shankar, V., Smith, A. K., &Rangaswamy, A. (2003). Customer satisfaction and loyalty in
online and offline environments. International Journal of Research in Marketing, 20, 153-
175.
Sheth, J.N., & Sobel, T. (2000). Clients for life - how great professionals develop
breakthrough relationships, New York: Simon & Schuster.
ShirshenduGanguli, 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
Steyn, C. (2000). Making customer loyalty real: Lessons from leading manufacturers.
Management Today, 12(2), 14–22
Strauss, B. &Mang P., (1999), Culture shocks’ in inter-cultural service encounters, Journal
of Service Marketing, 13 (3/4), 329-346.
Sulaiman, &Balakrishnan, (2011), Retailing trend and retailers perception- A study on
pharma industry, International Journal of Information Technology and Management
Research, 3 (2), July-December 2011, pp. 101-107.
Syed Usman Ali Gillani and Abdul Ghafoor Awan (2014), “Customer Loyalty in Financial
Sector: A case study of Commercial Banks in Southern Punjab”, International Journal of
Accounting and Financial Reporting, Vol. 4, No. 2, pp 587 – 606.
Takeuchi, H. and Quelch, J.A. (1983), “Quality is more than Making a Good Product,”
Harvard Business Review, July– August, pp. 139-145.
Tax, S. & Brown W.(1988), Recovering and Learning from Service Failure, Sloan
Management Review, 40, 75-88.
Bibliography
228
Vinita Kaura, (2013) "Antecedents of customer satisfaction: a study of Indian public and
private sector banks", International Journal of Bank Marketing, Vol. 31 Iss: 3, pp.167 –
186
Vinita Kaura, Chalasani S., Sourabh Sharma (2014) “Impact of Service Quality, Service
Convenience and Perceived Price Fairness on Customer Satisfaction in Indian Retail
Banking Sector”, Management and Labour Studies, Vol. 39 no. 2, pp 127-139,
V. Surekha, S. Anitha& S. Kaleeswari, (2015), “Impact of e - banking on service quality
of public and private sector banks”, International Journal in Commerce, IT & Social
Sciences, Vol.2 Issue-2, pp. 59 – 64.
Wallace, J.E. (1995). Organizational and professional commitment in professional and
nonprofessional organisations. Administrative Science Quarterly, 40, 228-255.
Weiss, A.M., & Kurland, N. (1997). Holding distribution channel relationships together:
The role of transaction-specific assets and length of prior relationships. Organization
Science, 8, 612-623.
Xu, Y.Z.; Goedegebuure, R. & Van der Heijden, B. (2006). Customer perception, customer
satisfaction, and customer loyalty within Chinese securities business: Towards a mediation
model for predicting customer behavior. Journal of Relationship Marketing, 5(4), 79-104.
Yavas, U. &Yasin M. (2001), Enhancing organizational performance in Banks: A
systematic approach, The Journal of Service Marketing, 15(6/7), 444-454.
Yau, O., McFetridge, P., Chow, R., Lee, J., Sin, L., &Tse, A. (2000). Is relationship
marketing for everyone. European Journal of Marketing, 34(9/10), 1111–1127.
Yu-TeTu, Wan-Chen Liu, Yu-Yi Chang (2014), “Customer Commitment as a Mediating
Variable between Corporate Brand Image and Customer Loyalty”, Journal of Education
and Vocational Research Vol. 5, No. 1, pp. 17-27.
Zahorik, A. J. & Rust, R.T. (1992). Modeling the impact of service quality on profitability:
A review. Advances in service marketing and management 1 (Greenwich, Ct: JAI Press),
247-76.
Bibliography
229
Zeithaml, V.A., Parasuraman, A. and Barry L.L. (1985) ‘Problems and Strategies in
Services Marketing’ Journal of Marketing, 49: Spring, 33-46.
Zeithaml, V.A., Parasuraman, A. and Berry, L.L. (1996) ‘The Behavioural Consequences
of Service Quality’, Journal Of Marketing, April, 31-46.
Zeithaml V.A. and Bitner M.J. (1996), Services Marketing , New York: McGraw-Hill.
Inc.
Zeithaml V.A. and Bitner M.J. (2000), Services Marketing (2nd ed.). New York: McGraw-
Hill. Inc.
Zeithaml, V. and Bitner, M. J. (2003) Service Marketing: Integrated Customer Focus
across the Firm, Third Edition, McGraw-Hill, USA.
Zemke, Ron(2002). The customer service revolution . Training 39 (July) 7,44-48.
Zikmund, W. (2003), Business Research Method, 7th edn. London: Thomson South-
Western.
Zikmund, W. &Babin, B. (2010), Exploring Marketing Research, 10th edn. United
Kingdom: South-Western Cengage Learning.
Bibliography
230
List of Publication
1. PanditRicha&DevinaUpadhyay, (January 2012), “Technology application in
banking”, Sankalpa- Journal of management and research, pg.no.64.
2. PanditRicha, UpadhyayDevina and Shah Priyanka, (January 2012), “Consumer
evaluation of OTC brand extension”, Epoch Strategies for Marketing, Family
Business and Entrepreneurship, pg.no. 230-246.
3. PanditRicha, UpadhyayDevina and Shah Priyanka, (January 2012), “Measuring
service quality”, Epoch Strategies for Marketing, Family Business and
Entrepreneurship, pg.no.317-331.
4. PanditRicha&UpadhyayDevina, (Aug 2012), “Measuring service quality of multi
cuisine restaurant in Ahmedabad city”, Indian journal of research – paripex, issue 8,
volume 1, pg. no. 91-92.
5. PanditRicha&DevinaUpadhyay, (September-2012),“Consumer perception towards
3G mobile technologies”, Global research analysis, volume 1, issue 4, pg. no. 43-44.
6. PanditRicha&Avani Shah, (October-2012), “Consumer Preference towards Retail
Banking Products”, Global Research Analysis, volume 1, issue 5, pg.no.122-123
7. Dr. Ram Kumar Balyan&PanditRicha, (August – 2013),“Measuring service quality
in retail banking published”, Indian Journal of Applied Research, volume 1 , Issue –
8, pg.no.381-382
8. PanditRicha, and Ganatra Rajesh, (Sep 2013),“e-User's Perspective on selection of
Internet Banking in Ahmedabad City”,Prothsahan,volume I, number I, pg.no. 51-56.
9. Dr. PolonaTominc&PanditRicha, (January - 2014), “Study of The Impact of Service
Quality on Consumer Behavior in Internet Banking Services”, Indian Journal of
Research, Vol.3, issue – 1, pg. No.131-132.
10. Upadhyay, Devina and Pandit, Richa,(January 2014),“Consumer’s lifestyle
segmentation approach towards bottled mineral water”, NISHKARSH –The Journal
of management and technology, volume I, number I, pg.no. 46-54.
11. Dr. Ram Kumar Balyan&PanditRicha, (October 2014), “Measuring Service Quality
of Indian Railway”, International Journal of Scientific Research, Vol. 3 , Issue – 1,
pg. No. 237- 238, ISSN – 2277 – 8179.
12. RichaPandit& Dr. Ram Kumar Balyan (July 2015), “To study Service Quality of Top
Public & Private Sector Banks in India”, International Journal of Scientific Research,
Vol.4, Issue – 7, Pg. No.739-741, ISSN – 2277 - 8179
Appendix
231
Appendix - Questionnaire
Dear Sir/ Madam,
I am Ms.RichaPandit, pursuing PhD from Gujarat Technological University. I am
conducting research on studying the Impact of Service Quality on Customer Satisfaction,
Retention, Loyalty and Commitment in the Indian Banking Sector. It should take only a
small amount of time to complete the questionnaire. Your response and participation form
a critical part of the success of my research. I would be very grateful if you could take
some time to fill the questionnaire. I would like to reassure you that your response will be
kept strictly confidential and will only be used for the purposes of this academic research.
DIRECTION: Top two NSE public sector banks: SBI & PNB and Top two NSE private
sector bank: ICICI & HDFC are taken for the purpose of the research. The statements
presented below describe SERVICE QUALITY, SATISFACTION, RETENTION,
LOYALTY and COMMITMENT in the bank.
There are five numbers (1: Strongly Disagree, 2: Disagree, 3: Neither Agree nor Disagree,
4: Agree, 5: Strongly Agree). The higher the number means the more I agree with the
statement. The lower the number means the more I disagree with the statement. If you feel
your agreement is between these two extremes, please pick any answer from within the
scale.
1. You have account in which bank? (Select any one bank & give your response in
the context of that bank only)
SBI PNB ICICI HDFC
2. Which type of the account you have in your bank. (Select any one option)
Current Account Savings Account
3. Which kind of service is more frequently used by you? (Multiple choice)
Draft / Cheque Cash credit Locker Credit card
Internet Banking Mobile Banking Fixed Deposit
Recurring Deposit SMS Alert NEFT / RTGS
Pay order Debit Card
4. Reasons for using service of particular bank. (Multiple choice)
Proximity (Nearness) Better Service Trustworthiness
Personal Relation Brand Name Personal association
Appendix
232
Service Quality 1
Strongly Disagree
2 Disagree
3 Neither Agree Nor
Disagree
4 Agree
5 Strongly
Agree
Bank’s physical facility is visually attractive. Bank is having modern looking and comfortable waiting area.
Banks have TV & music system in the waiting area that reduces anxiety while waiting.
Token system at the bank makes waiting line more organize.
Cleanliness is properly maintained at the bank. Materials like pamphlets, brochure provides detail information about bank’s various services.
Materials at the bank are visually appealing. Employees of the bank are very attentive & provide individual attention.
Employees of the bank have knowledge about the all the different kind services offered by the bank.
Employees of the bank are having high level of the competency.
Employees of the bank are very customer friendly & listen to me very carefully.
Employees of the bank understand your need. Employees of the bank are never too busy to respond to customer ‘s request.
Employees of the bank provide me prompt service.
Every employees of the bank are easily accessible by the customer.
When bank promises to do something, they do it in certain time.
When customers have any problem, bank shows sincere interest in solving it.
Bank performs the service right the first time. Bank provides the service at the time they promise to do so.
Bank insists on the error free record. I have selected bank because bank is having strong brand name in the market.
I believe that bank is ethically managed by the management.
Products of the bank like Fixed Deposit, Certificates are of a good quality.
Bank maintain confidentially while sending me online user id and password.
Bank offers locker facility at reasonable price with no hidden charges.
Bank is having strong security system in the bank premises.
Bank offers me variety of the financial product like mutual fund, insurance policies other than traditional banking product.
Bank always ensure proper functioning of ATM machine.
Bank never faces shortage of locker at every branch.
Appendix
233
Service Quality 1
Strongly Disagree
2 Disagree
3 Neither Agree Nor
Disagree
4 Agree
5 Strongly
Agree
Bank is having well managed web policies for secure online banking.
Bank always maintain transparency while communicating prices to me.
There are no hidden charges taken by bank while servicing me.
Bank is having convenient operating hours. Bank offers me 24*7 customer care services. Bank strictly follows RBI regulations & also informs me about the same.
I feel secure while using bank’s technical services such as NEFT, RTGS, Online Banking Etc.
Bank does regular upgradation in its technology.
Satisfaction
1 Strongly Disagree
2 Disagree
3 Neither Agree Nor
Disagree
4 Agree
5 Strongly
Agree
I think I did a right thing that I selected my bank.
Bank always exceed in my expectation while offering me the services.
Bank’s service exactly meets my requirement. I feel good that branch manager knows me personally.
I feel happy after every visit of the bank. Bank is having strong mechanism in case of service failure.
Bank offers me compensation in case of service failure.
Bank apologizes if they fail to serve me on time.
Bank always takes care of my special requirement.
Bank is having many no. of the branches. Location of bank is very convenient to commute.
Appendix
234
Retention
1 Strongly Disagree
2 Disagree
3 Neither Agree Nor
Disagree
4 Agree
5 Strongly
Agree
I say positive things about the bank to other people as I would like to have long-term association with the bank.
As bank is having attractive rewards system due to which I will stay with the bank for longer period of time.
I consider bank as my first choice whenever I purchase banking service.
I will purchase more services of the bank in the future.
Even if bank increases its price, I will continue with the bank in future.
I am ready to continue with the bank despite of the lucrative offers of the competitors due to the benefits I am receiving from the bank.
I will complain to the bank employees if I experience any problem in the bank service but I will not switch to the other bank.
I will continue with the bank due to high integrity maintain by the bank.
Loyalty
1 Strongly Disagree
2 Disagree
3 Neither Agree Nor
Disagree
4 Agree
5 Strongly
Agree
I always recommend my bank to others. I get best value for money from my bank. I am never interested in the various service offerings of the competitors.
I would not prefer to switch to the other bank.
I am having personal emotions attached with the bank.
Overall I am very happy with my bank. I consider myself loyal to the bank.
Commitment
1 Strongly Disagree
2 Disagree
3 Neither Agree Nor
Disagree
4 Agree
5 Strongly
Agree
It is unethical for me to switch to the other bank. It means lot to me to belong to the bank. I have interpersonal relationship with the bank due the customization offered to me.
There are few sacrifice that I will have to make if I switch to the other bank.
I feel proud of being associated with the bank. Strong sense obligation stops me to switch to the other bank.
I feel I owe a great deal to the bank.
Appendix
235
Demographic Detail:
1. Name: ________________
2. Gender : ( ) Male ( ) Female
3. Age: ( ) 18-24 ; ( ) 25-34 ( ) 35-44 ( ) 45-55 ( ) 55 – 65 ( ) Over 65
4. Education : ( ) Secondary school ( ) Higher Secondary school ( ) Graduate degree
( ) Postgraduate degree ( ) Professional qualifications
5. Income in Rs.: ( ) 0 - 10000 ( ) 10000 – 20000 ( ) 20000 – 30000 ( ) 30000 – 40000
( ) 40000 – 50000 ( ) above 50000
6. Occupation: ( ) Businessman ( ) Professional ( ) Govt. Service
( ) Private Service ( ) Housewife ( ) Student ( ) Retired