original research presentation

Assessing the impact of Core Banking &

Service Quality On Customer Satisfaction

In CBE (Bishoftu Branch)

By:

Endalkachew Abebe

Background of the Study

Banking industry is marked by aggressive competition and ever-changing customer demands.

As a result, banks need to adopt themselves to the changing environment.

the growth in ICT made the world banking industry enter into new phenomena.

Application of ICT is a recent phenomena in Ethi. Many banks use different ICT like ATM, Core Banking,

Mobile Banking, and etc… that improve the service quality in order to increase customer satisfaction.

Contd… Core Banking is an integrated application that

supports real time multi-Banking and Multi-Channel strategies

It enables customers to be a customer of the bank rather than being a customer of a particular branch

enable banks to strengthen and extend their relations with credit card providers

customers will enjoy reduced waiting time and a greater choice of banking channels and services

currently there are 13 banks who have acquired CORE banking application in Eth.

Contd…

Berry et al., (1990), defined service quality as the

discrepancy between customers’ expectations or

desire and their perceptions.”

Service quality is not objectively measured

according to some technical standards but is

subjectively felt by customers and measured

relative to customer-determined standards

Contd…

Service quality is “more difficult for consumers to evaluate than product quality; this is due to a lack of tangible evidence associated with the service”

According to Philip Kotler (2005), customer satisfaction is a person's judgments of a product's perceived performance (or outcome) in relationship to expectations.

Organizational Background

established in 1942 Pioneer to introduce modern service first bank to introduce ATM in Ethiopia has more than 4 million account holdershas12,800 talented and committed

employeesis the leading African bank with assets of

Birr 155 billion as of June 30th 2012

Statements of the Problem

Satisfying customers is the major mission.As customers are satisfied - organizations

achieves higher sales, profit, market share , gain loyalty and vice versa

Nevertheless, banks in Ethiopia have little care about their customers. They use more obsolete and traditional technologies that cause dissatisfaction

Contd…

This is also true for CBEThough CBE has been providing many kinds

of banking services since its establishment in 1942, it couldn’t go further in satisfying its customers until the last decade.

The bank applied core-banking technology in 2004 E.c to integrate the services delivered in its all branch banks and to improve the quality of its services.

Contd…

The application of this technology is believed to have many contributions for the bank.

The purpose of this study was to examine the impact of core banking and service quality on customer satisfaction.

Significance of the study

important to the bank to assess whether its application of core banking service enhance the level of customer satisfaction and identifies the position of service quality at the bank.

Identifies issues related to the application of core banking and service quality and thus provide feedback to managers.

Contd...

Result of this research project can be used as a base point for further studies in the related issues.

Objectives of the study

1. General objective To assess the impact of Core Banking

and service quality on Customer Satisfaction in Commercial Bank of

Ethiopia Bishoftu Branch.

Contd…2. Specific objectives To assess the changes that comes after the

application of core banking service To identify the impact of core banking on

customer satisfaction in the banks To identify the impact of service quality on

customer satisfaction in the banks To analyze the customer satisfaction level in CBE To provide some recommendation for the bank

Research questions

What are the changes that have come after the application of core banking service?

How satisfied are customers with the application of core banking service in CBE Bishoftu branch?

How satisfied customers are with service quality in CBE Bishoftu branch?

What is the level of customer satisfaction in CBE Bishoftu branch?

What must be done to further improve the services in CBE Bishoftu branch?

Scope of the study

Delimited to the changes that come after the introduction of core banking in the bank.

the project focus area is only CBE Bishoftu branch.

Limitation of the study

Not be considered as a representative of the whole service quality of CBE; that is the generalizability of the finding and the conclusion drawn will be limited to CBE Bishoftu branch.

Moreover, since this project is designed to be completed in four months time, it may not present detailed data to the intended level.

Conceptual framework for the impact of core banking and service quality on customer

satisfaction 

}→Customer

satisfaction

Core banking

Reliability

Assurance

Responsiveness

Empathy

Tangibles

Research methodology

A. Research design Descriptive-correlational form of research

design to provide solutions to the research problems

It involves gathering data that describe events and then organizes, tabulates, depicts, and describes the data collection.

A. Primary data information gathered from customers of the bank Questionnaire that have both open end and

closed end question were prepared and delivered to customers

B. Secondary Data information gathered from websites, books, and

journals, periodicals released by the bank and articles etc.

B. Types of data

C. Population of the study

current account holder =5000 saving account holder=25,00

Sub total=30,000all one time customers

D. Sample and sampling techniques

probability -stratified sampling techniques.proportion allocation method was used to

determine the sample sizen0=n*p0/N,

Contd…Based on the above formula the researcher

took a sample of20 customer from c/a =5000

100 customer from s/a=25,000

Sub total=30,000=120

all one time customers=average customer per day=1000 customer (i.e. using 10 percent of 1000 customer per day) =100

total sample size= 220 customers.

E. Method of data collection

self-administered questionnaire

F. Reliability test a questionnaire of 25 respondents was taken and

Cronbach alpha has been employed to evaluate the reliability scale of construct and dimension of each construct. Reliability scale of the overall service quality was 0.842.this means that it has high reliability

G. Method of data analysis

Descriptive statistics- Frequency, Percentage, Mean, Standard deviation

Inferential statistics-correlation and regression

analysis of data was carried out using SPSS version 20.0.

Data Analysis

Two Hundred Twenty questionnaires (220) were distributed to the respondents and out of these 210 of them were collected with a response rate of 95.5 percent.

However, only 200 responses were valid with complete answers.

Background information of Respondents

41.5 %

58.5 %39 %

33 %

18 %

10 %

28.

5 %

25 %

45 %

1.5

%

1.5 %

3.5 %

15.5 %

79.5 %

Mean & Standard deviation result

Customer satisfaction

Assurance Pearson CorrelationSig. (2-tailed) N

.877**.000200

Responsiveness Pearson CorrelationSig. (2-tailed) N

.349**.000200

Empathy Pearson CorrelationSig. (2-tailed)N

.867**.000200

Tangibility Pearson CorrelationSig. (2-tailed)N

.715**.000200

Reliability Pearson CorrelationSig. (2-tailed)N

.850**.000200

Core banking Pearson CorrelationSig. (2-tailed)N

.737**.000200

Pearson correlation

Correlation is significant at the 0.01 level (2-tailed)

Regression Analysis

Regression model for core banking

Model R R2 Adjusted R Square Std. Error of the Est.

1 .737a .543 .541 .296

Regression model for service quality model

Impact of service quality & core banking on customer satisfaction

1. Impact of core banking on customer satisfaction  

Dependent Variable: customer satisfaction Source: own survey, 2013

Model Unstandardized Coefficients

Standardized Coefficients

T Sig.

(Constant)Core

banking

B Std. Error Beta

1.239.719

.202

.047.737 6.143

15.337.000.000

2. Impact of service quality on customer satisfaction

Model Unstandardized Coefficients

Standardized Coefficients

T Sig.

B Std. Error Beta

(Constant) .110 .117 .936 .351

Reliability .311 .042 .325 7.425 .000

Assurance .437 .053 .459 8.177 .000

responsiveness -.004 .021 -.006 -.202 .840

Empathy .300 .057 .302 5.275 .000

Tangibles -.072 .043 -.084 -1.687 .093

Dependent Variable: customer satisfactionSource: own survey, 2013

Analysis of open ended question

Majority of the respondent states their opinion regarding core banking service. From their suggestion it can be inferred that network problem is the big issues.

It is a major obstacle in the check clearing operations, quick transfer of fund, cash withdrawal and etc.

Temporary failures in core banking services are not corrected immediately.

Finding, Conclusion and Recommendations

1. Discussion of findings Majority (58.5 percent) are male, Majority (39 percent) aged in the range of

18-30 years, Majority (45 percent) are degree holders,& Majority (79.5 percent) of the respondents

visits the bank once in a month.

Contd…The results of the descriptive statistical

analysiscustomers were most satisfied with the

assurance (Mean=4.34) followed by reliability (Mean=4.32), empathy (Mean=4.29) and tangibility (Mean=4.26)

customers were less satisfied with responsiveness (Mean=3.83)

customers are satisfied with the application of core banking (Mean=4.28)

Correlation result

there is a positive and sig. r/s b/n: Ass. and customer satisfaction(.877**), Resp. customer satisfaction(.349**) and Emp. and customer satisfaction(.867**),

Tan. and customer satisfaction(.715**), Rel. and customer satisfaction(.850**), Core banking and customer satisfaction(.737**).

Correlation is significant at the 0.01 level (2-tailed)

Contd…

Highest relationship Ass. and customer satisfaction (.877**),

Lowest relationship Resp. and customer satisfaction (.349**)

Regression result

Reliability has a positive and significant effect on customer satisfaction

Assurance has a positive and significant effect on customer satisfaction

Responsiveness has a negative & insignificant effect on customer satisfaction.

Contd…

empathy has a positive and significant effect on customer satisfaction

tangibility has a negative and insignificant effect on customer satisfaction

core banking has a positive and significant effect on customer satisfaction

Overall regression results

Coefficient of determination-R2 is the measure of proportion of the variance of dependent variable about its mean that is explained by the independent or predictor variables

The independent variables (ser. Qual.) accounted for 87.9 percent of the variance in customer satisfaction (R2 = 0.879)

The independent variable (core banking) accounted for 54.3 percent of the variance in customer satisfaction (r2 =0.543)

Conclusion

customers of bank were satisfied by core banking and the five service quality dimensions

customers were most satisfied with the assurance dimensions of service quality

customers were less satisfied by responsiveness dimensions of service quality

Contd…

correlation result shows positive and significant relation ship between core banking and customer satisfactionall service quality dimensions and

customer satisfaction

Contd…Regression results shows that

Reliability , Assurance and Empathy

have positive and significant impact

on customer satisfactionTangibility and Responsiveness has no

positive and significant impact on customer satisfaction

core banking has positive and significant relationship with customer satisfaction

Recommendations

Reliability The bank managers should enhance reliability on

the bank by:fulfilling the service as promised, performing the service exactly at the first

time, showing a keen interest in solving

customers problems, providing the service at the promised

time and by insisting on error free record.

Contd… Empathy

One way of addressing this could be by:

treating customer with great respect,

giving individual attention to customers,

serving customers based on their specific

needs and treating customers in a friendly

manner

Contd…

The bank should create some mechanism to minimize the network problem or to find other techniques that unstop the service at the time of disconnection of the network.

Thank

you