chapter vii conclusion -...

239

CHAPTER VII

CONCLUSION

7.1 INTRODUCTION

The concluding chapter presents a summary of the research work

undertaken. A comprehensive narration of context of the research, the problem,

and the research question is provided. Descriptions of how the research was

constructed and operationalized are also presented. A summary of the findings

and its implications are also provided. This chapter also includes the specific

contribution of the study to both knowledge and practice. The limitations of the

study are explained and the direction in which the research can be extended is set

7.2 SUMMARY OF THE RESEARCH

The-banking scenario in India is at cross roads and is continuously

evolving. The progress has been remarkable over the decade with the level of

competition increasing in the banking industry. In the recent years, the concept of

“business process reengineering” has entered the banking industry. Process

management offers organizations the opportunity to outperform competitors and

take market share away from competitors.

The modern banking is transforming the-banking and financial industry in

terms of the nature of core products /services and the way these are packaged,

proposed, delivered and consumed. Banks are turning to IT to improve business

efficiency, service quality and attract new customers. Technology such as

automated teller machine (ATM), phone- banking, tele-banking, PC-banking and

most recently Internet banking have changed the way the banks provide service.

Please purchase PDF Split-Merge on www.verypdf.com to remove this watermark.

240

There is a growing interest in understanding the users’ experience as

modern banking is observed to be a larger concept than user satisfaction. Today

public sector and private sector banks are offering similar products and services.

The process of bank computerization was started since 1985 in public sector

banks in India. However, some private sector banks have started computerization

prior to the public sector banks in India. The banks in India are using ICT not only

to improve their own internal processes but also to increase facilities and services

to their customers.

BPR began as a private sector technique to help organizations

fundamentally rethink how they do their work in order to dramatically improve

customer service, cut operational costs, and become world-class competitors. The

force of deregulation, globalization and advancing technology have paved the way

for the growth of banking industry. In this new era banking, companies are

focusing on managing customer relationships in order to efficiently maximize

revenues. Now all banks are captivating customers through innovation.

The customers’ choice and awareness have been increasing tremendously

during this decade mainly due to the opening up of the economy, the advent of

information technology and the media revolution. As market becomes

increasingly competitive, customers have an option to choose what they want.

Customers have an option to switch banks and banks are forced to work hard on

retaining customers. The pressure is that with too many banks competing,

retaining as well as gaining new customers has become important.

Due to competition within the banking sector and the use of Information

Technology within the banks and at the customer end, BPR has led to redesigning


241

the strategy in delivering quality services. However there is need to understand if

these radical changes provide the customer need. These issues raise the question

whether BPR, aimed at customer service, has really created customer satisfaction

and that leads to the following research question.

“Will modern banking facilities enabled by Business Process Re-

engineering influence the customer satisfaction among the Small Enterprises?”

Based on the research question, the research objectives are framed.

The study is focused on the small and medium enterprises of Coimbatore

city, known as the ‘Manchester of South India’, which has many textiles and

engineering industries. Coimbatore is prominent on the map of world’s

automobile industries producing ancillary parts for the manufacture of

automobiles. These industries are highly supported by the financial institutions.

Studies on BPR in banks to determine the improvement in the competitive

measures of cost management, customer service, quality and productivity are

found in the literatures (Ratinder, 2011; Adeyemi and Aremu, 2008; Chopra,

2006).

Study on e-banking initiatives in Indian public sector banks show that the

growth of productivity indicators of reengineered banking process is higher than

that of the partially computerized banks and banks following traditional mode of

operation. (Saroj and Kundu 2011; Elisha 2010) The customer’s satisfaction about

various modern-banking services is also found in the extant of literatures

(Malarvizhi.2011; Bhattacharjee 2011; Abdullah and Rozario, 2009). Studies on

comparison of public and private banks are done by Hugar and Vaz 2008; Mishra

and Jain 2007 and Uppal 2006. Satisfaction studies mostly analyze the service


242

quality and use the SERVQUAL and SERVPERF scales (Vanniarajan and Nathan

2008; Khan 2007; Akter and Ghosh 2006; Saha and Zhao 2005)

The study also analyzes the perception of bank customers with respect to

traditional and modern banking. It also embraces service quality analysis to know

the customers’ satisfaction level. This analysis is based on primary data collected

through questionnaire from corporate customers. Supporting literatures in this

connection has been reviewed and a set of hypotheses framed. To test the

hypotheses, bias free data were gathered and analyzed using statistical tools. The

study area is limited to Coimbatore city. In addition, the sample framework is

chosen from the member database of CODISSIA. 1000 samples were selected

randomly. A mixed and multi mode contact was made to collect the data using a

questionnaire. A total of 540 responses were received. On screening the

responses, 33 were found incomplete and/or missing responses. Finally, only 507

valid responses were available for the further data analysis. The collected data

were first coded. The coded data were entered into a spreadsheet and properly

sorted, classified and edited. The incorrect information and missing data were

analyzed and removed if found unusable. First, the descriptive analysis was done

to calculate the frequency distribution and measure the central tendency. Then the

validity was measured using factor analysis and its reliability through Cronbach’s

alpha. Further for inferential statistics, paired t-test, regression analysis and cross

tabulation with chi square test have been done.

Indian banking industry is distinctively recognized as public sector and

private sector. Despite private banks being ahead in technology, many customers

still prefer to have their accounts in the public banks because of security reasons.


243

Intense competition between banks and huge difference in the service has led to

customer switching their accounts form one bank to the other. As many as 91% of

the firms have switched banks and some firms have even switched banks more

than once.

Switching banks has become an increasingly common practice nowadays.

The reasons for this are plenty. The role of relationship between individuals and

their banks determine bank-switching behavior. The reason for changing the bank

is cited as the length of the relationship with the bank and the distance. In this

study, when choosing the bank, customers cite that the debit card facility as one of

the main reasons. Similarly, loan facility, quick service, flexibility and advanced

technology are some of the reasons for choosing a bank. Among the facilities

enjoyed in the traditional banking, the customers feel that they experienced a

personalized service. Over-draft was also cited as a facility frequently enjoyed in

traditional banking because of personal influence. However, availing various

loans and the speedy transaction were not satisfactory.

The perception on various banking features have been compared between

traditional and modern banking and the other between public and private sector

banks. To analyze the significance of the difference between the perception of

customers towards traditional and modern banking processes, after cross

tabulation a paired t-test was done. The results show that except employee

courteousness, willingness to help, all the other features were significantly

different between traditional and modern banking.

Different processes of the banking transactions were listed and tested for

the perception of the customer. An exploratory factor analysis identified three


244

factors such as procedural quality, transaction quality and customer care. Similar,

factor loading is observed in traditional and modern banking.

The satisfaction of the customers on the fifteen products of modern

banking are measured. The results show that many customers are almost satisfied

with all the modern banking products.

The impact of modern banking facilities enabled by BPR on the

customer’s satisfaction among small enterprises was analyzed using the regression

analysis. The results show that customer care has the maximum impact on the

satisfaction of the customers, followed by transactional quality and procedural

quality. All factors were found to be positive and significant. The model

predictability is high for public sector banks, but the procedural quality was found

insignificant. However, for the private sector banks, all the factors were found to

significantly influence satisfaction.

The impact of modern banking features on the level of satisfaction of the

customers was analyzed for various control groups. In both, public and private

sector banks, customer care was the prominent factor that led to satisfaction level.

Transaction quality and procedural quality were found to influence satisfaction in

their respective order. However, all these factors were found to explain

satisfaction more in public banks than private banks. Among the nature of

business, the findings are more explanatory for traders than for those in

manufacturing and services. Again, customer care is the most prominent predictor

of customer satisfaction. However, for traders and services, the procedural quality

is found to be insignificant. The model is found more suitable for partnership

firms than proprietorship and private limited firms. However, the procedural


245

quality is found to be insignificant for all types of organizational ownership. On

the size of the organization, the model is found to explain more of the medium

sized firms’ satisfaction influenced by the BPR enabled features of the bank. In

addition, the procedural quality was found to be insignificant for small firms.

The satisfactions of the customers who have switched bank at least twice

are found more fitting for the model. On the length of years with the bank, the

model is found to explain more about the customers who are with the bank

between 6 and 10 years. Interestingly, for customers with the same bank for more

than 11 years, the procedural quality is found to be negative and insignificant, and

transaction quality was insignificant. Considering the area of operation the model

was found to explain customers having international operations. However, in all

cases procedural quality was found insignificant.

The demographic characteristics of the customers and their influence on

the reason to change a bank or choose a bank were tested. The results show that

except for the area of operation, years with the bank, nature of business, other

demographic characteristics did not have any influence on reasons for changing or

choosing a bank. The nature of business is seen to be related only to the poor

service quality.

This study provides theoretical and practical implications for bank

managers, policy makers and academicians. From the research the study

implicates that the conceptual service quality dimensions can be analytically

understood based on the context of the study (Impact of Business process

Reengineering) as procedural quality, transactional quality and customer care. On

the influence of the service factors on the level of customer satisfaction, customer


246

care was found to be an important factor in customer satisfaction in modern

banking. Transactional quality had a positive but low impact on the customer

satisfaction. However, procedural quality was found to be insignificant in public

banks.

The extant of literatures compares the service quality in public and private

sector banks or between traditional and modern banking. This study makes a three

dimensional comparison. Though a significant difference was found between

traditional and modern banking features, employee courteousness and willingness

to help were found not to vary. The study reiterates that the procedural quality,

which provides a functional quality, is less influential on the satisfaction. On the

other hand, the transactional quality of the service counter has an influence on the

customer’s satisfaction. Above all, customer care is an important factor in

customer care and the stakeholders need to create a strategy focused on customer

care to elevate the satisfaction.

The outcome of the study provides the following recommendations. The

banks are investing in IT and introducing BPR to increase the technology and the

operational efficiency. The satisfaction of the customer lies in the humane

interaction and care. Banks will require having a Customer Service Committee to

improve and recover the service failure. Customer orientation culture needs to be

imparted in the service of the banks. Human element performs an important role

in perceived service quality as well as satisfaction. Employee courteousness and

willingness to help have been found to be unchanged in traditional and modern

banking, and this needs to be continued with proper training to employees.


247

Fear in use of technology in sensitive areas like fund transfer are still

existing in customers which produces a lower satisfaction in these service factors.

Proper awareness and demonstration to create trust in the-banking process need to

be provided to the customer. Customer loyalty programs, special events and

reward schemes can reduce the switching intention when a customer has been

with the bank for many years.

7.3 RESEARCH CONTRIBUTION

This study contributes towards the body of knowledge to address the

issues as identified in the knowledge gap. It contributes towards theoretical as

well as practical fronts.

7.3.1 CONTRIBUTION TO KNOWLEDGE

This study contributes to the knowledge on the impact of service quality of

the features enabled by BPR on the satisfaction of the customer. The outcome of

the study is a predictable model for customer satisfaction on service quality.

This study contributes to the analytical knowledge on the dimensions of

service quality. Contrast to the popular service quality models such as

SERVQUAL, this study has identified the service quality of BPR enabled process

as customer care, transactional quality and procedural quality.

The findings of this study highlight that the technical quality embedded in

the procedural quality has a low impact on customer satisfaction and is

insignificant in certain cases. This reiterates that the process supported by

technology becomes a commodity over a time and loses competitive advantage.

Therefore, banks need to focus on areas of customer encounter like transactional

quality and customer care.


248

This study contributes to understand the difference between the traditional

banks and modern banks and how the features of modern banks produce customer

satisfaction. It also compares the service quality and customer satisfaction in

public sector banks and private sector banks.

7.3.2 CONTRIBUTION TO PRACTICE

This research is of significant importance for bank managers. Based on the

obtained results one can identify the areas that need immediate attention and make

suggestions for further improvement.

The study contributes towards understanding the customer’s perception on

various features of modern banking enabled by BPR. It highlights the need for

focus on human element in a technology-enabled services and BPR should be

targeted on areas of customer interaction.

The study helps banks to understand the importance of customer care and

to device suitable strategy like training the employees in customer service

encounters and reiterates the need for service recovery for higher satisfaction.

The study also throws light on transactional quality and the need for

quicker, safer and easier transactions. The major contribution of this study is that

the understanding of the service quality and the customer’s intention will help the

banks to design switching barriers, so that customers do not deflect. Reward

scheme, special events will increase the customer loyalty and that needs to be

focused on the customers who have been with the bank for many years.


249

7.4 LIMITATIONS

A number of factors have limited the analysis of this study. Accordingly,

all measures have been taken within the study to restrict any cause that may result

in bias due to the limiting factors. The following limitations of this research work

are worth mentioning

This study is not made for a specific bank. The study covers a sample of

banks and does not include all the banks in Coimbatore.

One important limitation of this study lies in the fact that the data were

collected in a single urban city, Coimbatore. Hence the results generated from the

study may or may not be applied to other areas. This creates a limitation in

generalization of the research implications.

The survey method in small enterprises has inherent low response rate.

This limitation refers to people’s reluctance and refusal to answer the the

questionnaire. In such situations and time constraint, it is impossible to get the

required sample size. The sample has been restricted to 507 small enterprises from

selected Commercial Banks in Coimbatore.

The framework in this study was developed from the extant of literature

that were accessible. In addition, the framework was limited to understanding the

level of satisfaction in the modern banking products and facilities and how it is

influenced by the service quality of the features of modern banking. There may be

some other predictors of customer satisfaction that was perceived by bank

customers. This study did not consider them.


250

7.5 FUTURE AREAS OF COMPREHENSIVE RESEARCH

Primarily, the study needs to be extended to a larger geographical area.

Replication study in various places can be done and compared with each other.

This will improve the predictability and generality of the study results.

The results of this study are based on consumers’ perceptions on the

service aspects of banking features enabled by BPR. Future research should

investigate the congruence between consumers’ employees and the senior

management of the bank. This will help the industry to understand the service

quality from the service triangle perspective and help the banks in designing an

overall strategy involving, customers and employees.

Concerning future investigations, further research must be conducted in

order to explore the difference between micro, small and medium sized

enterprises. The study can also be extended to study the similar perception in

savings account of individuals since banks have a combination of retail and

corporate accounts.

Further, researchers should also consider taking a broader view towards

identifying the components of service quality and identifying them in the other

frameworks like SERVQUAL and SERVPERF. Future studies can also consider

external components like customer expectation to identify the gap in service and

the internal components like employee satisfaction.

The impact of service quality of banks of customer satisfaction have been

studied in various context like, traditional, modern banking, public , private sector

banking, Internet and mobile-banking etc. However, the factors considered for the

study explains only a part of the variations in the customer satisfaction. For


251

example, this study explains only around 30% of the outcome. Future research

may attempt to explore the “unexplored” constructs

7.6 CHAPTER SUMMARY

This chapter has provided a summary of the research work. The

contributions of the study to knowledge and practice have been discussed. The

limitations and future directions for research are also provided.


chapter vii conclusion -...

Documents