Customer Satisfaction In Commercial Banks

Published Date: 02 Nov 2017

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Commercial banks is a retail bank gives basic investment products, gives business loans and accepts cash deposits (Wikipedia Contributors, 2013). Increased competition, fluctuations in the economy, technological improvements and the growing needs of the customer have led to increasing the scope of the banks services provided and to better market those services.

In this continuously changing environment where competition increases every day, banks need to exploit and emphasize on the customer quality to gain a competitive advantage. Commercial banks face many challenges including the expensive high-technology, unpredictable cost of funds, competition from other banks and weakened customer loyalty. Hence a banks’ goal is to increase their efficiency and lower the costs all the while maintaining better relationships with customers so the customer leaves happy and satisfied.

Customer encounter quality is being enhanced by every bank because as the saying goes the first impression is the last impression. Customer satisfaction is argued to be a result of the customer’s perception and may or may not be the consequence of better service quality by commercial banks. In the banking industry, customer satisfaction has been the number one priority but can it be ascertained accurately, if yes is it really effective and worth competing for?

The chief focus of the study by Khalid Al-Sulaiti, Abdullah Al-Khulaifi and Fawzi AI-Khatib was to evaluate and analyze the expectations of bank customers in terms of quality and satisfaction in regard to the services provided by banks in Qatar (Khalid Al-Sulaiti, 2000). For the purpose of the study, questionnaires were given to customers and analyzed through a statistical software package. They concluded that despite the growth of the banking sector, there are fewer researches dedicated to test customer satisfaction. Customers felt the internal infrastructure and location of the bank was its most significant part. With regards to customer satisfaction, customers answered that honesty, accuracy and politeness were the three main attributes needed in staff. Speed of service suggestions by staff and ATM’s availability were the first things to increase customer satisfaction while credit cards and procedure to obtain overdrafts were the last. Overall, the customers were unhappy with the commission, fees and interest rates provided. The mean score that was calculated for these was the lowest of all. According to the ANOVA, it was shown that there were no differences in regard to sex however it was pointed out that older people look for speed of services and care. Also customers showed no difference in regard to the accounts held or nature of job. The weakness of the study was that the response rate for the questionnaires was low and was only 66%.

Quality is such an important factor that it is taken as a strategic weapon. A study in Jordan was done in Jordan by Anber Abraheem Shlash Mohammad and Shireen Yaseen Mohammad Alhamadani (Mohammad & Alhamadani, 2011) to obtain the level of customer satisfaction in Jordan. They used the reliable diagnostic model of SERVQUAL to measure service quality through five dimensions that are Assurance, Reliability, Empathy, Responsiveness and Tangibles. While using several regression analysis to test the effect of service quality on the customer satisfaction. The results of the regression analysis displayed a coefficient of determination of 0.261, meaning that 26.1% of customer satisfaction was based on service quality. The study concluded that in order to better understand the demands of the customer, banks should stay close and keep record of all current and future perceptions and expectations of the customer. The results showed that quality of service is an integral part of customer satisfaction. Bank managers should seek to improve the satisfaction levels of all customers, so they can increase their retention levels and attract new customers. The limitations to this study was that the sample taken was very low and limited to one city. Secondly, the culture differences between customers was not acknowledged however the results of the study were very strong. This could be from the fact that Jordan is an under developing economy.

Customer satisfaction in Nepalese banks was researched by Thaneswor Gautam and Sanjaya Dhital in his article (Gautam & Dhital, 2004). A paradigm for customer satisfaction was discussed called the expectancy disconfirmation paradigm, coming from social psychology. It states that customer form their perception and expectation before buying or using the product itself. After using the product or service, this expectations are either confirmed or aren’t. After the advent of democracy in Nepal, bank market became an attractive one however now the performance is questioned more frequently than ever. All Nepalese commercial banks were included in the study covering the "depositors", customers who deposit money. Standard questionnaire was designed using 5-point Likert Scale, demographic nominal data, rank scale and multiple choice scale. The study showed clearly the customers were more satisfied with second-generation joint venture banks. Customers were satisfied with banks where there was a shorter waiting time and the behavior of employees was good. The matured commercial banks were seen to be weaker in terms of satisfying their customers indicating a lower level of competency. While the second-generation banks having less ability and reliability were able to perform better as they knew better the customers and worked on their satisfaction rather than giving more products or services. Despite providing clues to the reader of customer satisfaction in Nepalese banks, the sample is still low. Although it can be argued that in 2004, it was the first study of its kind to be performed.

A research report in Biratnagar City, Nepal by Bal Krishna Sharma from Purbanchal University calls customer satisfaction, a long-term strategy (Sharma, 2011). He focused on the need of the delivery of improved customer need’s understanding and a fully integrated management system with transparency. It is necessary for a bank to revolve its every policy on one goal: customer satisfaction. Researchers conducted the survey through distributing simple questionnaires. Only frequent visitors were given the questionnaires and careful consideration was taken not to distribute on peak days for more reliable results. The study was able to conclude that customers were more satisfied with the banks that were situated in feasible locations, extensive ATM service plus courteous service from employees. The study showed that particular to Biratnagar City, the people were neither highly dissatisfied nor highly satisfied with the level of service quality. Customers pay less attention to the interest rates offered but rather want banks they can reach easily. In addition to the conclusions, several recommendations were presented by the author. Banks should attract customers with varied products and services, while extending ATM networks and providing proper parking facilities and courteous employees are a must. Again the report is limited to the particular city in Nepal. Quality is a perception which can differentiate to every other person for a variety of reasons and also only frequent customers were given the questionnaires which would make the results biased.

A journal article in the International Journal of Trade and Commerce-IIARTC by Deepti Kanojia and D.R. Yadav to better understand the workings of the Punjab National Bank, India (Kanojia & Yadav, 2012). Indian bank industry is now one of the vastest industry in the world. The study was done in Meerut city and the findings were based on a simple survey so hence there is a chance for respondents to be biased. The study states that the working of the customers mind is complicated and a mystery which isn’t quite easy to solve. The data was collected with face to face interviews with a sample size of 100 customers. In-depth interviews, projective techniques and focus groups were used while the quantitative data was collected through experimentation, questionnaires and observation. The reason of dissatisfaction in public sector banks is the attitude of the employees and the time taken to process a query or transaction. The study concluded that quick service is not just the answer instead the way in which any query is handled has vast importance. A customer will be satisfied with a longer time to solve a query but with more polite employee but cannot stand a rude impatient employee. Electronic bank services are now becoming more popular as they are a quick service and banks should focus on them. With no distinction in the services offered by all banks, now banks have to return to the most basic thing that customers look for, a satisfactory and pleasant visit. Only the banks which will fight for better and faster service will win this race in the bank industry to get to the top.

Customers want the best value for their money so they always strive to find the best services (AMOAH-MENSAH, 2010). A sample size of 1400 people from over 24 different communities in Ghana and Spain was taken. The set of questions were based on the 5 dimensions of SERVPERF. The principal analysis was used to diminish the 21 items of SERVPERF developed by Cronin and Taylor. The main concepts of satisfaction were divided and described in three forms namely value, satisfaction and quality. Value is defined according to Zeithaml is the importance that customers attach to products or services based on the amount they pay for it and their usage (Zeithaml, 1988). Satisfaction is when the needs and wants of the customer are met according to Fecikova (Feciková, 2004). Quality is meeting expectations of the customer. Customers evaluate quality both before and after use of service. Safety is an issue most important to the customer as they need protection of their valuables. In this study, the age, sex, education and occupational differences were taken into account when collecting the samples. The core limitation of the study was the houses weren’t broken down into zones in each community except in the cities of Barcelona and Girona. Although this was corrected by dividing number of houses total by total number of zones. The conclusions based resulted in the knowledge that the overall satisfaction was determined by occupation, educational and geographical locations. While the overall satisfaction was unmoved by the sex, age and community. The study also showed that not all the quality dimensions caused a part in the overall satisfaction. The overall satisfaction in both countries was low and customer surveys should be extensive as customer satisfaction has a high place in customers mind. Although the study was extensive, it has criticized the models it used and advised that there is further need for extensive research on the topic.

Conclusion

In this research paper, an effort was made to understand the importance of customer satisfaction in commercial banks. The literature view showed that even though satisfaction is a non-tangible thing, it can be measured through various models and a relationship was established in each research paper. It is concluded that customer satisfaction is indeed an integral part to enhance performance of banks. It plays an important part in nurturing the relationship between the banks and its client so that customers can be retained and new customers can be attracted.

Further extensive study and research maybe needed in this area as it is increasingly difficult to obtain the correct values to something as quality. However, commercial banks now need to fight for a competitive advantage and as every bank offers the same service, customer satisfaction has become the number one strategy!