Service Quality

Service Quality - Transcript

Service Quality Insights From The Indian Banking Scenario K Choudhury

Service Quality Insights From The Indian Banking Scenario
Koushiki Choudhury

Abstract The Indian banking industry is going through turbulent times With the lowering of entry barriers and blurring of product lines of banks and non banks since the financial sector reforms banks are functioning increasingly under competitive pressures Hence it is imperative that banks maintain a loyal customer base In order to achieve this and improve their market and profit positions many retail banks are directing their strategies towards increasing customer satisfaction and loyalty through improved service quality Moreover with the advent of international banking the trend towards larger bank holding companies and innovations in the marketplace customers have greater and greater difficulty in distinguishing and selecting one institution from another Therefore the current problem for the banking industry in India is to determine the dimensions of customer perceived service quality This is because if service quality dimensions can be identified service managers should be able to improve the delivery of customer perceived quality during the service process and have greater control over the overall outcome The objective of the study was to explore the dimensions of customer perceived service quality in the context of the Indian retail banking industry A set of service quality parameters drawn from customers perceptions about service quality as well as the bank marketing and service quality literature were drawn up These parameters have been used in the context of four of the largest banks in India to identify the underlying dimensions of service quality using factor analysis The study suggests that customers distinguish four dimensions of service quality in the case of the retail banking industry in India namely attitude competence tangibles and convenience Identifying the underlying dimensions of the service quality construct in the Indian retail banking industry is the first step in the definition and hence provision of quality service This article has drawn upon the findings of the service quality dimensions to contend the initiatives that banks managers can take to enhance employees skills and attitudes and instill a customer service culture Keywords service quality dimensions attitude competence convenience tangibles

1

Introduction

was formed Subramanian and Velayudham 1997 The Narasimhan Committee report suggested wide ranging reforms for the Indian banking sector in 1992 to introduce internationally accepted banking practices and enable Indian banks which were hitherto resisting liberalization and opening of their markets to achieve service excellence The Narasimhan Committee recommended the liberalisation of entry norms and suggested that new banks be permitted in the private sector provided they conformed to the minimum start

Regulatory structural and technological factors are significantly changing the banking environment throughout the world One factor that is spurring the growth of the service economy in India is the liberalisation that has been ushered in by the government in the banking sector The financial sector reform in India was designed to infuse greater competitive vitality in the system To achieve this objective the Narasimhan Committee

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up capital and other requirements The committee recommended too a liberal policy towards allowing foreign banks to open offices in India Since the reforms started the interest rate structure has been deregulated to a great extent and banks have been given a great degree of freedom in determining their rate structure for deposits and advances as well as their product range Banking has also become more competitive in respect of the location of points of sale that is the branch network The end result is that market power is getting shifted from banks to their customers With the lowering of entry barriers and blurring product lines of banks and non banks the oligopolistic nature of Indian banking is fast changing and giving way to a relatively freer market place The freedom of choice which bank customers did not have earlier because of standardised products and regimented interest rates has been given to the customers as a result of the changes taking place Subramanian Velayudham 1997 In other words financial liberalisation has led to intense competitive pressures and retail banks are consequently directing their strategies towards increasing customer satisfaction and loyalty through improved service quality Retail banks are pursuing this strategy in part because of the difficulty in differentiating based on the service offering Typically customers perceive very little difference in the banking products offered by retail banks as any new offering is quickly matched by competitors However much of the research on service quality has been in the developed countries Herbig Genestre 1996 even though services are among the fastest growing sectors in emerging countries Malhotra et al 1993 In fact the bulk of the research on service quality in banks has been in the context of US and European banking institutions At this juncture it is important to also study banking institutions based in developing economies like India which has recently liberalized its banking sector As banks in such countries as India mature lessons may be learned from their experiences by banks in developed economies as well

as in other developing countries as banking becomes more and more globally integrated In fact there exists a significant gap in the service marketing literature on how consumers evaluate service quality in contexts and cultures very different from the developed countries even though research has begun to explore this area Bolton and Myers 2003 In light of this paucity of research on service quality issues in developing countries it has become very important that banks in India determine the service quality factors which are pertinent to the customer s selection process as with increased competition with the advent of international banking the trend towards larger bank holding companies and innovations in the marketplace customers are now having greater difficulty in selecting one institution from another In order to provide excellent service quality identifying the underlying dimensions of the service quality construct is the first step in the definition and hence provision of quality service and hence should be a central concern for retail bank managers as well as service management academics and practitioners This article endeavours to fill the gap in the service quality literature by exploring the dimensions of customer perceived service quality in the context of the Indian retail banking industry A set of service quality parameters drawn from customers perceptions about service quality as well as the bank marketing and service quality literature have been drawn up These parameters have been used in the context of four of the largest banks in India to identify the underlying dimensions of service quality Finally the paper has drawn upon the findings of the service quality dimensions to contend the initiatives that banks managers can take to enhance employees skills and attitudes and instill a customer service culture 2 The Dimensions of Service Quality Underpinning our understanding of service quality is an array of factors or determinants A number of researchers have provided lists of quality determi

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nants but the best known determinants emanate from Parasuraman and colleagues from the USA who found five dimensions of service quality namely tangibles reliability responsiveness assurance and empathy and used these as the basis for their service quality measurement instrument SERVQUAL Parasuraman et al 1988 Zeithaml et al 1990 The result was the development of the SERVQUAL instrument based on the gap model The central idea in this model is that service quality is a function of the difference scores or gaps between expectations and perceptions An important advantage of the SERVQUAL instrument is that it has been proven valid and reliable across a large range of service contexts However while the SERVQUAL instrument has been widely used it has been subjected to certain criticisms as well The contention that service quality consists of five basic dimensions Parasuraman et al 1988 is according to some researchers questionable and they have suggested that SERVQUAL s dimensions are contextual and not universally applicable Ekinci Riley 1999 Brown et al 1993 Cronin Taylor 1992 Teas 1993 Bouman Van der Wiele 1992 Gagliano Hathcote 1994 Kang and James 2004 Lee 2005 Fowdar 2007 Instead the number and composition of the service quality dimensions are probably dependant on the service setting Brown et al 1993 Carman 1990 It has been suggested that for some services the SERVQUAL instrument needs considerable adaptation Dabholkar et al 1996 and that items used to measure service quality should reflect the specific service setting under investigation and that it is necessary in this regard to modify some of the items and add or delete items as required Carman 1990 Moreover research suggests that culture may play a fundamental role in determining how consumers perceive what constitutes service quality In a nutshell there are still issues and varying opinions about the dimensionality of service quality and the universality of the five dimensions Rust and Oliver 1994 These are of interest to and significant for users of SERVQUAL and for all those who wish to

understand better the concept of service quality Hence there is still a need for fundamental research into the dimensionality of service quality bearing in mind the contextual circumstances the specific industry and the specific service setting According to McCallum and Harrison 1985 because service encounters are first and foremost social encounters rules and expectations related to service encounters should vary considerably across culture Due to cultural and environmental differences consumers of services in different countries may have different perceptions of what service quality is and service marketers need to be sensitive to the variation of scripts that consumers will bring into a service encounter in different cultures Malhotra et al 1994 identify other influences on services quality dimensions such as the level of economic development citing that economic and socio cultural differences will affect customer perceptions of service quality Specifically the authors note that service quality dimensions of courtesy credibility and communication are related to cultural dimensions of individualism collectivism and power distance The authors also suggest that service quality dimensions such as reliability access and the understanding of the customer are related to factors of economic development such as affluence competition education infrastructure and technology Moreover environmental factors like culture communication infrastructure education technology and economic development should be expected to have an influence on the differences between developed and developing countries in terms of the service quality dimensions According to Malhotra et al 1994 the service quality dimensions of competence courtesy communication and credibility correlate significantly with two cultural dimensions power distance the extent to which a society honors the unequal distribution of power in institutions and organizations and individualism collectivism the extent to which a society has a loosely knit tightly knit social framework Small power distance and individualism were found to go together with

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greater national wealth whereas high power distance and collectivism were found to be associated with low national wealth Finally the service quality dimensions of security and tangibility are linked with the hierarchy along which individual needs are arranged physiological needs safety needs belonging and love esteem needs and self actualization needs Lower level needs are said to dominate higher level needs and to direct behavior until they are satisfied While individuals in developing countries have yet to master and fully satisfy the lower level needs physiological and safety needs individuals in developed countries have come a long way in fully meeting those needs and are preoccupied with addressing higher order needs and emotions Ultimately the strategic implication for the marketing of international services is to appropriately accentuate the quality dimensions differently in developed and developing countries 3 Methodology For the study reported herein responses were gathered from customers of four major banks in the retail banking industry of India the National Bank the Century Bank the Millennium Bank and the Prudential Bank All these four banks rank among the largest and strongly profitable banks in India moreover the banks have strong and significant retail presence Five branches for each bank were randomly selected The actual names of the banks have been changed in the study for purposes of confidentiality The study was conducted in Kolkata a major metropolitan city in the eastern region of India with a large and diverse population Questionnaires were self administered to customers within the branches of the banks The branches were considered by the management to be largely homogeneous with respect to size and service operations Every other customer entering the branches was asked to complete the questionnaire A total of 2400 customers were contacted 600 customers were contacted in each of the four banks and the overall response rate was 18 75 450 completed usable questionnaires The bank specific response rates were 15 33 92

completed questionnaires for the Millennium Bank 19 114 completed questionnaires for the Prudential Bank 17 33 104 completed questionnaires for the Century Bank and 23 33 140 completed questionnaires for the National Bank Demographic profiles of the samples from each bank were reviewed by the managers in the respective banks and considered to be representative of their customer bases The questionnaire for the measurement of customer perceived service quality followed the basic structure of the SERVQUAL instrument as developed by Parasuraman et al 1991 and consisted of two sections an expectation section and a perception section The expectation section required the respondent to indicate on a sevenpoint strongly disagree to strongly agree scale the extent to which the ideal service providing organisation in this case a bank possesses the characteristic desired in each statement In the perception section the statements required the respondent to indicate the extent to which the particular bank possesses the characteristic described again on a seven point strongly disagree to strongly agree scale The original SERVQUAL instrument had 7 categories that is it employed a 7 point scale Parasuraman et al 1991 Hence the instrument used in this study for measuring customer perceived service quality also employed a 7 point scale anchored by strongly disagree and strongly agree at the endpoints 1 and 7 respectively An inventory of service quality items was identified Items for measuring customer perceived service quality were adopted from the service quality and service marketing literature Parasuraman et al 1991 and the bank marketing literature Levesque McDougall 1996 Yavas et al 1997 Parasuraman et al 1988 Parasuraman et al 1991 Cronin and Taylor 1992 The list of items generated is shown in Table I and consisted of 24 items Ten items from this original list Table I were dropped because they were either vague repetitive or difficult to comprehend to respondents in a pilot study done

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with 50 customers from the Prudential Bank 40 customers from the Millennium Bank 45 customers from the National Bank and 50 customers from the Century Bank For instance Employees at your bank are neat appearing was not included because the term neat meant different things to different people in the pilot study Again the item your bank gives you individual attention was not used because 95 of the total number of customers surveyed in the pilot study felt

that it essentially captured the same aspect of service quality as your bank has employees who give you personal attention Of the total number of customers surveyed in the pilot study 96 had problems understanding the items your bank has your best interests at heart and your bank has modern looking equipment Again 97 of the total number of customers surveyed in the pilot study felt that the item your bank provides its services at the time it promises to do so captured

Table I Original List Of Items For Measuring Customer Perceived Service Quality Statements
SERVQUAL Dimensions Tangibles

SERVQUAL Items YOUR BANK has modern looking equipment YOUR BANK s physical facilities are visually appealing YOUR BANK s employees are neat appearing Materials associated with the service such as pamphlets and statements are visually appealing at YOUR BANK

Reliability

When YOUR BANK promises to do something by a certain time it does so When you have a problem YOUR BANK shows a sincere interest in solving it YOUR BANK performs the service right the first time YOUR BANK provides its services at the time it promises to do so YOUR BANK insists on error free records

Responsiveness

Employees of YOUR BANK tell you exactly when services will be performed Employees of YOUR BANK give you prompt service Employees of YOUR BANK are always willing to help you Employees of YOUR BANK are never too busy to respond to your requests

Assurance

The behaviour of employees of YOUR BANK instills confidence in customers You feel safe in your transactions with YOUR BANK Employees of YOUR BANK are consistently courteous with you Employees of YOUR BANK have the knowledge to answer your questions

Empathy

YOUR BANK gives you individual attention YOUR BANK has operating hours convenient to all its customers YOUR BANK has employees who give you personal attention YOUR BANK has your best interests at heart Employees of YOUR BANK understand your specific needs YOUR BANK has convenient branch locations It is very easy to get in and out of YOUR BANK quickly

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the same aspect of service quality as when your bank promises to do something by a certain time it does so and hence the former item was dropped The items employees of your bank are always willing to help you and employees of your bank are never too busy to respond to your requests were not included because 98 of the total number of customers surveyed in the pilot study felt that their essence was captured in other questions used in the scale Also the item the behaviour of employees of your bank instills confidence in customers was not included because it conveyed the same meaning to 94 of the total number of customers surveyed in the pilot study as you feel safe in your transactions with your bank The item it is very easy to get in and out of your bank quickly was also not included because it conveyed the same meaning to 96 of the total number of customers surveyed in the pilot study as employees of your bank give you prompt service The respondents understood the other items of the questionnaire The item your bank insists on error free records was not included because according to Parasuraman et al 1994 this item should be discarded on conceptual grounds as customers generally have limited or no access to a company s records and hence they may experience difficulty in assessing company performance on this item However one item was added and this was your bank has a large ATM network as all the customers surveyed in the pilot study indicated that this issue was very important with regards to banking services In total 15 items were arrived at to measure service quality in this study and this instrument was referred to as the modified service quality SERVQUAL scale Table II Feedback from the managers in each of the participating banks who reviewed the questionnaire confirmed that the modified SERVQUAL had face validity The questionnaire was administered in a pilot study to 50 customers from each of the four banks Reliability Cronbach s alpha for the modified SERVQUAL scale was tested for each of the four banks and for the entire sample The results were

Bank Prudential Millennium Century National Total pilot study sample

Cronbach s alpha 0 9024 0 8746 0 9121 0 9237 0 9278

It can thus be seen that the reliability figures are very high all above the recommended lower limit of 0 70 Nunnally 1978 4 Results and Findings Factor Analysis of The SERVQUAL Scores For each customer SERVQUAL scores were generated A SERVQUAL score is obtained by subtracting the expectation score from the perception score for each SERVQUAL item Factor analysis was conducted with the SERVQUAL scores for the entire set of 450 customers Factor analysis of the SERVQUAL scores for the SERVQUAL items was conducted and was followed by a Varimax rotation to examine the dimensionality of the items A 4 factor solution was obtained and the 15 items could be reconfigured into four dimensions namely attitude competence tangibles and convenience The factor loading matrix is presented in Table III Variables 9 11 12 13 14 and 15 combine to define the first factor which can be labelled as an attitude factor Variables 5 6 7 8 and 10 combine to define the second factor which can be labelled as a competence factor The third factor is correlated highly with variables 1 and 2 and can be termed as a tangibles factor Variables 3 and 4 combine to define the fourth factor which can be labelled as convenience The number of factors extracted was determined so that the cumulative percentage of variance extracted by the factors reaches a satisfactory level In this study 70 cumulative variance was chosen as the satisfactory level The factors identified from the factor analysis thus are

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providing the service The second factor competence
Factor 1 Attitude Prompt service Courteousness Knowledge Personal attention Ability to understand Factor 2 Competence Responsiveness Right service Dependability Service timing Safety Factor 3 Tangibles Physical facilities Materials Factor 4 Convenience Branch locations ATM network Operating hours

explained 21 71 of the variance and was constructed by five scale items which were primarily associated with the concept of providing reliable services to customers The third factor tangibles explained 11 77 of the variance and was constructed by two scale items which were primarily associated with the visual appeal of the banks physical facilities and communication materials to the customers Finally the fourth factor convenience explained 10 73 of the variance and encompassed two items related to the convenience of the banks branch locations and the spread of the banks

The first factor attitude accounted for the largest proportion that is 26 32 of the total explained variance This factor was defined by six scale items and was primarily related to the attitude and skills of the employees

Table II The items of the modified service quality SERVQUAL scale V stands for variable Variable Description V1 V2 YOUR BANK s physical facilities are visually appealing Physical facilities Materials associated with the service such as pamphlets and statements are visually appealing at YOUR BANK Materials V3 V4 V5 V6 V7 V8 V9 V10 V11 V12 V13 V14 V15 YOUR BANK has convenient branch locations Branch locations YOUR BANK has a large ATM network ATM network When you have a problem YOUR BANK shows a sincere interest in solving it Responsiveness YOUR BANK performs the service right the first time Right service When YOUR BANK promises to do something by a certain time it does so Dependability Employees of YOUR BANK tell you exactly when services will be performed Service timing Employees of YOUR BANK give you prompt service Prompt service You feel safe in your transactions with YOUR BANK Safety Employees of YOUR BANK are consistently courteous with you Courteousness Employees of YOUR BANK have the knowledge to answer your questions Knowledge YOUR BANK has operating hours convenient to all its customers Operating hours YOUR BANK has employees who give you personal attention Personal attention Employees of YOUR BANK understand your specific needs Ability to understand

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Table III Rotated Components Factor Analysis for Service Quality
Descriptions 1 Eigenvalues Percentage of variance explained Cumulative percentage of variance explained Reliabilities Cronbach s alpha 7 69 26 32 26 32 0 8841 2 1 14 21 71 48 04 0 8658 Factors 3 0 92 11 77 59 8 0 8410 4 0 84 10 73 70 54 0 8409

ATM networks Table III The Cronbach s alphas for all the four dimensions were well above the recommended lower limit of 0 70 Nunnally 1978 Table III Factor analysis was also conducted for each of the bank samples individually and the same factor solution was obtained across the banks The reliability coefficient Cronbach s alpha of the modified SERVQUAL scale used in this study was 0 9273 for the entire sample The bank wise reliability coefficients Cronbach s alpha for the modified SERVQUAL scale used in this study were as follows
Banks Cronbach s alpha Prudential 0 9162 Millennium 0 8848 Century 0 9095 National 0 9261 Overall 0 9273

Banks Dimensions Attitude Competence Tangibles Convenience

Prudential 0 9563 0 9342 0 9541 0 9274

Millennium 0 8745 0 8964 0 8996 0 8998

Century 0 9395 0 9245 0 9543 0 9639

National 0 9272 0 9124 0 9432 0 9537

Thus it can be seen that the Cronbach s alphas for all the four dimensions across all the four banks were well above the recommended lower limit of 0 70 Nunnally 1978 5 Discussions The dimensions of service quality

It can be seen that the reliability figures are very high all above the recommended lower limit of 0 70 Nunnally 1978 Cronbach s alphas were also computed to assess the reliability of the four dimensions attitude competence tangibles and convenience At the dimension level the aggregate Cronbach s alphas were
Dimensions Cronbach s alpha Attitude 0 8841 Competence 0 8657 Tangibles 0 8410 Convenience 0 8408

It can be seen that the reliability figures are very high all above the recommended lower limit of 0 70 Nunnally 1978 At the dimension level the Cronbach s alphas per bank were as follows

This study set out to expand understanding of how consumers evaluate service quality in the context of a developing economy an environment that differs significantly from the European and North American context that has hitherto dominated service quality research The goal of this study was to identify the dimensions of customer perceived service quality in the Indian retail banking sector The current research reinforces the fact that service quality is a complex and multidimensional construct The analysis of the 15 items comprising the various aspects of service quality in this study suggests that customers distinguish four dimensions of service quality in the case of the retail banking industry in India These

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four dimensions of customer perceived service quality are attitude competence tangibles and convenience All the four dimensions have their own unique service quality characteristics inherent in the Indian retail banking environment A recurring feature in the empirical studies which have analysed and used SERVQUAL is the wide variety of empirical factor structures obtained These vary primarily in the number of interpretable factors which consistently differ from the five factor structure reported by Parasuraman et al 1991 Contextual circumstances do have a bearing on the number of dimensions of SERVQUAL In this study a modified SERVQUAL scale was used and only those items were included from the original SERVQUAL scale which customers felt they understood and which were not repetitive Moreover two additional items were included related to branch locations and the ATM network These modifications and the fact that the modified SERVQUAL scale was used in a context the Indian retail banking sector entirely different from the one in which Parasuraman et al 1991 had conducted their studies may explain the emergence of service quality dimensions different from the ones identified by Parasuraman et al 1991 The service quality factor attitude has been found to be the most important service quality factor in terms of variance A plausible explanation for this finding lies in the fact that the factor attitude is largely concerned with the attitudes and skills of employees The factor attitude is defined by variables such as the provision of prompt service whether the employees are courteous whether the operating hours are convenient whether the employees give personal attention to the customers whether they can understand the customers needs and whether the employees have the knowledge to respond to customers needs Lovelock and Wirtz 2007 classified services along two axes namely relative involvement of goods ranging from pure services that are low on goods consulting insurance services with some goods or delivered

through goods air travel retailing couriers hotels banking maintenance to services embodied in goods music books and degree of consumer producer interaction from lower to higher The author suggested that banking was in the sector featuring medium goods and higher customer producer interactions since in banking consumers and service providers interact personally and the use of goods is at a medium level Hence in banking where there are high customer producer interactions the quality of service is determined to a large extent by the skills and attitudes of people producing the service According to Gr nroos 1990 perceived service quality consists of two parts technical quality and functional quality Technical quality refers to what customers receive during the service or what remains when the service is over a completed tax form the use of a rental car or a night s lodging Often customers can objectively measure whether the technical service quality was within the promised tolerances For instance they can see whether the rental car was ready as promised or the haircut properly done However in the case of services because customers are often either direct observers of the production process or active participants how the process is performed also has a strong influence on the overall impression of the quality of service This is functional quality A wellperformed service encounter may even overcome the negative impression caused by poor technical quality as well as generate positive word of mouth particularly if customers can see that employees have worked very hard to satisfy them in the face of problems outside their control Employees are part of the process which connects with the customer at the point of sale and hence employees remain the key to success at these service encounters or moments of truth It is these encounters with customers during a service that are the most important determinants of overall customer satisfaction and a customer s experience with the service will be defined by the brief experience with the firm s personnel and the firm s systems The rudeness of the bank s customer service representative the abruptness of the employee at the teller counter or the lack of

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interest of the person at the check deposit counter can alter one s overall attitude towards the service perhaps even reversing the impression caused by high technical quality In fact Bouman Van der Wiele s 1992 research into car servicing identified three service quality factors customer kindness tangibles and faith The authors found that customer kindness that is the front office personnel s approach to the customer and his problems regardless of the service delivered was the only factor to have a significant relationship with intentions to engage in word of mouth recommendations Levesque and McDougall 1996 also reported in their findings that the relational factor epitomised by the provision of personalised courteous service and helpful employees who understand the customers needs is the strongest driver for word of mouth Again in a survey of consumers to determine what their biggest complaints were about service Wessel 1989 observed that the most frequently mentioned complaints were staying home for delivery people who fail to show salesclerks who are on the phone while waiting on a customer salesclerks who say it s not my department salespeople who talk down to customers and salesclerks who can t describe how a product works In fact the customer s impressions of a service will be determined by the impressions with each of the employees contacted Hence this may explain why this attitude factor which is largely concerned with the attitude and the skills of the employees has emerged as the most important service quality factor The second most important service quality factor competence is defined by whether the bank performs the service right the first time whether the employees of the bank tell customers exactly when services will be performed whether the bank lives up to its promises whether customers feel safe in their transactions with the bank and whether the employees show a sincere interest in solving the customers problems In short this dimension is related to the banks ability to perform the promised service accurately and dependably Performing the service dependably and accurately is the

heart of service marketing excellence When a company performs a service carelessly when it makes avoidable mistakes and when it fails to deliver on promises made to attract customers it shakes customers confidence in its capabilities and undermines its chances of earning a reputation for service excellence That performing the service dependably and accurately is paramount to service customers has been strongly supported by research Zeithaml et al 1990 According to Zeithaml et al 1990 service providers apologies start to wear thin when a company is careless in performing the service when it makes frequent mistakes and when it is casual about keeping its service promises Under these circumstances customers lose confidence in the firm and little can be done to regain it The study by Zeithaml and Bitner 2003 further revealed that it is very important to do the service right the first time in case a service problem does crop up by resolving the problem to the customer s satisfaction the company can significantly improve customer retention However companies fare best when they prevent service problems altogether and fare worst when service problems occur and the company either ignores them or does not resolve them to the customer s satisfaction Performing the service accurately is perhaps the most important factor in service quality excellence The cost of performing the service inaccurately includes not only the cost of redoing the service but also the cost associated with negative word of mouth generated by displeased customers In case of services the factory is the field Again services are intangible and hence the criteria for flawless services are more subjective than the criteria for defect free tangible goods Hence for most services customers perceptions of whether the service has been performed correctly and not providerestablished criteria are the major determinants of reliability The service quality factor tangibles is defined by whether the physical facilities and materials associated with the service are visually appealing at the bank These are all factors that customers notice before or upon

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entering the bank Such visual factors help consumers form their initial impressions A crucial challenge in service marketing is that customers cannot see a service but can see the various tangibles associated with it all these tangibles the service facilities equipment and communication materials are clues about the intangible service If unmanaged these clues can send to the customers wrong messages about the service and render ineffective the marketing strategy of the company On the other hand improving quality through tangibles means attention to the smallest details that competitors might consider trivial Yet these visible details can add up for customers and signal a message of caring and competence The service quality factor convenience was defined by the convenience of the branch locations and the spread of the banks ATM networks In fact comments from customers such as All the branches should be connected and there should be more ATM services are frequent The factor convenience is the enabling factor that contributes to service quality by making it easy and comfortable for the customer to do business with their banks on a regular basis To enable their customers to do their transactions outside of branches banks in India are in fact expanding their ATM networks and taking actions to standardise procedures such as setting same withdrawal limits and availability of services across their ATM networks 6 Implications The study suggests that customers distinguish four dimensions of service quality in the case of the retail banking industry in India These four dimensions of customer perceived service quality are attitude competence tangibles and convenience Attitude and competence of employees are the two most important service quality factors in the context of the Indian retail banking sector and what is most important is the provision of competent service caring individualised attention to the customers employees knowledge and courtesy and the ability of the firm and its employees to inspire trust and confidence It is easy to see how banks

with a seller s market mentality would be weak in these areas Their organizational culture is just not attuned to looking at things from the customer s perspective Furthermore emerging from a seller s market era they are not structured to deliver excellent individualised service quality This situation may be depressing at first glance but in reality offers excellent prospects for those banks willing to change and adapt It is also important to recognize the implications of marketing and service quality in the Indian context Marketing in India for many years like in many developing nations was more a subject of socio political criticism than a concern of professional management There were many reasons for this comparative lack of interest including public acceptance of government and industry based agreements for planned production and distribution Additionally there were long post war and post independence periods since 1947 of socialistic policies of controls and scarcities and the legacy of protected markets in the Indian economy Slow economic growth and restrictive labor practices also made it difficult to shift resources into new marketing opportunities However with increased competition and a more deregulated economy Indian management has become much more sensitive to the role of marketing and many organizations have introduced marketing as a major functional component As India entered into the 1990s there grew a much deeper awareness of the need for managerial and especially marketing expertise Further Indian customers expectations of quality service have increased many folds Customer service has become an important integral component of many businesses in order to remain competitive Again the nature of the customer relationship is changing particularly on the retail side of banking As electronic banking becomes more prevalent a bank s service quality may well be measured in terms of personal support rather than technical support Although Indian consumers have become more and more technology savvy they also have been demanding more and more of quality and personalized service from manufacturers and service providers alike

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This is evidenced by the fact that although many banks have provided financial incentives for consumers to utilize automatic teller machines ATMs such as teller fees etc the unique selling proposition of a bank still appears to be personal banking services and services delivered with the personal touch In other words as banks become more and more high tech their technical services are becoming standardized reducing the importance of such services as a differentiating factor thus consumers will evaluate banks based more on their high touch factors than on their high tech factors In short the standardization of high tech banking and the resulting increased importance of high touch banking as a differentiating factor 7 Implications For Future Research

References Bolton R N and Myers M B 2003 Price Based Global Market Segmentation for Services Journal of Marketing Vol 67 July pp 108 128 Bouman M Van der Wiele T 1992 Measuring Service Quality In The Car Service Industry Building And Testing An Instrument International Journal of Service Industry Management Vol 3 No 4 pp 4 16 Brown T J Churchill G A Peter J P 1993 Improving the Measurement of Service Quality Journal of Retailing Vol 69 No 1 Spring pp 127 139 Carman J M 1990 Consumer Perceptions of Service Quality An Assessment Of The SERVQUAL Dimensions Journal Of Retailing Vol 66 No 1 pp 33 55 Cronin J J Taylor S A 1992 Measuring Service Quality A Re examination And Extension Journal Of Marketing Vol 56 July pp 55 68 Dabholkar P A Thorpe D I Rentz J O 1996 A Measure Of Service Quality For Retail Stores Scale Development And Validation Journal of the Academy of Marketing Science Vol 24 Winter pp 3 16 Ekinci Y Riley M 1999 Measuring Hotel Quality Back To Basics International Journal of Contemporary Hospitality Management Vol 11 pp 287 293 Fowdar R R 2007 Developing A Service Quality Questionnaire For The Hotel Industry In Mauritius Journal of Vacation Marketing Vol 13 No 1 pp 19 27 Gagliano K B Hathcote J 1994 Customer Expectations and Perceptions Of Service Quality In Apparel Retailing Journal of Services Marketing Vol 8 No 1 pp 60 69

The findings of this study provide a foundation upon which to pursue further research This research addresses an issue that has important implications for services marketing theory and practice Continued refinement of the scale for measuring service quality in retail banking proposed in this study is certainly possible based on further research and trends in retail banking Although in this study it was attempted to cover all aspects of service quality there may be certain aspects that may have been omitted or that may become relevant as new trends in banking evolve With time customers may reveal new aspects of service quality in retail banking that are important to them Future research can be conducted taking into account how the various dimensions of service quality such as say convenience are changing in terms of definition as well as new services that are being offered by the banks In future research customers may reveal new aspects of service quality in retail banking that are important to them and these would have to be incorporated in the scale so as to further explore the concept of service quality in the retail banking arena

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Service Quality Insights From The Indian Banking Scenario K Choudhury

Zeithaml V A Parasuraman A Berry L L 1990 Delivering Quality Service Balancing Customer Perceptions and Expectations New York The Free Press

Dr Ms Koushiki Choudhury Assistant Professor Marketing Indian Institute of Management Calcutta India koushiki iimcal ac in Telephone 9830197931 Dr Ms Koushiki Choudhury has a doctoral degree in Marketing from the Indian Institute of Management Calcutta and was a visiting doctoral scholar at the Curtin University Australia She completed her Master s degree from the Pennsylvania State University USA Dr Choudhury s research and teaching interests include services marketing service quality relationship marketing marketing research industrial marketing biotechnology marketing and international marketing She has extensive experience in the mining minerals biotechnology and financial services sector and has worked with Tata Steel Ltd which is one of the world s largest private sector steel companies and the flagship company of the largest and most respected business conglomerate in India the Tata Group as Manager Marketing and Business Development

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