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International Journal of Marketing Studies

Vol. 4, No. 1; February 2012

Customer Perception on Service Quality in Retail Banking in
Developing Countries - A Case Study
Md. Abdul Muyeed (Associate Professor)
Department of Economics, Islamic University, Kushtia 7003, Bangladesh E-mail: mamuyeed@hotmail.co.uk
Received: November 19, 2011
doi:10.5539/ijms.v4n1p116

Accepted: December 19, 2011

Published: February 1, 2012

URL: http://dx.doi.org/10.5539/ijms.v4n1p116

Abstract
The purpose of this paper is to evaluate the service quality in retail banking in the developing countries in general, and Bangladesh in particular. This is an analytical study based mainly on the primary data collected through scientifically developed questionnaire. The questionnaire has been personally administered on a sample size of 250, chosen from four banks in Bangladesh located in the northern district of Kushtia. The result indicates that customers' perception has reached on highest in the Prompt and accuracy in transactions of the bank and lowest in the service of modern equipment and décor. Due to the increasing competition in retail banking, customer service is an important part and bank must give their due attention to the customers' perception about service quality.

Keywords: Service quality, Developing country, Bank, Retail banking, Bangladesh 1. Introduction
Commercial banks—assaulted by the pressures of globalization, competition from non-banking financial institutions, and volatile market dynamics—are constantly seeking new ways to add value to their services Because financial services compete in the marketplace with generally undifferentiated products, service quality becomes a primary competitive weapon (Stafford, 1996). Currently technological changes are causing banks to rethink their strategies for services offered to both commercial and individual customers (Hossain and Shirely, 2010). Moreover, banks that excel in quality service can have a distinct marketing edge since improved levels of service quality are related to higher revenues, increased cross-sell ratios, higher customer retention (Bennett and Higgins, 1988), and expanded market share (Bowen and Hedges, 1993). Therefore, banks should focus on service quality as a core competitive strategy (Chaoprasert and Elsey, 2004). Within this background customer satisfaction and service quality are compelling the attention of all banking institutions around the world and in recent years, academicians and practitioners give more attention in this area as it assumed that service quality is a critical measure of firm performance (Lasser et al., 2000; Yavas and Yasin, 2001; Bick et al. 2004; Andreassen and Olsen, 2008). Therefore, the objective of the paper is to test a service quality instrument by using retail banking services in the developing counting like Bangladesh as a case point.

2. Concept of service quality
As mentioned before that Service quality has been wildly used to evaluate the performance of banking services (Cowling and Newman, 1995). Moreover service quality can be defined as the difference between customers’ expectations for service performance prior to the service encounter and their perceptions of the service received (Asubonteng et al., 1996). Gefan (2002) also defined service quality as the subjective comparison that customers make between the quality of the service that they want to receive and what they actually get. The banks understand that customers will be loyal if they receive greater value than from competitors (Dawes and Swailes, 1999) and on the other hand, bank can earn high profits if they are able to position themselves better than their competitors within a specific market (Davies et al., 1995). Therefore, banks need focus on service quality as a core competitive strategy (Chaoprasert and Elsey, 2004). Moreover, customers evaluate banks' performance mainly on the basis of their personal contact and...
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