Customer Satisfaction of Islami Bank Bangladesh Limited– a Factor Analytic Approach

Topics: Factor analysis, Principal component analysis, Singular value decomposition Pages: 19 (4685 words) Published: August 26, 2013
Thoughts on Economics
Vol. 20, No. 04

Customer Satisfaction of Islami Bank Bangladesh Limited– A Factor Analytic Approach

Muhammad Mahbubur Rahman(
Mohammad Yasir Rabbi((

[Abstract: With the opening-up of the economy, business activities are getting more and more competitive and consequently focusing more on the satisfaction of customers by providing tailor made products and rendering services. In the age of globalization and privatization, financial institutions, mainly banks, have been facing intense rivalry from both local and foreign COREs (Competitors, Opponents, Rivals and Enemies). To survive in this competitive environment, banks especially private banks realized the strategic importance of customer value and have been continuously structuring innovative and competitive products and services in order to enhance customer relationship. Private banks have been experiencing a phenomenal growth and have brought about a revolutionary change in the money market of Bangladesh. Among private commercial banks, Islami Bank Bangladesh Limited (IBBL) has been found to be the leader of the market with respect to the volume of transactions, profits, assets, market coverage etc. This dominance of IBBL in the market is attributed to the satisfaction of customers. In this context, the present study has been undertaken aiming at identifying the factors influencing the satisfaction of customers of IBBL by employing the sophisticated methodology – Factor Analysis. The study has considered 22 variables out of which, 12 variables are related to service quality, 5 variables to service features and 5 variables to future intentions. The study has finally found three most important successful factors such as personalized services, need based quality services and growth based competitive offers in order of their magnitudes, which are influencing Customer satisfaction of IBBL.]

Keywords: Customer Satisfaction, Banks, Services, Quality, Factor Analysis.

1.1 Statement of the Problem

Every business enterprise- manufacturing as well as service has to focus on the needs of customers in order to have a profitable niche in this competitive world. During the past decade the financial market has undergone a lot of changes. This is because of severe competition, increased demand for new and existing services, international flow of funds, globalization of trade, increased deregulation etc. In these changed scenarios, the occurrence of committed and often inherited relationships between a customer and his or her bank is becoming increasingly scarce (Levesque and McDougall, 1996). Therefore, several policies and strategies have been followed to retain customers, in which satisfaction plays a pivotal role (Meidan, 1996). Satisfied customers concentrate their business with one bank and pay premium for services and provide more numbers of customers to the bank. Winstanley (1997) clearly shows that customer satisfaction is not only linked to loyalty as such, but is also linked to bank revenue generation by different means and ways.

Financial markets across the world are getting more and more competitive. This market has been experiencing emergence of new banks and financial institutions, development of new products and services, technological advances and appliances, changes in preferences of customers etc. These shifts in financial market call for designing and redesigning financial products and need–oriented services, aiming at satisfying customers and enjoying their loyalties to the bank concerned. Customer satisfaction and retention drive, revenues, cost of doing business are key factors in the profitability of a business (Federal Express, 1992). So banks and financial institutions across the world have been providing products according to the needs of clients / customers and offering service before and after sales of financial products according to their demands.

In the present banking environment, customer satisfaction is a...

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