1 Introduction to the Organization The Bank of Ceylon is the first and leading commercial bank in Sri Lanka owned by the government of Sri Lanka. It established on 1st August 1939 by special statute, namely the bank of Ceylon ordinance. Now a diversified financial services organizations its business is to provide a broad range of banking and financial services to consumers, corporate customers and the government of Sri Lanka. The Bank of Ceylon provides diversified retail, wholesale, international, investment banking, services credit cards, SLIPS, RTGS payments, safe deposits, pawn broking services through a network of 303 local and 3 overseas branches(London, Male and Chennai) and off shore banking unit. As well as the bank already acquired over 60 percent of the market share in the foreign currency remittances. The Bank of Ceylon also played major role in encouraging and spreading the savings and investment habits of the people and helps to development of the national economy. Bank of Ceylon using on line banking operations was to complete deployment of the ICBS by connecting all branches. In addition to provide the better customer services Bank of Ceylon operates 117 extension offices and 253 ATMs including the Northern areas. 1.2 Background of the Study Any organization has customers and they cannot survive without customers. An organizations success also depends on the how they retain and attracting customers and how to treat them. Retain is most important than attracting because attracting is a more costly than retaining. In traditional organizational chart, customers are at the bottom level and management at the top level. Due to the globalization, increased the competition and awareness of the customers have dramatics change to the organizations behavior. Therefore the managers who thought that customer is the company’s only profit center. According to the modern customer oriented organizations inverted the traditional organizational chart and customers treat as the top of the chart. Today’s customers have more choices for their needs than ever


before. So keep customer with the business is significant to the manufacturing as well as service organizations. While the buyer is satisfied after purchase depends on the offers performance in relation to the buyers’ expectations. In similar satisfaction is a persons feeling of pleasure or disappointment resulting from comparing a products perceived performance for outcomes in relation to his or expectations. Customers that are satisfied will increase the in number, by more as well as they pays bills promptly. Usually, manufacturing and service organizations using customer satisfaction as the measure of quality. Service providing organizations face so many problems when going to satisfied customers because service organizations offer customize services to customers. Today’s organizations not only pay their attention to the satisfied the customers, organizations always try to delighted the customers mean that to exceed the customer expectations. In service providing organizations quality of their services is most critical factor. Services are activities, benefits or satisfactions which are offered for sale are provided in connections with the sale of goods which may be tangible or even intangible. Services have some features such as intangibility, perishability, inseparability, heterogeneity and so on. Service quality simply defines as it is a combination of two wards, service and quality. First we consider the term quality is an excellence product or service that fulfill or exceed the expectations. Dr Deming added that quality also means anticipating the future needs of the customer. We cannot find clear boundary for quality. Quality is subject to customer. Various experts had been defined quality in different ways. Quality is the totality of features and characteristics of a product or service that bears its ability to satisfy stated or implied needs. That is customer oriented definition. We can divide quality in mainly 2 ways product quality and service quality. According to the view point of quality founders the service quality is harder than product quality. The service quality focuses on standards or specifications that a service generation organizations promises. Service quality result from a comparison of what customers feel a service provider should offer (customer expectations), with how the provider actually performs. So we can say service quality is a function of the expectationsperformance gap and as the degree and directions of discrepancy between customer service performance and expectations. Service quality is a measure of how well the


service level delivered matches customer expectations. Customer complaints played vital role in service quality. Through service providing organizations banks play significant role. It is connect with the development of the national as well as international activities. The public and private sector has been found owning, managing and controlling the banking sector. It is right to mention that scientific inventions and innovations made ways for the use of technologies in almost all the sectors and the developed countries activated the process of promoting the technological - driven, user friendly services. As a developing country In Sri Lankan economy banking sector is in a prominent place. In Sri Lankan financial sector there is intensity of competition because there are 22 licensed commercial banks, 31 financial institutes, 14 licensed specialized banks. But here 2 government owned operates in financial sector. In namely, Peoples Bank and Bank of Ceylon. Those are the Sri Lankan first banks which are established in the beginning of the 19 century. After establishing the privet owned commercial banks then turn off the trend and Most Sri Lankan had negative perceptions regarding the government banks and its performance. But government banks had been high security for their deposits. Peoples Bank and Bank of Ceylon both are significant in national development but Bank of Ceylon posses’ highest asset in financial sector in Sri Lanka. BOC already adapted new technology for their services and turning their resources to competitive edge. But most of peoples believe that there are no customer base services in BOC. BOC used their valuable resources to provide better services to customers. But most of peoples who are came to get services from BOC, they are not totally satisfied. 1.3 Problem Statement In a modern world customer have thousands of alternatives with regard of their needs and wants. So customers are also tried to get the quality services than ever before. There are so many factors in behind of the customer satisfaction. Service quality is the one of the factor which is affect to the customer satisfaction. Here the research problem has been address; does service quality affect the customer satisfaction?


1.4 Objectives of the Study

To determine the relationship between the tangibles factor and customer satisfaction.

To determine the relationship between reliability factor and customer satisfaction.

To determine the relationship between responsiveness factor and customer satisfaction.

To determine the relationship between the courtesy factor and customer satisfaction.

To determine the relationship between the access and customer satisfaction. To identify which factor is the mostly affect the customer satisfaction. Make recommendations to enhance the service quality of Bank of Ceylon.

• •

1.5 Research Questions

Is there is a relationship between the tangibles factor and customer satisfaction?

• •

Is there is a relationship between reliability factor and customer satisfaction? Is there is a relationship between responsiveness factor and customer satisfaction?

Is there is a relationship between the courtesy factor and customer satisfaction?

• •

Is there is a relationship between the access and customer satisfaction? What is the most affected factor in the service quality to customer satisfaction?

What are the recommendations to overcome the problems regarding to the customer satisfaction?


1.6 Significance of the Study • • This study will enhance the modern organizational behavior. This study could be use as the literature review of the future studies and findings may be lays the foundation for further theories and developments of existing theories. • On the researchers’ perspective, it will enhance the academic carrier of the researcher and could be gain the additional knowledge regarding the research. • Further more this study will help to the BOC to identify the ways of satisfying customers by enhancing their service quality. • The findings will help to identify the attitudes regarding government banks and its performance of the customers. 1.7 Conceptualization and Operationalization 1.7.1 Conceptual Framework

Customer Expectation

Customer Satisfaction

Service Quality

Tangible Responsiveness Reliability Access Courtesy
Figure 1.1: Conceptual framework for the study Source: Researcher’s Original Construction Above figure represented that the framework for the study that framework developed by the researcher. The customer expectations are differ from customer to customer.


Through the various service quality factors, customer satisfied on the various factors. Here the researcher selected the most influence service quality factors which are related in the banking sector. Such as tangible, responsiveness, reliability, access and courtesy. The customer satisfaction depends on the service quality factors. So customer satisfaction is the dependent variable and service quality factors are independent variables. 1.7.2 Operationlization Variable Dependent variable (customer satisfaction) Independent variable (service quality factors) • • • Tangible • • Responsiven ess Online service of the BOC. ATM transactions Telephone banking Physical appeal of the materials and Indicator • Satisfy with the customer services of the BOC. • Switching to other banks • Recommending of BOC to the others. Likert scale Measurement

documentation Physical appearance of the branch premises of BOC • the time that provided the services • • Reliability • • • courtesy access • • Quick response of BOC Accuracy of the banking activities Security of the deposits and money Level of the services in all time of the day Politeness, friendliness of the employees Required time for the services Convenient locations Table 1.1: Operationlization Source: Researcher’s Original Construction

Likert scale


1.8 Limitations of the study

The customer satisfaction is not only depends on the service quality. There are various factors are affect to the customer satisfaction but in the research concern only on the service quality.

According to the Independent and depended variables could be generate many questions. But customers are do not like to answer for long questionnaires. So researcher had been to reduce the questions that are included in the questionnaire.

In this research only address to the government sector. But in the financial activities of the country, government sector as well as private sectors is played in equaling roll. Here not concern about the private sector banks.

The population is very large. So concern of the whole population is not economical as well as impossible.

BOC has different types of customers. So when going to select a branch as a sample it is restricted to get the better result. Because through the branch select only 50 customers.

There are no chance to check whether the question order is followed and also no opportunity to discuss with business customers. Because they are come to branch only for their financial (POD and TOD) needs. They are not like to consume their time on this type of research activities.

Time constraint is affect to the research and it is one of the major barriers of the study.

Unable to get the information, due to rules and regulations of the BOC.


CHAPTER TWO LITERATURE REVIEW 2.1 Introduction Here discussed the finding of the past researches, papers and books that are published. This included the various models that are related to the customer satisfaction. 2.2 Customer Satisfaction Customer satisfaction is a board sense and it differs from customer to customer, product to product and service to service. Previous studies have identified the benefits that customer satisfaction and define customer satisfaction on various ways which are delivers by an organizations. Most researchers agrees is that satisfaction is an attitude or evaluation that is formed by a customer comparing pre purchase expectations of what they would receive from the product to their subjective perceptions of the performance they actually did receive (Oliver 1980). From Wikipedia, the free encyclopedia point out that Customer satisfaction, a business term, is a measure of how products and services supplied by a company meet or surpass customer expectation. It is seen as a key performance indicator within business and is part of the four perspectives of a Balanced Scorecard. In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy. Kotler (2000, p.36) said that in his marketing book “Satisfaction is a person‘s feelings of pleasure or disappointments resulting from comparing a product’s perceived performance (or outcome) in relation to his or her expectations.” 2.3 Measuring Customer Satisfaction There is a famous writer said that "If you cannot measure it, you cannot improve it." - Lord William Thomson Kelvin (1824-1907). Organizations are increasingly interested in retaining existing customers while targeting non-customers; measuring


customer satisfaction provides an indication of how successful the organization is at providing products and/or services to the marketplace. Customer satisfaction is an ambiguous and abstract concept and the actual manifestation of the state of satisfaction will vary from person to person and product/service to product/service. The state of satisfaction depends on a number of both psychological and physical variables which correlate with satisfaction behaviors such as return and recommend rate. The level of satisfaction can also vary depending on other options the customer may have and other products against which the customer can compare the organization's products. Because satisfaction is basically a psychological state, care should be taken in the effort of quantitative measurement, although a large quantity of research in this area has recently been developed. Work done by Berry (Bart Allen) and Brodeur between 1990 and 1998 defined ten 'Quality Values' which influence satisfaction behavior, further expanded by Berry in 2002 and known as the ten domains of satisfaction. These ten domains of satisfaction include: Quality, Value, Timeliness, Efficiency, Ease of Access, Environment, Inter-departmental Teamwork, Front line Service Behaviors, Commitment to the Customer and Innovation. These factors are emphasized for continuous improvement and organizational change measurement and are most often utilized to develop the architecture for satisfaction measurement as an integrated model. Work done by Parasuraman, Zeithaml and Berry (Leonard L)between 1985 and 1988 provides the basis for the measurement of customer satisfaction with a service by using the gap between the customer's expectation of performance and their perceived experience of performance. This provides the measurer with a satisfaction "gap" which is objective and quantitative in nature. Work done by Cronin and Taylor propose the "confirmation/disconfirmation" theory of combining the "gap" described by Parasuraman, Zeithaml and Berry as two different measures (perception and expectation of performance) into a single measurement of performance according to expectation. According to Garbrand, customer satisfaction equals perception of performance divided by expectation of performance. The usual measures of customer satisfaction involve a survey with a set of statements using a Likert Technique or scale. The customer is asked to evaluate each statement


and in term of their perception and expectation of performance of the organization being measured. True "customer satisfaction" is an organization's ability to attract & retain customers and enhance the customer relationship over time. It is not simple and the answer cannot be collapsed into a single "customer satisfaction index." Every interaction a customer has with a company’s products & services is a reflection on quality. 2.4 Customer Retention Previous studies have identified the benefits that customer retention delivers to an organization (see Colgate et al., 1996; Reichheld and Sasser, 1990; Storbacka et al., 1994). For example, the longer a customer stays with an organization the more utility the customer generates (Reichheld and Sasser, 1990). This is an outcome of a number of factors relating to the time the customer spends with the organization. These include the higher initial costs of introducing and attracting a new customer, increases in both the value and number of purchases, the customer's better understanding of the organization, and positive word-of-mouth promotion. Apart from the benefits that the longevity of customers brings, research findings also suggest that the costs of customer retention activities are less than the costs of acquiring new customers. For example, Rust and Zahorik (1993) argue the financial implications of Attracting new customers may be five times as costly as keeping existing customers. However, maintaining high levels of satisfaction will not, by itself, ensure customer loyalty. Banks lose satisfied customers who have moved, retired, or no longer need certain services. As a consequence, retaining customers becomes a priority. Previous research shows, however, that longevity does not automatically leads to profitability (Colgate, Stewart, and Kinsella, 1996). 2.5 Customer Perceptions of Value Today, customers are more value oriented in their consumption of services because they have alternative choices (Slater, 1997; Woodruff, 1997). For example, Gale and Wood (1994) explained how customers make purchase decisions between competing providers. The author argued that customers buy on value; they do not simply buy products. Interestingly, it was observed that customers learn to think objectively


about value in the form of preferred attributes, attribute performance, and consequences from using a product in a use situation (Woodruff, 1997).

2.6 Customer Loyalty Customer retention improves profitability principally by reducing costs incurred in acquiring new customers. A prime objective of retention strategies must therefore be “zero defections of profitable customers” (Reichheld, 1996a). There is, however, a distinction between customers who are simply retained and those who are loyal. The concept of consumer inertia implies that some customers are only being retained, rather than expressing loyalty. Truly loyal customers are usually portrayed as being less price-sensitive and more inclined to increase the number and/or frequency of purchases. They may become advocates of the organization concerned and play a role in the decision making of their peers or family. 2.7 Customer Satisfaction Model (Teboul Model)

Company offer

Customer needs

Figure 2.1: Teboul Model In the Bester field’s total quality management book, Teboul model discussed as the customer’s needs are represented by the circle and the squire depicts the product or service offered by the organizations. Total satisfaction is achieved when the offer matches the needs. The part of the squire that lies within the circle is perceived by the customers as satisfying and the part of the squire outside the circle is perceived as unnecessary. It is important that the organizations listen to the “voice of the customer” and ensure that it’s marketing, design, production, and distribution processes truly meets the expectations of the customer. 2.8 Kano Model


Kano Model of customer satisfaction is a very useful tool to help you understand and classify user requirement for designing your service. Noritaki Kano is the originator behind the Kano model concept and he recognized that the degree of customer satisfaction varies depending on the fulfillment or non – fulfillment of certain customer requirements. Here customer requirement s classifies them into three categories. Such as basic requirements, performance requirements and excitement requirements. Important thing is the evolution of customer satisfaction will lead to the delighter. So service provider has to continually evolve the study and analysis of customer requirements and plot in to the Kano model to see how new and better ways to satisfy customers can be created. Unlike a product where the customer satisfaction comes from usage, in services, the customer satisfaction is derived from the experience of dealing with the service provider. Also service experiences are much more repeat and the cost of switching is low, so achieving high customer satisfaction is very critical. 2.9 Feedback and Complaints Feed back is Program to identify errors and to take corrective actions. Feedback and Its Five Uses • • • • • To discover customers’ satisfaction To discover relative priorities of quality; To discover opportunities for improvement; To identify customers’ To compare performance.

Recently, many organizations have implemented feedback loops that allow them to capture feedback at the point of experience. For example, National Express, one of the UK's leading travel companies invites passengers to send text messages whilst riding the bus. This has been shown to be useful as it allows companies to improve their customer service before the customer defects, thus making it far more likely that the customer will return next time.


In the Dale H. Bester field, Carol Bester field-Michna,Glen H. Bester field and Mary Besterfield- Sacre, 3rd edition 2004, Total quality management book,pointed out that the information on feed back is proactive, although complaints are reactive they are very vital ingathering data on customer perception. A dissatisfied customer can easily become a lost customer. Complaints can be seen as opportunities to obtain information and it can be seen as a measurement to Asses Company’s process improvement team. Each complaint should be accepted, analyzed and acted up on. When handling complaints, front- line employees played vital role. 2.10 Service Quality In the various researches had been defining the service quality in many term, following table present the service quality definitions, Definition customer expectations for service performance prior to the service encounter and their perceptions of the service received”. Service quality as the subjective comparison that Gefan(2002) customers make between the quality of the service that they want to receive and what they actually get. Service quality is determined by the differences between Parasuraman customer’s expectations of service provider’s performance (198,1988) and their evaluation of the service they received. Table 2.1: Service quality, Author

Service quality can be defined as “the difference between Asubonteng 1996)

2.11 Relationship Between Satisfaction and Service Quality Service quality is the key to measure user satisfaction (Pitt On the more widely used instrument for assessing customer satisfaction is SERVQUAL developed by Zeithaml ( 1998). Researchers have paid much attention to the close relationship between service quality and customer satisfaction (Bitner; Parasuraman; Parasuraman, 1988).SERVQUAL is widely


recognized and used, and it is regarded as applicable to a number of industries, including banking industry ( Yavas, Bilgin& Shemuell,1997).

2.12 Service Quality Dimensions Pioneering work by Parasuraman etal.(1985)led to a list of ten determinants (reliability,responsiveness,competence,access,courtesy,communication,credibility,se curity,understing the customer, and tangibles) Reliability involves consistency of performece and dependability. It means that the firm performs the service right the first time. It all means the firms honor its promises. Especially it involves accuracy in billing, keeping records correctly, performing the service at the designated time Responsiveness concerns the willingness or redines of employees to provide service. It involves timeliness of services that means –mailing transactions slips immediately, calling the customer back quickly and giving prompt service. Competence means possession of the required skills and knowledge to perform the services. It involves; knowledge and skills of the contact personal, knowledge and skill of operational support persons, research capability of the organization. Access involves approach, ability and ease of contact. it means the service is easily accessible by telephone, waiting time to receive service is not extensive, hours of operations are convenient and locations of service facility is convenient. Courtesy involves politeness, respect, consideration and friendliness of contact personal. It includes consideration for the consumer’s property, clean and neat appearance of public contact. Creditability involves trusts worthiness, believability, honesty. It involves having the customer’s best interest at heart. Contributing to creditability are; company name, company reputation, personal characteristics of the contact personal, the degree of hard sell involved in interaction with the customer. Security is the freedom from danger, risk or doubt. It involves safety, financial security and confidentially.


Tangibles include the physical evidence of the service; physical facilities, appearance of personal, tools or equipment used to provide the service, physical representation of the service.

3.1 Introduction

Here the researcher describe that the types of data, data collection methods, population, sample size, data presentation and data analysis tools. 3.2 Types of Data The data collection sources could be divided in primary data and secondary data. 3.2.1 Primary Data Primary data collect mainly by the distributing the questionnaire through the customers and interviewing customers and internal staff members of the branch. As well as observing customer reactions when arising problems and customer complaints. Questionnaires were mainly included two parts which focused major reasons such as demographic (personal) and attitudes. 3.2.2 Secondary Data Secondary data collect by the Banks Annual Reports, news paper articles, and library articles and via internet. 3.3 Data Collection Methods 3.3.1 Questionnaire Questionnaires developed basically on the statements and according to the Likert scale. (Strongly agreed, agreed, neutral, disagreed and strongly disagreed) when preparing the questionnaires using sinhala for the clarity and understandings of the customers. (See appendix VI) 3.3.2 Observations


As a Management Trainee of the BOC a researcher was able to carry out a number of observations like customer complaints and how customer behave when there is a dissatisfied, and how to staff members act to satisfied customers and staff members attitudes regarding the complaints. 3.4 Population Through the 305 branches of the BOC, for the efficiency of the research, select the Colombo district Homagama branch. Homagama is a semi urban area and it represents The all level of income holders who are connect with the BOC. 3.5 Sampling Here select convenience sampling method. Further select only 100 customers and they are selected base on their account types. (Current A/C, Normal Savings, NRFC A/C, Fixed Deposit A/C, And 18+ A/C). To collect the data for the study, a total of 100 individualized questionnaires were distributed by handover to a systematic random sample of customers. 3.6 Data Presentation Tools This research study used chart, graph, table and other related data represent tool for represent data make conclusion, finding and explore the final outcome. 3.7 Data Analysis Tools There are two types of researches, Such as quantitative and qualitative methods. Both of those were applied to the study. That was used Likert five scale analysis. (Strongly agreed, agreed, neutral, disagreed and strongly disagreed) Percentage analysis was used to analyze employees’ demographic factors and attitudes regarding the service quality factors. As well as used the mean and weighted average mean to analyze the data. Further analysis of the mutual exclusive events by used the sets.


CHAPTER FOUR DATA PRESENTATION, DISSCUSSION AND ANALYSIS 4.1 Introduction Here represented the data which were gathered by the questionnaires and observation of the researcher. Further in this chapter included the data presentation; discussion and analysis by used various methods. 4.2 Demographic Information 4.2.1 Distribution of Gender Customer attitudes are differing from gender to gender. As a percentage 52% of customers are female and 48% of customers are male who are included in the sample.

Gender composition of Respondents Male Female 52 48 Table 4.1: Distribution of Gender Source: Survey Data, 2009 Figure 4.1: Distribution of gender 4.2.2 Customers Age Composition

Gender as well as age class towards the differencing of the feelings, attitudes and beliefs of the people. So customer’s age composition is important to take the actions. There are 5 age classes were concerned in the research. years 15-25,years 26-35, years 36-45, years 46-55 and onward 56. Here began with the year 15, because the research designed to the accounts basis. Normally 18+ accounts were opened to the more than 15 years old younger’s.


Age composition of Respondents 15263646- 56 25 32 35 18 45 24 55 16 < 10

Table 4.2: Customers age composition Source: Survey Data, 2009

Figure 4.2: Customers age composition



The occupation that a person engaging is, a turning point of his or her social status and habits. According to the occupation determine the needs and wants of a person. Following data had represented the occupations of the persons with having the banking habits. Following table show the occupations and percentages. Occupation state service Business Privet sector self non employee Student 15 20 15 16 14 20

Table 4.3: Occupation Source: Survey Data, 2009


Figure 4.3: Occupation

4.2.4 Age of Banking practices

Here discussed the time period that a person connected with the banking and with the banking habits. It represented the history of the banking activities.

Age of banking practices 1- 2511- 20< 2 4 10 20 16 8 16 44 16 Table 4..4: Age of banking practices Source: Survey Data, 2009 Figure 4.4: Age of banking habits


4.2.5 Usage of Banks

In Sri Lanka mainly operate state owned
Government Bank


4 4




Private Bank

private owned banks. People deposit their money at

Figure 4.5: Usage of banks

the state banks, private and or both. This is the mutually exclusive events.

4.2.6 Other Banks and Customer

Some customers have their deposits than one bank. This represented by the following graph excluding the BOC. Here concluded the as government bank, peoples bank get the highest rank.

Figure 4.6: Other banks and customer Source: Survey Data, 2009



Account Type A bank offers various types of products to their customers. All banks differentiate their service by using the accounts like savings accounts, current accounts,
Saving Account

fixed deposits and society accounts
5 20
Current Account

30 8 10
Fixed Account

20 7


Figure 4.7: Account type Source: Survey Data, 2009

4.3 Service Quality Factors 4.3.1 Usage of the BOC Customers used banks for their financial needs and requirements. Most of current account holders used the bank in daily. Some customers used bank in daily basis, twice per month, once a month and once a two month.


Usage of the BOC Per week 25 Per month 28 Twice a month 20 Per two mont h 27

Table 4.5: Usage of the BOC Source: Survey Data, 2009 Figure 4.8: Usage of the BOC

4.3.2 Awareness about the BOC Services

Neighbors / friend are changing their friend’s attitudes and influence them in to their patterns and behaviors. Here discussed the most influence factors to the connect with the BOC. Positive ward of mouth is a strongest media to the influence people. As a marketing strategy advertising is a most popular way to attract and to give the information regarding the product or services to customers. Here 72% percent of customers get information regarding the services of BOC by their friends and neighbors and 28% percent of customers by the advertising. Awareness about the BOC services. By Nabors or By Friends Advertising 72 28 Table 4.6: Awareness about the BOC services. Source: Survey Data, 2009 Figure 4.9: Awareness about the BOC services. 4.3.3 Obtained Services

Earlier in the banking sector defends only on the employees and customers are come to the bank and get the services in personally. Due to incensement of technology add more value to service by telephone, internet and mobile services. Also BOC used this strategy to provide the better service to the customers.While BOC used the


technological assistances to their services but most of the customers like to get the services in personally.

Obtained services By By By Other Personally Internet Telephone 100 0 0 0

Table 4.7: Obtained services Source: Survey Data, 2009 Figure 4.10: Obtained services
4.3.4 Important Factors of the Quality of Service the BOC. (In Customers

View Point) According to the customers view point the customers were thought that service quality, low cost and high interest rates and product differentiations. Most of customer are preferred to the above all factors and they are highly concern about

Low Cost

2 3 1 5 1 5
Service Quality

2 0 8

7 1 2
Product differentiations

Figure 4.11: important factors of the service quality of the BOC Source: Survey Data, 2009 23

those factors when select a bank for their requirements. Following set represented the mutually exclusively of those events.

Following discussed the customer satisfaction originators as that customer how much accepts the service quality of the BOC by using the statements. Following tables and graphs are representing the information regarding the factors that are directly related with the service quality.

%Strongly disagreed 20 4 12 0 10

Strongly agreed %

Tangible factors

I well known about the online system of BOC I wide used of the ATM transactions I satisfied with the wide range of telephone transactions I satisfied with the visual appeal of the materials and documents of the BOC. I satisfied with the physical appearance and arrangement of the inside premises of BOC.

24 52 25 48 9

28 24 24 48 36

20 12 31 4 45


Disagreed% 8 8 8 0 0

Neutral %

Agreed %

Table 4.8: Tangible factors 4.3.5 Source: Survey Data, 2009 Awareness about the On Line System

Now a day all the banks are turning in to the automated systems. It ignore the time of the consumed with the banking transactions. Now BOC used fully automated system to provide to the better service to their customers. But most of customers are not well aware about the on line system of the BOC. Following table represented the percentage of the awareness of the on line system of the BOC.


Figure 4.12: On Line system Source: Survey Data, 2009 Use of ATM Transactions

In BOC there are 302 ATM machines were established in the inland wide to provide the better service to their customers. Also they are connected with the merchandises and shop with to the provided the customer services to their customers. It is ignored the delays of the ques. 52% customers are widely used ATM transaction and 24% are agreed shows that they are used the ATM transactions.

Figure 4.13: ATM Transaction Source: Survey Data, 2009 4.3.7 Use of Telephone Transactions


Here discussed the of customers deal with the BOC by using the telephone. The BOC facilitates the telephone transactions for their customers. Most of current account holders used telephone to inquire the balances and O/D information.

Figure 4.14: Telephone Banking
Source: Survey Data, 2009


Physical Appeal of the Documents

Here discussed the physical appeal of the documents which are used in the BOC. Such as applications, vouchers etc. as a government bank BOC required more documents than other banks. (When apply for the loan, opening the account,)

Figure 4.15: Material & Documents Source: Survey Data, 2009
4.3.9 Physical Appearances and Arrangement of the Premise

Physical appearances are the one of the attracting factor. With compared to the other banks BOC has less interior decorations and physical appearance. According to the customers perspectives they are neutral with the physical appearance of the BOC. Following tables and graphs are shows the customer attitudes regarding the decorations of the BOC.


Figure 4.16: Physical Appearance of the branch premise Source: Survey Data, 2009 4.3.10 The Time Factor Here concentrate the minimum time that required by service providers to provide service to the customers. Most of the transactions are required the less than 30 minutes and some transactions required more than 30 minutes. As a percentage 42% request less than 30 minutes and rest of the sample required the 58%. These time differentiations arise from the many reasons. Such as no book withdrawals of the other branch, no signature capturing in the system (current accounts), not included the operating instruction to the systems so on. Time factor Grater then 30 Less than 30 minutes minutes 42 58

Table 4.9: Time factor Source: Survey Data, 2009 Figure 4.17: Time factor Following table represent that the responsiveness of the BOC to the needs and requirements of the customer. Strongly agreed % I satisfied with the time 24 Responsiveness factor (from 8.30 am to 3.00 pm) that service provides by the Agreed % 40 Neutral % 24 Strongly Disagree disagree % % 12 0



I satisfied with the quick response of the BOC to the needs. Table 4.10: Responsiveness factor Source: Survey Data, 2009 4.3.11 Operating Hours Most of banks are worked from 8.30 am to 3.00 pm. But customers are like to get the extra time for their services. Now a day’s some private banks provide their service at to the after the 3.00 pm as well as private banks are open their branches in the weekend and holidays. That is dramatic effect on the BOC. 26 39 35 0 0

Figure 4.18: Time of the Service Provider Source: Survey Data, 2009

4.3.12 Quick Response Here discussed the speed of the services that are provided by the BOC. Customers are always tried to get the quick services for their needs and requirements. As well as here pay attention on the willingness of employees to help customers and employees interesting to responding to customer requesting.


Figure 4.19: Quick response Source: Survey Data, 2009 Following table shows that the reliability of the services which provided by the BOC. Strongly disagreed % 0 0 7 Disagreed % 0 0 0 Strongly Agreed % 38 17 38 Neutral % 8 0 32


I satisfied with the accuracy of the banking activities of the BOC. I satisfied with the security of the deposits and money on the BOC with compared to the other banks. I believed that the level of services at same of the all time of the day and all staff members.

Table 4.11: Reliability Source: Survey Data, 2009 4.3.13 Accuracy of the Transaction That included the accuracy of the reports, documents and money transactions of the BOC. Most of customers thought about the accuracy of the banking activities of the bank. It is the most important reliability factor when a customer going to select a bank.


Agreed % 54 83 23

Figure 4.20: Accuracy Source: Survey Data, 2009 4.3.14 Security of the Deposits Other important factor in the reliability is the security of the customers’ deposits. Due to the early incidents and cases that were arises in the Sri Lanka (sakvithis’ incident and Ceylinco Golden key incident) positively affected to the State banks trustworthiness. Because of the customers believed that there has high security of the deposits on the state banks. Due to that reasons most if customers come to the state banks for their banking activities.

Figure 4.21: Security of the deposit Source: Survey Data, 2009

4.3.15 Level of the Services Sometimes service levels are differing from the times of the day and all members of saff. Beginning of the day and evening (end of the day). That concern about the weather providing the service at the time policy and performing the service right at the first time, keeping promised. Time concrete is considered as the one of the effected factor in the reliability.


Figure 4.22: Level of services Source: Survey Data, 2009 Following table included the attitudes of the customers regarding the courtesy and politeness of the BOC. Agreed %Strongly Agreed % Neutral % %Strongly disagreed 0 22 Disagreed % 0 0


I satisfied with the politeness and pleasant demeanor of the staff members I believed that the other banks required more time than BOC of providing transactions.

25 0

36 24

39 54

Table 4.12: courtesy Source: Survey Data, 2009 4.3.16 Politeness And Friendliness Here concentrate the politeness of the employees and consideration of the customer as value to the bank. Courtesy included the respect of the all customers and friendliness of the contact personal. Some countries concern the teller courtesy of the main factor to the select a bank. As service providing organization a bank used the customize their services. Courtesy is the first insight of the customer to measure the service quality of bank.


Figure 4.23: Politeness & friendliness Source: Survey Data, 2009
4.3.17 Time that Required with Camper to Other Bank

When compare with the other government and private sector banks, the BOC how much required to going do a transaction. There is a social accepted argument that private banks provide services on the less timing than state owned banks. Here discussed the customer attitudes regarding the time with compared to the other banks.

Figure 4.24: Time that required with camper to other bank Source: Survey Data, 2009 In here shows the approachability and ease of contact. Access I satisfied with that the are 33 36 Table 4.13: Access Source: Survey Data, 2009 25 6 0 Strongly Agreed % Agreed % Neutral % Strongly disagreed % Disagreed %


established of the BOC.

4.3.18 Easy of Access


According to the access factor concern about the services branches are conveniently located to the customers. In BOC there are 307 branches, 117 extension offices and 302 ATM machines are located at the island wide.

Figure 4.25: Easy to Access Source: Survey Data, 2009

4.4 Customer satisfaction factors Here customer satisfaction discussed under the 3 main categories. • • • Satisfaction as an attitude Behavioral intention Behavioral response Strongly Agreed % an 35 25 53 Agreed % 48 43 35 Neutral % 17 23 12 Strongly disagreed % 0 9 0 Disagreed % 0 0 0

Customer satisfaction factors Satisfaction as

attitude Behavioral intention Behavioral response

Table 4.14: Customer satisfaction factors Source: Survey Data, 2009


Satisfaction as an Attitude


This refers to the customers overall satisfaction. Measure How extend customers are satisfied regarding the overall and key aspect of the service.

Figure 4.26: Satisfaction as an Attitude Source: Survey Data, 2009 4.4.2 Behavior Intention

This refers to the how the customers intends to behave in terms of switching the banks. Also Switching cost and the benefits are influence to the retain customers with the banks as well as the lack of the alternatives are affect to the customers behavioral intention.

Figure 4.27: Behavior intention Source: Survey Data, 2009 4.4.3 Behavior Responses

Behavioral response refers to how the customers have behaved in the past experiences in terms of word of mouth communicate about the bank. On other hand Recommendations of the customers about the services of the BOC to potential and new customers.


Figure 4.28: Behavior responses Source: Survey Data, 2009 4.4.4 Customer Ranking of the Service Quality Dimensions

This included the 5 factors which are the most important in the service quality of the BOC. Other way could be identifying the reasons that why the customers are connect with the BOC and retain with the BOC. This ranked According to the customers view point but this may be confused because of the customer’s knowledge, attitudes and education.( see appendix VII) When apply the weighted mean, ∑ X w/ ∑X Tangible Weighted mean 17.6 Reliability 29.6 Courtesy 20.2 Access 18.1 Responsiveness 14.6

Table 4.15: Weighted mean average Source: Survey Data, 2009 Here highest rank obtained by the reliability that means most of customers comes to the BOC for their assurances of the deposits and the accuracy of the BOC. Then high ranked the courtesy. That shows customers are like to politeness friendliness and respect of the staff members. Customers are weighted the courtesy as the second one. Also ease of the located comes to the third rank. When customers going to get the services, they consider the convince of activities. Further tangible get the 17.6 weight and fourth place of the rank shows the customers are not concern about the physical appearance and the technological usage of the BOC. Responsiveness get the 14.6 weight and it tells customers are ignor the customer delay and they retained with the BOC whether they are not having good responding from the BOC. 4.4.5 Customer Complaints


In here summarize the customer complaints in the last two month (July and August) July Complaint No of days per month ( opening days) Mean = ∑ f× / ∑f Mean of the July = 33/22 =1.5 Table 4.16: Customer Complaints Source: Survey Data, 2009 4.5 Data Disscussion And Analysis Mean of the August= 38/20 = 1.9 33 22 August 38 20

Here disscussed the reletionships of the data which were gatherd and then analysis the data. ( see appendix VII -summary table)
4.5.1 Determine the Relationship between the Tangibles and Customer

Satisfaction. According to the gathered data related in the tangible factor could be summarized as follows, Through the tangible factor the researcher find out that Customers were satisfied with the visual appeal of the documents and materials like applications, vouchers etc (Ques :04)of the BOC. So as summarize could be said that customers are 96% satisfied with the BOCs’ documents and materials than the ATM transactions, online system, telephone banking and physical appearance of the BOC. When considered about the negative relationships between the tangible factor and customer satisfaction, could be identified that there were weak relationship (28%) between the awareness about the on line system of the BOC. (Ques: 01) So the customer awareness of the online system must be improved. Cohen et al ,2006 said that due to use of the latest technology the respondent cannot directly contact their local branch. The consumers would prefer to speak their bank representatives directly. As an Asian country also Sri Lankan peoples have the less attention about the technology that is used in the banks.


4.5.2 Determine the Relationship between Responsiveness and Customer

Satisfaction. When considered the relationship between the responsiveness and the customer satisfaction, customers were satisfied with the quick response of the BOC (Ques: 07). As percentage 65% but that is not a strong relationship. On other hand there was 12 % and negative relationship between the operating hours of the BOC (Ques: 06). Normally BOCs’ provide their services from 8.30 am to 3.00 pm. but some other banks are provide their services than 3.00 pm. so the BOCs’ operating hours must be extend with the requirements of the customers.

Determine the Relationship between Reliability and Customer

Satisfaction. As a financial institute the BOC always pay their attention to assure their reliability. Here discussed the relationship between the reliability and the customer satisfaction. In case of reliability customers were 100% satisfied with the security of their deposits and money that they made in the BOC. (Ques: 08). security and customer satisfaction. When consider the negative relationship of the reliability and the customer satisfaction, the customer’s are 7% not satisfied with the level of services at same of the all time of the day and efficiency of the staff members. (Ques: 10). There were negative relationship and that must be improved.

That is the most

affected factor in the reliability and there were strong relationship between the

Determine the Relationship between the Courtesy and Customer

Satisfaction. Here discussed the relationship between the courtesy and the satisfaction 0f the customers. So 61% customers were satisfied with the staff members’ politeness and pleasant behavior while customers deal with the customers. (Ques: 11). The customers are believed that the Staff members are redness to provide the services in any time. There is a positive relationship between the courtesy of employees and the customer satisfaction.


Leeds (1992) argued that nearly three-quarters of the banking customers mentioned teller courtesy as a prime consideration in choosing a bank. In the side of the negative the researcher identified that there 22% of customers thought that there is negative relationship between the times that required of the BOC than other commercial banks. (Ques: 12). Here could be identified the customer are not satisfied with the time that are required in banking activities of the BOC.
4.5.4 Determine

the Relationship between the Access and Customer

Satisfaction. In case of here discussed the customer attitudes regarding the ease of the access to the BOC. (Ques: 13). 69% of customers were satisfied with the access factor of the BOC. Mean that the BOC branches are located at the convenient places to the reach the customers. In a study of Canadian customers in Montreal, Laroche and Taylor (1988) found that convenience is the principal reason for bank selection, followed by parental influence with respect to the status of the bank. In contrast, Kaynak and Kucukemiroglu's (1992) study of the Hong Kong banking market discovered that customers choose their banks because of convenience, long association, recommendations of friends and relatives, and accessibility to credit.
4.5.5 Identify Which Factor is the Mostly Affected to the Customer

Satisfaction. Through the factors of the services quality that is affected in the customer satisfaction, (tangible, responsiveness, reliability, courtesy and access) reliability is the strongest factor in the service quality of the BOC. All the customers are 100 satisfied with the security of the deposits that they made in the BOC. Major reason that cause is to the security is the customers’ trustworthiness about the BOC. As a government owned bank BOC has the government assure the security. So the researcher found out that the customer retain with the customers because of the reliability of the BOC. Other service quality factors are equal to the service quality factors of the other government and private banks. Reliability is the most affected service quality factor in the customer satisfaction.


CHAPTER FIVE CONCLUSION AND RECOMMENDATION 5.1 Introduction This chapter describes the conclusion of the research and recommendations that were made against to the problems. 5.2 Conclusion The researcher found out that the following things regarding the customer satisfaction. When consider about the factors of the service quality, Customers were satisfied on the tangible factor. Most of customers were satisfied about the facilities of BOC, efficiency of the equipments. Through these facilities the customers were have low satisfaction regarding the online system of the BOC. Now a day the banking sector has greater competition and banks strives to the over their competitors. The BOC also offer the same facilities with compared to the other banks. There were no excitements. Other factor was the responsiveness that impact to the customer satisfaction. Here the customers pay their attention regarding the quick response of the BOC to the customers need and requirements. The customers were averagely satisfied with the responsiveness of the BOC. As a government owned institute the customers had been the negative attitudes regarding the services and the responding of the services. This attitude was deeply connected with the society. Therefore couldn’t be assuring the customers satisfaction whether the BOCs’ provided better services. When consider the reliability factor, the customers were fully satisfied with the reliability of the services. Other hand could be expressed the idea of the customer satisfaction on basis of the reliability, the customers are delighted regarding the services that are provided by the BOC. To that mostly affected reason was that BOC is a government owned bank. Therefore customers have greater assurance of their deposits and money. Courtesy is the other one of the affected factor to the increase the customer satisfaction. This directly related with the human resource of the BOC. The customers believed that the employees who are employed in the BOC are respecting


their customers’ friendliness as well as polite with the customers. But the customers are not satisfied with the time required by the BOC to provide some services. Because of the other banking institutes are required less time to the banking activities. The researcher considered above factors as well as the ease of access and customer satisfaction. Here the researcher could be identified the most of customers were satisfied with the BOC branches that are located at the island wide. As a government owned bank the BOC has the responsibility of the increase the banking habits of the peoples. So the BOC were established in the urban, Semi urban, rural areas as well as in the northern areas. So the customers are satisfied with the service quality factors of the BOC. Ultimately the researcher concluded the findings as the customers are very satisfied of the reliability. Reliability is the one of the most important factor on selecting of the bank for the deposit. The BOC gives best service regarding the reliability but other factor such as tangible, responsiveness, courtesy and access had few impact of the customer satisfaction. 5.3 Recommendations Here shows that the recommendations were developed by the researcher to overcome the problems and the negative factors to increase the customer satisfaction. • One of the suggestions of the researcher is include the signature scanning for

the online system. In the BOC on line system included the signature scanning only for the current accounts. Now most of customers are tend to use the no book withdrawals. In the no book withdrawals customers faced so many problems and they have to fax the signatures to the branch and confirm the signature. Sometimes this required more than 1 hour. So this is due to customer delays. If the savings account further more holders’ signatures included to the system, the customers have to get the quick services from the BOC. • Furthermore should be using the new equipments in the day today operations.

Most of branches still used outdated equipments. So they cannot provide the better service to the customers due to the failures of the equipments. So the management of the BOC must allow the new equipments to the all branches.


All the branches of the BOC open the services for the customers at the 8.30

am. That time changed in to the 8.00 am that will useful to customers. Because most of customers are engaged in the job and them works commence up at the same time of the bank. So the customers have to face so many difficulties with the banking activities. If the time changed, that will increase the customer satisfaction.

With compared to the other commercial and developments banks, the BOC

provided the few amount of the advances (loans) for the customers. The management of the BOC believed that they will have too faced difficulties in the loan recoveries. If BOC provide the advanced to the government servants they cannot faced any problem with the recoveries because the government servants obtained permanent salary for the month. • Most of BOC branches are not arranged as according to the model branch

concept. At least “A” grade branches must be arranging in to the model branch concept. Through the model branch concept could be close-up with the customers and will help to provide the better customer service. • All the branches must be adapted in to the 5’S or kaizen methods. Because to

the well maintained of the documentations. Some branches handle the documentations and materials in improper manner. Due to this most of the mandates and vouchers were destroyed. Mandates are the most important documentation of the account and that must be securing the entire life of the account. Still there is no method to handle the documentations in the branches. So must be improving the methods like 5’S inside the branches. Employees are the major source of the service quality because they are the live factors which deal with the customers directly. The employees could use as the tool of the way to improve the customer satisfaction. Before going to satisfy the external customers must be satisfied the internal customers also. • To provide the better service and quick respond to the customers, in the BOC must improve the permanent employees in the BOC. Due to lack of employees there may cause to the customer delays and customer ques. So implement the


human resource plan for each branch and must assign the relevant number of employees. • As well as the employees must be rotate the within their working

environment. When engaged in a same work the employees are dissatisfied about their work and reduce the efficiency of the work. So job rotation may improve the employee’s satisfaction and it will help to increase the customer satisfaction. • Furthermore the employees who are working in the BOC have the number of

remunerations and fringe benefits. So most of employees are satisfied about the recognition and reward that they received. Also as government institute employees have the rights of the government employee. So banking sector employees retires age is year 60. According to the annual report of the 2008, 56% of employees age limit is more than the 55 years. In the bankers employees that the time limit of the retirements must be minimize and the must apply the young employees for the works on the PBO, CSM and the teller positions.

Also the BOC operated as the traditional bank. They provided the services

which are equal to the other banks. There are no many excitements. As a government bank, the BOC have the opportunity to provide the better services to their customers. But problem was the BOC not get these opportunities in the proper way. If the BOC implement the excitements to their services it will help to the increase the customer satisfaction.



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