CUSTOMER SATISFACTION WITH SERVICE

QUALITY:
A COMPARATIVE STUDY IN BETWEEN PUBLIC
AND PRIVATE SECTOR BANKS OF RAJASTHAN

ABSTRACT

Banks are backbone of every economy. With the debut of multinational private sector banks,
banking sector is confronting tough level of competition as well as a thirst to further improve
their service quality in an effort to gain a highly competitive edge over their customers. Public
sector banks are confronting tough challenges from the private sector banks and are also under
tremendous pressure to cope up with the facilities provided by the multinational banks. While
public sector banks possess an advantage of perception and powerful rural network private sector
banks have better services as well as amenities. Service quality is considered as a global
judgement, or attitude, relating to the superiority of the service. In today's increasing competitive
atmosphere providing service quality is vital for any service industry. This research paper is an
effort to examine the relationship in between service quality as well as customer satisfaction of
selected public and private sectors bank of Rajasthan. Service quality has actually been
considered as a form of attitude that results from the comparison of prospect with recital (Cronin
and Taylor, 1992, Parasuraman et al, 1985). For comparative purposes, five service quality
dimensions are used i.e. tangibility, reliability, assurance, responsiveness and empathy.

INTRODUCTION

Not long ago the Indian economy has witnessed the emergence of many banks in the private
sector. There are various reasons behind the increasing number of commercialization of banks.
The growth of such banks is not possible unless they witness some great success in the context of
customer satisfaction or may it be the net assets held by these banks, efficiency of their
management or the networks of each bank both in private and also public sector bank. The
following paper covers the performance comparison through service quality and customer

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satisfaction of private sector banks and of course the public sector banks and to give the reasons
and suggestions for the same.

The Indian banking system was heavily dominated by nationalized commercial banks until
globalization. The financial regulation as well as credit controls imposed by the government
created a system wherein competition was very less. A more competitive banking environment
has progressively been achieved throughout the deregulation measures and permission granted to
lots of people private and foreign banks into the Indian banking industry. These changes have
also caused a compression of profits and a re-orientation of banking strategy towards quality
service provision. The introduction of new private sector banks and foreign banks has decreased
margins and revenues to banks. As a result of the heightened competition, bank service quality
has grown to be an increasingly important factor in determining market shares and profitability
in banking sector. With a high potential in the Indian banking industry, all leading banks are
differentiating themselves based upon service quality offering (Asgarian, 2010).

Service quality has been considered as a measure of

matching the customer expectations with the degree of
service delivery, and is measured with comparing
customers’ expectations and perceptions of the services
extended by the organisation. For this purpose,
perceptions are mentioned as consumer’s attitude about
the service received and expectation as consumer’s
requirements. For that reason, the knowledge about
customer’s expectations and perceptions is important to
service marketers to attain sustainable highly
competitive advantage by maintaining service quality.

(www.canwasquality.com)

Service Customer
Quality Satisfaction
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This paper investigates whether the private banks or the public banks have higher customer
satisfaction. For that author use SERVIQUAL model.

REVIEW OF LITERATURE ON THIS STUDY

Sureshchandar (2002):- The relationship in between service quality and customer satisfaction
in Indian banking sector were found to be independent however closely related. Both constructs
were found to vary significantly in core services ie ,human element, systematization of service
delivery, tangibles and social responsibility.

Sharma S, et al (2007):- A comparative study of public and private banks with respect to
perceptions of customers regarding service quality was made and was found that service quality
is associated with satisfaction and there was significant difference between quality of services
provided by banks in smaller cities are far behind big cities in this regard.

In accordance with K. Rama Mohana Rao Quality means the degree of excellence in service
performance .Consumers perceive the overall quality of a service by experiencing the
consumption process and comparing the experience along with their expectations. The best
service quality firms cannot blame for poor quality .The service firm need to formulate strategies
for quality performance. Service quality management is the most critical task of service
companies Quality may be perceived in many dimensions. It may relate to cost, profitability,
customer satisfaction, customer relations or positive word of mouth, customer asses service
quality with their own criteria.

In the service literature, strong prominence is placed on the significance of service quality
perceptions and of course the relationship between customer satisfaction and service quality
(Bitner and Hubbert , 1994; Rust and Oliver , 1994). Service quality continues to be described
as a form of attitude that results from comparisons of expectations with performance (Cronin
and Taylor, 1992; Parasuraman etal, 1985).

Arasli et al. (2005) also declare that service quality is linked with customer satisfaction in
banking industry because banks know that service quality delivery to customers is crucial for the
success of banks in this competitive world. Service quality model (SERVQUAL) is the result of
a comparison of perceptions and expectations of customers with a particular service.

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The main instrument in analyzing the service quality is “The gap model” of service or Servqual
model which is developed by Parshuraman et al. 1985. This model is especially used to
determine average gap score (between customer’s perceptions and expectations) for each service
attribute and then to evaluate the company’s service quality.

Bahia, K and J Nantel (2000)- The paper suggested an alternative scale for measuring service
quality in retail banking and developed a scale called as Banking Service Quality Scale which
contained factors like effectiveness and assurance, access, price, tangibles, service portfolio and
reliability and was seen to be more reliable than SERVQUAL.

The five servqual dimensions are:

• Tangibles-Appearance of physical facilities, equipment, personnel, and communication

materials.

• Reliability-Ability to perform the promised service dependably and accurately.

• Responsiveness-Willingness to help customers and provide prompt service.

• Assurance-Knowledge and courtesy of employees and their ability to convey trust and
confidence.

• Empathy-Caring, individualized attention the firm provides its customers.

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 Tangibles

Empathy Reliability

Dimentions

Responsive
Assurance
ness

HYPOTHESIS

 There are no significant differences in customer satisfaction between private and public
banks in Rajasthan.
 There is no significant between male and female respondents towards the perception and
expectation of bank service.

METHODOLOGY

As a way to test our hypothesis, author randomly chose 75 customers of public and private banks
in Rajasthan. Of the 75 questionnaires distributed, all of them were fulfilled by the bank clients,
hence the size of the sample, with regards to the given questionnaire is considered to be enough.
The primary objective of this research is to use SERVQUAL instrument to evaluate service
quality and customer satisfaction in Rajasthan banking sectors. The tables below come to the
conclusion the personal information about the sample.

Questionnaire

Primary data was collected with an instrument as revised from Parasuraman et al. (1988).

Table1:- Frequency table of gender class of respondents

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 Gender
Valid Cumulative
Frequency Percent Percent Percent
Valid male 30 40 40 40
female 45 60 60 100
Total 75 100.0 100.0

Graph 1:- Frequency graph of gender class of respondents

Gender
100
100
75
80
60
60 45 Frequency
40
30 Percent
40

20

0
male female Total

Table 1 demonstrates the distribution of customer by gender. As is shown, female clients

comprise almost 60% of the surveyed population while males constitute 40% of the population
being surveyed.

Table 2:- Frequency table of Distribution of the Clients by the Type of the bank

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 Type of banks
Valid Cumulative
Frequency Percent Percent Percent
Valid Public bank 11 14.67 14.67 14.67
Private bank 10 13.33 13.33 28
both 54 72 72 100
Total 75 100.0 100.0

Graph 2:- Frequency graph of Distribution of the Clients by the Type of the bank

100
100
90
72 75
80
70
54
60
Frequency
50
Percent
40
30
14.67 13.33
20 11 10
10
0
Public bank Private bank Both Total

Table 2 and graph shows the distribution of the customer by bank types. As can be seen, the
majority of clients (72 %) had accounts both in private and public banks while 14.67 % of the
clients used public banks only. Customers of private banks are 13.33% .

Table 3:- Frequency table of Average Expectation and Perception Scores in the Five
Dimensions

Perceptions Expectations Gap Score

Mean Mean
Tangibles 4.22 5.24 -1.02

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Reliability 4.31 6.09 -1.78
Responsiveness 4.02 6.12 -2.1
Assurance 5.08 5.02 -0.06
Empathy 4.11 5.19 -1.08

Graph 3:- Frequency graph of Average Expectation and Perception Scores in the Five
Dimensions

7 6.09 6.12
6 5.24 5.08 5.19
5.02
5 4.22 4.31 4.11
4.02
4 Perceptions Mean
3 Expectations Mean
2 Expectations Mean
1 Gap Score
0
-0.06
-1
-1.02 -1.08
-2 -1.78
-2.1
-3

As Table 3 and graph 3 uncovers perceptions in both private as well as public banks were
significantly below expectations in all the five dimensions. The greatest gap score was found in
terms of reliability with a difference of -2.1 points. Mean perceptions of responsiveness
furthermore revealed that expectations were not fully met in either private or public banks.

Table 4:- frequency table of Classification of Expectations and Perceptions by Gender

Gender N Mean Std. deviation

Male Expectations 30 5.2318 .83142

Satisfactions 30 4.2189 1.18349

Female Expectations 45 5.1397 .523142

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 Satisfactions 45 4.3241 1.02104

Graph 4:- Frequency graph of classification of Expectations and Perceptions by Gender

45 45
45
40
35 30 30
30
25 N
20 Mean
15
Std. deviation
10 5.2318 5.1397
4.2189 4.3241
5 0.83142 1.18349 0.523142 1.02104
0
Expectations Satisfactions Expectations Satisfactions
Male Female

Table 4 compares female and male clients‟ expectations and perceptions. As can be seen, among
both groups expectations exceeded perceptions. Male clients‟ expectations with an average of
5.23 were moderately higher than those of females with a mean of 5.13; however, female clients‟
expectations averaging 5.13 outgrew their perceptions by 1.02. Among male clients, this
difference was less than 1 point in favor of the expectations.

Table 5:- Frequency table of Clients‟ Expectations and Perceptions of Banks

Type of bank N Mean Std. deviation

Public bank Expectations 11 5.2314 .58962

Satisfactions 11 4.5119 1.17854

Private bank Expectations 10 5.2458 1.46001

Satisfactions 10 4.4258 1.42569

Both Expectations 54 4.3698 1.42578

Satisfactions 54 5.7589 1.08541

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Graph 5:- Frequency graph of Clients‟ Expectations and Perceptions of Banks

60 54 54
50
40
30
20 N
11 11 10 10
10 5.2314 4.5119 5.2458 4.4258 4.3698 5.7589 Mean
0.58962 1.17854 1.46001 1.42569 1.42578 1.08541
0 Std. deviation

Satisfactions
Expectations

Satisfactions

Expectations

Satisfactions

Expectations
Public bank Private bank Both

The lowest amount of difference among the two variables of expectations and perceptions was
observed in private banks with the former being 5.6 against 4.6 for the latter, showing a
difference of 1.0 point. Following private banks, public banks showed a difference of 1.1 points
in favor of expectations compared to their clients‟ perceptions. Overall satisfaction of private
banks shows the highest number which indicates that it is disperses, i.e. the clients had different
ideas. For that reason, overall expectations of both private as well as public banks also show the
lowest number which indicates the cluster mode, i. e. the clients had close ideas to this issue.

CONCLUSION

As a whole, the expectations of bank customers of Rajasthan on service quality items as advised
by Parasuraman et al. (1988) exceeded their perceptions. The differences in the clients‟
expectations as well as perceptions different from bank to bank and in between female and male
customers.

It is not surprising that the largest discrepancy in between expectations and perceptions of
Rajasthan bank customers was observed with respect to responsiveness.

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Customers expect prompt service and will not put up with bank staff that appears to be too busy
to respond. Additionally they expect the bank to be sensitive to their needs and give the
customers personalized attention.

Customers are much moresatisfied with private banks than public banks. However public banks
pre-existed private banks in Rajasthan, private banks have taken more customer-oriented
measures and, consequently, been more successful in promoting customer satisfaction.

But that is also a well known fact that private banks are mainly consists of larger towns and
cities, leaving the smaller towns and villages exclusively to public banks. On the other side in the
tribal area public sector banks.

References:-

 Arasli, H., Mehtap-Smadi, S., & Turan Katircioglu, S. (2005). Customer service quality
in the Greek Cypriot banking industry. Managing Service Quality: An International
Journal, 15(1), 41-56.
 Asgarian, F. (2010). A Comparative Study on Service Quality and Customer Satisfaction
between Public Banks and Private Banks in Iran (Doctoral dissertation, Eastern
Mediterranean University (EMU).
 Bahia, K., & Nantel, J. (2000). A reliable and valid measurement scale for the perceived
service quality of banks. international journal of bank marketing, 18(2), 84-91.
 Bitner, M. J., & Hubbert, A. R. (1994). Encounter satisfaction versus overall satisfaction
versus quality. Service quality: New directions in theory and practice, 34, 72-94.
 Cronin Jr, J. J., & Taylor, S. A. (1992). Measuring service quality: a reexamination and
extension. The journal of marketing, 55-68.
 Cronin Jr, J. J., & Taylor, S. A. (1992). Measuring service quality: a reexamination and
extension. The journal of marketing, 55-68.
 K. Rama Mohana Rao, (2007), “Services Marketing” Pearson Education
 Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1985). A conceptual model of service
quality and its implications for future research. the Journal of Marketing, 41-50.
 Rust, R. T., & Oliver, R. L. (1994). Service quality in theory and practice.

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 Sureshchandar, G. S., Rajendran, C., & Anantharaman, R. N. (2002). The relationship
between service quality and customer satisfaction–a factor specific approach. Journal of
services marketing, 16(4), 363-379.

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