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Perceived
Elucidating perceived overall overall service
service quality in retail banking quality
Zalfa Laili Hamzah
Department of Marketing, University of Malaya, Kuala Lumpur, Malaysia
781
Siew Peng Lee
Department of Economics, University of Tunku Abdul Rahman, Received 20 December 2015
Petaling Jaya, Malaysia, and Revised 6 June 2016
13 July 2016
Sedigheh Moghavvemi Accepted 19 August 2016
Department of Operation and Management Information Systems,
University of Malaya, Kuala Lumpur, Malaysia

Abstract
Purpose – The purpose of this paper is to examine the dimensions of service quality (SERVQUAL) from the
perspective of the customers and its relationships with perceived overall SERVQUAL in retail banking and
also investigate the relationships between perceived overall SERVQUAL and customer trust, customer
satisfaction, and bank reputation.
Design/methodology/approach – A survey questionnaire was constructed, and data were collected from
375 regular customers of local banks. The convenience sampling method was employed to collect data from
existing customers of local banks operating in the Klang Valley area of Malaysia. Structural equation
modelling was applied to analyse the data.
Findings – The results of the study indicate four key dimensions of SERVQUAL – tangibles, empathy,
reliability and security, and internet banking – all of which are significantly and positively related to
customers’ perceived overall SERVQUAL. Internet banking facilities are another significant determinant of
the perceived overall SERVQUAL. The results are indicative of the strong and positive effect upon customer
satisfaction, their trust in the bank, and, finally, a bank’s reputation.
Research limitations/implications – This study has presented and tested empirical study of perceived
overall SERVQUAL model in the banking industry, particularly in the Malaysian context. This research
identified the dimensions of SERVQUAL (i.e. tangibles, empathy, reliability and security, and internet banking)
that influence the overall perceived SERVQUAL, and how these overall perceptions will eventually influence
customer trust, customer satisfaction, and bank reputation is valid and reliable in retail banking industry.
This study, however, only focussed on the banking industry. Given the diversity of the service industry, these
findings may have to be tested for the applicability to different service industries in future studies.
Practical implications – This research is useful to bank managers as it helps them improve SERVQUAL to
protect and expand their respective market share in a highly competitive industry. Banks could utilise the
results of this study to improve their service tangibility, empathy, reliability, and security, which will affect
both customer trust and satisfaction, and enhance a bank’s reputation.
Social implications – The findings of specific dimensions of SERVQUAL will contribute to customer
perception of banks’ image and reputation, and strengthen trust and satisfaction. Moreover, assisting
customers towards the understanding of how they should received high quality of services with regard to
quality should be perceived as emphatic, reliable, secured and tangibility of service.
Originality/value – The findings of this study highlight the specific dimensionalities of SERVQUAL
in influencing the perceived overall SERVQUAL. This study will increase the understanding on the impact of
perceived overall SERVQUAL on consumer trust, customer satisfaction, and a bank’s reputation. Specifically,
it reports an empirical study of a model of perceived overall SERVQUAL that simultaneously considers the
direct effects of perceived overall SERVQUAL on customer trust, customer satisfaction and bank reputation.
Keywords Trust, Reputation, Customer satisfaction, Perceived overall service quality
Paper type Research paper

International Journal of Bank

Introduction Marketing
Delivering high perceived overall service quality (SERVQUAL) is essential for companies Vol. 35 No. 5, 2017
pp. 781-804
that intend to distinguish themselves from their competitors and sustain their competitive © Emerald Publishing Limited
0265-2323
advantages (Stamenkov and Dika, 2015; Chowdhary and Prakash, 2007; Wang et al., 2003). DOI 10.1108/IJBM-12-2015-0204
IJBM In a competitive financial service environment, the pursuit of highly perceived overall
35,5 SERVQUAL is considered to be a central strategy to distinguish themselves in the quest of
realizing long-term success. Moreover, scholars and practitioners suggest that companies
that provide good services are perceived as being of high quality, which could then be used
to build customer trust, increase customer satisfaction, and improve corporate reputation
(Kassim and Abdullah, 2010; Eisingerich and Bell, 2008; Wang et al., 2003; Dawar and
782 Parker, 1994), all of which will result in an increase in business and financial performances.
However, it has been argued that the provision of a high-quality service is necessary but
insufficient for a successful business (Stamenkov and Dika, 2015). This situation might be
due to the fact that, thus far, most measurements of SERVQUAL, such as SERVQUAL and
service quality performance (SERVPERF), are insufficiently comprehensive to explain the
construct, and merely address generic scales across industries, which is unfeasible (Brady
and Cronin, 2001 and Mittal et al., 2015). By generic scales, customers tend to combine
evaluations of attributes, resulting in less accurate customer perception of the overall
perceive SERVQUAL of a particular industry.
Previous research on perceived overall SERVQUAL has received great attention in
recent decades, which is still being debated (Chowdhary and Prakash, 2007; Parasuraman
et al., 1988; Cronin and Taylor, 1992; Brady and Cronin, 2001; Kang and James, 2004;
Grönroos, 1984). Research in the past have solely focussed on functional quality
(Edvardsson, 2005), which is inadequate for capturing all of the aspects of SERVQUAL
(Mittal et al., 2015). Furthermore, research on perceived overall SERVQUAL tends to be
generic rather than context specific. As a result, there is a lack of understanding of
SERVQUAL in a specific context as generic context does not capture the specific nature of
the type of service (Mittal et al., 2015). A clear understanding of specific context is essential
because customers have a unique set of expectations based on the different types of
services, such as the service industry. For example, banking is regarded as a high contact
service as customers are directly connected to service providers (Lovelock, 1996).
Furthermore, banks facing challenges with regard to changes of marketing environment,
fierce competition, technology innovation, and the complex demand of customers that
necessitating continuous evaluations of the dimensionalities of SERVQUAL (Tsoukatos and
Mastrojianni, 2010).
Thus, an understanding of the specific dimensionalities of SERVQUAL is critical to all
service industries, including banks, as they need to deliver high quality of services in order
to fulfil customers’ demands and to survive in a competitive business environment
(Chowdhary and Prakash, 2007). As the current banking industry becomes more
competitive, customers tend to become more and more demanding. Therefore, it is
important that banks be concerned with delivering high-quality services to customers
(Chowdhary and Prakash, 2007). For example, they need to understand specific dimensions
(e.g. reliability, empathy, and convenience) applied in banking in order to fulfil customers’
demands with different expectations of services being provided (Mittal et al., 2015; Kang and
James, 2004). Fulfilling customer demands is important to banks, as it results in gained
trust, improved reputation, and subsequently retention of customers, especially when the
bank industry is one of the fastest-growing sectors. The importance of this sector in the
national economy is reflected in its contribution to the GDP.
While researchers agree that perceived SERVQUAL is a multi-dimensional construct, no
consensus has been reached about its generally valid and generic dimensions (Korda and
Snoj, 2010), and no general agreement has been agreed upon to the nature or content of the
dimensions (Brady and Cronin, 2001). For example, Parasuraman et al. (1988) developed the
SERVQUAL measurement with five dimensions. They claimed that the scale can be
generalised across service industries and have received wide acceptance amongst
researchers. Nevertheless, the empirical evidence suggests that widespread usage of these
dimensions is unjustified (Gilmore, 2003). In the financial sector, Bahia and Nantel (2000) Perceived
developed a bank SERVQUAL model containing six dimensions (i.e. effectiveness and overall service
assurance, access, price, tangibles, service portfolio, and reliability), while Guo et al. (2008) quality
reported four dimensions (i.e. reliability, human capital, communication, and technology) for
capturing SERVQUAL in the Chinese banking sector. Despite these SERVQUAL studies
conducted in the financial sector, there is a lack of agreement regarding the specific
dimensions of SERVQUAL in the banking sector (Monferrer-Tirado et al., 2016). In this 783
context, understanding the SERVQUAL dimensions and their respective relationships with
the perception of overall SERVQUAL of banking sector remains a key issue that requires
further investigation. Moreover, Chowdhary and Prakash (2007) suggested that the
identification of the determinants of SERVQUAL is necessary in order to be able to specify
measure, control, and improve customer perceived SERVQUAL.
Perceived overall SERVQUAL was argued to have a significant impact on business
performance, such as customer satisfaction (Caruana, 2002; Hu et al., 2009), customer trust,
and bank reputation (Cronin et al., 2000). These research works, however, were conducted
independently. The research that integrates bank SERVQUAL dimensionalities and its
impact on consumer trust, customer satisfaction, and bank reputation is still scarce
(Tsoukatos and Mastrojianni, 2010; Caruana, 2002; Bahia and Nantel, 2000; Lee and
Moghavvemi, 2015), particularly in a Malaysian context. This will limit the understanding
of how specific dimensionalities of SERVQUAL play their respective roles in developing
trust, enhance customer satisfaction, and build their reputation in banking. As pointed out
earlier, the dimensions of SERVQUAL may differ according to the type of service industry.
In this regard, understanding SERVQUAL dimensions and perceived overall SERVQUAL
remains a key issue that requires further investigation vis-à-vis the financial sector.
Theory of expectancy/disconfirmation paradigm also provides the grounding of this
study, with SERVQUAL as an antecedent and customer satisfaction as an outcome. The
theory suggests that key determinants of satisfaction are expectations and perception of
product and service performances (Oliver, 1989). Previous research works also suggested
that the theory provide a complete picture of the role of perceived overall SERVQUAL as a
determinant of satisfaction and behavioural outcome (Gupta and Stewart, 1996). Perceived
overall SERVQUAL also has been suggested to influence customer trust and bank
reputation. However, the effect of both constructs has not been tested in one model. Thus, a
better understanding of the effect of perceived overall SERVQUAL on customer satisfaction
with the presence of customer trust and bank reputation is helpful to the management when
strategizing their respective banks and allocating corporate resources (Caruana, 2002).
Therefore, it is also crucial to look at developing a richer model that incorporates these
constructs simultaneously, as proposed in the current study.
Therefore, an empirical investigation is required to properly address the following
questions: what are the dimensions of SERVQUAL in the banking context? To what extent
do the dimensionalities of SERVQUAL influence the perceived overall SERVQUAL? Does
perceived overall SERVQUAL influence consumer trust, customer satisfaction, and bank
reputation? Thus, this study examines the dimensionalities of SERVQUAL that affect the
perceived overall SERVQUAL and its impact upon customer trust, customer satisfaction,
and bank reputation in Malaysia. As such, collectively investigating the overall
SERVQUAL determinants is essential for strategizing their services marketing decisions,
and thereby warrants further investigation. The issue of overall SERVQUAL is important in
Malaysia for many reasons. First, there is a lack of research on how to manage SERVQUAL
in the Malaysian banking industry. Second, with the enormous growth of foreign banks,
local banks are aware of the competition, because there is a segment within the current
market that would switch to foreign banking services if the quality being offered were on
par with the local banks. Since the Asian financial crisis in 1997, the Malaysian banking
IJBM scene has undergone a number of significant changes, including the restructuring and
35,5 redesigning of the service delivery methods being offered. Over time, the Malaysian
banking sector is continuously improving, due to increasing competition from the growth of
foreign banks in local. As such, local banks are pressured to find ways to sustain their
respective competitiveness. Thus, this research is considered to be timely.
The remainder of this paper is structured in the following manner. The following
784 sections will provide information on the constructs being examined in this study, explain the
theoretical background, as well as provide a proposed conceptual model and the research
hypotheses. The research methodology will then be detailed in the subsequent section.
The following section presents the analysis, results, and discussion of the research. The final
section concludes the study by pointing out research contributions, research limitations,
and directions for future research.

SERVQUAL
SERVQUAL has been studied extensively in recent decades. Traditionally, SERVQUAL
refers to the customer’s overall evaluation of service firms’ attributes by comparing their
expectations and actual performance (Parasuraman et al., 1988). Parasuraman et al. (1988)
developed a 22-item instrument, recognised as SERVQUAL, which is widely used for
measuring service quality. The five dimensions of SERVQUAL that rely on customers to
form their judgement on perceived SERVQUAL are: assurance – employees’ knowledge and
courtesy and their ability to convey trust and confidence; empathy – caring and individual
attention given to customers; reliability – ability to perform the promised service
dependably and accurately; responsiveness – willingness to help customers and provide
prompt service; and tangibles – appearance of physical facilities, equipment, personnel,
and written materials (Parasuraman et al., 1988).
The scale of SERVQUAL was developed based on five industries, which are repair and
maintenance, retail banking, credit card companies, securities and brokerages, and long
distance telephone services. Despite their advantages and popularity, however, both scales
have their respective limitations. The main empirical problem is their unstable dimensions
(Van Dyke et al., 1997), which could differ depending upon the service industry to which the
scale was applied to (Babakus and Boller, 1992). Babakus and Boller (1992) proposed that
a quality measurement scale be adapted to specific individual service industry, and that a
general scale should not be used at all.
Furthermore, scholars have argued that SERVQUAL is a multi-dimensional construct,
with no agreement on generic dimensions (Lee and Moghavvemi, 2015). However, this model
has been criticised by Babakus and Boller (1992) and Parasuraman et al. (1994), both of
whom suggested further modifications to the SERVQUAL model. This is because many
studies fail to fully appreciate all five dimensions, leading to an alternative
conceptualisation of SERVQUAL. Thus, the SERVQUAL model remains the guiding
model in numerous studies in the service sector, focussing on various organisations, such as
banks, retail, and tourism. Many researchers have incorporated other constructs and
measures alongside the SERVQUAL dimensions in order to enrich and extend the
explanatory power of this model (Bahia and Nantel, 2000; Jamal and Naser, 2002; Al-Hawari
and Ward, 2006). Bahia and Nantel (2000) proposed an alternative measure of perceived
quality in retail banking, consisting of 31 items with six dimensions (i.e. effectiveness and
assurance, access, price, tangibles, service portfolio, and reliability). Another researcher
have suggested that high-quality of banking services should have high-quality of service
environment, interaction, empathy, and reliability (Karatepe et al., 2015). Jamal and Naser
(2002) and Al-Hawari and Ward (2006) have adopted the Parasuraman et al.’s (1988)
framework to examine the quality of service in retail banking services. However, most
SERVQUAL studies focussed on developed countries, with limited number of works
pertaining to commercial banks. For example, Shafie et al. (2004) examined the SERVQUAL Perceived
in Islamic banking industry. They suggested that an additional dimension (e.g. compliance overall service
with Islamic law) should be added to the SERVQUAL method, as the Islamic banking quality
industry operate under different principles and cultures compared to other service
industries. They posited that it is important for Islamic banks to consider cultural
differences when adopting SERVQUAL.
In the banking industry, the internet revolution has changed the way banks interact with 785
customers, all in the name of enhancing their provision of services (Akinci et al., 2004; Jun and
Cai, 2001; Joseph et al., 1999). Banks not only provide their services via traditional methods,
they also introduced internet banking services to build and maintain relationships with
customers (Mols, 2000). Internet banking has helped customers conveniently manage their
personal banking affairs. For example, banks offer their customers a variety of services
24 hours a day with internet access availability, anywhere, and anytime (Hamzah et al., 2014).
Moreover, internet banking provides customers with enhanced control over their financial
affairs that is user friendly and fits their lifestyle (Hamzah et al., 2014). Internet banking also
could potentially save costs, increase customer penetration, and develop the bank’s non-core
business. Due to these advantages, internet banking is fast gaining popularity among
customers. The changing needs of customers have forced banking services to transform their
services by providing high-quality internet banking services. Researchers have suggested
that high-quality internet banking services should be easy and convenient for operation
(Pikkarainen et al., 2006) and perceive usefulness, provide ease of use, reliability,
responsiveness and a high level of security (Liao and Cheung, 2008). Therefore, this study
suggests that internet banking could be an important determinant of the quality of banking
services, which will influence the customers’ perception of overall SERVQUAL.

Customer satisfaction
Jamal and Naser (2002) defined customer satisfaction as a feeling or evaluation by
customers towards products or services. Customer satisfaction is the result of the provision
of goods and services that meet or exceed customer’ needs (Szymanski and Henard, 2001).
Satisfied customers would be more than willing to pay premiums, provide referrals, and use
more products (Reichheld, 1996). In today’s highly competitive banking industry, customer
satisfaction is regarded as the essence of success ( Jamal and Naser, 2002; Siddiqi, 2011).
Satisfied customers will be more than likely to stay and recommend their respective banks
to their acquaintances. Inevitably, this will reduce bank costs associated with the provision
of services, due to fewer complaints (Reichheld and Aspinall, 1993).

Bank reputation
Scholars have suggested that SERVQUAL is important in increasing reputation(s) (Caruana
and Ewing, 2010; Walsh et al., 2009). Consumers assume that retailers who possess a
reputation for providing high SERVQUAL and products are at a lower risk (Purohit and
Srivastava, 2001; Dawar and Parker, 1994), which will shift their preference towards these
stores (Koistinen and Järvinen, 2009). In retail services, a good reputation is vital for customers
vis-à-vis purchasing or repeat purchasing behaviours (Wang et al., 2003; Graham and Fearn,
2005). This implies that customers are more likely to purchase and remain loyal to reputable
retailers (Nguyen and LeBlanc, 2001). Ou et al. (2006) stated that a retailer’s reputation is a sign
of excellent quality. A favourable and well-known reputation becomes an asset for a service
provider, as it will reside in the minds of customers. Moreover, customers tend to forgive
minor mistakes if a service provider is of positive repute (Kang and James, 2004).
There are two schools pertaining to company reputation and image: the similarity school
that states that company reputation is a synonym for company image, and the difference
school that differentiates these two phrases. The terms corporate image and corporate
IJBM reputation are considered as identical by Gotsi and Wilson (2001) who defined image as “the
35,5 total impression of the company”. Image is about overall impression residing in the mind of
customers. Fombrun (1996) considers the term corporate reputation and corporate image as
different concepts. According to Wartick (1992), corporate reputation is an “aggregation of a
single stakeholder’s perceptions of how well organizational responses are meeting the
demands and expectations of many organizational stakeholders”. Yoon et al. (1993) viewed
786 corporate reputation as the firm’s history of communicating to the customers, in terms of the
quality, its products, or services compared to that of its competitors. Based on the
discussions of the definitions of reputation, corporate reputation is a stakeholder’s overall
evaluation of a company over time. This evaluation is based on the customer’s direct
experiences with the bank.

Trust
Trust is formed when customers believe that banks will perform as promised (credibility trust)
and have confidence in employees’ ability and courtesy (benevolence trust) (Yap et al., 2012).
El-Manstrly et al. (2011) defined trust as a function of the perceived reliability and integrity of
a brand or service provider. Jan and Abdullah (2014) reported that trust in the banking sector
increases awareness concerning the importance of technology-related critical success factors.
Research has revealed that higher overall SERVQUAL would lead to a higher level of
trustworthiness, and positively increase the level of customer loyalty.

Theoretical background and hypotheses development

Having identified the variables associated with SERVQUAL, this study modified the
measurement for SERVQUAL to capture the customer perceptions of SERVQUAL in retail
banking, particularly in the context of Malaysia. This section presents the theoretical
background of a proposed conceptual framework for perceived overall SERVQUAL. The
conceptual framework is developed based on the literature review and prior scales that are
available for investigating the relationships between the perceived overall SERVQUAL,
trust, customer satisfaction, and bank reputation. The overall perceived SERVQUAL is
influenced by multiple constructs within SERVQUAL (tangibles, empathy, reliability and
security, convenience, and internet banking).
According to Lee and Moghavvemi (2015), many researchers (i.e. Behara et al., 2002;
Ladhari et al., 2011) found that SERVQUAL model and its measurement scales are changing
in conformity to the different types of service or country. Due to those reasons, we follow
Bahia and Nantel (2000) and Lee and Moghavvemi’s (2015) study, who identified dimensions
based on the most cited and most applicable dimensions of SERVQUAL in the context of
banking in Malaysia, such as tangibles, empathy, reliability and security, convenience, and
internet banking. These dimensions are identified from our exploratory study, which was
conducted previously. Additionally, the five dimensions (tangibles, reliability,
responsiveness, assurance, and empathy) of the SERVQUAL approach developed by
Parasuraman et al. (1988) appears to be less universally applicable (Gilmore, 2003).
Thus, based on literature, the SERVQUAL model is further modified to assess the level of
SERVQUAL in the Malaysian banking sector. The research model and the hypotheses
relationship between the constructs in this study is presented in Figure 1.
Earlier literature suggests that SERVQUAL incorporates a number of dimensions.
For the purpose of this study, the SERVQUAL model includes tangibles, empathy,
reliability and security, convenience, and internet banking. Tangibles comprise the physical
facilities, equipment, and the appearance of personnel. Bank customers usually look for any
tangibles as the indicators of a bank’s overall SERVQUAL. Customers can assess the
premises of the bank or the appearance of the bank’s staff. Physical facilities, availability,
the adequacy of equipment, and the appearance of a bank’s employees are viewed as
 Tangibility
Perceived
overall service
quality

H1
Empathy H2
Trust
H6
Reliability and H3
security
Perceived H7 Customer 787
H4 overall service
satisfaction
Convenience quality
H5 H8 Figure 1.
The conceptual
Internet banking Bank
research framework
reputation

important factors in terms of tangibility amongst customers in Hong Kong (Lau et al., 2013).
Therefore, the number of counters, the design of the transaction form, and the availability of
a water dispenser might increase the perception of SERVQUAL being received. Moreover,
bank users in India (Ravichandran et al., 2010) and Bangladesh (Rahman, 2013) also ranked
tangibles dimension as highly important in increasing customer satisfaction and loyalty.
Therefore, the following hypothesis is developed:
H1. There is a positive relationship between tangibles and perceived overall SERVQUAL.
Empathy is customers’ expectations with regard to the extent to which the service
provider appears to understand and is concerned about their individual needs and wants.
The concept of empathy is to understand the needs of the customers and provide
individual attention (Siddiqi, 2011). Researchers revealed that empathy plays a vital role in
influencing customer satisfaction with regard to the value of the SERVQUAL provided by
frontline staff (Annamalah et al., 2011; Kamal et al., 2013; Shanka, 2012; Siddiqi, 2011;
Estiri et al., 2011). Bank staff and customer interactions are reflected in the dimension of
empathy. This means that bank customers perceive good overall SERVQUAL in terms of
banking hours and personal attention given to them by the bank’s staff. Therefore, the
following hypothesis is proposed:
H2. There is a positive relationship between empathy and perceived overall SERVQUAL.
Reliability and security is the extent to which customers can rely on the service provider to
keep promises and perform in the best interests of the customers (Lee and Moghavvemi,
2015). Reliability has been identified as an influential component in determining the
customer loyalty in previous studies (Estiri et al., 2011; Kumar et al., 2010; Lau et al., 2013;
Mistry, 2013). Zafar et al. (2012) surveyed 192 bank users in Pakistan, and the results of their
study showed that reliability is positively correlated to customer loyalty, because customers
expect bank employees to have zero error records and fulfil their promise of delivering a
certain service within a stipulated time frame. Customers will not be satisfied with the
overall SERVQUAL if they do not feel reliable and secure about the competence of the
service provider. Thus, banks need to instil feelings of confidence in customers, and banks’
staff are expected to handle customers in a professional and competent manner. In this
study, security refers to the physical reliability at the bank, such as adequate security
guards and CCTVs, ATM machine, or bank located at a secure location, etc. As such,
reliability and security of the bank service is an important factor for customers in evaluating
the overall SERVQUAL (Lee and Moghavvemi, 2015). The hypothesis is as follows:
H3. There is a positive relationship between reliability and security, and perceived
overall SERVQUAL.
IJBM Kumar et al. (2009) included an additional dimension, convenience, to the SERVQUAL model.
35,5 Their findings indicated that the convenience factor plays a significant role in delivering the
SERVQUAL of banks in Malaysia. Therefore, the convenience dimension was also added to
the modified SERVQUAL model for the banks’ customers. Similarly, Awan et al. (2011)
found that the convenient availability of financial services is ranked high on the list of priority
by customers for SERVQUAL in the banking sector of Pakistan. This implies that the greater
788 the level of convenience, the greater the perceived overall SERVQUAL. The convenience of
service remains the responsibility of the service provider, indicating the full range of available
services, convenience, and ease-of-access via its location, operating hours, employees, and
operation systems. Hence, the following hypothesis is formulated:
H4. There is a positive relationship between convenience and perceived
overall SERVQUAL.
Internet banking distinguishes itself from its competitors (Abdullah and Kassim, 2009).
Internet banking is the use of the internet as a delivery channel for banking services, such as
opening a deposit account or transferring funds between different accounts, and new
banking services, i.e. electronic bills and payments ( Jun and Cai, 2001). The internet has
been accepted as a new channel of banking transactions. With the high growth of new
technology, the increased use of the internet has a great impact on the characteristics of
subsequent services. Studies have shown that the provision of internet banking services is
important in attracting more customers (Hamzah et al., 2014). Rod et al. (2009) and Jun and
Cai (2001) found that the more positive the customer perception of the SERVQUAL of
internet banking, the greater the likelihood that overall SERVQUAL will be perceived.
Therefore, we include the provision of high-quality internet banking as being influential to
the overall SERVQUAL of the banking sector. The developed hypothesis is as follows:
H5. There is a positive relationship between internet banking and perceived
overall SERVQUAL.
In the banking industry, trust is regarded as one of the relevant collaborative relationships
between a customer and a bank, and as a channel to enhance competitiveness (Barney and
Hansen, 1994; Levy and Hino, 2016). Trust is conceptualised as the customers’ expectations
and beliefs that their service provider will carry out actions as promised (Levy and Hino,
2016). Singh and Sirdeshmukh (2000) found that trust is essential for building and
maintaining long-term relationships. They are of the belief that if one party can bring
positive outcomes to the other party, trust can therefore be developed. A high level of trust
leads to the future potential of the relationship between customers and service providers
(Amin et al., 2013). The way in which perceived overall SERVQUAL (such as speed and
efficiency of transactions; employees of bank are polite and friendly, and willingness to help)
affects trust has yet been adequately investigated. For this reason, one of the objectives of
this study is to investigate the overall perceived SERVQUAL of customer trust in a bank.
Based on the above discussion, the following hypothesis is proposed:
H6. There is a positive relationship between perceived overall SERVQUAL and
customer trust.
The relationship between SERVQUAL and customer satisfaction has received considerable
academic attention in the past few years (Cronin et al., 2000; Sureshchandar et al., 2002).
SERVQUAL and customer satisfaction are widely recognised as key influences in the
formation of consumers’ purchase intentions in a service environment (Taylor and Baker,
1994). Perceived SERVQUAL and satisfaction have generally been conceptualised to be
distinct constructs (Spring and Mackoy, 1996). As such, greater understanding of the
relationship between perceived overall SERVQUAL and customer satisfaction is required
(Spring and Mackoy, 1996). González et al. (2007) found that perceived SERVQUAL Perceived
influences customer satisfaction in behavioural intention of tourism industry. Mägi and overall service
Julander (1996) indicate that perceived SERVQUAL influences customer satisfaction in quality
Swedish grocery retailing. Based on earlier studies, this study hypothesises that perceived
overall SERVQUAL has a significantly positive effect on customer satisfaction. Higher
levels of perceived overall SERVQUAL will lead to higher customer satisfaction. As such,
the hypothesis is developed: 789
H7. There is a positive relationship between perceived overall SERVQUAL and
customer satisfaction.
It has been suggested that SERVPERF is essential in building a good reputation
(Wang et al., 2003). Zeithaml and Shappiro stated that perceived SERVQUAL is associated
with the reputation of brand name. Selnes (1993) found that the reputation of a brand is
influenced by how consumer experiences performance of quality of services or product.
Customers form a general overall evaluation of services based on their sum of beliefs or
expectations of a set of attributes. Their perceptions of quality of service are influenced by
their respective experiences on high- or low-quality performances. For example, when they
experience high-quality services, the reputation of a bank will increase vis-à-vis customers.
Thus, the hypothesis is proposed as follows:
H8. There is a positive relationship between perceived overall SERVQUAL and
bank reputation.

Research methodology
This study aims to examine the dimensions of SERVQUAL in the banking sector. It will also
look into how the dimensions will influence the perceived overall SERVQUAL, which results
in the building of trust, customer satisfaction, and bank reputation. A questionnaire survey
was conducted to examine the quality of services among local banks in Malaysia,
particularly in the Klang Valley area, Malaysia. Currently, there are 27 commercial banks,
16 Islamic banks, and 11 investment banks offering various products and services
to the public (Bank Negara Malaysia, 2015b). Since the pricing in Malaysian banks is
regulated, the SERVQUAL being delivered becomes important if the banks want to retain
and attract customers. With the increasing number of international banks, local banks are
competing in a highly competitive environment for the provision of quality services based
on customer expectations.
The judgement sampling method was used to collect data. Respondents were first asked
whether they had bank accounts with local banks; if they replied in the affirmative, they
were asked to participate in the survey. For each question, the respondents were asked to
tick the response that best described their degree of agreement/disagreement. Most of the
questionnaire items were adapted from previous studies on banking, and a few more
constructs were introduced in our study in order to obtain adequate measures of the
dimensions of interest (see Figure 1). All items were measured using a seven-point Likert
scale – ranging from 1, indicating strongly disagree to 7, indicating strongly agree. We
measured the antecedents of perceived overall SERVQUAL (i.e. tangibles, empathy,
convenience, reliability and security, and internet banking) and the consequences of
perceived overall SERVQUAL on customer satisfaction, trust, and bank reputation.
In total, 400 questionnaires were gathered over a six-week period. However, only 375 were
usable for further data analysis. The two-step approach of structural equation modelling
(SEM) using AMOS 18.0 (maximum likelihood estimation) was employed to predict the
relationships between the constructs. This approach was selected due to its capability of
testing the causal relationships between the constructs with multiple measurement items.
IJBM Results
35,5 Profile of respondents
The demographic profile of the respondents is presented in Table I. Based on the results,
61 per cent of the respondents were females, while 39 per cent (229) were males. The
smaller percentage of the latter is due to difficulties in approaching them. The majority of
the respondents (75.4 per cent) were between 21 and 40 years old. The largest group of
790 respondents’ works for the public and private sectors was 68 per cent, while those who are
self-employed were 10 per cent, and students, housewife, or others (investment
consultants, insurance agents) made up of 22 per cent of the total respondents. Personal
income was measured in Malaysian Ringgit (RM). In total, 30 per cent of the respondents
had a monthly income of between RM2,001 and RM4,000. Most of the respondents prefer
internet banking (68 per cent) and use ATMs (79 per cent), while a lower percentage
(40 per cent) prefer tellers at the bank. These results are consistent with the statistics
published by the central bank, which indicated that online banking has become very
popular in Malaysia. Currently, 31 banks in Malaysia offer internet banking, and nearly
19.8 million internet banking subscribers (penetration to population of 63.7 per cent)
conducted more than 210 million banking transactions, valued at 2.33 billion Ringgit as of
June 2015 (Bank Negara Malaysia, 2015a).

Exploratory factor analysis

Table II presents the mean scores, standard deviations, Cronbach’s α value, and the results of
the exploratory factor analysis of the constructs in this study. The mean scores have been

Profile Description Frequency Percentage (%)

Gender Male 146 38.9

Female 229 61.1
Age Below 20 years 5 1.3
21-30 years 153 40.8
31-40 years 129 34.4
41-50 years 61 16.3
51 years above 27 7.2
Profession Salaried-private sector 169 45.1
Salaried-government 88 23.5
Student 59 15.7
Business/self-employment 37 9.9
Housewife 12 3.2
Others 10 2.7
Monthly income Below RM2,000 53 14.1
RM2,001-RM4,000 113 30.1
RM4,001-RM6,000 63 16.8
RM6,001-RM8,000 28 7.5
RM8,001-RM10,000 41 10.9
RM10001 and above 77 20.5
Preferred transaction Automated teller machines 294 78.4
Internet banking 255 68.0
Tellers at bank 150 40.0
Phone banking 19 5.1
Duration of being bank customer Less than 1 year 14 3.7
1-5 years 149 39.7
Table I. 6-10 years 110 29.3
Demographic profile More than 10 years 102 27.2
of respondents Note: n ¼ 375
 Factor
Perceived
Constructs Item statements Mean SD α loading overall service
quality
Tangibles Infrastructure and facilities, such as parking space and
ATMs, are adequate 4.46 0.14 0.802 0.579
Equipment in the bank is modern-looking 0.780
Printed materials, such as brochures and statements
are attractive 0.758 791
Maintain clean and pleasant branch facilities 0.831
The lobby area is comfortable while waiting for services 0.817
Provide easy-to-read and understandable bank statement 0.719
Empathy Bank gives customers individual attention 4.74 0.91 0.832 0.754
Bank staff never too busy to respond to my requests 0.608
Bank staff understand customer’s specific needs 0.777
Bank staff are friendly and polite 0.667
Bank is very responsive to customer complaints 0.831
Bank staff are polite when handling customer complaints 0.828
Bank staff willing to help elderly and disabled customers and
give them special attention 0.599
Reliability and Bank maintains error-free records (e.g. accurate bills and
security statements) 5.11 0.89 0.894 0.791
Bank keeps confidentiality of account and privacy of
customers 0.746
Bank delivers up-to-date records 0.711
Physical security at bank is adequate (e.g. security guards,
CCTVs) 0.633
ATM machine is located at a secure location 0.775
Bank is located in secure location 0.825
Bank is quick to alert customers to any suspicious or
fraudulent transaction 0.686
Bank always asks questions for verification in phone banking 0.564
Convenience Bank branches are located in a convenient location 4.53 0.95 0.817 0.729
Bank extends its working hours in order to meet customer needs 0.639
Number of open tellers during peak hours is adequate 0.655
Waiting time for receiving services is not too long 0.685
Bank provides the necessary convenience for customers
(e.g. parking area and special counters for elderly/disabled
customers) 0.644
ATMs are conveniently located (e.g. shopping malls,
government departments, etc.) 0.732
Bank service is easily accessible by telephone 0.595
Internet The online banking has adequate security features 5.19 1.02 0.929 0.844
banking The online banking is fast for making transactions 0.901
It is easy to learn how to operate online system 0.902
The online system makes appropriate confirmation
concerning the completion of transactions 0.890
I received confirmation of every online transaction by SMS 0.766
The online banking system has a user-friendly interface 0.887
Overall service My bank always delivers excellent overall service 4.95 0.87 0.915 0.849
quality The services offered by my bank are high quality 0.878
My bank delivers superior service in every way 0.861
My bank offers me a complete range of products 0.789
The personnel provide a friendly atmosphere 0.831
The bank insists on error-free records 0.831 Table II.
Mean scores,
Cronbach’s α and
(continued ) factor loading
IJBM Factor
35,5 Constructs Item statements Mean SD α loading

Trust The bank staff are trustworthy 5.25 0.86 0.918 0.839
The bank treats me in an honest way in every transaction 0.840
I feel safe in my transactions with the bank 0.865
The bank will not let other people know my account balance 0.817
792 Bank tellers accurately verify all transaction requests 0.842
Overall, I have complete trust in my bank 0.855
Customer The services of this bank meet my expectations 5.01 0.85 0.883 0.827
satisfaction I did the right thing when I chose this bank for its services 0.861
I am satisfied with the quality of the bank’s services 0.859
I am satisfied with the various bonus link programmes of
the bank 0.614
I am satisfied with the interactions that I have had with the bank 0.818
The bank satisfies my needs 0.830
Bank I will continue to patronize this bank even if the service
reputation charges are increased 4.59 0.99 0.874 0.769
I am willing to pay more for using the services of this bank 0.832
To me, this bank would rank first among the other banks 0.828
The bank I patronize reflects a lot about who I am 0.845
This bank has a good reputation in this industry 0.692
The bank does what it promises for its customers 0.736
Table II. Note: Scores based on a seven-point scale ranging from 1 ¼ strongly disagree to 7 ¼ strongly agree

computed by equally weighing the mean scores of all of the items. The analysis shows that on
a seven-point scale, the mean scores of the independent variables range from 4.53 to 5.19,
which indicates that customers perceive that the quality of service being offered by the banks
is moderate. The mean score for internet banking is 5.19 (SD ¼ 1.02), which suggests that
customers find the service provided by the internet as highly important. The mean score for
overall SERVQUAL is 4.95 (SD ¼ 0.87), which implies that the customers of banks indicate
that the overall SERVQUAL is moderate. The mean score for trust is 5.25 (SD ¼ 0.86),
suggesting that the customers find the service provider trustworthy. The results of the
exploratory factor analysis show that the factor loadings for all items are greater than 0.50,
and each of these items load strongly onto their respective associated factors.

Measurement model
In order to achieve an adequate goodness of fit on the measurement model and identify
possible problems, this study assessed the path estimates, standardised residuals, and
modification indices of the measurement model (Hair et al., 2006). The assessment of the
standardised regression weight indicates that all items were loaded high within their
constructs, which was within the acceptable values of 0.70 and above, except for three
items, thus, these items were deemed unsatisfactory (Hair et al., 2006) and deleted from the
measurement model. In terms of the assessment of the standardised residual values, the
results indicated that all of the items have standardised residual values of less than │2.5│,
with the exception of one item from reliability and security, which was deleted from the
model. The modification indices assessment shows the co-variance between some of the
items in the tangibility and empathy construct with high error co-variance between
these indicators. The estimation of a coefficient may be considered removed from
the measurement model if the modification indices value is equal to 4 or greater
(Hair et al., 2006). The substantial modification indices value is assumed to be 7.88 for a
significant model improvement. Based on the results of the aforementioned assessment, Perceived
these items were dropped from the initial measurement model in order to improve the overall service
model’s fit. Furthermore, these items add very little explanatory power to the quality
measurement model, and thus they were removed from further analysis. The estimated
parameters were all statistically significant between the latent and measured variables.
The results of the measurement model – χ²/df (2.53), TLI (0.91), CFI (0.91), IFI (0.91),
RMSEA (0.06), and GFI (0.82) – indicate the acceptable model fit of the data. 793
Convergent and discriminant validity
According to Hair et al. (1995), uni-dimensionality should always be assessed prior to
examining validity. This is due to the fact that the analysis of validity is based on the
assumption of uni-dimensionality (Nunnally and Bernstein, 1994). In order to test for
uni-dimensionality, the confirmatory factor analysis (CFA) was conducted (Anderson and
Gerbing, 1991) through SEM, AMOS 18.0 to ascertain that each item in the model represents
the same measure (Ahire et al., 1996). SEM takes a confirmatory approach rather than an
exploratory approach to analyse data and provide a confirmatory test of measurement theory
for the constructs. SEM explains how measured variables logically and systematically
represent the constructs involved in the theoretical model. This study applied the
pre-validated measurement to prior studies, thus, CFA is the most appropriate approach in
assessing a construct’s validity (Hair et al., 2006). CFA describes the extent to which a set of
measured items actually reflects the theoretical latent construct.
The construct validity test was performed to determine to what extent the items appear
to measure the construct of interest instead of other constructs. The convergent validity of
the measurement items can be assessed by composite reliability and the variance extracted
measure. Composite reliability depicts the degree to which the item indicates a common
construct. The variance extracted measure reflects the amount of variance in the items
captured by the construct.
The CFA results showed that the standardised parameter estimates were higher than
0.70, and the signs of parameter estimation were all in the same direction to measure specific
latent variables.
The composite reliability, correlation, average variance extracted (AVE), and square root of
the AVE were calculated and presented in Table III. The results revealed that the composite
reliability of all of the constructs was greater than 0.72, and the output of AVE for the
model with independent and dependent variables exceeded 0.50 (Fornell and Larcker, 1981).
Hair et al. (1995) and Carmines and Zeller (1988) recommended that composite reliability should

Construct CR AVE 1 2 3 4 5 6 7 8 9

Tangibles 0.80 0.82 0.90

Empathy 0.81 0.82 0.587** 0.90
Reliability and
Security 0.72 0.67 0.533** 0.429** 0.81
Convenience 0.78 0.79 0.592** 0.716** 0.361** 0.88
Internet banking 0.93 0.85 0.437** 0.355** 0.720** 0.305** 0.92
Overall service
quality 0.92 0.83 0.505** 0.435** 0.698** 0.320** 0.666** 0.91
Trust 0.90 0.82 0.467** 0.383** 0.713** 0.282** 0.626** 0.772** 0.90
Customer Table III.
satisfaction 0.88 0.80 0.500** 0.409** 0.594** 0.320** 0.571** 0.822** 0.744** 0.89 Composite reliability,
Bank reputation 0.82 0.73 0.403** 0.234** 0.580** 0.222** 0.517** 0.641** 0.596** 0.587** 0.85 average variance
Notes: CR, composite reliability. The values in the diagonal are the square root of the AVE. **po 0.01 extracted, correlation
IJBM be greater than 0.70, and AVE should be greater than 0.50 to indicate construct validity. In order
35,5 to evaluate discriminant validity, this study compared the square root of each construct’s AVEs
to its correlation with other variables (Chin, 1998). The results showed that all items were loaded
significantly on their predefined constructs, and that the construct correlations were all below
the square root of AVE for each construct. If the square root of the AVE for each construct is
larger than the correlation between the construct and any other construct in the model, then the
794 measures should be considered to possess adequate discriminant validity (Fornell and Larcker,
1981). Thus, our results proved the reliability of the data and convergent validity.

Structural model and hypothesis testing

After conducting the validity and reliability tests for all the constructs through the
measurement model, it is also necessary to demonstrate the overall fit of the structural
model (see Figure 2). In this study, the hypothesised model was assessed using multiple
model-fit measures to assess its overall goodness of fit.
The structural model revealed an adequate model fit with the data. The results in Table IV
show that χ²/df (2.46), TLI (0.91), CFI (0.92), IFI (0.92), RMSEA (0.06), and GFI (0.82) were above
or quite close to the cut-off criteria. The table also shows the recommended level of each index
(Hair et al., 2006; Meyers et al., 2005). In this study, the GFI values of 0.70 and 0.82 were lower
than the commonly cited thresholds of 0.90; however, they were within range of the
recommended levels. Yen and Lu (2008) argued that a GFI ranging from 0.80 to 0.90 could be
interpreted as a reasonable fit. In Table IV, all the model-fit indices on the measurement and
structural model were above or quite close to the cut-off criteria suggested by Hair et al. (2006).
This indicates that all the data fit reasonably well with the proposed model. Thus, it can be
concluded that the models are valid, and we can continue to analyse the outcome of the
hypothesised effects.

Results of hypotheses testing

The relationship between the independent variables and overall SERVQUAL was
investigated. Table V summarises the results of the hypothesised relationships. As shown in

Figure 2.
Structural model
the table, tangibles, empathy, internet banking, and reliability and security have a positive Perceived
and significant influence on the overall SERVQUAL, thus supporting H1, H2, H3, and H5. overall service
This indicates that tangibles, empathy, internet banking, and reliability and security are all quality
important factors that influence customer perception of the overall SERVQUAL received
from the bank. These factors accounted for 73 per cent of variance in the overall
SERVQUAL. Reliability and security was a stronger predictor of the overall SERVQUAL.
The results in Table V show that hypothesis H4 is not supported. The result shows that the 795
coefficient from convenience to overall SERVQUAL is not statistically significant, with a
very weak standardised estimate ( β ¼ 0.013, p o0.78). A possible explanation is that
customers are more prone to utilising online services and devices, making convenience
irrelevant vis-à-vis their perception of the quality of services offered by banks.
H6-H8 are concerned with the direct effect of perceived overall SERVQUAL on trust,
customer satisfaction, and a bank’s reputation. It is observed that the overall SERVQUAL
has a positive and significant effect on trust ( β ¼ 0.91 and p o0.00), customer satisfaction
( β ¼ 0.92 and p o0.00), and bank reputation ( β ¼ 0.51 and p o0.00), thus supporting H6-
H8. This indicates that the overall SERVQUAL is a significant contributor in building
customer trust in relation to banks, and customers will be satisfied if the perceived overall
SERVQUAL is high. Our results also suggest that good overall SERVQUAL is an important
aspect in enhancing a bank’s reputation.

Discussion and implications

Based on the work of Caruana (2002), Bahia and Nantel (2000), and Lee and Moghavvemi
(2015), this study presented and tested an empirical study of a model of perceived overall
SERVQUAL in the banking industry, particularly in the Malaysian context. This research
identified dimensions of SERVQUAL (i.e. tangibles, empathy, reliability and security,

Quality-of-fit measure Recommended value Measurement model Structural model

χ²/df ⩽ 3.00 2.53 2.47

TLI ⩾ 0.90 0.91 0.91
CFI ⩾ 0.90 0.91 0.92
IFI ⩾ 0.90 0.91 0.92
RMSEA ⩽ 0.08 0.06 0.06 Table IV.
GFI ⩾ 0.90 0.80 0.81 Goodness of fit indices
Notes: The ratio of χ² to degree-of-freedom (df); TLI, Tucker-Lewis index; CFI, comparative fit index; of the measurement
IFI, incremental fit index; RMSEA, root mean square error of approximation; GFI, goodness of fit index and structural model

Constructs Hypotheses β SE CR p-value Support

Tangibles → Overall service quality H1 0.10 0.06 1.98 0.04** Yes

Empathy → Overall service quality H2 0.24 0.07 4.27 *** Yes
Reliability and security → Overall service quality H3 0.41 0.07 6.42 *** Yes
Convenience → Overall service quality H4 0.01 0.03 0.02 0.78 No
Internet banking → Overall service quality H5 0.23 0.04 4.48 *** Yes
Overall service quality → Trust H6 0.91 0.05 16.44 *** Yes
Overall service quality → Satisfaction H7 0.92 0.05 15.11 *** Yes
Overall service quality → Image/reputation H8 0.51 0.06 8.55 *** Yes
Table V.
Notes: β ¼ standardized regression weight; SE, standardized error; CR, critical ratio. **po 0.01; Hypotheses
***po 0.001 testing results
IJBM and internet banking) that influence the overall perceived SERVQUAL, and examine
35,5 how these overall perceptions will eventually influence customer trust, customer
satisfaction, and bank reputation being valid and reliable in the retail banking industry.
Knowledge from the findings of this study is critical to practitioners and academics alike,
especially in the context of accurately measuring SERVQUAL in order to better
understand its essential antecedents and consequences for improving quality to achieve a
796 competitive advantage.
Our findings confirm that all hypotheses (H1-H8) were supported and confirmed, albeit
H4 was not supported. This research suggested a number of implications to the theory.
First, this study confirms that there are four dimensions (i.e. tangibles, empathy, reliability
and security, and internet banking) of SERVQUAL that influence the perceived overall
SERVQUAL in banking. Second, this study confirms that the perceived overall SERVQUAL
positively effects customer trust, customer satisfaction, and bank reputation. This study
also confirmed the theory of expectancy of disconfirmation on the possible relationship
between SERVQUAL and satisfaction and behavioural outcome. This study has presented a
model of perceived overall SERVQUAL pertaining to the banking industry. This research
explains how the dimensions of SERVQUAL influence the overall perceived SERVQUAL,
and how these overall perceptions will eventually influence customer trust, customer
satisfaction, and reputation. The significant relationship between the overall perceived
SERVQUAL and customer trust indicates that when customers perceive the overall
SERVQUAL to be high, they will trust the banks more, which results in satisfied customers
and better bank reputations. The findings of this study are consistent with previous studies.
For example, Cronin et al. (2000) reported that SERVQUAL is an important driver of overall
perceived SERVQUAL.
Second, our results also suggest that perceived overall SERVQUAL be represented by
tangibles, empathy, reliability, while security and internet banking is significantly related to
customer satisfaction, customer trust, and bank reputation. The significant relationship
between perceived overall SERVQUAL and customer satisfaction, trust, and bank
reputation indicates that the quality performance of tangibles, empathy, reliability, and
security and internet banking is important for banks to satisfy customer, increase customer
trust and enhance the perception of good bank reputation of bank. The findings on the
significant relationship between perceived overall SERVQUAL and trust also support Singh
and Sirdeshmukh (2000) and Amin et al. (2013), both of whom found that SERVQUAL is
essential in building trust. In the context of the banking industry, trust is defined as a bank
being trustworthy, honest, practices integrity, and is reliable in delivering service to its
customers. The test results indicate that there is enough empirical evidence to state that the
overall SERVQUAL significantly enhances customer trust.
The significant relationship between perceived overall SERVQUAL and customer
satisfaction supporting the previous research by Spring and Mackoy (1996),
González et al. (2007), McDougall and Levesque (2000), and Glaveli et al. (2006).
The positive relationship between perceived overall perception SERVQUAL and customer
satisfaction suggests that customers are more likely to be satisfied with their bank when
the perceived overall SERVQUAL is high. This finding suggests that customer will be
satisfied with a bank when service performance being delivered met their needs and
expectations. Finally, our findings on the relationship between dimensions’ overall
SERVQUAL and bank reputation are supported by Wang et al. (2003).
Overall, our research contributes to theoretical implications. Specifically, it examines the
specific dimensions of SERVQUAL and its influence on the perceived overall SERVQUAL.
We also provide an empirical examination of the direct relationship between the perceived
overall SERVQUAL and customer trust, customer satisfaction, and bank reputation.
This empirical investigation forms a novel contribution to the literature.
 With respect to managerial implications, this study help managers identify the specific Perceived
dimensions of SERVQUAL (i.e. tangible, reliability and security, empathy, and internet overall service
banking), which will allow them to improve the overall SERVQUAL of banking. quality
This research has provided managers with a model to help them measure SERVPERF.
This suggests that banks should not sacrifice personnel quality (i.e. staff professionalism
and training, etc.) and tangible quality to maximise profitability.
Tangibility has been shown to be one of the dimensions of SERVQUAL. This means that 797
customers need more tangibility to identify services where value is created in their physical
presence on the service process, for example, in the context of banking. This would suggest
that banks should provide adequate infrastructure and facilities, such as parking space and
ATMs, modern-looking equipment in the bank, attractive brochures and statements, and
comfortable lobby area in order to gain trust, increase customer satisfaction, and enhance
perception of better reputation.
Furthermore, this study confirmed that reliability and security construct having a
strong impact on the perceived overall SERVQUAL. This indicates that the banks need to
address reliability and security concerns in the context of the ability to perform services
accurately and without error, and the banks’ ability to inspire feeling of security.
For example, banks should maintain error-free records (e.g. accurate bills and statements),
keep confidentiality of account and privacy of customers, provide adequate physical
security, and alert customers quickly for any suspicious or fraudulent transaction. In most
cases of services evaluation, customers expect service processes to be reliable (Chowdhary
and Prakash, 2007).
Empathy is clearly regarded as important to the perceived overall SERVQUAL.
Customers expect the banks to personalise their attention. For example, banks should train
their staff to always respond to customer request, understand customers’ specific needs, be
friendly and polite, responsive to customer complaints, and maintain politeness when
handling customers.
Finally, this study empirically confirmed that internet banking was found to have a
considerable effect on the perceived overall SERVQUAL in the proposed relations. This may
be due to the majority of customers searching for internet banking facilities, making it a key
determinant of overall SERVQUAL. This suggests that bank management should make the
effort to promote online banking in their respective marketing strategy. For example, banks
should provide adequate security features, quick transactions, appropriate confirmation
concerning the completion of transactions, and user-friendly features.
Although our findings agree with the previous findings on SERVQUAL, we did not find
any significant support for the impact of convenience on the overall SERVQUAL. The most
possible explanation is that customers do not consider convenient location of banks,
working hours, the number of ATM to satisfy, build trust, and have a good reputation.
As such, these dimensions should be continuously monitored in order to build customer
trust, improve customer satisfaction, and enhance the reputation of an organisation.
By carefully focussing on these dimensions, managers would be able to build enduring
relationships with their customers. To strengthen competitiveness, it is recommended that
banks should not just focus on customer satisfaction, but also emphasise SERVQUAL
(tangibles, empathy, reliability and security, and internet banking) in order to achieve high
levels of perceived overall SERVQUAL and trust, and the reputation of the banks. In most
service industry, e.g. banking, an improvement of SERVQUAL will certainly contribute to
positive reputation (Wang et al., 2003).
All in all, a proper understanding of the determinants and consequences of perceived
overall SERVQUAL is essential to the organisation in order to be competitive. As a result of
this, further research exploring the relationship between SERVQUAL and trust, customer
satisfaction and bank reputation are clearly necessary and appropriate.
IJBM Conclusion, limitations and future research
35,5 Customers are the core focus of banks. Thus, it is essential for the banks’ management to
understand how customers’ perceive overall SERVQUAL. Due to the fact that banks do not
provide tangible products, their SERVQUAL is usually assessed by measures of the service-
provider’s relationship with customers. Thus, the perception will affect customer trust in
banks, customer satisfaction, and a bank’s reputation. SERVQUAL can be used as a tool to
798 distinguish, provide a competitive edge, and increase the market size of the banks.
Furthermore, a high-quality bank-customer relationship can help bank serve customers
in a more satisfactory manner; and customers are more likely to trust a bank, which will
ultimately enhance a bank’s reputation. This study examines the SERVQUAL issues in the
Malaysian banking industry from the perspective of customers. Based on the data furnished
by bank customers in Malaysia and the subsequent analysis, some important findings were
made. It is therefore important for local banks to improve SERVQUAL if they are to build
and enhance customer trust, satisfaction, and reputation. This would attract a larger share
of profitable customers and maintain a sustainable competitive advantage in the long run in
the banking industry.
This study also found that customer experience on the overall SERVQUAL
significantly affects customers’ trust towards a bank, customer satisfaction, and bank
reputation. This suggests that customer perception of the overall SERVQUAL is another
strategy that banks should emphasise, as high-quality service results in customer trust,
satisfied customers, and enhanced bank reputation. This study is a preliminary attempt to
explore the dynamic relationship between service-related factors: tangibles, empathy,
reliability and security, convenience, internet banking, overall SERVQUAL, bank
reputation, trust, and customer satisfaction. There are, however, limitations to the current
study. This study only identified five dimensions of SERVQUAL, future research should
consider another dimensions of SERVQUAL that have potential to influence customer
satisfaction, trust, and bank reputation. This study also focussed on the banking industry.
Given the diversity of the service industry, these findings may have to be tested for
applicability in different service industries. Most importantly, the results indicated that
SERVQUAL might play an important role in producing a strong image and reputation,
trust, and satisfaction.

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804 About the authors
Dr Zalfa Laili Hamzah is currently serves as the Senior Lecturer in the Marketing Department of the
Faculty of Business and Accountancy at the University of Malaya, Kuala Lumpur, where she received
her PhD Degree in Corporate Branding. She has taught courses at postgraduate programme in
Marketing Management, Brand Management, and Services Marketing. Her research interests are
corporate brand, corporate image, service/brand management, consumer behaviour, and online
branding. Dr Zalfa has presented her research papers at several international conferences including the
Thought Leader Conference of Brand Management, Academy of Marketing, London, ANZMAC
International Corporate Identity Group. Dr Zalfa Laili Hamzah is the corresponding author and can be
contacted at: zalfa@um.edu.my
Dr Siew Peng Lee is an Assistant Professor of Finance at the Faculty of Accountancy and
Management, Universiti Tunku Abdul Rahman, Malaysia. She also served as an Ad Hoc Referee for
national and international journals. Her primary research interest is in corporate finance, and Islamic
banking and finance. She has researched and published in national and international journals and
presented papers at conferences.
Dr Sedigheh Moghavvemi is a Senior Lecturer within the Faculty of Business and Accountancy,
University of Malaya. Her primary research activities involve the area of adoption behaviour of
innovative information systems by individuals and organisations, the area of information management
and it effect on organisations and also tourism. Dr Sedigheh has researched on the effect of information
technology on tourism industry, Islamic medical tourism, Halal tourism and the impact of social
network on Islamic medical tourism.

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