International Journal of Computing and Business Research

(IJCBR)
ISSN (Online) : 2229-6166
Volume 3 Issue 1 January 2012

CUSTOMER SATISFACTION IN INDIAN BANKING SERVICES

(A STUDY IN ALIGARH DISTRICT)
Dr. Jyoti Agarwal
Asst. Professor
Institute of Business Management
Mangalayatan University, Aligharh

ABSTRACT
The banking industry like many other financial service industries is facing a rapidly changing
market, new technologies, economic uncertainties, fierce competition and more demanding
customers and the changing climate has presented an unprecedented set of challenges.
Banking is a customer oriented services industry, therefore, the customer is the focus and
customer service is the differentiating factors.
In the backdrop of all these developments the investigator makes an attempt to explain the
Customer Service satisfaction in Indian banking Sector. For this study, descriptive research
design is used where the data is collected through the questionnaire. The information is
gathered from the different customers of the two banks, viz., State Bank of India and ICICI Bank
located in the district Aligarh, Uttar Pradesh. Fifty bank respondents from each bank were
contacted personally in order to seek fair and frank responses on quality of service in banks.
The service quality model developed by Zeithamal, Parsuraman and Berry (1988) has been
used in the present study.
The analysis clearly shows that there exists wide perceptual difference among Indian (public
sector) banks regarding overall service quality with their respective customers, when compared
to Private sector banks. Whereas the said perceptual difference in private banks is narrow.
Key words: Customer service, Banking, Service quality

International Journal of Computing and Business Research

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ISSN (Online) : 2229-6166
Volume 3 Issue 1 January 2012
INTRODUCTION
The Financial Services is the backbone of service sector. This is important not only for the
banking sector but for the Indian economy as a whole. This is so because banking is a catalyst
and life of modern trade and commerce. It is an integral part of all the businesses and social
activities. This rapid transformation of services in the banking system has led to the evolution of
a highly competitive and complex market where there is a continuous refinement of services.
Hence the increased role of banking in Indias economic development on the one hand and the
changes in the business climate on the other has put increased pressure on them. These
changes are compelling the banks to reorganize themselves in order to cope with the present
conditions.
With the current change in the functional orientation of banks, the purpose of banking is
redefined. Now, the Financial Institutions are trying to provide all the services at the customers
doorstep. The customer has become the focal point either to develop or maintain stability in the
business. Every engagement with the customer is an opportunity to either develop or destroy a
customers faith in the Bank. The expectations of the customers have also increased many
folds. Intense competition among the banks has redefined the concept of the entire banking
system. The banks are looking for new ways not only to attract but also to retain the customers
and gain competitive advantage over their competitors. The banks like other business
organizations are deploying innovative sales techniques and advanced marketing tools to gain
supremacy.The main driver of this change is changing customer needs and expectations.
Customers in urban India no longer want to wait in long queues and spend hours in banking
transactions. This change in customer attitude has gone hand in hand with the development of
ATMs, phone and net banking along with availability of service right at the customer's doorstep.
With the emergence of universal banking, banks aim to provide all banking product and service
offering under one roof and their endeavor is to be customer centric. With the emergence of
economic reforms in world in general and in India in particular, private banks have come up in a
big way with prime emphasis on technical and customer focused issues.
In this paper, the main contention of the author is to highlight the customer satisfaction through
service quality provided by the banks-SBI from the public sector banking and ICICI from the
private sector banking.

International Journal of Computing and Business Research

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ISSN (Online) : 2229-6166
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RESEARCH METHODOLOGY
OBJECTIVES OF THE STUDY
1. To ascertain the perceptions of customers regarding the service quality in banks.
2. To analyze and compare the perceptions of the customers in private (ICICI) and public
(SBI) banks.
The study provides a comparative analysis of the performance of ICICI and SBI in Aligarh,
district.
RESEARCH DESIGN
Research design is a master plan specifying the method and procedure for collection and
analyzing needed information. The research design in this project is descriptive. Descriptive
research includes surveys and fact-finding inquiries of different kinds. For this study, descriptive
research design is used where the data is collected through the questionnaire. The information
is gathered from the different customers of the two banks, viz., State Bank of India and ICICI
Bank located in the district Aligarh, Uttar Pradesh. Fifty bank respondents from each bank were
contacted personally in order to seek fair and frank responses on quality of service in banks.
The service quality model developed by Zeithamal, Parsuraman and Berry (1988) has been
used in the present study. The main assumption of the model is that service quality is multidimensional concept. These dimensions contribute to the assessment of the service quality in
any setting.
The statements in the construct are one-dimensional and performance based, which incorporate
the statements of 'SERVQUAL' model that can be used as measurement (Cronin & Taylor,
1992). The 24 statements have been grouped under five dimensions. In order to ascertain the
perceptions of service quality, Likert's 5-point scale has been used for its suitability to estimate
the range and variations in the perceptions. The scale 1-5 represents '5' as strongly agree and
'1' as strongly disagree.
SCOPE OF THE STUDY

International Journal of Computing and Business Research

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ISSN (Online) : 2229-6166
Volume 3 Issue 1 January 2012
Present study has been restricted to time period from Jan 2011 to Feb 2011 in Aligarh, ICICI
Bank of Aligarh, town has been taken as a representative unit of private banks and SBI Bank
has been taken as a representative unit of public sector banks. A survey of 50 people each from
both the banks has been conducted who are the general people of the banks. Doctors,
businessmen, professors and persons from self employed category, etc, have been surveyed.
DATA COLLECTION
Primary Data were collected using the questionnaire and personal contact approach. The
respondents were approached personally on order to seek fair and frank responses on quality of
service. Secondary data has been collected from the internet, published reports and the fact
sheets of SBI Bank and ICICI Bank. For analysis of the data, weighted Mean had been used.
REVIEW OF LITERATURE
A deliberate attempt to study services marketing and service quality issues dates back to the
mid-1960s (Rathmell, 1966). However, interest on the topic has gained considerable momentum
within the past two decades or so. On the one hand, delivery of high service quality to
customers offers firms an opportunity to differentiate themselves in competitive markets. On the
other hand, high service quality results in customer satisfaction and loyalty, greater willingness
to recommend to someone else, reduction in customer complaints, and improved customer
retention rates (see, for example, Bitner, 1990; Danaher, 1997;Headley and Miller, 1993;
Levesque and McDougall,1996; Magi and Julander, 1996; Zeithaml et al., 1996).
Today, service quality is considered a critical measure of organizational performance and
continues to compel the attention of practitioners and academics (Lassar et al., 2000; Yavas
and Yasin, 2001). Unlike goods quality, which can be measured with some objectivity, service
quality is abstract and elusive. The unique features of services such as inseparability of
production and consumption, intangibility, and heterogeneity make measurement of quality a
very complex issue. In the absence of objective measures, firms must rely on consumers
perceptions of service quality to identify their strengths and/or weaknesses, and design
appropriate strategies. This makes development of psychometrically sound and managerially
useful instruments to measure service quality imperative.

International Journal of Computing and Business Research

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Customer satisfaction is an important theoretical as well as practical issue for most marketers
and consumer researchers. Customer satisfaction is increasingly becoming a corporate goal as
more and more companies strive for quality in their products and services Customer satisfaction
is the feeling or attitude of a customer towards a product or service after it has been used and is
generally described as the full meeting of one's expectations. Customer satisfaction is a major
outcome of marketing activity whereby it serves as a link between the various stages of
consumer buying behaviour. For instance, if customers are satisfied with a particular service
offering after its use, then they are likely to engage in repeat purchase and try line extensions. A
study conducted by Levesque and McDougall confirmed and reinforced the idea that
unsatisfactory customer service leads to a drop in customer satisfaction and willingness to
recommend the service to a friend. This would in turn lead to an increase in the rate of switching
by customers.
To measure customer satisfaction with different aspects of service quality, Parasuraman, Valerie
Zeithaml and Berry developed a survey research instrument called SERVQUAL . It is based on
the premise that the customers can evaluate a firm's service quality by comparing their
perceptions of its service with their own expectations. SERVQUAL is seen as a measurement
tool that can be applied across broad spectrum of service industries. In its basic form, the scale
contains 24 perception items and a series of expectation items, reflecting the five dimensions of
service quality.
Their findings suggest that, in reality, SERVQUAL scores measure only two factors: intrinsic
service quality (resembling what is termed functional quality) and extrinsic service quality (which
refers to the tangible aspects of service delivery and "resembles to some extent what Gronroos
refers to as technical quality"). Generic dimensions customers use to evaluate service quality
are credibility, security, access communication, understanding the customer, tangibles, reliability,
responsiveness, competence, courtesy.
SERVQUAL Scale
The SERVQUAL scale includes five dimensions: tangibles, reliability, responsiveness,
assurance and empathy. Within each dimension are several items measured on a five -point
scale from strongly agree to strongly disagree, for a total of 24 items.

International Journal of Computing and Business Research

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ISSN (Online) : 2229-6166
Volume 3 Issue 1 January 2012
SERVQUAL QUESTIONS
For actual survey respondents, instructions are also included, and each statement is
accompanied by a seven-point scale ranging from "Strongly Agree--5" to "Strongly Disagree--1".
Only the end points of the scale are labeled; there are no words above the number 2 through 4.
Tangibles
1. Excellent banks (refer to cable TV companies, hospitals, or the appropriate service
business throughout the questionnaire) will have modern-looking equipments.
2. The physical facilities at excellent banks will be visually appealing.
3. Employees at excellent banks will be neat in appearance.
4. Materials (e.g., brochures or statements) associated with the service will be visually
appealing in an excellent bank.
5. The ATMs of this bank are technologically well equipped
6. The ATMs of this bank are adequate in numbers
7. The internet banking services of this bank are widespread
Reliability
8. When excellent banks promise to do something by a certain time, they will do so.
9. When customers have a problem, excellent banks show a sincere interest in solving it.
10. Excellent banks will perform the service right the first time.
11. Excellent banks will provide their services at the time they promise to do so.
12. Excellent banks insist on error free records.
Responsiveness
13. Employees of excellent banks will tell customers exactly when service will be performed.
14. Employees of excellent banks will give prompt service to customers.
15. Employees of excellent banks are always willing to help customers.
16. Employees of excellent banks are never too busy to respond to customer requests.
Assurance
17. The behavior of employees of excellent banks will instill confidence in customers.
18. Customers of excellent banks will feel safe in their transactions.
19. Employees of excellent banks are consistently courteous with customers.
20. Employees of excellent banks are having the knowledge to answer customer questions.
Empathy

International Journal of Computing and Business Research

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21. Excellent banks will give customers individual attention.
22. Excellent banks will have operating hours convenient to all their customers.
23. Excellent banks will have employees who give customers personal attention.
24. Employees of excellent banks will understand the specific needs of their customers
These findings do not undermine the value of Zeithaml, Parasuraman, and Berry's achievement
in identifying some of the key underlying constructs in service quality, but they do highlight the
difficulty of measuring customer perceptions of quality. Anne Smith notes that the majority of
researchers using SERVQUAL have omitted from, added to, or altered the list of statements
purporting to measure service quality.
ANALYSIS AND INTERPRETATION
In line with the objective of the study, the main areas of questioning and analysis concerned
perceptions of service quality and its dimensions: tangibility, reliability, responsiveness,
assurance and empathy. As stated, perceptions were measured on a five point strongly agree to
strongly disagree scale.
OVERALL SERVICE QUALITY
The analysis of Table-6 clearly shows that there exists wide perceptual difference among Indian
(public sector) banks regarding overall service quality with their respective customers, whereas
the said perceptual difference in private banks is narrows.
The mean of SBI (71.24) when compared to mean of ICICI (83.5) shows that there is a
significant difference in the quality of service being delivered by SBI with the quality of service
as perceived by their respective customers. In other words, service quality delivered by banks
such as ICICI is higher than that of SBI.

Table-6: Overall Service Quality

Servqual Dimension
1. Tangibility
2. Reliability
3. Responsiveness

SBI

ICICI

Mean
23.34
13.86
10.02

Mean
24.38
16.22
13.9

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4. Assurance
5. Empathy
Overall Service Quality

Volume 3 Issue 1 January 2012

13.04
10.98
71.24

13.68
15.32
83.5

DIMENSION-WISE ANALYSIS
Tangibility: The data in Table-1 brings to light the difference in the perceptions of the banks--SBI
and ICICI with their respective customers on tangibles. The data reveals that banks such as
ICICI (24.38) are exceeding the perceptions of their customers when compared to SBI. While
SBI with a mean of 23.34 falls short below the perceptions of their customers on this dimension
of service quality when compared to ICICI. The element wise analysis of tangibility shows
serious short fall of perceptions among banks like SBI on up to date modern equipment,
physical facilities available in a bank, neat appearance, materials in banks and internet facility
as perceived by their respective customers. While SBI have outperformed ICICI regarding
numbers of ATMs available.
Table-1: Perceptions of Customers about banks Tangibility

Servqual Dimension
1.
2.
3.
4.
5.
6.
7.

Modern Equipment
Physical Facility
Neat in appearance
Material in banks
ATM Technically equipped
ATMs in adequate numbers
Internet banking services
Tangibility (1+2+3+4+5+6+7)

SBI

ICICI

Mean
3.5
2.84
3.2
3.16
4.12
3.78
2.74
23.34

Mean
3.9
3.38
3.6
3.62
3.92
2.4
3.86
24.38

Reliability: The analysis of reliability dimension of service quality shows significant differences
in the perceptions of SBI with their respective customers. SBI (13.86) shows that they fall below
the expectations of their customers in delivering quality services, whereas ICICI (16.22) is
exceeding the perceptions of their customers in this dimension. The element wise analysis of
reliability shows that SBI is far below the perceptions of their respective customers as far as

International Journal of Computing and Business Research

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ISSN (Online) : 2229-6166
Volume 3 Issue 1 January 2012
keeping promise, Interest in solving problem, and providing service at promised time are
concerned.

Table-2: Perceptions of Customers about banks Reliability

Servqual Dimension
8. Promise to do in time
9. Interest in solving the problem
10. Performing service right the first time
11. Provide service at promised time
12. Error free records
Reliability(8+9+10+11+12)

SBI

ICICI

Mean
2.56
2.36
3.2
2.62
3.12
13.86

Mean
3.18
3.34
3.46
3.24
3.0
16.22

Responsiveness: The data in Table-3 brings to light that there are significant perceptual
differences on the responsiveness dimension of service quality with their customers. SBI (10.07)
shows that the bank is far below the perceptions of their customers on the said dimension when
compared with ICICI (13.9). The element wise analysis of this dimension shows that SBI is
falling below the perceptions of their customers on communicating to the customer regarding
performance of service, employees providing prompt services and willingness to help
customers.
Table-3: Perceptions of Customers about banks Responsiveness
Servqual Dimension
13. Telling customers

exactly when

service will be performed

14. Giving prompt service to
customers
15. Always willing to help customers
16. Never too busy to respond to
customers requests

SBI

ICICI

Mean

Mean

2.56

3.76

2.64

3.24

2.14
2.68

3.86
3.04

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Responsiveness(13+14+15+16)
10.02

13.9

Assurance: The perceptual difference between ICICI (13.68) and SBI (13.04) customers is low
as is evident from the mean. The respondents of SBI and ICICI have given almost equal rating
on assurance dimension to both the banks. The element wise analysis shows that ICICI is
exceeding the perceptions of their customers as far as trust worthiness and courteous with
customers. While SBI is exceeding ICICI in feeling safe in transacting with the bank and having
adequate knowledge in answering questions to the customers.
Table-4: Perceptions of Customers about banks Assurance
Servqual Dimension
17. Behavior of employee will instill
confidence in customers
18.
feeling safe in their
transactions
19. consistently courteous with customers
20. having knowledge to answer customers

SBI

ICICI

Mean

Mean

3.28

3.32

3.64

3.52

3.04
3.08

3.96
2.88

questions
Assurance(17+18+19+20)
13.04
13.68
Empathy: The data analysis of Table-5 discloses the fact that banks such as SBI (10.98) stand
away from their customers regarding delivery of quality services when compared with ICICI
(15.32). There exists a wide gap between the perceptions of banks such as SBI and their
customers as is evident from there mean.
Table-5: Perceptions of Customers about banks Empathy
Servqual Dimension
21. giving customer individual attention
22. convenient operating hours
23. giving customers personal attention
24. able to understand the specific needs of
the customers
Empathy(21+22+23+24)

CONCLUSION:

10

SBI

ICICI

Mean
3.00
2.12
2.88
2.98

Mean
3.9
4.12
3.6
3.7

10.98

15.32

International Journal of Computing and Business Research

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ISSN (Online) : 2229-6166
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The banking sector in India is undergoing major changes due to competition and the advent of
technology. The customer is looking for better quality services which enhance his/her
satisfaction. This study derives its basis from various research findings and is also in line with
empirical findings with respect to customer satisfaction by other researchers.
To sum up, the results of the study lead us to the following conclusion and policy implication:

The customer satisfaction in terms of service quality is a relational marketing paradigm.

The relationships are mostly viewed from the perspective of the firm providing services.
For service firm in our case the banks, building strong relationship is important for
improving customer satisfaction through service quality.

Public sector banks like SBI fall much below the perceptions of their customers on all
dimensions of service quality. Private Banks such as ICICI bank are exceeding the
perceptions of their customers on all dimensions of service quality.

The above findings suggest the need and relevance of heavy investment on tangibles
particularly computer based banking, internet and intranet services, tele-banking,
'anywhere and anytime banking', etc., besides physical facilities and communication
material. This will help in delivering quick and accurate services to customers as well as
reducing the workload of frontline staff and thereby providing ways to employees to
respond to customer requests. This investment will also ensure convenient banking
hours on which the services of our banks are perceived by the customers to be very low.

Customer service must match with marketing efforts, otherwise a customer would
remain a dissatisfied soul and all marketing efforts will go down the drain. The process of
fulfilling customer needs, therefore, requires tailoring bank services to what customers
want, rather than making them accept whatever banks can conveniently provide. Today,
customers are exposed to the standards of international banking and expect the same
range of service quality from Indian banks. If public sector banks fail to regulate the
quality and efficiency of their financial services to match or surpass those of private
banks or foreign banks, time is not far away when they will lose substantial market share
to private and foreign banks.

Banks must pay attention to potential failure points and service recovery procedures,
which become integral to employees' training. In other words, it amounts to empowering

11

International Journal of Computing and Business Research

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employees to exercise responsibility, judgment and creativity in responding to customers'
problems.

Banks should continually assess and reassess how customers perceive bank services
so as to know whether the bank meets or exceeds or is below the expectations of their
customers. Such an appraisal, however, is a tedious task because customer service is
complex in nature and dynamic in action. Moreover, it can vary greatly from one branch
to another. Also, what is 'good service' today may become 'indifferent service' tomorrow
and 'bad service' the next day. Frequent customer surveys, therefore, throw light on
ratification and refinement which will go a long way to improve the service quality in
banks.

REFERENCES:

A. Parasuraman, Valarie A. Zeithaml, and Leonard Berry, SERVQUAL: A Multiple

Item Scale for Measuring Customer Perceptions of Service Quality, Journal of
Retailing 64 (1988).

Anne M. Smith, "Measuring Service Quality: Is SERVQUAL Now Redundant?"

Journal of Marketing Management (Jan/Feb/Aril 1955) pp 257-276

Bitner, MJ, and AR Hubbert, 1994, "Encounter Satisfaction versus overall

Satisfaction versus Quality", in Rust, R T and Oliver, R L (Eds), Service Quality: New
Directions in Theory and Practice, London: Sage.

East, R., 1997, Consumer Behavior: Advances and Applications in Marketing,

London: Prentice--Hall.

Jha, S. M. 2000, Bank Marketing Millennium Edition, Mumbai: Himalaya

Jham, Vimi, 2005, "Insights into Customer Interactions in the Banking Industry--A
Qualitative Relationship Marketing Study", Review of Professional Management, Vol.
3, No. 1 pp 10-17.

Levesque, T, and GHG McDougall, 1996, 'Determinants of Customer Satisfaction in

Retail Banking,' International Journal of bank Marketing, Vol 14, No 7 pp 12-20

Lovelock, Cristopher, 2001, service Marketing: People, Technology, Strategy, 4the

Edition, Prentic Hall.

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Narasimham

Volume 3 Issue 1 January 2012

Committee Report, 1997,--www.indianembassy.org/enews/apr98.

pdf<http://www.indianembassy.org/enews/apr98.pdf.

Oliver, R L, 1980, "Cognitive Model of the Antecedents and Consequences of

satisfaction Decisions", Journal of marketing Research, Vol. 17, No, pp 460-9

Osman M. Karatepe, Ugur Yava, Emin Babaku Measuring service quality of banks:
Scale development and validation Journal of Retailing and Consumer Services 12
(2005) pp 373383.

Vimi Jham and Kaleem Mohd Khan, "Customer satisfaction in the Indian Banking
Sector. A Study" IIMB Management Review, Vol. 20 No. 1, March 2008.

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