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30ЭКОНОМИЧЕСКИЕ НАУКИ
CUSTOMER SERVICE AND QUALITY ISSUES IN THE
BANKING SECTOR Ilyassova А.
Ilyassova Aigerim - Candidate in Economic Sciences, Finance Director, KIC LEASING JSC, ALMATY, REPUBLIC OF KAZAKHSTAN
Abstract: the article analyzes the issues of customer service and quality of services in relation to the banking sector. It is proposed to use the SERVQUAL model to measure satisfaction with the quality of services. Recommendations are given on improving the quality of banking services and improving customer satisfaction in the banking sector.
Keywords: customer service, quality of services, banking services, customer satisfaction.
Among other aspects of business, importance of customer service performance and service quality issues can not be overestimated in any economic sector. This article aims to assess the impact of performance management systems on this particular vital performance type.
Many companies monitor customer satisfaction on a continual basis, and Sweden even did it on a national level. The Swedish annual Customer Satisfaction Barometer measures customer satisfaction in more than 30 industries and for more than 100 corporations. The index was intended to be complementary to productivity measures. Whereas productivity reflects the quantity of output, Customer Satisfaction barometer measures quality of output as experienced by the buyer [Fornell C., 1992].
Consumer satisfaction has been the subject of much attention in the literature because of its potential influence on consumer behavioral intention and customer retention. [Cronin et al, 2000] Satisfied customers are less expensive and perform as a source of positive word-of-mouth that is even more effective and trustworthy than advertising. Moreover, customer satisfaction helps to ensure customer retention, which is far less costly than
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customer replacement [Hill, 1997; Yavas, 2007]. While bank customers are loyal, they also are keeping abreast of what other banks are doing. This could hurt a bank's retention rate if customers get wind of better service offerings by a competitor. [Mazur M., 2008] Interestingly, examining the relationship between market share and customer satisfaction by a location model revealed that satisfaction should be lower in industries where supply is homogeneous and demand heterogeneous. Satisfaction should be higher when the heterogeneity/homogeneity of demand is matched by the supply [Fornell C., 1992].
To stay competitive, banks try to increase customer loyalty by offering more helpful service. This can come in the form of reducing the wait times in their branches and providing easier access and smoother navigation for Web sites. Studying and monitoring customer attitudes are becoming important issue for banks. It is becoming a very important tool to survive in severe competition among banks. According to marketing fundamentals, retaining customers is much cheaper than attracting new ones. Therefore, building customer loyalty is a very important task in the banking sector.
However, researchers agree that loyal customers are not necessarily satisfied customers, but satisfied customers tend to be loyal customers. Aside from satisfaction, there are other means of customer retention, for instance customer switching barriers can also cause retention. Fornell C. emphasizes that 'all companies are not equally affected by customer satisfaction, but virtually all companies depend on repeat business' [Fornell C., 1992].
Kenny G. warns that in identifying strategic factors for customers there is a significant difference between the wording of internal processes/capabilities and strategic factors: 'Customers don't care about advertising and staff training. They only care what advertising and staff training achieve for them. In other words, they only perceive the impact of advertising and staff training when these procedures surface as strategic factors - as store image and good customer service'. [Kenny G., 2005] Many organisations develop definitions of strategic factors without
reference to how their key stakeholders define them. Kenny G. offers five methods for identifying strategic factors:
- Customer responses to performance (e.g., letters, phone calls, conversations)
- Sales force feedback (e.g., sales reports on product/service sales)
- Customer survey (e.g., questionnaire or interviews)
- Customer focus groups (i.e., small-group, in-depth discussions)
- Competitor activity (e.g., changes in their performance) [Kenny G., 2005].
One way of enhancing customer satisfaction and increasing customer loyalty is through offering superior service quality [Lee et al, 2005; Xin et al, 2007]. The role of service quality has been emphasized and comprehensively studied in services literature during the last 20 years [Parasuraman et al, 2002].A sound measure of service quality is necessary for identifying the aspects of service needing performance improvement, assessing how much improvement is needed on each aspect, and evaluating the impact of improvement efforts. Banking institutions and their top management need to gain a better understanding of how customers assess the quality of services they obtain through electronic means [Bauer et al, 2005].
Many studies emphasize the importance of service quality in customer satisfaction. Services quality is considered to be even more important in online banking than in other fields for many reasons. First of all, online banking services are mainly free, and customers mainly pay attention to quality when selecting a service provider. They prefer ease of use and convenience. Secondly, it is risky because online banking related to financial transactions. Thirdly, customers worry about privacy and security. Consequently, online banking services should precisely meet the expectations of customers. Moreover, it is stated that online customers are more difficult to satisfy and retain compared to the traditional customer [Lee et al, 2005].
The extant literature suggests that service quality is strongly related to online satisfaction. [Devaraj et al, 2002] Prior research
has found that satisfaction with a product or service has been identified as an important determinant for enhancing existing customers' loyalty. Satisfied customers are more likely to possess a stronger repurchase intention and to recommend the product/service to their acquaintances [Skogland et al, 2004]. According to these studies, loyalty and customer attitudes derive from customer satisfaction. So, customer satisfaction is the main factor in building customer relationship and positive attitudes of internet banking consumers.
In marketing terms high quality can be mainly measured by customer satisfaction. SERVQUAL is the instrument developed by Zeithaml and can be used to measure Service Quality of banking services or one aspect of them, for instance, online banking services. According to Zeithaml et al, e-service quality is defined as the extent the web facilitates effective shopping, purchasing and delivery of products and services [Zeithaml et al, 2006]. Service quality can be considered as an elusive and abstract construct that is difficult to capture and measure [Heinonen et al, 2007]. The most accepted and widely adopted instrument to measure service quality is the SERVQUAL model.
SERVQUAL is most valuable when it is used periodically to track service quality trends, and when it is used in conjunction with other forms of service quality measurement. A retailer, for example, would learn a great deal about its service quality and what needs to be done to improve it by administering both SERVQUAL and an employee survey three or four times a year, plus systematically soliciting and analyzing customer suggestions and complaints [Berry L. et al, 1988].
e-SERVQUAL measures are discussed in many ways for the last twenty years. The assessment of customers' electronic service quality perceptions has, thus, become increasingly important and strategic for both service-oriented organisations and their manufacturing counterparts.
Traditionally, the SERVQUAL, a multiple item instrument, and its adaptations have been used to assess customer-perceived service quality, which has been validated as an important determinant in e-
commerce channel satisfaction [Devaraj et al, 2002]. SERVQUAL scale involves a survey containing 21 service attributes, grouped into the five service quality dimensions of reliability, responsiveness, assurance, empathy, and tangibles [Zeithaml et al, 2006]. However, all of these factors can not be used in online banking for many reasons. First of all, personnel attitudes are not so important for online services. Secondly, tangibles of services and online services are different. In previous works Zeithaml et al mentioned e-SERVQUAL measures such as fulfilment, efficiency, reliability and privacy [Zeithaml et al 2000, 2002].
Parasuraman et al modified e-SERVQUAL measures by including information/system availability and content, ease of use, privacy and security, interactivity and entertainment [Parasuraman et al, 2005]. In addition, the main measures of website quality discussed and identified in separate studies. Yang et al offered to use the following factors as the main determinants of website quality: ease of use, content, accuracy, timeliness of response, attractiveness of the site and privacy [Yang et al, 2001]. Similarly, Liu et al noted that determined security, website design, service provided by the site, quality of information and playfulness are important components of web quality [Liu et al, 2000]. Lociacono et al defined main determinants of WEBQUAL scale consisting of informational fit, interaction, trust, response time, design, intuitiveness, visual appeal, innovativeness, flow, integrated communication, business process and substitutability [Lociacono et al, 2000].
Parasuraman et al gave a comprehensive review of the emerging e-SERVQUAL literature. According to authors, two major shortcomings can be found in previous studies. First, service quality is considered as website quality, and second, arguable reflection of listed determinants of service quality from previous studies took place [Parasuraman et al, 2005].
Previous studies use different measures of e-service quality and they have some contradictions with each other in defining major e-Service Quality determinants. Conceptually, all main measures are similar to e-SERVQUAL determinants of Zeithaml. Other studies give some specific measures which can be useful for
detailed measuring of Online Banking Service Quality. Zeithaml et al named four major dimensions of service quality that are important for customers, they are :
1. Efficiency - the ability of customers to get to the website, and check out with minimal effort.
2. Fullfilment - the accuracy of service promises.
3. Reliability - the technical function of the site.
4. Privacy - the assurance that data are not shared and that credit information is secured [Zeithaml et al, 2006].
Analysis of customer satisfaction provides insights into the future behaviors of online banking customers, such as ongoing loyalty and increasing share of wallet. The cause-and-effect methodology enables to not only measure current levels of customer satisfaction, but to use this information to project the impact of satisfaction increases on how customers are likely to behave in the future. [Freed L., 2005]. In practice, consumers may evaluate a new product or service positively, yet they may choose not to try it. As suggested by Meuter et al, that lack of "consumer readiness" can explain much of this failure to try. Customers can positively evaluate an innovative service but they can refuse to use this service if they do not understand their role (role clarity), if they perceive no clear benefit to using it (motivation), or if they believe that they are not able to use it (ability) [Meuter M. et al, 2005].
Banks use different marketing strategies in the banking sector. According to Bigham Bernstel J., attracting and retaining customers involves three marketing strategies:
1. Acquisition: motivating targeted consumers (including existing consumers) to enroll in your service.
2. Activation: prompting enrolled customers to begin using the service on regular basis to view and pay bills.
3. Retention: leveraging the "stickiness" of bill pay and presentment to retain online customers and keep them coming back to your site on a regular and continual basis [Bigham Bernstel J., 2003].
These strategies are mainly based on internet banking adoption. However, these three marketing strategies could be used as overall strategies for customer service. For this purpose customer
relationship management (CRM) systems can be implemented. As suggested by Sarel and Marmorstein, relationship marketing may prove to be the most promising avenue for banks to pursue. They argue that deploying online banking as a component of a customer-equity building strategy may be the best way to go [Sarel D., Marmorstein H., 2003]. The customer equity approach is based on a long term of a strategy acquiring, retaining and selling additional services to the desired customer, and online banking capabilities could help banks improve their efforts in all of these areas. It is clear that banks need to study the potential benefits and risks from the innovators and early adopters.
Nowadays, banks are more aware of the need to enhance future usage and to build long lasting relationships with customers. They seek to take competitive advantages by building close relationships with customers. By building customer relationships banks could sell more products and services to their existing customers by further expanding their non-core online businesses such as insurance, stock brokerage and fund marketing. In order to enhance customer relationship management (e-CRM) program it is important to study regularly customer attitudes. Finally, customer relationship management enhances customer loyalty and retention.
References
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6. Parasuraman A., Zeithaml V. Measuring and Improving Service Quality. Sage. USA, 2002.
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