A Measurement of Customer Service Quality of Banks in Dhaka City of Bangladesh

South Asian Journal of Management, Jan-Mar 2005 by Islam, Nazrul, Ahmed, Ezaz

This study attempts to identify the factors related to service quality of the banks in Dhaka City of Bangladesh. It identifies the relationship between age, educational background, profession, and length of involvement, types of services obtained by the clients and the service quality factors. An extensive survey of bank clients has been performed with a structured questionnaire to identify the factors. A segmentation of the respondents was made based on the nature of services provided by the banks such as, deposit, lending and other financial services. The sample clients were selected from the branches located in four clusters of banks including Motijheel, Gulshan, Dhanmondi, and Uttara of Dhaka City. 404 bank clients were interviewed from Nationalized, Private and Foreign commercial banks. Among the banks, four are government, six are private and one is in foreign sector. In selecting sample, it was assumed that the bank clients of Dhaka City are more sensitive compared to other cities of Bangladesh, as their education level is higher. The sample clients were selected randomly at the banks while interviewing. Both descriptive and inferential statistics were used in the analysis. Factor analysis was done to identify the service quality factors of the banks. Correlations between the factors and age, educational background, profession, length of involvement, and types of service obtained were identified to know the relationships. In order to explore the relationship with the overall service quality, multiple regression analysis was performed. Results show that the most important service quality factor of banks is personal attention to the clients followed by error-free records, safety in transaction, and tangible physical facilities of the bank. It is also found that there is a significant difference between the expected and perceived service quality of public and private banks. A significant correlation between the performance of promises in time and professions of the clients is observed. Perceived service quality factors have significant relationship with the overall service quality of the banks located in Dhaka City which indicates that the factors identified have strong influence on the overall service quality.

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INTRODUCTION

Quality in service is very important especially for the growth and development of service sector business enterprises (Powell, 1995). It works as an antecedent of customer satisfaction (Ruyter and Bloemer, 1995). In past, quality was measured only for the tangible products because of less dominance of service sector in the economy. Due to the increasing importance of service sector in the economy, the measurement of service quality became important. ISO standards is one of the measurement tools of service quality, where quality is defined as the totality of features and characteristics of a product, process or service. Crosby (1979), a renowned researcher in service quality, defined quality as the 'conformance to requirements'. The guru of quality movement Juran (1988, 1992) defined quality as 'fitness for use' while, Deming (1986) viewed quality as a process promising to result in products or services.

In late 1980s, Parasuramam et al., (1985, 1991, 1994) explained quality as a gap between what customers feel should be offered and what is provided. Even though there is no single definition on quality, they all have a single focus on how users look at it (Fiji, 1994; Parasuraman, 1985; Teas, 1994; Zeithaml, 1988; Khader, 1997). In 1996, Ramaswamy identified three different sets of measures for service quality that a company should be concerned with (Ramaswamy, 1996):

* Service performance measures are primarily internally focused and evaluate the current performance and hence it is ensured that it continues to be reliable to meet the design specification;

* Customer measures, on the other hand, are both internally and externally focused and aim at assessing the impact of the service performance on customers;

* Financial measures, which are indicators of the financial health of the organization.

The above theories and suggestions by other researchers such as, Liljander (1995), Cadottee, Woodruff and Jenkins (1983, 1987), Bolfing and Woodruff (1988), Prakash and Lounsbury (1984), and Swan (1988) suggest many possible comparison standards including predicted service, ideal service, excellent service, desired service, deserved service, needs and values, cultural norms, promises, adequate service, best brand norm, brand norm, product type norm, favorite brand' model, comparative expectations, equity and fairness. However, SERVQUAL only incorporates a rough aggregated mixture of a selection of these.

Among the contemporary instruments for measuring service quality, SERVQUAL has got attention by the researchers in various fields including insurance, bank, education, Information Technology (IT), etc. as it deals with users views regarding services (Parasuraman et al., 1985, 1991, 1994). Although, a separate formality dimension in bank and restaurant service was identified by the research SERVQUAL is useful to measure the service quality of the bank (Witkowski, et al, 2001). Parasuraman and Zeithaml's SERVQUAL includes five dimensions of service that are relevant for measuring the service quality of banks by its clients. The dimensions are reliability (ability to perform the promised service, dependably and accurately), tangibility (physical facilities, equipment and appearance of personnel), responsiveness (willingness to help customers and provide prompt service), assurance (knowledge and courtesy of employees and their ability to inspire trust and confidence) and empathy (caring individualized attention the service provider gives its customers).