Customer Satisfaction In Bank Of Ceylon

Abstract

In this comparative commercial world, the bank has to satisfy the needs and wants of the customers, and has to attract new customers, and hence enhance their business. Service quality is considered through the banks strategies. Therefore, every bank has to emphasize on customer satisfaction. As far as the banks are concerned this phenomenon is very prominent.

Banking sector has to improve and modernize their service. I have selected the subject “Service quality and Customer satisfaction in Commercial bank of Ceylon limited in Jaffna District- Sri Lanka”.

This research article has three tasks. First task is a research proposal which includes the introduction of the subject, hypothesis and methodology. Second task includes Literature review, data presentation and data analysis. Third task states the findings and some recommendations from the analysis.

Finally the information gathered from the questionnaire, relevant books, mails and annual reports. To the best of my ability in order to present the research report, I have used the above guides to the research. Please be excuse due to any mistakes in this study.

-Researcher.

Task 1

1.1 INTRODUCTION

This research topic is “Service quality and customer satisfaction in Commercial bank of Ceylon limited in Jaffna District- Sri Lanka”.

Sri Lanka is one of the developing countries in South Asia which has twenty five districts based on geographical and political system. Jaffna is one of the districts of Sri Lanka. There are different kinds of banks in Sri Lanka, such as, central bank, commercial bank, Exchange bank, Agricultural bank, saving bank, rural bank, and development bank etc.

Commercial bank is selected for the research purpose in Jaffna district in Sri Lanka. This is an institution and accepts money from the public for non-interests bearing current accounts. A customer may withdraw on demand by cheque, the monies in his or her current account. Particular this bank is focused on the study.

Banking institutions and their activities are vital for the development of the country. Customer satisfaction plays a major role in the banking activities in the competitive environment. So bank’s has to evaluate the satisfaction of customers. Parasuraman.P (1988) said that “a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance (or out come) in relation to his or her expectation”. The banks are aiming for high satisfaction because customers who are just satisfied still find it easy to switch when a better offer comes along. The bank has invested heavily in researching the market to identify service quality.

Today many banks undertake service quality through the satisfaction their customers. Service quality based on customer’s needs and wants expectation. Normally bank’s successfulness depends on large co-operate customers. This is profitability of banks .Therefore customers satisfaction is very useful concept about the banking sector. It can be achieved increasing customer service and service quality.

1.2 OBJECTIVES OF THE STUDY

Objectives are the end results of the process. Customer satisfaction also ends result of the service quality of the banking process. So the objective of the study is to know the organizations position.

Through this study the researcher can get new ideas about service quality in banking sector and to improve customer satisfaction and can provide new ideas to modify any inefficient matters and can suggest any advantages and in future development.

This research study will have some following objectives .these are

Evaluation the service quality that the affect on customer satisfaction.

Assessing the relationship between service quality and customer satisfaction.

To identify the reasons, the service improvement and why a bank improves customer satisfaction.

To find out the significant factor, service quality for achieving customer satisfaction.

Whether there is any relationship between in customer satisfaction and bank’s performance. If so, what type of relationship (positive/ negative).

1.3 SIGNIFICANSE OF YHE STUDY

When we consider the significance of the study that provides some important factors to organization customers, employees and managers.

If there is high customer satisfaction it will help full to organization and managers to get more customers. They can get much deposit and get more profit through this satisfaction. They can get a well goodwill in private banks also to provide a caring service quality .but on the other hand if there is dissatisfaction it is difficult to increase their market share.

Customer satisfaction also helps to employees. If the employees give good service quality they can get good marks to their performance report on banking assistance, so it will help to their reward system.

This study gives us a chance to understand to what extent the theoretical knowledge we have studied is being followed in practice .Study of working people may help us to understand clearly how the customer satisfaction of banking is important to meet the changing needs of the people to achieve the goals of the institution.

1.4 LIMITATIONS OF RESEARCH

There must be some limitation to any event; it is not an expectation in this report. Though there are various factors causing service quality and customer satisfaction.

Prevailing condition

Due to the prevailing situation some customers and employees may not say whole true data strategies and benefits. Through there are various factors causing as service quality and customer satisfaction the following factors are taken this study.

Improving service quality has high expresses, so it is not possible to implement immediately in Jaffna district.

Select the sample of banks customers in the research with require their concern and it is there fore not expected to be with bias.

This study has only tried to find out relationship between service quality and customer satisfaction.

Customer satisfaction is a human behaviour, that is difficult to measure

The questionnaire will prepare specially for customer-(selected samples).

1.5 METHODOLOGY

1.5.1 INTRODUCTION

This chapter allocated to describe the methodologies that have used in relation to this study. This includes conceptualization, operationalization, research sample, data collection techniques and method of analysis. Further the way of research sample was selected. The system adopted in collecting data techniques used in analysis, the data and the measures utilized for analyzing the dates are explained.

1.5.2 CONCEPTUALIZATION

In the conceptual frame work, the researcher can compare the relationship between independent variable and dependent variable. The problem of the service quality and customer satisfaction in the banks could be conceptualized based on the factors assumed that can cause for this problem. The following conceptual frame work can be formulated.

Conceptual frame work

Tangibles

Reliability

Responsiveness Services Customer

Quality Satisfaction

Assurance

Empathy

In this frame work showed the relationship between the key variables of the dependent variable and independent variables. The services quality is independent variable and customer satisfaction is dependent variable.

The service quality are consist tangibles, reliability, responsiveness, assurance and empathy. If perceived service quality is equal to or, greater than expectation, the customer is satisfied. If perceived service quality is less than expectations the customer is dissatisfied.

Services quality depends on five variables such as tangibles, Reliability, Responsiveness, Assurance, and Empathy. In this variables are functioning in a better position there, quality service. It is issued by the firm. It is lead to customer satisfaction.

OPERATIONALIZATION

In this research the operationalization model is given below.

Concept

Variable

Indicator

Measurement

Service

Quality

Tangible

Reliability

Responsiveness

Assurance

Empathy

Questionnaire

Questionnaire

Questionnaire

Questionnaire

Questionnaire

Questionnaire

Questionnaire

Questionnaire

Questionnaire

Customers Satisfaction

Customers loyalty

Customer complain

Customer expectation

Customer relationship

Questionnaire

Questionnaire

Questionnaire

Questionnaire

Questionnaire

Questionnaire

Questionnaire

Questionnaire

RESEARCH SAMPLE

In developing the research plan the research has to decide or, sample size, its composition and means of collecting data. There fore, for this research purpose a bank will be selected as sample. Commercial bank has been selected for this study in Jaffna district in Sri Lanka. Customer residing in some selected divisional areas of the Jaffna district was selected for this purpose. Samples for data collection are selected randomly.

1.5.5 DATA COLLECTION TECHNIQUES

A scientific research is on the basis of Positivism and interpretivsm which are applied for this study. Primary data and secondary data were collected for the research work. Primary data was collected by the questionnaire through the gatekeeper who is working as a managing assistant in commercial bank (Jaffna branch, Sri Lanka).

Secondary data has been collected from the Commercial bank of Ceylon Ltd, Jaffna from their annual report, articles, magazines and report and other related publications. Furthers such data has also been collected from publications, definitions about customer’s satisfaction.

Questionnaire is a collection of written questions about the respondent’s attitudes, opinions, perceptions act. Information was collected by gatekeeper. Questionnaire was issued and collected randomly to the commercial bank’s customers in Jaffna district-Sri Lanka by gatekeeper. The questionnaire is included two parts.

The questionnaire was prepared with questions in different sections to measure the customer satisfaction.

These question were prepared based on the types of bank’s details such as,

* Tangible

* Responsiveness

* Assurance

* Empathy

* Reliability and

* Customer satisfaction.

The questionnaire includes questions that are related to how far a bank has been attempted to fulfil the customer needs and wants. Marks were allocated in the following manner to the answer to the given questions.

Very strongly Accepted – 05

Accepted- 04

Not to do say 03

Rejected – 02

Very Strongly Rejected- 01

1.5.6 HYPOTHESIS OF THE STUDY

Hypotheses are the assumption that guides the research activity towards the ultimate finding based on the hypothesis. The researcher will go through the research activity including data collection analysis and then researcher will attain and ultimate conclusion. This research also has two hypotheses relating to customer satisfaction and service quality in respect of private banks.

The moderator hypothesis is supported if the interaction is significant and although, there may also be significant main effects for the predictor and moderator, these are not directly relevant to testing the moderator hypothesis (Baron and Kenny, 1986; P 1174) According we report only the significant, interaction path co-efficient. The analyses revealed only two significant effects of moderation.

Service failure moderated the effect of functional quality on overall satisfaction, and

Communication moderated the effect of functional quality on functional satisfaction.

H1 – The service quality has mainly depended on the tangible, reliability, responsiveness, assurance and empathy with customer satisfaction.

H2 -The service quality has an impact on customer satisfaction.

1.5.7 AN ACTION PLAN

It is important to formulate an action plan to do the research. It is considered mainly six main steps for a scientific research such as; the research question, hypothesis, methodology, literature review, data collection and analysis, conclusion with recommendations. This study followed an action plan with a time table.

10/10/2009 – Identify the research question or hypothesis

12/10/2009 – Formulate the methodology

15/102009 – Refer the literature review

19/10/2009 – Data collection and analysis

02/11/2009 – Presentation of findings

2.0 Task 2

2.1 LITERTATURE REVIEW

2.1.1 SERVICE QUALITY- DEFINITIONS

Asubonteng (1996) said that it can be defined as “the difference between customers expectations for service performance prior to the service encounter and their perceptions of the service received”

Gefan(2002) referred that “Service quality as the subjective comparison that customers make between the qualities of the service. That they want to receive and what they get”

Parasuraman et al (1985, 1988) said that “Service quality is determined by the differences between customer’s expectations of the services provider’s performance and their evaluation of the services the received”

2.1.2 CUSTOMER VALUE

Any promise is that customers will buy from the bank that they perceive offers the highest customers delivered value.

The customer delivered value is the difference between total customer value and total customer cost. The total customer value is the bundle of benefits customers expect from a given product or service. Total customer cost is the bundle of costs customers expect to incur in evaluating, obtaining, using and disposing of the product or service.

The researchers found five determinants of service quality. These are as follows.

01. Reliability: the ability to perform the promised service dependably and accurately

02. Responsiveness: the willingness to help customers and to provide prompt service.

03. Assurance convey: the knowledge & courtesy of employees and their ability to trust and confidence.

04. Empathy: the provision of caring individualized attention to customers.

05 Tangibles: the appearance of physical facilities equipment, personal & Communication materials

Figure 1: Service quality model

Service delivery

(Including pre and past contacts)

External

Communications

To consumers

Translation of perception into service quality

Management perception of consumer expectation

Word of month Communication

Personal

Needs

Past

Experience

Expected services

Perceived services

Gap 05

Gap – 01 Gap 04

Gap – 03

Gap -02

Gap – 04

(Source: – A parasuraman, Valarie, A Zeithamal and Leonard Berry, Journal of

Marketing, fall 1985)

2.1.3 DEFINITION OF CUSTOMER SATISFACTION

Kotler said that “Satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance (or out come) in relation to this or her expectations” (Kotler, 2000, p 36)

Hount said that “Satisfaction is a function of customer’s belief that he or she was treated fairly” (Hount 1991)

2.1.4 METHODS OF TRAKING AND MEASURING CUSTOMER STATIFACTION

Marketing concepts and tools describe how companies can track customer satisfaction. Companies use the following methods to measure how much customer satisfaction they are creating.

Complaint and suggestion systems

A customer – centred organization makes it easy for its customers to deliver suggestions and complaints. Many restaurants and hotels provide forms for guests to report like or dislike. Companies are also adding web pages and e -mail to facilitate two – way communication. These information flows provide companies with good ideas and enable them to act quickly to resolve problems.

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Customer satisfaction surveys

Studies show that although customers are dissatisfied with one out of every for purchases, less than five percent of dissatisfied customers will complain. Most customers will buy less or switch suppliers complaint levels are thus not a good measure of customer satisfaction, responsive company’s measure customer satisfaction directly by conduction periodic surveys they send questionnaires or make telephone calls to a random sample of recent customer. They also solicit buyer’s views on their competitors’ performances.

Lost customer analysis

Companies should contact customers who have stopped buying or who have switched to another supplier to learn why this happened. It is necessary to monitor the customer loss rate. If it is increasing this clearly indicates that the company is failing to satisfy customers,

2.1.5 RELATIONSHIP BETWEEN SERVICE QUALITY AND CUSTOMER SATISFACTION

Spreng and Mackoy (1996) had also found the path coefficient between service quality satisfactions to be significant (Lee et al 2000) wood side (1989) had found similar empirical evidence. The findings of Lee et al (2000), who have studied customers of an entertainment park and an aerobic school also supports this argument.

The Lock of consensus in the causality between these two constructs has been caused mainly by the use of the constructs at different levels by researchers (Lee et al 2000) those who argue that satisfaction is an antecedent of perceived service quality have treated perceived quality as a global construct while treating satisfaction as an encounter (or transaction) specific construct. The majority of those who have found perceived service quality to be an antecedent rather than a transaction specific construct. Further some researchers have argued that perceived quality could also play a role at transaction level. at this level, it is found to be an antecedent of satisfaction with the transaction (Rust and Oliver, 1994) what is evident from the foregoing discussion is that “When the level of aggregation of both constructs is identical, there is less dispute that quality is an antecedent to satisfaction” (Roest and Pieters, 1997)

2.2.0 DATA PRESENTATION AND ANALYSIS

2.2.1 INTRODUCTION

This chapter presents and analyses the data collected from samples from banking sector. This chapter tries to find out the relationship between the variables by using correlation and regression analyses with graphs by using SPSS and Microsoft Excel Packages. Further more, here the researcher examined the average of variables and percentage of variables and explains the relationship and comparisons by using the bar charts.

2.2.1 CORELATION ANALYSIS

Correlation analysis is a statistical analysis, which statistically measures the extent and nature of the relationship between two variables. That means if changes of two variables are associated with each other, they are said to be correlates. It signifies a relationship between them.

In this research this analysis is under taken to find out the relationship between.

Quality of Tangibles and customer satisfaction.

Quality of Reliability and customer satisfaction.

Quality of Responsiveness and customer satisfaction.

Quality of Assurance and customer satisfaction.

Quality of Empathy and customer satisfaction.

The co-efficient of correlation (r) is always between-1 and 1 and tells the type and strength of relationship between these variables. That is, if r is positive, there is positive relationship between the two variables. If r is less than zero that means there is negative relationship between two variables. The strength of relationship between the variables will be as follows.

r= +1 indicates complete positive correlation.

r= -1 indicates complete negative correlation.

r= +/-0.5 indicates moderate correlation.

r= +/-0.8 or +/-0.9 indicates strong correlation.

r= +/-0.2 or +/-0.4 indicates weak correlation.

r= 0 indicates zero or no correlation.

Following tables illustrate the coefficient of correlation derived by the analysis for variables Tangibles, Reliability, Responsiveness, Assurance and Empathy related to customer satisfaction in the Commercial bank of Ceylon Ltd.

Table -1 coefficient of correlation between customer satisfaction and service quality

Service Quality

Customer satisfaction (r )

Tangible

Reliability

Responsiveness

Assurance

Empathy

Total

0.229

0.579**

0.753**

0.388

0.641**

0.787**

When interpreting the coefficient of correlation, the researcher can observe that, there is positive relationship between services quality and customer satisfaction in all cases. r is +0.787. The relationship is moderate in the case of service quality compared with customer satisfaction of the Commercial bank of Ceylon Ltd.

In the case of tangible, the relationship between the tangible and customer satisfaction is positive relationship and also the relationship between the tangible and customer satisfaction is weak because the coefficient of correlation is + 0.229 between tangible and customer satisfaction.

In the case of reliability, the relationship between the reliability and customer satisfaction is positive relationship and also the relationship between the reliability and customer satisfaction is moderate. The coefficient of correlation is + 0.578** between reliability and customer satisfaction.

In the case of responsiveness, the relationship between the responsiveness and customer satisfaction is positive relationship and also the relationship between the responsiveness and customer satisfaction is strong. The coefficient of correlation is + 0.753** between responsiveness and customer satisfaction.

In the case of Assurance, the relationship between the Assurance and customer satisfaction is positive relationship and also the relationship between the Assurance and customer satisfaction is weak. The coefficient of correlation is + 0.388 between Assurance and customer satisfaction.

In the case of Empathy, the relationship between Empathy and customer satisfaction is positive relationship and also the relationship between the Empathy and customer satisfaction is moderate. The coefficient of correlation is + 0.641** between Empathy and customer satisfaction.

There for, the relationship between total service quality and total customer satisfaction is strong positive relationship. The coefficient of correlation (r) 0.787** between total service quality and total customer satisfaction.

The pattern of variation of the service quality as tangible, reliability, responsiveness, assurance and empathy in relation to the value of the satisfaction of the customer are as follows.

Table 2 regression summary – service quality and customer satisfaction in Commercial bank of Ceylon ltd in Jaffna district.

Y= a + box

Service quality

a

b

r2

Tangible

Reliability

Responsiveness

Assurance

Empathy

61.0

38.1

22.9

49.6

36.8

0.229

0.578

0.753

0.388

0.641

0.053

0.334

0.567

0.151

0.411

Quality of tangible and customer satisfaction

The regression equation of customer satisfaction in relation to the quality of the tangible in Commercial bank of Ceylon in Jaffna district is given below.

Y=a+ bx

Y= 61.0 + 0.229X

Based on this equation when X increases by one unit, the value of y is increase by 0.229 that is the customer satisfaction is increased by 0.229 per each additional unit of tangible.

This prediction equation is graphed in the following graph, along with a plot of the data points.

Graph 1 Tangible and customer satisfaction

Now let us check the usefulness of the hypothesized model – that is whether X (tangible) really contributes information for the prediction of y (customer satisfaction) using the straight -line model.

The coefficient of determination (r2) represents the proportion of the variation in y that is explained by the independent variable (x). In the case of customer satisfaction is 5.3% that means 5.3% of the variance in the customer satisfaction can be explained

by the changes in the quality of tangible. This indicates that 94.7% of customer satisfaction will be influenced by the other factors.

Quality of Reliability and customer satisfaction

The regression equation of customer satisfaction in relation to the Quality of Reliability in Commercial bank of Ceylon Limited in Jaffna district is given below.

Y= 38.1 + 0.578 X

Based on this equation when X increases by one unit, the value y is increase by 0.578. That is the customer satisfaction increase by 0.578 per each additional units of Reliability.

This prediction equation is graphed in the following graph with a Plot of the data points.

Graph 2 Reliability and customer satisfaction

Now, let us check the usefulness of the hypothesized model, that is, Whether X (Reliability) really contributes information for the prediction of Y (customer satisfaction) using the straight -line model.

The coefficient of determination (r2) represents the proportion of the variation in Y that explained by the independent variable. In case of customer satisfaction is the reliability influences only 33.4% that means 33.4% of the variance in the customer satisfaction. This indicates that 66.6% of customer satisfaction will be influenced by the other factors.

Quality of Responsiveness and customer satisfaction

The regression equation of customer satisfaction in relation to the Quality of Responsiveness in Commercial bank of Ceylon Limited in Jaffna district is given below.

Y= 22.9 + 0.753 X

Based on this equation when X increase by one unit, the value Y will also increase by 0.753. That is the customer satisfaction will increase by 0.753 each additional units of Responsiveness.

This prediction equation is graphed in the following graph along with a Plot of the data points.

Graph 3 Responsiveness and customer satisfaction

Now, let us check the usefulness of the hypothesized model, that is x (responsiveness) really contributes of information for the prediction of y (customer satisfaction) using the straight-line model.

The coefficient of determination (r2) represents the proportion of the variation in y that explained by the independent variable. In the case of customer satisfaction is the Responsiveness influence only 56.7%. It means 56.7% of the variance in customer satisfaction. This indicates that 43.3% of customer satisfaction will be influenced by other factors.

Quality of Assurance and customer satisfaction

The regression equation of the customer satisfaction in relation to quality of Assurance in Commercial Bank Ceylon Limited in Jaffna district is given below.

Y=49.6 + 0.388X

Based on this equation when x increase by one unit, the value of y will also increase by 0.388. That is the customer satisfaction will increase by 0.388 per each additional units of Assurance.

This prediction equation is graphed in the following graph, along with a plot of the data points.

Graph 4 Assurance and customer satisfaction

Now, let us check the usefulness of the hypothesized model, that is, whether x (Assurance) really contributes of information for the prediction of y (customer satisfaction) using the straight-line model.

The coefficient of determination (r2) represents the proportion of the variation in y that explained by the independent variable. In case of customer satisfaction is the Assurance influences only 15.1% at mean, it means 15.1% of the variance in the customer satisfaction. This indicates the 84.9% of customer satisfaction will be influenced by other factors.

05. Quality of Empathy and customer satisfaction

The regression equation of the customer satisfaction in relation to quality of Empathy in Commercial Bank of Ceylon Limited in Jaffna district is given below.

Y= 36.8 + 0.641X

Based on this equation when x increase by one unit, the value of y will also increase by 0.641. That is the customer satisfaction will increase by 0.641 per each additional units of Empathy.

This prediction equation is graphed in the following graph, along with a plot of the data points.

Graph 5 Empathy and customer satisfaction

Now, let us check the usefulness of the hypothesized model, that is, whether x (Empathy) really contributes of information for the prediction of y (customer satisfaction) using the straight-line model.

The coefficient of determination (r2) represents the proportion of the variation in y that explained by the independent variable. In case of customer satisfaction is the Empathy influences only 41.1% that means 41.1% of variance in customer satisfaction. This indicates the 58.9% of customer satisfaction will be influenced by other factors.

Task 3

DISCUSSION AND CONCLUSION

3.0 INTRODUCTION

This is final chapter of this research. This chapter includes the findings of the research, hypotheses testing and recommendations. This chapter discusses the findings of the research and the test of the hypotheses whether the hypotheses are accepted or not. Further it gives suggestion to improve the service quality in order to achieve the customer satisfaction.

3.1 FINDING OF THE RESEARCH

In this research, the researcher finds out the results based on the data presentation and data analysis used in this research a correlation, average and percentage. The area concerned with this research is banking sector with selected sample from Commercial bank of Ceylon Ltd in Jaffna district.

According to the correlation analysis, the following findings are prepared. The relationship between the Tangible and customer satisfaction is positive and weak as at 0.229, Reliability and customer satisfaction is positive but moderate as at 0.578*, Responsiveness and customer satisfaction is positive and strong as at 0.753, Assurance and customer satisfaction is positive and weak as at 0.388 and Empathy and customer satisfaction is positive but moderate as at 0.641* in Commercial bank of Ceylon Ltd in Jaffna-Sri Lanka.

Based on the re