International Journal of Scientific and Research Publications, Volume 10, Issue 9, September 2020 811

ISSN 2250-3153

The impact of service quality and customer satisfaction

on banking services - an overview!
Gentiana Mjaku, Ph.D. c

Department of Marketing, Faculty of Economics, University of Tetova

DOI: 10.29322/IJSRP.10.09.2020.p10597
http://dx.doi.org/10.29322/IJSRP.10.09.2020.p10597

Abstract- Financial transactions are a part of daily life - regardless The study aims to investigate the effects of service quality
of whether done through a bank office or by method of other and customer satisfaction on banking services with customer
online channels. Banks perform services such as: including fund satisfaction. New advances are being presented and there is
transfers between accounts both within the bank and different consistently a dread of financial vulnerabilities. Furious rivalry, all
banks, bill payment, credit card payment, utilities payment and the more requesting clients and the changing atmosphere have
also configuring the initial set up for access to such services. So, introduced an unmatched arrangement of difficulties (Lovelock,
the study focuses on the commercial banking sector. 2001) for banks in the nation. Therefore, customer satisfaction is
This study is an attempt to explore the interrelationship the key for many banks to survive in competition.
between service quality and customer satisfaction. As and In other words customer satisfaction revolves around the
evaluation the importance of customer satisfaction in receiving state of mind that the customer has about a particular product.
banking services. Quality customer service and satisfaction are Therefore, customer satisfaction plays an important role in
recognized as the most important factors for bank customer consumer buying behavior because a satisfied customer may
acquisition and retention (Jamal, 2004; Armstrong and Seng, repeat purchase which may eventually lead to customer retention
2000; Lassar et al., 2000). Satisfied customers rarely file or loyalty. It is as a result of this that service providers or marketers
complaints and are overall more loyal to the bank. in general often handle customers in such a way that they can be
This will be a real contribution for the banks because in this satisfied with their services or product. (Biradawa, 2019)
way, banks can seek guidance to improve their service quality in Completely comprehension of the client, thinking about
order to retain their customers. Previous results show that service him/her as the need and offering quality types of assistance are as
quality has a positive and significant effect on banking services the assuring factors of success in the today’s business market.
and shows that customer satisfaction has a positive and signicant Today’s interpretation made of a customer is quite different to
effect on financial performance. what has prevailed in the past. This implies a client is certainly not
a negligible buyer of merchandise or services any more, yet he is
Index Terms- Service Quality, Customer Satisfaction, Banking somewhat considered as a functioning and powerful part in all
Services, Banking Sector. business exercises. what's more, growing associations with client
and attempting to fulfill him in all stages will build the proficiency
and adequacy of an association in accomplishing the client.
I. INTRODUCTION

W hy is customer satisfaction research so important? Satisfied

customers spend more money, refer more customers and
patronize businesses longer than unsatisfied customers. This all
II. LITERATURE REVIEWS
a. CUSTOMER SATISFACTION
prompts more income for organizations that can keep their clients The word satisfaction derives from that latin "satis"
fulfilled. Subsequently, organizations endeavoring to boost (meaning good enough, adequate) and "facio" (do or make).
income should truly think about putting resources into a consumer Decisions can be interpreted as "an attempt to accomplish
loyalty and dedication research program. (Pokalsky) something" or "make an adequate". Oxford Advanced Learner's
Numerous nations around the globe have begun giving more dictionary (2000) describes satisfaction as "the good feeling that
consideration to estimating client or buyer fulfillment at the you have when you reach something or when something that you
national level, including Africa, America, Asia and Europe. To want to happen does happen"; "the act of fullfilling a need or
explore the satisfaction level and the factors that affect the desire"; and "an acceptable way of dealing with a complaint, a
consumer attitude many researchers have conducted studies. debt, an injury, etcCustomer satisfaction is a state of mind that
Research suggests that customer dissatisfaction is still the major customers have about a product or services after using that product
reason of bank customers’ switch to other banks (Manrai and and service offered by a company in return of customer
Manrai, 2007). This dissatisfaction could be because of a variety expectations about the products. (SABIR, ET AL, 2014, 3)
of reasons. Fundamentally, satisfaction is something individual. An
This study gives a greater understanding of the factors that important role has An individual’s satisfaction to achieve a bank’s
are important to development of an effective banking system and goal. Customer satisfaction according to Oliver (1997) is the
meets customer needs and expectations. meeting between the expectations and reality of a selected product
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International Journal of Scientific and Research Publications, Volume 10, Issue 9, September 2020 812
ISSN 2250-3153

and service. Customer satisfaction has been considered the new items or services your clients need, putting one's organization
essence of success in today’s highly competitive banking industry. ahead of the competition (David, 2006).
Prabhakaran and Satya (2003) stressed that the client is the king Customer satisfaction leads to product repurchase that ultimately
Even Richard L. Oliver (1997) in his book "Satisfaction: A leads to brand loyalty. In mid 1970's consumer satisfaction
Behavioral Perpective on the Consumer" states that everyone developed as an authentic field of study. The first study of
understands what satisfaction is, but once asked to define it, agriculture’s Index of Consumer satisfaction to report direct
nobody seems to know. Customer satisfaction is one of banks’ information on consumer satisfaction was U.S department. (Pfaff
goals today. 1972). As a rule, if the clients are happy with the given products
To foresee furious rivalry in service industry, Banks must or services, the likelihood that they utilize the services s again
offer types of assistance which meet clients' prerequisites and increases (East, 1997). Additionally, fulfilled clients will most
fulfillment. Therefore, a processing of quality of service offered to likely speak excitedly about their purchasing or the use of a
meet customer satisfaction is required. Clients' have the particular service; this will prompt positive publicizing (File and
opportunity to survey whether the services offered by banks give Prince, 1992; Richens, 1983) Then again, disappointed clients will
them the normal fulfillment or not. most presumably switch to an alternate brand; this will prompt
Various organizations in order to assess customer negative publicizing (Nasserzadeh et al. 2008).
satisfaction with their products and services have applied the b. SERVICE QUALITY
ACSI model in their marketing. A key point of the model to Since the day that the job of the service in regular day to day
measure customer satisfaction with a variety of products and existence got clear, the services quality issue was considered as
services, as well as the ability to compare results is the ability to the principle highlight of rivalry among organizations with the
use similar types of questions. Which means that the results can goal that given the quality of services, the organization can be
be applied in order to ascertain customer satisfaction and as a become different from its competitors and this results in achieving
resource to create the ability to compete at the micro level as well competitive advantage. Gronroos (2000) defined service as, “A
as at the macro level - by industry sectors to include the country service is a process consisting of a series of more or less intangible
as a whole. The model can also be used to analyse factors affecting activities that normally take place in interactions between the
consumer behaviours, which can be applied to develop and customer and service employees or physical resources or goods
improve the effectiveness of an organisation. (Unyathanakorn & and/ or systems of service provider, which are provided as
Rompho, 2014, 51) solutions to customer problems”.
Source of the idea is identified with the advertising idea that Parasuraman, Berry and Zeithaml (1988) who emphasize
benefit is created through fulfillment of client needs and needs. that service quality is the customer's perception of the service
(SABIR, ET AL, 2014, 3) We have a number of studies supporting expected with the service received. A few authors have connected
the fact that we have a link between customer satisfaction and bank the quality of service with customer satisfaction (Dauda and Lee
performance (Jham and Khan, 2008). Customer satisfaction has 2016; Ali and Filieri 2015; Jun, Yang, and Kim 2004). Lovelock
been studied by a number of researchers in the retail banking and Wright (2005: 96) further state that customers assess their
industry. The vast majority of the scientists found that service level of satisfaction or dissatisfaction after using services.
quality is the predecessor of consumer satisfaction (Bedi, 2010; Cronin and Steven (1992) stated that service quality is the actual
Kassim and Abdullah, 2010; Kumar et al., 2010; Yee et al., 2010; performance of services provided to customers. Like any other
Kumar et al., 2009; Naeem and Saif, 2009; Balaji, 2009; industries, the banking industry focuses on earning profit through
Parasuraman et al., 1988). ensuring expected level of customer satisfaction and retention. In
Organizations at that point need to adjust their activities and order to do so, proper attention must be given to the service
endeavors to fulfill and hold clients, conceding to the significance quality.
of clients in driving execution (Johnson et al., 2000). As markets Fogli (2006) defined term service quality as “a global
shrink, organizations are scrambling to support consumers judgment or attitude relating to particular service; the customer’s
satisfaction and keep their present clients as opposed to dedicating overall impression of the relative inferiority or superiority of the
extra assets to pursue likely new clients. This is on the grounds organization and its services”. The connection between services
that it costs five to eight fold the amount of to get new clients than quality and consumer satisfaction has been submitted to
to clutch old ones is vital to understanding the drive toward exceptional investigation by leading service quality specialists
benchmarking and following consumer satisfaction (Cacippo, (Bitner and Hubbert,1994; Bolton and Drew, 1994), just as the
2000). connections between quality, consumer satisfaction, client
Customer satisfaction can be corresponded with a number maintenance and gainfulness (Storbacka et al., 1994).
of factors. In a study conducted by Colgate (1997), he has found Thus, as a core competitive strategy banks need to
out that customer service is the most important factor that concentrate on service quality (Chaoprasert and Elsey,2004). One
influences satisfaction rates or levels. Also of significance are of the ways to improve quality of service is by fulfilling
tuning in to the necessities of clients and worth. customers’ expectations.
In addition to service quality, also one of the factors that Kotler and Keller (2009: 143) characterize client focused
affect satisfaction, and customer loyalty is institution image quality and state quality is the entirety of highlights and attributes
(Beneke et al. 2011). Client input or estimations of consumer of an item or service that relies upon their capacity to satisfy
satisfaction can help recognize atrisk clients, representatives and expressed or inferred needs. We can say that the seller has
accomplices before they are lost. Consumer satisfaction conveyed quality when the item or service has met or surpassed
estimations can likewise give important bits of knowledge into client desires.

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International Journal of Scientific and Research Publications, Volume 10, Issue 9, September 2020 813
ISSN 2250-3153

Quality of Service is “Quality customer service is the assessment banks and respect to its appraisal isn't just a strategy, yet in
of the merits or feature of a product or service”. Characterized as addition the nature of prevalent assistance is actually the
clients' appraisal on advantages or uniqueness of an item qualification perspective among effective and inefficient banks
(Zeithaml, 2008:89). (Khorshidi et al, 2014).
The service quality factors recognized by Parasuraman et Today the consideration regarding consumer satisfaction
al., (1994) are reliability, responsiveness, competence, and disappointment is getting greater. The parties most directly
accessibility, courtesy, communication, credibility, security, related to customer satisfaction or dissatisfaction are consumer
understanding and tangibility. Alfred and Addam (2001) marketers, consumers, and consumer behavior researchers. More
investigated attitudes with fifteen service quality variables. In the tight rivalry, where an ever increasing number of makers are
current examination, the service quality in retail banking is studied occupied with satisfying the requirements and needs of shoppers,
using factors drawn from the reviews (Cronin and Taylor 1992; makes each organization place a direction on consumer
Zillur Rahman, 2005; Verma and Vohna 2000; Mushtag A Bhat, satisfaction as the essential objective.
2005) The concept of service quality and customer satisfaction is
While, according Zeithaml and Bitner (2008:112), service related to one another. Service quality is related to customer
consists of five dimensions: Reliability, Assurance, tangibility, perceptions of quality based on long-term cognitive evaluation of
Responsiveness and Empathy. corporate service delivery, while customer satisfaction is the
1. Reliability is the ability to perform the services certainly customer's short-term emotional reaction to a particular service
and correctly. While responsive is the capacity to support experience.
clients and give quick services. As indicated by Olsen and Dover (cited in Zeithaml, et al.,
2. Assurance serves to increase customer confidence from 1993), client desires or desires are the convictions of clients before
service providers, who meet customer requirements. trying or buying a product or service. In any case, the
3. While tangible dimension is physical appearance of conceptualization and operationalization of client desires stays a
service providers such as buildings, equipment layout, controversial issue, particularly with respect to the qualities of
interior and exterior, and physical appearance of service explicit desires guidelines, the quantity of norms utilized, and the
providers ’personnel. source of expectations. Each consumer may have a few diverse
4. Empathy, is specialist co-ops' capacity to focus on pre-utilization desires. Moreover, various shoppers may likewise
clients. apply various sorts of expectations for various circumstances.
Service quality has several indicators: Quality of service has a huge impact to consumer satisfaction
a) Ability to perform the promised services (Ratanavaraha et al. 2015; Ali and Raza, 2015), In this manner,
b) Knowledge and politeness considering the services quality is vital so as to diminish the costs,
c) Care for customers proper profitability and customers’ satisfaction (Hosseini et al,
d) Willingness to help customers 2010). The effect that occurs is mediated by partial customer
e) Appearance of physical facilities satisfaction either by simple or multiple mediation. Thus, in this
One of the reasons of the switching of clients starting with case the quality of service is one key determinant of success in
one bank then onto the next bank is on the grounds that clients creating customer satisfaction which then affects customer loyalty
aren't happy with the manner in which the bank takes care of issues (Kuo et al. 2011).
or handles issues. For researchers, Service quality is one of the It should be noted that customer satisfaction is affected by a
most attractive areas over the last decade in the retail banking few factors that one of the most significant of these elements
sector (Avkiran, 1994; Stafford, 1996; Johnston and Jeffrey, 1996; incorporates the quality of product or service in reality, the
Angur et al., 1999; Lassar et al., 2000; Bahia and Nantel, 2000; customer satisfaction has a close relationship with providing
Sureshchandar et al., 2002; Gounaris et al., 2003; Choudhury, quality or service.
2008). At present in a competitive market, institutions endeavor to
Service quality is considered as one of the critical success hold clients by relying on their satisfaction and loyalty, so a
factors that influence the competitiveness of an organization. A definitive objective of the institucions is to prevail with regards to
bank by providing high quality service, can make a difference acquiring and keeping up client repurchase expectations and
from competitors. (MISTRY, 2013, 133). eventually money related execution (Egblopeali and Aimin;
2011).

III. DISCUSSIONS AND CONCLUSIONS

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ISSN 2250-3153

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AUTHORS
[18] Kumar, M., Kee, F.T. and Charles, V. (2010), “Comparative evaluation of
critical factors in delivering service quality of banks: an application of First Author – Gentiana Mjaku, Ph.D. Candidate, University of
dominance analysis in modified SERVQUAL model”, International Journal Tetova, [email protected]
of Quality & Reliability Management, 27 (3), 351-77.
[19] Kumar, M., Kee, F.T. and Manshor, A.T. (2009), “Determining the relative
importance of critical factors in delivering service quality of banks: an
Correspondence Author – Gentiana Mjaku, Ph.D. Candidate,
application of dominance analysis in SERVQUAL model”, Managing University of Tetova, [email protected]+38345498156
Service Quality,19 (2), 211-28.

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