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A Study of Impact of Service Quality on Customer

Satisfaction, Loyalty, Commitment & Retention

in the Indian Banking Sector

A Thesis submitted to Gujarat Technological University

for the Award of

Doctor of Philosophy

In

Management

By

Richa Durgeshbhai Pandit

[119997392026]

GUJARAT TECHNOLOGICAL UNIVERSITY

AHMEDABAD

June - 2016

A Study of Impact of Service Quality on Customer Satisfaction, Loyalty, Commitment & Retention

in the Indian Banking Sector

A Thesis submitted to Gujarat Technological University

for the Award of

Doctor of Philosophy

In

Management

By

Richa Durgeshbhai Pandit

[119997392026]

under supervision of

Dr. Ram Kumar Balyan

GUJARAT TECHNOLOGICAL UNIVERSITY

AHMEDABAD

June - 2016

i

DECLARATION

I declare that the thesis entitled “A Study of Impact of Service Quality on Customer

Satisfaction, Loyalty, Commitment & Retention in the Indian Banking

Sector”submitted by me for the degree of Doctor of Philosophy is the record of research

work carried out by me during the period from September 2011 to December 2015 under

the supervision of Dr. Ram Kumar Balyan and this has not formed the basis for the

award of any degree, diploma, associateship, fellowship, titles in this or any other

University or other institution of higher learning.

I further declare that the material obtained from other sources has been duly acknowledged

in the thesis. I shall be solely responsible for any plagiarism or other irregularities, if

noticed in the thesis.

Signature of the Research Scholar : …………………………… Date:….………………

Name of Research Scholar: RichaDurgeshbhaiPandit

Place: Ahmedabad

ii

CERTIFICATE

I certify that the work incorporated in the thesis “A Study of Impact of Service Quality

on Customer Satisfaction, Loyalty, Commitment & Retention in the Indian Banking

Sector” submitted by Ms. RichaDurgeshbhaiPanditwas carried out by the candidate

under my supervision/guidance. To the best of my knowledge: (i) the candidate has not

submitted the same research work to any other institution for any degree/diploma,

Associateship, Fellowship or other similar titles (ii) the thesis submitted is a record of

original research work done by the Research Scholar during the period of study under my

supervision, and (iii) the thesis represents independent research work on the part of the

Research Scholar.

Signature of Supervisor: ……………………………… Date: ………………

Name of Supervisor: Dr. Ram Kumar Balyan

Place: Ahmedabad

iii

Originality Report Certificate

It is certified that PhD Thesis titled “A Study of Impact of Service Quality on Customer

Satisfaction, Loyalty, Commitment & Retention in the Indian Banking Sector” by

RichaDurgeshbhaiPandit has been examined by us. We undertake the following:

a. Thesis has significant new work / knowledge as compared already published or are

under consideration to be published elsewhere. No sentence, equation, diagram, table,

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No ideas, processes, results or words of others have been presented as Author own work.

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found within limits as per GTU Plagiarism Policy and instructions issued from time to time

(i.e. permitted similarity index <=25%).

Signature of the Research Scholar : …………………………… Date: ….………


Place: Ahmedabad

Signature of Supervisor: ……………………………… Date: ………………


Place: Ahmedabad

v

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facilitation of research at GTU and elsewhere, I, RichaDurgeshbhaiPandit having

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vi

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vii

viii

ABSTRACT

Today, the banking industry has become highly competitive in India. It is not only focusing

on providing wide range of products to create competitive advantages; but also emphasizes

on the importance of services, particularly in maintaining service quality. Thus, it is clear

that service quality offers a way of achieving success among competing services,

particularly in the case of firms that offer nearly identical services, such as banks, where

establishing service quality may be the only way of differentiating oneself.Service quality

significantly influences customer satisfaction. It is therefore imperative on the part of

bankers to stress upon both service quality and customer satisfaction and retaining valued

customers in banks. Further, a satisfied customer is likely to be committed & loyal to a

bank who will give repeating business to the bank.

800 customers of four selected banks – SBI, PNB, ICICI and HDFC were surveyed

through non probability convenience sampling. After checking reliability of the collected

data, various statistical tests were performed on the collected data. Factors of the service

quality were extracted through exploratory factor analysis and based on that, empirical

model of the service quality was proposed. Validity of the model checked through the

confirmatory factor analysis. After that, association of the factors of service quality with

the customer satisfaction / retention / loyalty and commitment were examined. It has been

found out that customers of the public sector banks are more satisfied in comparison with

the private sector banks.

Than after, impact of the factors of service quality on customer satisfaction / retention /

loyalty and commitment were checked. In this objective also, more impact of service

quality on customer satisfaction / retention / loyalty and commitment is being observed in

public sector banks as compare with the private sector banks. Profiling of the customers of

the selected four banks was also studied. Lastly, banks were ranked on the parameter of the

service quality.

Majorly this thesis has contributed in the area of the service quality and added richness to

the existing body of knowledge pertaining to the factors of service quality by incorporating

new information through qualitative research. Moreover, proposed service quality model

will give more comprehensive insight to the banks in formulating the strategies for

customer services.

ix

Acknowledgement

I wish to express my sincere gratitude to those individuals who have supported me

throughout my journey of the doctoral research. First, my deep appreciation goes to my

supervisor Dr. Ram Kumar Balyan, whose valuable advice has enabled me to complete my

doctoral research in time. The completion of the doctoral work could not have been

possible without flawless support and guidance of the DPC (Doctoral Progress Committee

Members): Dr. Dharmendra Mistry and Dr. Gurpreet Arora. Special thanks to foreign co

supervisor Prof. Dr. PolonaTominc for her helpful insights.

I also acknowledge Honorable Vice Chancellor Dr. Akshai Aggarwal, Dr. RajulGajjar and

Dr. N.M. Bhatt, Dean, Ph.D Section, Mr. J.C.Lilani, I/C Registrar, Ms. Mona Chaurasiya,

Research Coordinator, Mr. DhavalGohil and Staff Members of Ph.D section for their

assistance and support. Very special thanks go to Director of my institute Dr. Arti Trivedi

and my dearest colleague for their continuous support and encouragement.

Lastly, journey of the doctoral research could not have reached to its destination without

the support of the four pillars of my life - My Mom, Dad, Sister and My Husband. This

thesis is dedicated to them for their constant source of love, concern, support and strength.

My In-Laws have also added aid to me throughout this endeavor. I have to give a special

mention to the little angle of my life, my son - Vivan whose unconditional love has always

been a motivation for me.

x

Table of Content

Sr. No Content Pg. No.

Title Page

Declaration i

Certificate ii

Originality Report Certificate iii

Non Exclusive License Certificate v

Thesis Approval Form vii

Abstract viii

Acknowledgement ix

Chapter

1

Introduction 1

1.1 Introduction to the Indian Banking Sector 1

1.2 Definition of Bank 2

1.3 Business Model 3

1.4 History of Indian Banking Sector 5

1.4.1 Post Independence 6

1.4.2 Nationalization 7

1.4.3 Liberalization 8

1.5 Types of Banks 9

1.5.1 Scheduled Banks 9

1.5.2 Commercial Banks 9

1.5.3 Cooperative Banks 10

1.5.4 Urban Co-operative Banks 10

1.5.5 State Co-Operative Banks 10

1.5.6 Foreign Banks 10

1.5.7 Regional Rural Banks 11

1.5.8 Public Sector Banks 11

1.5.9 Private Sector Banks 12

1.5.10 Old Private Sector Banks 12

1.5.11 New Private Sector Banks 12

1.6 Growth of banking industry 13

xi


1.7 The growth drivers of the Indian Banking Industry 13

1.7.1 High growth of Indian Economy 13

1.7.2 Rising per capita income 14

1.7.3 New channel – Mobile banking is expected to become the

second largest channel for banking after ATMs

14

1.7.4 Financial Inclusion Program 14

1.8 Service Quality in Banking 15

1.9 Need of studying Service Quality in Banking 16

1.10 Background of the Study 17

1.11 Purpose of the Study 18

1.12 Statement of the Problem 18

1.13 Scope of the Study 19

1.14 Objectives of the Study 19

1.15 Significance of the Study 19

1.16 Structure of the Thesis 20

Chapter

2

Literature Review 22

2.1 Introduction 22

2.2 Service Quality 22

2.2.1 Definition of service quality 23

2.2.2 Characteristics of Service 24

2.3 Models of Service Quality 26

2.3.1 Gronroos's Model 26

2.3.2 Lehtinen and Lehtinen Model 28

2.3.3 SERVQUAL Scale 29

2.3.4 SERVPERF Scale 31

2.4 Service Quality in Banks 32

2.5 Customer Satisfaction 33

2.5.1 Definitions of Customer Satisfaction 33

2.5.2 Measuring Customer Satisfaction 34

2.6 Customer Satisfaction in Banks 39

2.7 Customer Loyalty 40

xii


2.7.1 Categories of Customer Loyalty 41

2.7.2 Theoretical framework for the multi-item loyalty scale 43

2.7.3 Customer Loyalty In Banks 45

2.8 Customer Retention 45

2.8.1 Customer Retention in Banks 49

2.9 Customer Commitment 50

2.9.1 Affective commitment 50

2.9.2 Calculative or continuance commitment 51

2.9.3 Normative commitment 51

2.10 Customer Commitment in Banks 56

2.11 Summary of Literature Review 57

2.12 Research Gap 72

2.13 Conceptual Framework 72

Chapter

3

Research Methodology 74

3.1 Introduction 74

3.2 Research Design 75

3.2.1 Exploratory Research Design 75

3.2.2 Descriptive Research Design 76

3.3 Sample Design 76

3.3.1 Sample Unit 76

3.3.2 Sample Technique 77

3.3.3 Sample Size 77

3.4 Sources of Data 78

3.5 Planning of Data Collection 78

3.6 Data Collection Instrument & Scaling Technique 79

3.7 Pilot Study 81

3.7.1 Reliability of the Research Instrument 81

3.8 Confidence Interval Test 82

Chapter

4

Data Analysis 96

4.1 Introduction 96

xiii


4.2 Exploratory Factor Analysis (EFA) 97

4.3 Confirmatory Factor Analysis (CFA) 99

4.4 Validity of the scale 101

4.4.1 Construct Validity 101

4.4.2 Convergent Validity 101

4.4.3 Discriminant Validity 103

4.4.4 Nomological Validity 103

4.5 Correlation and Simple Regression 104

4.6 State Bank of India 105

4.6.1 Exploratory Factor Analysis 105

4.6.2 Anti Image Matrices 105

4.6.3 Factor Naming 110

4.6.4 Confirmatory Factor Analysis 111

4.6.5 Pearson Correlation 115

4.6.6 Simple Regression 118

4.6.7 Cross Tabulation 121

4.6.8 Least Square Method 127

4.7 Punjab National Bank 130









4.8 ICICI Bank 155






xiv





4.9 HDFC Bank 175









Chapter

5

Discussion of Findings 195

5.1 Findings of research objective 1 195





Chapter

6

Conclusions, Major Contributions and Scope of Further

Work

208

6.1 Conclusions 204

6.2 Major Contribution 209

6.2.1 Theoretical Implication 209

6.2.2 Managerial Implication 210

6.3 Limitation of the study 211

6.4 Direction for future research 212

Chapter

7

Bibliography 213

List of Publication 230

Appendix Questionnaire 231

xv

List of Abbreviation

Sr. No Abbreviation

1 EFA Exploratory Factor Analysis

2 CFA Confirmatory Factor Analysis

3 RMSEA Root Mean Square Error of Approximation

4 CFI Comparative Fit Index

5 NFI Normed Fit Index

6 GFI Goodness-of-fit

7 AGFI Adjusted Goodness of Fit Index

8 TLI Tucker Lewis Index

9 IFI Incremental Fit Index

10 RFI Relative Fit Index

11 AVE Average Variance Extracted

12 CR Construct Reliability

13 CBE Competency of Bank Employee

14 AS Augmented Service

15 PE Physical Evidence

16 EB Ethos of the Bank

17 ASTS Assortment of the services

18 SP Service Product

19 ISB Interior Signage & Service Ability

20 AP Accomplishing the Promises

xvi

List of Figure

Sr. No Content Pg.No

2.1 The Gronroos’s Model 27

2.2 Customer Loyalty Scale 44

2.3 Research Model 73

4.1 Factor Structure – SBI 112

4.2 Factor Structure – PNB 137

4.3 Factor Structure – ICICI 161

4.4 Factor Structure – HDFC 180

5.1 Research Model 196

xvii

List of Tables


1.1 Growth of the bank in FY 2011 13

2.1 Difference between goods & services 26

2.2 Summary 57

3.1 Sample Unit 77

3.2 Sample size formula 78

3.3 Variables Identified for Questionnaire 80

3.4 Scaling of the Questionnaire 81

3.5 Reliability Test Result 82

3.6 Confidence Interval Test Result 83

4.1 Factor Loading 99

4.2 KMO and Bartlett's Test – SBI 105

4.3 Correlation Table – SBI 105

4.4 Anti image Table –SBI 106

4.5 Communalities Table –SBI 107

4.6 Total Variance Explained –SBI 108

4.7 Rotated Component Matrix –SBI 109

4.8 Model Fit Indexes –SBI 113

4.9 Convergent Validity –SBI 114

4.10 Discriminant Validity &Nomological Validity –SBI 115

4.11 Summary of Hypothesis Testing – Objective 2(a) –SBI 116

4.12 Summary of Hypothesis Testing – Objective 2(b) –SBI 116

4.13 Summary of Hypothesis Testing – Objective 2(c) –SBI 117

4.14 Summary of Hypothesis Testing – Objective 2(d) –SBI 118

4.15 Summary of Hypothesis Testing – Objective 3(a) –SBI 119

4.16 Summary of Hypothesis Testing – Objective 3(b) –SBI 119

4.17 Summary of Hypothesis Testing – Objective 3(c) –SBI 120

4.18 Summary of Hypothesis Testing – Objective 3(d) –SBI 120

4.19 Cross Tabulation of the demographic variable – Gender –SBI 121

xviii


4.20 Cross Tabulation of the demographic variable – Age –SBI 122

4.21 Cross Tabulation of the demographic variable – Education –SBI 123

4.22 Cross Tabulation of the demographic variable – Income –SBI 125

4.23 Cross Tabulation of the demographic variable – Occupation –SBI 126

4.24 Ideal Score and Least Scores of Respondents –SBI 127

4.25 Responses of the Respondents –SBI 128

4.26 KMO and Bartlett's Test – PNB 130

4.27 Correlation Table – PNB 130

4.28 Anti image Table –PNB 131

4.29 Communalities Table –PNB 132

4.30 Total Variance Explained –PNB 133

4.31 Rotated Component Matrix –PNB 134

4.32 Model Fit Indexes –PNB 138

4.33 Convergent Validity –PNB 138

4.34 Discriminant Validity &Nomological Validity –PNB 139

4.35 Summary of Hypothesis Testing – Objective 2(a) –PNB 140

4.36 Summary of Hypothesis Testing – Objective 2(b) –PNB 141

4.37 Summary of Hypothesis Testing – Objective 2(c) –PNB 141

4.38 Summary of Hypothesis Testing – Objective 2(d) –PNB 142

4.39 Summary of Hypothesis Testing – Objective 3(a) –PNB 143

4.40 Summary of Hypothesis Testing – Objective 3(b) –PNB 144

4.41 Summary of Hypothesis Testing – Objective 3(c) –PNB 144

4.42 Summary of Hypothesis Testing – Objective 3(d) –PNB 145

4.43 Cross Tabulation of the demographic variable – Gender –PNB 146

4.44 Cross Tabulation of the demographic variable – Age –PNB 147

4.45 Cross Tabulation of the demographic variable – Education –PNB 148

4.46 Cross Tabulation of the demographic variable – Income –PNB 150

4.47 Cross Tabulation of the demographic variable – Occupation –

PNB

151

4.48 Ideal Score and Least Scores of Respondents –PNB 152

4.49 Responses of the Respondents –PNB 153

xix


4.50 KMO and Bartlett's Test – ICICI 155

4.51 Correlation Table – ICICI 155

4.52 Anti image Table –ICICI 156

4.53 Communalities Table –ICICI 157

4.54 Total Variance Explained –ICICI 158

4.55 Rotated Component Matrix –ICICI 159

4.56 Model Fit Indexes –ICICI 161

4.57 Convergent Validity –ICICI 162

4.58 Discriminant Validity &Nomological Validity –ICICI 163

4.59 Summary of Hypothesis Testing – Objective 2(a) –ICICI 163

4.60 Summary of Hypothesis Testing – Objective 2(b) –ICICI 164

4.61 Summary of Hypothesis Testing – Objective 2(c) –ICICI 165

4.62 Summary of Hypothesis Testing – Objective 2(d) –ICICI 165

4.63 Summary of Hypothesis Testing – Objective 3(a) –ICICI 166

4.64 Summary of Hypothesis Testing – Objective 3(b) –ICICI 167

4.65 Summary of Hypothesis Testing – Objective 3(c) –ICICI 167

4.66 Summary of Hypothesis Testing – Objective 3(d) –ICICI 168

4.67 Cross Tabulation of the demographic variable – Gender –ICICI 168

4.68 Cross Tabulation of the demographic variable – Age –ICICI 169

4.69 Cross Tabulation of the demographic variable – Education –

ICICI

170

4.70 Cross Tabulation of the demographic variable – Income –ICICI 171


ICICI

172

4.72 Ideal Score and Least Scores of Respondents –ICICI 173

4.73 Responses of the Respondents –ICICI 173

4.74 KMO and Bartlett's Test – HDFC 175

4.75 Correlation Table – HDFC 175

4.76 Anti image Table –HDFC 176

4.77 Communalities Table –HDFC 177

4.78 Total Variance Explained –HDFC 177

xx


4.79 Rotated Component Matrix –HDFC 178

4.80 Model Fit Indexes –HDFC 181

4.81 Convergent Validity –HDFC 181

4.82 Discriminant Validity &Nomological Validity –HDFC 182

4.83 Summary of Hypothesis Testing – Objective 2(a) –HDFC 183

4.84 Summary of Hypothesis Testing – Objective 2(b) –HDFC 183

4.85 Summary of Hypothesis Testing – Objective 2(c) –HDFC 184

4.86 Summary of Hypothesis Testing – Objective 2(d) –HDFC 184

4.87 Summary of Hypothesis Testing – Objective 3(a) –HDFC 185

4.88 Summary of Hypothesis Testing – Objective 3(b) –HDFC 186

4.89 Summary of Hypothesis Testing – Objective 3(c) –HDFC 186

4.90 Summary of Hypothesis Testing – Objective 3(d) –HDFC 187

4.91 Cross Tabulation of the demographic variable – Gender –HDFC 188

4.92 Cross Tabulation of the demographic variable – Age –HDFC 188

4.93 Cross Tabulation of the demographic variable – Education –

HDFC

189

4.94 Cross Tabulation of the demographic variable – Income –HDFC 190


HDFC

191

4.96 Ideal Score and Least Scores of Respondents –HDFC 192

4.97 Responses of the Respondents –HDFC 192

5.1 Consistency Mapping 198

5.2 Pearson Correlation Value 199

5.3 R Square Value 201

5.4 Consistency Mapping of Research Objective 2 & 3 202

5.5 Summary of the demographic analysis in SBI 203

5.6 Summary of the demographic analysis in PNB 204

5.7 Summary of the demographic analysis in ICICI 205

5.8 Summary of the demographic analysis in HDFC 206

5.9 Ranking of the bank 207

xxi

List of Appendices

Appendix A: [Questionnaire]

Introduction

1

CHAPTER–1

INTRODUCTION

1.1 Introduction to the Indian Banking Sector :

Banking Sector is the backbone of any financial system and economy. Commercial banks

play an important role in the development of underdeveloped/developing economies by

mobilization of resources and their better allocation. Indian Banking System is regulated

by the central bank of the country i.e. Reserve Bank of India (RBI), which was

nationalized in 1949. RBI is the primary regulator for the banking sector and the

government exercises direct and indirect control over banks through RBI to protect the

depositors and to stabilize the banking system. Extensive powers have been conferred on

RBI under the RBI Act, 1934, and Banking Regulations Act, 1949. In 1969 the

government nationalized 14 major banks to break the ownership and control of few leaders

of Banking and industry over the economic power and banking system. This has resulted in

balanced geographical growth of banks in rural areas and small towns, as it accounts for

majority of the population. Government as the owner of the banks decided the agenda for

the banks and directed the flow of the credit .The focus changed from class banking to

social banking. This social transformation process though resulted in unprecedented

expansion of banking and financial system. However the regulated business environment,

poor quality of credit portfolio due to social lending without adequate safeguards against

defaults, thin margins on social lending, disruptive tactics of trade unions, increasing

number of loss making branches due to unmindful branch expansion in rural areas and

other factors resulted in sacrifice of the service quality and the operational productivity and

profitability of these organizations.

The banks still managed to survive due to the regulated business environment which killed

the scope for competition among banks. The Indian banking system has changed a lot over

the last five decades especially in the last 15 years with India taking to the path of free

market economy and globalization with clear commitments under WTO (World Trade

Organization) regime. A journey from private ownership and control of commercial banks

Introduction

2

to government ownership and control by way of nationalization, has come in full circle in

the wake of liberalization and introduction of new players in the shape of Private Sector

Banks and Foreign Banks.

Fresh induction of public stake and corporate governance in government owned banks has

brought the element of stiff competition in the environment with greater adoption of the

new technologies and ideas, renewed perception of service quality along with the high

degree of professional management and marketing concepts in the Indian Banking system.

Currently there are twenty eight public sector banks which account for 87% of the total

bank branches (and 74% of deposits), twenty four private sector banks which account for

12% of the total bank branches (and 20% of deposits) and twenty nine foreign banks

accounting for 0.45% of the branches (and 5.5% of deposits) (Indian Banks’ Association,

2007). The entry of foreign/private banks and various financial sector reforms like

deregulation of interest rates, new norms on asset classification and provisioning, adoption

of Basle Accord on capital adequacy coupled with other policy measures aimed at adopting

best global practices has revolutionized the banking industry in India. The Public Sector

Banks, which still account for the major part of the Indian Banking Industry in terms of

size and reach are facing stiff competition from Private and Foreign Banks as also from the

Non-Banking Financial Institutions. The Foreign Banks which form only 0.26 % of the

total number of branches in India still manage to gather 5% of the total deposits.

The growing competition and highly stressed profits have not only introduced the new

marketing concepts in the Indian banking sector but has also brought the customer

satisfaction to the center of the focus. It has become very important for the banks to retain

their existing customer base as well as to enlarge the same. It is reported that 90% of bank

switching in the Asian Banking market occurs due to pricing, service quality and

inconvenience. Since pricing in Indian banks is regulated it is the service quality delivered

which then becomes important if the banks want to retain and attract customers.

1.2 Definition of Bank:

In general terms, banking is business activity of accepting and safeguarding money owned

by other individuals and entities, and then lending out this money in order to earn a profit.

The institution that is approved to carry out such business activity legally under the

regulation and acts of any given country is known as Bank. A bank is a financial institute

Introduction

3

and a financial mediator that accepts deposits and channels those deposits into lending

activities, either directly or through capital markets. A bank connects customers that have

capital deficits to customers with capital surpluses.

Due to their critical status within the financial system and the economy, generally, banks

are highly regulated in most countries. Most banks operate under a system known as

fractional reserve banking where they hold only a small reserve of the funds deposited and

lend out the rest for profit. It is majorly subject to minimum capital requirements that are

based on an international set of capital standards.

The statutory definition of Banking is:

The meaning of "Banking Business" is as follows:

• receiving the money from the general public through current, deposit, savings or other

similar account and it is repayable on demand or with a period of call or notice of less than

that period;

• paying or collecting checks drawn by or paid in by customers.

With the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit,

direct debit and internet banking, the cheque has lost its dominance in most banking

systems as a payment instrument. Due to this, legal theorists suggest that the cheque based

definition should be extended to take account of financial institutions that offers current

accounts for customers and allow customers to pay and be paid by third parties, even if

they do not pay and collect checks.

1.3 Business Model:

A bank can generate profits through different ways including interest, transaction fees and

financial advice. The foremost method is through charging interest on the capital that is

being lent to the customers. The bank generate revenues from the variation between the

level of interest it offers for deposits and other sources of funds, and the level of interest it

charge in its lending activities.

This distinction is referred to as the spread between the cost of funds and the loan interest

rate. Initially, profitability from lending activities was referred as cyclical and it was more

Introduction

4

dependent on the requirements and strengths of loan customers and the stage of the

economic cycle. Fees and financial guidance comprise of a more steady income stream and

banks have emphasized on these income lines to smooth their financial performance.

Governments and Banks jointly have taken many actions to make sure that Banks remain

profitable with increasingly changing market conditions.

Firstly, Banking Acts has allowed banks to merge with investment and insurance houses.

Integrating banking, investment, and insurance functions has permitted traditional banks to

act in response to increasing consumer needs for "one-stop shopping" by facilitating cross-

selling of products and banks hope that this will increase their profitability.

Banks have also extended the use of risk-based pricing from consumer lending businesses

which are offering higher interest rates to those customers that have higher credit risk and

thus increased chance of default on loans. This facilitates the bank to compensate the

losses from bad loans, lowers the price of loans to those customers who have better credit

histories, and propose them the credit products.

Third, they have increased the methods of payment processing offered to the general public

and corporate clients. These products include debit cards, prepaid cards, smart cards, and

credit cards. Banks make it easier for consumers to conveniently make transactions and

ensure smoother consumption over time.

With easy availability credit, there is also increased risk that consumers will mismanage

their financial resources and end up in accumulating excessive debt. Banks earn money

from different card products via interest payments and fees taken from the consumers and

transaction fees charged to the companies that accept the credit- debit - cards. This has

resulted in making profit and facilitating economic development as a whole.

Introduction

5

1.4 History of Indian Banking Sector:

Banking in India started off in the last decades of the 18th century. The first banks were

The General Bank of India that started in 1786 and Bank of Hindustan, which started in

1770; both are now non-operational. The oldest bank that is still operating in India is the

State Bank of India, which originated in the Bank of Calcutta in June 1806, than soon it

became the Bank of Bengal. This was one of the three presidency banks; the other two

being the Bank of Bombay and the Bank of Madras, all three banks were established under

charters from the British East India Company. For many years the Presidency banks acted

as quasi-central banks, as did their successors. The three banks merged in 1921 and formed

the Imperial Bank of India and after India's independence; it became the State Bank of

India in 1955.

Merchants in Calcutta established the Union Bank in 1839, but it failed in 1840 as a

consequence of the economic crisis. The Allahabad Bank, established in 1865 and still

functioning today, is the oldest Joint Stock bank in India.(Joint Stock Bank: A company

that issues stock and requires shareholders to be held liable for the company's debt) It was

not the first though. That honor belongs to the Bank of Upper India, which was established

in 1863, and which survived until 1913, when it failed, with some of its assets and

liabilities being transferred to the Alliance Bank of Simla.

Foreign banks too started to app, particularly in Calcutta, in the 1860s. The

Comptoird'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay

in 1862; branches in Madras and Pondicherry, then a French colony, followed. HSBC

established itself in Bengal in 1869. Calcutta was the most active trading port in India,

mainly due to the trade of the British Empire, and so became a banking center.

The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in

1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank, established in

Lahore in 1895, which has survived to the present and is now one of the largest banks in

India. Around the turn of the 20th Century, the Indian economy was passing through a

relative period of stability. Around five decades had elapsed since the Indian Mutiny, and

the social, industrial and other infrastructure had improved. Indians had established small

banks, most of which served particular ethnic and religious communities.

Introduction

6

The presidency banks dominated banking in India but there were also some exchange

banks and a number of Indian joint stock banks. All these banks operated in different

segments of the economy. The exchange banks, mostly owned by Europeans, concentrated

on financing foreign trade. Indian joint stock banks were generally undercapitalized and

lacked the experience and maturity to compete with the presidency and exchange banks.

This segmentation let Lord Curzon to observe, "In respect of banking it seems we are

behind the times. We are like some old fashioned sailing ship, divided by solid wooden

bulkheads into separate and cumbersome compartments."

The period between 1906 and 1911, saw the establishment of banks inspired by the

Swadeshi movement. The Swadeshi movement inspired local businessmen and political

figures to found banks of and for the Indian community. A number of banks established

then have survived to the present such as Bank of India, Corporation Bank, Indian Bank,

Bank of Baroda, Canara Bank and Central Bank of India.

The fervour of Swadeshi movement lead to establishing of many private banks in Dakshina

Kannada and Udupi district which were unified earlier and known by the name South

Canara ( South Kanara ) district. Four nationalized banks started in this district and also a

leading private sector bank. Hence undivided Dakshina Kannada district is known as

"Cradle of Indian Banking". During the First World War (1914–1918) through the end of

the Second World War (1939–1945), and two years thereafter until the independence of

India were challenging for Indian banking. The years of the First World War were

turbulent, and it took its toll with banks simply collapsing despite the Indian economy

gaining indirect boost due to war-related economic activities.

1.4.1 Post-Independence:

The partition of India in 1947 adversely impacted the economies of Punjab and West

Bengal, paralyzing banking activities for months. India's independence marked the end of a

regime of the Laissez-faire for the Indian banking. The Government of India initiated

measures to play an active role in the economic life of the nation, and the Industrial Policy

Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted

into greater involvement of the state in different segments of the economy including

banking and finance.

Introduction

7

The major steps to regulate banking included:

• The Reserve Bank of India, India's central banking authority, was established in

April 1935, but was nationalized on January 1, 1949 under the terms of the Reserve

Bank of India (Transfer to Public Ownership) Act, 1948 (RBI, 2005b).

• In 1949, the Banking Regulation Act was enacted which empowered the Reserve

Bank of India (RBI) "to regulate, control, and inspect the banks in India".

• The Banking Regulation Act also provided that no new bank or branch of an existing

bank could be opened without a license from the RBI, and no two banks could have

common directors.

1.4.2 Nationalization:

Despite the provisions, control and regulations of Reserve Bank of India, banks in India

except the State Bank of India or SBI, continued to be owned and operated by private

persons. By the 1960s, the Indian banking industry had become an important tool to

facilitate the development of the Indian economy. At the same time, it had emerged as a

large employer, and a debate had ensued about the nationalization of the banking industry.

Indira Gandhi, then Prime Minister of India, expressed the intention of the Government of

India in the annual conference of the All India Congress Meeting in a paper entitled "Stray

thoughts on Bank Nationalization." The meeting received the paper with enthusiasm.

Thereafter, her move was swift and sudden. The Government of India issued an ordinance

('Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969')) and

nationalized the 14 largest commercial banks with effect from the midnight of July 19,

1969. These banks contained 85 percent of bank deposits in the country.Jayaprakash

Narayan, a national leader of India, described the step as a "masterstroke of political

sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the

Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the

presidential approval on 9 August 1969.

A second dose of nationalization of 6 more commercial banks followed in 1980. The stated

reason for the nationalization was to give the government more control of credit delivery.

With the second dose of nationalization, the Government of India controlled around 91%

of the banking business of India. Later on, in the year 1993, the government merged New

Introduction

8

Bank of India with Punjab National Bank. It was the only merger between nationalized

banks and resulted in the reduction of the number of nationalized banks from 20 to 19.

After this, until the 1990s, the nationalized banks grew at a pace of around 4%, closer to

the average growth rate of the Indian economy.

1.4.3 Liberalization:

In the early 1990s, Narasimha Rao government embarked on a policy of liberalization, and

had approved license to a small number of private banks. These was known as New

Generation tech-savvy banks, and included Global Trust Bank (the first of such new

generation banks to be established), and later it amalgamated with Oriental Bank of

Banking, UTI Bank (since renamed Axis Bank), ICICI Bank and HDFC Bank. This move,

along with the rapid growth in Indian economy and it has revitalized the entire banking

sector in India. The rapid growth in banking was strongly contributed by all the three

sectors of banks, namely, government banks, private banks and foreign banks.

The next stage of the development in the Indian banking has started with establishment

with the proposed relaxation in the norms for Foreign Direct Investment, wherein all

Foreign Investors in banks may be given rights to vote that could exceed the present capital

of 10%, at present it has gone up to 74% with some restrictions. The new policy shuddered

the Indian Banking sector completely. Previously bankers were used to the 4-6-4 method

(Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new waves lead in a

modern outlook and tech-savvy methods of working for traditional banks. This has led to

the retail boom in India. People have not only started demanding more from their banks but

also received more.

Currently, banking in India is generally referred as mature in terms of supply, product

range and reach. Although reach in rural India has still remained a challenge for the private

sector and foreign sector banks. As far as the quality of assets and capital adequacy is

concern, Indian banks are considered to possess clean, strong and transparent balance

sheets relative to other banks in similar economies in its region. The Reserve Bank of India

is an independent body, with minimal pressure from the government. The policy of the

Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate and

this has mostly been true.

Introduction

9

The growth of the Indian economy is expected to be strong for quite some time-especially

in its services sector due the demand for banking services, especially in retail banking,

mortgages and investment services as they are expected to be strong. One may also expect

M&As, takeovers, and asset sales.

In current years critics have cited that the non-government owned banks are very much

aggressive in their loan recovery efforts in connection with housing, vehicle and personal

loans. According to the press reports, the banks' loan recovery efforts have driven

defaulting borrowers to suicide.

1.5 Types of Banks

1.5.1 Scheduled Banks

Scheduled Banks in India are those banks which have been included in the Second

Schedule of Reserve Bank of India (RBI) Act, 1934.RBI has included only those banks in

this schedule which has satisfied the criteria laid down vide section 42 (6) (a) of the Act.

As on 30th June, 1999, there were 300 scheduled banks in India having a total network of

64,918 branches. Scheduled commercial banks in India include State Bank of India and its

associates (7), nationalised banks (19), foreign banks (45), private sector banks (32), co-

operative banks and regional rural banks.

"Scheduled banks in India" means the State Bank of India constituted under the State Bank

of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India

(Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under

section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970

(5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of

Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the

Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), but does not include

a co-operative bank".

1.5.2 Commercial Banks

A commercial bank (or business bank) is a type of financial institution and intermediary. It

is a bank that lends money and provides transactional, savings, and money market accounts

and that accepts time deposit. Commercial bank being the financial institution performs

Introduction

10

diverse types of functions. It satisfies the financial needs of the sectors such as agriculture,

industry, trade, communication, etc. That means they play very significant role in a process

of economic social needs. The functions performed by banks are changing according to

change in time and recently they are becoming customer centric and widening their

functions.

1.5.3 Cooperative Banks

Cooperative banking is retail and commercial banking organized on a cooperative basis.

Cooperative banking institutions take deposits and lend money in most parts of the world.

Cooperative banking, includes retail banking carried out by credit unions, mutual savings

banks, building societies and cooperatives, as well as commercial banking services

provided by mutual organizations (such as cooperative federations) to cooperative

businesses. There are basically two types of cooperative banks:

(i) Urban Co-Operative Banks

(ii) State Co-Operative Banks.

1.5.4 Urban Co-operative Banks

The term Urban Co-operative Banks (UCBs), though not formally defined, refers to

primary cooperative banks located in urban and semi-urban areas. These banks, till 1996,

were allowed to lend money only for non-agricultural purposes. This distinction does not

hold today. These banks were traditionally centredaround communities, localities work

place groups. They essentially lent to small borrowers and businesses. Today, their scope

of operations has widened considerably.

1.5.5 State Co-Operative Banks

State Co-Operative Banks refers to banks incorporated through state legislature and

wherein state government is a stakeholder to it. The purpose is to address the lending and

borrowing mechanism for the people of the state.

Introduction

11

1.5.6 Foreign Banks

A Bank based in foreign country is known as foreign bank. But if the majority holding of

public listed bank is with Foreign Institutional Investors (FIIs), then also it can be termed

as Foreign Bank.

1.5.7 Regional Rural Banks

The Government of India set up Regional Rural Banks (RRBs) on October 2,

1975.Initially, five RRBs were set up on October 2, 1975 which were sponsored by

Syndicate Bank, State Bank of India, Punjab National Bank, United Commercial Bank and

United Bank of India. Capital share being 50% by the central government, 15% by the

state government and 35% by the scheduled bank. Regional Rural Banks in India s mainly

focused upon the agro sector. Regional rural banks in India penetrated every corner of the

country and extended a helping hand in the growth process of the country.

1.5.8 Public Sector Banks

Public Sector Banks (PSBs) are banks where a majority stake (i.e. more than 50%) is held

by a government. The shares of these banks are listed on stock exchanges. There are a total

of 26 PSBs in India. State Bank of Saurashtra and State Bank of Indore merged with SBI.

The objectives behind nationalization where:

• To break the ownership and control of banks by a few business families,

• To prevent the concentration of wealth and economic power,

• To mobilize savings from masses from all parts of the country,

• To cater to the needs of the priority sectors

The Central Government entered the banking business with the nationalization of the

Imperial Bank of India in 1955. A 60% stake was taken by the Reserve Bank of India and

the new bank was named as the State Bank of India. The seven other state banks became

the subsidiaries of the new bank when nationalized on 19 July 1960. The next major

nationalization of banks took place in 1969 when the government of India, under prime

Introduction

12

minister Indira Gandhi, nationalized an additional 14 major banks. The next round of

nationalization took place in April 1980. The government nationalized six banks.

1.5.9 Private Sector Banks

All those banks where greater parts of stake or equity are held by the private shareholders

and not by government are called "private-sector banks". These are the major players in the

banking sector as well as in expansion of the business activities India. The present private-

sector banks equipped with all kinds of contemporary innovations, monetary tools and

techniques to handle the complexities are a result of the evolutionary process over two

centuries. They have a highly developed organizational structure and are professionally

managed. Thus they have grown faster and stronger since past few years.

1.5.10 Old Private Sector Banks

The banks, which were not nationalized at the time of bank nationalization that took place

during 1969 and 1980 are known to be the old private-sector banks. These were not

nationalized, because of their small size and regional focus.

1.5.11 New Private Sector Banks

The banks, which came in operation after 1991, with the introduction of economic reforms

and financial sector reforms are called "new private-sector banks". Banking regulation act

was amended in 1993, which had permitted the entry of new private-sector banks in the

Indian banking sector. However, there were certain criteria set for the establishment of the

new private-sector banks, some of those criteria being:

• The bank should have a minimum net worth of Rs. 100 crores.

• The promoters holding should be a minimum of 25% of the paid-up capital.

• Within 3 years of the starting of the operations, the bank should offer shares to

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Introduction

14

1.7.2 Rising per capita income

The rising per capita income will drive the growth of retail credit. Indians have a

conservative outlook towards credit except for housing and other necessities. However,

with an increase in disposable income and increased exposure to a range of products,

consumers have shown a higher willingness to take credit, particularly, young customers.

A study of the customer profiles of different types of banks, reveals that foreign and

private banks share of younger customers is over 60% whereas public banks have only

32% customers under the age of 40. Private Banks also possess a greater share of the

profitable mass affluent segment.

1.7.3 New channel – Mobile banking is expected to become the second largest channel

for banking after ATMs

New channels used to offer banking services will drive the growth of banking industry

exponentially in the future by increasing productivity and acquiring new customers. During

the last decade, banking through ATMs and internet has shown a tremendous growth,

which is still in the growth phase. After ATMs, mobile banking is expected to give another

push to this industry growth in a big way, with the help of new 3G and smart phone

technology (mobile usage has grown tremendously over the years). This can be looked at

as branchless banking and so will also reduce costs as there is no need for physical

infrastructure and human resources. This will help in acquiring new customers, mainly

who live in rural areas (though this will take time due to technology and infrastructure

issues). It is predicted by the industry experts that mobile banking would become the

second largest channel of banking after ATMs.

1.7.4 Financial Inclusion Program

Currently, in India, 41% of the adult population don’t have bank accounts, which indicates

a large untapped market for banking players. Under the Financial Inclusion Program, RBI

is trying to tap this untapped market and the growth potential in rural markets by volume

growth for banks. Financial inclusion is the delivery of banking services at an affordable

cost to the vast sections of disadvantaged and low income groups. The RBI has also taken

many initiatives such as Financial Literacy Program, promoting effective use of

Introduction

15

development communication and using Information and Communication Technology

(ICT) to spread general banking concepts to people in the under-banked areas. All these

initiatives of promoting rural banking are taken with the help of mobile banking, self-help

groups, microfinance institutions, etc. Financial Inclusion, on the one side, helps corporate

in fulfilling their social responsibilities and on the other side it is fueling growth in other

industries and so as a whole economy.

1.8 Service Quality in Banking:

The Indian banking has seen momentous changes in the post independence era. It has

witnessed a remarkable shift in its operating environment during the last decade. Various

reform measures, both qualitative and quantitative, were introduced with an objective to

revitalize Indian banking sector and to meet the future challenges. Every aspect of the

functioning of the Indian banking industry, be it a customer service, resource mobilization,

credit management, asset-liability management, investments, human resource

development, and forex management are undergoing dramatic changes with the reforms

gathering the momentum and speed. Several innovative IT-based services such as

Automated Teller Machines (ATMs), electronic fund transfer (EFT), anywhere-anytime

banking, smart cards, internet banking etc. are no longer alien concepts to Indian banking

customers.

The market has changed drastically and has become largely customer centric. From sellers’

market the banks have been forced to operate in the buyer's market. The change has made

the customer a king. The customer, in future, will continue to demand new and better

products, will switch to new providers quickly, will find information easily, and may even

do more and more of ‘legwork’ personally. All of these factors mean more buying power

for the consumer. The key to success in the changed environment will be one's ability to

reach the client at his doorsteps, and providing products and services in a customized

manner. Thus, with these changes customers' expectations and perceptions of service

quality are bound to change.

Today's customer is not going to settle on anything less than his/her expectations. To

compete, successfully, with each other, banks are using different marketing strategies to

live up to the customers’ expectations and stay ahead in the league. Banks have focused to

develop strategies to differentiate themselves from their competitors and providing their

Introduction

16

customers with high quality banking services and highly technology innovative products.

Due to the rapidly changing environment, service quality and customer satisfaction is

gaining the greater attention of all banking institutions.

Banking institutions are acknowledging that unless customer needs are taken into account

in designing and delivering services, technical superiority will not bring success (Zeithaml

and Bitner 1996). New marketing concepts and strategies are paying greater attention to

identifying customer needs and expectation and offering high service quality to customer.

As argued in literature of service quality, it is probably the effective measurement,

management and improvement of service quality which will enable banking institutions to

achieve a differential advantage over their competitors.

1.9 Need of studying Service Quality in Banking:

Customers play very important role in development of services industry particularly

financial services. Therefore, customer service is an essential in the banking service to

compete in the market driven environment. Measurement of service quality is difficult in

banking sector as compare to the manufacturing sector as services are intangible in nature.

Increasingly, service quality has used as a strategic tool by the various market players to

position themselves effectively in the market.

Service quality has become a critical prerequisite for satisfying and retaining valued

customers in banks. The interest is largely driven by the realization that high service

quality results in customer satisfaction and loyalty with the product or service, greater

willingness to recommend someone else, reduction in complaints and improved customer

retention (Zeithaml et al., 1996). Further, a satisfied customer is likely to be a loyal

customer who will give repeating business to the bank (Heskett et al., 1994). Most

importantly, the cost of retaining current customers by improving product and services is

significantly lower than the cost of winning new customers. Because of the importance of

the service quality and customer satisfaction as a route to competitive advantage and

corporate profitability in banking, it has become difficult to identify a single bank which

has not initiated some kind of service quality improvement drive.

Also, a clear and detailed understanding of the demands of the various market segments is

essential to successfully target new base (Yavas&Yasin, 2001).Undoubtedly, owing to the

belief that delivery of high service quality is a must for attaining customer satisfaction and

Introduction

17

a number of other desirable behavioral outcomes, recent years have witnessed a flurry of

research exploring interrelationships between service quality and customer satisfaction.

This study will expand the research in Indian banking sector. Specifically, the study will

conduct a survey of Indian bank customers to develop theoretically and empirically the

understanding of the relationship between Service Quality, Customer Satisfaction,

retention, loyalty & commitment. This study seeks to evaluate empirically the degree of

effect on service quality on customer satisfaction retention, loyalty & commitment. While

studying the factors affecting service quality, attempts will be made to clarify the

relationship between service quality with customer satisfaction retention, loyalty &

commitment in Indian public and private sector banks.

1.10 Background of the Study:

Major reforms and transformations have happen in Indian Banking Sector in past years

after the privatization and liberalization. Due to fierce competition in the financial market,

bank players have started sensing the importance of the service quality an instrument in

achieving competitive advantage. Banks have started utilizing significant proportion of

their budget on expenditure related to the service performance such as employees training.

It has been studied that once customers’ expectations are met or exceeded than customers

are likely to get satisfied.

Satisfied customers are likely to become loyal to the service firm & give repetitive

business to the firm. This grounded the customer commitment towards the service

provider. As the cost of acquiring new customer is very high and hence it is very much

essential for the banks to retain the customers for longer period of time. For effective

marketing strategy formulation, an information about the customer’s perception of the

service quality is very much required.

Several research has been done in past to check the service quality and this has resulted in

the formulation of service quality models such as SERVQUAL and SERVPERF. But it has

also been studied that, these models are not completely applicable and suitable in Indian

Service Sector. Moreover, the entire service sector is very dynamic and changing from the

time to time. Therefore, periodic research is needed to the study whether the quality of the

service delivered by the banks are meeting the customer expectation or not.

Introduction

18

Plentiful research have been done the field of service marketing in various service industry

across the world. The studies have mainly focused on the markets of the developed

countries and a few Asian markets neglecting less sophisticated Indian markets such as

banking. This has motivated researchers to study an impact of service quality on customer

satisfaction, retention, loyalty and commitment.

1.11 Purpose of the Study:

Service Quality is mostly researched topic that has gained considerable attention from

researchers. Focusing on delivering good service quality has been main focus of the all

service providers and this has helped them to position themselves effectively in market.

The main problem identified in the study was that majority of the banks are not having

systematic mode of evaluating and monitoring the quality of the service offered to the

customer. The purpose of the study is to analyze whether the quality of service offered by

their banks is meeting their expectations or not.

This research tries to get insight about what customer think about the quality of the service

that they receive from their respective banks. Particularly, this research will identify those

factors of the service quality that contribute and influence customer satisfaction, customer

retention, customer loyalty and customer commitment. This research will examine how

selected four banks – State Bank of India, Punjab National Bank, ICICI Bank and HDFC

Bank perform in terms of service quality.

This research will investigate the impact of service quality on customer satisfaction,

customer retention, customer commitment and customer loyalty. Moreover, service quality

will also be studied based on demographic factor such as gender, age, income, occupation

and education. While studying the service quality, this research will guide management of

the banks about the important factors to be considers to improve the overall service quality

performance.

1.12 Statement of the Problem:

A great deal of research has been done on the subject of service quality and its dimension

in the context of banking sector. However, a little effort has been made to link dimensions

of service quality with customer satisfaction, retention, loyalty and commitment in Indian

Banking Sector. It has been found out in the literature that, SERVQUAL is not completely

Introduction

19

applicable in Indian context and hence the major problem of the study was to identify the

factors of service quality in Indian context in banking sectors. Further, problem of the

study was to examine impact of service quality on customer satisfaction, retention, loyalty

and commitment in Indian public and private sector banks.

1.13 Scope of the Study:

The research carried out in the thesis focus on service quality and its impact on customer

satisfaction, retention, loyalty and commitment in four banks: SBI, PNB, ICICI and

HDFC. Four major cities of Gujarat were selected: Ahmedabad, Baroda, Surat and Rajkot.

50 customers from each bank in each city were selected for conducting the research. The

selections of the four banks were done on the basis of market capitalization value in the FY

2011. SPSS 20 and AMOS 20 software were used for analysis of the data. This research

would guide the banks in improving service quality and understating its impact on

customer satisfaction, retention, loyalty and commitment.

1.14 Objectives of the Study:

The following research objectives were used as the basic focus of the investigation.

1. To study the factors contributing to the Service Quality.

2. To find out correlation between service quality, customer satisfaction / Retention /

Commitment & Loyalty

3. To study the impact of service quality on customer satisfaction / Retention /

Commitment & Loyalty.

4. To identify important factors of service quality from the demographic perspective of

customers.

5. To rank the selected banks based on the service quality.

1.15 Significance of the Study:

This study contributes to the body of literature as well as to the bank management. In an

era of globalization service quality has become eminent feature of the banking services.

Determining various literature of service quality, efforts were made to identify the

Introduction

20

important factors of service quality and how it affect the customer satisfaction, retention,

loyalty and commitment in selected four banks. Despite of these, it has not been sufficient

to understand complicated factors of service quality and its impact on customer

satisfaction, retention, loyalty and commitment due to various situation, time and

customers. Due to the intense competition exist in the banking sector, the result of the

study could give some suggestion to the management of the banks pertaining to the service

quality and improvement in it. And hence it will ultimately lead to the customer

satisfaction, retention, loyalty and commitment in the banks.

1.16 Structure of the Thesis:

This thesis comprises of chapters, and the chapters will be settled as following:

Chapter 2:Review of Literature

This chapter starts by describing the concepts of the service quality & how it affects the

customer satisfaction & in turn retention, commitment & loyalty. This chapter has explored

the study carried out with the reference to the Indian banking sector. Lastly this chapter

provides literature review on service quality & four construct of the consumer behavior

and also found out whether, there is any relationship between service quality & customer

satisfaction, retention, loyalty & commitment taking Indian Banking Sector into the

consideration.

Chapter 3: Research Methodology

This chapter includes the research hypothesis. This chapter has identified the suitable

research design and administration of the research. The questionnaire structure, format,

content, translation, the procedures of the data collection and pilot study is being discussed.

Chapter 4: Data Analysis

This chapter provides the detailed result of the analysis. To carry out data analysis, SPSS

package is used & based on the research objectives as well as hypothesis suitable statistical

tools are selected.

Chapter 5: Discussion of Findings,

This chapter provides a summary of the overall study and highlighting its major findings.

Introduction

21

Chapter 6: Conclusion, Major Contribution and Scope of Further work

This chapter provides a summary of the overall study & conclusion. It also provides a

theoretical & practical implication and limitations, and suggesting future opportunities for

further research.

Literature Review

22

CHAPTER–2

LITERATURE REVIEW

2.1 Introduction:

In the past few decades, service quality has received a lot of attention from researchers and

practitioners because of its strong impact on business performance, customer satisfaction,

customer loyalty and retention. Service quality is usually understood as a measure of how

well the level of the delivered services matches customer’s expectations (Santos, 2003).

According to the definition of Gro¨nroos (1984) service quality is “the outcome of an

evaluation process, where the consumer compares his expectations with the service he

perceives he has received”. Furthermore, Parasuraman et al. (1988) defined service quality

as “the overall evaluation of a specific service firm that results from comparing that firm’s

performance with the customers’ general expectations of how firms in that industry should

perform”. Dr. H.S. Sandhu et al (2011), found out in their research that SERVQUAL

instrument cannot be applicable to the Indian life insurance sector and further research is

necessitated to comprehend the service quality within the Indian context in similar sectors.

Majority of the service provider deliver higher level of the services as a part of their

business strategy in order to position themselves ahead in the market competition. Most of

the Indian Banks perform the same function & therefore customers place service quality on

the top in their priority list while choosing a particular bank. Moreover, the banks carry

their business with public money & hence customer expects better service from the bank,

they choose. In such situation, customer select the bank based on the quality service

offered to him. Therefore, banks prosper or decline majorly depend on the quality service

offered to the customer and due to this reason majority of the banks in India have placed

service quality at the top of the list of business strategy.

In a view of the importance of the services and its impact on various variables of consumer

behavior, the literature review begins with overview of the concept of service quality,

customer satisfaction, loyalty, retention & committee. This literature review also provides

theoretical framework for this study and the research objectives to be formed.

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23

2.2 Service Quality:

2.2.1 Definition of service quality:

Since decades, service quality has been widely studied by many researchers but there is no

common consensus about the conceptualization of service quality. Different researchers

have focus on the different aspects of the service quality. The most common definition

among the researchers for service quality is that “service quality is the customer’s

perception of service excellence which means quality is defined by the customer’s

impression of the service provided” (Berry et al. 1988; Parasuraman et al. 1985). The main

assumption behind the definition of service quality is that customers build their perception

of service quality based on their past experiences of service performance and therefore the

customer’s perception decides service quality.

There are many other definition for the customer’s perception of the service quality.

Takeuchi and Quelch 1983 have studied that consumer’s attitudes or judgements are

resulting from comparisons by consumers of expectations of service with their perceptions

of actual service performance. (Berry et al. 1988; Gronroos 1982). Berry (1980), along

with Booms and Bitner (1981), argue that, due to the intangible nature of services,

customer use elements associated with the physical environment when evaluating service

quality. Managing the evidence and using the environmental psychology are often seen as

important marketing tools.

Levitt (1981) proposes that customers use appearances to make judgments about realities,

and less tangible a product the more powerful is the effect of packaging in judging that

product. Hostage (1975) for his part, believes that a service firm’s contact personnel

comprise the major determinant of service quality, while Lewis and Booms (1983) propose

that service quality resides in the ability of the service firm to satisfy its customer needs,

i.e. customer satisfaction. Lehtinen and Lehtinen (1982) have defined service quality in the

context of physical quality, interactive quality and corporate (image) quality. According to

them, Physical quality relates to the tangible aspects of the service. Interactive quality

deals with the interactive nature of services and refers to the two-way flow that occurs

between the customer and the service provider, or his/her representative, including both

automated and animated interactions. Corporate quality refers to the image attributed to a

service provider by its current and potential customers, as well as other publics. They also

Literature Review

24

suggest that when compared with the other two quality dimensions, corporate quality

tended to be more stable over time. But the traditional approach for defining service

quality emphasizes that service quality perception is a comparison of consumer

expectations with actual performance (Gronroos 1984; Lewis and Booms 1983;

Parasuraman et al. 1985; Parasuraman et al. 1990). Madu and Madu (2002) defined the 15

dimensions of online service quality: performance, features, structure, aesthetics,

reliability, storage capacity, serviceability, security and system integrity, trust,

responsiveness, product/service differentiation and customization, Web store policies,

reputation, assurance, and empathy.

2.2.2 Characteristics of Service:

The most important and unique feature of services, is that services are processes, not

product. Another important characteristic is that service production & consumption takes

place at the same time and along with the service provider, consumers are also equally

involve in the service process. Due to these characteristics, service firm has no products,

but only interactive processes. The characteristics that differentiate services from

manufacturing in the context of quality have been illustrated by many researchers (Bitran

&Lojo, 1993; Parasuraman, et al., 1993 and Zeithaml, et al., 1996) as follows:

Nature of Products - which are basically intangible in services including a tangible

action. Therefore customer satisfaction in services is not only influenced by objective

measures of performance but also influenced by intangible aspects during the service

performance.

Heterogeneity - It creates another challenge for quality management in services,

because quality in service is not just ensuring conformity to standards, but taking into

account service diversity of customers while the service delivery is taking place. It

also take into account the behaviour and expectations of the customer being served

and the need to customize the service delivery accordingly.

Simultaneity - It means most services are produced and consumed at the same time.

This represents a difficulty in quality management of services because it is not

usually possible to actively monitor all service deliveries that are taking place and the

service cannot be inspected before its consumption.

Perishability - It refers to the fact that services cannot be saved, stored, resold, or

returned because they are performances. A seat on an airplane or in a restaurant, an

Literature Review

25

hour of a lawyers time, a medical/academic advice or telephone line capacity cannot

be reclaimed and used or resold at a later time which is quite in contrast to goods

(Zeithaml,et.al , 1985).

Due to intangibility, heterogeneity, perishability and simultaneous production and

consumption, it has become very difficult to measure the quality of the service. Therefore,

quality is relative & subjective and depends upon perceptions & expectations of the

customers related to the service delivery.

Parasuraman, et.al. (1985) suggested that the criteria used by consumers that are important

in moulding their expectations and perceptions of delivered service fit ten dimensions:

tangibility, reliability, responsiveness, communication, credibility, security, competence,

courtesy; understanding/knowing the customer and access. Subsequent research, analysis

and testing by Parasuraman, et.al. (1988) have condensed these into five dimensions of

service quality:

1. Tangibility : physical facilities, equipment, appearance of personnel

2. Reliability : ability to perform the promised service dependably and

accurately

3. Responsiveness : willingness to help customers and provide prompt service

4. Assurance : knowledge and courtesy of employees and their ability to

convey trust and confidence

5. Empathy : caring individualized attention the company provides to its

customers

Above listed characteristics make service unique & special which has its own

measurements & concepts. Following table summarises the main difference between

services & products:

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TABLE 2.1 Difference between goods & services

Goods Services Tangible Intangible Homogenous Heterogeneous Production and distribution separated from Consumption

Production, distribution and consumption simultaneous from consumption

Represents a thing Represents an activity or process Core value produced in factory Core value produced in buyer-seller

Interactions Customers do not normally participate in the production process

Customers participate in production process

Can be stored Cannot be stored Transfer of ownership No transfer of ownership Source: Gronroos (2000, p: 47)

2.3 Models of Service Quality:

Since a decade, many researchers have tried to develop various models on service quality

that act as a different construct from the product quality. The main objectives of the service

quality models is to describe factors affecting the service quality in the firm & find out the

solution of the service quality problem and also develop the framework for improving

service quality programs. (Ghobadian, Speller. and Jones, 1994).

2.3.1 Gronroos's Model

Gronroos (1984) developed the service quality model in order to understand how

customers perceive and assess service quality, and also to find out in what way service

quality can be influenced. The Gronroos's model is based on an assumption that perceived

service quality is the outcome of the consumer's comparison between his/her expectations

and perception (the outcome of the evaluation process). Apart from that, this model also

studies that the overall evaluation and perception of service quality highly depends on

three dimensions: technical quality, functional quality and image. The image dimension

answers two questions: what a customer gets from the service company and how a

customer gets this service. So, Gronroos's model tries to study what customers in a service

setting are looking for and how they evaluate it. As a result, the service provider will be

able to control, affect and manage the customer's evaluation in the desired direction

(Gronroos, 1989). Following figure illustrates the Gronroos model of perceiving service

quality.

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27

What? How?

FIGURE 2.1 TheGronroos’s Model

Source: Gronroos (1984, p: 40)

In this model, perceived service quality is the results from three dimensions of quality;

technical, functional and image (Gronroos, 2000):

Technical quality or outcome dimension: Technical quality means what the

consumer gets as a result of his/her interactions with a service firm. So, this

dimension represents the physical outcome of the service delivered to customers, e.

g. a room or a bed provided for a guest in a hotel.

Functional quality or the process-related dimension: Functional quality shows

how the customer gets the service, and how he/she experiences the production and

consumption process, i. e. the way the outcome of the service is delivered to the

customer. So, this dimension focuses on employees' performance and their buyer-

seller interactions with customer, i. e. this dimension indicates the psychological

Perceived Service Quality

Functional

Quality

Technical

Quality

Image

Traditional marketing activities (advertising, field selling, pricing); and external influences by traditions, ideology and word of mouth

Perceived

Services

Expected

Services

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28

aspect of the service delivered, e. g. the staff's behaviour in a bank, hotel or

restaurant.

Image: This dimension implies the result of the customer's recognition and

perception of the technical and functional quality dimensions. Hence, the firm's

image, which represents one of the quality dimensions, will affect the customer's

perceived service quality. In addition to the technical and functional dimensions,

corporate image can be influenced by other variables such as price, external

communications, physical location, the appearance of the site and the competence

and behavior of service provider's employee(s) (Ghobadiane t al., 1994).

Kang and James (2004) support the Gronroos's model stating that this model provides a

wide illustration of service quality perception through including the main dimensions of

service quality. So, in other words, the technical quality dimension explains service quality

after the service is performed while the functional quality dimension explains service

quality during delivery of the service. Thus, such a model involves all dimensions of

service quality construct.

Finally as a part of the conclusion, it has been derived from the Gronroos’s model that

functional quality is the most important dimension of service quality followed by corporate

image dimension as it is more dependent on functional dimension and word-of-mouth

communication. And corporate image can compensate the problems in both temporary and

overall technical quality dimension.

2.3.2 Lehtinen and Lehtinen Model:

Lehtinen and Lehtinen (1991) proposed another model to give more details on how

customers perceive service quality. The researchers have proposed two approaches to

understand service quality: the first approach is three-dimensional and second is two-

dimensional. The first approach indicates three dimensions of service quality: (1) Physical

quality, (2) interactive quality, and (3) Corporate image.

Physical quality is further classified in two components: physical product components

which basically refer to the goods deliver during the interaction process like food in

restaurant & physical support components provide a framework where service can be

easily produced & deliver. Physical support components if further divided in two

categories in this model: the environment that comprised of physical layout of the service

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29

production firm and second category is instrument that includes tools required for

producing & delivering the services like black board & chock stick in education service.

Interactive quality is with reference to the interaction held between customer & service

personnel of the service firm. As per this model, service production can be done by service

provider (interactive person) or by physical equipment (interactive equipment).

Sometimes, interaction also takes place among the customers as well.

Corporate image refers to what current & potential customers perceive about the company.

This is the only dimension of the service quality which can created before consuming or

experiencing the service from any of the service organization. In addition to that, word-of-

mouth has a great influence on corporate image.

The second approach in Lehtinen and Lehtinen's model emphasizes on the service quality

process and its output. Process quality refers to the consumer’s experience of service

production process. Basically it assess the fit exists between the participation of the service

personnel & consumer. The degree participation gets differ from the service to service.

For example, there will be heavier participation of customer at ATM machine as compare

to hair salon.

Output quality deals with the customer’s evaluation of the service process. Evaluation of

service is very difficult on the part of the customer as well as service provider. Service

output is not only measured by the customer but also by any person around them and hence

output quality represents the overall result of the service process.

2.3.3 SERVQUAL Scale:

Parasuraman et al (1985; 1988) developed the SERVQUAL scale based on the gap model

and it was used as an instrument for measuring customers' perceptions of service quality.

Parasuraman et al have identified the ten dimensions of the service quality: reliability,

responsiveness, competence, access, courtesy, communication, credibility, security,

understanding (knowing the customers) and tangibles. These dimensions signify the key

factors or elements which can be used by customers to evaluate service quality.

Ten dimensions of SERVQUAL categorized into two groups of statement: the first group

of statements measures customer’s expectations about the firms and second group of

statements measures customer’s perception of service. Half of the statements are positively

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formed & half of the statements are negatively formed. Hence, ten dimensions are used as

foundation for developing the SERVQUAL scale.

Later, researchers of SERVQUAL found that some items in scale are overlapping &

convey the same meaning. Due to overlapping, researchers had refined and improved the

scale. Parasuraman et al (1988), had conducted various stages of data collection &

statistical analysis to refine the scale and final set of the service quality includes only five

dimensions; reliability, responsiveness tangibles, assurance and empathy

(Fitzsimmons and Fitzsimmons,2006).

According to the SERVQUAL scale, the outcome for each dimension of customers'

expectations and customers' perceptions are compared to estimate the gap in scores

between the two components. As a result of this comparison, a firm's level of service

quality assessment can be defined, e. g. the larger the gap, the lower the service quality

evaluation, whilst the lower the gap, the larger the evaluation (Hoffman and Bateson,

1997). To sum up, SERVQUAL scale shows the extent to which service performance in

each of the five dimensions of service quality meet the level of the performance customers

expect from the service firm.

The SERVQUAL instrument provides some applications and advantages as stated below

(Parasuraman et al., 1988; Coulthard, 2004):

1. Can be employed in different types of service companies.

2. Offers valuable information about customers' perception of service quality by

measuring them on the key dimensions of the service quality. Thus, the scale offers a

comprehensive framework of five service quality dimensions.

3. Can be used to follow trends in customers' assessment of service quality.

4. Offers an assessment of service quality for each dimension and also an overall

assessment. Apart from that the scale depicts the relative importance of the five

dimensions.

5. It also allows a firm to categorize customers into various segments, as per their

individual degrees of perceiving service quality.

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Parasuraman et al (1985; 1988) argue that the five dimensions used in the SERVQUAL

scale represent and provide generic instrument and dimensions for measuring service

quality in a variety range of services. Over the past years, the SERVQUAL instrument has

been used widely and extensively for measuring service quality in different contexts and

industries like banking, healthcare, hotels, restaurants retail chains, communication, real

estate, higher education, etc. In addition to that, the SERVQUAL instrument has been used

widely in several cultures and countries including: the USA, UK, China, Honk Kong,

Greece, and so many other countries. The SERVQUAL scale has been imitated and

appreciated well in the service quality literature in the last decades by academics,

researchers and industry people (Buttle, 1996).

2.3.4 SERVPERF Scale:

This scale was established by Cronin and Taylor (1992) to measure service quality as an

alternative approach for measuring this construct. According to the method of measuring

service quality, a performance-based measure of service quality is more valid and reliable

method to measure service quality. Therefore, the SERVPERF scale was developed that

measures only the performance perceptions data. Main assumption of this scale is that

measuring the respondents' expectations is not essential.

In their research, Cronin & Taylor (1992) proved that SERVQUAL is not an adequate

approach for measuring service quality by proposing SERVPERF. In order to act in

response to Parasuraman et al's (1994) criticisms of SERVPERF, Cronin and Taylor (1994)

had reconfirmed the adequacy of the SERVPERF scale for measuring and conceptualizing

service quality after doing another pragmatic study. Brady et al (2002) had adopted the

SERVPERF scale & confirmed the superiority of the scale as more appropriate instrument

for measuring the service quality.

Discussion was carried out among many researchers about whether SERVPERF will

outperform SERVQUAL for measuring service quality or vice versa. To end the

discussion, Carrillat et al (2007) presented result of rigorous meta-analysis study using 17

years of empirical service quality studies. The result signifies the validity of both the scales

for measuring the service quality. Moreover, researchers found that SERVPERF is stronger

than SERVQUAL for service quality measuring with highest correlation coefficient.

Findings of the study also implies that some modification to the extent of the study will

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32

increase predictive power of SERVQUAL wherein no changes are required in

SERVPERF. But overall, research proves that both the scales (SERVQUAL &

SERVPERF) are very popular, valid & reliable for measuring service quality.

2.4 Service Quality in Banks:

Koushiki (2013) studied that service quality has strong impact on customer’s purchase

intention. The research was conducted in Indian Banking Sector. It has been found out that

reliability is the most important factor of the service quality followed by employee

behavior, tangibles and convenience. The same author has conducted research in 2014 in

order to study how the different dimension of service quality influence the customer’s

word – of – mouth. The findings of the study revealed four dimensions of service quality in

retail banking, namely, attitude, competence, tangibles and convenience and showed that

the service quality factor attitude is most important in influencing WOM.

According to ShirshenduGanguli, Sanjit Kumar Roy, (2011), four dimensions of service

quality has been identified that has significant impact on customer satisfaction and loyalty.

These dimensions are customer service, technology security and information quality,

technology convenience, and technology usage easiness and reliability.

Anand Sharma et al (2014) found in his study that Customer loyalty is very significant in

creating and retaining competitive advantage in the service industry specifically in sectors

like banking industry in India. This realization has made industry researchers and

academics to pay more and more attention to studyservice quality dimensions and their

impact on customer satisfaction and loyalty. It has also been further discussed in the paper

that, there is an impact of service quality on customer satisfaction and loyalty in public and

private sector banks.

V. Surekha et al (2015) discussed in their paper that a small perceptual difference exists

among the customers regarding overall service quality in public and private sector banks.

The respondents of the public and private sector banks mostly concentrate on the staffs of

the banks for improving customer satisfaction. If banks want to sustain customers on a

long term basis, bankers should work towards 100% customer satisfaction that

automatically foster customer delight.

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Abdel Fattah Mahmoud Al-Azzam (2015) confirmed interrelationships among service

quality and customer satisfaction in the retail banking sector. It has been indicated in his

paper that tangibility has a positive influence on customer satisfaction. This can be

explicated by customer significance of tangible variables in terms of physical facilities,

equipment and staff performance. Customers can evaluate bank facilities, design,

sufficiency, vision equipment, and the appearance of workers in the bank. Finally, he

concluded that service quality has a significant influence on customer satisfaction.

2.5 Customer Satisfaction:

In today’s era, the change has observed in the market from manufacture based market to

customer based market. Customers have become valuable asset for the company for which

they compete in the market. Customer’s expectation about the products or services has

direct impact on their satisfaction and hence it is very important for an organization to have

knowledge about the customer satisfaction that will help them to improve their quality of

the services offered to the customers. (Chen, 2004).

2.5.1 Definitions of Customer Satisfaction:

As per the previous research, degree of the satisfaction differs from the customer to

customer as per their likeness, expectation, perception or motivation from the particular

product or services. Reichheld, and Sasser (1990) researched 14 businesses and found that

if a business reduces 5% of the customer loss, it will improve 25 – 95% of the income.

Muller (1991) researched that customer satisfaction will become the future key to success

because customer satisfaction directly influences their loyalty & re-purchase decision.

Customer satisfaction is an indicator that customers have used the product or consumed the

services. Following is the definition of the customer satisfaction.

Kotler (1991) defined the customer satisfaction as a customer perception that compares

their pre-purchase expectation with post-purchase perception. According to Oliver (1981),

customer satisfaction is the evaluation a customer makes to a certain exchange, which

reflects the relation of the customer expectation and their real perception to products or the

services they receive. Expectation is the short-term prediction. Customer satisfaction is the

reflection of the service quality. It comes when the customer satisfaction occurs when the

two are equal, or the latter exceed the former (Cronin & Taylor, 1992; Kotler, 1991).

Customer satisfaction is greatly affected by the quality of the product or services.

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34

As per the definition of Oliver, 1997 &Zeithaml&Bitner 2000, Customer satisfaction is the

customer’s evaluation of services after purchase as oppose to their expectation. Anderson,

Fornell& Lehmann (1994) mentioned that customer satisfaction is the overall experience

customers have when purchasing & consuming the services. It is accumulative perception

that will influence product quality, service quality & customer re-purchase decisions.

Customer satisfaction & service quality are directly related to each other. Improving

service quality leads to the improvement in customer satisfaction. (Zeithaml&Bitner 1996).

According to the definition of Baker & Crompton (2000), satisfaction is the personal

experience and mentality related the nitration between personal expectation & actual

receive. Ostrom&Iacobuci (1995) mentioned “Satisfaction is the subjective opinion. It is

the benefit that customer get from purchasing products or services.” It is basically

reflection customers make to their previous purchase. If is always exceeds their

expectation their loyalty increases. It provides value to the business.

Satisfaction is a psychological reflection. Satisfaction directly has influence on customer’s

post purchase behavior such as praising, complaining, increasing / decreasing loyalty,

attitude & brand switching.

2.5.2 Measuring Customer Satisfaction:

Caedozo (1965) suggested that using overall measurement to record customer’s response

to different attribute of products & services. As per the research of the Day (1977),

customer satisfaction can be measured by studying the individual part of the services to

learn customer’s real feelings and then add them together to get overall evaluation. Bitner

(1990) said service is intangible & different from product. To measure customer

satisfaction in case of services, he had introduced physical aspect, process management &

personnel to the 4P of marketing mix.

Churchill (1982) summarized the following four concepts:

1. Customer Expectation: Benefits customers expect before purchasing products or

services. It is the expected quality of products or services.

2. Product / Service Quality: Customer’s evaluation after purchase. It is compared

with customer expectation.

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3. Disparity: The differences of customer expectation and service quality. The

difference will influence the evaluation customers give to the services.

4. Customer satisfaction: when customer expectation equals service / product quality

or vice versa.

Kuo (1999) recognized seven factors influencing customer satisfaction: service, content,

price, convenience, corporate image, equipment, staff and procedure. Huang (1998)

identified five factors influencing customer satisfaction: product, service, staff, overall

performance of the products and closeness to the expectations. Customer satisfaction

basically reflects customer attitude which is not quantified and objective in manner.

Various rating scales are used by many researchers to measure customer satisfaction.

Rating scale methods are as follows:

1. Simple satisfaction scale: From 7 – 1, this scale rates customer satisfaction from

Completely satisfied, Very satisfied, to a Little satisfied 7 Not Satisfied.

2. Mixed Scale: From 7 – 1, this scales rates customer satisfaction from Very

Satisfied to Not satisfied wherein very satisfied & not satisfied are at opposite end

of the scale.

3. Expectation Scale: This scale basically measures the service quality. Measurement

standards are the difference between customer expectation & perception to the real

service received by the customer.

4. Attitude Scale: This scale is use for measuring customer attitude & feelings towards

the services. Rating ranges from 1 – 3 or 5 – 7 from Like, Very much like to Do not

like and dislike very much. Higher the customer rate more satisfied they are.

5. Emotion Scale: This scale measures customer’s emotion towards service. Positive

emotion is result of customer satisfaction & negative shows dissatisfaction.

Yau and his colleagues (2000) developed and validated a measurement of Relationship

Marketing Orientation (RMO) scale & had defined it as “The RMO centers on the creation

and maintenance of relationship between two parties of exchange, the supplier as an

individual and the customer as an individual through the possession of the desire to be

mutually empathic, reciprocal, trusting, and to form bonds.” This scale is basically having

six dimensions: Trust, Bonding, Reciprocity, Empathy, Communication and shared value.

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Customer satisfaction and purchasing behavior can be described as a cycle. Customer’s

post – purchase perception to product or service have direct influence on their re-purchase

intentions that results in positive word-of-mouth & influencing other people as well.

Service industry faces more difficulty as compare to manufacturing sector in measuring

customer satisfaction & hence service industry more effective system to be design for

assessing customer satisfaction which will help the service firms for improving the quality

of the services offered to the customers.

Customer satisfaction is the degree of the happiness customers have towards the products

or service & it also shows the probability of repurchase intentions. Satisfaction is the

outcome of the comparison between the expectation & actual experience. Organizations

should always try to identify the reasons why customers are not satisfied; it should be

discussed addressed promptly because old customers bring new customers. Unsatisfied

customers will quit & also take potential customers with them.

Every research studies the relationship of the different items with the satisfaction level &

determines the sequence for improvement. The following is a ranking system provided by

Japanese Efficiency Association 1994;

1. Excellent Items: Items have a strong effect on satisfaction. Customers are very

satisfied with them.

2. Problematic Items: Items have strong effect on satisfaction. Currently, customers are

not very satisfied with them.

3. Questionable Items: Items do not have a strong effect on satisfaction and customers

are not very satisfied with them.

4. Mediocre Items: Items that do not have a strong effect on satisfaction and customers

are highly satisfied with them. They do not need any change at present time.

Because of the unique nature of the services, it is very much important to study customer

satisfaction separately in service industry. Whether customer is getting what they are

expecting or are they being underdeliver? According to the Zahorik, Rust (1992), service

fails because of the gap between expectation & perfromance of the services on any of the

five dimensions: tangibles, reliability, responsiveness, assurance or empathy that will

ultimately result in customer dissactisfaction & in order to avoid customer dissatisfaction,

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management ought to identify customer’s needs & desire in order to design service to serve

them.

Further researchers opined that Satisfaction has long been recognized as an important

model of customer reactions to the service design often incorporate it as a variable. Are

customer’s complain being properly addressed? It has also been highlighted by the

researcher that how customers’ who complain may have more loyalty than those who don’t

and customers whose complain have been successfully remedied may be more loyal still.

In late 1980’s, it was believed that to focus on service quality as toll for increasing or

maintaing market share was not a priority. These belief are not held in high esteem today.

Parasuraman, Zeithaml & Berry (1988), stated that customer satisfaction is directyl linked

with profits & lowering customer defection rate can be profitable to the company & infact

it is more profitable than gaining market share or lowering costs. In addition to this,

researchers also added that the longativity of customer’s relationship favorably influences

profitability. Customers who remain with the firm for periods of years because they are

pleased with the service & more likely to buy additional services & spread positive word-

of-mouth than short term customers.

In fact author says that these long term relationship also provide price insulation allowing

the service provider to charge higher prices and the customer willing to pay those increased

prices to maintain the relationship and obtain the value they believe they are receivening.

But how satisfied customers have to be lift up service provider to this level? Zeithaml,

Berry & Parasuraman (1995) continue in their research that thresholds of the service

appear to affect the consumer behavior. When satisfaction rose above the a certain

threshold, repurchase loyalty climbed rapidly. In contrast, when satisfaction fell below a

threshold, customer loyalty declined with equaly rapidly. So the research continues to

suggest that a positive service experience does affect customer satisfaction & subsequently

retention.

Anderson, Fornell and Rust (1997) examined that what had to surrendered to atain desired

threshold further researchers explained that the firm wants to achieve superior level of the

customer satisfaction needs to devote resources for handling return, rework, warranties &

complaint management & thus by doing so, firm can lower down the costs & improve

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productivity. Further authors stated that reducing defects leads to greater productivity,

favorable word-of-mouth & price premium.

Andreassen (2001) states that whether superior service recovery efforts leads greater

satisfaction than if nothing had gone wrong. He further explored whether this phenomenon

would turn an indifferent customer to satisfied customer or not and findings of the showed

that customers who had gone through the service recovery phase were no different than

ordinary satisfied customers.

In a research carried out by Zemke in 2002, it was found out that today’s consumers are

savvier than the consumers of past & harder to satisfy. Poor customer service directly

affects satisfaction which in turn affects customer retention. Today’s customers are more

educated & informed. The new customer is more sensitive to disparities in service.

According to the Jones, Taylor, Becherer and Halstead (2003), customers who understand

the service instruction are more satisfied & less likely to switch. This research has

emphasis more on expectations & the role those expectation plays in satisfaction.

Reserachers further add that When expectations are met or exceeded, customers report

higher level of satisfaction. Therefore it is very important step for a service firm in

managing customer satisfaction is creating relaistic expectations. Literature also suggests

that thorough knowledge of use of service will enahnce the knowledge & benefit of the

service and lead to greater satisfaction & reduce switching behavior. Additionally, this

satisfaction lead to advocay through positive word of mouth.

Ranaweera and Prabhu (2003), write that The more satisfied customers are, greater the

retention rate, positive word-of-mouth, & financial benefits to the firm. Mere satisfaction is

not enough. In their research, researchers found out that, there are varying degree of

customer satisfaction & trust is one important key determinant that is having direct impact

on customer satisfaction. Customer satisfaction is also found to be stronger drive of

customer retention. Further authors investigated, importance of service recovery after

service failure & stated that customers are ready to accept apology & compensation offered

by the service provider as a part of service recovery process.

Jones & Farquhar (2003), researcherd on banking industry & acknowledge that perception

of service quality & customer satisfaction have influence on customer loyalty. Service

personnels play key role in customer satisfaction as banking industry is known for having

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passel of less than satisfied customers due to the hassel of switching to another bank.

Moreover, customer loyalty is also heavily influenced by services offered by the service

personnels of organization. Authors also mention the strong possibility of customer who is

dissatisfied with service they are receiving as being more susceptible to the competition.

Fecikova (2004), states that there are two type of customers, internal (employees) and

external (market place). Quality springs from a satisfied work force. Altenatively,

employee turnover can be traced external customer dissatisfaction due to poor work

product from the disgruntled staff. Customer satisfaction is ultimately reflected by both

internal & external customers simultaneously.

2.6 Customer Satisfaction in Banks:

Vinita Kaura (2013) has studied the effect of service quality on customer satisfaction in

India Public & Private Sector Bank. Three dimensions of the service quality were

discussed in the paper. Dimensions of service quality are employee behavior, tangibility

and information technology. Dimensions of service convenience are decision convenience,

access convenience, transaction convenience, benefit convenience and post‐benefit

convenience. For public sector banks, except tangibility, all antecedents have positive

impact on customer satisfaction. For private sector banks except tangibility and benefit

convenience all antecedents have positive impact on customer satisfaction.

Vinita et al (2014), examined in their study that the extent to which service quality,

perceived price fairness and service convenience (antecedents of customer satisfaction)

influence customer satisfaction for Indian retail banking sector. Dimensions of service

quality are human behaviour, tangibility and information technology. Dimensions of

service convenience are decision convenience, access convenience, transaction

convenience, benefit convenience and post-benefit convenience. Results indicate that

except tangibility, all antecedents of customer satisfaction have positive impact on

customer satisfaction. Human behaviour contributes maximum in explaining customer

satisfaction. This study highlights the importance of service quality, service convenience

and price in satisfying customers.

Kingshuk&Mounita (2014) stated in their study that Customer satisfaction increases the

existing customer loyalty, repurchase process, awareness of the people about the firm,

decrease the price flexibility, the cost of gaining new customers and prevent the customers

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being affected from competitive enterprise. With better understanding of customers'

perceptions, commercial banks can ascertain the actions required to meet the customers'

needs. Enhancing the customers� experience is now a crucial component of attracting new

customers and retaining the existing customers in order to grow and protect a profitable

business. Customer satisfaction with respect to service quality is an invaluable asset for the

modern organizations, providing unmatched competitive edge.

2.7 Customer Loyalty:

The early literature on loyalty conceptualized the term as a behavior of repeat purchasing

of a particular product/service over time. Churchill (1942) focused on the purchased

sequence in particular brands, while other researchers (e.g. Brody & Cunningham, 1968;

Cunningham, 1956) measured loyalty through the percentage of purchasing contributed to

a given service business; moreover, Farley (1964) stated on random measures like

probability of purchase. Most of the early studies suppose loyalty in terms of repeated

purchases of the same brand mostly.

The factors that measure loyalty are switching, recommendations, repurchase intentions,

and willingness to pay a price premium. (Anderson & Sullivan, 1993). This approach is

widely used but it is not enough to explore the complex pattern of repeat purchases.

Therefore Day (1969) proposed two category of customer loyalty one is the behavioral and

another is the attitudinal loyalty. He argued that the use of solely behavior-based loyalty

measures because these do not discriminate between true loyalty and temporary loyalty.

The important point is that these spuriously loyal buyers do not have any attachment to

brand attributes, and they can be immediately approached by another brand that provides a

better deal.

Jacoby (1971) investigates a conceptual definition of brand loyalty. He researched that the

significance of a conscious evaluation process, leading to loyal behavior, thereby

excluding random repeat purchase. Many researchers emphasised that true customer

loyalty also should include a positive attitude, and in a sense of commitment to the

organization. (Dick & Basu 1994; Ganesh et al. 2000); Oliver (1997) defined the loyalty of

the same commitment to keep re-buying behaviors of consumers preferred products /

services, these consumers do not have much negative impact of market changes.

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Jones and Sasser (1995), said that there are long-term and short-term customer loyalty. A

long-term loyal customer has a long-term purchase, and will not easily change their choice,

and the short-term loyal customers will immediately change their minds when they have a

better choice of products or services. According to Weiss and Kurland (1997)‘s research,

the length of relationship lead to the asymmetric investments in customers of different

sources, which adversely affected the direction of the relationship. They have further

questioned the issue that the effect of maintaining strong relationships between service

suppliers and customers, and the benefit of the relationship. Though customers & service

providers have long-term relationship but it must be based on balance between giving and

getting but people always tend to forget giving and favor getting.

Oliver (1997) believed that the customer loyalty means that customers may purchase the

product under the environmental impact or the marketing events prompt the transformation

that possibly hidden in customer behavior, but they would not change their commitment of

repeated purchase and further purchase intention with the preferred product/ service. Ha

(1998) showed that pressures and influences from the social environment explain the

consumer‘s pattern of repeated purchases to buy a specific brand. In fact, the social impact

is so mandatory that although the consumers may have a negative attitude towards a brand,

and she/he decides to buy it in order to avoid the criticism of the social environment

2.7.1 Categories of Customer Loyalty:

Gounaris & Stathakopoulos(2004) have categorized customer loyalty in the following four

categories:

Premium loyalty represents the highest level of loyalty since premium loyal consumers

have a favorable attitude towards the brand, they repeatedly purchase it and, also, they

have the approval of their social environment for doing so.

Inertia loyalty on the other hand is much weaker. Although it encompasses a pattern of

repeated purchases, it lacks both affectional and social reinforcement. Habitual or

convenience-seeking behavior can explain the pattern of repeated purchases.

Covetous loyalty is quite different from both premium and inertia loyalty in the sense that

it does not involve purchasing of the brand. However, covetous loyal consumers have

grown positive feelings and affection for the brand. The social environment reinforces this

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attitude. Such consumers are important for the company because of the income they

indirectly generate through influencing the choices of peers, relatives, and friends and so

on.

No loyalty is no purchase at all, and a complete lack of attachment to the brand. Also no

social influences to be even cognitively loyal to a brand.

Basically, the development of the concept of customer satisfaction is loyalty intentions,

which meansa willingness to repurchase a brand, which is the company primary concern.

Various researches have been carried out emphasising the benefits of the customer loyalty

to service provider.

As per the research of Xu et al. (2006), those benefits consist of (1) Positive word of

mouth; (2) Increases in the number of purchases; (3) Increases in the value of purchases.

Loyal customers can be very helpful to the service firms for improving service quality, as

they provide genuine feedback about the service quality & in a positive way.

A positive word of mouth is defined as informal communications and evaluations between

existing and potential customers regarding the products or services. It is the result of a

customer‘s view of the value received in a transaction or relationship and can be

understood as the customer‘s overall evaluation of the performance (Hennig-Thurau et al.,

2002). As personal communication is considered as a more reliable source than non-

personal information (Zeithaml & Bitner, 1996), word-of-mouth and oral communication

has strong impact on the future of consumer purchasing decisions. Especially in banking

industry, when the service involves high risk for the customers, word-of-mouth

communication could broaden the customer base for the bank (Hennig-Thurau et al.,

2002).

For the banking industry, Bowen and Chen (2001) mentioned that through providing

strong word-of-mouth, create business referrals, provide references, loyalty of customers

will help bank promote its market performance. These loyal customers will help the banks

in raising sales volume by purchasing broader categories of the bank‘s products or by

making frequent purchases. Some banks are only worried about meeting customers‘

expectations, in a high level of customers‘ satisfaction. These banks think that repurchase

will be increased if they satisfy customers‘ needs.

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However, Jones and Sasser (1995) had proven that customer repurchase does not

necessarily mean that customers are loyal. They might at any time defect and for different

reasons.

Shankar, Smith, & Rangaswamy, (2003) stated that loyalty and commitment strengthen

overall satisfaction and made customers to be tolerant to the disappointing experiences.

From a managerial perspective, it is very essenatial for management who is responsible for

customer retention programs need to provide information on the determinants of customer

loyalty. This is particularly important for managers to know for which customers could

rely heavily on satisfaction as a driver of loyalty. Bitner (1990) shows that satisfaction has

an mediated effect on loyalty by perceived service quality.

According to Jones and Sasser (1995), there were two types customers predominate:

loyalists and mercenaries. Loyalists are very satisfied customers who are willing to buy

back, while mercenaries are mild-satisfied customers who do not have a long-term

commitment and are continuously finding a better deal from another company.

In sum, maintaining customer loyalty in the long-term could be one of most important

strategies for service industry. Steyn (2000) said that, loyalty brings growth in customer

base and generate benefits for an industry. Therefore how to develop the potential

customer value through maintaining higher quality of service and then loyalty of customers

is at the heart of most service industry.

2.7.2 Theoretical framework for the multi-item loyalty scale:

Oliver (1999) hypothesised that there are four phases in the development of customer

loyalty. Each phase has a number of characteristics or dimensions, that act as either

sustainers (attracting the customer to stay) or vulnerabilities (pulling the customer towards

a substitute). The following figure depicts characteristics of customer loyalty development,

there are two mediating factors, sustaining and vulnerability elements. The mediating

factors allow modelling of the continued influence of competitors, advertising, service

failure and other external influences that sustain or make an existing customer’s loyalty

development vulnerable.

According to the author, as As customers progress through the phases of loyalty

development, the sustainers and vulnerability elements change to reflect the degree of

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involvement. The theory is that once a customer has found a product or service that he or

she enjoys (meeting with expectations of cost, quality and benefits), and continues to use,

he or she becomes less concerned with seeking alternatives and does not respond to

advertising or competitive threats (Oliver, 1999).

FIGURE 2.2 Customer Loyalty Scale

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2.7.3 Customer Loyalty In Banks:

Rizwan et al (2014) indicated in their paper that service quality, trust and reputation are

positively influences customer’s loyalty. The impact of service quality on customer loyalty

stalks from positive relations between service quality and factors such as reputation and

trust. Improvement in service quality leads to the increase in customer loyalty. Authors

further added that service quality should be given more importance while formulating

strategies for developing customer loyalty.

Sayed and Abdul (2014) researched in their paper that, perceived value and service quality

is important determinants to create the customer satisfaction and trust. The strong positive

correlation of customer satisfaction and customer loyalty means that the bank customers

will recommend the bank to other people. There is a direct relationship between overall

service quality and satisfaction response, the banks should not overlook the importance of

quality, whenever the quality improvement efforts are oriented to meet the

customers’needs.

2.8 Customer Retention:

Reichheld& Sasser (1990) stated that, longer the firm retains the customer, more profit

customer generates. Authors also claimed that higher the retention rates leads to higher net

present value of the customers. This is a result of various factors like effects of the higher

cost of attracting new customers, increased cost of purchases over a period of time,

expanded number of purchases, positive word – of- mouth and mutual understanding

between customers & firm. According to Ahmad &Buttle (2002), Service firms must

improve customer service quality and satisfaction in order to retain customers. Authors

further advocated retention measurement and preventing customer disloyalty by analyzing

complaint and service data and identifying & creating deterrents to customer switching.

Reichheld& Sasser (1996), suggested that in order to succeed in retaining the customers,

firm should adopt the strategies like defining & measuring retention and seeking loyalty by

focusing on the quality of the service. Moreover, strategy should also include changing the

channel of distribution, reducing the number of undesirable customers through filtering,

offering the rewards to service personnel for retaining the customers, using coupons to

distinguish and reward the customer who re-purchase and designing the program to attract

& retain the valued customers.

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Appiah-Adu (1999) conducted research on increasing the effectiveness of the customer

retention. He recommended that service firms needs to investigate the length & depth of

the relationship through cross-selling. Higher customer retention leads to generate the

higher profits through higher sales, decreased cost for attracting new customers, satisfied

price-sensitive customer and decreasing the cost of customer service. According to the

author, 5% increase in customer retention increased the average customer value by 125%.

Customer retention is the important factor leads to increase profitability & revenue. Boles,

Barksdale & Johnson (1997), proposed that retaining customers is not only cheaper than

attracting the new one but it is also profitable for suppliers & buyers. Authors further

added that companies that retain high percentage of customers can improve their retention

& easily attract the new customers in future. Usually, increased customer retention is

usually associated with higher customer satisfaction. The Harrison company (2003),

defines the customer retention as engaging the customers in a fair and equitable marketing

promises that encourages consolidation and growth of customer relationships for lifetime

and provide the missing piece to the marketing puzzle – RETENTION.

Boles et al (1997) examined the effect of quality of salesperson’s relationship with a

customer on the likelihood of retaining the customer business. They hypnotized that

customer intentions & willingness to continue doing business with the current supplier are

associated with higher level of relationship quality. Research findings indicated that the

quality of salespeople impacts the attitudes and intentions of customers. Customers who

gave high score for their relationships with their sales representative were more likely to

remain customers.

Outstanding service quality leads to the customer retention. According to the research of

Zeithaml (1996), service quality leads to continuing profits, increased expense, payment of

cost and generation of referred customers. Further, author stated that certain behavior

signals that customers are falsifying commitments with the firm. Customers demonstrate

their favorable intentions such as admiring the company, conveying fondness, enhancing

purchasing volume, paying premium readily, making positive comments about the firm to

others and continue buying with the same firm.

Berry &Zeithaml (1988) found the positive and significant link between perceived service

quality of the customers & their intention to refer the firm to the others. Zeithaml (1996),

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proposed the list of particular indicator of the favorable behavioral intentions and these

indicators are making positive comments about the firm, recommending firm to the others,

paying price premium to the company and remaining loyal to the firm. On the contrary,

inferior service quality leads to unfavorable behavioral intentions that causes customers to

defect from the firms, leading to reduced expenditure, lost customers and increasing the

cost of acquiring the new customers. Author further noted that complaining is perceived as

a mixture of deconstructive responses that arise from discontent & forecast defection.

Tax & Brown (1988), classified complaining behavior into three category: voice responses,

private response (negative word-of-mouth communication) and third-party response

(taking lawful action). Tax & Brown (1998) noted that sometimes customers, who defect

from the firm without explanation later on spread negative word-of-mouth. The propensity

of customers to switch can affect the firm’s market share & profitability. In such situation,

firm needs to understand that customer switch to the competitors because of better or

higher service quality. Customer may only switch because of unsatisfactory service of the

company. It has also been proved in the research of Zeithaml (1996) that improve in

service quality can enhance favorable behavior intentions & reduce unfavorable intentions

amongst the customers.

Barnes &Howlett (1998) presented evidence that service quality is directly related to the

customer retention. Lassar, Manolis and Winsor (2000), explored & confirmed the impact

of service quality on customer satisfaction in banking industry. It is very essential for a

service firm to hire right people as they are the customer’s first impression of organization.

Having wrong people in the customer service can lead to lower sales & decrease in

customer retention. According to Gittell (2002), relationship between service providers &

customers are important for achieving high level of customer satisfaction and customer

retention.

Banking service provider has to understand the consumer and try to influence the

purchasing behavior of the customer. According to Moira (1997), many service providers

use three strategies to minimize the customer defection including discounts, enhanced

services & value added services. Service firms spend numerous resources to attract the

new customers rather than focusing on the retaining the existing one. According to

Pedersen &Nysveen (2001), found that loyal customers reduce marketing cost and raise

entry barriers to the market. Moreover, authors also opined that customers tend to remain

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with the current service provider when rating customer satisfaction to be very high.

Further it was reported that customer satisfaction & corporate revenue increases 1.3% &

5% respectively, for every 5% increase in employee satisfaction.

Bowen et. al (2001) found that customer satisfaction was significantly related to the

employee satisfaction variables of working climates, colleagues, atmosphere & access to

timely information. As a result, increased satisfaction within the employees of the service

providers can lead to improve service quality, customer satisfaction & retention. Strauss

and Mang (1999) found that cultural differences play significant role in service evaluation.

Researchers have measure the customer evaluation of service provider based on five

dimensions: mutual understanding, provision of extra attention, perceived authenticity in

interaction, competence of service provider and meeting the customer expectation.

Operational environment of the bank have two areas, back-stage and front stage. Back-

stage emphasize on efficiency essential for operations not directly observed by the

customers. Front-stage operations consist of the responsibilities & actions occur at the

moment of truth or when customers directly interact with service staff. Technology-

orientation promotes back-stage activities and people-orientation promotes front-stage

operations. Therefore, banking service business is partly carried out by technology but

mostly through the people.

According to Yavas&Yasin (2001), back-stage operation directly do not affect customer

satisfaction unless & until employees are familiar with the system &/or service. Customer

satisfaction can only being achieved by handling them in a friendly manner. Loyal

customers in banking are defined as those who will stay with the same bank, are likely to

try new products of their bank and willingly recommend their banking service to others.

Thus, customer loyalty is the connection to a company’s products or services above &

beyond that of the competitors in the market place.

In today’s competitive environment, the major challenge in front of the bank is to gain the

new customers & retaining the existing profitable customers. The banking industry is

basically an establishment that involved in admitting demand & other deposits and making

commercial, industrial and customer loans. Currently, banking is one of the key service

industries where customer satisfaction research has increased its importance. The main

reason behind this is growing level of competition. Lassar et al (2000)’s research supported

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that the banking industry offered a proper setting for comparing models of service quality.

The increased competition has led banking industry to focus on customer satisfaction &

customer retention through improved service quality.

Prior research on bank service provider and customers found that service provider’s morale

is strongly related to the customer satisfaction, customer retention and customer loyalty;

that is when bank customers perceive the front-line service providers to be happy with their

work, these customers are more likely to be satisfied and retain with the bank as per the

research of the Allred (2001). Moreover, author also suggested that in order to maximize

the customer retention in banking, service providers need to pay close attention to the

customer needs & quality of services.

According to Moira (1997), service provider & customer perceptions of service quality are

relevant to the customer retention rates. Author studied two large branches of retail banks.

One retail bank had a higher customer retention rate of 75% and the second had lower

customer retention rate of 60%. The rates were computed by separating all inactive

accounts & including current account holders. Both the banks had similar geographic

locations, size, number of employees and socio-economic profile of customers but the big

difference between these two banks are of the customer retention rate. The research had

identified that customer- employee correlation & practices for conveying service to the

customers are the major reason of having higher retention rate of the customer in one retail

bank.

2.8.1 Customer Retention in Banks:

Muhammed S. Alnsour (2013) discussed the important drivers of relational strategies in

banks: trust, satisfaction, loyalty, commitment, closeness, communication, transparency,

confidentiality, privacy, culture, customer acquisition, and reputation. Strategies proposed

by the researchers in this paper to achieve customer retention include loyalty scheme

programmes, developing product and service quality, continuous contact and two-way

communication, developing the internal customers (human resources) through emphasizing

the important role of internal marketing, and benchmarking with other banks to stay

competitive.

Msoka&Msoka (2014) stated that improve service quality enhance the customer retention

and quality of the service product has significant influence on customer satisfaction. Major

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indicators of customer retention discussed in the paper are staff kindness, adequate and

timely information, complaints handling and better prices of banks products and services.

Emmah et al (2015) stipulate in their study that Retaining customers is key in giving a

competitive edge in the banking industry. Banks must identify factors that they need to

improve on so as to increase customer retention.Banks need to come up with ways of

rewarding the sales force for retaining customers. Organizations should endeavor to create

value for their customers. For the banks to gain a sustainable competitive advantage, bank

need to extend the quality of their services beyond the core services.

2.9 Customer Commitment:

The famous motivation theory which proposed by Maslow (1943) is the satisfaction of

needs that the origins of the conceptualization of commitment. This paper explores the

meaning of commitment in banking services with particular reference to the relationship of

bank staff vs. their clients and the relationship of bank staff vs. organization. Commitment

has also been closely related to the need for social belonging.

Garbarino& Johnson (1999) have emphasized that commitment is an important component

of successful relationship because it gives rise to mediate behaviors. It will help build a

long-term relationship between the service parties. Commitment is effective to influence

investors‘ decisions that seek to establish and maintain long-term, mutually beneficial

relationships.

Beatty, Homer and Kahle (1988) conducted a research on the distinct constructs of

commitment, in order to state that commitment in the buyer-seller relationship, directly

generate loyalty among customers. In this research, authors had proposed three different

types of commitment, that is, affective commitment, calculative commitment and

normative commitment.

2.9.1 Affective commitment:

According to Allen & Meyer (1990), affective commitment can be defined as a party‘s

willingness to maintain certain relationship. Instead of utility benefit, people choose to

maintain such relationship out of the own sake of this relationship (e.g. the pleasure or the

sense of belonging derived from such relationship). Further authors described that affective

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commitment is the relative strength of an individual’s identification with and involvement

in a particular organization. Moreover, authors said that since affective commitment is

linked with productive behavior aimed at contributing meaningfully to the organization, it

is often seen as the most valuable part for building commitment for an organization.

Moreover, Jaros, Jermier, Koehler, &Sincich (1993) referred affective dimension as a bond

to an organization as an affective attachment that includes feelings like: affection, warmth,

belongingness, loyalty, fondness, pleasure, and so on.

2.9.2 Calculative or continuance commitment:

Unlike affective commitment, the reason of calculative or continuance commitment is the

review of switching costs of leaving the original counterpart in a relationship. If the

calculation of costs and benefits of available alternatives or substitutes of previous choice

show the higher gains for customer, then they have the higher possibility to maintain a

relationship (Allen and Meyer, 1990). This implies that customers will calculate the benefit

of stay and deduct the cost of leaving, if the result is plus, then the customers will stay in

the original choice as probably. Finally, according to the researcher’s continuance

commitment involves profit associated with continued participation and a ‘cost’ associated

with leaving.

Meyer and Allen,(1990) have extended continuance commitment to further two

dimensions: high sacrifice and low alternatives. The high sacrifice means the personal cost

of discarding and losing an investment in an organization, and the low alternatives means

there are few existing alternatives feasible for the personal individual.

2.9.3 Normative commitment:

Normative commitment is referred as the moral obligation generated from a relationship

(Allen and Meyer, 1990). Authors further defined normative commitment as the

internalized normative pressure to act in a way, which meets organizational goals and

interests. This has been studied extensively & referred as emotional bond between an

employer and employee. In another word, it can be described as the degree to which an

individual feels psychologically attached to an employing firm through internalization of

its goals, values and missions.

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Allen and Meyer (1990) have explained three different dimensions of commitment:

Affective commitment (desire), moral commitment (perceived obligation) and technical-

economical commitment (perceived cost-benefit). Meyer and Herscovitch (2001) defined

the difference between the moral and affective dimensions of commitment as the moral

commitment being in the rational moral perception and affective commitment as being in

the sphere of desire and feelings. For human behaviors, judgments and feelings can be seen

differently, but still linked together as they are human behaviors that cannot be separated

and only distinguished as mind-sets constructs.

Another aspect of commitment is the focus (or foci) of commitment. Foci of commitment

are the individuals or groups to whom a person is attached (Reichers 1985). People could

be attached to organizations, unions or occupations (entities)-Attitudinal commitment or to

some courses of action (e.g. continuing membership, goals or policies) -Behavioral

commitment conclusively, commitment is described including both aspects (Meyer and

Allen, 1990).

An organization is comprised of various components such as the profession, managers,

work groups and customers. Each component has unique role to play role and keeps its

own goals. If the customers do not receive good service quality from employees than the

commitment of employee towards organization cannot bring benefit for the organization.

Therefore, dual foci of commitment’ is necessary to be emphasized on, added the customer

commitment in the employee commitment (Reichers (1985). According to the research of

Bremmels (1995) and Becker&Billing (1993), Dual foci of commitment’ could be referred

as a distinctive construct, keeping stronger power in explaining commitment than the

single foci construct. In addition, a Dual focus of commitment has important implications

for the relationship between an employee and customer. For example, if an employee is

committed to the organization but not the customer, then the stuff may serve customer just

out of organizational rules, and eventually impact negatively on the service quality

perceived by the customer. Therefore author emphasized that employee commitment is

negatively related to the customer perceptions of service quality.

In this study, role of organizational commitment is also been examined because in service

industry, service personnel plays very important role in providing good quality service to

the customers as they are the one who are in the direct contact with the customers &

actively involved in the service delivery process. Meyer and Herscovitch (2001) present a

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definition of commitment in the workplace basically, it is a force that binds an individual

to a course of action of relevance to one or more aims. According to Porter, Steers,

Mowday&boulian research (1974), organizational commitment was defined as an

individual‘s (1) belief in and acceptance of organizational goals and values, (2) willingness

to exert effort toward organizational goal accomplishment, and (3) strong desire to

maintain organizational membership. Morrow (1983) is of an opinion that definitions

should be limited to an employee‘s compliance (submit driven by reward and punishment),

identification (a desire for identify), and internalization (individual value compact with

organizational goal and value). So, Reichers (1985) stated that organizational commitment

should be viewed as a union of various groups and, therefore, organizational commitment

can be accurately understood as a collection of multiple commitments to various groups

that comprise the organization.

Meyer and Allen (1997) have proposed three main antecedent groups of commitment:

(1) Organizational variables, such as the nature of a job, job design, human resource

policies, communication and participation policies, or manager behaviors.

(2) Personal variables, such as age, gender, tenure, job expectations, job values, kinship

responsibilities, affectivity and motivation toward work.

(3) Environmental variables like job opportunities.

It is necessary to examine the reason why customer choose particular service provider. As

per the commitment theory of relationship marketing the reason for successful relationship

development with a particular service firm is due to the commitment and trust so, building

commitment amongst to customer for a bank is very essential for establishing long-term

relationship. As per the research of Morgan and Hunt (1994), organization needs to

promote commitment in order to develop a cooperative network of customer relationships.

Moreover, authors recommend that market relationships are described as the power of one

partner over another. They suggest that since members in a relationship are compelled to

do and they want to do so. The coercive power of commitment gives fulfillment between

partners.

According to Bessant (2005), banking sector is now a fast growing industry with its GDP

in UK generating twice more than before. The origin of professions is that of groups of

people that are joined together to practice their occupation with training that is specifically

designed to them under the rigorous ethical and knowledge standard basis. Hence, the

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result of relationships is being based on implicit commitments between the two parties. It

has also been notices that the banking professionals service firms are increasingly being

noticed as excellent examples of relationships where the two parties show the relationship

between commitment and trust evidently.

Sheth and Sobel (2000), describe the attributes of successful banking professionals as: The

two foundational attributes for any banking professional who aspires to serve clients are

selfless independence and empathy - they (successful banking professionals) are dedicated,

loyal and focus on their client’s agenda, not their own.

Maister (1997) stated that there are not many research conducted into commitment within

the banking profession but he provides some insights about the attributes of a successful

banking professional. The emphasis is on the importance of values and passion for client

assistance. Client is the judge of banking professionalism. As per the researcher, banking

professionals should possess the intentions such as:

Successful (banking professional) firms are clearly differentiated by a strict adherence to

values, i.e. to banking professionalism…New business will be won only to the extent that

the client believes that the banking professional is interested, cares and is trying to

help…Believe passionately in what you do, and never knowingly compromise your

standards and values. Act like a true banking professional, aiming for true excellence, and

the money will follow.

Potentially banking staff is a great example of commitment amongst the professions

because of the nature of banking service. Banking services have very specific obligations

to be fulfilled by the banking staff with competence of duties and care. Thus banking

services usually requires the banking staff to learn and acquire knowledge of their clients

& competence to offer them best service over & above the industry define standards.

Before summing the review of literature on commitment, it is very essential to discuss the

nature of commitment in service industry. Porter et al. (1974) described the important

distinction between attitudinal and behavioral commitment as:

Attitudinal commitment emphasized on the processes by which people think about their

relationship with the organization … behavioral commitment, on the other hand, relates to

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the process by which individuals’ become locked into a certain organization and how they

deal with the problem.

The concept of service profit chain is proposed by Heskett, Jones, Sasser and Schlesinger

(1994) the constructs that connects the models – management practice, employee attitude,

customer behavior and business performance together but this model does not involve the

commitment behavior as a construct. However, it suggests that employee productivity

decreases costs and increased customer perceived value for service. Thus the connection

between customer satisfaction and retention is linked. This signifies the importance of

banking professionals as they have a great knowledge of their customers & they will be

able to provide a better customer service, in turn, the customers will be more satisfied with

the service, thus sends positive feedbacks back to the bank employees. This is rather

significant in terms of understanding commitment, as productivity and retention are crucial

factors related to commitment. The twenty-nine banking professional service firms sees the

link between the employees ‘commitments and financial performance.

Following five statuses explore the meaning of commitment in banking industry with

reference to the relationship between banking professionals and related clients:

Firstly, according to (Beaton and Beaton, 1995), the relationships between banking

professionals and their clients are often long-term, dedicated and participative. These key

points are often associated with high commitment relationships Thus a banking

professional tends to perform superb jobs for their clients with much commitment.

Secondly, banking professionals should have competences & knowledge that are strongly

demanded and the services delivered are usually intangible with high complexity.

Sometimes the customers also have enough knowledge to support their bank professionals

to perform the service delivery process. At the same time, sometimes the technology

quality is not easy to be identified by customers, the behavior of banking professional does

affect the customer‘s judgment for the value of service Hence the method of service by the

banking professional is utterly important. The commitment behavior of banking

professional helps to determine a client‘s perception of service quality (Freeman and Dart,

1993).

Third, the characteristics of these banking professionals and their organizations are

particularly related to examining commitment. For example, in partnership firm, equity

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partners provide a financial investment to the firm & become co-owner of the firm. In such

case, the partner needs to be stable and stays long-term in the organization, and sometimes

participates in strategic decision making. Thus making them more likely to be committed

to the organization.

Maister (1997) indicates the bank staff is becoming more committed to selected clients,

fulfilling many vital roles as a business partner and advisor. The strategic roles fulfilled by

advisors results in the client’s tendency to choose and remain with to build long-term

relationships with the banks. He further added that, there is also a continuous trend towards

specialization by banking professionals in particular domains such as specialist financial

service. Both banking staff and clients also invest time and mutual commitments especially

when large organizations need specific advices. According to (Wallace, 1995), Investments

added may result from the change in service delivery process. For example, banks invest in

computer systems linked to the client’ systems, and enabling them to produce and

exchange documentation that conforms to their client’s systems. This requires an

investment of resources to their client relationships.

Fifth, with little research carried on the commitment of the relationship between banking

professionals and clients, it is surprising to take into consideration that the rapid growth of

banking professional services within the economy (Frow, 2007). Work in this area has

largely focused on conflict of commitment between the relationships held by the banking

professional internally within the organization and externally within the profession

(Wallace, 1995). Thus additional research is essential for the examination of the process

that underlines successful relationships within banking professional services. (Frow, 2007).

As per Buttle& Burton (2002), there is a positive relationship between loyalty and

satisfaction; satisfaction and commitment (Fornell, 1992); commitment and retention

(Bolemer&Oderkerken-Schroder, 2003;), However, there has been no evidence for which

variables that will have greater impact of service quality.

2.10 Customer Commitment in Banks:

Mohd. Al Hawari (2011) stated in his paper that automated factors have a direct and

positive influence on customer delight, which in turn has a direct influence on both

customer trust and customer commitment. Further, he added that customer commitment is

a predictor of strong customer- bank relationship and ultimately helps in enhancing

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57

customer delight. This paper significantly shows the importance of automated service

quality in gaining customers' commitment in retail banking context.

Yu-TeTu et al (2014) stipulate in their research that committed customers have a more

positive impression of their relationship with the company and indicate strong intentions to

remain in the relationship. Customer commitment is a factor that also leads to the customer

loyalty.

RahmatMadjid (2015) stated in his paper that customer trust and commitment can provide

real of contributions on customer satisfaction. This means better customer trust and

commitment, the higher the customer satisfaction. Frequent bank visit is the most

important indicator of the customer commitment. Relationship quality and service quality

are antecedent of the customer commitment.

2.11 Summary of Literature Review:

TABLE 2.2 Summary

Sr. No

Author Year Journal Title of the Paper Key Findings

Service Quality 1 Hostage 1975 Harvard

Business Review

Quality Control in a Service Business

Five dimensions of service quality discussed in this paper.

2 Booms &Bitner 1981 Journal of Marketing

Marketing Strategies and Organisation Structures for Services Firms

This paper outlines the importance of the physical cues in service deliverables.

3 Gronroos, 1984 European Journal of Marketing

A service quality model and its marketing implications

Service quality model in the context of technical & functional quality discussed.

4 Parasuraman, zeithaml& berry

1985 Journal of Marketing

“A Conceptual Model of Service Quality and Its Implications for Future Research,

GAP Model

5 Lehtinen and Lehtinen 1991 The Service Industrial Journal

Two Approaches to Service Quality Dimensions

Model developed in this paper that emphasized mainly on three dimensions of service quality – Physical; interactive & corporate image

6 Zahorik& Rust 1992 Advances in service marketing and management

Modeling the impact of service quality on profitability

In this paper authors have discuss return on quality approach wherein they have proposed that manager should consider financial impact of service quality

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Sr. No


before spending heavily on service quality.

7 Cronin & Taylor 1994 Journal of Marketing

SERVPERF versus SERVQUAL: Reconciling Performance-Based and Perceptions-Minus-Expectations Measurement of Service Quality

SERVPERF Model

8 Zeithaml, Parasuraman, Berry

1994 Journal of Retailing

Alternative Scales for Measuring Service Quality: A Comparative Assessment Based on Psychometric and Diagnostic Criteria

In this paper, authors have develop three column scale for measuring service quality but practically it is not more feasible use alternative scale. The major finding of the study is that there is considerable inter dimensional overlap among responsiveness, empathy & assurance.

9 Zeithaml, Parasuraman, Berry

1996 Journal of Marketing

The Behavioural Consequences of Service Quality

SERVQUAL Model & also mention that service quality & customer satisfaction is directly related to each other.

10 Moira, C. 1997 Management Decision

Modeling the impact of customer-employee relationship on customer retention rates in a major UK retail bank

The relationship quality of the employees with the customer helps firm for developing good relationship with the customer for longer period of time. Commitment comes out to be the strongest dimension in thi.

11 Barnes &Howlett 1998 International Journal of Bank Marketing

Predictors of equity in relationships between financial services providers and retail customers

Research reveals that dimensions of service quality affect customer retention but in financial services, it needs to be explored further.

12 Gronroos, 2000 Book by John Wiley & Sons, UK.

Service Management and Marketing: a Customer Relationship Management Approach,

Difference between goods & services discussed along with it, author has discussed characteristics of the services in detail.

13 Yavas, U. &Yasin 2001 The Journal of Service Marketing

Enhancing organizational performance in Banks: A systematic approach

Service quality is the factor which plays important role in enhancing organizational performance. This paper demonstrate that service quality enhance employee’s productivity result in

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responding promptly to customer demands which in turn reduce complaints and improving customer satisfaction.

14 Madu&Madu 2002 International Journal of Quality & Reliability Management

Dimensions of e-quality”,

This paper has found out that other than the five traditional dimension of service quality, there are few more aspects like security, web policies, system integrity should also be incorporated while measuring service quality.

15 Rizal Ahmad, Francis Buttle,

2002 Marketing Intelligence & Planning

Customer retention management: a reflection of theory and practice

Authors have confirmed that relationship marketing in the context of services should be considered for developing retention strategies.

16 Jones & Farquhar 2003 Journal of financial services marketing

Contact management & customer loyalty

Author stated that customer’s perception of service quality have influence on customer loyalty.

17 Rangaswamy, A 2003 International Journal of Research in Marketing

Customer satisfaction and loyalty in online and offline environments.

Service quality has individual impact on customer loyalty & commitment & jointly loyalty & commitment affecting customer satisfaction.

18 Bloemer&Oderkerken-Schroder

2003 Australasian Marketing Journal

Antecedents and consequences of affective commitment.

This paper found that to develop loyalty among customer, key factors are commitment & satisfaction. But still impact of service quality on commitment is yet to be explored.

19 Santos, J 2003 Managing Service Quality (MCB UP Ltd)

E-service quality: a model of virtual service quality dimensions

Author has proposed some dimension of e-service quality such as reliability, efficiency, support, communication, security, and incentives

20 Mushtaq A Bhat 2005 The Journal of Business Perspective

SERVICE QUALITY PERCEPTIONS IN BANKS: A COMPARATIVE ANALYSIS ; VISION

The major findings of the study is that Indian consumers perceive that service quality of all the banks in India is below their expectation & hence dimensions of Service quality needs to investigated in depth again in the context of all the sectors of Indian Banking

21 Mushtaq A Bhat 2005 Journal of CORELATES OF The major findings of this

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Services Research

SERVICE QUALITY IN BANKS: AN EMPIRICAL INVESTIGATION

paper are that understanding of the service quality gets differ among various demographic variable.

22 Monica Bedi 2010 Journal of Services Research

An integrated framework for service quality, customer satisfaction and behavioral responses in Indian banking industry— a comparison of public and private sector banks

This study has found out significant impact of service quality on customer satisfaction in private & public sector bank but the degree to which service quality affects customer satisfaction is not yet explored.

23 IliasSantouridis and Panagiotis Trivellas

2010 The TQM Jouranl

Investigating the impact of service quality and customer satisfaction on customer loyalty in mobile telephony in Greece

Customer service, pricing structure and billing system are the service quality dimensions that have the more significant positive influence on customer satisfaction, which in turn has a significant positive impact on customer loyalty. The mediation role of customer satisfaction on the service quality and customer loyalty relationship has also been confirmed.

24 H.S Sandhu & Naresh Nagpal

2011 International Business Research

Measuring Life Insurance Service Quality: An Empirical Assessment of SERVQUAL Instrument

Evidently, SERVQUAL instrument cannot be applicable to the Indian life insurance sector and further research is necessitated to comprehend the service quality within the Indian context.

25 ShirshenduGanguli&Sanjit Kumar Roy

2011 International Journal of Bank Marketing

Generic technology‐based service quality dimensions in banking: Impact on customer satisfaction and loyalty

A customer service , reliability and technology usage easiness has significant impact on customer satisfaction and loyalty

26 Krishna A. Goyal, & Vijay Joshi

2012 International Journal of Business Research and Management

Indian Banking Industry: Challenges And Opportunities

General sentiments, challenges & opportunities discussed in this paper giving more emphasis on marketing strategies in context of services order to get sustainable competitive edge over the intense competition from national and global banks.

27 Koushiki Choudhury 2013 International Journal of

Service quality and customers’

This paper highlighted the fact that service quality in

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Bank Marketing

purchase intentions: an empirical study of the Indian banking sector

the retail banking has significant impact on the purchase intention of the customers. The important factors are reliability, employee behavior, tangibles and convenience.

28 Anand Sharma, Ashish Gupta, Sandeep Kumar Bharti

2014 Int. J. of Trade and Commerce- IIARTC,

Factors Determining Service Quality Aspects of Banking Sector in India

Impact of service quality on customer satisfaction and loyalty is confirmed in this paper.

29 V. Surekha, S. Anitha& S. Kaleeswari

2015 International Journal in Commerce, IT & Social Sciences

Impact of e - banking on service quality of public and private sector banks

This paper focus on the bank employees as an important parameter in delivering good quality service to the customer.

30 Abdel Fattah Mahmoud Al-Azzam

2015 European Journal of Business and Management

The Impact of Service Quality Dimensions on Customer Satisfaction: A Field Study of Arab Bank in Irbid City, Jordan

Influence of tangibility on customer satisfaction is discussed in this paper.

Customersatisfaction31 Churchill & Carol 1982 Journal of

Marketing Research

An investigation into determinants of consumer satisfaction

Customer satisfaction and purchasing behavior cycle

32 Reichheld& Sasser 1990 Journal of Marketing Research

A model of customer satisfaction with service encounter involving failure & recovery

Customer’s react strongly to service failure & it is essential for service firm to have effective service recovery strategy because findings of the paper suggest that customer satisfaction is highly depend upon customer’s evaluation of service recovery in case of service failure.

33 Muller, Wolfgang 1991 European Management Journal

Gaining competitive advantage through customer satisfaction

Author has depicted importance of satisfaction in highly competitive market of Europe. He has also mention that service quality is the key driver of customer satisfaction.

34 Zahorik& Rust 1992 A review. Advances in service marketing and management

Modeling the impact of service quality on profitability

This paper has provide insight that five determinants of service quality have greater impact on customer satisfaction in the retail banking market of USA.

35 Fornell 1992 Journal of Marketing

A National customer

In this study, quality was important parameter in

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Sr. No


satisfaction barometer: The Swedish experience

measuring customer satisfaction. Satisfaction found to be lower in the heterogeneous industries. The same results needs to be investigated in the context of India as services are heterogeneous in nature.

36 Anderson & Sullivan 1993 Marketing Science

The antecedents and consequences of customer satisfaction for firms

The major findings of the study is that quality which falls short of expectations has a greater impact on satisfaction and repurchase intentions than quality which exceeds expectations

37 Garbarino& Johnson 1999 Journal of Marketing

The different roles of satisfaction, trust and commitment in customer relationships

As per this paper, customer satisfaction gets differ in their relationship with the firm on a continuum from transactional to highly relational bonds. Customer satisfaction is a primary construct towards customer commitment.

38 Baker & Crompton 2000 Annals of Tourism Research

Satisfaction & Behavioral Intentions.

According to the paper, quality is the important attribute of the service & satisfaction is referred as customer’s emotional state. perceived quality would have a stronger effect on satisfaction

39 Yau el.al 2000 European Journal of Marketing

Is relationship marketing for everyone

RMO Scale.

40 Jones, Henry and Fraquhar 2003 Contact management & customer loyalty

Journal of financial services marketing

This paper has explored the theories of contact management wherein customers interact with bank’s point of contact person on the front desk. The major finding of the study conclude that banks needs to manage the service quality in contact management as it has direct impact on customer satisfaction.

41 Chen 2004 Master Dissertation, Yi-Shou University, Kaohsuing, Taiwan

A Study of customer satisfaction and Behavioral Intentions of Service Quality for Fixed Network Communication

This study has emphasized on need of study of the service quality & customer satisfaction in the context of telecommunication. With the use of SERVQUAL, author has indicated that service quality is the key driver of customer satisfaction.

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42 Fecikova, 2004 TQM magazine. Vol 16 (1),

An index method of satisfaction

This paper have depicted the importance of customer satisfaction in commercial and public service organizations. Companies success depends upon the customer retention which can come through customer satisfaction & service quality extent great help in managing the customer satisfaction.

43 Vinita Kaura 2013 International Journal of Bank Marketing

Antecedents of customer satisfaction: a study of Indian public and private sector banks

It has been stipulated in the paper that there are three dimension of the service quality that has an effect on customer satisfaction – employee behavior, tangibility and information technology.

44 Vinita Kaura, Chalasani S., Sourabh Sharma

2014 Management and Labour Studies

Impact of Service Quality, Service Convenience and Perceived Price Fairness on Customer Satisfaction in Indian Retail Banking Sector

Importance of service quality discussed in this paper. Human behavior, tangibility and information technology are the dimension of service quality significantly contributing to the customer satisfaction.

45 Kingshuk&Mounita 2014 A Journal of Humanities & Social Science

Service Quality and Customer Satisfaction in Commercial Banks: An Empirical Study

Author stated in their paper that Customer satisfaction increases the existing customer loyalty, repurchase process, awareness of the people about the firm and decrease the price flexibility

CustomerLoyalty46 Day 1969 Journal of

Advertising Research,

A two.-dimensional concept of brand loyalty

Author has discussed two categories of customer loyalty – Attitudinal loyalty & behavioral loyalty

47 Jacoby 1971 Proceedings of the 89th Annual Convention of the American Psychological Association

Brand loyalty: A conceptual definition

In this paper, author has distinguished brand loyalty from repeat purchase. Brand loyalty is a broader aspect that includes repeat purchase as well but it has to be viewed as a broader term.

48 Dick &Basu 1994 . Journal of the Academy of Marketing Science

Customer loyalty: Towards an integrated conceptual framework

Customer loyalty is viewed as the strength of the relationship between an individual's relative attitude and repeat patronage. The relationship is seen as mediated by social norms and situational factors.

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Cognitive, affective, and conative antecedents of relative attitude are identified as contributing to loyalty, along with motivational, perceptual, and behavioral consequences

49 Jones & Sasser 1995 Harvard Business Review

Why satisfied customers defect

In this paper, authors have viewed customer loyalty in the category of short term & long term. Authors further added that customer loyalty is the feelings of an attachment or affection for company’s people, product or services. These feelings manifest themselves in terms of purchasing from the firm. The ultimate measure of the loyalty is the share of the purchase.

50 Ha, C 1998 Journal of Product and Brand Management

The theory of reasoned action applied to customer loyalty

As per the paper, attitudes towards the purchase and subjective norm like quality of product or services leads to the maximum unit brand loyalty.

51 Oliver 1999 Journal of Marketing

Whence consumer loyalty

As per the author, loyalty emerges as a combination of perceived product superiority, personal fortitude, social bonding, and their synergistic effects. As each fails to be attained or is by individual firms that serve consumer markets, the potential for loyalty erodes. Multi – Item loyalty Scale

52 Steyn 2000 Management Today

Making customer loyalty real: Lessons from leading manufacturers

According to the author, unlike manufacturing industries, quality of service plays important role in managing customer loyalty.

53 Pedersen, E. P. &Nysveen 2001 The International Journal of Bank Marketing

Shopbot banking: An exploratory study of customer loyalty effects

Agent technology has been applied to design new services simplifying product and merchant broker is termed “shopbots”. Findings of the study shows that cognitive loyalty depends upon customers’ past switching behavior. Further it has been added that strong forms of loyalty developed in long-term on the basis of the service quality will not be affected

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by shopbots. 54 Bowen & Chen 2001 International

Journal of Contemporary Hospitality Management

The relationship between customer loyalty and customer satisfaction

It has been found out that word of mouth, customer commitment is highly associated with customer loyalty. But there are no or little evidence for linear relationship between customer satisfaction & customer loyalty.

55 Hennig-Thurau, Gwinner, Gremler

2002 Journal of Service Research

Understanding relationship marketing outcomes: An integration of relational benefits and relationship quality

According to the author, it is very important to develop and maintain enduring relationships with customers of service businesses. Customer loyalty is the approach that focuses on the benefits consumers receive apart from the core service.

56 Gounaris, S. and Stathakopoulos

2004 Brand Management

Antecedents and consequences of brand loyalty: An empirical study

Author has proposed four types of loyalty: (premium loyalty, inertia loyalty, covetous loyalty and no loyalty) related to four types of consumer behavior (word-of-mouth communication, buy alternative brand, go to different store and buy nothing)

57 Xu, Y.Z.; Goedegebuure, R. & Van der Heijden

2006 Journal of Relationship Marketing

Customer perception, customer satisfaction, and customer loyalty within Chinese securities business: Towards a mediation model for predicting customer behavior

This study proposed link between customer perceived service value to customer loyalty. Customer perceived service quality has a significant effect upon loyalty in terms of positive word of mouth, willingness to pay more and to stay with the business.

58 Christopher Lovelock, JochenWirtz&Jayanta Chatterjee

2011 Pearson Education Inc

Book on Service Marketing – People, Technology, Strategy

Wheel of loyalty

59 Rizwan Ali, Gao Leifu and Ramiz Rehman

2014 International Journal of Learning & Development

Factors Influencing Customer Loyalty of Banking Industry: Empirical Evidence from Pakistan

This study confirms The impact of service quality on customer loyalty stalks from positive relations between service quality and factors such as reputation and trust. Improvement in service quality leads to the increase in customer loyalty.

60 Syed Usman Ali Gillani 2014 International Customer Loyalty A strong and positive

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and Abdul Ghafoor Awan Journal of Accounting and Financial Reporting

in Financial Sector: A case study of Commercial Banks in Southern Punjab

association is established between customer satisfaction and customer loyalty in this paper.

CustomerRetention61 Tax & Brown 1988 Management

Review Recovering and Learning from Service Failure

According to the author, Many companies consider investments in complaint handling as means of increasing customer retention. Retention has direct association with complaint handling.

62 Reichheld F.F and Sasser W.E

1990 Journal of Marketing Research

A model of customer satisfaction with service encounter involving failure & recovery

Customer retention has a powerful impact on the bottom line. It can have more to do with a service company’s profits than scale, market share, unit costs, and many other factors usually associated with competitive advantage. As a customer’s relationship with the company lengthens, profits rise. Companies can boost profits by almost 100% by retaining just 5% more of their customers.

63 Reichheld 1996 Harvard Business School Press

The loyalty effect, Boston

In this paper, author has shown loyalty as economic necessity. Further, author has emphasized that acquiring customer is more expensive than retaining the existing one. If customer stick to the firm & make repeat purchase than firm can easily maintain profitability for the long term.

64 Boles, Barksdale, & Johnson,

1997 The Journal of Business & Industrial Marketing

Business relationship: An examination of effects of buyer- salesperson relationship on customer retention and willingness to refer and recommend

Buyer-salesperson relationships were more likely to generate recommendations and referrals from customers. Author further suggested that a salesperson’s efforts to build relationships are rewarded by greater customer retention and increased business through referrals and recommendations.

65 Moira 1997 MCB UP Ltd Modeling the impact of customer-

This paper reveals that employee and customer perceptions of service

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employee relationship on customer retention rates in a major UK retail bank

quality are related to customer retention rates.

66 Banrnes&Howlett 1998 The International Journal of Bank Marketing

Predictor of equity in relationship between financial service providers and retail customers

As per the author, there is a little investigation made in the field of financial services with respect to relationship marketing. Findings of the paper reveals that service quality is important component of relationship marketing.

67 Appiah – Adu 1999 The Service Industry Journal

Marketing effectiveness and customer retention in service sector

Author recommended that customer retention is significantly associated with marketing effectiveness in service industry. Marketing effectiveness is an attempt to satisfy the customer & than after maintaining long term relationship with them.

68 Lassar, Manolis, & Winsor

2000 The International Journal of Bank Marketing

Service quality perspectives and satisfaction in private banking

This paper has examined effect of service quality on relationship marketing. The findings of the paper, explore that fact that service quality is define with reference to the ability of sales person’s ability to satisfy & retain the customer.

69 Gittell 2002 Journal of Service Research

Relationship between service providers and their impact on customers

Author has examined the relationship between service provider & customer and identify that it is very important for achieving customer outcomes like loyalty, satisfaction as well as retention. Further author has identify that stronger the provider-customer relationship directly increase customer retention with the firm.

70 Ranaweera, Chatura, Praghu, Jaideep

2003 Journal of Targeting, Measurement and Analysis for Marketing

On the relative importance of customer satisfaction and trust as a determinants of Customer retention and positive word of mouth.

Author has examine the relationship between trust, word-of-mouth & customer retention. The major outcome of the paper is that trust & positive word-of-mouth is strongly associated with customer retention & it can only been achieve by offering good quality service to the customer.

71 Muhammed S. Alnsour 2013 International How to Retain a Drivers of relational

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Journal of Marketing Studies

Bank Customer: A Qualitative Study of Jordanian Banks Relational Strategies

strategies such as trust, satisfaction, loyalty, commitment, closeness, communication, transparency, confidentiality, privacy, culture, customer acquisition, and reputation identified in this paper.

72 Msoka&Msoka 2014 Journal of Finance and Bank Management

Determinants of Customer Retention in Commercial Banks in Tanzania

The major finding of the paper is that improve service quality enhance the customer retention and quality of the service product has significant influence on customer satisfaction.

73 Emmah 2015 International Journal of Business and Management

Effectiveness of Customer Retention Strategies: A Case of Commercial Banks, Kenya

Customer retention was identified as strategic tool in this paper. Further, it has also been discussed in the paper that For the banks to gain a sustainable competitive advantage, bank need to extend the quality of their services beyond the core services.

CustomerCommitment74 Reichers 1985 Academy of

Management Review

A review and reconceptualisation of organizational commitment

In this paper author argued that a global conception of organizational commitment needs to be reviewed on a macro level. He further added that a multiple commitments approach has to be more precise and meaningful and employees experience several different commitments adds value to the service offered to customer.

75 Beatty, Homer &Kahle 1988 Journal of Business Research

The involvement-commitment model: Theory and implications

Author has proposed commitment model wherein they have discussed about affective commitment, calculative commitment and normative commitment

76 Allen & Meyer, 1990 Journal of Occupational Psychology

The measurement of antecedents of affective, continuous and normative commitment to the organization

Author has discussed affective, normative & continues commitment in detail wherein they have define it in general term as willingness of individual of being associated with one organization for certain period in time.

77 Becker & Billings 1993 Journal of Organizational

Profiles of commitment: An

Author has indicated that Foci of commitment are the

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Behavior empirical test individuals and groups to whom an employee is attached, and bases of commitment are the motives engendering attachment. Based on this four profiles of the commitment is discussed: (1) The Locally Committed (employees who are attached to their supervisor and work group), (2) the Globally Committed (who are attached to top management and the organization), (3) the Committed (who are attached to both local and global foci), and (4) the Uncommitted (who are attached to neither local nor global foci). This profiles has impact on employees performance in service delivery process.

78 Morgan & Hunt 1994 Journal of Marketing

The commitment-trust theory of relationship Marketing

In this paper, it has found that successful relationship marketing requires relationship commitment. Relationship commitment is very essential in order to compete at global level in service industry.

79 Beaton & Beaton 1995 Journal of Marketing Management

Marrying service providers and their clients: A relationship approach to services management

This paper highlights growing recognition of commitment as a predictor of successful long‐term relationships between service providers and their clients. Components of commitment are service values and investment & alternatives of services. Commitment incorporates and overtakes quality and value as the primary concern of service managers

80 Maister 1997 New York: The Free Press

True professionalism

In this book, author has discusses the role of commitment among different professionals. He further added that little research is conducted on role of commitment in banking industry. He has emphasized on certain attributes that banking professional must possessed : Strong value system,

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knowledge, care, competence to understand the client’ s requirement which is somewhere overlapping with the dimension of service quality & hence direct relationship between service quality & client-customer commitment is proven but it required further research to be conducted in the context of banking industry.

81 Sheth& Sobel 2000 New York: Simon & Schuster

Clients for life - how great professionals develop breakthrough relationships

As per the author, Marketing is undergoing a paradigmatic shift from the exchange of goods, to providing a service and due to this service organizations have started focusing on having global account management teams who aspire to serve the customer with selfless independence and empathy which are the key dimensions of service quality.

82 Meyer &Herscovitch 2001 Human Resource Management Review

Commitment in the workplace: Toward a general model

According to this author, it is recognized now a day that employees can develop multiple work-relevant commitments, and that commitment itself is a multidimensional construct. Author further added that Commitment is a force that binds an individual to a course of action of relevance to a target and this is very essential in service industry as service personnel plays very important role in offering good service to the customer.

83 Bloemer, J. &Oderkerken-Schroder

2003 Australasian Marketing Journal

Antecedents and consequences of affective commitment

Findings of the paper is that affective commitment has impact on loyalty in terms of word of mouth, purchase intention, price insensitivity and complaining. Affective commitment is a key determinant of word of mouth, purchase intention and price sensitivity.

84 Bessant 2005 Book : Innovation in professional

New Directions Author has specifically taken the reference of banking sector of UK to

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services discussed commitment. Banking is a group of professional work together to serve the customer. This is an excellent example of commitment between employee & customer.

85 Frow 2007 Journal of Marketing Management

The meaning of commitment in professional service relationships: a study of the meaning of commitment used by lawyers and their clients

As per the author, conceptualization of commitment from psychology and organizational behavior literatures, cannot be used without considering the market-based context in which it is used. There is requirement for in depth research of commitment in the context of marketing relationship. The findings show that the meaning of commitment used in professional relationships may be more complex than its traditional conceptualization and should be extended to include at least three additional components including: 'partnership commitment', 'impression management commitment' and 'personal commitment.

86 Mohd. Al Hawari 2011 Asia Pacific Journal of Marketing and Logistics

Automated service quality as a predictor of customers' commitment: A practical study within the UAE retail banking context

Customer commitment has identified as an important predictor of strong customer- bank relationship and ultimately helps in enhancing customer delight in this paper.

87 Yu-TeTu 2014 Journal of Education and Vocational Research

Customer Commitment as a Mediating Variable between Corporate Brand Image and Customer Loyalty

Major finding of the study is that Customer commitment is a factor that leads to the customer loyalty.

88 RahmatMadjid 2015 International Journal Of Engineering And Science

Explaining Customer Satisfaction with Experience, Customer Trust and Commitment in Syariah Banks Kendari City

Frequent bank visit is found out to be more important indicator of the customer commitment. Relationship quality and service quality are antecedent of the customer commitment.

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2.12 Research Gap:

After review various literatures on service quality, it can be concluded that delivery of high

service quality is a must for attaining customer satisfaction and a number of other desirable

behavioral outcomes. Zeithaml&Bitner (1996) state that Customer satisfaction & service

quality is directly related to each other. Improving service quality leads to the improvement

in customer satisfaction. They have further added that positive service experience does

affect customer satisfaction & subsequently retention. Zemke (2002), study that Poor

customer service directly affects satisfaction which in turn affects customer retention.

Ranaweera and Prabhu (2003), write that Customer satisfaction is found to be stronger

drive of customer retention. Jones & Farquhar (2003), have carried out their study on

banking sector & state that perception of service quality & customer satisfaction have

influence on customer loyalty. Shankar, Smith, & Rangaswamy, (2003) state that

satisfaction has an mediated effect on loyalty by perceived service quality & opine that

loyalty and commitment strengthen overall satisfaction.According to Ahmad & Buttle

(2002), Service firms must improve customer service quality and satisfaction in order to

retain customers. Barnes &Howlett (1998) study that service quality is directly related to

the customer retention. Lassar, Manolis and Winsor (2000), explored the impact of service

quality on customer satisfaction in banking industry. As per Buttle & Burton (2002), there

is a positive relationship between loyalty and satisfaction; satisfaction and commitment

(Fornell, 1992); commitment and retention (Bolemer & Oderkerken-Schroder, 2003;).

However, in the various literature reviewed, overall service quality has been studied but

there has been no evidence for which factors of service quality that will have greater

association and impact on customer satisfaction, retention, loyalty and commitment in the

context of Indian Banking Sector and this has become the research gap for the study.

2.13 Conceptual Framework:

Impact of service quality on customer satisfaction, retention, loyalty and commitment has

studied in the Indian Banking Sector. Literature review has laid down the foundation for

developing the conceptual framework. After narrowing down the scope of literature

review, variables of service quality, customer satisfaction, retention, loyalty and

commitment were identified. A structured questionnaire was developed with the identified

variables of service quality, customer satisfaction, retention, loyalty and commitment. The

empirical investigation involves developing & testing the factor structure of service quality

Literature Review

73

with the use of exploratory and confirmatory factor analysis. With the use of correlation

and simple regression, association and impact of service quality on customer satisfaction,

retention, loyalty and commitment were examined.

FIGURE 2.3 Research Model

Service Quality

1. Competency of bank employees

2. Augmented Service

3. Physical Evidence

4. Ethos of the bank

5. Assortment of Service

6. Service Product

7. Interior Signage & Service ability

8. Accomplishing

Customer Satisfaction

Customer Commitment

Customer Loyalty

Customer Retention

Research Methodology

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CHAPTER–3

RESEARCH METHODOLOGY

3.1 Introduction:

This chapter gives a methodological foundation that address research questions and

hypothesis for understanding a relationship between service quality and customer

satisfaction, customer retention, customer loyalty and customer commitment in selected

four banks (State Bank of India, Punjab National Bank, ICICI Bank and HDFC Bank). The

research question and hypothesis evolved from the research gap identified in literature

review. This chapter includes description of selected research design, sampling method,

sample size, questionnaire design and analysis of pilot testing. Five research objectives

were identified for the study in Chapter One and they are reiterated again as follows:

The following research objectives were used as the basic focus of the investigation.

1. To study the factors contributing to the Service Quality.

2. To find out correlation between service quality, customer

satisfaction/Retention/Commitment & Loyalty

3. To study the impact of service quality on customer

satisfaction/Retention/Commitment & Loyalty.

4. To identify important factors of service quality from the demographic perspective of

customers.

5. To rank the selected banks based on the service quality.


75

3.2 Research Design:

Research Design can be defined as the systematic planning of research to permit valid

conclusion. (Reis & Judd, 2000, p. 17). It engrosses the specifications of the population to

be studied, the treatment to be administered, and the dependent variables to be measured.

Polit, Hungler, & Beck, 2001, define a research design as “the overall plan for collecting

and analysing data including specifications for enhancing the internal and external validity

of the study”.

Burns & Grove, 2009 define a research design as “a blueprint for conducting a study with

maximum control over factors that may interfere with the validity of the findings”.

Parahoo, 2006 describes a research design as “a plan that describes how, when and where

data are to be collected and analysed”. Polit& Beck, 2012 define a research design as “the

researcher’s overall for answering the research question or testing the research hypothesis”.

Research design is basically master plan of a research that focuses on how the study is to

be conducted. It point out all of the major parts of the research study such as the samples or

groups, measures, treatments or programs, etc and work together in order to address the

research questions. Research design most fundamentally affects the internal validity of

research, that is, the ability to draw conclusions about what actually causes any observable

differences in a dependent measure. Research design is inextricably linked to data analysis

(Miller &Salkind, 2002).

3.2.1 Exploratory Research Design:

According to Malhotra & Das (2005), exploratory research is defined as a research use to

explore or search through a problem or situation to provide insights and understanding.

Exploratory research is meaningful in any situation where the researcher does not have

enough understanding to proceed with the research project. Exploratory research is

characterized by flexibility and versatility with respect to the methods because formal

research protocols and procedures are not employed. It rarely involves structured

questionnaires, large samples, and probability sampling plans. In this research, researchers

are alert to new ideas and insights as they proceed. Once a new idea or insight is

discovered, they may redirect their exploration in that direction. That new direction is

pursued until its possibilities are exhausted or another direction is found. For this reason,


76

the focus of the investigation may shift constantly as new insights are discovered. Thus, the

creativity and ingenuity of the researcher plays a major role in exploratory research.

3.2.2 Descriptive Research Design:

Malhotra and Das (2005) stipulates that Descriptive Research design describe the

characteristics of relevant group. They further added that this research design is more

appropriate in estimating the percentage of units in a specified population showing certain

behavior, determining the perception of product characteristics, degree of association

between various marketing variables and making specific predictions. A major difference

between exploratory and descriptive research is that descriptive research is characterized

by the prior formulation of specific hypotheses. So the information is clearly defined.

Descriptive research is preplanned and well structured. It is based on the large sample size.

The research design selected for the study is Descriptive Research Design.

3.3 Sample Design:

A sample is taken from the population and then survey is conducted. A sample is a part of

the population which is studied in order to make inferences about the whole population. If

the sample is adequate it will have the same characteristics of the population (Zikmund,

2003) and the findings are usually used to make conclusions about the population. So, a

good sample is minuscule version of the population. A sample design involves the

following:

• Sample Unit

• Sample Technique

• Sample Size

3.3.1 Sample Unit:

The purpose of the study is to study an impact of service quality on customer satisfaction,

customer retention, customer loyalty and customer commitment. Moreover, study focuses

on Gujarat State Only and hence four major cities in selected four banks – State Bank of

India, Punjab National Bank, ICICI Bank and HDFC Bank were taken as a sample unit. So

account holder of each bank serves as respondent. These four banks are top for among


77

NSE 50 (S & P CNX Nifty, 2011) which has average market capitalization of 5 billion

rupees or more in the last six months of Financial Year 2011. Out of Gujarat –

Ahmedabad, Rajkot, Baroda and Surat are being considered for conducting survey. So

respondents are from the selected four banks and from selected four cities of Gujarat.

TABLE 3.1 Sample Unit

Top Two Public Sector Bank Top Two Private Sector Bank State Bank of India ICICI Bank Punjab National Bank HDFC Bank

Source: data retrieved from moneycontrol.com

3.3.2 Sample Technique:

Sample techniques are used for selecting sample from population by reducing the no. of

respondents in manageable size. Sample technique is broadly classified as non-probability

and probability sampling. Non Probability sampling technique is selected for the study.

Because according to Malhotra & Das (2005), in this technique researcher can decide what

elements to include in the sample. This technique also gives good estimation of the

population characteristics.

Further, convenience sampling is used as a part of Non-Probability Sampling. As per the

Malhotra and Das (2005), Convenience Sampling attempts to obtain a sample of

convenient elements. Respondents are selected as they happen to be at the right place at the

right time. In this study also respondents are selected based on the convenience of the

researcher.

3.3.3 Sample Size:

Sample size has an effect on how the sample findings accurately represent the population

(Burns & Bush, 2010). The larger the sample is, the more likely that the generalizations are

an accurate reflection of the population (Saunders, Lewis & Thornhill,2009) In general,

there has been an understanding among authors of statistical books that the larger the

sample the more appropriate for the use of various statistical analysis (Pallant, 2007).

Following table represents the determination of the sample size use for conducting the

survey.


78

TABLE 3.2 Sample Size Formula

Sr. No.

Parameter Interpretation

1 Standard Deviation σ Standard Deviation: Here five point Likert scale is used in questionnaire so range = 6σ (5-1) = 6σ σ = 4/6 = 0.67

2 Level of Confidence at 95% In a normal distribution, approximately 95% of the sample values are within two standard deviations of the true population value (e.g., mean).

3 Level of Precisionat ± 5% The level of precision, sometimes called sampling error, is the range in which the true value of the population is estimated to be. It is denoted as e.

4 Sample Size Formulation N = Z2 σ2 = (1.96)2 (0.67)2 e2 (0.05)2 = 676 = (Taken as 800)

Source: RajendraNargundkar (2010), Marketing Research.

3.4 Sources of Data

Sources of data are categorized as Primary Data and secondary data. According to

Malhotra and Das (2009), Primary Data are originated by a researcher for the specific

purpose of addressing the problem at hand. Primary data is collected through marketing

research. Secondary data is obtain from marketing journals, books, websites and published

& unpublished thesis work.

3.5 Planning of Data Collection

Data collection is carried out through Survey Method. Malhotra and Das (2009) define

Survey Method as a methodology of obtaining information based on questioning

respondents. In this study, respondents are asked various questions on service quality of

their respective banks and regarding their satisfaction, loyalty, retention and commitment

towards their bank. Questioning in the study is done in a structured way and hence it is also

called as structured data collection method in which formal questionnaire having questions

prearranged in order is used.

200 respondents of each city – Ahmedabad, Surat, Rajkot and Baroda were contacted

during the data collection stage. Out of 200, 50 respondents of each bank – State Bank of

India, Punjab National Bank, ICICI Bank and HDFC Bank were contacted with structured

questionnaire. Banking customers were given questionnaire while they were waiting in


79

queue. Some of the customers had filled the questionnaire after they had finished their

banking transaction. This has allowed sufficient time to the customer without interfering in

their banking activities. Asking customer to complete a questionnaire in the bank provides

them a chance to pay attention to dimensions while answering the questionnaire, this also

eliminates problems with customers trying to recall their experience. (Burn & Bush,2009).

Some of the respondents were also contacted through e-mail.

3.6 Data Collection Instrument & Scaling Technique

Questionnaire is a structured technique for data collection that consists of a series of

questions, written or verbal that a respondent answer. Questions in questionnaire are the

key to the survey research so they must be developed with caution and to be vital to the

survey. (Malhotra & Das, 2009). It is bad to use open-ended questions in self-completion

surveys because answers would be inadequate and be very typical. One main advantage of

using close-ended questions in a questionnaire is that they are pre-coded. This kind of

questions suits self-completion questionnaires because they save the respondent’s time

writing in the answers (Hague et al., 2004). So, the questions uses in the questionnaire of

this study are close-ended and respondents are asked to choose the option to show their

level agreement.

In this study, the structured questionnaire focused on measuring service quality, customer

satisfaction, customer retention, customer loyalty, customer commitment and demographic

variables. Questionnaire consist of the five sections that measure service quality, customer

satisfaction, customer retention, customer loyalty, customer commitment respectively. The

questionnaire ends with getting the demographic details of the respondents.

The researcher has used 5 point Likert Scale for the study instead of 7 point Likert Scale.

Because according to Prayag (2007), 5 point scales reduce the level of frustration among

respondents, and increases the rate and quality of the responses. Malhotra and Das (2009)

added that it is very easy to construct and administer. Moreover, respondents readily

understand how to use scale and this scale is more suitable for mail and personal interview.

So, all the statements are developed on 5 point Likert Scale so as to get normal spread of

observations.


80

TABLE 3.3 Variables Identified for Questionnaire

Authors Variables identified Section in Questionnaire

Booms and Bitner (1981), Tangible Cues

Service Quality

Hostage (1975) Service firm’s contact persons & their personalize services

Lehtinen and Lehtinen (1982) Corporate Image, Ethics & Value System in the bank. (Gronroos, 2000): Technical outcome Madu and Madu (2002) Bank’s security policies & online services Lehtinen and Lehtinen (1982) Service products (Gronroos, 2000): Functional Outcome Parasuraman, zeithaml& berry (1985) SERVQUAL Zahorik, Rust (1992), Pricing policies Parasuraman, Zeithaml& Berry (1988), Value added services Reichheld& Sasser (1996) offerings like rewards, Lehmann (1994) Customer Expectation Customer

Satisfaction Andreassen (2001) Service recovery Zeithaml (1996) Positive comments about the bank, recommending

firm to the others, paying price premium Customer Retention

Moira (1997) employee correlation Oliver (1999) Multi-item scale for measuring customer loyalty Customer

Loyalty Garbarino& Johnson (1999) Long-term, mutually beneficial relationships.

Customer Commitment

Allen & Meyer (1990), willingness to maintain certain relationship, affection, warmth, belongingness, loyalty, fondness, pleasure, switching cost,

(Beaton and Beaton, 1995 Committed behavior of banking professionals,

Developed by Researcher

For measuring service quality, partial SERVQUAL by Parasuraman, zeithaml& berry

(1985) was adopted. In addition to that Gronroos, (2000) and Lehtinen (1982) models were

used to identify more variables for measuring service quality. Few more researchers’

literature work was referred and then 37 items were finalized to measure service quality.

Oliver (1999)’s multi – item scale of 7 items was adopted to determine customer loyalty.

As mention in the above table, research work of various researchers were taken into the

consideration to develop questionnaire having 11 items for measuring customer

satisfaction, 8 items for measuring customer retention and 7 items for measuring customer

commitment respectively. All the items were evaluated on 5 point Likert Scale ranging

from 1 (= strongly disagree) to 5 (= strongly agree). The diagrammatic rating scale used in

the questionnaire is as follows:


81

TABLE 3.4 Scaling of the Questionnaire

Strongly disagree 1

Disagree 2

Neither disagree nor agree 3

Agree 4

Strongly agree 5

After reviewing the literature and variables of questionnaire, service quality is identified as

independent variable whose impact is to be studied on four dependent variables customer

satisfaction, customer retention, customer loyalty, customer commitment respectively.

3.7 Pilot Study:

A pilot study was carried out prior to the data collection stage. Malhotra and Das (2009),

refers pilot study as a testing of questionnaire on a small sample of respondent to identify

and eliminate potential problem. The appropriateness of the questions of the questionnaire

was tested including question content, wording, sequence, form and layout. The pilot study

was carried out in Ahmedabad city. Survey of 100 respondents was conducted in pilot

study. With the use of Cronbach Alpha and confidence interval test, reliability of the

questionnaire was checked.

3.7.1 Reliability of the Research Instrument:

Reliability test was conducted during the scale development process so as to identify the

consistence of the scale and if required to purify the scale. Reliability is an indication of

how consistent the findings are based on the method of data collection and analysis.

Furthermore, reliability is more important when the questionnaire is a Likert-type because

there are many variables testing the concept. (Saunders, Lewis & Thornhill, 2007).

In the words of Freeman (1965) “The term reliability has two closely related but somewhat

different connotations in psychological testing. First, it refers to the extent to which a test

is internally consistent, that is, consistency of results obtained throughout the test when

administered once. In other words, how accurately is the test measuring a particular item?

Second, reliability refers to the extent to which a measuring device yields consistent results

upon testing and retesting.

Usually, the Cronbach’s alpha is used to measure the reliability of the instrument.

Cronbach’s alpha estimate tells us how highly the items in the questionnaire are

interrelated. (Pallant, 2007). The Cronbach alpha coefficient ranges from 0 to 1 with a


82

minimum of 0.6 while other studies suggest that anything above 0.7 suggest high levels of

internal reliability (Hair et al., 2006). Nunnally (1978) suggested that an alpha value of 0.7

is acceptable.

TABLE 3.5 Reliability Test Result

Variable No. of Items Cronbach's Alpha Service Quality 37 0.941 Customer Satisfaction 11 0.838 Customer Retention 8 0.866 Customer Loyalty 7 0.864 Customer Commitment 7 0.831

In this study, researchers has used SPSS version 20.0 for testing reliability through

Cronbach alpha coefficient. Aplha value of 0.7 is used as minimal accepted level as

suggested by Nunnally (1978). Internal reliabilities were computed for 37 items of Service

Quality, 11 items of customer satisfaction, 8 items of customer retention, 7 items of

customer loyalty and 7 items of customer commitment and Cronbach Alpha value obtained

for service quality is 0.941, customer satisfaction is 0.838, customer retention is 0.866,

customer loyalty is 0.864 and customer commitment is 0.831 respectively. This result

shows that the research instrument appears to be highly reliable for measuring impact of

service quality on customer satisfaction, customer retention, customer loyalty and customer

commitment.

3.8 Confidence Interval Test:

Statistical inference is the process of using sample results to draw conclusions about the

characteristics of a population. (Richard Lavina& David Rubin, 1998). It means that, based

on the sample proportion of respondents, who agree with the statement, the proportion of

all bank customers that agree with the statement is estimated. To, measure with how much

confidence respondents have answered in the questionnaire is calculated statistically with

the use of the following formula. (Sulaiman&Balakrishnan, 2011)

Standard Error of Proportion (S.E) = √PQ/N

P = No. of Respondents that have agreed with the statement

Q = No. of Respondents that have disagreed with the statement


83

N = Sample Size

Here, confidence level is set as 95%.

Results of the confidence interval test for all the statements of service quality, customer

satisfaction, retention, loyalty and commitment on five point Likert scale is as follows:

TABLE 3.6 Confidence Interval Test Result

Y N TOTAL P Q S.E.

95% confidence level lower

bound

95% confidence

level upper bound

Interpretation

S1 60 14 74 0.81 0.19 0.0392 0.73 0.89 It can be estimated with 95% confidence, that between 73% and 89% of the bank customers agree that bank has a visually attractive physical facility.

S2 65 16 81 0.80 0.20 0.0398 0.72 0.88 It can be estimated with 95% confidence, that between 72% and 88% of the bank customers agree that Bank is having modern looking and comfortable waiting.

S3 46 19 65 0.71 0.29 0.0455 0.62 0.80 It can be estimated with 95% confidence, that between 62% and 80% of the bank customers agree that TV and music system in waiting area reduces anxiety.

S4 67 15 82 0.82 0.18 0.0387 0.74 0.89 It can be estimated with 95% confidence, that between 74% and 89% of the bank customers agree that Token system at the bank makes waiting line more organize.

S5 67 9 76 0.88 0.12 0.0323 0.82 0.94 It can be estimated with 95% confidence, that between 82% and 94% of the bank customers agree that Cleanliness is properly maintained at the bank.


84

Y N TOTAL P Q S.E.


bound

95% confidence

level upper bound

Interpretation

S6 69 5 74 0.93 0.07 0.0251 0.88 0.98 It can be estimated with 95% confidence, that between 88% and 98% of the bank customers agree that Materials like pamphlets, brochure provides detail information about bank’s various services.

S7 58 15 73 0.79 0.21 0.0404 0.72 0.87 It can be estimated with 95% confidence, that between 72% and 87% of the bank customers agree that Materials at the bank are visually appealing ranges.

S8 57 13 70 0.81 0.19 0.0389 0.74 0.89 It can be estimated with 95% confidence, that between 74% and 89% of the bank customers agree that Employees of the bank are very attentive & provide individual attention.

S9 64 12 76 0.84 0.16 0.0365 0.77 0.91 It can be estimated with 95% confidence, that between 77% and 91% of the bank customers agree that Employees of the bank have knowledge about the all the different kind services offered by the bank.

S10 42 18 60 0.70 0.30 0.0458 0.61 0.79 It can be estimated with 95% confidence, that between 61% and 79% of the bank customers agree that Employees of the bank are having high level of the competency.


85

Y N TOTAL P Q S.E.


bound

95% confidence

level upper bound

Interpretation

S11 68 15 83 0.82 0.18 0.0385 0.74 0.89 It can be estimated with 95% confidence, that between 74% and 89% of the bank customers agree that Employees of the bank are very customer friendly & listen to the customer very carefully.

S12 58 13 71 0.82 0.18 0.0387 0.74 0.89 It can be estimated with 95% confidence, that between 74% and 89% of the bank customers agree that Employees of the bank understand customer need.

S13 38 15 53 0.72 0.28 0.0450 0.63 0.81 It can be estimated with 95% confidence, that between 63% and 81% of the bank customers agree that Employees of the bank are never too busy to respond to customer ‘s request.

S14 50 21 71 0.70 0.30 0.0456 0.61 0.79 It can be estimated with 95% confidence, that between 61% and 79% of the bank customers agree that Employees of the bank provide prompt service.

S15 50 20 70 0.71 0.29 0.0452 0.63 0.80 It can be estimated with 95% confidence, that between 63% and 80% of the bank customers agree that Every employees of the bank are easily accessible by the customer.

S16 56 25 81 0.69 0.31 0.0462 0.60 0.78 It can be estimated with 95% confidence, that between 60% and 78% of the bank customers agree that When bank promises to do something, they do it in certain time.


86

Y N TOTAL P Q S.E.


bound

95% confidence

level upper bound

Interpretation

S17 57 16 73 0.78 0.22 0.0414 0.70 0.86 It can be estimated with 95% confidence, that between 70% and 86% of the bank customers agree that When customers have any problem, bank shows sincere interest in solving it.

S18 60 15 75 0.80 0.20 0.0400 0.72 0.88 It can be estimated with 95% confidence, that between 72% and 88% of the bank customers agree that Bank performs the service right the first time.

S19 53 17 70 0.76 0.24 0.0429 0.67 0.84 It can be estimated with 95% confidence, that between 67% and 84% of the bank customers agree that Bank provides the service at the time they promise to do so.

S20 64 15 79 0.81 0.19 0.0392 0.73 0.89 It can be estimated with 95% confidence, that between 73% and 89% of the bank customers agree that Bank insists on the error free record.

S21 60 10 70 0.86 0.14 0.0350 0.79 0.93 It can be estimated with 95% confidence, that between 79% and 93% of the bank customers agree that they have selected bank because bank is having strong brand name in the market.

S22 81 5 86 0.94 0.06 0.0234 0.90 0.99 It can be estimated with 95% confidence, that between 90% and 99% of the bank customers agree that bank is ethically managed by the management.


87

Y N TOTAL P Q S.E.


bound

95% confidence

level upper bound

Interpretation

S23 75 5 80 0.94 0.06 0.0242 0.89 0.98 It can be estimated with 95% confidence, that between 89% and 98% of the bank customers agree that Products of the bank like Fixed Deposit, Certificates are of a good quality.

S24 45 19 64 0.70 0.30 0.0457 0.61 0.79 It can be estimated with 95% confidence, that between 61% and 79% of the bank customers agree that Bank maintain confidentially while sending online user id and password.

S25 52 22 74 0.70 0.30 0.0457 0.61 0.79 It can be estimated with 95% confidence, that between 61% and 79% of the bank customers agree that Bank offers locker facility at reasonable price with no hidden charges.

S26 61 10 71 0.86 0.14 0.0348 0.79 0.93 It can be estimated with 95% confidence, that between 79% and 93% of the bank customers agree that Bank is having strong security system in the bank premises.

S27 64 14 78 0.82 0.18 0.0384 0.75 0.90 It can be estimated with 95% confidence, that between 75% and 90% of the bank customers agree that Bank offers variety of the financial product like mutual fund, insurance policies other than traditional banking product.

S28 63 18 81 0.78 0.22 0.0416 0.70 0.86 It can be estimated with 95% confidence, that between 70% and 86% of the bank customers agree that Bank always ensure proper functioning of ATM machine.


88

Y N TOTAL P Q S.E.


bound

95% confidence

level upper bound

Interpretation

S29 45 19 64 0.70 0.30 0.0457 0.61 0.79 It can be estimated with 95% confidence, that between 61% and 79% of the bank customers agree that Bank never faces shortage of locker at every branch.

S30 62 17 79 0.78 0.22 0.0411 0.70 0.87 It can be estimated with 95% confidence, that between 70% and 87% of the bank customers agree that Bank is having well managed web policies for secure online banking.

S31 65 12 77 0.84 0.16 0.0363 0.77 0.92 It can be estimated with 95% confidence, that between 77% and 92% of the bank customers agree that Bank always maintain transparency while communicating prices.

S32 66 14 80 0.83 0.18 0.0380 0.75 0.90 It can be estimated with 95% confidence, that between 75% and 90% of the bank customers agree that There are no hidden charges taken by bank.

S33 70 13 83 0.84 0.16 0.0363 0.77 0.91 It can be estimated with 95% confidence, that between 77% and 91% of the bank customers agree that Bank is having convenient operating hours.

S34 51 18 69 0.74 0.26 0.0439 0.65 0.83 It can be estimated with 95% confidence, that between 65% and 83% of the bank customers agree that Bank offers 24*7 customer care services.


89

Y N TOTAL P Q S.E.


bound

95% confidence

level upper bound

Interpretation

S35 56 9 65 0.86 0.14 0.0345 0.79 0.93 It can be estimated with 95% confidence, that between 79% and 93% of the bank customers agree that Bank strictly follows RBI regulations & also informs customers about the same.

S36 74 10 84 0.88 0.12 0.0324 0.82 0.94 It can be estimated with 95% confidence, that between 82% and 94% of the bank customers agree that It is secure to use online banking.

S37 78 9 87 0.90 0.10 0.0305 0.84 0.96 It can be estimated with 95% confidence, that between 84% and 96% of the bank customers agree that Bank does regular upgradation in its technology ranges from 0.84 to 0.96.

S38 75 9 84 0.89 0.11 0.0309 0.83 0.95 It can be estimated with 95% confidence, that between 83% and 95% of the bank customers agree that they have selected the right bank.

S39 51 13 64 0.80 0.20 0.0402 0.72 0.88 It can be estimated with 95% confidence, that between 72% and 88% of the bank customers agree that Bank always exceed in their expectation while offering the services.

S40 71 6 77 0.92 0.08 0.0268 0.87 0.97 It can be estimated with 95% confidence, that between 87% and 97% of the bank customers agree that Bank’s service exactly meets their requirement.


90

Y N TOTAL P Q S.E.


bound

95% confidence

level upper bound

Interpretation

S41 45 20 65 0.69 0.31 0.0462 0.60 0.78 It can be estimated with 95% confidence, that between 60% and 78% of the bank customers agree that they feel good that branch manager knows them personally.

S42 52 18 70 0.74 0.26 0.0437 0.66 0.83 It can be estimated with 95% confidence, that between 66% and 83% of the bank customers agree that they feel happy after every visit of the bank.

S43 50 22 72 0.69 0.31 0.0461 0.60 0.78 It can be estimated with 95% confidence, that between 60% and 78% of the bank customers agree that Bank is having strong mechanism in case of service failure.

S44 45 20 65 0.69 0.31 0.0462 0.60 0.78 It can be estimated with 95% confidence, that between 60% and 78% of the bank customers agree that Bank offers compensation in case of service failure.

S45 52 20 72 0.72 0.28 0.0448 0.63 0.81 It can be estimated with 95% confidence, that between 63% and 81% of the bank customers agree that Bank apologizes if they fail to serve on time.

S46 45 19 64 0.70 0.30 0.0457 0.61 0.79 It can be estimated with 95% confidence, that between 61% and 79% of the bank customers agree that Bank always takes care of their special requirement.


91

Y N TOTAL P Q S.E.


bound

95% confidence

level upper bound

Interpretation

S47 83 7 90 0.92 0.08 0.0268 0.87 0.97 It can be estimated with 95% confidence, that between 87% and 97% of the bank customers agree that Bank is having many no. of the branches.

S48 81 11 92 0.88 0.12 0.0324 0.82 0.94 It can be estimated with 95% confidence, that between 82% and 94% of the bank customers agree that Location of bank is very convenient to commute.

S49 61 15 76 0.80 0.20 0.0398 0.72 0.88 It can be estimated with 95% confidence, that between 72% and 88% of the bank customers agree that they say positive things about the bank to other people as they would like to have long-term association with the bank.

S50 46 17 63 0.73 0.27 0.0444 0.64 0.82 It can be estimated with 95% confidence, that between 64% and 82% of the bank customers agree that as bank is having attractive rewards system due to which they will stay with the bank for longer period of time ranges.

S51 62 13 75 0.83 0.17 0.0379 0.75 0.90 It can be estimated with 95% confidence, that between 75% and 90% of the bank customers agree that they consider bank as their first choice whenever they purchase banking service.


92

Y N TOTAL P Q S.E.


bound

95% confidence

level upper bound

Interpretation

S52 64 9 73 0.88 0.12 0.0329 0.81 0.94 It can be estimated with 95% confidence, that between 81% and 94% of the bank customers agree that they will purchase more services of the bank in the future.

S53 46 21 67 0.69 0.31 0.0464 0.60 0.78 It can be estimated with 95% confidence, that between 60% and 78% of the bank customers agree that Even if bank increases its price, they will continue with the bank.

S54 54 17 71 0.76 0.24 0.0427 0.68 0.84 It can be estimated with 95% confidence, that between 68% and 84% of the bank customers agree that they are ready to continue with the bank despite of the lucrative offers of the competitors due to the benefits they are receiving from the bank.

S55 61 12 73 0.84 0.16 0.0371 0.76 0.91 It can be estimated with 95% confidence, that between 76% and 91% of the bank customers agree that they will complain to the bank employees if they experience any problem in the bank service but they will not switch to the other bank.

S56 63 11 74 0.85 0.15 0.0356 0.78 0.92 It can be estimated with 95% confidence, that between 78% and 92% of the bank customers agree that they will continue with the bank due to high integrity maintain by the bank.


93

Y N TOTAL P Q S.E.


bound

95% confidence

level upper bound

Interpretation

S57 63 14 77 0.82 0.18 0.0386 0.74 0.89 It can be estimated with 95% confidence, that between 74% and 89% of the bank customers agree that they always recommend my bank to others.

S58 73 7 80 0.91 0.09 0.0283 0.86 0.97 It can be estimated with 95% confidence, that between 86% and 97% of the bank customers agree that they get best value for money from the bank.

S59 53 13 66 0.80 0.20 0.0398 0.73 0.88 It can be estimated with 95% confidence, that between 73% and 88% of the bank customers agree that they are never interested in the various service offerings of the competitors.

S60 50 19 69 0.72 0.28 0.0447 0.64 0.81 It can be estimated with 95% confidence, that between 64% and 81% of the bank customers agree that they would not prefer to switch to the other bank.

S61 45 20 65 0.69 0.31 0.0462 0.60 0.78 It can be estimated with 95% confidence, that between 60% and 78% of the bank customers agree that they are having personal emotions attached with the bank.

S62 76 6 82 0.93 0.07 0.0260 0.88 0.98 It can be estimated with 95% confidence, that between 88% and 98% of the bank customers agree that Overall they are very happy with their bank.


94

Y N TOTAL P Q S.E.


bound

95% confidence

level upper bound

Interpretation

S63 76 8 84 0.90 0.10 0.0294 0.85 0.96 It can be estimated with 95% confidence, that between 85% and 96% of the bank customers agree that that they consider themselves loyal to the bank.

S64 46 20 66 0.70 0.30 0.0460 0.61 0.79 It can be estimated with 95% confidence, that between 61% and 79% of the bank customers agree that that It is unethical for them to switch to the other bank.

S65 50 19 69 0.72 0.28 0.0447 0.64 0.81 It can be estimated with 95% confidence, that between 64% and 81% of the bank customers agree that that It means lot to them to belong to the bank.

S66 59 13 72 0.82 0.18 0.0385 0.74 0.89 It can be estimated with 95% confidence, that between 74% and 89% of the bank customers agree that that they have interpersonal relationship with the bank due the customization offered to them.

S67 40 17 57 0.70 0.30 0.0457 0.61 0.79 It can be estimated with 95% confidence, that between 61% and 79% of the bank customers agree that that they will have to make few sacrifices if they switch to the other bank.

S68 58 15 73 0.79 0.21 0.0404 0.72 0.87 It can be estimated with 95% confidence, that between 72% and 87% of the bank customers agree that that they feel proud of being associated with the bank.


95

Y N TOTAL P Q S.E.


bound

95% confidence

level upper bound

Interpretation

S69 55 12 67 0.82 0.18 0.0383 0.75 0.90 It can be estimated with 95% confidence, that between 75% and 90% of the bank customers agree that that Strong sense obligation stops them to switch to the other bank.

S70 66 11 77 0.86 0.14 0.0350 0.79 0.93 It can be estimated with 95% confidence, that between 79% and 93% of the bank customers agree that that they owe a great deal to the bank.

Above table reveled that fact that majority of the respondents have given their response in

the confidence level range of 61 % to 99 %. This results also validates the research

instrument and hence based on these two statistical evidences data collection of 800

respondents were conducted.

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CHAPTER–4

DATA ANALYSIS

4.1 Introduction:

After the Pilot Testing, data collection of 800 respondents was carried out. Than researcher

ensue to the data processing and data analysis. According to the Gromme (1998), Data

processing concerns activities and technologies which prepare the collected data for

analysis: data checking, entry, coding, and editing. Data analysis concerns activities and

technologies which provide statistical insight in the collected data: weighting, tabulations,

and response analysis (Gromme, 1998).

In this chapter, researcher has used AMOS 18 and SPSS 20 to perform various statistical

techniques to analysis the data. Data were first coded in excel sheet and exported to

Statistical Software for further analysis. Tools selected for analysis are Exploratory factor

analysis, Confirmatory factor analysis, Correlation, Simple Regression and Cross

Tabulation. For reducing and summarizing the data, bank wise exploratory factor analysis

was performed in which principle component method with varimax rotation was selected.

After extracting the factors, structure of factors was prepared for all the four banks

separately whose validity and reliability was checked through confirmatory factor analysis.

Bank wise, Correlation was applied to assess relationship between the factors of service

quality derived and confirmed through exploratory and confirmatory factor analysis and

customer satisfaction, retention, loyalty and commitment. Impact of factors of service

quality on customer satisfaction, retention, loyalty and commitment was assessed with the

use of simple regression. Customer’s perception towards the service quality based on

demographic variables like gender, age, income, occupation and education was examined

through cross tabulation. Throughout the analysis, acceptance and rejection of hypotheses

was done at the confidence level at 95%. (of 5% of level of significance).

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97

4.2 Exploratory Factor Analysis (EFA):

According to Kinnear and Gray (2010) the purpose of exploratory factor analysis is to find

the independent factors that explain the correlations. In this case, items are usually reduced

to common interrelated and meaningful dimensions with a very small amount of

information loss explaining as much as possible variance of original items. According to

Cooper and Schindler (2008) factor analysis is a technique used for specific computational

techniques. These factors, also called latent variables, often aim to measure things that are

usually hard to measure directly, such as attitudes and feelings. This is a way to explain the

relationships among variables by combining them into smaller number factors (Zikmund,

2003; Coakes and Steed, 2001).

To identify the latent variables, factor analysis is the most effective statistical technique.

According to Gilbert and Veloutsou (2004) this technique has been adopted by almost one

sixth of the authors of journal articles over the past thirty years. Due to this reason,

exploratory factor analysis was selected to study the service quality of all four banks.

Appropriateness and suitability of the data is assessed by the Kaiser-Meyer-Olkin (KMO)

and Bartlett’s Test of Sphericity. Higher KMO value signifies higher correlation among

the variables. According to Kaiser and Rice (1974), KMO value greater than 0.6 can be

considered as adequate. KMO measures the sample adequacy criteria wherein low

correlation value of variables indicates that they are not fit to be member of any of the

factor.

Bartlett’s Test of Sphericity tests the correlation among the variables (Hair, 2006). A

statistically significant Bartlett’s Test of Sphericity (Sig. < 0.05) indicates that significant

correlations exist among the variables.

The most common factor analysis technique to extract factor is Principle Component

Analysis (Kinnear & Gray, 2010; Cooper & Schindler, 2008). In this technique,

correlations of different variables are referred to study the relationship between them and

grouping them into a small number of factors having common themes. The calculations

will lead to factor scores which explain a maximum possible share of the variance, while

factors obtained will be orthogonal and in terms of the number, will be equal to no more

than the number of original variables. Mathematical technique for simplifying the

interpretation of factors is called factor rotation (Zikmund et al., 2010). Varimax rotation

Data Analysis

98

was favoured since it minimized the correlation across factors and maximized within the

factors. After rotation, factors remain uncorrelated (as opposite to oblique rotation, where

factors are correlated after rotation). This helped to yield ‘clear’ factors (Nunnally, 1978).

Hair (2006), stated that Anti-image correlation matrix represents partial correlation among

variables and the degree to which the factor explain each other in the results. The diagonal

contains measures of sampling adequacy for each variable (higher than 0.05), and the off-

diagonal values show negative value for the partial correlation among variables (close to

zero).

Variance is another important component of factor analysis. According to Hair (2006),

variance is a value (the square of the standard deviation) that represents the total amount of

dispersion of values for a single variable about its mean. When a variable is correlated with

another variable, it basically shares variance with the other variable. Thus it is important to

understand how much a variable’s variance is shared with the other variables. Hair (2006)

defines communalities as the total amount of variance an original variables shares with all

other variables included in analysis. Communalities values of the items greater than 0.5 is

considered for further analysis. Communalities show which part of the variance of each

variable is explained by a given number of factors.

For interpreting the factor interpretation, Hair (2006), suggests to refer to the factor

loadings. Factor Loadings are the correlation of each variable and the factor. Loadings

indicate the degree of correspondence between the variable and the factor, with higher

loadings making the variable representative of the factor. Factor loading of ± 0.30 to ±

0.40 are minimally acceptable, values greater than ± 0.50 are generally considered

necessary for practical significance. Following table represents guidelines for identifying

significant factor loadings based on sample size.

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TABLE 4.1 Factor Loading

Factor Loading Sample size needed for significance level of 5%

0.30 350

0.35 250 0.40 200 0.45 150 0.50 120 0.55 100 0.60 85 0.65 70 0.70 60 0.75 50

Source: Hair (2006)

Sometimes, one variable is having significant loading in several factors. Such variable is

found to have more than one significant loading is termed as Cross-Loading. Such type of

the variables should be eliminated from the analysis so as to simplify the factor structure.

(Hair, 2006). According to the Hair (2006), there is no specific rule in selecting the rotation

method, therefore, the VARIMAX rotation method selected while performing the

exploratory factor analysis. Principal Component Factor Analysis method is adopted for

while performing the factor analysis. The objective for the selection of this method is to

summarize most of the original information (variance) in a minimum number of factors for

prediction purposes. With component analysis each variable contributes a value of 1 to the

total eigen value. Thus, only the factors having eigen values greater than 1 are considered

significant. (Hair, 2006).

4.3 Confirmatory Factor Analysis (CFA):

The Confirmatory Factor Analysis process determines whether the hypothesized structure

provides a good fit to the data, or in other words, that a relationship between the observed

variables and their underlying latent, or unobserved, constructs exist (Child, 1990). The

CFA would also verify that all items are properly aligned with the correct facets within the

general construct being measured. Exploratory Factor Analysis extracts the factors from

the set of variables and provides the factor structure. CFA is used to test the extent to

which factor structure derived from the EFA represents the actual data. According to Hair

(2006), CFA is used to provide a confirmatory test of Measurement Theory. A

Measurement Theory specifies how measured variables logically and systematically

represents the constructs involved in a theoretical model.

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100

While using CFA, many different fit statistics are used to determine the model fit for the

data. There are various indexes that are used for assess Model Fit. The first is the Chi-

Square Test with degrees of freedom (<2). According to Hu &Bentler (1999), the chi-

square test indicates the amount of difference between expected and observed covariance

matrices. A chi-square value close to zero and a chi-square p-value greater than 0.05

indicate that there is little difference between the expected and observed covariance

matrices, which is an indicator of good fit.

The Root Mean Square Error of Approximation (RMSEA) is related to the residuals in the

model. RMSEA values range from zero to one with a smaller RMSEA value indicating

better model fit. Good model fit is typically indicated by an RMSEA value of 0.06 or less

(Hu &Bentler, 1999), but a value of 0.08 or less is often considered acceptable (Browne

&Cudeck, 1993).

The Comparative Fit Index (CFI) is an incremental fit index, which assesses overall

improvement of a proposed model over an independence model where the observed

variables are uncorrelated (Byrne, 2006). CFI values range from zero to one with a larger

value indicating better model fit. Acceptable model fit is indicated by a CFI value of 0.90

or greater (Hu &Bentler, 1999). The Normed Fit Index (NFI) is another common indicator

to measure model fit. For this indicator larger values specifies better model fit and value

above 0.90 is considered acceptable (Hu &Bentler, 1999).

Hair (2006), describes Goodness-of-fit as another indicator that produces fit statistics. GFI

values greater than 0.90 are considered good. Next important indicator is Adjusted

Goodness of Fit Index (AGFI) that takes into account differing degrees of model

complexity. AGFI values are typically lower than GFI values in proportion to model fit.

AGFI values greater than 0.90 are considered good. Tucker Lewis Index (TLI) is

conceptually similar to NFI but varies in that it is actually a comparison of the normed chi-

square values for the specified model, which to some degree takes into account model

complexity. Typically, model is considered good having TLI values higher than 0.90.

Incremental Fit Index assess how well the estimated model fits relative to some baseline

model in which it is assumed that all observed variables are uncorrelated. IFI value above

0.90 is considered good and last indicator is RFI that is known as Relative Fit Index whose

value greater than 0.90 is also considered as a good fit for model (Bollen, 1986).

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4.4 Validity of the scale:

According to Zikmund and Babin (2010) validity is the accuracy of a measure or the extent

to which a score truthfully represents a concept. In other words, Validity is concerned with

the test being capable of testing what it was designed for, which is not as simple as it

seems (Hair, 2006). There are four different types of validity that assess the accuracy of an

instrument: Content Validity, Construct Validity, Convergent Validity, Discriminant

Validity and Nomological Validity.

4.4.1 Construct Validity

This is one of the most important validity. Construct validity is the assessment of the

degree to which an operationalisation correctly measures its targeted variables (Bagozzi,

Youjae and Phillips (1991). Further authors added that “without assessing construct

validity one cannot estimate and correct for confounding influences of random error and

method variance, and the results of the theory testing may be ambiguous.” Hair (2006),

stated that Construct validity provides confidence that the item measures taken from a

sample represents the actual true score that exists in the population.

4.4.2 Convergent Validity

The items that are indicators of a specific construct should converge or share a high

proportion of variance in common is known as Convergent Validity (Hair,2006). Anderson

and Gerbing, (1991) advocate that convergent validity is tested by determining whether the

items in a scale converge or load together on a single construct in the measurement model.

In other words, convergent validity is the degree of convergence seen when two attempts

are made to measure the same construct through maximally different methods. If there is

no convergence, either the theory used in the study needs to be analyzed, or the

purification of measure needs to be implemented by eliminating the items. To have

convergent validity, the scores for the category ‘excellent’ must be higher than the

category ‘very good’ for each of the dimensions. The scores for the category ‘good’ must

also be higher than the scores for the category ‘poor’ and so on. (Aldlaigan&Buttle, 2002)

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102

Convergent validity can be established using the following approaches:

Factor Loading: The size of the factor loading is important consideration. In case of high

convergent validity, high loading on the factor would indicate that they converge on a

common point on their latent construct. A rule of thumb is that standardized loading

estimates should be 0.5 or higher, and 0.7 or higher. The reason of this rule of thumb is

that, the square of standardized factor loading represents how much variation in an item is

explained by the latent factor and is termed the Variance Extracted of the item. (Hair,

2006)

Average Variance Extracted (AVE): In CFA, the Average Variance Extracted (AVE) is

calculated as the mean variance extracted for the items loadings on a construct and is a

summary indicator of convergence. The value is calculated as follows:

In the formula above the λ represents the standardized factor loading and i is the number of

items. So, for n items, AVE is computed as the sum of the squared standardized factor

loadings divided by the number of items, as shown above (Fornell and Larcker

(1981).Fornell and Larcker (1981) suggested that adequately convergent should have

measures that contain more than 50% explained or common variance in the factor analytic

sense. An AVE measure should be computed for each latent construct in a measurement

model.

Reliability: Reliability is also an indicator of Convergent Validity. Coefficient alpha

remains a commonly applied estimate although it may understate reliability. Construct

Reliability (CR) value is computed with the following formula:

It is computed from the squared sum of factor loadings (λ i) for each construct and the sum

of the error variance terms for a construct ( i). The rule of thumb for reliability estimate

is that 0.7 or higher suggests good reliability. Reliability between 0.6 and 0.7 may be

nAVE

n

ii

1

2

n

i

n

iii

n

ii

CR

1 1

2

1

2

)()(

)(

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103

acceptable, provided that other indicator of a model’s construct validity are good (Hair,

2006).

4.4.3 Discriminant Validity:

Discriminant validity shows that the measure is unique in some way. Discriminant validity

gauges the extent to which measures of two different constructs are comparatively

distinctive from each other. (Campbell and Fiske, 1959). Discriminant validity assesses the

degree to which a concept and its indicators differ from another concept and its indicators.

It means that items from one scale should not load or converge too closely with items from

a different scale and that different latent variables which correlate too highly may indeed

be measuring the same construct rather than different constructs (Garver and Mentzer,

1999). According to Fornell and Larcker, (1981), Shared variance is the amount of

variance that a variable (construct) is able to explain in another variable (construct). It is

represented by the square of the correlation between any two variables (constructs).

Further, authors presented method for assessing the discriminant validity of two or more

factors. Here, a researcher compares the AVE of each construct with the shared variance

between constructs. If the AVE for each construct is greater than its shared variance with

any other construct, discriminant validity is supported.

4.4.4 Nomological Validity

Nomological validity has been defined as the degree to which predictions from a formal

theoretical network containing the concept under scrutiny are confirmed (Campbell, 1960).

It assesses the degree to which constructs that are theoretically related are empirically

related (i.e., their measures correlate significantly in the predicted direction).This validity

is tested by examining whether the positive correlation exists among the constructs or not

and whether the correlation among the constructs in a measurement theory makes sense.

(Hair,2006). As per Bhattacherjee (2002), nomological validity examines the predictive

ability of the measurement scale (focal scale) within the nomological network of

antecedent and consequent variables, i.e., it is a measure of theoretical correspondence

between the theory and the construct within the theory. The measure should behave as

expected with other constructs to which it is theoretically related, i.e., it should display

nomological validity. (Peter 1981)

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4.5 Correlation and Simple Regression:

Correlation is the most widely used statistic that summarizes the strength of association

between two variables. As it was originally proposed by Karl Pearson and hence it is

known as the Pearson Correlation Co-efficient (r). It is also referred as Simple Correlation

or Bivariate Correlation. The correlation r value describes both a magnitude and a

direction of either positive or negative. It may take on a range of values from -1 to 0 to +1,

where the values are absolute and non dimensional with no units involved. A correlation

coefficient of zero indicates that no association exists between the measured variables. The

closer the r coefficient approaches ± 1, regardless of the direction, the stronger is the

existing association indicating a more linear relationship between the two variables. The

correlation coefficients (in absolute value) which are ≤ 0.35 are generally considered to

represent low or weak correlations, 0.36 to 0.67 modest or moderate correlations, and 0.68

to 1.0 strong or high correlations with r coefficients ≥ 0.90 very high correlations. (Richard

Taylor, 1990)

Regression analysis allows the prediction or estimation of the value of one variable (the

criterion, dependent, or predicted variable; traditionally called as Y) from one or more

predictor variables (called X). Simple regression estimates the extent to which the

predicted variable changes as a single predictor variable changes. According to the

RajendraNargundkar (2010), regression equation is judged for its usefulness based on:

1. The overall F-test for the model. If this is significant at 95 per cent confidence level, it

indicates that the model is good overall. This shows up as a p- value of less than 0.05 on

the ANOVA table in the regression output.

2. To decide whether the explanatory variable in the model is a significant or not than

significance value should be referred. If the p- value is less than 0.05, it indicates that the

concerned variable is significant in the model.

3. The R2 value (coefficient of determination and adjusted coefficient of determination) of

a model infers what percentage of the variation in the dependent variable is explained by

all independent variables in model.

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Bank Wise Analysis

4.6 State Bank of India:

Objective 1: To study the factors contributing to Service Quality

4.6.1 Exploratory Factor Analysis

TABLE 4.2 KMO and Bartlett's Test - SBI

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .904

Bartlett's Test of Sphericity Approx. Chi-Square 2267.153 Df 276 Sig. .000

Significance value of Bartlett’s Test of Sphericity is 0.00 that is less than 0.05 which

stipulates that data is multivariate normal and acceptable for factor analysis. Moreover,

KMO value is 0.904 that indicates that data set considered to be highly suitable for factor

analysis.

TABLE 4.3 Correlation Table - SBI

Table Correlation Matrixa

a. Determinant = 0.00066

The determinant of the Correlation Matrix is 0.0006 that is higher than the 0.00001 and

hence no multicollinearity is observed in the data

4.6.2 Anti Image Matrices

Table 4.4 represents correlation values of 24 factors of service quality of SBI. Diagonal

values of the all the factors depict in the second half of the table measure the sampling

adequacy. As all the variables are having partial correlation values higher than the 0.5 and

hence it can be interpreting that all the 24 factors of service quality have practical and

statistical significance and data is suitable for performing factor analysis.

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TABLE :4.4 Anti image Table - SBI

Data Analysis

107

TABLE 4.5 Communalities Table - SBI

Sr. No

Variables Initial Extraction

3 Banks have TV & music system in the waiting area that reduces anxiety while waiting.

1.000 .744

4 Token system at the bank makes waiting line more organize 1.000 .693

5 Cleanliness is properly maintained at the bank. 1.000 .709

6 Materials like pamphlets, brochure provides detail information about bank’s various services.

1.000 .743

7 Materials at the bank are visually appealing. 1.000 .676

8 Employees of the bank are very attentive & provide individual attention. 1.000 .551

10 Employees of the bank are having high level of the competency. 1.000 .690

11 Employees of the bank are very customer friendly & listen to me very carefully. 1.000 .650

12 Employees of the bank understand your need. 1.000 .651

13 Employees of the bank are never too busy to respond to customer ‘s request. 1.000 .600

14 Employees of the bank provide me prompt service. 1.000 .651

15 Every employees of the bank are easily accessible by the customer. 1.000 .615

16 When bank promises to do something, they do it in certain time. 1.000 .596

17 When customers have any problem, bank shows sincere interest in solving it. 1.000 .620

21 I have selected bank because bank is having strong brand name in the market. 1.000 .750

22 I believe that bank is ethically managed by the management. 1.000 .702

25 Bank offers locker facility at reasonable price with no hidden charges. 1.000 .512

27 Bank offers me variety of the financial product like mutual fund, insurance policies other than traditional banking product.

1.000 .649

29 Bank never faces shortage of locker at every branch. 1.000 .791

30 Bank is having well managed web policies for secure online banking. 1.000 .691

31 Bank always maintain transparency while communicating prices to me. 1.000 .656

32 There are no hidden charges taken by bank while servicing me. 1.000 .563

36 I feel secure while using bank’s technical services such as NEFT, RTGS, Online Banking Etc.

1.000 .647

37 Bank does regular upgradation in its technology. 1.000 .593

Extraction Method: Principal Component Analysis.

Table 4.5 shows the communalities values of all the 24 factor of service quality. Here all

the values are above 0.5 which suggest that the data set was appropriate for further

analysis.

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TABLE 4.6 Total Variance Explained - SBI

Component Initial Eigenvalues

Extraction Sums of Squared Loadings

Rotation Sums of Squared Loadings

Total% of

Variance Cumulative

% Total

% of Variance

Cumulative %

Total % of

Variance Cumulative

%

1 9.079 37.827 37.827 9.079 37.827 37.827 4.938 20.575 20.575

2 1.903 7.931 45.758 1.903 7.931 45.758 3.598 14.992 35.567

3 1.356 5.649 51.407 1.356 5.649 51.407 2.447 10.194 45.762

4 1.237 5.152 56.560 1.237 5.152 56.560 1.640 6.834 52.596

5 1.146 4.774 61.334 1.146 4.774 61.334 1.621 6.752 59.348

6 1.026 4.273 65.607 1.026 4.273 65.607 1.502 6.258 65.607

7 .826 3.442 69.049

8 .707 2.946 71.995

9 .675 2.813 74.808

10 .633 2.637 77.445

11 .609 2.538 79.983

12 .551 2.298 82.280

13 .505 2.103 84.383

14 .496 2.066 86.449

15 .458 1.910 88.359

16 .422 1.760 90.119

17 .393 1.639 91.758

18 .357 1.490 93.247

19 .347 1.446 94.694

20 .336 1.400 96.094

21 .274 1.141 97.235

22 .246 1.026 98.261

23 .219 .911 99.172

24 .199 .828 100.000


All the 24 factors in Table 4.6 accounted for 65.607 percent of the variance. Total variance

explained (65.607 percent) by these 24 components exceeds the 60 percent threshold

commonly used in social sciences. (Hair, 2006).

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TABLE 4.7 Rotated Component Matrixa- SBI

Sr. No Variables Component

1 2 3 4 5 6

3 Banks have TV & music system in the waiting area that reduces anxiety while waiting.

.133 .079 .173 .082 .820 .102

4 Token system at the bank makes waiting line more organize .270 .095 .134 .048 .768 -.040

5 Cleanliness is properly maintained at the bank. .200 .213 .726 .244 .194 -.003


.221 .111 .815 .055 .120 .019

7 Materials at the bank are visually appealing. .388 .050 .719 .004 .078 .027

8 Employees of the bank are very attentive & provide individual attention.

.588 .291 .295 -.060 .166 .049

10 Employees of the bank are having high level of the competency.

.626 .209 .344 .201 .131 .280

11 Employees of the bank are very customer friendly & listen to me very carefully.

.716 .264 .164 .112 .161 .041

12 Employees of the bank understand your need. .703 .210 .272 .133 .112 .093

13 Employees of the bank are never too busy to respond to customer ‘s request.

.671 .106 .230 .099 .053 .269

14 Employees of the bank provide me prompt service. .736 .272 .113 .063 -.049 -.127

15 Every employees of the bank are easily accessible by the customer.

.726 .150 -.026 .150 .194 .068

16 When bank promises to do something, they do it in certain time.

.636 .271 .251 .146 .178 -.038

17 When customers have any problem, bank shows sincere interest in solving it.

.637 .338 .172 .219 .125 -.082

21 I have selected bank because bank is having strong brand name in the market.

.189 .120 .047 .824 .117 .070

22 I believe that bank is ethically managed by the management.

.210 .254 .175 .749 .011 -.028

25 Bank offers locker facility at reasonable price with no hidden charges.

.180 .653 -.006 .218 .045 .064


.068 .317 .241 .187 -.052 .670

29 Bank never faces shortage of locker at every branch. .059 .104 -.129 -.089 .091 .862

30 Bank is having well managed web policies for secure online banking.

.331 .722 .042 .076 .165 .162

31 Bank always maintain transparency while communicating prices to me.

.351 .672 .163 -.001 -.149 .177

32 There are no hidden charges taken by bank while servicing me.

.348 .618 .130 .203 -.029 -.038


.134 .773 .069 .091 .104 .087

37 Bank does regular upgradation in its technology. .205 .645 .262 .035 .197 .165

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.

a. Rotation converged in 7 iterations.

Data Analysis

110

Rotated component matrix table represent the strength of relationship between the item and

factor and membership of the item under one factor. Here the membership of the item in

factor is determines by identifying the highest loading in one factor. The loading values

ranges between the 0 and 1. Value close to 1 indicated the highest factor loading. Another

important thing is that while determining the factor membership, negative sign of the factor

is being ignored. Generally factor loading higher than 0.5 is acceptable but as per the Hair

(2006), for sample size of 200 factor loading of 0.40 is acceptable. 200 respondents of SBI

were surveyed and hence 0.40 is considered as acceptable factor loading.

4.6.3 Factor Naming:

Once the factors extracted than the next step is to interpret and name the factors. Factor

naming is done based on the membership of various items in various factors as follows:

Factor 1 Competency of Bank Employee

The first factor is a linear combination of item 8, 10, 11, 12, 13, 14, 15, 16 and 17. All the

items are pertaining to the bank employees’ attentiveness, their ability to understand the

customer needs, promptness in services, problem solving and their easy accessibility.

Considering these items factor 1 is named as Competency of the Bank Employee.

Factor 2 Augmented Services

Second factor is a linear combination of item 25, 30, 31, 32, 36 and 37. This factor is a

combination of the items that represent banking products and facilities like bank’s locker

service, online services like NEFT & RTGS as well as bank’s pricing and web policies and

hence this factor is named as Augmented Services.

Factor 3 Physical Evidence

This factor is a linear combination of item 5, 6 and 7. These items comprises of cleanliness

in the bank’s premises and bank’s various materials like pamphlets, brochures etc. As per

the literature of service quality, all these items are a part of Physical Evidence.

Factor 4 Ethos of the bank.

This factor is a linear combination of item 21 and 22 only. Item 21 is of bank’s brand name

in the market where as item 22 signifies ethical management. These items epitomize the

Data Analysis

111

philosophy of the bank so far as ethics are concern and it results in creating a good brand

name in the market.

Factor 5 Assortment of services.

This factor is linear combination of item 3 and 4 only. Item 3 represents bank’s waiting

area with TV & music. Item 4 consists of the token system available at the bank. Bank

offers variety of the services to its customers. Token system and TV & music system in

waiting area reduce anxiety of waiting in the bank premises. So factor is named as

Assortment of services.

Factor 6 Service Product.

The last factor is linear combination of item 27 and 29 that represent availability of various

bank’s products such as mutual fund, insurance policies and locker facility. As the items

grouped in this factor represent the various banking product through which bank offer

services to its customers and hence this factor is named as service product.

4.6.4 Confirmatory Factor Analysis:

Total six factors are extracted in Exploratory Factor Analysis and based on it following

factor structure is developed. Confirmatory factor analysis is used to verify and confirmed

thisstructure. In the following structure, Competency of Bank Employee (CBE),

Augmented Service (AS), Physical Evidence (PE), Ethos of the Bank (EB), Assortment of

the services (ASTS) and Service Product (SP) are the observed variables and service

quality is latent variables in the following factor structure. Validity of the factor structure is

determined through Convergent Validity, Discriminant Validity and Nomological Validity.

Data Analysis

112

FIGURE 4.1 Factor Structure - SBI

E1

E2

E3

E4

E5

E6

E7

E8

E9

E10

E11

E12

E13

E14

E15

E16

E17

E18

E19

E20

E21

E22

E23

E24

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

cbe1

cbe2

cbe3

cbe4

cbe5

cbe6

cbe7

cbe8

cbe9

as1

as2

as3

as4

as5

as6

pe1

pe2

pe3

eb1

eb2

asts1

asts2

sp1

sp2

cbe

as

pe

eb

asts

sp

r1

r2

r3

r4

r5

r6

sq

1

1

1

1

1

1

1

1 1

1

1

1

1

Data Analysis

113

TABLE4.8 Model Fit Indexes - SBI

Ratio of Chi-square to degrees of freedom (CMIN/DF) 1.627 Goodness-of-fit index (GFI) 0.906 Adjusted GFI (AGFI) 0.896 Normed fit index (NFI) 0.931 Tucker-Lewis Index (TLI) 0.917 Incremental Fit Index (IFI) 0.927 Relative Fit Index (RFI) 0.911 Comparative Fit Index (CFI) 0.926 Root Mean Square Error of Approximation (RMSEA) 0.056

Fit statistics depicted in the above table determine the model fit data. The first is Chi-

square to degrees of freedom whose value is higher than 0.05 showing the little difference

between the expected and observed covariance matrices, which is one indicator of good fit.

Next indicator is Goodness-of-fit index (GFI) and Adjusted GFI (AGFI). GFI is higher

than 0.9 and AGFI is close to 0.9 indicating good model fit. Tucker-Lewis Index (TLI),

Incremental Fit Index (IFI) and Relative Fit Index (RFI) values are higher than 0.9

signifies the model is fit for the data. The Comparative Fit Index (CFI) is an incremental fit

index, which assesses overall improvement of a proposed model and in the above model,

CFI value is higher than 0.90 showing a good model fit. The last indicator is Root Mean

Square Error of Approximation (RMSEA) that is related to residuals in the model. Good

model fit is typically indicated by an RMSEA value of 0.06 or less and RMSEA value of

the data is under the acceptable range and hence it can be interpreted that model is fit for

the data.

Data Analysis

114

TABLE 4.9 Convergent Validity- SBI

Constructs Items Item

Loadings t-values

Composite Reliability

(CR) AVE

Competency of Bank Employee (CBE)

CBE1 0.682

0.945

0.531

CBE2 0.787 10.133 CBE3 0.686 10.113 CBE4 0.687 10.124 CBE5 0.774 8.799 CBE6 0.695 9.045 CBE7 0.764 8.676 CBE8 0.736 9.532 CBE9 0.739 9.572

Augmented Services (AS) AS1 0.785

0.930

0.563

AS2 0.808 8.281 AS3 0.734 7.822 AS4 0.690 7.516 AS5 0.691 7.519 AS6 0.786 7.487

Physical Evidence (PE) PE1 0.771 0.869

0.560 PE2 0.756 9.602

PE3 0.719 9.233 Ethos of the Bank (EB) EB1 0.745

0.824

0.571 EB2 0.767 5.821 Assortment of Services (ASTS1) ASTS1 0.744

0.814 0.556

ASTS2 0.748 5.216 Service Product (SP) SP1 1.00 0.842 0.651

SP2 0.551 1.984

Item Loadings of all the six factors are 0.5 or higher signifies that these factors converge

on a common point on Latent Variable – Service Quality. t- Value also known as Critical

Ration of all the observed variables is higher than 1.96 at a significant level of 0.05

confirms the convergent validity. Composite Reliabilities is another indicator of

convergent validity. Composite reliability of all the observed variables are higher than 0.7

indicated good reliability of the factor structure. Last component of convergent validity is

Average Variance Extracted (AVE). AVE calculated for all the six constructs is higher

than 0.50 indicating that more than half the variance of the service quality is explained by

each construct. Item Loading, t-value, construct reliability and AVE confirms the

convergent validity of the factor structure.


115

TABLE 4.10 Discriminant Validity & Nomological Validity - SBI

Average AVE of Two Construct

Square Correlation

CBE <--> AS 0.593 .536 CBE <--> PE 0.574 .506 CBE <--> EB 0.580 .574 CBE <--> ASTS 0.572 .569

CBE <--> SP 0.620 .349

AS <--> PE 0.579 .496 AS <--> EB 0.584 .561 AS <--> ASTS 0.577 .378 AS <--> SP 0.624 .466 PE <--> EB 0.565 .487 PE <--> ASTS 0.558 .548 PE <--> SP 0.605 .313 EB <--> ASTS 0.563 .333 EB <--> SP 0.611 .290 ASTS <--> SP 0.603 .168

Discriminant Validity is the extent to which a construct is truly distinct from the other

construct. Average AVE of the two construct must exceed the square of their correlation to

satisfy the Discrimiant Validity Test (Hair,2006). Values depicted in the above table for all

the constructs, satisfy the condition and hence it can be concluded that discriminant

validity of the factor structure is confirmed. According to Hair (2006), nomological

validity is tested by examining the correlation between the construct in the measurement

model. The correlation values shows that constructs are positively related to each other and

support the nomological validity of the model.

Objective 2: To find out correlation between service quality, customer satisfaction /

Retention / Commitment & Loyalty

4.6.5 Pearson Correlation:

Factor structure of service quality in State Bank of India is confirmed through Exploratory

Factor Analysis and Confirmatory Factor Analysis. Total six factor of the service quality

are derived. To fulfill above stated objective, Pearson Correlation test was performed

between the six factors of service quality and customer satisfaction / retention /

commitment & loyalty. Hypothesis of this objective is as follows:

Data Analysis

116

TABLE 4.11 Summary of Hypothesis Testing – Objective 2(a) - SBI

Correlation co-efficient value is positive that indicates that all the six factors of the service

quality are positively associated with the customer satisfaction. Moreover, significance

value of all the six factors is 0.00 that is less than 0.05 and hence null hypothesis is not

accepted for all the six factors. Co-efficient values for all the six factors are in the range of

0.36 to 0.67 (Richard Taylor, 1990) that represents modest or moderate correlation

between service quality and customer satisfaction. Level of association between customer

satisfaction and factor 1 is 64.2%, factor 2 is 59.4%, factor 3 is 50.1%, factor 4 is 37.1%,

factor 5 is 40.6% and factor 6 is 43.7% respectively.

TABLE 4.12 Summary of Hypothesis Testing – Objective 2 (b) -SBI

Sub objective II (a): To find out correlation between Service Quality and Customer Satisfaction.

Hypothesis Pearson

Correlation Coefficient

Significance Value

Result

H1(a): There is an association between Customer Satisfaction and Competency of bank employee.

0.642 0.00 Accepted

H2 (a): There is an association between Customer Satisfaction and Augmented Services.

0.594 0.00 Accepted

H3 (a): There is an association between Customer Satisfaction and Physical Evidence.

0.501 0.00 Accepted

H4 (a): There is an association between Customer Satisfaction and Ethos of the Bank.

0.371 0.00 Accepted

H5 (a): There is an association between Customer Satisfaction and Assortment of Services.

0.406 0.00 Accepted

H6 (a): There is an association between Customer Satisfaction and Service Product.

0.437 0.00 Accepted

Sub objective II (b): To find out correlation between Service Quality and Customer Retention.

Hypothesis Pearson


Significance Value

Result

H1 (b): There is an association between Customer Retention and Competency of bank employee.

0.458 0.00 Accepted

H2 (b): There is an association between Customer Retention and Augmented Services.

0.404 0.00 Accepted

H3 (b): There is an association between Customer Retention and Physical Evidence.

0.250 0.00 Accepted

H4 (b): There is an association between Customer Retention and Ethos of the Bank.

0.458 0.00 Accepted

H5 (b): There is an association between Customer Retention and Assortment of Services.

0.297 0.00 Accepted

H6 (b): There is an association between Customer Retention and Service Product.

0.376 0.00 Accepted

Data Analysis

117

Significance value of all the six factors is 0.00 that is less than 0.05 and hence null

hypothesis is not accepted for all the six factors. Co-efficient values of the factor –

Physical Evidence is 0.250 and the factor – Assortment of Services is 0.297. According to

Richard Taylor (1990), if the correlation value is ≤ 0.35, it represents low or weak

correlation. Therefore these two factors of service quality are not considered for the

regression analysis. Remaining four factors’ co-efficient values is in the range of 0.36 to

0.67 (Richard Taylor, 1990) depicts the moderate correlation between service quality and

customer retention.

TABLE 4.13 Summary of Hypothesis Testing – Objective 2 (c) - SBI

Correlation co-efficient values of the factors of service quality depicted in the table 4.13 is

having positive sign but the factor Physical Evidence, Ethos of the Bank and Assortment of

the service’s Pearson values are less than 0.35 so it can be interpreted that these three

factors are having low or weak correlation with the customer loyalty. Whereas remaining

three factors are having r values in the range of 0.36 to 0.67 illustrating that Competency

Of bank employee, Service Product and Augmented Services have moderate correlation

with customer loyalty. All the factors significance values (0.00) are less than 0.05 therefore

null hypotheses is not accepted.

Sub objective II (c): To find out correlation between Service Quality and Customer Loyalty.

Hypothesis Pearson


Significance Value

Result

H1 (c): There is an association between Customer Loyalty and Competency of bank employee.

0.371 0.00 Accepted

H2 (c): There is an association between Customer Loyalty and Augmented Services.

0.370 0.00 Accepted

H3 (c): There is an association between Customer Loyalty and Physical Evidence.

0.305 0.00 Accepted

H4 (c): There is an association between Customer Loyalty and Ethos of the Bank.

0.270 0.00 Accepted

H5 (c): There is an association between Customer Loyalty and Assortment of Services.

0.210 0.00 Accepted

H6 (c): There is an association between Customer Loyalty and Service Product.

0.378 0.00 Accepted

Data Analysis

118

TABLE 4.14 Summary of Hypothesis Testing – Objective 2 (d) - SBI


having positive sign but the factor Physical Evidence, Ethos of the Bank and Assortment of

Services’ Pearson values are less than 0.35 so it can be interpreted that these three factors

are having low or weak correlation with the customer commitment. Whereas remaining

three factors are having r values in the range of 0.36 to 0.67 illustrating that Competency

Of bank employee, Service Product and Augmented Services have moderate correlation

with customer commitment. All the factors significance values (0.00) are less than 0.05

therefore null hypotheses is not accepted.

Objective 3: To study the impact of service quality on customer satisfaction /

Retention / Commitment & Loyalty.

4.6.6 Simple Regression

The result of correlation analysis has identified the factors of service quality that has

positive and moderate association with the customer satisfaction, retention, loyalty and

commitment. Simple regression analysis was carried out to find out the impact of factors of

service quality on customer satisfaction, retention, loyalty and commitment.

Sub objective II (d): To find out correlation between Service Quality and Customer Commitment.

Hypothesis Pearson


Significance Value

Result

H1 (d): There is an association between Customer Commitment and Competency of bank employee.

0.391 0.00 Accepted

H2 (d): There is an association between Customer Commitment and Augmented Services.

0.372 0.00 Accepted

H3 (d): There is an association between Customer Commitment and Physical Evidence.

0.273 0.00 Accepted

H4 (d): There is an association between Customer Commitment and Ethos of the Bank.

0.307 0.00 Accepted

H5 (d): There is an association between Customer Commitment and Assortment of Services.

0.250 0.00 Accepted

H6 (d): There is an association between Customer Commitment and Service Product.

0.372 0.00 Accepted

Data Analysis

119

TABLE 4.15 Summary of Hypothesis Testing – Objective 3 (a) - SBI

Table 4.15 exhibits that ANOVA values of all the six factors are 0.00 less than 0.05 at 95

per cent confidence level which indicate that model is overall good. Another parameter is

significance value. Significance values of all the six factors (0.00) are less than 0.05 that

signifies that variables in the model are significant. Therefore null hypotheses are not

accepted for all the six factors. R2 value of the factor 1(Competency of bank employee)

shows that 41.2% of variation in customer satisfaction is explained by this factor. Factor 2

(Augmented Services) explain 35.2%, factor 3 (Physical Evidence) explain 25.1%, factor 4

(Ethos of the Bank) explain 13.8%, factor 5 (Assortment of Services) explain 16.5% and

factor 6 (Service Product) explain 19.1% of variation in customer satisfaction respectively.

TABLE 4.16 Summary of Hypothesis Testing – Objective 3 (b) - SBI

Sub objective III (a): To study the impact of Service Quality on Customer Satisfaction.

Hypothesis Significance

Value R Square

Value ANOVA

Value Result

H1 (a): There is a significant impact of Competency of bank employee on Customer Satisfaction.

0.00 0.412 0.00 Accepted

H2 (a): There is a significant impact of Augmented Services on Customer Satisfaction.

0.00 0.352 0.00 Accepted

H3 (a): There is a significant impact of Physical Evidence on Customer Satisfaction.

0.00 0.251 0.00 Accepted

H4 (a): There is a significant impact of Ethos of the Bank on Customer Satisfaction

0.00 0.138 0.00 Accepted

H5 (a): There is a significant impact of Assortment of Services on Customer Satisfaction.

0.00 0.165 0.00 Accepted

H6 (a): There is a significant impact of Service Product on Customer Satisfaction.

0.00 0.191 0.00 Accepted

Sub objective III (b): To study the impact of Service Quality on Customer Retention.


Value R Square

Value ANOVA

Value Result

H1 (b): There is a significant impact of Competency of bank employee on Customer Retention.

0.00 0.066 0.00 Accepted

H2 (b): There is a significant impact of Augmented Services on Customer Retention.

0.00 0.042 0.00 Accepted

H3 (b): There is a significant impact of Ethos of the Bank on Customer Retention

0.00 0.066 0.00 Accepted

H4 (b): There is a significant impact of Service Product on Customer Retention.

0.00 0.071 0.00 Accepted

Data Analysis

120

Correlation analysis stipulates that factors depicted in the table 4.16 are having moderate

association with the customer retention and hence these four factors of service quality are

considered for regression analysis. ANOVA values of all the four factors imply that model

is overall good. Significance value shows that variables in the regression model are

significant and hence null hypotheses of all the four factors are not accepted. R2 value of

four factors are 6.6%, 4.2%, 6.6% and 7.1% respectively that explain the variation in the

customer retention by these factors.

TABLE 4.17 Summary of Hypothesis Testing – Objective 3 (c) - SBI

Only above mention three factors are found to be associated with customer loyalty that is

considered for regression analysis. ANOVA values imply that model is overall good. As

per the significance value of all the three factors, null hypothesis is not accepted. It also

signifies that variables of the regression are significant. Factor 1 (Competency Of bank

employee)’s R2 value is 11.6% followed by 12.3 % and 7.7% for factor 2 (Augmented

Services) and factor 3(Service Product) respectively. This explains variation in customer

loyalty by all these three factors of service quality.

TABLE 4.18 Summary of Hypothesis Testing – Objective 3 (d) - SBI

Sub objective III (c): To study the impact of Service Quality on Customer Loyalty.


Value

R Square Value

ANOVA Value

Result

H1 (c): There is a significant impact of Competency of bank employee on Customer Loyalty.

0.00 0.116 0.00 Accepted

H2 (c): There is a significant impact of Augmented Services on Customer Loyalty.

0.00 0.123 0.00 Accepted

H3 (c): There is a significant impact of Service Product on Customer Loyalty.

0.00 0.077 0.00 Accepted

Sub objective III (d): To study the impact of Service Quality on Customer Commitment. Hypothesis Significance

Value R Square

Value ANOVA

Value Result

H1 (d): There is a significant impact of Competency of bank employee on Customer Commitment.

0.00 0.085 0.00 Accepted

H2 (d): There is a significant impact of Augmented Services on Customer Commitment.

0.00 0.131 0.00 Accepted

H3 (d): There is a significant impact of Service Product on Customer Commitment.

0.00 0.131 0.00 Accepted

Data Analysis

121

Only above mention three factors are found to be moderately associated with customer

commitment that is considered for regression analysis. ANOVA values imply that model is

overall good. As per the significance value of all the three factors, null hypothesis is not

accepted. It also signifies that variables of the regression are significant. Factor 1

(Competency Of bank employee)’s R2 value is 8.5% followed by 13.1 % and 13.1% for

factor 2 (Augmented Services) and factor 3(Service Product) respectively. This explains

variation in customer commitment by all these three factors of service quality.

Objective 4: To identify important factors of service quality from the demographic

perspective of customers.

4.6.7 Cross Tabulation

With the use of Exploratory Factor Analysis following six factor of service quality

extracted. Factor structure of the six factors was confirmed through Confirmatory Factor

Analysis. Customer’s perceptions towards these six factors were examined with the use of

Cross Tabulation.

TABLE 4.19 Cross Tabulation of the demographic variable – Gender - SBI

Sr. No

Factor of Service Quality Gender Strongly Disagree

Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree

1 Competency of Bank Employee

Male 1 16 28 52 21 Female 2 5 28 37 10

2 Augmented Services Male 3 9 15 40 51 Female 1 3 21 44 13

3 Physical Evidence Male 7 19 23 45 24 Female 2 5 22 39 14

4 Ethos of the Bank Male 13 19 20 44 22 Female 2 6 23 38 13

5 Assortment of Services Male 8 20 22 54 14 Female 6 8 30 31 7

6 Service Product Male 4 14 38 51 9 Female 5 7 20 48 4

Out of 200 respondents, 52 males and 37 females agree with the fact that employees of

State Bank of India are competent. 40 males and 44 females agree that the bank provides

better service & with good quality. 45 males and 39 females believe that bank is having

good & attractive physical evidence. 44 males and 38 female believe that SBI’s philosophy

is good and it results into good culture within the bank. 54 male and 31 female agree that

Data Analysis

122

bank is having various services to be offered to customer. 51 male and 48 female are of an

opinion that the service product of the SBI is good.

TABLE 4.20 Cross Tabulation of the demographic variable – Age - SBI

Sr. No

Factor of Service Quality Age Strongly Disagree

Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree

1 Competency of Bank Employee

18-24 2 8 11 11 4 25-34 0 7 15 28 10 35-44 1 2 6 37 3 45-55 0 3 8 9 6 55-65 0 5 5 8 8

Over 65 0 0 1 2 0 2 Augmented Services 18-24 2 4 15 30 11

25-34 1 3 10 27 23 35-44 0 1 3 12 7 45-55 1 2 4 8 11 55-65 0 2 3 5 12

Over 65 0 0 1 2 0 3 Physical Evidence 18-24 2 6 16 35 3

25-34 0 3 14 28 19 35-44 1 0 6 11 5 45-55 1 2 6 12 5 55-65 0 1 3 12 6

Over 65 0 0 0 2 1

4 Ethos of the Bank 18-24 1 8 16 31 6 25-34 1 3 12 33 15 35-44 1 2 8 10 2 45-55 0 2 4 15 5 55-65 0 0 3 12 7

Over 65 0 0 0 2 1 5 Assortment of Services 18-24 7 6 18 27 4

25-34 1 14 11 29 9 35-44 2 3 7 10 1 45-55 2 4 7 9 4 55-65 0 1 7 11 3

Over 65 0 0 1 1 1 6 Service Product 18-24 1 2 22 35 2

25-34 3 7 19 30 5 35-44 0 1 7 12 3 45-55 0 4 6 14 2 55-65 1 6 3 10 2

Over 65 0 1 0 2 0

Out of 200 respondents, 37 respondents falling in the age group of 35 – 44 years, opines

that SBI is having competent staff to deliver services to customers. Respondents of an age

group 18-24 agree with the factor that bank offers augmented services. Respondents of the

same age group (18-24) also believe that bank’s material is good and maintain cleanliness

in the bank premises. Respondents represent the age category of 25-34 are having opinion

Data Analysis

123

that bank is having a good brand name in the market and bank is ethically managed.

Further, 18-24 age groups’ respondents think that bank offers variety of services and

service products.

TABLE 4.21 Cross Tabulation of the demographic variable – Education - SBI

Sr. No

Factor of Service Quality

Education Strongly Disagree

Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree

1 Competency of bank employee

Secondary School

0 1 1 1 1

Higher Secondary School

0 3 2 6 3

Graduate degree 3 10 22 46 15 Postgraduate degree

0 6 14 36 6

Professional qualifications

0 1 7 9 7

2 Augmented Services Secondary School

0 1 1 0 2


1 1 1 3 8


0 1 11 33 17


1 1 4

9 8

3 Physical Evidence Secondary School

0 0 2 1 1


0 2 1 7 4


1 2 16 50 13


1 0 6 12 5

4 Ethos of the Bank Secondary School

0 0 1 2 1


1 1 1 8 3


1 2 16 34 9


0 1 6 48 6

Data Analysis

124

Sr. No



Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree

5 Assortment of Services

Secondary School

0 0 2 1 1


2 1 0 10 1


2 7 20 27 6


1 5 6 9 3

6 Service Product Secondary School

0 0 2 2 0


0 2 3 7 2


2 5 16 46 3


1 4 11 7 1

Education is another demographic variable that is use to examined the perception of

customer towards the service offered by the State Bank of India. Majority of customer

surveyed are graduate (46) who believe that State Bank of India has competent employees

and bank offers better service and wide variety of services. 50 respondents are post

graduate who think that physical evidence that includes materials used by banks and

cleanliness in premises is very good. 48 respondents are professionally qualified and

having opinion that bank exercise ethics while managing the firm and due to it, SBI is

having good brand name in the market. Further, 40 graduate respondents and 46 post

graduate respondents agree with the factors that bank’s service products are very good and

bank is having bundle of services to be offered.

Data Analysis

125

TABLE 4.22 Cross Tabulation of the demographic variable – Income - SBI

Sr. No.


Income in Rs. Strongly Disagree

Disagree Neither

Agree Nor Disagree

Agree Strongly

Agree


0-10000 1 5 12 20 3 10000-20000 0 7 14 15 10 20000-30000 1 4 5 14 5 30000-40000 1 3 8 30 4 40000-50000 0 1 2 8 1 Above 50000 0 1 5 12 8

2 Augmented Services 0-10000 2 1 13 8 5 10000-20000 0 1 7 15 15 20000-30000 0 6 7 28 15 30000-40000 2 2 4 10 12 40000-50000 0 1 1 11 2 Above 50000 0 1 4 12 15

3 Physical Evidence 0-10000 0 1 0 3 0 10000-20000 1 1 15 21 3 20000-30000 1 3 12 26 7 30000-40000 0 2 4 19 18 40000-50000 2 3 6 15 15 Above 50000 0 2 2 11 7

4 Ethos of the Bank 0-10000 1 6 11 20 4 10000-20000 1 1 15 16 10 20000-30000 0 4 7 16 8 30000-40000 1 3 5 30 5 40000-50000 0 1 2 5 2 Above 50000 0 0 3 16 7

5 Assortment of Services

0-10000 5 6 11 17 3 10000-20000 3 7 14 22 4 20000-30000 2 5 6 18 4 30000-40000 2 4 7 19 5 40000-50000 0 0 7 3 0 Above 50000 0 6 7 8 5

6 Service Product 0-10000 1 2 13 24 2 10000-20000 1 3 13 28 5 20000-30000 2 3 10 19 1 30000-40000 0 9 10 15 3 40000-50000 0 1 5 3 1 Above 50000 1 3 6 14 2

Competency of bank employee – factor is considered good by the respondents (30) having

the income in the range of Rs.30000 – 40000. Further they also think that bank is managed

ethically and brand name of the bank in the market is also good. Respondents having the

income between Rs. 20000 and Rs. 30000 deem that service product and pricing policy of

the bank is good. They also believe that cleanliness is properly maintained in the bank and

material of the bank is also good. Last two factors are mostly considered by the

respondents having income in the category of Rs.10000 – 20000. According to them,

tangible cues of the bank and service offering of the bank are good.

Data Analysis

126

TABLE 4.23 Cross Tabulation of the demographic variable – Occupation - SBI

Sr. No.



Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree


Businessman 0 2 1 3 2 Professional 0 1 6 8 4 Govt. Service 1 2 12 23 15 Private Service 2 9 18 41 6 Housewife 0 1 1 3 1 Student 0 5 6 18 1 Retired 0 1 2 3 2

2 Augmented Services Businessman 0 1 0 3 4 Professional 0 1 5 8 5 Govt. Service 0 2 5 17 29 Private Service 3 5 14 34 20 Housewife 0 0 1 4 1 Student 1 2 9 16 2 Retired 0 1 2 2 3

3 Physical Evidence Businessman 0 0 0 6 6 Professional 1 1 2 10 7 Govt. Service 1 1 4 22 28 Private Service 1 7 12 38 9 Housewife 0 0 1 3 3 Student 0 2 4 19 7 Retired 0 0 0 3 2

4 Ethos of the bank Businessman 0 1 2 3 2 Professional 0 1 6 42 3 Govt. Service 1 2 8 31 11 Private Service 2 5 14 9 13 Housewife 0 0 0 5 1 Student 0 6 11 11 2 Retired 0 0 2 2 4

5 Assortment of services Businessman 0 3 3 2 0 Professional 4 3 4 5 3 Govt. Service 2 6 10 35 8 Private Service 3 13 17 27 8 Housewife 0 0 2 3 1 Student 3 3 9 15 0 Retired 0 0 7 0 1

6 Service Product Businessman 0 0 2 39 0 Professional 0 0 5 14 0 Govt. Service 2 9 12 24 6 Private Service 2 8 20 6 7 Housewife 0 1 0 5 0 Student 1 2 10 16 1 Retired 0 1 4 3 0

State Bank Employees are competent – this is mostly believed by those respondents (41)

who are doing job in the private sector. They also believe that bank offers augmented

services. The same respondents also opine that bank is having attractive physical evidence.

42 respondents who are professional think that ethos of SBI is good. 35 respondents who

Data Analysis

127

are government job holder consider that SBI is having variety of services to offer. 39

businessmen think that the service product of the state bank is good.

Objective 5: To rank the SBI based on the service quality

4.6.8 Least Square Method

It describes the calculation of the respondent’s perception’s towards service quality

through ideal and least scores. Ideal scores are calculated by multiplying the number of

respondents in each category with (+3) and product with total number of criteria. Least

scores calculated by multiplying the number of respondents in each category with (-1) and

the product with number of criteria in the questionnaires

TABLE 4.24 Ideal Score and Least Scores of Respondents - SBI

Category Equation Ideal Score Equation Least Score Service Quality in SBI, 200 × 3 × 37 22200 200 × -1 × 37 -7400

The results of the study are as under. The tables are formed on the basis of the questions of

service quality contained in the questionnaire.

Data Analysis

128

TABLE 4.25 Responses of the Respondents - SBI

No Criterias of Service Quality Completely

Agree Agree Neutral Disagree

Completely Disagree

Score

+3 +2 +1 0 -1 1 Bank’s physical facility is

visually attractive 31 133 21 7 8 372

2 Bank is having modern looking and comfortable waiting area

49 104 22 21 4 373

3 Banks have TV & music system in the waiting area that reduces anxiety while waiting

33 78 30 41 18 267

4 Token system at the bank makes waiting line more organize

52 101 14 25 8 364

5 Cleanliness is properly maintained at the bank.

71 102 14 10 3 428


40 126 17 13 4 385

7 Materials at the bank are visually appealing.

37 115 28 15 5 364


55 78 41 21 5 357

9 Employees of the bank have knowledge about the all the different kind services offered by the bank.

61 89 30 18 2 389


53 70 46 21 10 335


62 89 27 17 5 386

12 Employees of the bank understand your need.

55 91 35 16 3 379


48 83 31 34 4 337

14 Employees of the bank provide me prompt service.

49 98 29 20 4 368


59 89 30 21 1 384


52 95 35 13 5 376


61 91 31 15 2 394

18 Bank performs the service right the first time.

45 95 40 18 2 363

19 Bank provides the service at the time they promise to do so.

61 93 31 13 2 398

Data Analysis

129



Completely Disagree

Score

20 Bank insists on the error free record.

52 91 33 22 2 369


83 67 23 21 6 400


48 109 33 7 3 392

23 Products of the bank like Fixed Deposit, Certificates are of a good quality.

78 95 20 5 2 442

24 Bank maintain confidentially while sending me online user id and password.

86 90 19 4 1 456


52 84 45 10 9 360

26 Bank is having strong security system in the bank premises.

59 104 27 8 2 410


36 112 37 13 2 367

28 Bank always ensure proper functioning of ATM machine.

58 91 19 21 11 364

29 Bank never faces shortage of locker at every branch.

33 61 64 33 9 276


64 86 30 19 1 393


72 84 29 11 4 409


74 80 28 14 4 406

33 Bank is having convenient operating hours.

50 106 31 10 3 178

34 Bank offers me 24*7 customer care services.

53 92 35 14 6 351

35 Bank strictly follows RBI regulations & also informs me about the same.

78 88 25 7 2 433


77 82 33 6 2 426

37 Bank does regular upgradation in its technology.

71 94 21 12 2 420

Total Score (+)13871 (62.48%)

Ideal Score (+)22200 Least Score -7400

Source: Field Survey

Data Analysis

130

Table 4.25 reveals the overall opinion of the customers with the service quality of SBI.

Here no negative score is being observed in the table. The level of service quality is found

to be 62.48% of ideal score that shows that service quality of SBI is overall considered

good.

4.7 Punjab National Bank:



TABLE 4.26 KMO and Bartlett's Test - PNB



KMO value of the data set is 0.908, this signifies that higher correlation exist among the

variables. Further, significant value of Bartlett’s Test of Sphericity is lesser than 0.05

indicating that sufficient correlation exists among the variables and hence further analysis

can be carried out on the data set.

TABLE 4.27 Table Correlation Matrix - PNB

Table Correlation Matrixa

a. Determinant = 0.000213


therefore no multicollinearity is observed in the data.


Table 4.28 exhibits correlation values of 24 factors of service quality of PNB. Second part

of the table shows Diagonal values of the all the factors of service quality. As all the

variables are having this values higher than the 0.5, therefore it can be interpreting that all

the 24 factors of service quality have practical and statistical significance and data is

suitable for performing factor analysis.

Data Analysis

131

TABLE 4.28 Anti Image Table - PNB

Data Analysis

132

TABLE 4.29 Communalities Table - PNB

Sr. No


1 Bank’s physical facility is visually attractive. 1.000 .759

2 Bank is having modern looking and comfortable waiting area. 1.000 .784

5 Cleanliness is properly maintained at the bank. 1.000 .703


1.000 .601

8 Employees of the bank are very attentive & provide individual attention. 1.000 .696


1.000 .729



1.000 .702



1.000 .641


16 When bank promises to do something, they do it in certain time. 1.000 .721


1.000 .656

18 Bank performs the service right the first time. 1.000 .717

19 Bank provides the service at the time they promise to do so. 1.000 .625


23 Products of the bank like Fixed Deposit, Certificates are of a good quality. 1.000 .594


1.000 .705


1.000 .626

29 Bank never faces shortage of locker at every branch. 1.000 .693


34 Bank offers me 24*7 customer care services. 1.000 .609

35 Bank strictly follows RBI regulations & also informs me about the same. 1.000 .697



Communalities values depicted in the table 4.29 for all the 24 variables of service quality

are higher than 0.5 and therefore data set were appropriate for further analysis.

Data Analysis

133

TABLE 4.30 Total Variance Explained - PNB




Total% of

Variance Cumulative

% Total

% of Variance

Cumulative %

Total % of

Variance Cumulative

%

1 9.396 39.150 39.150 9.396 39.150 39.150 4.335 18.064 18.064

2 1.791 7.464 46.614 1.791 7.464 46.614 2.776 11.568 29.631

3 1.500 6.251 52.864 1.500 6.251 52.864 2.676 11.149 40.780

4 1.216 5.067 57.931 1.216 5.067 57.931 2.290 9.540 50.320

5 1.155 4.814 62.745 1.155 4.814 62.745 2.133 8.889 59.209

6 1.064 4.435 67.180 1.064 4.435 67.180 1.913 7.971 67.180

7 .801 3.338 70.517

8 .751 3.130 73.647

9 .674 2.807 76.453

10 .668 2.783 79.237

11 .593 2.470 81.707

12 .524 2.183 83.890

13 .468 1.948 85.838

14 .455 1.897 87.735

15 .430 1.790 89.525

16 .365 1.519 91.045

17 .358 1.492 92.537

18 .327 1.364 93.901

19 .299 1.246 95.147

20 .290 1.207 96.354

21 .273 1.138 97.491

22 .263 1.096 98.587

23 .203 .845 99.432

24 .136 .568 100.000


Here, 24 variables of service quality explained 67.18 % of variance that is higher than the

threshold value of 60%.

Data Analysis

134

TABLE 4.31 Rotated Component Matrixa- PNB

Sr. No. Variables Component

1 2 3 4 5 6

1 Bank’s physical facility is visually attractive. .205 .733 .278 -.117 .118 .272

2 Bank is having modern looking and comfortable waiting area.

.266 .805 .037 -.059 .167 .177

5 Cleanliness is properly maintained at the bank. .289 .712 .089 .313 .083 .000


.295 .581 .199 .367 -.043 -.018


.762 .215 .169 .163 .098 .069


.726 .191 .091 .185 .351 .006


.722 .169 .139 .184 .109 .208


.764 .219 .140 .069 .200 .077

12 Employees of the bank understand your need. .707 .174 .298 .189 .099 .110

13 Employees of the bank are never too busy to respond to customer‘s request.

.645 .139 .375 .044 -.074 .239


.574 .318 .384 .200 -.008 .149


.269 .286 .699 .166 .195 -.112


.348 .265 .634 .160 .157 .115

18 Bank performs the service right the first time. .202 -.011 .778 .039 .123 .232

19 Bank provides the service at the time they promise to do so.

.212 .094 .641 .343 .170 .117


.065 .101 .178 -.033 .788 .159


.175 .354 .144 .225 .591 .131


.243 .075 .127 .693 .155 .347


.130 .232 .088 .044 .355 .648

29 Bank never faces shortage of locker at every branch. .126 .012 .147 .233 -.036 .775


.225 -.090 .136 .350 .656 .051

34 Bank offers me 24*7 customer care services. .275 .108 .194 .622 -.038 .308


.109 .082 .179 .741 .312 .010

37 Bank does regular upgradation in its technology. .218 .230 .064 .211 .352 .537



Data Analysis

135

Rotated component matrix table represent the strength of relationship between the item &


factor is determined by identifying the highest loading in one factor. The loading values




(2006), for sample size of 200 factor loading of 0.40 is acceptable. 200 respondents of

PNB were surveyed and hence 0.40 is considered as acceptable factor loading.


After extracting the factors, factors are given name based on the grouping of the various

items in each factor as follows:


This factor is linear combination of items 8, 9, 10, 11, 12, 13 and 15. All these items

represent bank employees’ customer orientation, their competency, their ability to

understand the need of customers as well as easy accessibility of bank employees.

Considering these all these items together, this factor is named as competency of bank

employee. The similar factor extracted for the State Bank of India also.

Factor 2 Interior signage & service ability

This factor is linear combination of items 1, 2, 5 and 6. These items comprise of bank’s

internal environment, cleanliness and materials like brochure and pamphlets. As all these

items are pertaining to the bank’s interior signage and it plays significant role in facilitating

the service to the customers and hence this factor is name as Interior signage and service

ability.

Factor 3 Accomplishing the Promises

This factor is a combination of items 16, 17, 18 and 19. These items are pertaining to the

fulfilling the promise in time, promptness in solving the problem and performing the right

service at the right time. Group of these items are named as accomplishing the promises.

Data Analysis

136

Factor 4 Assortment of Service

As this factor is a group of item 24, 34 and 35, so it represents the variables like

maintaining confidentiality, customer care service and adhering RBI regulations. Apart

from the plain vanilla banking service, service of PNB includes the above mention services

represented in the item 24, 34 and 35. Deeming this, factor name assortment of service is

given to this factor. The similar name was given to the factor obtained in the SBI but the

items loaded under that factor were different. However, the name given to this factor

represents both the banks.

Factor 5 Augmented Services

Augmented services name is given to the factor as it symbolizes the items 22, 23 and 31.

These items are related to bank’s ethical management, banking product like certificates &

fixed deposit and pricing policies of the bank. Like SBI, respondents of PNB also opine

that, service of PNB has improved over a period of time and hence this factor also carries

the similar name: Augmented Services.

Factor 6 Service Product

Like SBI, this factor is also linear combination of item 27, 29 and 37. These items

represent the various products through which bank offers services to its customers. As the

similar items loaded under this factor also and hence this factors bear the same name:

Service Product.


After using Exploratory Factor Analysis, total six factors are extracted and with the use of

that factors following factor structure developed. This factor structure is confirmed through

Confirmatory Factor Analysis. In this factor structure, latent variable is service quality and

observed variables are Competency of Bank Employee (CBE), Interior Signage & Service

Ability (ISB), Accomplishing the Promises (AP), Assortment of Service (ASTS),

Augmented Service (AS), and Service Product (SP). Convergent Validity, Discriminant

Validity and Nomological Validity are used to validate the factor structure.

Data Analysis

137

FIGURE 4.2Factor Structure - PNB

E1

E2

E3

E4

E5

E6

E7

E8

E9

E10

E11

E12

E13

E14

E15

E18

E20

E21

E22

E23

E24

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

1

cbe1

cbe2

cbe3

cbe4

cbe5

cbe6

abe7

isb1

isb2

isb3

isb4

ap1

ap2

ap3

ap4

asts3

as2

as3

sp1

sp2

sp3

cbe

isb

ap

asts

as

sp

r1

r2

r3

r4

r5

r6

sq

1

1

1

1

1

11

1

1

1

1

1

1

E16 1

asts1

E17 asts2

1

E19 1 as1

Data Analysis

138

TABLE 4.32 Model Fit Indexes- PNB


Model fit is decided by the various Model Fix Indexes. First index is Chi-square to degrees

of freedom depicting difference between the expected and observed covariance matrices.

The value is higher than 0.05 indicated a good model fit. The values of Goodness-of-fit

index (GFI), Adjusted GFI (AGFI), Tucker-Lewis Index (TLI), Incremental Fit Index (IFI)

and Relative Fit Index (RFI) are higher than 0.9 signifies a good model fit. 0.969 CFI

value indicates a good model fit. Root Mean Square Error of Approximation (RMSEA)

that is related to residuals in the model and RMSEA value is less than 0.06 indicates a

good model fit.

TABLE 4.33 Convergent Validity - PNB

Constructs Items Item Loadings

t-values

Composite Reliability

(CR)

AVE

Competency Of Bank Employee (CBE) CBE1 .781

0.943

0.576

CBE2 .758 11.355 CBE3 .758 11.351 CBE4 .776 11.676 CBE5 .792 11.986 CBE6 .697 10.256 CBE7 .747 11.146

Interior Signage & Service Ability (ISB) ISB1 .823 0.887

0.546 ISB2 .852 12.516

ISB3 .673 9.746 ISB4 .573 8.086

Accomplishing The Promises (AP) AP1 .742 0.883

0.526 AP2 .796 10.428

AP3 .653 8.623 AP4 .705 9.310

Assortment of Services (ASTS)

ASTS1 .757 0.862

0.546 ASTS2 .710 8.573

ASTS3 .749 7.988 Augmented Services AS1 .621

0.841 0.511

AS2 .738 7.048 AS3 .778 6.038

Service Product (SP) SP1 .772 0.863

0.548 SP2 .719 5.927 SP3 .729 7.441

Data Analysis

139

Item loadings of all the factors are higher than 0.05 shows that these factors converge on a

common point on Latent Variable – Service Quality. T-value (Critical Ratio) of all the six

observed variables are higher than 1.96 at 0.05 significance level show the convergent

validity. Convergent validity is also confirmed by Composite Reliability. Composite

Reliabilities values depicted in the above table confirms the reliability of the factor

structure as the values of all the observed variables are higher than 0.7. Average Variance

Extracted (AVE) calculated for all the six constructs is higher than 0.50 indicating that

more than half the variance of the service quality is explained by each construct. This last

factor confirms the convergent validity.

TABLE 4.34 Discriminant Validity &Nomological Validity - PNB


Estimate

CBE <--> ISB 0.560 .558 CBE <--> AP 0.550 .541 CBE <--> ASTS 0.560 .551 CBE <--> AS 0.543 .534 CBE <--> SP 0.561 .502 ISB <--> AP 0.535 .528 ISB <--> ASTS 0.545 .416 ISB <--> AS 0.528 .522 ISB <--> SP 0.546 .543 AP <--> ASTS 0.536 .534 AP <--> AS 0.518 .514 AP <--> SP 0.537 .529 ASTS <--> AS 0.528 .524 ASTS <--> SP 0.547 .512 AS <--> SP 0.529 .523

Discriminant validity is determined by average of AVE. Average AVE of the two construct

must exceed the square of their correlation to satisfy the Discrimiant Validity Test

(Hair,2006). In the above table, average AVE of two construct exceed the square of the

correlation proves the Discriminant Validity. According to Hair (2006), nomological

validity is tested by examining the correlation between the construct in the measurement

model. The correlation values shows that constructs are positively related to each other and

support the nomological validity of the model.

Data Analysis

140




Factors were extracted through Exploratory Factor Analysis and factor structure was

developed. This factor structure was confirmed through Confirmatory Factor Analysis.

Once the facture structure was confirmed than after, Pearson Correlation Test was applied

in order to identify the association between the factors of the service quality extracted

through the factor analysis and customer satisfaction, retention, loyalty and commitment.

TABLE 4.35 Summary of Hypothesis Testing – Objective 2(a) - PNB

Here the Pearson Correlation Values of all the factors of service quality are positive that

indicates that the factors of service quality have positive association with the customer

satisfaction. Moreover, Pearson Correlation Values are significant at 95 percent confidence

level as the significance value of all the factors of service quality is less than 0.05.

Therefore null hypothesis is not accepted. Further, there is a 62.5% of association was

found out between factor 1 (Competency of Bank Employee) and customer satisfaction,

followed by 51.3% of association of factor 2 (Interior signage & service ability), 54.1% of

association of factor 3 (Accomplishing The Promises), 65.4% of association of factor 4

(Assortment of services), 55.7% of association of factor 5(Augmented Services) and 60.8%

of association of factor 6 (Service Product) with the customer satisfaction.


Hypothesis Pearson


Significance Value

Result

H1 (a): There is an association between Customer Satisfaction and Competency of Bank Employee.

0.625 0.00 Accepted

H2 (a): There is an association between Customer Satisfaction and Interior signage & service ability.

0.513 0.00 Accepted

H3 (a): There is an association between Customer Satisfaction and Accomplishing the promises.

0.541 0.00 Accepted

H4 (a): There is an association between Customer Satisfaction and Assortment of services.

0.654 0.00 Accepted


0.557 0.00 Accepted

H6 (a): There is an association between Customer Satisfaction and Service Product.

0.608 0.00 Accepted

Data Analysis

141

TABLE 4.36 Summary of Hypothesis Testing – Objective 2(b) - PNB

Positive correlation values are exhibited in the table 4.36 at 95 per cent confidence level

and all these values are very much significant as p value (significant values) are less than α

value (0.05) for all the factor of service quality. So, null hypothesis is not accepted.

Moderate association is being observed among all the factors of service quality and

customer retention. Level of association with customer retention of factor 1 (Competency

of Bank Employee) is 41.4%, factor 2 (Interior signage & service ability) is 44.4%, factor

3 (Accomplishing the Promises) is 39.3 %, factor 4 (Assortment of services) is 45.4%,

factor 5 (Augmented Services) is 37.7% and factor 6 (Service Product) is 49.4%

respectively.

TABLE 4.37 Summary of Hypothesis Testing – Objective 2(c) - PNB


Hypothesis Pearson


Significance Value

Result

H1 (b): There is an association between Customer Retention and Competency of Bank Employee.

0.414 0.00 Accepted

H2 (b): There is an association between Customer Retention and Interior signage & service ability.

0.444 0.00 Accepted

H3 (b): There is an association between Customer Retention and Accomplishing the promises.

0.393 0.00 Accepted

H4 (b): There is an association between Customer Retention and Assortment of services.

0.454 0.00 Accepted


0.377 0.00 Accepted

H6 (b): There is an association between Customer Retention and Service Product.

0.494 0.00 Accepted


Hypothesis Pearson


Significance Value

Result

H1 (c): There is an association between Customer Loyalty and Competency of Bank Employee.

0.424 0.00 Accepted

H2 (c): There is an association between Customer Loyalty and Interior signage & service ability.

0.521 0.00 Accepted

H3 (c): There is an association between Customer Loyalty and Accomplishing the promises.

0.413 0.00 Accepted

H4 (c): There is an association between Customer Loyalty and Assortment of services.

0.447 0.00 Accepted


0.361 0.00 Accepted

H6 (c): There is an association between Customer Loyalty and Service Product.

0.557 0.00 Accepted

Data Analysis

142

It can be interpreted from the table 4.37 that positive and moderate correlation exists

among all the variables of the service quality and customer loyalty as the level of an

association of all the six factors of the service quality is found to be 42.4% (factor1 -

Competency Of Bank Employee), 52.1% (factor2 - Interior signage & service ability),

41.3% (factor3 - Accomplishing The Promises), 44.7% (factor4 - Assortment of services),

36.1% (factor5- Augmented Services) and 55.7% (factor 6 - Service Product) respectively.

Here, in this table, significant values of all the six factors of service quality are significant

(0.00) at 95 per cent confidence level so null hypothesis for all the six factors are not

accepted.

TABLE 4.38 Summary of Hypothesis Testing – Objective 2(d) - PNB

P values (0.00) of all the factors of service quality are less than α value (0.05) at 95 per

cent confidence level so null hypothesis is not accepted for this objective. Association

between customer commitment and factor 1 is reported as 37.5%, followed by 36% of

factor 2, 49.4 % of factor3, 46.6% of factor4, 36% of factor5 and 43.4% of factor6 of

service quality. Overall moderate association has been found out between the service

quality and customer commitment.


Hypothesis Pearson


Significance Value

Result

H1 (d): There is an association between Customer Commitment and Competency of Bank Employee.

0.375 0.00 Accepted

H2 (d): There is an association between Customer Commitment and Interior signage & service ability.

0.360 0.00 Accepted

H3 (d): There is an association between Customer Commitment and Accomplishing the promises.

0.494 0.00 Accepted

H4 (d): There is an association between Customer Commitment and Assortment of services.

0.466 0.00 Accepted


0.360 0.00 Accepted

H6 (d): There is an association between Customer Commitment and Service Product.

0.434 0.00 Accepted

Data Analysis

143


Retention / Commitment & Loyalty.

4.7.6 Simple Regression:



commitment. Than after simple regression analysis was carried out to find out the impact

of factors of service quality on customer satisfaction, retention, loyalty and commitment.

TABLE 4.39 Summary of Hypothesis Testing – Objective 3 (a) - PNB

ANOVA values for all the factors of service quality (0.00) is less than 0.05 at 95 per cent

confidence level indicate that the regression model is overall good. Further, significance

values of all the factors are also 0.00 that are less than 0.05 indicated that the variables are

significant in the model and null hypothesis for all the factors of service quality is not

accepted. R2 Value of factor - Competency of bank employee is 0.391 which stipulates that

39.1% of variance in customer satisfaction can be explained by this factor. Variance in

customer satisfaction caused by factor 2 is 26.3%, factor3 is 29.2%, factor4 is 42.7%,

factor5 is 31% and factor6 is 37% respectively.



Value

R Square Value

ANOVA Value

Result

H1 (a): There is a significant impact of Competency of Bank Employees on Customer Satisfaction.

0.00 0.391 0.00 Accepted

H2 (a): There is a significant impact of Interior signage & service ability on Customer Satisfaction.

0.00 0.263 0.00 Accepted

H3 (a): There is a significant impact of Accomplishing the promises on Customer Satisfaction.

0.00 0.292 0.00 Accepted

H4 (a): There is a significant impact of Assortment of services on Customer Satisfaction.

0.00 0.427 0.00 Accepted

H5 (a): There is a significant impact of Augmented Services on Customer Satisfaction.

0.00 0.310 0.00 Accepted

H6 (a): There is a significant impact of Service Product on Customer Satisfaction.

0.00 0.370 0.00 Accepted

Data Analysis

144

TABLE 4.40 Summary of Hypothesis Testing – Objective 3 (b) - PNB

For the dependent variable customer retention, R2 Value of the factor 1 is 17.1%, factor 2 is

19.7%, factor 3 is 15.4%, factor 4 is 20.6%, factor 5 is 12.8% and factor 6 is 17.1%. R2

Value explains the variance in customer retention due to the six factors of service quality.

All these values are significant 95 per cent confidence level as p values of all the six

factors of service quality are less than the 0.05. Therefore null hypothesis of all the six

factors of service quality are not accepted. ANOVA values (0.00) are also less than α value

(0.05) indicates that regression model is good and the variables in the model are

significant.

TABLE 4.41 Summary of Hypothesis Testing – Objective 3 (c) - PNB



Value

R Square Value

ANOVA Value

Result

H1 (b): There is a significant impact of Competency of Bank Employees on Customer Retention.

0.00 0.171 0.00 Accepted

H2 (b): There is a significant impact of Interior signage & service ability on Customer Retention.

0.00 0.197 0.00 Accepted

H3 (b): There is a significant impact of Accomplishing the promises on Customer Retention.

0.00 0.154 0.00 Accepted

H4 (b): There is a significant impact of Assortment of services on Customer Retention.

0.00 0.206 0.00 Accepted

H5 (b): There is a significant impact of Augmented Services on Customer Retention.

0.00 0.128 0.00 Accepted

H6 (b): There is a significant impact of Service Product on Customer Retention.

0.00 0.171 0.00 Accepted



Value

R Square Value

ANOVA Value

Result

H1 (c): There is a significant impact of Competency of Bank Employees on Customer Loyalty.

0.00 0.180 0.00 Accepted

H2 (c): There is a significant impact of Interior signage & service ability on Customer Loyalty.

0.00 0.272 0.00 Accepted

H3 (c): There is a significant impact of Accomplishing the promises on Customer Loyalty.

0.00 0.170 0.00 Accepted

H4 (c): There is a significant impact of Assortment of services on Customer Loyalty.

0.00 0.200 0.00 Accepted

H5 (c): There is a significant impact of Augmented Services on Customer Loyalty.

0.00 0.130 0.00 Accepted

H6 (c): There is a significant impact of Service Product on Customer Loyalty.

0.00 0.310 0.00 Accepted

Data Analysis

145

The significance value (0.00) of the six factors of service quality at 95 per cent confidence

level indicates that variables in the regression model are significant and hence null

hypothesis of all the six factors of service quality is not accepted. ANOVA values of all the

factors (0.00) also signify that overall regression model is good. The variance in customer

loyalty is explained factor 1 (Competency of Bank Employee) is 18%, factor 2 (Interior

signage & service ability) is 27.2%, factor 3 (Accomplishing the Promises) is 17%, factor

4 (Assortment of services) is 20%, factor 5 (Augmented Services) is 13% and factor 6

(Service Product) is 31% respectively.

TABLE 4.42 Summary of Hypothesis Testing – Objective 3 (d) - PNB

ANOVA value (0.00) of all the factors of service quality is below 0.05 infers that

regression model is good. Significant value of all the factors of service quality is also less

than 0.05 at 95 per cent confidence level indicating that variables in the regression model is

significant. So, null hypothesis of all the factors of service quality is not accepted. Further,

all the factors of service quality contribute 12.6%, 13%, 24.4%, 21.7%, 13% and 18.8% of

variance in the dependent variable customer commitment correspondingly.

Sub objective III (d): To study the impact of Service Quality on Customer Commitment.


Value

R Square Value

ANOVA Value

Result

H1 (d): There is a significant impact of Competency of Bank Employees on Customer Commitment.

0.00 0.126 0.00 Accepted

H2 (d): There is a significant impact of Interior signage & service ability on Customer Commitment.

0.00 0.130 0.00 Accepted

H3 (d): There is a significant impact of Accomplishing the promises on Customer Commitment.

0.00 0.244 0.00 Accepted

H4 (d): There is a significant impact of Assortment of services on Customer Commitment.

0.00 0.217 0.00 Accepted

H5 (d): There is a significant impact of Augmented Services on Customer Commitment.

0.00 0.130 0.00 Accepted

H6 (d): There is a significant impact of Service Product on Customer Commitment.

0.00 0.188 0.00 Accepted

Data Analysis

146



4.7.7 Cross Tabulation:

With the use of Exploratory Factor Analysis following six factor of service quality

extracted. Factor structure of the six factors was confirmed through Confirmatory Factor

Analysis. Customer’s perceptions towards these six factors were examined with the use of

Cross Tabulation based on the demographic variables like Gender, Age, Occupation,

Income and Education.

TABLE 4.43 Cross Tabulation of the demographic variable – Gender - PNB

Sr. No. Factor of Service

Quality Gender

Strongly Disagree

Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree

1 Competency of Bank Employees

Male 1 19 11 61 20 Female 7 12 11 42 16

2 Interior signage & service ability

Male 0 10 35 47 20 Female 3 8 28 43 6

3 Accomplishing the promises

Male 1 18 24 45 24 Female 2 9 25 33 19

4 Assortment of services

Male 3 14 24 44 23 Female 1 11 18 24 38

5 Augmented Services

Male 0 9 34 43 26 Female 2 6 26 38 16

6 Service Product Male 0 22 24 44 22 Female 1 11 23 27 26

200 respondents of PNB were surveyed. Total six factors were extracted in Exploratory

Factor Analysis. So far as, First factor is concerned, total 61 males and 42 female think that

Bank Employee of PNB are very competent in offering quality service to the customers. 47

males and 43 females opine that interior signage of the bank is very good and it results in

delivery of good services. 45 male and 33 female believe that bank is very good at

fulfilling its promises. 44 male and 24 female believe that the bank offers variety of the

service to its customers. 43 male and 38 female are having opinion that bank is managed

ethically and offer amplified services. Lastly, 44 male and 27 female deem that overall

service product of the bank is good.

Data Analysis

147

TABLE 4.44 Cross Tabulation of the demographic variable – Age - PNB

Sr. No.

Factor of Service Quality Age Strongly Disagree

Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree


18-24 0 3 5 20 9 25-34 2 8 14 29 11 35-44 4 9 11 16 10 45-55 1 9 4 8 5 55-65 1 1 2 5 6

Over 65 0 1 0 3 3 2 Interior signage & service

ability 18-24 0 1 11 18 7 25-34 1 8 9 38 8 35-44 1 5 11 25 8 45-55 1 2 9 13 2 55-65 0 1 1 13 0

Over 65 0 1 3 2 1 3 Accomplishing the

promises 18-24 0 4 9 11 13 25-34 2 7 21 23 12 35-44 2 9 15 12 12 45-55 0 5 8 9 5 55-65 0 2 5 4 4

Over 65 0 0 1 3 3 4 Assortment of services 18-24 0 1 9 13 14

25-34 2 7 15 16 12 35-44 2 10 7 28 15 45-55 0 3 4 13 7 55-65 0 2 2 7 4

Over 65 0 2 0 2 3 5 Augmented Services 18-24 0 3 7 20 7

25-34 0 3 21 12 10 35-44 1 6 8 21 14 45-55 0 2 6 30 7 55-65 1 0 2 8 4

Over 65 0 0 3 0 3 6 Service Product 18-24 0 4 6 25 2

25-34 0 11 15 32 6 35-44 1 8 11 21 9 45-55 0 6 12 9 0 55-65 0 3 1 9 2

Over 65 0 1 2 3 1

PNB is very good at Factor 1 – (Competency of Bank Employee) is opined by the

respondents of the age group of 25-34. The same age group respondents also believe that

signage used by the bank for interior of the branch is very attractive and contribute

significantly for delivering good services and bank is very good in accomplishing its

promises as well. Respondents falling in age group of 35 – 44 think that bank offers

bundle of services. 30 respondents from the age group of 45-55 opine that bank follows

ethics and provide better services to its customers. 32 respondents representing the age

group of 25-34 think that bank is very good at offering various service products such as

mutual fund, insurance polices etc.

Data Analysis

148

TABLE 4.45 Cross Tabulation of the demographic variable – Education - PNB

Sr. No.



Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree


Secondary School

0 0 1 4 0


1 8 6 9 4

Graduate degree

3 13 13 24 26

Postgraduate degree

3 3 10 35 10


2 6 6 9 4


Secondary School

3 3 6 12 1


0 5 9 8 3

Graduate degree

3 7 16 39 11

Postgraduate degree

0 4 12 29 7


0 2 6 10 4


Secondary School

0 1 4 1 0


0 5 15 5 3

Graduate degree

0 11 18 21 29

Postgraduate degree

0 7 16 25 13


3 3 6 10 4

4 Assortment of services

Secondary School

0 0 2 0 4


3 9 8 5 3

Graduate degree

0 8 16 7 30

Postgraduate degree

1 5 21 18 16


0 3 11 25 5

Data Analysis

149

Sr. No.



Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree

5 Augmented Services

Secondary School

0 1 2 0 3


0 4 10 10 4

Graduate degree

1 5 15 33 25

Postgraduate degree

1 4 13 34 9


0 1 11 10 4

6 Service Product Secondary School

0 1 1 4 0


0 10 5 10 3

Graduate degree

0 13 13 43 10

Postgraduate degree

0 8 17 31 5


1 1 11 11 2

Majority of the respondents (35) are postgraduate who believe that bank employees are

very competent in performing their duties and fulfill their promise timely. 39 respondents

having the graduate degree consider the interior of the bank very attractive and also having

opinion that service product of the bank is good. Majority of the customers’ are

professional and think that bank’s service is of wide variety and meet all their needs. 33

graduate and 34 post graduate opine that bank is ethically managed and offer better

services.

Data Analysis

150

TABLE 4.46 Cross Tabulation of the demographic variable – Income - PNB

Sr. No.

Factor of Service Quality Income in Rs. Strongly Disagree

Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree


0-10000 2 3 12 18 4 10000-20000 2 8 9 16 11 20000-30000 3 6 6 19 6 30000-40000 1 4 5 21 6 40000-50000 0 3 1 10 3 Above 50000 1 7 3 5 5


0-10000 0 5 9 21 5 10000-20000 1 6 11 21 8 20000-30000 1 4 11 33 4 30000-40000 1 3 2 11 5 40000-50000 2 0 7 8 0 Above 50000 2 0 4 11 4


0-10000 0 10 6 11 8 10000-20000 1 8 15 12 14 20000-30000 0 3 13 27 8 30000-40000 1 3 5 9 8 40000-50000 0 3 6 6 3 Above 50000 1 0 4 7 8

4 Assortment of services 0-10000 1 5 9 11 14 10000-20000 2 11 10 14 13 20000-30000 1 7 7 21 10 30000-40000 0 1 8 9 8 40000-50000 0 1 8 4 4 Above 50000 0 0 4 11 6

5 Augmented Services 0-10000 1 4 12 20 8 10000-20000 0 7 10 23 10 20000-30000 0 1 9 19 12 30000-40000 1 1 8 8 8 40000-50000 0 1 7 8 1 Above 50000 0 0 5 8 7

6 Service Product 0-10000 0 9 8 18 5 10000-20000 1 15 9 19 3 20000-30000 0 5 9 18 6 30000-40000 0 2 8 12 4 40000-50000 0 0 2 25 1 Above 50000 0 2 11 7 1

Majority of the respondents are having an income in the range of Rs. 30000 – 40000 and

they have shown agreement to the factor 1 that Competency of the bank employees is very

good. Respondents having income in the category of Rs. 20000 – 30000 opine that interior

signage of the bank is good and it plays an important role in offering quality service to the

customers. Further they also believe that bank offers wide variety of services and

employees of the bank are very good at accomplishing the promises. Respondents’ income

is between Rs.10000 – 20000 believe that bank ethically strong and offer better services.

Factor 6 (Service Product) is considered as a good factor for the PNB bank by the

respondents whose income is in the range of Rs. 40000 – 50000.

Data Analysis

151

TABLE 4.47 Cross Tabulation of the demographic variable – Occupation - PNB

Sr. No



Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree







4 Assortment of services Businessman 1 1 2 6 4 Professional 2 9 8 26 5 Govt. Service 1 3 12 11 16 Private Service 0 7 15 12 19 Housewife 0 3 3 5 4 Student 0 0 3 3 8 Retired 0 2 3 1 5

5 Augmented Services Businessman 0 1 1 40 4 Professional 0 4 8 19 5 Govt. Service 0 2 4 24 13 Private Service 0 6 6 3 13 Housewife 2 0 2 8 2 Student 0 1 3 9 4 Retired 0 1 3 8 4

6 Service Product Businessman 0 2 4 7 1 Professional 1 7 12 16 0 Govt. Service 0 6 13 17 7 Private Service 0 13 8 37 7 Housewife 0 2 3 6 4 Student 0 1 4 11 0 Retired 0 2 3 5 1

The last demographic variable is occupation. Majority of the private service employees

consider that PNB is very good at factor 1 that represents the competency of the bank

employee and factor 2 that signifies the interior signage of the bank. Majority of the

government employees strongly agree with the factor 3 that PNB is very good in

Data Analysis

152

accomplishing the promises. 26 professional believe that PNB is having a variety of the

service to be offered to its customers. Businessmen are the majority of the respondents

who thinks that bank offers augmented services. Again, respondents working in the private

sector opine that service product of the bank is good.

Objective 5: To study service quality of PNB


Table 4.47 depicts the calculation of the respondent’s perceptions towards service quality




the product with number of criteria in the questionnaires.

TABLE 4.48Ideal Score and Least Scores of Respondents- PNB

Category Equation Ideal Score Equation Least Score Service Quality in PNB, 200 × 3 × 37 22200 200 × -1 × 37 -7400



Data Analysis

153

TABLE 4.49Responses of the Respondents- PNB



Completely Disagree

Score



2 Bank is having modern

looking and comfortable waiting area

42 101 25 28 4 349


34 72 33 50 11 268


44 92 32 27 5 343


66 86 31 13 4 397

6 Materials like pamphlets,

brochure provides detail information about bank’s various services.

55 91 35 16 3 379


34 92 53 20 1 338

8 Employees of the bank are

very attentive & provide individual attention.

50 74 51 21 4 345


54 83 38 19 6 360


42 73 50 31 4 318


47 85 45 15 8 348


41 88 52 14 5 346


never too busy to respond to customer‘s request.

35 60 63 34 8 280


34 83 56 24 3 321

15 Every employees of the bank

are easily accessible by the customer.

39 85 36 33 7 316


40 80 51 21 8 323


49 83 47 18 3 357


37 89 51 19 5 335

19 Bank provides the service at

the time they promise to do so.

49 80 45 23 3 349

Data Analysis

154



Completely Disagree

Score


48 70 49 29 4 329

21 I have selected bank because

bank is having strong brand name in the market.

55 74 43 25 3 353


53 100 34 10 3 390


78 77 34 8 3 419


68 66 44 11 11 369


31 66 66 25 12 279


67 79 31 16 7 383


38 87 53 19 3 338


53 85 36 17 9 356


25 54 68 34 19 232

30 Bank is having well managed

web policies for secure online banking.

53 78 47 20 2 360


48 83 47 17 5 352


58 73 40 21 8 352


44 92 36 21 7 345

34 Bank offers me 24*7

customer care services. 50 80 41 20 9

342


56 89 41 11 3 384


66 82 38 14 0 400


59 89 34 15 3 386

Total Score (+) 12796

(57.63%) Ideal Score (+)22200 Least Score -7400


Data Analysis

155

Customer opinion about the service quality of the Punjab National Bank is depicted in the

table 4.48. Negative score is not observed in the table 4.48. The level of service quality is

found to be 57.63% of ideal score that signifying that service quality of PNB is considered

good.

4.8 ICICI Bank



TABLE 4.50KMO and Bartlett's Test - ICICI



Significance Value of Bartlett’s Test of Sphericity (0.00) is lesser than 0.05 that infers that

correlation exists among the variables. Moreover, KMO value is 0.916 indicates that much

higher correlation exists among the variables and hence further analysis can be carried out

on the data set.

TABLE 4.51Correlation Matrixa- ICICI

Correlation Matrixa

a. Determinant = .006


therefore no multicollinearity is observed in the data.


The table 4.51 exhibits correlation values of 13 factors of service quality of ICICI Bank.

Diagonal values of the all the 13 factors of service quality is depicted in the second part of

the table. As all the variables are having values higher than the 0.5, therefore it can be

interpreting that all the 13 factors of service quality have practical and statistical

significance and data is suitable for performing factor analysis.

Data Analysis

156

TABLE 4.52 Anti Image Matrices - ICICI

Anti-image Matrices

VAR1 VAR2 VAR10 VAR11 VAR12 VAR13 VAR14 VAR15 VAR17 VAR21 VAR22 VAR23 VAR34

Anti-image Covariance

VAR1 .480 -.296 -.077 -.046 .070 -.006 .029 -.015 -.022 .011 .024 -.055 -.028

VAR2 -.296 .424 .083 .071 -.113 -.011 -.077 -.009 -.003 .017 -.110 .045 -.007

VAR10 -.077 .083 .457 -.141 -.066 -.089 -.076 -.010 -.052 .029 -.075 -.032 -.016

VAR11 -.046 .071 -.141 .495 -.108 .008 -.102 -.012 -.033 -.037 -.025 .076 -.080

VAR12 .070 -.113 -.066 -.108 .419 -.141 .063 -.044 -.151 -.078 .011 -.049 .061

VAR13 -.006 -.011 -.089 .008 -.141 .529 -.077 -.094 .053 -.016 -.028 .059 -.077

VAR14 .029 -.077 -.076 -.102 .063 -.077 .444 -.170 -.048 -.103 .054 -.120 .100

VAR15 -.015 -.009 -.010 -.012 -.044 -.094 -.170 .532 -.080 .097 .032 -.025 -.120

VAR17 -.022 -.003 -.052 -.033 -.151 .053 -.048 -.080 .600 -.023 -.041 .016 .000

VAR21 .011 .017 .029 -.037 -.078 -.016 -.103 .097 -.023 .626 -.183 -.089 -.151

VAR22 .024 -.110 -.075 -.025 .011 -.028 .054 .032 -.041 -.183 .653 -.169 .058

VAR23 -.055 .045 -.032 .076 -.049 .059 -.120 -.025 .016 -.089 -.169 .692 -.116

VAR34 -.028 -.007 -.016 -.080 .061 -.077 .100 -.120 .000 -.151 .058 -.116 .801

Anti-image Correlation

VAR1 .694a -.655 -.165 -.095 .156 -.012 .062 -.031 -.040 .020 .043 -.096 -.046

VAR2 -.655 .664a .188 .156 -.268 -.024 -.178 -.018 -.006 .033 -.208 .083 -.012

VAR10 -.165 .188 .890a -.297 -.150 -.182 -.168 -.020 -.100 .055 -.136 -.057 -.027

VAR11 -.095 .156 -.297 .878a -.237 .016 -.217 -.023 -.060 -.067 -.044 .131 -.126

VAR12 .156 -.268 -.150 -.237 .841a -.300 .146 -.093 -.301 -.153 .020 -.092 .106

VAR13 -.012 -.024 -.182 .016 -.300 .898a -.160 -.177 .095 -.028 -.048 .097 -.119

VAR14 .062 -.178 -.168 -.217 .146 -.160 .840a -.350 -.093 -.195 .099 -.217 .168

VAR15 -.031 -.018 -.020 -.023 -.093 -.177 -.350 .874a -.142 .168 .055 -.040 -.184

VAR17 -.040 -.006 -.100 -.060 -.301 .095 -.093 -.142 .917a -.037 -.066 .025 -.001

VAR21 .020 .033 .055 -.067 -.153 -.028 -.195 .168 -.037 .838a -.286 -.135 -.213

VAR22 .043 -.208 -.136 -.044 .020 -.048 .099 .055 -.066 -.286 .826a -.252 .081

VAR23 -.096 .083 -.057 .131 -.092 .097 -.217 -.040 .025 -.135 -.252 .832a -.156

VAR34 -.046 -.012 -.027 -.126 .106 -.119 .168 -.184 -.001 -.213 .081 -.156 .759a

a. Measures of Sampling Adequacy(MSA)

Data Analysis

157

TABLE 4.53Communalities Table - ICICI

Sr. No



2 Bank is having modern looking and comfortable waiting area. 1.000 .854



1.000 .613


13 Employees of the bank are never too busy to respond to Customer‘s request.

1.000 .561

14 Employees of the bank provide me prompt service. 1.000 .586



1.000 .674


1.000 .644



1.000 .549

34 Bank offers me 24*7 customer care services. 1.000 .527


Communalities values depicted in the table 4.52 for all the 13 variables of service quality

are higher than 0.5 and therefore data set was appropriate for further analysis.

Data Analysis

158

TABLE 4.54 Total Variance Explained- ICICI

Total Variance Explained




Total% of

Variance Cumulative

% Total

% of Variance

Cumulative%

Total % of

Variance Cumulative

%

1 5.180 39.844 39.844 5.180 39.844 39.844 3.805 29.269 29.269

2 1.349 10.378 50.222 1.349 10.378 50.222 2.130 16.388 45.656

3 1.195 9.191 59.412 1.195 9.191 59.412 1.788 13.756 59.412

4 .944 7.259 66.671

5 .761 5.851 72.522

6 .636 4.890 77.412

7 .616 4.738 82.150

8 .562 4.327 86.477

9 .500 3.845 90.322

10 .398 3.061 93.383

11 .339 2.607 95.991

12 .310 2.388 98.378

13 .211 1.622 100.000


Here, 13 variables of service quality explained 59.41 % of variance that is equal to the

threshold value of 60% and hence further analysis was carried out.

Data Analysis

159

TABLE 4.55Rotated Component Matrixa- ICICI

Rotated Component Matrixa

Sr. No. Variables Component

1 2 3

1 Bank’s physical facility is visually attractive. .200 .111 .860

2 Bank is having modern looking and comfortable waiting area. .193 .142 .893

10 Employees of the bank are having high level of the competency. .745 .271 .054


.748 .228 -.025

12 Employees of the bank understand your need. .705 .268 .198

13 Employees of the bank are never too busy to respond to Customer‘s request.

.715 .162 .154

14 Employees of the bank provide me prompt service. .699 .251 .185


.737 .033 .186


.637 .196 .171


.248 .763 .011

22 I believe that bank is ethically managed by the management. .119 .721 .266


.163 .712 .126

34 Bank offers me 24*7 customer care services. .253 .403 -.018



Rotated component matrix table shows the strength of relationship between the item &


factor is determined by identifying the highest loading in one factor. The loading values





ICICI were surveyed and hence 0.40 is considered as acceptable factor loading.


Factors are given name once all the factors are extracted following the above mention steps

of Exploratory Factor Analysis.

Data Analysis

160


The same factor extracted in the SBI and PNB banks and hence the similar naming –

Competency of Bank Employee is given to this factor as it is a linear combination of item

10, 11, 12, 13, 14, 15 and 17. All these items measure proficiency of the bank employee in

understanding customer needs and problem and accordingly offering them prompt service

that match their customer expectation.

Factor 2 Ethos of the Bank

Factor 2 is name as ethos of the bank as it represents items 21, 22, 23 and 34. These items

signify the branding and ethical management of the bank and bank’s philosophy in offering

services and service products to the customers.

Factor 3 Physical Evidence

This factor comprises of the item 1 & 2 that represent bank’s physical facility and modern

looking interior. Therefore, this factor is named as Physical Evidence.

4.8.4 Confirmatory Factor:

Using Exploratory Factor Analysis, three factors are extracted and following factor

structure developed. This factor structure is confirmed through Confirmatory Factor

Analysis. In this factor structure, latent variable is service quality and observed variables

are Competency of bank Employee (CBE), Ethos of the bank (EB) and Physical Evidence

(PE). Convergent Validity, Discriminant Validity and Nomological Validity are used to

validate the factor structure.

Data Analysis

161

FIGURE 4.3Factor Structure - ICICI

TABLE 4.56Model Fit Indexes- ICICI


E1

E2

E3

E4

E5

E6

E7

E8

E9

E10

E11

E12

E13

1

1

1

1

11

1

1

1

1

1

1

1

cbe1

cbe2

cbe3

cbe4

cbe5

cbe6

cbe7

eb1

eb2

eb3

eb4

pe1

pe2

cbe

eb

pe

r2

r3

sq

1

11

11

r1

1

1

Data Analysis

162

Fit statistics determine the model fit. The first fit statistics is Chi-square to degrees of

freedom and CMIN value is higher than 0.05 as shown in the table 4.55 indicating good fit.

Goodness-of-fit index (GFI) is higher than 0.9 whereas Adjusted GFI (AGFI) value is

close to 0.9 showing a good fit. Tucker-Lewis Index (TLI), Incremental Fit Index (IFI) and

Relative Fit Index (RFI) values are higher than 0.9 signifies the model is fit for the data.

The Comparative Fit Index (CFI) value depicted in the table 4.55 signifies good model fit

as CFI value is higher than 0.9. The last indicator is Root Mean Square Error of

Approximation (RMSEA). As RMSEA value is lesser than 0.06 indicates a good model fit.

TABLE 4.57Convergent Validity- ICICI

Constructs Items Item Loadings t-values Composite Reliability

(CR) AVE

Competency of bank Employee (CBE)

CBE1 .754

0.927

0.516

CBE2 .711 9.833 CBE3 .751 10.424 CBE4 .695 9.593 CBE5 .722 9.993 CBE6 .655 9.010 CBE7 .739 8.774

Ethos of the Bank (EB)

EB1 .682 0.882

0.523 EB2 .730 6.675

EB3 .796 6.434 EB4 .681 4.440

Physical Evidence (PE)

PE1 .804 0.890

0.68 PE2 .856 6.851

Three factors extracted in Exploratory Factor Analysis. Item loading of all the three

observed variables is higher than 0.5 indicating that these factors converge on a common

point on a latent variable – Service Quality. Critical Ratio is signifies as t-values in the

table 4.56. T-values of all the observed variables are higher than 1.96 at significant level of

0.5 validates Convergent Validity. Another indicator of convergent validity is Composite

Reliability. Values of Composite Reliability depicted in the table 4.56 are higher than 0.7

showing a good reliability of the factor structure. Last component of Convergent Validity

is AVE (Average Variance Extracted). AVE calculated for all the three constructs is higher

than 0.50 indicating that more than half the variance of the service quality is explained

each construct. Considering all the components, convergent validity of the factor structure

is confirmed.

Data Analysis

163

TABLE 4.58Discriminant Validity &Nomological Validity- ICICI


Estimate

CBE <--> EB 0.519 .511 EB <--> PE 0.601 .434 CBE <--> PE 0.598 .468



satisfy the Discrimiant Validity Test (Hair,2006). Discriminant Validity of the Factor

Structure is confirms as values depicted in the table 4.57 satisfy the condition. According

to Hair (2006), nomological validity is tested by examining the correlation between the

construct in the measurement model. The correlation values shows that constructs are

positively related to each other and support the nomological validity of the model.




Total three factors extracted in Exploratory Factor Analysis and factor structure was

devised. This factor structure was confirmed through Confirmatory Factor Analysis. To

study an association between the factors of service quality and customer satisfaction,

retention, loyalty and commitment, Pearson Correlation Test was applied.

TABLE 4.59 Summary of Hypothesis Testing – Objective 2(a)- ICICI


Hypothesis Pearson


Significance Value

Result

H1 (a): There is an association between Customer Satisfaction and Competency of bank employee.

0.594 0.00 Accepted

H2 (a): There is an association between Customer Satisfaction and Ethos of the Bank.

0.598 0.00 Accepted

H3 (a): There is an association between Customer Satisfaction and Physical Evidence.

0.374 0.00 Accepted

Data Analysis

164

Pearson Correlation Value of all the three factors of service quality indicating the positive

and moderate association with the customer satisfaction at 95 per cent confidence level.

Further the significant value is also less than 0.05 and hence null hypothesis of all the three

factors of service quality is not accepted. Level of association between customer

satisfaction and factor 1 (Competency of bank employee) is 59.4%, followed by factor2

(Ethos of the bank) is 59.8% and factor 3 (Physical Evidence) is 37.4%.

TABLE 4.60 Summary of Hypothesis Testing – Objective 2(b)- ICICI

Pearson Correlation Values depicted in the table 4.59 indicates positive association

between customer retention and service quality factors. Coefficient values are significant

(0.00) at 95 per cent confidence level. Therefore, null hypothesis is not accepted. Here

moderate association is being observed between customer retention and factor -1

(Competency of bank employee) & factor -2 (Ethos of the Bank) with 39.3% and 40.2%

respectively. Whereas Physical evidence is having weak correlation with customer

retention at 34.9% level of association.


Hypothesis Pearson


Significance Value

Result

H1 (b): There is an association between Customer Retention and Competency of bank employee.

0.393 0.00 Accepted

H2 (b): There is an association between Customer Retention and Ethos of the Bank.

0.402 0.00 Accepted

H3 (b): There is an association between Customer Retention and Physical Evidence.

0.349 0.00 Accepted

Data Analysis

165

TABLE 4.61 Summary of Hypothesis Testing – Objective 2(c)- ICICI

Positive correlation values are exhibited in the table 4.60 at 95 per cent confidence level

and all these values are very much significant as p value (significant values) are less than α

value (0.05) for all the factor of service quality. So, null hypothesis is not accepted.

Moderate association is being observed between the two factors of service quality and

customer loyalty. Level of association with customer loyalty of factor 1 (Competency of

Bank Employee) is 39.4%, and factor 2 (Ethos of the Bank) is 44.1%, A weak association

exist between the customer loyalty and Physical Evidence at 26.2%.

TABLE 4.62 Summary of Hypothesis Testing – Objective 2(d)- ICICI

Pearson Correlation Value of factor 1 (Competency of bank employee) indicates 38% of

association with customer commitment, followed by factor 2 (Ethos of the Bank) with

41.5% of association but weak correlation is found out between customer commitment and

factor 3 (Physical Evidence) at 18.2%. All these values are significant (0.00) at 95 per cent

confidence level so null hypothesis of all the three factors of service quality is not

accepted.


Hypothesis Pearson


Significance Value

Result

H1 (c): There is an association between Customer Loyalty and Competency of bank employee.

0.394 0.00 Accepted

H2 (c): There is an association between Customer Loyalty and Ethos of the Bank.

0.441 0.00 Accepted

H3 (c): There is an association between Customer Loyalty and Physical Evidence.

0.262 0.00 Accepted


Hypothesis Pearson


Significance Value

Result

H1 (d): There is an association between Customer Commitment and Competency of bank employee.

0.380 0.00 Accepted

H2 (d): There is an association between Customer Commitment and Ethos of the Bank.

0.415 0.00 Accepted

H3 (d): There is an association between Customer Commitment and Physical Evidence.

0.182 0.00 Accepted

Data Analysis

166


retention / commitment & loyalty.


Correlation analysis shows that not all the three factors of service quality are moderately

associated with customer satisfaction / retention / commitment & loyalty. Some factors of

service quality have weak correlation with the customer satisfaction / retention /

commitment & loyalty and hence those factors are not considered for Regression Analysis

to study its impact on the service quality.

TABLE 4.63 Summary of Hypothesis Testing – Objective 3 (a)- ICICI

ANOVA values of all the service quality factors are significant at 95 per cent confidence

level indicating that model is good. Moreover, significance values are also lesser than 0.05

signifies that variables in the model are significant. Thus, null hypothesis of all the factors

of service quality is not accepted. Variance in customer satisfaction explained by factor 1

(Competency of bank employee) is 35.3%, followed by factor 2 (Ethos of the bank) is

35.8% and factor 3 (Physical Evidence) is 13.2%.



Value

R Square Value

ANOVA Value

Result

H1 (a): There is a significant impact of Competency of Bank Employees on Customer Satisfaction.

0.00 0.353 0.00 Accepted

H2 (a): There is a significant impact of Ethos of the bank on Customer Satisfaction.

0.00 0.358 0.00 Accepted

H3 (a): There is a significant impact of Physical Evidence on Customer Satisfaction.

0.00 0.132 0.00 Accepted

Data Analysis

167

TABLE 4.64 Summary of Hypothesis Testing – Objective 3 (b)- ICICI

Only two factors of service quality depicted in table4.63 have moderate association with

the customer retention. R2 Value of factor 1 (Competency of bank employee) indicates

11.1% variance in customer retention whereas factor 2 (Ethos of the bank) explain 16.2%

of variance in customer retention. All these values of service quality factors are significant

at 95 per cent confidence level indicating the significance of the variables in regression

model whereas ANOVA values indicating that model is good as it is lesser than 0.05.

Therefore null hypothesis is not accepted for all the factors of service quality.

TABLE 4.65 Summary of Hypothesis Testing – Objective 3 (c)- ICICI

ANOVA value for above two factors of service quality (0.00) is less than 0.05 at 95 per

cent confidence level indicates that the regression model is overall good. Further,

significance values of those two the factors are also 0.00 that are less than 0.05 indicated

that the variables are significant in the model and null hypothesis for above two factors of

service quality is not accepted. R2 Value of factor1 - Competency of bank employee is

0.093 which implies that 9.3% of variance in customer loyalty can be explained by this

factor. Variance in customer loyalty caused by factor 2 – Ethos of the bank is 19.5%.



Value

R Square Value

ANOVA Value

Result

H1 (b): There is a significant impact of Competency of Bank Employees on Customer Retention.

0.00 0.111 0.00 Accepted

H2 (b): There is a significant impact of Ethos of the bank on Customer Retention.

0.00 0.162 0.00 Accepted



Value R Square

Value ANOVA

Value Result

H1 (c): There is a significant impact of Competency of Bank Employees on Customer Loyalty.

0.00 0.093 0.00 Accepted

H2 (c): There is a significant impact of Ethos of the bank on Customer Loyalty.

0.00 0.195 0.00 Accepted

Data Analysis

168

TABLE 4.66 Summary of Hypothesis Testing – Objective 3 (d)- ICICI

R2 Value of factor -1 (Competency of bank employee) is 0.109 explaining 10.9% of

variance in customer commitment and factor -2 (Ethos of the bank) is 0.172 explaining

17.2% of variance in customer commitment. As these values are lesser than 0.05 at 95 per

cent confidence level and hence variables are significant in the regression model. Further

ANOVA values are also lesser than 0.05 shows that the regression model is good. Thus,

null hypothesis of factor 1 and factor 2 are not accepted.




Total three factors extracted in Exploratory Factor Analysis and Factor Structure was

developed. The factor structure was confirmed through Confirmatory Factor Analysis.

Customer Perception was examined based on the following demographic variables.

TABLE 4.67 Cross Tabulation of the demographic variable – Gender- ICICI

Sr. No.


Gender Strongly Disagree

Disagree Neither

Agree Nor Disagree

Agree Strongly

Agree

1 Competency of bankemployee

Male 2 10 25 43 39 Female 0 9 16 40 16

2 Ethos of the bank Male 4 16 36 51 14 Female 5 11 18 33 12

3 Physical Evidence

Male 1 9 27 49 33 Female 5 4 22 37 13

Total 43 male and 40 female has given an opinion that competency of ICICI bank

employee is good. 51 male and 33 female opine that service quality of ICICI bank is good.

Moreover, bank is having good brand name in the market and bank is managed ethically.

49 male and 37 female consider that physical evidence of the bank is good.

Sub objective III (d): To study the impact of Service Quality on Customer Commitment.


Value R Square

Value ANOVA

Value Result

H1 (d): There is a significant impact of Competency of Bank Employees on Customer Commitment.

0.00 0.109 0.00 Accepted

H2 (d): There is a significant impact of Ethos of the bank on Customer Commitment.

0.00 0.172 0.00 Accepted

Data Analysis

169

TABLE 4.68 Cross Tabulation of the demographic variable – Age- ICICI

Sr. No.


Age Strongly Disagree

Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree


18-24 1 3 10 22 4 25-34 3 7 20 30 11 35-44 1 2 11 20 7 45-55 0 4 5 8 9 55-65 0 0 2 3 14

Over 65 0 0 3 0 0 2 Ethos of the bank

18-24 0 3 13 17 7 25-34 1 6 19 28 17 35-44 1 0 15 19 6 45-55 0 0 5 15 6 55-65 0 0 1 10 8

Over 65 0 0 1 2 0 3 Physical

Evidence 18-24 2 3 9 23 3 25-34 1 7 10 25 9 35-44 2 1 8 36 5 45-55 1 1 9 10 5 55-65 0 1 8 6 4

Over 65 0 0 0 10 1

Factor 1 is considered mostly by the respondents of age group of 25-34. According to

them, ICICI bank employees’ competency is good. Further, the same age group also

believes that service quality of the bank is good, bank is having a good name in the market

and bank is managed ethically. Respondents represent the age group of 35 – 44 think that

physical evidence of the bank is good.

Data Analysis

170

TABLE 4.69 Cross Tabulation of the demographic variable – Education- ICICI

Sr. No.



Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree


Secondary School

0 0 2 0 1


1 2 7 4 3

Graduate degree

2 8 26 35 23

Postgraduate degree

2 4 22 23 13


0 2 7 8 5

2 Ethos of the bank

Secondary School

1 1 1 1 1


1 1 2 11 4

Graduate degree

2 7 20 27 22

Postgraduate degree

0 1 17 37 19


2 1 3 15 3

3 Physical Evidence

Secondary School

0 0 0 2 1


1 1 4 9 2

Graduate degree

2 4 27 48 13

Postgraduate degree

3 8 12 33 8


0 0 6 13 3

Majority of the respondents who believe that the competency of the bank employee is good

are having graduate degree. Further, they also believe that physical evidence of the bank is

good. Majority of the respondents who are having post graduate degree consider the

service quality of the bank good. They also believe that bank is ethically managed and

having a good brand name in the market.

Data Analysis

171

TABLE 4.70 Cross Tabulation of the demographic variable – Income- ICICI

Sr. No.



Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree


0-10000 2 3 10 12 5 10000-20000 0 6 10 15 8 20000-30000 2 3 8 13 6 30000-40000 1 1 10 28 8 40000-50000 1 0 4 6 6 Above 50000 1 3 5 12 12

2 Ethos of the bank

0-10000 1 4 9 9 3 10000-20000 3 6 8 13 8 20000-30000 1 4 6 23 2 30000-40000 1 3 8 35 4 40000-50000 0 3 3 8 3 Above 50000 1 4 7 14 6

3 Physical Evidence

0-10000 1 3 7 19 5 10000-20000 3 1 16 15 4 20000-30000 2 3 4 19 4 30000-40000 1 5 9 16 8 40000-50000 0 1 5 26 1 Above 50000 0 0 7 10 5

Respondents having income in the category of Rs. 30000 – 40000 opine that the ICICI

bank is having competent employees. Further the respondents having the same income also

believes that philosophy of the bank is very good and bank is ethically managed.

Respondents having income between Rs. 40000 and 50000 have agreement on the factor 3

and deem that bank’s physical environment is good.

Data Analysis

172

TABLE 4.71 Cross Tabulation of the demographic variable – Occupation- ICICI

Sr. No. Factor of Service

Quality Occupation

Strongly Disagree

Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree



2 Ethos of the bank


3 Physical Evidence


Respondents having favorable view towards the factor 1 are doing the job in the private

sector and believe that bank employees a very competent in delivering the service.

Majority of the professionals opine that the ethos of the bank is good. They also feel that

bank provide a good quality service. Majority of the businessmen think that physical

evidence of the ICIC bank is good.

Objective 5: To study service quality of ICICI






the product with number of criteria in the questionnaires.

Data Analysis

173

TABLE 4.72Ideal Score and Least Scores of Respondents- ICICI

Category Equation Ideal Score Equation Least Score Service Quality in ICICI, 200 × 3 × 37 22200 200 × -1 × 37 -7400



TABLE 4.73Responses of the Respondents- ICICI



Completely Disagree

Score



2 Bank is having modern looking and comfortable waiting area

38 112 33 16 1 370


32 70 53 38 7 282


37 110 37 14 2 366


54 109 28 9 0 408



39 113 31 12 5 369


33 111 41 14 1 361



47 86 52 11 4 361


58 91 30 15 6 380


47 67 67 16 3 339


59 88 34 13 6 381


48 97 39 15 1 376


never too busy to respond to customer ‘s request.

44 81 48 24 3 339


47 87 45 17 4 356

15 Every employees of the bank

are easily accessible by the 45 85 42 24 4

343

Data Analysis

174



Completely Disagree

Score

customer. 16 When bank promises to do

something, they do it in certain time.

53 87 33 21 6 360


63 76 46 12 3 384


38 100 35 19 8 341

19 Bank provides the service at

the time they promise to do so.

57 85 38 16 4 375


48 87 43 20 2 359

21 I have selected bank because

bank is having strong brand name in the market.

52 76 46 17 9 345


54 90 45 10 1 386


68 85 38 7 2 410


80 70 35 11 4 411


49 54 64 19 14 305


70 79 34 13 4 398


44 99 46 8 3 373


55 89 30 20 6 367


19 55 86 29 11 242

30 Bank is having well managed

web policies for secure online banking.

65 87 37 10 1 405


53 77 48 18 4 357


56 87 29 24 4 367


45 114 31 8 2 392



353

35 Bank strictly follows RBI regulations & also informs

64 78 42 13 3 387

Data Analysis

175



Completely Disagree

Score

me about the same. 36 I feel secure while using

bank’s technical services such as NEFT, RTGS, Online Banking Etc.

77 82 32 8 1 426


81 74 33 11 1 423

Total Score (+) 13559 (61.07%)

Ideal Score (+)22200 Least Score -7400 Source: Field Survey

Customer opinion about the service quality of the ICICI Bank is depicted in the table 4.71.

No Negative score is observed in the table 4.71. The level of service quality is found to be

61.07% of ideal score that signifying that service quality of ICICI is considered good.

4.9 HDFC Bank:



TABLE 4.74KMO and Bartlett's Test - HDFC


Bartlett's Test of Sphericity Approx. Chi-Square 3559.447

Df 666

Sig. .000

KMO values depicted in the above table are 0.898 showing much higher correlation among

the variables. Further, significance Value of Bartlett’s Test of Sphericity (0.00) is lesser

than 0.05 indicates that correlation exists among the variables.

TABLE 4.75Correlation Matrixa- HDFC

Correlation Matrixa

a. Determinant = .033

No multicollinearity is observed in the data as Correlation Matrix is 0.033 that is higher

than the 0.00001.

Data Analysis

176


Correlation values of 11 factors of service quality of HDFC Bank depicted in the table

4.74. Diagonal values of the all the 11 factors of service quality exhibited in the second

part of the table. As all the variables are having values higher than the 0.5, therefore it can

be interpreting that all the 11 factors of service quality have practical and statistical

significance and data is suitable for performing factor analysis.

TABLE 4.76 Anti Image Matrice- HDFC

VAR1 VAR2 VAR6 VAR11 VAR15 VAR17 VAR22 VAR30 VAR31 VAR36 VAR37

Anti-image Covariance

VAR1 .569 -.260 .031 -.044 -.062 .046 -.078 -.021 -.005 -.021 -.029

VAR2 -.260 .504 -.003 -.055 -.004 -.074 -.091 -.018 -.064 .028 -.067

VAR6 .031 -.003 .694 -.302 .019 .038 .014 -.095 .030 -.006 -.062

VAR11 -.044 -.055 -.302 .580 -.065 -.135 .000 .111 -.055 -.005 -.054

VAR15 -.062 -.004 .019 -.065 .649 -.252 -.020 -.047 .021 -.022 -.045

VAR17 .046 -.074 .038 -.135 -.252 .605 -.049 -.117 .016 .066 .003

VAR22 -.078 -.091 .014 .000 -.020 -.049 .719 -.052 -.104 -.033 -.025

VAR30 -.021 -.018 -.095 .111 -.047 -.117 -.052 .522 -.140 -.208 -.048

VAR31 -.005 -.064 .030 -.055 .021 .016 -.104 -.140 .662 -.094 -.060

VAR36 -.021 .028 -.006 -.005 -.022 .066 -.033 -.208 -.094 .586 -.167

VAR37 -.029 -.067 -.062 -.054 -.045 .003 -.025 -.048 -.060 -.167 .639

Anti-image Correlation

VAR1 .805a -.486 .049 -.076 -.101 .078 -.123 -.039 -.008 -.037 -.049

VAR2 -.486 .820a -.005 -.101 -.006 -.135 -.150 -.034 -.110 .051 -.118

VAR6 .049 -.005 .686a -.476 .028 .059 .020 -.158 .045 -.009 -.094

VAR11 -.076 -.101 -.476 .723a -.106 -.229 -.002 .202 -.089 -.009 -.089

VAR15 -.101 -.006 .028 -.106 .831a -.402 -.029 -.081 .032 -.036 -.069

VAR17 .078 -.135 .059 -.229 -.402 .764a -.075 -.209 .025 .110 .005

VAR22 -.123 -.150 .020 -.002 -.029 -.075 .926a -.085 -.151 -.051 -.036

VAR30 -.039 -.034 -.158 .202 -.081 -.209 -.085 .804a -.239 -.376 -.084

VAR31 -.008 -.110 .045 -.089 .032 .025 -.151 -.239 .890a -.151 -.092

VAR36 -.037 .051 -.009 -.009 -.036 .110 -.051 -.376 -.151 .806a -.273

VAR37 -.049 -.118 -.094 -.089 -.069 .005 -.036 -.084 -.092 -.273 .905a

a. Measures of Sampling Adequacy(MSA)

Data Analysis

177

TABLE 4.77Communalities Table - HDFC

Sr. No.



2 Bank is having modern looking and comfortable waiting area 1.000 .632


1.000 .760


1.000 .735



1.000 .543


30 Bank is having well managed web policies for secure online banking. 1.000 .629



1.000 .700



Communalities values of all 11 factors of service quality are higher than 0.5 indicating that

data set was appropriate for further analysis.

TABLE 4.78 Total Variance Explained - HDFC




Total% of

Variance Cumulative

% Total

% of Variance

Cumulative %

Total % of

Variance Cumulative

%

1 4.123 37.483 37.483 4.123 37.483 37.483 2.510 22.815 22.815

2 1.364 12.401 49.885 1.364 12.401 49.885 2.481 22.556 45.371

3 1.114 10.124 60.009 1.114 10.124 60.009 1.610 14.638 60.009

4 .978 8.889 68.898

5 .685 6.226 75.124

6 .587 5.340 80.464

7 .559 5.084 85.547

8 .480 4.364 89.911

9 .442 4.023 93.934

10 .346 3.146 97.079

11 .321 2.921 100.000


As per the table 4.76, 11 variables of service quality explained 60% of the variance. This is

equal to the threshold value of 60% and hence further analysis was carried out.

Data Analysis

178

TABLE 4.79Rotated Component Matrixa- HDFC

Sr. No.

Variables Component

1 2 3

1 Bank’s physical facility is visually attractive. .275 .699 -.019

2 Bank is having modern looking and comfortable waiting area .289 .736 .081


.210 -.011 .846


.048 .361 .776


.093 .641 .275


.035 .660 .325

22 I believe that bank is ethically managed by the management. .413 .343 -.076


.748 .248 .088


.689 .246 .035


.831 .040 .092

37 Bank does regular upgradation in its technology. .633 .234 .285



Relationship between the item & factor and membership of the item under one factor is

exhibited in the Rotated component matrix table. The membership of the item in factor is

determined by identifying the highest loading in one factor. The loading values ranges

between the 0 and 1. Value close to 1 indicated the highest factor loading. Another




HDFC were surveyed and hence 0.40 is considered as acceptable factor loading.

Data Analysis

179

4.9.3 Factor Naming

Factors are given name once all the factors are extracted following the above mention steps

of Exploratory Factor Analysis.

Factor 1 Augmented Service

This factor is linear combination of item 22, 30, 31, 36 and 37. These items are pertaining

to the ethics of the bank, bank policies pertaining to the technical services and pricing

policies. Considering these items, this factor is named as augmented service.

Factor 2 Interior signage & service ability

Item 1, 2, 15 and 17 form this factor that is named as interior signage & service ability.

These items are pertaining to the bank’s physical activities and internal facility. Item 15

and 17 are related to the bank employees’ capability of delivering the services.

Factor 3 Assortment of services

This factor comprises of the item 6 & 11 that represent bank’s product & service and

accordingly it is named as assortment of services.


Three factors extracted using Exploratory Factor Analysis and following factor structure

developed. This factor structure is confirmed through Confirmatory Factor Analysis. In

this factor structure, latent variable is service quality and observed variables are

Augmented Service (AS), Interior signage & service ability (ISA) and Assortment of

service (ASTS). Convergent Validity, Discriminant Validity and Nomological Validity are

used to validate the factor structure.

Data Analysis

180

FIGURE 4.4 Factor Structure - HDFC

E1

E2

E3

E4

E5

E6

E7

E8

E9

E10

E11

1

1

1

1

1

1

1

1

1

1

as1

as2

as3

as4

as5

isa1

isa2

isa3

isa4

asts1

asts2

as

isa

asts

r2

r3

sq

1

11

11

r1

11

Data Analysis

181

TABLE 4.80 Model Fit Indexes- HDFC


Fit statistics determine the model fit. The first fit statistics is Chi-square to degrees of

freedom and CMIN value is higher than 0.05 as shown in the table 4.78 indicating good fit.

Goodness-of-fit index (GFI) and Adjusted GFI (AGFI) values are higher than 0.9 showing

a good fit. Tucker-Lewis Index (TLI), Incremental Fit Index (IFI) and Relative Fit Index

(RFI) values are higher than 0.9 signifies the model is fit for the data. The Comparative Fit

Index (CFI) value also signifies good model fit as CFI value is higher than 0.9. The last

indicator is Root Mean Square Error of Approximation (RMSEA). As RMSEA value is

lesser than 0.06 indicates a good model fit.

TABLE 4.81 Convergent Validity- HDFC

Constructs Items Item Loadings t-values Composite Reliability

(CR) AVE

Augmented Service (AS)

AS1 .736 0.905 0.526 AS2 .735 6.701 AS3 .743 6.260 AS4 .677 6.439 AS5 .734 6.212

Interior signage & service ability (ISA)

ISA1 .681 0.890 0.539 ISA2 .760 8.324 ISA3 .747 6.510 ISA4 .748 6.516

Assortment of service (ASTS)

ASTS1 .538 0.816 0.604 ASTS2 .959 4.034

Three factors depicted in the table 4.79 are extracted in Exploratory Factor Analysis. Item

loading of all the three observed variables is higher than 0.5 indicating that these factors

converge on a common point on a latent variable – Service Quality. Critical Ratio (t-

values) of all the observed variables are higher than 1.96 at significant level of 0.5

validates Convergent Validity. Values of Composite Reliability calculated are higher than

0.7 showing a good reliability of the factor structure. Last component is AVE (Average

Data Analysis

182

Variance Extracted). AVE calculated for all the three constructs is higher than 0.50

indicating that more than half the variance of the service quality is explained each

construct. Considering all the components, convergent validity of the factor structure is

confirmed.

TABLE 4.82 Discriminant Validity &Nomological Validity- HDFC


Estimate

as <--> isa 0.532 .527 as <--> asts 0.571 .523 isa <--> asts 0.565 .315



satisfy the Discrimiant Validity Test (Hair,2006). Discriminant Validity of the Factor

Structure is confirms as values depicted in the table 4.80 satisfy the condition. According

to Hair (2006), nomological validity is tested by examining the correlation between the

construct in the measurement model. The correlation values shows that constructs are

positively related to each other and support the nomological validity of the model.

Data Analysis

183




Factor Structure was developed through Exploratory Factor Analysis and the same is

confirmed through Confirmatory Factor Analysis. Three factors of service quality were

extracted and their correlation with customer satisfaction / retention / commitment &

loyalty was determined through Pearson Correlation. Hypothesis for the same is as

follows:

TABLE 4.83 Summary of Hypothesis Testing – Objective 2(a)- HDFC

Positive correlation co-efficient shows that the three factors of service quality are

positively related to the customer satisfaction. Significance values (0.00) of all the three

factors of service quality are less than 0.05 so, null hypotheses is not accepted. Moderate

correlation is observed between customer satisfaction and the factors of service quality

with 56.3% for factor 1 (Augmented Service), 58.8% for factor 2 (Interior signage &

service ability) and 45.2% for factor 3 (Assortment of service).

TABLE 4.84 Summary of Hypothesis Testing – Objective 2(b) - HDFC


Hypothesis Pearson


Significance Value

Result


0.563 0.00 Accepted

H2 (a): There is an association between Customer Satisfaction and Interior signage & service ability.

0.588 0.00 Accepted

H3 (a): There is an association between Customer Satisfaction and Assortment of service.

0.452 0.00 Accepted


Hypothesis Pearson


Significance Value

Result


0.425 0.00 Accepted

H2 (b): There is an association between Customer Retention and Interior signage & service ability.

0.438 0.00 Accepted

H3 (b): There is an association between Customer Retention and Assortment of service.

0.375 0.00 Accepted

Data Analysis

184

Significance value of three factors of service quality is 0.00 that is less than 0.05 and hence

null hypothesis is not accepted for all the three factors of service quality. Co-efficient

values of the three factors of service quality are positive indicating the positive association

with customer retention. Percentage of association is 42.5% of factor 1, 43.8% of factor 2

and 37.5% of factor 3 respectively.

TABLE 4.85 Summary of Hypothesis Testing – Objective 2(c)- HDFC

Positive association is examined between customer loyalty and three factors of service

quality. These values are significant (0.00) at 95 per cent confidence level. Therefore, null

hypothesis is not accepted. Pearson Correlation Values of factor 1 demonstrates 46.5% of

association with customer loyalty, followed by 40.6% of association of factor 2 and 36.1%

of association of factor 3.

TABLE 4.86 Summary of Hypothesis Testing – Objective 2(d)- HDFC


having positive sign indicating positive association. All the factors significance values

(0.00) are less than 0.05 therefore null hypotheses is not accepted. Factor 1 is associated

with customer commitment by 37.4%, followed by factor 2 with 38.8% and factor 3 with

37.7%.


Hypothesis Pearson


Significance Value

Result


0.465 0.00 Accepted

H2 (c): There is an association between Customer Loyalty and Interior signage & service ability.

0.406 0.00 Accepted

H3 (c): There is an association between Customer Loyalty and Assortment of service.

0.361 0.00 Accepted


Hypothesis Pearson


Significance Value

Result


0.374 0.00 Accepted

H2 (d): There is an association between Customer Commitment and Interior signage & service ability.

0.388 0.00 Accepted

H3 (d): There is an association between Customer Commitment and Assortment of service.

0.377 0.00 Accepted

Data Analysis

185


retention / commitment & loyalty.




commitment. Than after simple regression analysis was carried out to find out the impact

of factors of service quality on customer satisfaction, retention, loyalty and commitment.

TABLE 4.87 Summary of Hypothesis Testing – Objective 3 (a)- HDFC

Regression model is good and this has been indicated by ANOVA values of three factors

of service quality at 95 per cent confidence level. Significance values illustrate that

variables in the regression model are significant. So, null hypothesis of all the three factors

of service quality are not accepted. R2 value of the factor 1 (Augmented Service) shows

that 31.7% of variation in customer satisfaction is explained by this factor. Factor 2

(Interior signage & service ability) explain 34.6%, and factor 3 (Assortment of service)

explain 20.5%, of variation in customer satisfaction respectively.



Value

R Square Value

ANOVA Value

Result

H1 (a): There is a significant impact of Augmented Service of the bank on Customer Satisfaction.

0.00 0.317 0.00 Accepted

H2 (a): There is a significant impact of Interior signage & service ability on Customer Satisfaction.

0.00 0.346 0.00 Accepted

H3 (a): There is a significant impact of Assortment of service on Customer Satisfaction.

0.00 0.205 0.00 Accepted

Data Analysis

186

TABLE 4.88 Summary of Hypothesis Testing – Objective 3 (b)- HDFC

ANOVA values of regression model imply that model is overall good. Significance value

(0.00) shows that variables in the regression model are significant at 95 per cent

confidence level and hence null hypotheses of all the three factors are not accepted. R2

values of three factors are 18.1%, 19.2% and 10% respectively that explain the variation in

the customer retention by these factors.

TABLE 4.89 Summary of Hypothesis Testing – Objective 3 (c)- HDFC

As per the correlation analysis, all the three factors of service quality are moderately

associated with customer loyalty and hence regression analysis carried out between the

three factors of service quality and customer loyalty. ANOVA values signify that model is

overall good. As per the significance value (0.00) of all the three factors, null hypothesis is

not accepted. It also signifies that variables of the regression are significant. R2 value of

Factor 1 (Augmented Service) is 21.7% followed by 16.4 % and 6.8% for factor 2 (Interior

signage & service ability) and factor 3(Assortment of service) respectively. This explains

variation in customer loyalty by all these three factors of service quality.



Value

R Square Value

ANOVA Value

Result

H1 (b): There is a significant impact of Augmented Service of the bank on Customer Retention.

0.00 0.181 0.00 Accepted

H2 (b): There is a significant impact of Interior signage & service ability on Customer Retention.

0.00 0.192 0.00 Accepted

H3 (b): There is a significant impact of Assortment of service on Customer Retention.

0.00 0.100 0.00 Accepted



Value

R Square Value

ANOVA Value

Result

H1 (c): There is a significant impact of Augmented Service of the bank on Customer Loyalty.

0.00 0.217 0.00 Accepted

H2 (c): There is a significant impact of Interior signage & service ability on Customer Loyalty.

0.00 0.164 0.00 Accepted

H3 (c): There is a significant impact of Assortment of service on Customer Loyalty.

0.00 0.068 0.00 Accepted

Data Analysis

187

TABLE 4.90 Summary of Hypothesis Testing – Objective 3 (d) - HDFC

As the significance value of all the three factors are less than 0.05 at 95 per cent confidence

level, so null hypotheses of all the three factors are not accepted. It also signifies that

variables of the regression are significant. ANOVA values imply that model is overall

good. R2 value explain the variation in customer commitment. Factor 1 (Augmented

Service) leads to 14% variation in customer commitment followed by factor 2 (Interior

signage & service ability) causing 15.1% and factor 3 (Assortment of service) causing

5.6% variation in customer commitment.




Customer’s perception towards the service quality was examined through cross tabulation

base on the demographic variables like Gender, Age, Occupation, Income and Education.

Three factors extracted in Exploratory Factor Analysis and Confirmed through

Confirmatory Factor Analysis were consider while studying the customer perception.

Sub objective III (d): To study the impact of Service Quality on Customer Commitment. Hypothesis Significance

Value R

Square Value

ANOVA Value

Result

H1 (d): There is a significant impact of Augmented Service of the bank on Customer Commitment.

0.00 0.140 0.00 Accepted

H2 (d): There is a significant impact of Interior signage & service ability on Customer Commitment.

0.00 0.151 0.00 Accepted

H3 (d): There is a significant impact of Assortment of service on Customer Commitment.

0.00 0.056 0.00 Accepted

Data Analysis

188

TABLE 4.91 Cross Tabulation of the demographic variable – Gender- HDFC

Sr. No


Gender Strongly Disagree

Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree

1 Augmented Service Male 1 3 16 63 24 Female 0 2 18 54 19


Male 1 3 22 60 21 Female 1 1 25 43 21

3 Assortment of service

Male 0 4 16 59 28 Female 2 1 12 32 44

63 males and 54 females believe that HDFC bank is managed ethically and offers

augmented services. 60 males and 43 females perceive that bank is having good interior

signage and it enhance bank’s ability to deliver a good service. Further 59 males and 32

females have shown their agreement towards the factor 3 that signifies the fact that bank’s

various products are of a good quality and bank offers good quality service as well.

TABLE 4.92 Cross Tabulation of the demographic variable – Age- HDFC

Sr. No


Age Strongly Disagree

Disagree Neither

Agree Nor Disagree

Agree Strongly

Agree

1 Augmented Service

18-24 0 1 4 30 4 25-34 0 3 15 51 17 35-44 0 1 6 19 6 45-55 1 0 3 11 12 55-65 0 0 3 6 3

Over 65 0 0 0 0 1 2

Interior signage & service ability

18-24 0 0 10 20 9 25-34 1 1 18 50 16 35-44 1 1 8 17 5 45-55 0 2 8 8 9 55-65 0 0 3 8 4

Over 65 0 0 0 1 0 3 Assortment of service 18-24 1 0 6 13 19

25-34 0 2 12 15 26 35-44 1 2 2 46 12 45-55 0 1 4 10 12 55-65 0 0 4 7 4

Over 65 0 0 0 1 0

Majority of the respondents are from the age category of 25-34 perceive that bank offers

services in better manner over a period of time. The same age group respondents also

believe that bank is having a good interior signage and offers good services. Respondents

of age group 35-44 think that bank offers variety of the services.

Data Analysis

189

TABLE 4.93 Cross Tabulation of the demographic variable – Education- HDFC

Sr. No.



Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree

1 Augmented Service

Secondary School 3 3 0 5 1 Higher Secondary School

1 3 2 8 4


1 2 15 47 17


0 2 4 11 4



1 2 5 9 0


1 1 20 44 16


0 1 3 10 7



1 1 4 4 6


1 2 12 30 26


0 1 2 11 7

Education is another demographic variable that is use to examined the perception of

customer towards the service offered by the HDFC. Majority of customer surveyed are

post graduate who perceive that HDFC offers services in improved manner. The same

respondents also think that bank is having good interior signage and due to it, bank

manages to offer good quality service. Factor 3 is mainly considered by the respondents

who are graduates and believe that banking product of HDFC is of a good quality and bank

also provides variety of services.

Data Analysis

190

TABLE 4.94 Cross Tabulation of the demographic variable – Income- HDFC

Sr. No.



Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree

1 Augmented Service

0-10000 0 3 6 20 4 10000-20000 1 0 6 18 8 20000-30000 0 1 9 22 12 30000-40000 0 1 7 35 7 40000-50000 0 0 4 13 2 Above 50000 0 0 2 9 10


0-10000 2 1 9 25 5 10000-20000 0 1 9 16 7 20000-30000 0 1 10 31 8 30000-40000 0 0 8 16 11 40000-50000 0 0 4 10 5 Above 50000 0 1 7 6 7


0-10000 3 2 9 13 13 10000-20000 4 1 3 12 25 20000-30000 5 2 8 14 12 30000-40000 2 0 3 16 13 40000-50000 5 0 3 10 1 Above 50000 0 0 2 10 9

Factor 1 is mainly considered by the respondents having income in the category of Rs.

30000 – 40000. They think that bank offers augmented services. Respondents having an

income in the category of Rs. 20000 – 30000 believe that interior signage of the bank is

good and HDFC is having very well defined service delivery procedure. Lastly,

Respondents having income in the category of Rs. 10000 – 20000 strongly believe that

HDFC offers various services and products to its customers.

Data Analysis

191

TABLE 4.95 Cross Tabulation of the demographic variable – Occupation- HDFC

Sr. No.



Disagree

Neither Agree Nor

Disagree

Agree Strongly

Agree

1 Augmented Service




3 Assortment of service Businessman 0 0 1 38 8 Professional 0 3 8 17 11 Govt. Service 1 0 4 12 12 Private Service 0 2 8 9 31 Housewife 1 0 2 9 5 Student 0 0 4 4 6 Retired 0 0 1 3 0

Majority of the respondents are doing job in private sector and they are having an opinion

that HDFC undertakes all the e-Banking activities in a very well manner. So far as factor 2

is concern, majority of the respondents are professional perceive that bank’s interior

signage is good and it enables the bank to offer qualitative service to its customers.

Majority of the businessman consider the bank offers wide range of services and service

products.

Data Analysis

192

Objective 5: To study service quality of HDFC






the product with number of criteria in the questionnaires

TABLE 4.96Ideal Score and Least Scores of Respondents- HDFC

Category Equation Ideal Score Equation Least Score Service Quality in HDFC, 200 × 3 × 37 22200 200 × -1 × 37 -7400



TABLE 4.97Responses of the Respondents- HDFC

No Criterias of Service

Quality Completely


Completely Disagree

Score



2 Bank is having modern

looking and comfortable waiting area

56 88 39 9 8 375


25 74 38 42 21 240


43 99 33 20 5 355


67 93 28 8 4 411



50 98 43 7 2 387


47 88 52 9 4 365



61 78 38 20 3 374

9 Employees of the bank have knowledge about the

61 82 41 8 8 380

Data Analysis

193


Quality Completely


Completely Disagree

Score

all the different kind services offered by the bank.


41 87 52 17 3 346


65 82 35 10 8 386


48 89 43 13 7 358


never too busy to respond to customer ‘s request.

37 94 42 20 7 334


44 89 48 16 3 355

15 Every employees of the

bank are easily accessible by the customer.

41 75 55 23 6 322


36 82 50 23 9 313


47 89 44 13 7 356


38 87 51 16 8 331

19 Bank provides the service

at the time they promise to do so.

44 95 45 11 5 362


42 80 47 28 3 330

21 I have selected bank

because bank is having strong brand name in the market.

47 87 52 11 3 364


57 97 36 7 3 398


68 78 47 4 3 404


73 79 31 9 8 400


29 70 50 35 16 261


62 86 35 9 8 385

27 Bank offers me variety of the financial product like

45 90 49 10 6 358

Data Analysis

194


Quality Completely


Completely Disagree

Score

mutual fund, insurance policies other than traditional banking product.


55 87 39 5 14 364


25 51 76 27 21 232

30 Bank is having well

managed web policies for secure online banking.

54 92 41 6 7 380


42 93 49 13 3 358


38 87 44 24 7 325


43 100 31 18 8 352



333


58 82 35 15 10 363


68 87 33 9 3 408


78 77 32 8 5 415

Total Score (+) 13154 (59.25%)

Ideal Score (+)22200 Least Score -7400


Customer opinion about the service quality of the HDFC Bank is depicted in the table 4.95.

No Negative score is observed in the table 4.95. The level of service quality is found to be

59.25% of ideal score that signifying that service quality of HDFC is considered good.

Discussion of Findings

195

CHAPTER–5

DISCUSSION OF FINDINGS

This chapter summarizes the research procedure and presents a background of the research.

The findings discussed in this chapter are in the context of the five research objectives

established for the study. The findings are drawn based on the statistical analysis

performed in the previous chapter of data analysis for all the four banks taken for the

study.

5.1 Findings of research objective 1: To study the factors contributing to

the service quality :

Based on the Literature Review, variables were identified to establish the questionnaire for

measuring the service quality. The scale was purified through reliability analysis and then

after exploratory factor analysis was performed to extract the factors and developed the

factor structure. Factor structure was confirmed through the confirmatory factor analysis.

For both the public sector banks – SBI and PNB, total six factors extracted where as in

case of private sector bank – ICICI and HDFC, total three factors extracted and all the

factors for all four banks are analogous except one factor which is very much unique in

nature. The factor structure developed for all the four banks confirm the research model

proposed in the conceptual framework as depicted in the figure 5.1.


196

.

FIGURE 5.1 Research Model

First factor of the service quality comprises of the highest no of the items illustrating the

fact that the bank employees of the banks are very good at understanding the needs of the

customers and delivering the service accordingly. Moreover, it has also been found out

that despite of being employees of banks fulfill the promise in the stipulated time and take

keen interest in solving the problems of the customers. All these factors contribute to the

competency of the SBI bank employees. This factor represents reliability and

responsiveness dimension of service quality as proposed by Parasuraman, et.al. (1985).

Augmented Services is the another factor having the 6 variables grouped in it. Service

Product includes the basic banking product like Locker as well as e-banking product such

as NEFT, RTGS etc is being offered by the bank in improved manner. It has been found

out that respondents mostly like to avail the locker facilities of the banks only because

there are no hidden charges associated with this service. Another component of this factor

is pricing policies. The research reveals the fact that banks always maintain the

transparency in communicating the prices of its various offline and online services to its

customers. Similar study was carried out by ShirshenduGanguli, Sanjit Kumar Roy,

(2011) in which author has discussed analogous factor in name of customer service,

Service Quality

1. Competency of bank employees

2. Augmented Service

3. Physical Evidence

4. Ethos of the bank

5. Assortment of Service

6. Service Product

7. Interior Signage & Service ability

8. Accomplishing the promise

Customer Satisfaction

Customer Commitment

Customer Loyalty

Customer Retention


197

technology security and information quality, technology convenience, and technology

usage easiness and reliability.

The third factor highlights the fact that bank’s physical evidence is always found to be

clean and its material like brochure and pamphlets are visually appealing.Koushiki (2013)

has mention the importance of tangibility as an important parameters of service quality in

Indian Banking Sector. Forth factor also offer another major finding that SBI is considered

as most ethically managed and strongly branded bank in the Indian Banking Sector due the

good ethos of the bank. This factor is similar to the study of Gronroos (2000) wherein the

researcher has also highlighted the importance of the firm’s image as important dimension

of service quality.

Next factor is assortment of service and it composed of the variables like TV, music and

token system at the bank. This factor depict the fact that other than basic banking service,

SBI has bundle of the services to offer to its customer such as token system that reduce

anxiety of customer in waiting area. Moreover, TV and music system in the premise of the

banks play very important role in engaging the customers waiting in the waiting area.

Services marketing theories by Parasuraman (1988) define tangibility as physical facilities

and equipments and the factor extracted here resembles the tangibility as define by

researcher. The factor extracted in the study also focuses on the availability of TV, music

system and token system of banks.

Another factor is service product. Besides the traditional banking service, this factor

includes other financial products such as mutual fund, insurance etc. Therefore, service

product name is given to this factor. SBI is found to be the one among the four banks,

which is good at offering variety of the services and financial products. Abdel Fattah

Mahmoud Al-Azzam (2015) stipulates in paper that Customers can evaluate bank facilities

on the parameters such as service product design, sufficiency, vision equipment, and the

appearance of workers in the bank.

Next factor is interior signage & service ability. In this factor, it has been found out that

bank a premise is very modern looking and visually appealing. This factor is analogous to

the first dimension of the service quality proposed by Lehtinen and Lehtinen (1991).

Researchers have named this dimension as physical quality that includes physical layout of

the service firm and tools required for producing and delivering the services. The second


198

factor also communicates the similar fact about the bank’s premises and tolls such as

pamphlets and brochure use to communicate the various banking services. Therefore,

interior signage plays very important role enabling the employees of the bank to deliver

good quality service to its customers.

Accomplishing the promises is the only factor extracted in PNB. The quintessence of this

factor is conveyed through bank’s ability in fulfilling the promise at the right time as well

as bank employees sincerity in understanding and solving the customer problems. Forth

factor stressed upon the range of the services offered by the bank. As a part of this factor it

has been found out that bank services focuses on the maintaining the confidentiality,

offering 24*7 customer care service and strictly adhering the banking regulation of RBI.

This represents reliability of the dimension of service quality proposed by Parasuraman,

et.al. (1988).

Last factor is ethos of the bank. Study revealed the fact that ICICI bank is having a strong

brand name in the market and service products of the bank such as FD & certificates issued

by them are of the good quality and bank always offers 24*7 customer care services. All

these elements depict that bank employ a good ethos in managing it. This factor is similar

to the study of Gronroos (2000) wherein the researcher has also highlighted the importance

of the firm’s image as important dimension of service quality. Ghobadian et al., 1994 have

also stated in their research that in addition to the technical and functional dimensions,

corporate image can be influenced by other variables such as price, external

communications, physical location, appearance of the site and competence and behavior of

service provider's employee(s)

TABLE 5.1 Consistency Mapping

Sr. No Factors of Service Quality Consistency with the previous research 1 Competency of bank employees Parasuraman, et.al. (1985). 2 Augmented service ShirshenduGanguli, Sanjit Kumar Roy, (2011) 3 Physical evidence Koushiki (2013) &Gronroos (2000) 4 Assortment of service Parasuraman, et.al. (1988). 5 Service product Abdel Fattah Mahmoud Al-Azzam (2015) 6 Interior signage & service ability Lehtinen and Lehtinen (1991) 7 Accomplishing the promises Parasuraman, et.al. (1988). 8 Ethos of the bank Gronroos (2000) &Ghobadian et al., (1994)


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5.2 Findings of research objective 2: To find out correlation between

service quality, customer satisfaction / retention / commitment

&loyalty :

This research objective was satisfied through Pearson Correlation between the factors of

service quality and customer satisfaction / retention / commitment & loyalty for all the four

Banks.

TABLE 5.2 Pearson Correlation Value

Customer Satisfaction Customer Retention Customer Loyalty Customer Commitment Competency Of bank

employee

SBI: 0.642 / PNB: 0.625 ICICI: 0.594

Competency Of bank employee

SBI:0.458 / PNB: 0.414 ICICI: 0.393/


SBI: 0.371 / PNB: 0.424 ICICI: 0.394


SBI: 0.391 / PNB: 0.375 ICICI: 0.380

Augmented Service

SBI: 0.594 / PNB: 0.557 HDFC: 0.563

Augmented Service SBI:0.404 / PNB: 0.377 HDFC: 0.425

Augmented Service

SBI: 0.370 / PNB: 0.361 HDFC:0.465

Augmented Service

SBI: 0.372 / PNB: 0.360 HDFC: 0.374

Physical Evidence

SBI :0.501/ICICI: 0.374

Physical Evidence SBI :0.250 / ICICI: 0.349

Physical Evidence

SBI :0.305 / ICICI: 0.262

Physical Evidence

SBI: 0.273 / ICICI:0.182

Ethos of the bank

SBI :0.371/ICICI: 0.59

Ethos of the bank

SBI :0.458/ICICI: 0.402

Ethos of the bank

SBI :0.270 /ICICI: 0.441

Ethos of the bank

SBI : 0.307 / ICICI: 0.415

Assortment of services SBI: 0.406 / PNB: 0.654 HDFC: 0.452

Assortment of services SBI: 0.297 / PNB: 0.454 HDFC: 0.375

Assortment of services

SBI: 0.210 / PNB: 0.447 HDFC:0.361


SBI: 0.250 / PNB: 0.466 HDFC: 0.377

Service Product

SBI: 0.437 / PNB: 0.608

Service Product

SBI: 0.376 / PNB: 0.494

Service Product

SBI: 0.378 / PNB: 0.557

Service Product

SBI: 0.372 / PNB: 0.434


PNB:0.513/ HDFC:0.588


PNB:0.444/HDFC: 0.438


PNB: 0.521/HDFC:0.406


PNB:0.360 / HDFC:0.388

Accomplishing the promise

PNB: 0.541

Accomplishing the promise

PNB: 0.393

Accomplishing the promise PNB: 0.413


Moderate and positive correlation has been found out between the factors of service quality

and customer satisfaction, retention, loyalty and commitment. Competency of the bank

employees, Assortment of service and Service product are having higher correlation. These

factors lead to the higher satisfaction as compare to the other factors of service quality. Out

of the eight factors of service quality, three factors - Competency of the bank employees,


200

Augmented Service and Physical Evidence are having higher correlation values in SBI.

This leads to the finding that customers of SBI are more satisfied with the bank service in

comparison with the other three banks. Similarly, PNB is also having three prominent

factors of service quality as depicted in table 5.2. Therefore, it can be inferred that

customers of public sector banks – SBI and PNB are more satisfied as compare to the


Competency of the bank employee, Ethos of the bank, Assortment of services are the

factors associated with the customer retention similarly as these factors are having similar

correlation values. These are the most prominent factors of the service quality in public

sector banks for retaining customers. Service product is the most important factors of the

service quality for PNB along with the Interior Signage & Service Ability and

accomplishing the promises that indicates higher customer retention in the PNB.

Major reasons for the customer loyalty towards the bank are competency of the bank

employee, augmented service, ethos of the bank, assortment of the bank and service

product. PNB is found to better service provider in comparison with other three banks on

the stated four factors of the service quality. By and large, customers of the public sector

banks are found to more loyal towards their bank in comparison with the private sector

bank. Key factors of the service quality contributing to the customer commitment are ethos

of the bank, assortment of services, service product and competency of the bank employee.

This is an indication of the finding that customer commitment is also high in public sector

bank as compare to the private sector bank.

Commitment level is found to be similar in PNB and SBI. Therefore the major result of the

objective shed light on the fact that customers of public sector bank are more satisfied,

more loyal and more committed to the bank as compare to the private sector banks.

Likewise, customer retention is also high in public sector bank in comparison with the

private sector bank.


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5.3 Findings related to the research objective 3: To study the impact of

service quality on customer satisfaction / retention / commitment

&loyalty :

To fulfill this objective, simple regression analysis test was performed between the factors

of service quality and customer satisfaction / retention / commitment & loyalty for all the

four banks.

TABLE 5.3 R Square Value

Customer Satisfaction Customer Retention Customer Loyalty Customer Commitment Competency Of bank

employee

SBI: 0.412 / PNB: 0.391 ICICI: 0.353


SBI: 0.066 / PNB: 0.171 ICICI: 0.111


SBI: 0.116 / PNB: 0.180 ICICI:0.093


SBI: 0.085 / PNB: 0.126 ICICI:0.109

Augmented Service

SBI: 0.352 / PNB: 0.310 HDFC: 0.317

Augmented Service

SBI: 0.042 / PNB: 0.128 HDFC:0.181

Augmented Service

SBI: 0.123 / PNB: 0.130 HDFC:0.217

Augmented Service

SBI: 0.131 / PNB: 0.130 HDFC: 0.140

Physical Evidence

SBI:0.251/ICICI: 0.132

Physical Evidence

--------------

Physical Evidence

--------------

Physical Evidence

--------------

Ethos of the bank

SBI:0.138 /ICICI:0.358

Ethos of the bank SBI:0.066 / ICICI: 0.162

Ethos of the bank ICICI: 0.195

Ethos of the bank ICICI: 0.172


SBI: 0.165 / PNB: 0.427 HDFC: 0.205

Assortment of services PNB: 0.206 / HDFC:0.100

Assortment of services PNB: 0.200 /HDFC:0.068

Assortment of services PNB: 0.217 / HDFC:0.056

Service Product

SBI: 0.191 / PNB: 0.370

Service Product SBI: 0.071 / PNB: 0.171




PNB: 0.263/HDFC:0.346


PNB: 0.197/HDFC:0.192


PNB: 0.272/HDFC:0.164


PNB: 0.130/HDFC:0.151





In this objective, an attempt is made to examine to variation caused by service quality

factors in customer satisfaction, retention, loyalty and commitment. Important factors of

the service quality impacting the customer satisfaction are competency of the bank

employee, assortment of service, augmented service, and ethos of the bank and service

product. This result is in the consistency with the finding 2 leading to the indication impact


202

of service quality on customer satisfaction is higher in SBI as compare to the other three

bank.

Augmented service, assortment of the services, service product and interior signage &

service ability are the most influencing factors of the service quality on customer retention.

This result is also in consistent with the result of the findings 2 showing the fact that these

are the most dominant factors in PNB that impact greatly on customer retention.

Influential factors of service quality are augmented service, assortment of service, service

product and interior signage & service ability. These factors impact customer loyalty

significantly in comparison with the other factors of service quality. Significant impact of

service quality on customer loyalty is found in PNB in comparison with the other banks.

Lastly, important service quality factors of service quality impacting customer

commitment are augmented service, assortment of the service, service product and interior

signage & service ability. PNB customers are more committed in comparison with the

other banks customers because of the impact of service quality on customer commitment.

The major highlights of this objective is in consistence with the result of the findings 2

inferring that impact of service quality is more public sector bank in comparison with the


TABLE 5.4 Consistency Mapping of Research Objective 2 & 3

Sr. No Research Objective 2 Research Objective 3 1 Customer Satisfaction is higher in SBI. Impact of Factor of Service Quality on

Customer Satisfaction is higher in SBI. 2 Customer Retention is higher in PNB. Factors of service quality impacting customer

retention are higher in PNB. 3 Customers of PNB are more loyal as

compare with other three banks. Impact of factors of service quality on customer loyalty is higher in PNB.

4 Customer commitment is similar in PNB & SBI.

Impact of factors of service quality on customer commitment is higher in PNB.


203

5.4 Findings related to the research objective 4:To identify important

factors of service quality from the demographic perspective of

customers :

TABLE 5.5Summary of the demographic analysis in SBI

Factors of Service Quality

Gender Age Education Income Occupation

Competency of bank employee

Male 35-44 Graduate 30000-40000 Private Service

Augmented Services Female 18-24 Graduate 20000-30000 Private Service Physical Evidence Male 18-24 Postgraduate 20000-30000 Private Service Ethos of the Bank Male 25-34 Professional 30000-40000 Professional Assortment of Services

Male 25-34 Graduate 10000-20000 Govt. Service

Service Product Female 18-24 Postgraduate 10000-20000 Businessman

Based on the demographic analysis, it has been found out that males consider competency

of the bank employees, physical evidence, ethos of the bank, and assortment of services are

important parameter in judging the bank’s service quality and the rest of the two factors are

considered by females. Respondents’ categories in the strata of 18-24 years of age,

perceive that service quality of bank is good. This perception is based on the factors –

augmented services, physical evidence and service product of the bank. Whereas

customers classifies in the age group of 25-34 perceive good service quality of the bank

considering ethos of the bank and assortment of services. Lastly, respondents having age

between 35 and 44 perceive that bank’s employees are competent enough to give good

service quality.

So far as education is concern, majority of the respondents are graduates who have a good

perception about the bank. They have built their perception based on the good competency

of the bank employees, augmented service of the bank and assortment of services.

Respondents who are post graduate, have rated bank as a good service provider deeming

bank’s service product & physical evidence. Respondents who are professionals believe

that ethos of the bank is good. Customers stratified in the income group of Rs. 30000 –

40000 have rated bank’s service quality based on the dimension – bank employees’

competency and ethos of the bank, where as customer having income of Rs.20000 – 30000

have considered augmented service of the bank and bank’s physical evidence. Based on

these factors, good perception towards the bank’s service quality is built among the


204

customers. Lastly, customers earning between Rs.10000 and 20000 rated the bank based

of the two service quality dimensions – assortment of service and its service product.

Respondents having different occupation have judged their opinion about the bank’s

service quality based on the different dimension of the service quality. Customers who are

private employees have considered bank employees’ competency, augmented service and

physical evidence of the bank. Professionals have considered ethos of the bank as an

important factor of service quality, businessmen have considered bank’s service product

and government employees’ have considered assortment service of the bank and based on

it, they have perceive state bank of India as a good service provider.

TABLE 5.6Summary of the demographic analysis in PNB

Factors of Service Quality

Gender Age Education Income Occupation

Competency of Bank Employees

Male 25-34 Postgraduate 30000-40000 Private Service


Male 25-34 Graduate 20000-30000 Private Service

Accomplishing The Promises

Male 25-34 Graduate 20000-30000 Govt. Service


Male 35-44 Graduate 20000-30000 Professionals

Augmented Services Male 45-55 Postgraduate 10000-20000 Businessman Service Product Male 25-34 Graduate 40000-50000 Private Service

Out of 200 respondents surveyed, majority of them are male who have perceived PNB as a

good service provider in the Indian banking sector. So far as age is concern, customers

categorized in the group of 25-34 have considered four factors (competency of bank

employee, interior signage & service ability, accomplishing the promises and service

products) of the service quality and rated PNB a good service provider in the public sector

banking. For the customers having age between 35 and 44 have given importance to the

factor – assortment of services, whereas customer in the age bracket of 45 – 55 believe that

bank offer improved service all the time. Considering these factors, customer have form

positive perception regarding the service of the bank.

Majority of the customers surveyed are either graduate or postgraduate. Customers having

graduate degree perceive PNB as a good service provider based on the four dimensions of

the service quality that are interior signage & service ability, accomplishing the promise,

assortment of service and service product. On the other hand, post graduate customers


205

believe that PNB is very good in offering augmented services. Moreover, they also

perceive that competency of the bank employees is good and hence overall service quality

of the bank is good.

Customers are categorized in the four income groups who have responded in the research.

First strata is Rs. 20000-30000. Respondents having income in these strata perceive

positively about the bank’s service quality based on the factors such as interior signage &

service ability, accomplishing the promises and assortment of services. Customers having

income between Rs.30000 – 40000 feels that employee of this bank are very competitive

and provide good service. Due importance is given to the bank’s service product by the

customers having income between Rs.40000 – 50000. Lastly, respondents earning between

Rs.10000 and 20000 thinks that bank is managed ethically and always impart better

service.

So far as occupation is concern, majority of the respondents are private service employees

and they have opine about the bank’s service quality based on the three parameters –

competency of the bank employees, interior signage & service ability and service product.

Government employees deem that bank fulfill its promises and hence rated it as a good

service provider. Professionals opine that bank offer variety of services and businessmen

thinks that bank practices ethics in its operation and offer a improved service to its

customers.

TABLE 5.7Summary of the demographic analysis in ICICI

Factors of Service Quality Gender Age Education Income Occupation Competency of bankemployee Male 25-34 Graduate 30000-40000 Private Service Ethos of the bank Male 25-34 Postgraduate 30000-40000 Professionals PhysicalEvidence Male 35-44 Graduate 40000-50000 Businessmen

Three factors were extracted in exploratory factor analysis and customers’ perception was

studied based on these factors. Like PNB, for this bank also majority of the respondents

surveyed were males and they have perceived that the service of ICICI bank is good based

on the above stated three factors. Customers’ surveyed were in the age group of 25-34 and

they believed that the employees of ICICI bank are competent, and ethos of the bank is

good. Considering these factors, they perceive positively about the bank’s service quality.

Customers’ falls in the age group of 35 and 44 perceived that physical evidence in the bank

is good and it makes a service experience unique. Graduate customers have considered


206

physical evidence and bank employees’ competency as an important factors and based on

it, they have rated service of ICICI. Whereas postgraduate customers’ have considered the

factor that stress upon the philosophy of the bank.

So far as income is concern, customers having income in the category of Rs. 30000-40000

have rated bank on the basis of two service quality factors – competency of bank

employees and ethos of the bank. Physical evidence is an important factor for the

customers, who are earning between Rs. 40000 and 50000. Lastly, private employees have

considered bank employees’ competency, professionals have considered that bank is

having a good philosophy and businessmen have considered physical evidence while

perceiving about the service quality of the bank.

TABLE 5.8Summary of the demographic analysis in HDFC

Factors of Service Quality Gender Age Education Income Occupation Augmented Service Male 25-34 Postgraduate 30000-40000 Private Service Interior signage & service ability

Male 25-34 Postgraduate 20000-30000 Professionals

Assortment of service Male 35-44 Graduate 10000-20000 Businessmen

Like PNB and ICICI, for this bank also majority of the respondents are males who have

rated bank’s service quality on the basis of the three factors extracted in the factor analysis.

Only one factor – assortment of service is considered by the customers having age in the

category of 35 – 44. Whereas the customers have age in the group of 25-34 have given

more weightage to the two factors – augmented service and interior signage & service

ability. Customers surveyed are either graduate or postgraduate by education.

Postgraduate respondents deem that bank offers augmented services. They also believe that

interior signage of the bank is good and it enables better service delivery to the customers.

Graduate opine that bank offers variety of services to its customers. Customers earning

between Rs.30000 and 40000, have rated bank on the factor named as augmented services

of the bank. Interior signage & service ability is the factor considered by the respondents

having income in the category of Rs.20000 – 30000. Lastly, respondents earning between

Rs.10000 and 20000, believe that bank offers widespread of services to the customers.

Customers having different occupation, have diverse parameters for forming their

perception about the bank’s service quality. Private employees feel that bank is very good

in bestowing improved services. Professionals deem that interior signage of the bank is


207

very good and bank is able to provide better services all the time. Lastly, businessmen

perceive that bank is having range of the services and service product to be offered.

5.5 Findings related to the research objective 5: To rank the selected

banks based on the service quality :

TABLE 5.9 Ranking of the bank

Rank Bank Total Score Total Score in % 1 State Bank of India (SBI) (+)13871 62.48 2 ICICI Bank (+)13559 61.07 3 HDFC Bank (+)13154 59.25 4 Punjab National Bank(PNB) (+)12796 57.63

Table 5.5 illustrates the result of ideal and least score. As mention in it, SBI ranks first with

62.48% of the total score, so far as customer perception towards the service quality of the

bank is concern. It is being followed by ICICI, HDFC and PNB with the total score

depicted in the above table. As the total score values for four banks are positive and hence

it can be interpreted that customers have positive perception towards the services of all the

four banks. Minute difference is highlighted in the total score values of SBI and ICICI

bank. This result shed a light on the fact that customers perceive that the service quality of

both banks are similar but PNB stands last so far as customer’s opinion about its quality of

the service is concern.

Conclusions, Major Contributions and Scope of Further Work

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CHAPTER–6

CONCLUSIONS, MAJOR CONTRIBUTIONS AND SCOPE OF FURTHER WORK

6.1 Conclusions :

Service quality and its dimension were studied by different authors since years. But direct

relationship between service quality and customer satisfaction, retention, loyalty and

commitment were not studied. In this doctoral research, an attempt was made to establish

bridges between the factors of service quality and customer satisfaction, retention, loyalty

and commitment in Indian Banking Sector. For the purpose of research, four banks (SBI,

PNB, ICICI, HDFC) were selected based on the basis of market capitalization. Firstly,

various factors were extracted for all the four banks separately and an empirical model of

service quality was developed based on it. Confirmatory Factor Analysis was used to

validate the model.

Data was collected from the customers of four banks and hypothesized relation was

established between the factors of service quality and customer satisfaction, retention,

loyalty and commitment. The result of the analysis stipulates that not all the factors of

service quality contribute to satisfy the customer, retain them and make them loyal &

committed to the bank. In the chapter of the findings major contributing factors of service

quality and its impact of customer satisfaction, retention, loyalty and commitment were

discussed.

Demographics of the customers were also taken into the consideration for the purpose of

study. How demographic variables has impacted in forming the perception of the

customers were discussed and lastly, through statistics, overall service quality of all the

four banks were identified and banks were given rank based on it. This chapter includes

implication of the study, limitation of the study and recommended directions for future

research.


209

6.2 Major Contribution :

6.2.1 Theoretical Implication

Based on the research objectives, constructs studied – service quality, customer

satisfaction, retention, loyalty and commitment has contributed to the theory as follows:

The major contribution of this research is in the area of understanding the factors of

service quality pertaining to the Indian Banking Sector. Theoretically, this research

has contributed to the existing body of knowledge pertaining to the factors of service

quality by incorporating new information through qualitative research. An empirical

model of service quality has developed and it has added richness to the service

quality constructs studied so far in the context of Indian Banking Sector.

Various literatures have shed a light on the relationship between service quality and

customer satisfaction, retention, loyalty and commitment. However, there was lack

of study on identifying the factors of service quality and its impact on customer

satisfaction, retention, loyalty and commitment in the context of service quality.

With empirical models of service quality developed for all the four banks provide

more an inclusive picture of service quality. Utilizing this model has helped the

researcher in studying its relationship with customer satisfaction, retention, loyalty

and commitment.

With an advent of twenty first century, the world economy is changing rapidly and it

has a deep impact on our economy also. In the past years, radical changes have been

observed such as new licensing policies for operating in Indian Banking Sector. This

will allow new players to explore the opportunities offered by banking sector in

India. Therefore, it was essential to study the service quality model in the context

demographic variables of the customers. Consequently, this thesis contributes to the

body of knowledge that how customers perceive towards the service quality of the

Indian banks based on their demographics.


210

6.2.2 Managerial Implication

As our economy is dominated by the service sectors & banking has been one of the leading

contributing industry and hence service quality is a key instrument for the banking players

to differentiate themselves from others. This indicates the importance of the service quality

as an important construct for banks. Higher service quality facilitates the bank in satisfying

the customers, retaining them and making them loyal & committed to the bank. So this

study has the following implication for banks:

It is very much essential for the service providers in the banks to understand the role

and importance of the service quality. This thesis reveals the fact that, employees of

the bank are the key contributor in offering good service quality as they are the

representatives of the bank. So it is recommended to the banks to design

comprehensive training programme for employees in dealing with the customers by

being prompt in offering the service and solving the problems, pleasing and

courteous while communicating with them. With the use of empirical model of

service quality developed in the thesis, banks will be able to identify which factors of

service quality best accommodates them.

Physical evidence & Interior Signage have also emerged as another important factors

in attracting, satisfying and retaining the customers. So, it is strongly recommended

to the service provider to pay more attention in getting out of the brick and mortal

layout of the bank and give modern look to the bank. This will make services more

effective. It is very much difficult to differentiate the service in banking. Thus

focusing on the these factors, bank will be able to create its unique position in the

mind of customers. As banks are majorly govern by Reserve Bank of India but banks

are given autonomy to decide on the service products such interest on the loans and

fixed deposites. Considering these factors, bank can distinguish itself very well from

others.

Studying the factors of service quality will help the service providers to better

understand how customers have perceived about the service quality of all the four

banks and how it has impacted on customer satisfaction, retention, loyalty and

commitment. Thus service provider can formulate the strategy according and make

necessary changes in the certain factors of the service quality in order to satisfied the

customer and retain them with the bank as well as make them committed and loyal to

the bank. Almost analogous factors have been extracted in all the four banks except


211

one factor (Accomplishing of promises) of PNB that depicts unique of that factor.

Therefore, this factor structure of service quality is valid for the public & private

sector banks of India.

The major finding shed the light on the fact that customers of public sector banks are

more satisfied, loyal and committed to the bank. Customer retention is also higher in

public sector bank. Thus, the factor structure of the service quality can help the

private sector players to formulate strategy based on the factors identified and

validated the proposed research model.

Demographics analysis has presented comprehensive picture of the customer profile.

This will help the bank to focus more on certain segment of the customers and offer

them the services focusing more on the factors preferred by them. Lastly based on

the ranking given by the customers, bank can use the service result to formulate or

redesign its policies in order to improve the service quality.

6.3 Limitation of the study :

Although the findings of the study contribute to the body of knowledge, there are certain

limitations of the study as follows:

Banking sector was chosen for the purpose of the study in Gujarat. The study has

focused on the customers of the four major cities of Gujarat and they were from the

four banks – SBI, PNB, ICICI and HDFC and this restricts the generalization of the

study.

An empirical model of the service quality developed in the thesis contains the factors

pertaining to the four banks taken for the purpose of the study. There may be several

other factors of service quality that may have impact on customer satisfaction,

retention, loyalty and commitment and hence this lead to another limitation of the

study.

Respondents’ error may subsist in the study (Malhotra & Das (2005). Respondents’

may not be able to fill out the entire questionnaire due to certain reasons.

As rapid changes are observed in the banking sector and this may led to the change

in the customer’s perception about the service quality of the bank. Shift in the

customer perception also occur due to change in the variables such as age, income

and occupation and hence this research can be replicated in the future.


212

6.4 Direction for future research :

Four major cities of Gujarat were taken for the study. The service quality model

build with the factors in the thesis can be use to study service quality in the rural

banking.

As generalization was one of the limitations of the study, therefore the similar study

can be imitated in other geographic area of the country at a larger scale.

The study has focused on the general services offered by the bank. Future research

may be conducted in the different types of the banking services such as corporate

banking, international banking, and government banking to see whether the empirical

model of the service quality developed in the study is consistent in the different

services.

Only public sector and private sector banks were taken for the purpose of study. The

service quality model can also be examined in other sectors of banks such as foreign

banks, cooperative banks, scheduled banks etc.

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segmentation approach towards bottled mineral water”, NISHKARSH –The Journal

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of Indian Railway”, International Journal of Scientific Research, Vol. 3 , Issue – 1,

pg. No. 237- 238, ISSN – 2277 – 8179.

12. RichaPandit& Dr. Ram Kumar Balyan (July 2015), “To study Service Quality of Top

Public & Private Sector Banks in India”, International Journal of Scientific Research,

Vol.4, Issue – 7, Pg. No.739-741, ISSN – 2277 - 8179

Appendix

231

Appendix - Questionnaire

Dear Sir/ Madam,

I am Ms.RichaPandit, pursuing PhD from Gujarat Technological University. I am

conducting research on studying the Impact of Service Quality on Customer Satisfaction,

Retention, Loyalty and Commitment in the Indian Banking Sector. It should take only a

small amount of time to complete the questionnaire. Your response and participation form

a critical part of the success of my research. I would be very grateful if you could take

some time to fill the questionnaire. I would like to reassure you that your response will be

kept strictly confidential and will only be used for the purposes of this academic research.

DIRECTION: Top two NSE public sector banks: SBI & PNB and Top two NSE private

sector bank: ICICI & HDFC are taken for the purpose of the research. The statements

presented below describe SERVICE QUALITY, SATISFACTION, RETENTION,

LOYALTY and COMMITMENT in the bank.

There are five numbers (1: Strongly Disagree, 2: Disagree, 3: Neither Agree nor Disagree,

4: Agree, 5: Strongly Agree). The higher the number means the more I agree with the

statement. The lower the number means the more I disagree with the statement. If you feel

your agreement is between these two extremes, please pick any answer from within the

scale.

1. You have account in which bank? (Select any one bank & give your response in

the context of that bank only)

SBI PNB ICICI HDFC

2. Which type of the account you have in your bank. (Select any one option)

Current Account Savings Account

3. Which kind of service is more frequently used by you? (Multiple choice)

Draft / Cheque Cash credit Locker Credit card

Internet Banking Mobile Banking Fixed Deposit

Recurring Deposit SMS Alert NEFT / RTGS

Pay order Debit Card

4. Reasons for using service of particular bank. (Multiple choice)

Proximity (Nearness) Better Service Trustworthiness

Personal Relation Brand Name Personal association

Appendix

232

Service Quality 1

Strongly Disagree

2 Disagree

3 Neither Agree Nor

Disagree

4 Agree

5 Strongly

Agree

Bank’s physical facility is visually attractive. Bank is having modern looking and comfortable waiting area.

Banks have TV & music system in the waiting area that reduces anxiety while waiting.

Token system at the bank makes waiting line more organize.

Cleanliness is properly maintained at the bank. Materials like pamphlets, brochure provides detail information about bank’s various services.

Materials at the bank are visually appealing. Employees of the bank are very attentive & provide individual attention.

Employees of the bank have knowledge about the all the different kind services offered by the bank.

Employees of the bank are having high level of the competency.

Employees of the bank are very customer friendly & listen to me very carefully.

Employees of the bank understand your need. Employees of the bank are never too busy to respond to customer ‘s request.

Employees of the bank provide me prompt service.

Every employees of the bank are easily accessible by the customer.

When bank promises to do something, they do it in certain time.

When customers have any problem, bank shows sincere interest in solving it.

Bank performs the service right the first time. Bank provides the service at the time they promise to do so.

Bank insists on the error free record. I have selected bank because bank is having strong brand name in the market.

I believe that bank is ethically managed by the management.

Products of the bank like Fixed Deposit, Certificates are of a good quality.

Bank maintain confidentially while sending me online user id and password.

Bank offers locker facility at reasonable price with no hidden charges.

Bank is having strong security system in the bank premises.

Bank offers me variety of the financial product like mutual fund, insurance policies other than traditional banking product.

Bank always ensure proper functioning of ATM machine.

Bank never faces shortage of locker at every branch.

Appendix

233

Service Quality 1

Strongly Disagree

2 Disagree

3 Neither Agree Nor

Disagree

4 Agree

5 Strongly

Agree

Bank is having well managed web policies for secure online banking.

Bank always maintain transparency while communicating prices to me.

There are no hidden charges taken by bank while servicing me.

Bank is having convenient operating hours. Bank offers me 24*7 customer care services. Bank strictly follows RBI regulations & also informs me about the same.

I feel secure while using bank’s technical services such as NEFT, RTGS, Online Banking Etc.

Bank does regular upgradation in its technology.

Satisfaction

1 Strongly Disagree

2 Disagree

3 Neither Agree Nor

Disagree

4 Agree

5 Strongly

Agree

I think I did a right thing that I selected my bank.

Bank always exceed in my expectation while offering me the services.

Bank’s service exactly meets my requirement. I feel good that branch manager knows me personally.

I feel happy after every visit of the bank. Bank is having strong mechanism in case of service failure.

Bank offers me compensation in case of service failure.

Bank apologizes if they fail to serve me on time.

Bank always takes care of my special requirement.

Bank is having many no. of the branches. Location of bank is very convenient to commute.

Appendix

234

Retention

1 Strongly Disagree

2 Disagree

3 Neither Agree Nor

Disagree

4 Agree

5 Strongly

Agree

I say positive things about the bank to other people as I would like to have long-term association with the bank.

As bank is having attractive rewards system due to which I will stay with the bank for longer period of time.

I consider bank as my first choice whenever I purchase banking service.

I will purchase more services of the bank in the future.

Even if bank increases its price, I will continue with the bank in future.

I am ready to continue with the bank despite of the lucrative offers of the competitors due to the benefits I am receiving from the bank.

I will complain to the bank employees if I experience any problem in the bank service but I will not switch to the other bank.

I will continue with the bank due to high integrity maintain by the bank.

Loyalty

1 Strongly Disagree

2 Disagree

3 Neither Agree Nor

Disagree

4 Agree

5 Strongly

Agree

I always recommend my bank to others. I get best value for money from my bank. I am never interested in the various service offerings of the competitors.

I would not prefer to switch to the other bank.

I am having personal emotions attached with the bank.

Overall I am very happy with my bank. I consider myself loyal to the bank.

Commitment

1 Strongly Disagree

2 Disagree

3 Neither Agree Nor

Disagree

4 Agree

5 Strongly

Agree

It is unethical for me to switch to the other bank. It means lot to me to belong to the bank. I have interpersonal relationship with the bank due the customization offered to me.

There are few sacrifice that I will have to make if I switch to the other bank.

I feel proud of being associated with the bank. Strong sense obligation stops me to switch to the other bank.

I feel I owe a great deal to the bank.

Appendix

235

Demographic Detail:

1. Name: ________________

2. Gender : ( ) Male ( ) Female

3. Age: ( ) 18-24 ; ( ) 25-34 ( ) 35-44 ( ) 45-55 ( ) 55 – 65 ( ) Over 65

4. Education : ( ) Secondary school ( ) Higher Secondary school ( ) Graduate degree

( ) Postgraduate degree ( ) Professional qualifications

5. Income in Rs.: ( ) 0 - 10000 ( ) 10000 – 20000 ( ) 20000 – 30000 ( ) 30000 – 40000

( ) 40000 – 50000 ( ) above 50000

6. Occupation: ( ) Businessman ( ) Professional ( ) Govt. Service

( ) Private Service ( ) Housewife ( ) Student ( ) Retired

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