Research manual sample

Chapter No. 1

Introduction

Background

The banking and financial sector has tremendous implications

in global and national economies. Technological developments

and liberation from part of the regulators in recent years

has resulted in phenomenal development of the financial

industry in terms of size, structure and products/services

offered. From a relatively closed system depending on

traditional banking activities, the financial sector has

transformed to a more open and effective system (Ilter et.

al., 2009).

In such a business environment, however, competition is

tough. Considering the options, providing excellent customer

services becomes highly crucial. Satisfied customers are

central to performance and returns from an organizational

perspective. In fact, the importance of the customer is such

that, in many places, customer is viewed as the most

important stakeholder of all. Organizations today are

investing tremendous time and money to understand their

customers, viewing them as a group whose satisfaction must

be the top priority in strategic planning and striving to

promote an increased focus on customer results,

incorporating improvements their practices (Magnesh, 2010).

In order to enhance service quality from a banking

perspective, one area that banks and financial institutions

can capitalize on is automated service. Automated service

provides an excellent opportunity to the banks to create new

models for service design strategies and new service

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development. Importantly, automated service does not only

include internet banking, it also accounts for other

dimensions such as ATM and telephone banking (Al-Hawari et.

al., 2005).

Internet banking allows customers to access their accounts

and general information regarding banks products and

services through the bank’s web site. The ATM on the other

hand is service delivery mode that allows customers to

withdraw cash, transfer funds, etc. through a machine

instead of a teller. While telephone banking enables a

customer to conduct banking activities such as balance

enquiries, payment transfers, etc. using a telephone.

In Pakistan, where almost 81% of the banking assets are

owned by the private sector while foreign investors

contribute 47% of the total paid up capital, banking was

declared as the best performing sector in 2007 with banking

assets worth more than $60 billion. Advancing from period of

severe shortage of resources and uncertainty, the banking

industry today is characterized as highly competitive,

striving to attract customers through provisioning of

superior service quality (Ahmad et. al. 2010).

Problem identification

Considering the competitive nature of present day banking

industry, excellence in quality has become an imperative for

long-term survival and growth. The development of

technologies has enabled banks to offer superior services in

order to achieve customer satisfaction. Moreover, the number

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of bank customers opting to use self-service delivery

channels is increasing by the day.

Not only are the banks responding by offering more and more

automated services, in order to retain their existing

customers and attract new ones, they intend to offer a

service that the customer finds, of the highest quality.

However, the working of a customers’ mind can often be a

challenge. If customers’ perceptions are not fully

understood, it can be quite an issue. In order to completely

comprehend the customers’ perceptions on the issue of

automated service quality, an investigation needs to be

conducted.

Problem Statement

In order to enhance the level of perceived automated service

quality, the relevant factors namely, ATM service quality,

telephone banking quality, internet banking quality,

customer perception of price and perceived core service

quality need to be investigated.

Research Question

Do factors such as ATM service quality, telephone-banking

quality, internet banking quality, customer perception of

price and perceived core service quality lead to perceived

automated service quality?

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Objectives of the Study

The major objectives of the study are:

To investigate the issue of perceived automated service

quality.

To extract the important factors which impact perceived

automated service quality.

To suggest ways to enhance perceived automated service

quality.

Rationale of the Study

This study will help understand the customers’ perspective

on various dimensions of automated services offered. The

customers’ perspective if translated into measurable

targets, could serve as a valuable insight to monitor

improvements, and deciding upon attributes that need to be

focused on, to enhance automated service quality.

Customers satisfied with quality, not only are more prone to

stick to the bank, they are likely to spread positive word

of mouth and attract other customers as well, meaning, more

returns for the bank.

Theoretical Framework

The model presented below posits that customers’ perceived

automated service quality for banking services is based

mainly on five factors namely, ATM quality, telephone

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banking quality, internet banking quality, perceived price

and core service quality. The model has been adopted from

the published research paper, “Measuring Banks’ Automated

Service Quality: A Confirmatory Factor Analysis Approach”

(Al-Hawari et. al. 2005).

Schematic Diagram

Hypothesis

Five factors, namely, ATM service quality, telephone-banking

quality, internet banking quality, customer perception of

price and perceived core service quality are proposed to

have influence on perceived automated service quality.

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H1: ATM service quality is positively related to perceived

automated service quality.

H2: Telephone banking quality is positively related to

perceived automated service quality.

H3: Internet banking quality is positively related to


H4: Customer perception of price is positively related to


H5: Perceived core service quality is positively related to


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Chapter No. 2

Literature Review

A study conducted in India revealed that customers very

particularly unhappy with the drinking water facilities,

parking facilities, ventilation and the ATM locations.

Negative responses on tangibles clearly stated that the bank

had been ignorant about its infrastructure. Customers also

expressed concerns on service delivery. Scores on assurance

were also low, implying the need for employers on skill

building on customer handling techniques. The bank had

performed better in case of empathy, reliability and

responsiveness (Magnesh, 2010).

Regarding ATM quality, a study was conducted in Pakistan

which stated convenience, efficient operations, security and

privacy as the main dimensions of ATM service quality. It

was further stated that ATM service quality positively and

significantly contributed towards customer satisfaction. The

study proposed that banks should actively monitor customers’

preferences with regard to ATM usage. Moreover the banks

should specially focus on aspects of security and privacy

and diversify their offerings to build a sustainable

relationship with its customers (Khan, 2010).

On the issue of internet banking adoption, a research was

carried out in Malaysia. The research stressed on offering

enhanced salience of internet banking to customer needs,

greater compatibility of internet banking to customer

banking norms and lifestyle and easy to adopt systems

requiring minimal mental and physical strain in order to

promote internet banking. Moreover, the study proposed,

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offering an easily readable, comprehensive information on

the website, fast transaction processing, timely

downloading/uploading, interactivity, customization and

website semblance. Features such as music, animation,

cartoons, advertisements, jingles, etc. were also proposed

to be effective tools of enhancing adoption (Suki, 2010).

In a research conducted in the UK, it was determined that

customers became attached with their respective banks. The

attachment was based on three forms of value, faith in

organizational competence, mutually aligned and congruent

values and social bonds delivering high levels of relational

value. Moreover, this kind of attachment lead towards

perceived service quality, satisfaction and intention to

recommend a bank. The study proposed that switching costs

fell and differentiation enhanced, the banks should aim to

bond customers to hold them for longer periods of time

(Aldlaigan & Buttle, 2005).

A research conducted in Australia stated that value

dimensions held significant importance with regard to

consumers’ continued usage of internet banking service.

Technology dimensions such as attraction to usability were

also helpful in the process. However, the study denied the

relationship between social determinants and internet

banking usage (Adapa et. al., 2009).

Two thirds of the the population in Finland pay their bills

through the internet. However the adoption rates for mobile

banking are minimal. One reason attributed to this

resistance is that complexity of mobile phone usage for

banking purposes (Laukkanen, 2008).

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Trust was determined to be one the most significant factors

leading towards internet banking acceptance. Moreover,

usability depended on the customers’ perception with regard

to usefulness and ease of use. Behavioral intention to use

internet banking was also found to be significantly related

to attitude, perceived usefulness and trust. The results

signified the importance of creating trust to enhance

internet banking adoption (Suh & Han, 2002).

Two parallel banking systems are running side by side in

Pakistan, one being Islamic while other being conventional.

A study was conducted to determine service quality

perceptions between the customers of the two systems. The

results showed a significant difference in the perceptions

of male and female customers with regard to service quality

among customers of Islamic banks while there was no such

difference in the case of conventional banks. The study

suggested employing separate strategies for the two genders

to remove the perception gap in case of Islamic banks (Ahmad

et. al., 2010).

Results of a study conducted in Australia revealed that

customers strongly believed in using internet banking

services in order ease their operations, however concerns

such as security and technology anxiety hurdled their usage.

Promotion of a safe, efficient and conductive environment

from the banks’ perspective was strongly recommended (Yeow

et. al., 2008).

A research on service quality delivery conducted in Malaysia

concluded that tangibles, which included, the appearance of

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the company, its representatives, materials and equipment,

strongly influenced service quality perception. The study

also emphasized on the importance of assurance, empathy, and

customer satisfaction. Moreover, the study suggested the

incorporation of extensive customer relations training

programs for the frontlines and tellers. This would enhance

the banks’ core competency with regard to customer

satisfaction (Munusamy et. al., 2010).

A study conducted in Bangladesh revealed that determinants

such as the depositor’s desire for higher returns,

convenient transactions, consistency and uniformity with

regard to service and higher cost-benefit implications were

essential to customers while selecting their required

services. The study recommended improving the process of

technological development (Rashid et. al., 2008).

The results of a study conducted to assess service quality

in the Mauritian banking sector revealed a huge difference

between customers’ perception and expectation towards

factors such as reliability and responsiveness. The study

stressed on the need improve customer service and

incorporate quality improvements. However, the customers’

expressed satisfaction with the banks’ physical attributes,

equipment and appearance of staff. Another important finding

revealed that those customers who belonged to higher income

groups were more prone to be unsatisfied with the banks’

service (Agathi, 2010).

Banks spend large amounts of money in order to gain

acceptance of mobile banking, which is considered the latest

of the automated banking developments. However, a study

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revealed that, despite its benefits and internet

availability, a large number of customers did not utilize

mobile banking for various reasons. The major reason

attributed to this resistance was safety and security. The

study also revealed that those customers who did use mobile

banking, kept its usage limited, mainly for checking account

status. This meant that mobile banking was not doing

justice to its purpose, which was to provide convenience to

the customer by reducing bank visits (Termsnguanwong, 2010).

The significance of considering perceived quality as a

multidimensional construct was stressed upon, from a

managerial perspective, in a study conducted in Slovenia. It

was suggested that emphasis be laid on safety, confidence in

employees and physical infrastructure since solely

concentrating on core services was not enough (Korda & Snoj,

2010).

A study conducted in New Zealand revealed that New Zealand

banks performed exceptionally well in providing the latest

information to their customers. However on issues such as

security, down time, response time and technical complexity,

improvements were suggested in order to meet customer

requirements and satisfy them (Chung & Paynter, 2002).

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Chapter No. 3

Method

Sample

300 survey questionnaires will be personally delivered to a

sample comprising of bank customers who have used at least

one of the automated services. In order to meet the above

mentioned targets, permission will be sought from the

respective managements and bank branches will be personally

visited.

Instrument and Measures

The questionnaire will be adopted from the published

research paper, “Measuring Banks’ Automated Service Quality:

A Confirmatory Factor Analysis Approach” (Al-Hawari et. al.,

2005). Factors like ATM quality, internet banking quality,

telephone banking quality, core service quality and

perception of price will be analyzed by using a five point

likert scale.

Procedure

300 questionnaires will be distributed to bank customers in

order to extract primary data. In order to extract secondary

data, relevant literature will be extracted from published

research papers, conference papers, books, articles, etc.

available on EBSCO, SPRINGER LINK, Blackwell Synergy and

other sources. The data will be analyzed using Statistical

Package for Social Sciences through Pearson Correlation.

References

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Adapa, S., Rindfleish, J., Cooksey, R. and Valenzuela, F.

(2009). Consumers’ Continued Usage of Internet

Banking: Australian Context. Paper presented at

ANZMAC Annual Conference, Monash University,

Victoria, 30 November – 2 December 2009.

Agathee, U. S. (2010). An Assessment on Service Quality in

the Mauritian Banking Sector. Paper presented at

International Research Symposium in Service

Management. Le Meridien Hotel, Mauritius, 24-27

August 2010.

Ahmad, A., Rehman, K., Saif, I. and Safwan, N. (2010). An

empirical investigation of Islamic banking in

Pakistan based on perception of service quality.

African Journal of Business Management. 4(6),

1185-1193.

Aldlaigan, A. and Buttle, F. (2005) Beyond satisfaction:

customer attachment to retail banks. International

Journal of Bank Marketing. 23(4), 349-359.

Chung, W. and Paynter, J. (2002). An Evaluation of Internet

Banking in New Zealand. Paper presented at 35th

Hawaii International Conference on System

Sciences, Manoa, 7-10 January 2002.

Ilter, B., Saatcioglu, O. Y. and Koruoglu, E (2009). Who

uses internet banking in Turkey and why? Paper

presented at European and Mediterranean Conference

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on Information Systems, Crowne Plaza Hotel, Izmir,

13-14 July 2009.

Khan, M. A. (2010). An Empirical Study of Automated Teller

Machine Service Quality and Customer Satisfaction

in Pakistani Banks. European Journal of Social

Sciences. 13(3), 333-344.

Korda, A. P. and Snoj, B. (2010). Development, Validity and

Reliability of Perceived Service Quality in Retail

Banking and its Relationship With Perceived Value

and Customer Satisfaction. Managing Global

Transitions 8(2), 187–205.

Laukkanen, T. (2008). Determinants of mobile banking

resistance: A preliminary model. Unpublished

thesis. University of Joensuu.

Magesh, R. (2010). A Study on Quality of Service as a Tool

for Enhancement of Customer Satisfaction in Banks.

Global Journal of Finance and Management. 2(1),

123-133.

Munusamy, J., Chelliah, S., and Mun, H. W. (2010). Service

Quality Delivery and Its Impact on Customer

Satisfaction in the Banking Sector in Malaysia.

International Journal of Innovation, Management

and Technology, 1(4), 398-404.

Rashid, M., Hassan, M. K., Ahmad, A. U. F. (2008). Quality

Perception of the Customers towards Domestic

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Islamic Banks in Bangladesh. Journal of Islamic

Economics, Banking and Finance, 5(1), 109-131.

Suki, N. M. (2010). An Empirical Study of Factors Affecting

the Internet Banking Adoption among Malaysian

Consumers. Journal of Internet Banking and

Commerce. 15(2), 1-11.

Suh, B. and Han, I. (2002). Effect of trust on customer

acceptance of Internet banking. Electronic

Commerce Research and Applications. 1, 247–263.

Termsnguanwong, S. (2010). Customers’ Discernment of Mobile

Banking Business: Northern Region of Thailand.

Paper presented at International Trade & Academic

Research Conference (ITARC), London, 8-10 November

2010.

Yeow, P. H .P., Yuen, Y. Y., Tong, D. Y. K. and Lim, N.

(2008). User acceptance of Online Banking Service

in Australia. Communications of the IBIMA. 1, 191-

197.

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Appendix A

Questionnaire

GENDER MALE FEMALE

AGE 18-30 31-40 41-50 51 +

1. The ATMs are placed at secure locations:

2. The ATM interface is user friendly:

3. The ATMs are conveniently located:

4. The waiting time in telephone banking is short:

5. Telephone banking instructions are clearly followed:

StronglyAgree

AgreeNeither

Agree/DisagreeDisagree

StronglyDisagree

StronglyAgree

AgreeNeither


StronglyDisagree

StronglyAgree

AgreeNeither


StronglyDisagree

StronglyAgree

AgreeNeither


StronglyDisagree

StronglyAgree

AgreeNeither


StronglyDisagree

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6. The telephone banking service is reliable:

7. Internet banking is easy to use:

8. Internet banking is secure:

9. Internet banking transactions are error free:

10.Internet banking interface is attractive:

11.The service charges are adequately explained:

StronglyAgree

AgreeNeither


StronglyDisagree

StronglyAgree

AgreeNeither


StronglyDisagree

StronglyAgree

AgreeNeither


StronglyDisagree

StronglyAgree

AgreeNeither


StronglyDisagree

StronglyAgree

AgreeNeither


StronglyDisagree

StronglyAgree

AgreeNeither


StronglyDisagree

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12.The service charges are acceptable:

13.The service charges are competitive:

14.A wide range of services is available:

15.Diverse service features are on offer:

16.Overall I am satisfied with the automated service

quality:

StronglyAgree

AgreeNeither


StronglyDisagree

StronglyAgree

AgreeNeither


StronglyDisagree

StronglyAgree

AgreeNeither


StronglyDisagree

StronglyAgree

AgreeNeither


StronglyDisagree

StronglyAgree

AgreeNeither


StronglyDisagree

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Research manual sample