CHAPTER 1: INTRODUCTION OF THESIS: AIMS AND OBJECTIVES
Chapter one, being the first chapter of the dissertation, sets out an account of the area of interest by contributing insights on customer satisfaction, service and SERVQUAL and brief profile of Banking Industry of Pakistan. It further explains the choice rationale of dissertation research which is followed by overall research aims and objectives. Chapter one further puts forward an overview of the final output of the research which precedes the section on structure of the dissertation. Chapter one ends with the conclusion of the chapter.
An Account of Area of Interest:
Customer Satisfaction is at the heart of all organizations. No matter, whether an organization is offering goods or services, it is an issue of imperative consideration. It has long been researched and yet present dynamic competitive era requires continuing focus on it. It is a source of competitive advantage for the firms as it yields loyalty which is a key determinant of an organization's profitability. Everyday organizations invest in understanding consumer behaviour so as to increase their awareness of the factors that influence customer satisfaction.
Service and SERVQUAL:
The significance of service sector is increasing (Kueh and Voon, 2007). The economies are transforming from agricultural or manufacturing to service economies (Lovelock, 2004). Herbig and Genestre (1996) highlighted that service sector has always been in lime light in the developed countries. Their idea was furthered by Malhotra et al. (1993) who presented the case of emerging economies in which sector sector is also oberving phenomenal growth. Literature on quality management highlighted that quality has both elements viz tangible and intangible where the later is the service component. The issue of service quality is yet another interesting and debatable concept as the issue has yet been facing defining and measuring problems with no overall consensus (Wisniewski, 2001). In any particular transaction, if the actual value recieved from a service meets or exceed the expectations of service recipients than the service is regarded as quality service (Asher, 1996). Similarly, Parasuraman et al. (1985) put forward that the percieved service quality is a function of performance of a service provider. If the percieved peformance is greater than expectations, then the service is considered to be satisfactory and leads to customer satisfaction. The service encounters has long been studied to analyze the influence of customer's perception of service quality and customers satisfaction. It is the amount of time for which a customer directly recieve service.
However, Firoz and Maghrabi (1994) suggested that service quality is commonly absconded in emerging markets as these markets are characteritized by sellers enjoying monoply. Samli and Frohlich (1992) put forward that the present times observes a very competitive banking environment in which survival of the organizations depends on being better at delivering services to the customers. The model was frequently been adopted to measure the customer satisfaction among various industries. The earlier research highlighted that SERVQUAL is quite influential in identifying the gap between actual and perceived customer expectations. Despite all the advanatges of SERVQUAL, it has some criticism as well (Carman, 1990, Cronin and Taylor, 1992, Johns, 1996). Desombre and Eccles (1998) used this model in hospitals, Kangis and Passa (1997) in banks and Luk (1997) used it for travel aganecies. Yet there are other evidences of use of SERVQUAL for universities and police services.
Banking Industry is one of the most vibrant and intensive sector of information. It is among the oldest form of commerce and recently has undergone deep transformation because of e-commerce. This transformtion changed the traditional banking to online-banking. Frust et al (2000) explained the concept of online banking and put forward that it involves the use of internet as a delivery channel for banking services. At it's very basic level, it deals with services like providing information about products and services yet is is extended to complex services including accessing accounts, fund transfers and entering into buying and selling of financial products and services online. Such endevaors are regarded as online banking. The online banking is becoming an important determinent of competitive advanatge of traditional banks as it is expected to observe exponential growth in years to come (Liao and Cheung, 2002).
The banking sector of Pakistan is one of the fastest growing banking sector of the world. Very recently, this has observed a dynamic shift from traitional banking practices towards online banking. Pakistan has around 40 secheduled and non-scheduled banks. These banks offer advance services beside traditional banking services where the former include loans, house and car financiang and corporate banking services. Deshmukh and Sambasivarao (1994) suggested that this phenomenon was world wide. Liao and Cheung (2002) commented on this and proposed that information technology brought this revolution which development of new products, services, opportunities and more information became possible. Lymperopoulos and Chaniotakis (2004) suggested that impact of technology based transactions on customers' perception and behaviour is an important area of study. Furthermore, it is not the cost structure of the banks but it is customers'attitude that resulted in these new distribution channels. Moutinho et al. (1997) commented that onlilne banking is providing convenience, access to bank for 24 hours and 7 days a week at relatively lower cost. Gerrard and Cunningham (2003) suggested that it also results in cost savings and convenience on the part of the customers. With the virtue of online banking, customers do not have to travel to the bank and they can reduce their bank's visits. This improves customer satisfaction. It also results in cost efficiencies on the part of the bank as a lot of money can be saved in terms of employees and office space. Further to this, Moutinho et al. (1997) suggested that online banking enhances customers' loyalty and their self-image by providing them superior services.
In addition to all the benefits of online banking, there are some associated challenges. These include security concerns, complexity of transaction, technological problems, reliability of IT infrastructure and lack of personal assistance from a banker. Liao and Cheung (2002) suggested that perceived usefulness of online banking lies in the customer expectation related to security, transaction speed, convenience and accuracy of transaction.
Choice Rationale of the Thesis Research:
There is a growing level of competition between online banking transactions and traditional banking transactions (ECB, 1999). Yakhlef (2001) suggested that online banking is a complement of traditional banking and yet in many cases is a substitute through which communication and interaction with customers become better. The recent times observed a change in perception of online banking not only in minds of bank's customers but bankers also. Courtesy of information technology, this new mode of distribution of services have brought tremendous changes in the financial industry. Now a days, banks encourage their customers to buy online as it involves lower costs due to less paper work and reduction in risks of haman mistakes (Howcroft et al., 2002). It also results in reduction in disputes among bank and its clients (Kiang et al., 2000). The main focus of this dissertation is to analyse the perception of bank clients about the online banking services offered by the bank. For this, SERVQUAL model (Parasuraman et al., 1988) of service quality would be used. The use of this model is consistent with recent research (Dash et al., 2009). The research used the context of Banking Industry of Pakistan.
Aims and Objectives of Thesis Research:
The main focus of this dissertation is to analyse the perception of bank clients of online banking services offered by the banks. This dissertation will focus on the perception of bank clients from the online banking services offered by the bank. The purpose of this study is to fill in the void partially by addressing the issues within the context of perception of clients of online banking system in Pakistani banking environment. This study uses a survey of Pakistani bank customers to investigate the customers' perception of reliability, accessibility, user-freindliness, privacy/security, efficiency, responsivness and fullfilment of online banking system.
It is envisaged that the disseration would encompass following reasearch questions:
- Customer's perception about reliability of online banking.
- Customer's perception about accessibility of online banking.
- Customer's perception about user-friendliness of online banking.
- Customer's perception about privacy/security of online banking.
- Customer's perception about efficiency of online banking.
- Customer's perception about responsiveness of online banking.
- Customer's perception about fullfilment of online banking.
Outcome of Dissertation Research:
The final outcome of this research will be a list of factors that were perceived as important determinants of customer satisfaction as perceived valuable by customers of e-banking facilities. This list will be highlighted in terms of various constructs as proposed by SERVQUAL model of Parasuraman et al (1988).
Structure of the Dissertation:
This section gives an overview of how this dissertation is structured. In order to present the material in a logical manner and to facilitate readership, this dissertation is divided into five chapters. An overview of these chapters is given hereunder:
- Chapter One: This chapter contributed an account of area of the research by contributing material on customer satisfaction, service and SERQUAL along with elaboration of Banking Industry of Pakistan. It further added aims and objectives of dissertation; along with final outcomes and structure of the dissertation.
- Chapter Two: This chapter would present literature on satisfying the target market, importance of service dimension of organization offering, overview of SERVQUAL model, the current state of banking industry of Pakistan and an amalgamation of the contributed areas.
- Chapter Three: This chapter spells out, in detail, the application of research techniques employed for the accomplishment of this research endeavour. It will highlight the issues associated population and sampling design, overview of statistical techniques employed and related research issues.
- Chapter Four: This chapter will impart the findings and related analysis and reflections on the collected data. The findings will originate by applying relevant statistical techniques on the collected data.
- Chapter Five: This is the last chapter of the dissertation and deals with the conclusion of the dissertation. It also contributes associated limitations and highlights various areas for the interested persons in which future research efforts should be directed.
This chapter was the first chapter of the dissertation. It contributed a detailed account of the proposed area of research, the associated aims and objectives of research along with final outcomes of the research. The chapter substantiated that satisfying customers is an important area of managerial and academic research. Furthermore, management of services is a crucial area and it adds to the competitive advantage of firms. Banking industry of Pakistan has grown substantially during the last few years. These propositions made researching attributes that have potential of satisfying customers in Banking Industry of Pakistan; an important issue which must be addressed. The next chapter will expound contemporary literature on dissertation topic.
- ASHER, M. (1996) Managing Quality in the Service Sector, London, Kogan Page.
- CARMAN, J. M. (1990) Consumer perceptions of service quality: an assessment of the SERVQUAL dimensions. Journal of Retailing, 66, 33-55.
- CRONIN, J. J. & TAYLOR, S. A. (1992) Measuring service quality: a re-examination and extension. Journal of Marketing, 56 55-68.
- DASH, S., BRUNING, E. & ACHARYA, M. (2009) The effect of power distance and individualism on service quality expectations in banking A two-country individual- and national-cultural comparison. International Journal of Bank Marketing, 27, 336-358.
- DESHMUKH, S. G. & SAMBASIVARAO, K. V. (1994) Strategic framework for implementing the flexible manufacturing systems in India. International Journal of Operations & Production Management 14, 52-65.
- DESOMBRE, T. & ECCLES, G. (1998) Improving service quality in Trust hospitals: lessons from the hotel sector. International Journal of Health Care Quality Assurance, 11, 21-27.
- ECB (1999) The Effects of Technology in the EU Banking Systems. Frankfurt, European Central Bank.
- FIROZ, N. M. & MAGHRABI, A. S. (1994) The role of service marketing in economic development: an analysis. International Journal of Management, 1, 641-647.
- FRUST, K., LANG, W. W. & NOLLE, D. E. (2000) Internet Banking: Developments and Prospects. Economic and Policy Analysis Working Paper 2000-9.
- GERRARD, P. & CUNNINGHAM, J. B. (2003) The diffusion of Internet banking among Singapore consumers. International Journal of Bank Marketing, 21, 16-28.
- HERBIG, P. & GENESTRE, A. (1996) An examination of the cross-cultural differences in service quality: The example of Mexico and USA. Journal of Consumer Marketing, 13, 43-53.
- HOWCROFT, B., HAMILTON, R. & HEWER, P. (2002) Consumer attitude and the usage and adoption of home-based banking in the United Kingdom. The International Journal of Bank Marketing, 20, 111-121.
- JOHNS, H. (1996) The developing role of quality in the hospitality industry. Service Quality in Hospitality Organizations, 21, 9-26.
- KANGIS, P. & PASSA, V. (1997) Awareness of service charges and its influence on customer expectations and perceptions of quality in banking. Journal of Services Marketing, 11, 105-116.
- KIANG, M. Y., RAGHU, T. S. & HUEU-MIN SHANG, K. (2000) Marketing on the Internet - who can benefit from an online marketing approach? Decision Support Systems, 27, 383-393.
- KUEH, K. & VOON, B. H. (2007) Culture and service quality expectations Evidence from Generation Y consumers in Malaysia. Managing Service Quality, 17
- LIAO, Z. & CHEUNG, M. T. (2002) Internet-based e-banking and consumer attitudes: an empirical study. Information & Management, 39, 283-295.
- LOVELOCK, C., PATTERSON, P. AND WALKER, R. (2004) Services Marketing: An Asia-Pacific and Australian Perspective, Australia, Camberwell., Pearson Education.
- LUK, S. T. K. (1997) An examination of the role of marketing culture in service quality. International Journal of Contemporary Hospitality Management, 9, 3-21.
- LYMPEROPOULOS, C. & CHANIOTAKIS, E. (2004) Branch employees' perceptions towards implications of e-banking in Greece. International Journal of Retail & Distribution Management, 32, 302-311.
- MALHOTRA, N. K., ULGADO, F. M., AGARWAL, J. & BAALBAKI, I. B. (1993) International services marketing: a comparative evaluation of the dimensions of service quality between developed and developing countries. Academy of Marketing Science, 8, 99-108.
- MOUTINHO, L., DAVIES, F., DENG, S., S., M. P. & E., A. J. (1997) The future role of bank branches and their managers: comparing managerial perceptions in Canada and Spain. International Journal of Bank Marketing, 15, 99-105.
- PARASURAMAN, A., ZEITHAML, V. A. & BERRY, L. L. (1985) A conceptual model of service quality and its implication. Journal of Marketing, 49, 41-50.
- PARASURAMAN, A., ZEITHAML, V. A. & BERRY, L. L. (1988) SERVQUAL: a multiple-item scale for measuring consumer perceptions of service quality. Journal of Retailing, 64, 12-40.
- SAMLI, C. A. & FROHLICH, C. J. (1992) Service: the competitive edge in banking. Journal Services Marketing, 9, 15-22.
- WISNIEWSKI, M. (2001) Using SERVQUAL to assess customer satisfaction with public sector quality: the example of Mexico and the USA. Journal of Consumer Marketing, 19, 15-22.
- YAKHLEF, A. (2001) Does the Internet compete with or complement bricks-and-mortar bank branches? International Journal of Retail & Distribution Management, 29, 272-281.