Analysis of Service Quality Gap and Customers’
Satisfaction in Private Banks in India
Dr. S. P. Singh,
Head & Dean,
Faculty of Management Studies,
Gurukul Kangri University,
Haridwar email:spsingh1952@[Link]
Ms. Sunayna Khurana,
Cell No. 9354325838
Email: sunaynak@[Link]
Abstract:
In ever increasing intense competition, providing service quality is vital for banks to compete. The
objectives of this research paper are to investigate the level of service quality of private banks from
the customers’ perspective and assessing their satisfaction of services Private Banks provide. A
sample of 300 bank customers of private banks in Hisar district was selected by random sampling
technique. A survey questionnaire, based on widely accepted SERVQUAL model, consisting of 22
items measuring customers’ understanding, service standards, service performance,
communications and service quality was administered. A descriptive statistics analysis was used to
analyze the date collected. The results indicated that the quality of services private banks provide
was below customers’ expectations.
Keywords: Banks, Expectations, Perceptions, Satisfactions, Service Quality
_______________________________________________________________________________
The main objectives of this study were to examine the level of service quality in Private
banking industry from the perspective of bank customers. The specific objectives were as follows:
1. To examine Gender wise customers’ expectations and perceptions of service quality
provided by the Private banks in Hissar District
2. To identify whether there is difference in expectation & perception of service quality of
male & female customers
3. To identify the main attributes of service quality in which male & female (separately) are
more satisfied or dissatisfied.
Review of Literature
Defining and measuring quality in services might be difficult due to the intangible nature of the
service offering. The researches on service quality have been carried out within the framework of
widely accepted service quality SERVQUAL instrument. (Parasuraman et. al.(1985, 1988, and
1991). Since then, many researchers have used the 22-items scale to study service quality in
different sectors of the service industry including financial institutions (Gounaris et. al. 2003;
Arasli et. al. 2005).
The service quality model was derived from the magnitude and directions of five gaps as
follows:
Gap 1 (Understanding): the difference between customer expectations and management
perceptions of customer expectations
Gap 2 (Service Standards): the difference between service quality specifications and management
perceptions of consumer expectations.
Gap 3 (Service Performance): the difference between service quality specifications and the service
actually delivered.
Gap 4 (Communications): the difference between service delivery and what is communicated
about the service to customers.
Gap 5 (Service Quality): The difference between customer expectation of service quality and
customer perception of the organization’s performance.
Gaps 1 to 4 affect the way service is delivered and these four gaps lead to Gap 5. Therefore, the
extent of Gap 5 depends on the size and direction of these four gaps (Gap 1, Gap 2, Gap 3 and Gap
4).
Customer Satisfaction
Early concepts of satisfaction research have defined satisfaction as a post choice evaluative
judgment concerning a specific purchase decision (Churchill and Sauprenant 1992; Oliver 1980).
Most researchers agree that satisfaction is an attitude or evaluation that is formed by the customer
comparing their pre-purchase expectations of what they would receive from the product to their
subjective perceptions of the performance they actually did receive (Oliver,1980). Further,
“Satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing a
product’s perceived performance (or outcome) in relation to his or her expectations”. (Kotler,
2000, p.36).Customer satisfaction is a collective outcome of perception, evaluation and
psychological reactions to the consumption experience with a product/service. (Yi , 1990 ).
Satisfaction Formation
In marketing literature (e.g. Churchill and Surprenant, 1982; Oliver 1980) as well as recent
information system studies (e.g. McKinney et al., 2002), the disconfirmation theory emerges as the
primary foundation for satisfaction models. According to this theory, satisfaction is determined by
the discrepancy between perceived performance and cognitive standards such as expectation and
desires. Oliver (1980) described the process by which satisfaction judgments are reached in the
expectancy-disconfirmation framework. Buyers form expectations of the specific product or
service before purchase and perceived quality level which is influenced by expectations (Khalifa
and Liu 2003).Customer expectation can be defined as customer’s pretrial beliefs about a product
(McKinney, Yoon and Zahedi 2002). Expectations are viewed as predictions made by consumers
about what is likely to happen during impending transaction or exchange (Zeithaml 1988).
Perceived performance is defined as customer’s perception of how product performance fulfills
their needs, wants and desire (Cadotte et al.1987). Perceived quality is the customer’s judgment
about an entity’s overall excellence or superiority (Zeithaml 1988). Disconfirmation is defined as
customers’ subjective judgments resulting from comparing their expectations and their perceptions
of performance received ((McKinney et al. 2002, Spreng et al. 1996). Ho and Wu (1999) identified
five antecedents of customer satisfaction appropriate for online shopping. These are logistical
support, information and technical characteristics, home page presentation and product
characteristics. Eastin (2002) presented the model (see figure 6) that demonstrate the adoption of
four ecommerce activities currently available to Internet users: (1) online shopping, (2) online
banking, (3) online investing, and (4) electronic payment for an Internet service (i.e., access to
exclusive sites). Eastin also explained six attributes common to the model. These are – perceived
convenience and financial benefits, risk, previous use of the telephone for a similar purpose, self
efficacy, and Internet use and all six attributes play a significant role in the adoption processes.
Methodology
A sample of 300 respondents having at least one saving account in private sector bank was
selected by Quota sampling technique (50% Males & 50% Females). A questionnaire consisting of
22 items based on SERVQUAL model was administered on the sample.
The questionnaire was divided into 4 sections. The first section measured the expectations (E) of
service quality in the private banks, the second, perception (P) of service quality private banks in
Hissar District provide. The third section dealt with the respondents’ satisfaction levels and lastly
the demographic profile of the respondents. A five-point Likert Scale ranging from strongly
disagree = 1 to strongly agree = 5, was used to measure the 22 attributes relating to five
dimensions.
Statistical Package for Social Science (SPSS) 10.5 version was used to analyse the data set.
A frequency distribution was used to describe the sample. The mean and standard deviations of the
attributes were also computed. Independent t-tests were used to test the significant difference
between sample means.
Hypotheses
H1: There is no significant difference in service quality gaps (G1-G22) perceived by Male &
female customers.
H3: There is no significant difference in satisfaction level related to Personal Contacts of Bank
Employees compared between Male & female.
H4: There is no significant difference in satisfaction levels related to Quality of Banking Services
when compared between Male & female.
H2: There is no significant difference in overall satisfaction of Male & femalecustomers.
Findings and Discussion
Analysis of Demographic Profiles of Respondents:
After doing cross tabulation between gender and occupations, it was found that out of 150, 35 male
respondents belonged to business class & 115 belonged to service class. In female respondents, 47
belonged to business class & 103 belonged to service class (Table 1)
Table 1: Occupation * Gender Cross tabulation Count
Gender Total
MALE FEMALE
Business
35 47 82
Occupation
Service
115 103 218
Total
150 150 300
Table 2 cross tabulates age & gender. It was found that out of 300, 86 respondents belonged to age
group of 26-30, 69, to 31-25 age group, 54 to 36-40, 18 to 41-45 and 3 to 46-50 age group.
Table 2: Age * Gender Cross tabulation Count
Gender
Total
FEMALE
MALE
Upto 25 32 38 70
26-30 42 44 86
31-35 32 37 69
Age
36-40 31 23 54
41-45 13 5 18
46-50 3 3
Total
150 150 300
Analysis of Service Quality Gap (Gap 5)
Service quality gap analysis was carried out done to measure the gender wise gap between the
customers’ expectations and their perception of the commercial banking industry, based on the 22
attributes pertaining to service quality. It was found that the highest service quality gap (-1.19) in
case of male was in attribute A20 (Bank staff giving customers best interest at heart) & in female
(-1.20) was in attribute A21 (Personal attention given) & lowest service quality gap (-0.64) in
case of male was in attribute A 3 (Materials associated with My Bank's service (such as ATM card,
debit cards, catalogs, or statements) are visually appealing.) & in female (-0.67) was in attribute
A1 (My Bank has modern-looking equipment and fixtures).
Hypothesis testing
Hypothesis 1: There is no significant difference in quality of services private banks provide to
male and female customers.
The data for all the attributes was subjected to the Independent Sample t-test. The Lavene’s test for
Equality of variances was applied. The F-statistic value had p-values of more than 0.05 for all the
attributes, excepts A2, A5, A7, A8, A9, A11, A12, A13 & A15. This explains that for all the
attributes except these 9, the null hypotheses were accepted. This supported the use of the pooled
variance t-test for each of these to test the equality of means. The associated values of significance
(p-value), were again more than 0.05, except for 7 attributes (A1, A2, A9, A11, A12, A17 & A21).
This led to conclude that for all the attributes, except 7, the null hypotheses were accepted & the
differences in the means were not found to be significant. (Table no.3)
Hypothesis 2: There is no significant difference in overall satisfaction level when compared
between male & female respondents.
The data for overall satisfaction was subjected to the independent sample t-test. The
Lavene’s test for Equality of variances was applied. The F-statistic value had p-values of more
than 0.05 (0.926). The null hypothesis 2 was accepted. This supported the use of the pooled
variance t-test to test the equality of means. The associated values of significance (p-value), was
again more than 0.05 (0.252) the null hypothesis accepted. This leads to conclude that there is no
significant difference in overall satisfaction level of male & female respondents. (Table 4)
Table 3: Hypothesis testing- H1
Gap Mean 95% Confidence
Std. Sig.
[Link] Attributes Sample (E-P) F Sig.(p) t-value Differe Interval of the
Deviation (2-tailed)
Mean nce Difference
Gender Lower Upper
My Bank has modern-looking Male -0.84 0.72
A1 1.713 0.192 2.134 0.034 0.17 0.01 0.33
equipment and fixtures. Female -0.67 0.68
The physical facilities at My Bank Male -0.95 0.75
A2 5.585 0.019 2.049 0.041 0.18 0.01 0.35
are visually appealing Female -0.77 0.77
Materials associated with My Bank's
Male -0.64 1.26
service (such as ATM card, debit
A3 0.425 0.515 -0.465 0.642 -0.07 -0.35 0.22
cards, catalogs, or statements) are
visually appealing. Female -0.71 1.22
Neat appearance of Bank staff Male -0.71 0.74
A4 2.04 0.154 0.227 0.821 0.02 -0.15 0.19
Female -0.69 0.79
Bank staff keeping promise Male -0.97 0.76
A5 6.416 0.012 0.131 0.896 0.01 -0.19 0.21
Female -0.95 0.99
Sincere interest in solving Male -1.01 0.72
A6 2.729 0.1 -0.454 0.65 -0.04 -0.21 0.13
customers’ problems Female -1.05 0.8
When My Bank promises to do Male -1.01 0.58
A7 something by a certain time, it will 15.911 0.000 0 1 0 -0.16 0.16
do so Female -1.01 0.79
My Bank insists on error-free sales Male -0.95 0.52
A8 27.169 0 1.185 0.237 0.09 -0.06 0.23
transactions and records Female -0.86 0.73
Sales person in My Bank give Male -1.00 0.6
A9 11.945 0.001 2.182 0.03 0.16 0.02 0.3
prompt service to customers Female -0.84 0.67
Bank staff performing services right Male -1.01 0.58
A10 3.609 0.058 0.754 0.451 0.05 -0.09 0.19
the first time Female -0.96 0.64
Bank staff telling customers exactly Male -1.00 0.66
A11 12.305 0.001 2.899 0.004 0.23 0.07 0.39
when services will be performed Female -0.77 0.74
A12 Bank staff willingness to help Male -1.00 0.68 10.152 0.002 2.552 0.011 0.21 0.05 0.37
Female -0.79 0.73
Prompt response from Bank staff Male -0.97 0.74
A13 4.682 0.031 1.945 0.053 0.17 0.00 0.35
Female -0.79 0.81
Behaviors of Bank staff instill Male -0.81 0.8
A14 0.328 0.567 -0.904 0.367 -0.08 -0.25 0.09
confidence in customers Female -0.89 0.73
Customers feel safe in their Male -0.83 0.52
A15 11.985 0.001 0.665 0.506 0.05 -0.09 0.18
transactions Female -0.79 0.68
Friendliness and courtesy of Bank Male -1.04 0.69
A16 2.446 0.119 0.436 0.663 0.03 -0.12 0.18
staff Female -1.01 0.63
Bank staff having knowledge to Male -1.12 0.74
A17 0.813 0.368 2.476 0.014 0.21 0.04 0.37
answer questions Female -0.91 0.7
Individual attention given by Bank Male -0.98 0.69
A18 0.54 0.463 -1.02 0.308 -0.08 -0.23 0.07
staff Female -1.06 0.67
Convenient operating hours Male -0.87 0.64
A19 0.005 0.941 0.945 0.346 0.07 -0.07 0.21
Female -0.80 0.58
Bank staff giving customers best Male -1.19 0.62
A20 1.875 0.172 1.608 0.109 0.11 -0.03 0.25
interest at heart Female -1.07 0.6
Personal attention given Male -1.04 0.68
A21 3.339 0.069 -2.038 0.042 -0.16 -0.31 -0.01
Female -1.20 0.68
Understanding the specific needs of Male -0.94 0.83
A22 1.89 0.17 1.256 0.21 0.13 -0.07 0.33
customers Female -0.81 0.92
Hypothesis 3: There is no significant difference in satisfaction level of personal contacts of
bank employees between male & femalecustomers.
The data for satisfaction level related to personal contacts of bank employees was subjected to the
Independent Sample t-test. The Lavene’s test for Equality of variances was applied. The F-statistic
value had p-values of more than 0.05 (0.978), this meant that the null hypothesis 3 was accepted.
This supported the use of the pooled variance t-test to test the equality of means. The associated
values of significance (p-value), was again more than 0.05 (0.105). It is, therefore concluded that
there is no significant difference in satisfaction level of personal contacts of bank employees
between male & female respondents. (Table 4)
Hypothesis 4: There is no significant difference in satisfaction levels related to Quality of
Banking Services when compared between male & female respondents.
The data for satisfaction level related to Quality of Banking Services was again subjected to the
Independent Sample t-test. The Lavene’s test for Equality of variances was applied. The F value
had p-values of less than 0.05 (0.014), this meant that the null hypothesis 4 get rejected. Since the
associated values of significance (p-value) was more than 0.05 (0. 267), the null hypothesis 4 was
accepted. It is therefore concluded that there is no significant difference in satisfaction levels
related to Quality of Banking Services when compared between Male & female. (Table 4)
Conclusion and Implication
The results of Gap 5 analyses showed that customers’ perception for private banks in
Hissar District was lower than their expectations. In attributes like “Bank staff giving customers
best interest at heart”, “Personal attention given” , “Friendliness and courtesy of Bank staff”,
“When My Bank promises to do something by a certain time, it will do
Table 4: Hypothesis testing: H2,H3,H4
Levene's Test for
Equality of t-test for Equality of Means
Variances
Sample Mean Std. F Sig. t df Sig. (2- Mean 95% Confidence
Deviation tailed) Difference Interval of the
Difference
Gender Lower Upper
Overall Male 3.43 .69
.009 .926 1.147 298 .252 .09. -.06 .25
satisfaction Female 3.33 .72
Personal Male
3.18 1.03
Contact
.001 .978 -1.628 298 .105 -.19 -.43 .04.
Female
3.37 1.03
Quality of Male 3.87 .77
Banking Female 6.080 .014 -1.113 298 .267 -.11 -.30 .08
3.97 .89
Services
so”, “Individual attention given by Bank staff” ,the service quality gap were high (more than -1.00).
The bigger is the gap the greater the need to improve the level of service quality. The study also
found that male customers are dissatisfied with attributes like “Bank staff giving customers’ best
interest at heart”, on the other side females are dissatisfied with other attributes as “Personal
attention given by bank employees”. This means that banks have to give more importance to such
attributes and must take steps to reduce the service quality gap. The study noted that perception &
expectation of males & females related to 15 attributes of service quality are same. This explains
that these fifteen attributes are of importance for both group of customers (male & female).
Related to overall satisfaction with the banks services, it was also found that male customers
are little more satisfied than female customers as the mean value of satisfaction level of male (3.43)
is more than the mean value of satisfaction level of female customers (3.33). The study also revealed
that there is no significant difference between the Satisfaction level of male & female customer
related to Overall satisfaction, Personal Contacts of bank employees and Quality of Banking
Services. This means that bank customers whether they are male or females are just satisfied with
services of private banks. They have more expectations with banks. Therefore the Private Banks
should adopt measures to reduce the service quality gaps specially related to attributes likes “Bank
staff giving customers best interest at heart”, “Personal attention given” , “Friendliness and courtesy
of Bank staff”, “When My Bank promises to do something by a certain time, it will do so” and
“Individual attention given by Bank staff”.
Limitations and Future Research
The main limitation of this study is that it was conducted for a single district. Further
research may be conducted on a wider sample. This would provide more generalized conclusions for
the private banks. Additionally, since India aspires to become globally competent financial centre, it
would be appropriate and relevant to replicate the study using global samples. The implication is that
when banks in this country provide services to global customers such as business travelers, tourists,
students, they would have to provide quality services to foreign customers. Therefore, the quality
and customer satisfaction issues attached to services are subject to international domains.
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