Identifying Customers Satisfaction to PCBs in Bangladesh: A Case Study of Southeast Bank Ltd. at Uttara Branch

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1 68 Identifying Customers Satisfaction to PCBs in Bangladesh: A Case Study of Southeast Bank Ltd. at Uttara Branch Md. Asfaqur Rahman ρ, Kazi Abul Bashar α & Md. Afzal Hossain µ ρ Lecturer, Department of Business Administration, Pabna University of Science and Technology, Paban-6600, Bangladesh α Associate Professor, Department of Business Administration, Shanto-Mariam University of Science & Technology, Uttara, Dhaka, Bangladesh µ Assistant Professor, Department of Business Administration, Shanto-Mariam University of Science & Technology, Uttara, Dhaka, Bangladesh Abstract: This study investigates customers satisfaction level to a branch of private commercial bank in Bangladesh and the overall service experience and outcome that the customer made and their feelings of reaction. A Multiple Regression Analysis was conducted for finding out the impact of independent variables on dependent variable. The study reveals that there are both positive and negative relationships between the dependent variable and the independent variables. The test shows a percent of positive contribution from the savings account facilities followed by customer care with a percent scale. The highest negative contribution comes from the Loan Repayment Terms and Conditions. Key Words: Bank, Customer Satisfaction, PCBs, Service. JEL Code: M, M31 Introduction: Bank is the life-blood of the modern economy and deals with the money of people. Trustworthiness is the main prerequisite to establish a bank. Banks are playing major role to the economic development of the country through the creation of savings, mobilization of savings through lending in the profitable sectors. Besides these two activities, now a day s banks are providing various services to its clients. Specially, assistance in foreign exchange, discounting bills, creation of loan deposit, collection and payment of money on behalf of clients, purchase and sale of shares and securities, under-writing shares and debentures, safe custody of money and wealth, money transfer, counseling and issue of bank solvency certificate etc. People i.e., the employees of the organization do all these activities. In a bank, there are some critical things to understand. For this reason, highly educated, efficient and dedicated personnel are required to run a bank in this competitive era. Banks are to facilitate all kinds of economic activities and finance many other needs of the people, in both urban and rural areas. Along with the fundamental banking needs, customers now want loan to finance building of his house, an auto loan for buying a car, a credit card for ongoing purchases, a long-term investment plan to finance his child's higher education, a pension plan for his retirement and many more. Banks are getting more and more pressure from customer s increasing demand, highly competitive market and strict regulations. Changes are now shaping up the way customers perceive the services of a bank in terms of service delivery and quality of service. It is undeniable that the banking sector in the country has gone through significant changes in recent years. Currently, there are 56 various types of banks with around 8,500 branches operating in the country which include several new entrants. The technological advancement and its gradual usage in the banking sector have transformed itself from a provider of plain vanilla services to a provider of universal banking. Online Banking, Automated Teller Machine (ATM), Point of Sale (POS),

2 internet, mobile application etc. have been introduced in the banking sector. Through online banking, a customer can receive banking service from any branch of a bank disregarding where his/her account has been opened. The protection of customer's interest and importance of quality customer services are gaining ground day by day. Bangladesh Bank has issued a complete guideline on customer service focusing on aspects of institutional and individual ethical standards, customer service quality and customer awareness programme and complaint management system. According to the Bangladesh Bank, the complaints it has received are mostly related to general banking such as different types of account opening and operations, wrong calculation of interest, additional interest charge, violation of rules in determining interest rate, irregularity in collecting money against cheque, bill and draft, commission, determining fees, remittance, local or foreign bills, debit card, credit card, ATM operation, payment against guarantee or L/C, time lagging for sanctioning loans, delay for paying salary, pension, allowances etc. All commercial banks in the country offer retail products. Research Objectives: To identify the key factors which affect the customer satisfaction. To identify the effects of each factor on overall customer satisfaction. Theoretical Foundation of Research Framework In today s dynamic business environment from the firm s point of view it is about building and sustaining strong relationship with their customers by understanding the ingredients of customer satisfaction (Banerjee & Sah 01). Banks in these modern days are rising the expectations and delivering performance to match. For these they track their customers expectations, perceived performance, and customer satisfaction. Highly satisfied customers produce several benefits for the organization. Satisfied customers remain with the organization for a longer period, and talk favorably to others about the organization and its products and services (Ganiyu, 01). Customer satisfaction is the extent to which a product or service s perceived performance matches a customer s expectations. If the product or service s performance falls short of expectations, the customer is dissatisfied. If performance matches or exceeds expectations, the customer is satisfied or delighted. Customer satisfaction is a psychological concept that involves the feeling of well-being and pleasure that results from obtaining what one hopes for and expects from an appealing product and/or service (Kandampully & Suhartanto, 000). Customer satisfaction can also be defined as satisfaction based on an outcome or a process. The concept of customer satisfaction occupies a central position in marketing thought and practice. Many companies today are aiming for TCS- Total Customer Satisfaction (Potluri, 011). Vavra's outcome definition of customer satisfaction characterizes satisfaction as the end-state resulting from the experience of consumption. This end state may be a cognitive state of reward, an emotional response to an experience or a comparison of rewards and costs to the anticipated consequences (Pizam & Ellis, 1999). Satisfaction of customers is the most important forecaster of service quality of banking sector. Management of banks should confirm that the banking atmosphere should focus on quick and fair services to their customers (Haq & Muhammad, 013). To be successful, a customer satisfaction measurement (CSM) programme could be incorporated to the organization s corporate culture. Because in today s corporate culture, retaining and satisfying current and past customers are prioritized highly (Naumann, 1995). Razak et al. (007) also reported that overall satisfaction is the outcome of customer s evaluation of a set of experiences that are linked with the specific service provider. It is observed that organization s concentration on customer expectations resulted into greater satisfaction. On the other hand, 69

3 dissatisfied customer may switch to alternative products/services and communicate negative message to others. In Bangladesh, customers in the banking sector are in a strong bargaining position due to the significant growth of banks. Therefore, banks have to provide service carefully because of the availability of banks. Service quality has been a vital issue of discussion and research over the past three decades. Research on service quality has well established that the customer perception of the quality of a service depends on customer s pre-service expectations (Karim & Chowdhury, 014). The present study on Uttara Branch of Southeast Bank Limited is to investigate the customers satisfaction level and the overall service experience and outcome that the customer made and their feelings of reaction. The ten most crucial factors that the researchers identified for measuring customer satisfaction are: account opening easiness, customer care, online service, transaction time/duration, saving account facility, interest rate, availability of loan facility, loan repayment terms and conditions, credit card facility, and Automated Teller Machine (ATM) facility. ATM facility Account opening easiness Customer care Credit card facility Loan repayment terms and conditions Customer Satisfaction Online service Transaction time/ duration Availability of loan facility Interest rate Saving account facility Materials and Methods This study initiated to investigate the customers satisfaction level and the overall service experience and outcome that the customer made and their feelings of reaction on Uttara Branch of Southeast Bank Limited. The said factors responsible for customers satisfaction are account opening easiness, customer care, online service, transaction time/duration, saving account facility, interest rate, availability of loan facility, loan repayment terms and conditions, credit card facility, and Automated Teller Machine facility. This study mainly based on primary data originating from a survey during the period of 3 April 014 to 7 May 014. A structured questionnaire was prepared with 9 point likert scale. Ten independent variables and one dependent variable have been used to carry out the research. The independent and dependent variables were identified and there was one question for each of the variables. Since there were 11(eleven) variables (1dep. +10 ind.), 11 questions were included in the questionnaire. For the preparation of questionnaire and data analysis purpose, 9-point Likert scale was used. For a positive statement, highest number (9) meant that the respondent is extremely agree with the statement while lowest number (1) meant the respondent was extremely disagree with the statement. In case of negative statements the procedure was just vice-versa. The 70

4 questionnaires were provided to the respondents as a random sampling basis for conducting study. There is no available source for the address of customers of a commercial bank. Therefore, friends, relatives, and other informal reference group were used to locate the potential respondents. Questionnaires were sent by , postal mail and directed to 50 respondents. The number of initial replies received was 40. After screening the replies by the researchers finally respondents were taken for this study. Test of Hypothesis was established with a research question. Multiple Regression and Discriminate Analysis were conducted for finding out the impact of independent variables on Dependent variable and how they affected the dependent variable. Hypotheses Testing Before the hypotheses testing, two hypotheses were selected. The null hypothesis was assumed that, there is no contribution of the factors over the dependent variable. The alternative hypothesis was assumed that, there is some contribution of each of the factors over the dependent variable. A one tailed test was carried out and the hypothesis test was done by suing the multiple regression analysis, at 5% level of significance. Methodology for Data Analysis For conducting the research study ANOVA and Multiple Regression Analysis were selected for finding out the relationship among variables. The SPSS Statistics software package was used for this statistical analysis. Multiple Regression Analysis Regression analysis is used for describing the relationship between two variables. But if the number of variables is greater than two, then multiple regression analysis is applicable. Multiple regression analysis results in an equation. The coefficient of each of the independent variables implies its importance. That is higher coefficient implies its higher contribution and vice versa. A positive sign in front of the independent variables means the contribution is positive and vice versa. That is, an increase in the contribution results in an increase in the dependent variable. Such equation may be in the form of: Y= 0 1X 1 X 3 X 3 4 X 4 5 X 5... n X n Where, Y = Dependent Variable and X 1 n = independent variables. Analyses and Results Hypotheses Test The hypotheses assumed for the test H 0 : R = 0 H 1 : R 0 Here, the null hypothesis assumes that there is no impact of independent factors over dependent variable. R value has been used here. The R value indicates the overall influence of the independent variables on the dependent variables. A value above zero indicates some contribution and zero value indicates no contribution. Following table is found from the regression analysis: 71

5 Multiple Regression Analysis Table-1: Descriptive Statistics Variables Mean Std. Deviation N Customer satisfaction Account opening easiness Online service Transaction time/ duration Savings account facility Loan repayment terms & conditions Credit card facility ATM facility Table-: Model Summary Change Statistics R F Std. Error of Square change the Estimate Change Df1 Df Sig. F Change Model R R Square Adjusted R Square a a. Predictors: (Constant), ATM facility, loan repayment terms & conditions, account opening easeness, availability of loan facility, savings account facility, online service, customer care, transaction time, credit card facility, interest rate We know that R = 0 means that there is no correlation among the variables. Here, R = which is greater than zero (0). Thus, there is a significant correlation among the variables. Table-3: ANOVA b Model Sum of Squares Df Mean Square F Sig 1. Regression a Residual Total a. Predictors: (Constant), ATM facility, loan repayment terms & conditions, account opening easeness, availability of loan facility, savings account facility, online service, customer care, transaction time, credit card facility, interest rate b. Dependent Variable: Customer satisfaction The above table reveals that, at 10 and 19 degrees of freedom the calculated value of F (9.906) is greater than the tabulated value of F (.18). Therefore, the null hypothesis is rejected and the test is significant. This indicates the independent variables opportunity for account opening easiness, customer care, interest rate of savings A/C, Credit card facilities, ATM facilities etc. have significant relationship with customer satisfaction. Relationship Analysis The information regarding the multiple regression analysis generated from SPSS is given below: 7

6 Model 1 (Constant) Account Opening easiness Online service Transaction time Saving account facility Loan repayment terms & conditions Table-4: Coefficients Un standardized Coefficients B Std. Error Standardiz ed Coefficien ts Beta t Sig % Confidence Interval for B Lower Bound Uppe r Boun d a. Dependent Variable: Customer satisfaction Cs= A C 0.104Of T Sf Ir Lf 0.610Lr Cc 0.504At Where, Customer Satisfaction= Cs, Account Opening Easiness = A, Customer Care = C, Online Facilities = Of, Transaction Duration = T, Savings A/C Facilities = Sf, Interest Rate of Savings A/C = Ir, Loan Facilities= Lf, Loan Repayment Terms & Condition = Lr, Credit card Facilities= Cc and ATM Facilities = At. The above table reveals that there are both positive and negative relative relationships between the dependent variable and the independent variables. However, the positive contribution of the independent variables to customer satisfaction of Southeast Bank Limited are the Account opening easiness 35.40%, Transaction duration 19.90%, Savings A/C facilities 57.80%, of savings A/C 10.10%, Loan facilities 35.60%, and the credit card facilities 37.0%. The negative contribution of the independent variables to customer satisfaction of Southeast Bank Limited are the 37.50%, Loan repayment terms & conditions 61.00% and ATM facilities has a negative contribution of 50.40%. Discriminate Analysis We have selected 03 (three) group discriminate analysis by way of categorizing the dependent variable (i.e Customer Satisfaction) into 03 (three) groups, such as: High (3), Medium () and Low (1). We got 0 (Two) discriminated functions and analyzed the Wilks Lambda Coefficient, F ratio and Standardized Canonical Discrimination Function Coefficients. Analysis of Eigenvalues and Canonical Correlation The Eigenvalue is the ratio of between-groups sum of squares to within-groups of error sum squares. Larger Eigenvalue indicates that the discrimination function is more useful in distinguishing between groups. 73

7 Summary of Canonical Discriminate Functions Table-5: Eigenvalues Function Eigenvalue % of Variance Cumulative % Canonical Cor a. First canonical functions were used in the analysis. The above table reveals that the Eigenvalues associated with the functions are for function-1 and for function- and these accounts for 97.10% and.90% respectively of the explained variance. The canonical correlations associated with the functions are and Analysis of Wilks Lambda Wilks Lambda is the proportion of the total variance in the discriminate scores not explained by differences among groups. Wilks Lambda coefficient shows how much discrimination one independent variable can make among the categories of satisfaction of customers. Table-6: Wilks Lambda Test of Function (s) Eigenvalue Chi-square df Sig. 1 through The higher values of Wilk s Lambda indicate lower discrimination ability and lower values indicate discrimination ability. Table-7: Tests of Equality of Group Means Wilks F Df1 Df Sig. Lambda Account opening easiness Online service Transaction time Saving account facility Loan repayment terms & conditions Credit card facility ATM The variable which causes the most discrimination among the categories is indeed the most important one to look for. Online service has the lowest value (.064) of Wilks Lambda. Thus, it has the highest discrimination power among all the independent variables. Loan repayment terms & conditions have the highest value (.47) of Wilks Lambda. So, it has the lowest discriminating power among all the independent variables. 74

8 75 Summary of Canonical Discriminate Functions: Table-8: Standardized Canonical Discriminate Function Coefficients Function 1 Account opening easiness Online service Transaction time Saving account facility Loan repayment terms & conditions Credit card facility ATM Table-9: Structure Matrix Function 1 Online Service Credit card facility Transaction time ATM facility Account opening easiness Saving account facility Loan repayment terms & conditions.618*.609*.484*.436*.43*.48*.396*.374*.355*.83* Pooled within-groups correlations between discriminating variables and standardized canonical discriminate functions Variables ordered by absolute size of correlation within function. *Largest absolute correlation between each variable and any discriminate function Table-10: Function at Group Centroids Customer satisfaction Low Medium High Function Unstandardized canonical discriminate functions evaluated at group means. Classification Statistics Table-11: Prior Probabilities for Groups Customer satisfaction Low Medium High Total Prior Cases Used in Analysis Unweighted Weighted

9 Table-1: Classification Function Coefficients Customer satisfaction Low Medium High Account opening easiness Online service Transaction time Savings account facility Loan repayment terms & conditions Credit card facility ATM Facility (Constant) Fisher s Linear discriminate functions Recommendation 1. With increasing competition between competitors in terms of expanding business while maintaining sound financial health, the main retail banking challenges are:. Product innovation: With the traditional products, banks need to develop products which will focus on individual needs and provide a customized solution for customer based on their individual circumstances. The emerging opportunity to reach various groups of unbanked customers will require banks to innovate products that can better match customer needs at a lower cost to both bank and customer. 3. Reaching to new customers: It is now becoming far easier to reach new customers than ever before. Technological advancement has made it possible to reach new areas without physically presents there. The agent banking and the mobile banking are the two very effective tools to reach new customers at a lower cost. 4. Use of technology: Use of technology such as computerization of the banking sector has already enabled banks to increase their operational efficiencies. Customers now want speed and efficiency, but at a lower cost. Banks need to invest more on technology to achieve faster connectivity between branches, setting up of Central Data Repository, generation of MIS, prevention of frauds and reducing transaction costs. 5. Improved customer service: Providing superior customer services is becoming an important issue for any bank. Customers now want quick service with minimum response time, efficient service delivery, tailor-made and value-added products to suit specific needs, hassle-free procedures, minimum transaction cost and pleasant and personalized service. Banks now need to focus on customer service more than ever before. They need to train their staffs adequately to provide better quality services without fail. 6. Customer Relationship Management: Along with superior customer service, banks will have to focus on customer relationship management (CRM). In the era of intense competition, banks now need more customer retention and loyalty. Customer Relationship Management (CRM) is, therefore, becoming one of the strategies that every commercial bank will consider to increase the company's revenue performance. 76

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