Service Quality A Study with Special Reference to Tamil Nadu Public Sector Banks

Service Quality A Study with Special Reference to Tamil Nadu Public Sector Banks M. Devanathan Ph.D. Research Scholar and Assistant Professor of Business Administration, Annamalai University, Tamil Nadu South India Dr. S. Jambulingam Assistant Professor of Business Administration, Annamalai University, Tamil Nadu South India ABSTRACT Customer service with quality is important in banks, which are the systems and organizational arrangement, as well as the characteristics and behavior of employees/employers towards customers. In order to increase goodwill, capture more customers and to gain customer loyalty, the banks strive to offer quality services. This study was undertaken to know the perception of customers towards the public sector banks in Tamil Nadu. Descriptive study method has adopted and convenience sampling technique was followed. On that basis, a sample size of 256 customers of different public sector banks was selected for this purpose from the major cities of Tamil Nadu state namely, Chennai, Madurai, Coimbatore and Trichy by using Servqual instrument developed by Parasuraman et al., 1998. The results show that specific customer categories namely, Young age group, unmarried customers, who have above 6 dependents and live in joint family customers have also higher level perception towards service quality of the public sector banks. Further, the result shows that post-graduate level and professional course educated customers, mainly students and lower and high income group customers also have higher level perception towards the service quality of the banks in the study area. Key Words: Customer Perception, Public Sector Banking Services, Service Quality INTRODUCTION AND BACKGROUND There has been phenomenal growth of service industries in recent years. More people are now employed in service industries than in manufacturing industries. A good part of business sector with its banks, hotels, law firms, consultation firms, air lines etc, is in the service business. Customer service with quality is important in banks, which are the systems and organizational arrangement, as well as the characteristics and behavior of employees/employers towards customers. In order to increase goodwill, capture more customers and to gain customer loyalty, the banks strive to offer quality services. The services by the banks are rendered to the customers according to the demands and expectations, will lead to the customer satisfaction. IRJBM www.irjbm.org April - 2014 - Volume No IV Page 90

Satisfaction of customer is an essential factor in Customer satisfaction in the success of an organization. In the banking industry, where intangible products are marketed, the importance of customer satisfaction is a more significant factor. The customers are found to be central point in making decisions of the banking industry with respect to the practices of the banking organization. Creation of customers and thereby delivery of essential services in more than expectation of the customers should be there especially in banking services. In this perspective, identifying a potential customer, the right services marketing strategies and positive attitude are important to the banking sector. Currently, the public sector banks face severe pressures since the increase in privatization and globalization. The customers of public sector banks compare in services quality among the banks. Presently competition from the private sector banks and initiation of banking reforms since early 1990s has led to an increased emphasis on efficient customer service. Overall, the banks face toughest competitive situation for survival, in order to this purpose, the banks are intended to maintain the service quality among the banks. Hence, measuring service quality of the banking sector has increasingly created an interest among the private and public sector banks. Service quality has been used to position the banks in the retail banking environment (Brown and Swartz, 1989). However, the service quality is difficult to measure (Rust et al., 1995). Due to the explosion of information technology, the banks offer different service products. The internet, electronic delivery channels etc. help the banks in capturing the customers and to be ultimate successors (Cooper and Edgett, 1996). Understanding, conceptualization and measurement of service quality are the recent discussion in services marketing. There has been sufficient research as to how service quality should be measured (Babakus and Boller, 1992; Brown, Chruchil and Peter 1993; Parasuraman, Zeithamal and Berry, 1985, 1988, 1991 and 1994). Different researchers have developed alternate concepts for service quality, like the Nordic perspective (Gronroos, 1982, 1984) and the American perspective (Parasuraman, Zeithamal and Berry, 1988). The Nordic perspective explains the service quality on two dimensions i.e., functional and technical quality. The American perspective on the other hand defines service quality on five dimensions, which are reliability, responsiveness, empathy, assurance and tangibility. It is so because the customers do not perceive quality as a uni-dimensional concept (Zeithamal, Parasuraman and Berry, 1993). Later the increased interest in the multi-dimensions of service quality led to the development of another model (Rust and Oliver, 1994), which identified service quality as a three dimensional concept. The present study is aimed to know the perception of customers towards various services rendered by the public sector banks in Tamil Nadu. The researchers have adopted the model explains the service quality on the basis of gap between the expected level of service and perception of the customers with respect to the level of services received. Many researchers have studied a wider scope that the five dimensions namely, reliability, responsiveness, empathy, assurance and tangibles. The present study measures the perceived service quality of the customers for the overall services by the banks. IRJBM www.irjbm.org April - 2014 - Volume No IV Page 91

OBJECTIVE OF THE STUDY To identify the perception of customers on service quality of the Public Sector Banks in Tamil Nadu. HYPOTHESIS The Public Sector Bank Customers do not differ on their perception towards Banking Services Quality METHODOLOGY The main purpose of the present study is to identify the perception of public sector bank customers towards service quality, descriptive study method was adopted, which is to be appropriative for this study. Convenient sampling technique was used in selecting the samples. The present study was conducted in major cities of Tamil Nadu state namely, Chennai, Madurai, Coimbatore and Trichy from 256 customers. To measure the service quality of the banks, a model named SERVQUAL was developed by Parasuraman (1988) was used. The inventory consists of 34 statements for measuring service quality by using five point scale Strongly Agree (5), Agree (4), Undecided (3), Disagree (2) and Strongly Disagree (1). RESULTS AND DISCUSSION To test the hypothesis the mean scores obtained by the public sector bank customers are compared and computed by using F test and t test. To compare the perception of customers towards service quality of banks, their demographic variables such as, Age, Gender, Marital Status, No. of Dependents, Family Type, Educational Qualification, Occupation and Family Monthly Income are categorized scientifically and systematically. The proposed hypothesis is also sub-divided based on the customers demographic variables, which are discussed as follow. Demographic Variables and Perception of Service Quality among the customers on Banking Service The Table-1 shows the results of one-way analysis of variance and independent sample t test, Mean, Standard Deviations of public sector bank customers perception towards service quality of the banks based on their demographic variables. IRJBM www.irjbm.org April - 2014 - Volume No IV Page 92

Table 1. Results of One-way Analysis of Variance and t test among the public sector bank customers perception towards Service quality of the banks Personal Variables Categories N Mean S.D. F p Age Upto 35 years 190 120.74 10.70 36 45 years 44 118.57 14.00 Above 45 years 22 112.46 12.61 Gender Male 157 120.22 11.76 Female 99 118.77 11.57 Marital Status Married 130 118.23 12.55 Unmarried 126 121.12 10.56 Number of Dependents Upto 2 members 3 to 4 members 41 130 119.71 118.30 10.89 10.49 5 to 6 members 49 121.55 11.73 Above6 members 36 121.92 15.77 Family Type Joint 88 122.01 13.49 Nuclear 168 118.42 10.46 Educational High School level 3 104.00 3.61 Qualification Higher Secondary level 10 113.60 9.43 Graduate 50 116.16 12.20 Post-graduate 137 121.77 10.27 Professional 47 121.81 13.28 Others 9 107.56 6.84 Occupation Student 71 121.03 11.43 Govt. Employee 14 127.21 17.41 Private employee 85 120.93 10.27 Business 33 119.55 11.09 Professional 34 118.71 9.44 Housewife 11 106.36 7.88 Retired 8 103.50 6.07 Family Monthly upto Rs.10,000 25 121.44 10.94 Income (Rs.) Source: Computed. # - t values 10,001 to 25,000 101 116.77 11.38 25,001 to 50,000 113 121.31 11.77 Above Rs.50,000 17 123.18 11.28 Total 256 119.66 11.69 5.365 0.005 9.660# 0.335 1.994# 0.047 1.470 0.223 2.354# 0.019 6.238 0.000 7.175 0.000 3.621 0.014 IRJBM www.irjbm.org April - 2014 - Volume No IV Page 93

H 0 1a : Different age group of public sector bank customers do not differ on their perception towards banking services quality. The respondents are categorized into three on the basis of their age such as upto 35 years, 36-45 years, and above 45 years and their mean scores towards service quality of the banks are found to be 120.74, 118.57 and 112.46, respectively. The mean scores show that customers belong to the age group Upto 35 years have obtained higher mean scores than others. Hence, the means scores indicate that young age group customers have higher level perception towards service quality of the public sector banks. It is also interesting to know the standard deviation among the customers, which also show young customers do not deviate much themselves on service quality of the banks. To test the hypothesis (1a), one-way analysis of variance was employed and the obtained F value is 5.365 with the p value 0.005. It means there is 0.01 level significant difference among the customers perception towards service quality of the banks. Hence, the proposed hypothesis is rejected. H 0 1b : The Male and Female public sector bank customers do not differ on their perception towards banking services quality. The respondents are categorized as male and female and their mean scores towards service quality of banks are found to be 120.22 and 118.77, respectively. The mean scores show that customers do not vary in their perception towards service quality of the banks according to their gender and the standard deviation values also do not differ. Further, the obtained t value is found to be (9.660) is not significant at the 0.05 level since the p value is 0.335. Hence, the proposed hypothesis is accepted. H 0 1c : The Married and Unmarried public sector bank customers do not differ on their perception towards banking services quality. The respondents are categorized as married and unmarried and their mean scores towards service quality of banks are found to be 118.23 and 121.12 respectively. The mean scores show that unmarried customers have higher level perception than married customers towards service quality of the banks. Further, obtained t value (1.994) is found to be significant at the 0.05 level since the p value is 0.047. Hence, the proposed hypothesis is rejected. H 0 1d : The public sector bank customers do not differ on their perception towards banking services quality according to their number of dependents. The respondents are categorized into four on the basis of their number of dependents such as upto 2 members; 3 to 4 members, 5 to 6 members and above 6 members and their mean scores towards service quality of the banks are found to be 119.71, 118.30, 121.55 and 121.92, respectively. The mean scores show that customers have above 6 members as dependents who have obtained higher mean scores than others. Hence, the means scores indicate that above 6 members dependents having customers have higher level perception towards service quality of the public sector banks. To test the hypothesis (1d), one-way analysis of variance was employed and the obtained F value is found to be 1.470 with the IRJBM www.irjbm.org April - 2014 - Volume No IV Page 94

p value 0.223. It means there is no significant difference among the customers perception towards service quality of the banks. Hence, the proposed hypothesis is accepted. H 0 1e : The Joint and Nuclear family type public sector bank customers do not differ on their perception towards banking services quality. The respondents are categorized as joint and nuclear family type of customers and their mean scores towards service quality of banks are found to be 122.01 and 118.42, respectively. The mean scores show that joint family type customers have higher level perception than nuclear family type customers towards service quality of the banks. Further, obtained t value (2.354) is found to be significant at the 0.01 level since the p value is 0.019. Hence, the proposed hypothesis is rejected. H 0 1f : The public sector bank customers do not differ on their perception towards banking services quality according to their educational qualifications. The respondents are categorized into six on the basis of their educational qualification such as High School level, Higher Secondary level, Graduate, Post-graduate, Professional and Others and their mean scores towards service quality of the banks are found to be 104.00, 113.60, 116.16, 121.77, 121.81 and 107.56, respectively. The mean scores show that respondents who have qualified at Post-Graduation and Professional who have obtained higher mean scores than others. Hence, the means scores indicate that postgraduate and professional degree qualified respondents have higher level perception towards service quality of the banks. To test the hypothesis (1f), one-way analysis of variance was employed and the obtained F value is found to be 6.238 with the p value 0.000. It means there is 0.01 level significant difference among the customers perception towards service quality of the banks. Hence, the proposed hypothesis is rejected. H 0 1g : The public sector bank customers do not differ on their perception towards banking services quality according to their occupation. The customers are categorized into seven on the basis of their occupation such as Student, Government Employee, Private Employee, Business, Professional, Housewife and Retired and their mean scores towards service quality of the banks are found to be 121.03, 127.21, 120.93, 119.55, 118.71, 106.36 and 103.50, respectively. The mean scores show that customers who are government employees have higher mean scores than others. Hence, the means scores indicate that government employees have higher level perception towards service quality of the banks. To test the hypothesis (1g), one-way analysis of variance was employed and the obtained F value is found to be 7.175 with the p value 0.000. It means there is 0.01 level significant difference among the customers perception towards service quality of the banks. Hence, the proposed hypothesis is rejected. H 0 1h : The public sector bank customers do not differ on their perception towards banking services quality according to their family monthly income. IRJBM www.irjbm.org April - 2014 - Volume No IV Page 95

The customers are categorized into four on the basis of their family monthly income such as upto Rs.10,000, Rs.10001 to 25,000, Rs.25,001 to 50,000 and above Rs.50,000 and their mean scores towards service quality of the banks are found to be 121.44, 116.77, 121.31 and 123.18, respectively. The mean scores show that customers who earn upto Rs.10,000 and above Rs.50,000 have higher mean scores than others. Hence, the means scores indicate that lower and higher monthly income group customers have higher level perception towards service quality of the banks. To test the hypothesis (1h), one-way analysis of variance was employed and the obtained F value is found to be 3.621 with the p value 0.014. It means there is 0.01 level significant differences among the customers perception towards service quality of the banks. Hence, the proposed hypothesis is rejected. SUMMARY OF FINDINGS AND CONCLUSION Hence, the results offer evidence that customer perception about the service quality of the public sector banks is found to be future behavioural intentions. The results show that specific customer categories namely, Young age group, unmarried customers, who have above 6 dependents and live in joint family customers have also higher level perception towards service quality of the banks. Further, the result shows that post-graduate level and professional courses educated customers, mainly students and lower and high income group customers also have higher level perception towards the service quality of the banks in the study area. Thus, the result would assist the banks in using the customer profiles for identifying their expectations from banks to retain them in the competitive environment. REFERENCES 1. Brown, Stephen W. and Teresa A. Swartz (1989) A Gap Analysis of Professional Service Quality ; Journal of Marketing, 53:April, 92-98. 2. Brown, Tom J., Churchill Jr, Gilbert A. and Peter, J. Paul (1993) Improving the Measurement of Service Quality ; Journal of Retailing,69:1, 127-139. 3. Cooper, Robert G. and Edgett, Scott J. (1996) Factors for New Financial Services, Marketing Management, 5:3, 37. 4. Gronroos, Christian (1984) A Service Quality Model and its Implications, European Journal of Marketing, 18:4, 36-44. 5. Narasimham, M. (1991) Report on Financial Sector Reforms-1991, New Delhi, Committee of Financial Sector, Ministry of Finance, Government of India 6. Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1985), A conceptual model of service quality and its implications for future research, Journal of Marketing, Vol. 49 No. 4, pp. 41-50. 7. Parasuraman, Zeithaml and Berry, "SERVQUAL. (1988): A Multiple-Item Scale for Measuring Customer Perceptions of Service Quality," Journal of Retailing, Spring 1988, pp. 12-40. 8. Parsuraman A., Zeithaml, Valerie A. and Berry, Leonard L. (1988) A multiple Item Scale for Measuring Consumer Perception of Service Quality, Journal of Retailing, IRJBM www.irjbm.org April - 2014 - Volume No IV Page 96

64:1, 12-40. Journal of Services Research, Volume 4, Number 2 (October 2004 - March 2005) 9. Parsuraman A., Zeithaml, Valerie A. and Berry, Leonard L. (1991) Refinement & Reassessment of SERVQUAL scale ; Journal of Retailing, 67:4, 420-450. 10. Parsuraman A., Zeithaml, Valerie A. and Berry, Leonard L. (1994) Reassessment of Expectations as a Comparison Standard in Measuring Service Quality: Implications for Future Research, Journal of Marketing, 58:February, 201-230. 11. Rust, Roland T., Zahorik, Anthony J., and Keiningham, Timothy L. (1995), Service Marketing, New York, Harper Collins College Publishers, pg. 318. 12. Zeithaml, V.A., Berry, L.L. and Parasuraman, A. (1996), The behavioral consequences of service quality, Journal of Marketing, Vol. 60 No. 2, pp. 31-46. 13. Zeithaml, Valerie A., Parsuraman & Leonard L. Berry (1993) Strategic Positioning on Dimensions of Service Quality, Advances in Services Marketing and Management, Vol.2 (ed.) Teresa A. Swartz, David E. Bowen & Brown W. Stephen, Greenwich, Conn. JAI press, pp.207 228. IRJBM www.irjbm.org April - 2014 - Volume No IV Page 97