Banking Industry In Mauritius Accounting Essay

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Customers are more and more mindful of the service quality being provided by an organisation and they expect that their wishes are fulfilled. In an increasingly competitive environment, service quality as a critical measure of organisational performance attracts banking institutions and remains at the forefront of services marketing literature and practice (Lasser et al., 2000; Yavas and Yasin, 2001; Dhandabani, 2010). This study assesses what customers are expecting in terms of service quality from the commercial banks operating in Mauritius and what they are in fact receiving.

This chapter consists of the idea behind the study, problem statement, aim and objectives of the research, research questions and the research hypothesis. Banking industry is also scrutinized. The chapter finally outlines the structure of the dissertation.


Mauritius which is among the leading economies in Africa, aims to rank among the top ten most investment- and business-friendly locations in the world (Michigan State University). To be able to fulfill this aim, the banking sector plays a major role and the service quality being offered by the banking sector is of utmost importance to attract private individuals, businesses, governments.

Huseyin et al., (2005) argued that good knowledge of the characteristics and advantages of service quality by banks do contribute for their success and their persistence in the international banking competitive environment (Ragavan and Mageh, 2013). Saravanan and Rao (2007) pointed out that service quality remains critical in the service industries, as businesses strive to uphold a competitive advantage in the market place and achieving customer satisfaction. Bheenick (2012), Governor of Central Bank of Mauritius (BOM), drew the attention that there is still scope for more competition and there is room for the banking sector to grow in size and sophistication to diversify consumer choice (Appendix 1). Banks compete with generally undifferentiated services and products in the market place, thereby service quality becomes a key competitive weapon (Stafford, 1996). This should alarm the existing commercial banks and make them realised how service quality is vital to compete for market shares and to avoid the tendency of existing customers switching to another bank. Customers are increasingly aware of the options on offer regarding the rising standards of service (Krishnaveni et al., 2004; Mishra et al., 2010). Customers therefore compare services being provided by different banks and then select the one offering superior quality.

The Mauritian banking sector contributes a great deal to the economy and the financial intermediation sector which is driven mainly by the banks posted a higher growth of 5.5 per cent. At 30 September 2011, the banks realised profit after tax of Rs15.9 billion while the GDP in 2011 was at 3.9 per cent.

Hence, the above information shows the importance of the banking sector for the Mauritian economy and how service quality may be a vital tool to gain competitive edge.

1.2 Banking industry in Mauritius

Today, the Mauritian banking sector has 21 commercial banks with 216 branches, 8 non-bank deposit taking institutions, 10 money-changers and 6 foreign exchange dealers. For the purpose of the study, service quality only in the banking industry more specifically that of commercial banks dealing mostly with retailed banking will be scrutinised. The service quality by offshore and Islamic banking will not be assessed.

The Table 1.1 illustrates the 216 branches that the 21 commercial banks operate; the number of ATMs which were around 436 in September 2012 and the approximate number of employees employed by each bank. Compared to the other commercial banks operating in Mauritius, the Century Banking Corporation Ltd is an Islamic bank and its operations depend on the Shari'a. Banyan Tree Bank Limited has been licensed in September 2012 and its operations are not yet fully established. Investec Bank (Mauritius) Limited, P.T Bank Internasional Indonesia, Standard Chartered Bank (Mauritius) Limited, Deutsche Bank (Mauritius) Limited are more offshore oriented.

Table 1.1: Commercial banks in Mauritius


No. of branches

No. of ATMs

No. of employees

ABC Banking Corporation Ltd




AfrAsia Bank Limited




Bank of Baroda




Bank One Limited




Banque des Mascareignes Ltée




BanyanTree Bank Limited




Barclays Bank PLC




Bramer Banking Corporation Ltd




Century Banking Corporation Ltd




Deutsche Bank (Mauritius) Limited




Habib Bank Ltd




HSBC Bank (Mauritius) Limited




Investec Bank (Mauritius) Limited




Mauritius Post and Cooperative Bank Ltd




P.T Bank Internasional Indonesia




SBI (Mauritius) Ltd




Standard Bank (Mauritius) Limited




Standard Chartered Bank (Mauritius) Limited




State Bank of Mauritius Ltd (SBM)




The Hongkong and Shanghai Banking Corporation Limited




The Mauritius Commercial Bank Ltd (MCB)




Source: fieldwork

The banks in Mauritius are providing different banking and financial services to private, corporate and institutional clients. They offer personal banking, business and specialised services. Added to the existing products and services, the banks also put highly qualified and experienced professionals to the customer's disposition to give them advice and to guide them.

1.3 Problem Statement

Reputation of an organisation is very fragile and any service quality problems are not favorable for its name. Ha and Jang (2009) argues that service failure occurs when customer perceptions do not meet customer expectations. The problem with service failure is that it may lead to a destroyed relationship between the customer and the organisation.

Commercial banks operating in Mauritius are being awarded and are gaining international recognition. This can be epitomised by the MCB which has been rewarded "Best SEM-7 Company, Online Reporting and Corporate Governance Disclosures Awards" by PricewaterhouseCoopers for 2012, the "Best Local Bank in Mauritius" at EMEA Finance Award for 2012, " Best Emerging Market Bank 2012" in the Global Finance Magazine (MCB Annual Report 2012). Similarly, AfrAsia Bank has been selected as the "Best Local Private Bank in Mauritius" in 2011 and 2012 and as the "Best Private Bank for the Super Affluent in Mauritius" by Euromoney Private Banking Survey in 2012 (Afrasia Bank Annual Report 2012).

Many customers depend on the commercial banks to deliver high quality services daily. The question does arise how banks that though awarded, have shortcomings in their service quality. At the MCB which ranked 18th in Africa and 662nd among the top 1000 banks and the SBM clients have been victims of phishing (L'express, 2nd March 2012) (Appendix 2). Following these cases, the Mauritius Bankers Association (MBA), on behalf of its members, in a press release, alerted bank customers to various fraudulent e-mails (Appendix 3).

Moreover, according to Bheenick (2012), fee income is now a non-negligible part of banks' total income and there have been complaints from various quarters that bank charges are on the high side. A Working Group on fees, charges and commissions has been set up to study the reasonableness of bank charges corresponding to the services offered. But then, till now no action has been undertaken to rectify the problem.

The problems mentioned above call for the assessment of service quality.

1.4 Aim

The aim of the study is to assess customers' service quality expectations and perceptions of commercial banks.

1.5 Objectives

The main goal of the study is to identify the customers' expectations and perceptions on service quality factors in banks as per Servqual model using a modified version of Servqual questionnaire. An insight on the different aspects of service quality by the banks is provided. The order of importance of the items under each dimension of Servqual model quality will be ranked. The Servqual approach and the paired sample tests will be used to assess the difference between customer's expectations and perceptions. Similarly, the goal is to reduce the number of variables into a few meaningful objectives, to determine the new dimensions of service quality and to identify the most important factors using Factor Analysis (FA).

Finally, recommendations following the findings of the study will be made based on statistical techniques used.

1.6 Research Questions

The study seeks to answer the following questions:

Are the services being offered by the commercial banks in Mauritius meeting customers' expectations?

What are the perceptions of the customers about the services that they are receiving?

Is there a gap between the expectations and the perceptions of the customers?

1.7 Hypothesis

The following hypothesis may be formulated for this study:

H1. There is no difference between customers' expectations and perceptions.

1.8 Format of the study

The following is an outline of the dissertation:

Chapter 1: Introduction

In this chapter a general outline of the study is given. It introduces the motivation behind the study and the problem statement. Aims, hypothesis, research question and objectives have been formulated and the banking industry is evaluated.

Chapter 2: Literature Review

In chapter two, the theoretical framework will be presented. Different concepts such as service quality, customer expectations and perceptions, and perceived service quality are described. Finally, the SERVQUAL model is outlined and empirical studies are reviewed.

Chapter 3: Methodology

This chapter will describe the methods that will be used for making the survey and for analysis. The questionnaire structure as well as the method for choosing the sample of population is also described. Lastly, the data analysis techniques are studied.

Chapter 4: Analysis of Findings

In chapter four, the data, the findings and the analysis of the result will be dealt with. Gaps between expectations and perceptions are analysed using Servqual approach and paired sample t-tests. Factor Analysis is used to reduce the number variables of the SERVQUAL items. Data collected from the respondents will be analysed using Statistical Package for Social Scientists (SPSS) software and Excel 2007.

Chapter 5: Recommendations and Conclusion

In chapter five, the recommendations within the context of the study and conclusions of the dissertation will be highlighted. Moreover, proposal for further research will be made.

1.9 Conclusion

Chapter one gives a brief and general description of the research and presents the statement of the problem, objectives of the study, research questions, motivation of the study, an overview of banking industry and finally the structure of the research. Chapter two will present service quality concept adopted in this study and reviews the literature and explain in details the constructs of the study.