Service Delivery In The Banking Sector Marketing Essay

Technological innovations in the service industries enabled the organizations to deliver services efficiently and effectively. Due to the innovation in the service delivery methods, new ways of businesses are introduced throughout the world. Service industries e.g. transport, wholesalers, retailers, dealers, manufacturing, trading etc. are bringing innovations in the services by adopting the latest technology. The main purpose behind adopting the technology is to improve the service quality (Tether, Miles, Blind, Hipp, Christiana, Karlsruhe, Liso and Cainelli, 2001). The usage of information technology in the service sector has got prior importance because of the time and cost efficiency factors that are linked with the technology. In Banking sector technological innovations are taking the shape of trend as the whole sector is making huge investments in technology in order to gain customer satisfaction and to build strong reputation among the customers. In order to survive in this competitive environment technological innovations are very important (Joseph, McClure and Joseph, 1999). Technological innovations are also necessary because they improve the service quality and service quality is an important aspect of any organization. Service quality is evasive and is not distinguished clearly, but high quality service provision is the target that every organization wants to achieve. Providing particular specification for quality services is not an easy task because services are intangible.

Banking sector is shifting form manual area to technology because of technological shift. Manual banking services demands much time and employee effort; in contrast, technological innovations have reduced the time and manual efforts. As banking sector is the one of the busiest sector in the world so more manpower is required to bring the efficiency in the services. Technological innovations however do not require manpower and has improved the efficiency of the services. In manual services customers have to wait for long time in queues which reduces the efficiency of service delivery and much time is required to deliver a service. Technological innovations brought fastest ways to deliver a service and in return got the high service quality and customer satisfaction (Zeithmal, parasuraman and Malhotra, 2000). Service organizations are mostly customer oriented and to survive in this competition they need to deliver high quality services. In the banking sector profitability is directly proportional to the high quality service delivery. So, it is important to monitor and enhance the services to bring improvements and deliver services efficiently. One of the technological innovations which have really contributed in the information technology is internet and it has created revolution in the world. Internet adoption in the service sector has reduced the time, communication and distance constraints. Evolution of internet have also enforced financial sector to review their performances and bring information technology in the sector. Revolutionary wave of internet has also enforced banking sector to improve their performance and increase the service efficiency. Dynamic changes in the global economical and cultural environment have motivated the banks to assess technology and the strategies of internet banking (Khan and Mahaputra, 2009).

Problem statement:

With the rapid advancement in the technology, customers’ expectations have been increased and they desire best in class services in this information age. At the same time, they also desire such services which are more convenient and time and cost efficient. It has become increasingly important for online service providers to know which attributes are mostly considered by consumers in assessing the quality. Therefore understanding of attributes that affects the e-services has became an important considerations of businesses.

Internet banking has reduced the human interaction level and therefore provides consistency in online information systems. Based on above discussion, the purpose of recent study is to gain the better understanding that how e-banking facility has impacted the service quality dimensions of banking sector form customers’ point of view. As services are difficult to evaluate so five quality dimensions will be used to evaluate the service quality those are reliability, responsiveness, communication, security and access. Research problem formulated here is:

To get the better insights of how e-commerce/internet banking has affected the service quality dimensions in the banking sector.

Significance of study:

This study has a massive importance for service oriented organizations because:

This research would be helpful in gaining knowledge about functions of e-commerce, its products, and operations.

As this study is completely focusing on quality issues, which would be helpful for understanding service dimensions and their implementation would provide quality services to the customers.

It would be helpful in understanding that how e-commerce has improved the service quality in the banking sector and how it is time and cost efficient.

It would provide better insights of how e-banking has helped redefining and strengthening relationships with customers.

It would also give the better understanding of how has e-banking changed the banking industry worldwide.

This would also be beneficial in knowing that how e-commerce has helped the banking sector in facing the fierce and continuous competition.

It would also be helpful in knowing how the service quality dimensions help in evaluating the service quality of corporations.

Objectives of study:

The objectives of this study are as follows:

To get the better understanding of e-banking operations those are helpful in improving service quality.

To evaluate the service quality of banking sector by using the service quality dimensions those are responsiveness, reliability, communication, security and access.

To study how internet banking is beneficial to the customers.

To find out how has internet banking can help in improving productivity.

To study how much internet banking has penetrated in customers minds.

To study the internet banking facilities offered by the banks to its customers.

LITERATURE REVIEW

Service quality:

With the rapid advancement in the technology, customers’ expectations have been increased and they desire best in class services in this information age. At the same time, they also desire such services which are more convenient and time and cost efficient. It has become increasingly important for online service providers to know which attributes are mostly considered by consumers in assessing the quality. Therefore understanding of attributes that affects the e-services has became an important considerations of businesses.

Service industries are customer oriented and their survival largely depends on the service quality provided by them. Researches suggest that customers judge quality not in an individual way but rather based on different factors relevant to the service. Service quality is divided in to three parts, physical quality, corporate quality and interactive quality whereas physical quality refers to tangibles assets of the service industries, corporate quality refers to the reputation of the industry in minds of consumers and interactive quality refers to interaction between customers and employees. If the service industries meet the entire service dimensions customer became satisfied and leads to the profitability of the organization.

The SERQUAL was introduced by Parasuraman, Zeithaml and Berry which consists of five dimensions. These five dimensions are responsiveness, empathy, reliability, assurance and tangibility. Reliability is the ability of any organization to fulfill the promised services accurately. Responsiveness is basically the act of the employees and their attitude towards customers. Assurance shows that how much knowledgeable employees are to deliver the service and how much trustworthy they are? Empathy shows that either customer is given personal attention or not? Tangibility refers to all those physical equipments or written material that represents the services. These dimensions basically reflect that how customers perceive the services. These five dimensions are relevant with the banking sector.

SERQUAL method is also used for the internal marketing and is based on the fact that the every employee should recognize that customer service is most important. There is positive connection between customer satisfaction and internal and external service quality. Satisfaction enhances the loyalty of the consumers with the firm.

E-service quality:

E-services have opened up the new ways toward best-in class service quality. It has also led to the change in the customers perceptions about the service quality. Service industries wonder that how customers perceive and evaluate quality of service on web and whether this evaluation criterion is different from traditional services. After many efforts of many commercial groups and researchers a term e-SQ was developed which means that extent to which websites provide the efficient and convenient service like purchasing, buying, delivering and shopping etc.

Seven different dimensions were found on the basis of which consumers judge the service quality of the web services. These seven dimensions are efficiency, fulfillment, reliability, privacy, responsiveness, compensation and contact. First four dimensions are used for core service evaluation, and last 3 are used for the evaluation of service recovery. Empathy was considered as less important for online services. Zeithaml have developed different dimensions for measuring e-service quality: reliability, access, ease of navigation, flexibility, efficiency, security, personalization, assurance and responsiveness, price knowledge and site aesthetics.

(Madu, 2002) came up with 15 quality dimensions that help in the evaluation of online services: empathy, assurance, reputation, web store policies, customization, responsiveness, trust, integrity, security, serviceability, storage capacity, reliability, aesthetics, structure and performance. Online banking for Pakistani banks is new delivery channel and this delivery channel is transactional as well as informative medium. But it has not yet been popularly adopted by Pakistan. Researchers suggests that new banks, well established banks, private banks have probability of adopting this technology and also due to unawareness of consumers this technology is yet not been popularly accepted by consumers. But recent researchers have shown that people are attracting towards this new service. Also with the increased accessibility of internet this service is used by consumers who are at higher class levels or higher mediocre. Banks are adopting this technology to increase the market share and to attract more customers. This study aims to determine which factors are mostly considered by the consumers and which factors leads to their satisfaction.

Service quality in banking:

Service quality has been used by banks to evaluate their performance. (Johnston, 1995) stated that 18 attributes are used in the evaluation of the service quality in banking sector: security, responsiveness, reliability, integrity, responsiveness, functionality, friendliness, flexibility, courtesy, competence, communication, commitment, comfort, tidiness, care, availability, attentiveness, aesthetics and access. (Nantel, 2002) stated five dimensions in the banking sector: effectiveness, tangibles, service portfolio, reliability and access.

Researchers have suggested that there is a close relationship between the service quality and customers satisfaction. Service quality is a judgment tool which can broadly evaluate the customer satisfaction. Some attributes are important in the customer satisfaction and some are less important but when less important factors are neglected they can lead to the customers’ dissatisfaction. Both types of banks either traditional and internet banks must focus on responsiveness, reliability and access.

METHODOLOGY

In this research Descriptive research method will be used in order to understand the service quality of banking sector and how has internet banking improved the quality. This type of research will also be helpful in determining the level of customers’ satisfaction and productivity of banking sector. Measurement tool used in this research is service quality dimensions that are responsiveness, reliability, access, security and communication. This is the most famous type of research technique which is used in survey research design and is also most useful in describing the characteristics of consumer behavior.

Instrument for data collection:

Structured questionnaire will be used in this research. Questions will be designed to find the service quality of internet banking and satisfaction level of users. The personally administered questionnaire will be used in this study. Likert scale will be used in the questionnaire.

Research type:

This research is quantitative. Quantitative method is best in conducting this survey and to provide accurate and precise results. All dimensions will be quantitatively measured and in order to analyze which dimension is weak and which is actively participating in meeting the desired expectations of customers.

Sample design:

The sample method selected will be non-probability sampling and will be purposive non-probability sampling/judgment sampling. This method is selected so that people with the expert judgment will be able to participate in the research and people who are actually using the internet services of banking would be invited to give their feedback. Sample size will be about 150-200 customers.

Results:

Results will be presented by using the SPSS tool and by using the graphs, charts and tables data will be interpreted and results will be given.

DELIVERABLES:

Through this research, results of following questions will be delivered.

What is the effect of e-commerce on the reliability of the banking sector?

What is the effect of e-commerce on the responsiveness of the banking sector?

What is the effect of e-commerce on the communication of the banking sector?

What is the effect of e-commerce on the access of the banking sector?

What is the effect of e-commerce on the security of the banking sector?

After the analysis results will show that how has e-commerce affected the service quality dimensions of the banking sector and which dimension is most important and which has least importance.