Research Proposal: A Proposal for the study of customer satisfaction of commercial bank.
Chapter-1
Introduction
1.1 Background
Banking
sector in Nepal is facing a rapidly changing market. This is also known as the
late effect of world financial crisis. In addition, the impact of the economic
problems and financial crisis among the financial institutions creates a great
challenge for the overall banking sectors. At this situation aiming for the customer satisfaction is the most challenging task for
banks. Through the satisfied customers, a bank can easily measure the effectiveness
of the business, its potential and position in the industries and the areas
that are needed to polish and improve. But gathering a
satisfied customer is not an overnight miracle but with the
full of patience and bountiful of effort.
It is a well known fact that no business can exist without customers. So they
must be satisfied. More than any other, banking is a customer
oriented services industry and Nepalese banks have started realizing that
business depends on client service and the satisfaction of the customer. Customer
satisfaction is the key factor for customer retention and thereby the banks
success. So identifying and improving the factors that can limit the
satisfaction of customer is the crucial step for the bank which wants to be a step forward than its competitors.
Customer satisfaction is an ambiguous
and applied concept and the actual manifestation of the state of satisfaction
will vary from person to person and product/service to product/service. The
state of satisfaction depends on a number of both psychological and physical
variables which correlate with satisfaction behaviors such as return and recommend
rate. The level of satisfaction can also vary depending on other options the customer
may have and other products against which the customer can compare the organization's
products. Among several factors; Quality, Timeliness, Efficiency, Ease of
Access, Organizational environment, Commitment to the Customer and Innovation,
Behavior of employees, Willingness to solve problems, friendliness, knowledge
level, communication skills etc. are some major factors that affect the
satisfaction of customer. These factors are used for measurement and continuous
improvement of customer satisfaction.
Machhapuchchhre Bank Ltd was founded in
1998 as the first regional commercial bank to start banking business from the
western region of Nepal with its head office in Pokhara. It is one of the full
fledged commercial bank operating in Nepal; and it ranks in the top most among
the private commercial banks. With its past success and experience MBL is
striving to facilitate its customers’ needs by delivering the best of services
in combination with the state of the art technologies and best international practices.
But its business environment is not same as it was in the past. Its business
environment is more complex with the entrance of powerful competitor, rapid
change in customers’ service/product expectations, increasing employee turnover,
possible cross sales and with many other factors. So, before moving to the
something new and continuing existing one, it is necessary to identify the factors
affecting the satisfaction and its current level.
1.2 Statement of the Problem
Customers have expectations and criteria when they
judge whether the provided banking services is satisfactory or not. At the same
time, due to the high competition in a banking sector, the perception of
customers and potential customers are also divided according to the services
that they want to achieve. The proper identification of customer satisfaction helps
to retain customers and to increase brand awareness, profitability and
effectiveness of bank’s services. These are the major customer oriented opportunities
and challenges for the banking sector in Nepal, so the Machhapuchchhre Bank Ltd’s.
Among the different problems regarding customer satisfaction, followings will
be the major concern of this study.
i.
What are the factors affecting the
customer satisfaction of MBL?
ii.
How the MBL can gather the customer
satisfaction, which is the same focus of other competing banks?
iii.
What are the most satisfactory factors
that are provided by competing banks to its customers?
iv.
What types of product/services are
expected by MBL’s customer in future?
1.3
Objective of the Study
General objectives:
i.
To identify, if any, possible way to increase
customer satisfaction.
ii.
To explore the factor affecting the customer
satisfaction of Machhapuchchhre Bank Ltd.
Specific objective:
iii.
To explore and analyze critically the customer
satisfaction of Machhapuchchhre Bank Ltd.
1.4
Research Hypotheses
The following are the possible alternative hypotheses in this study.
H1: Competency of the bank has positive impact on customer
satisfaction.
H2: Responsiveness of the bank has positive impact on
customer satisfaction.
H3: Timeliness of the bank has positive impact on customer
satisfaction.
H4: Online banking of the bank has positive impact on
customer satisfaction.
H5: Communication of the bank has positive impact on customer
satisfaction.
H6: Credibility of the bank has positive impact on customer
satisfaction.
H7: Customer and Social welfare program of the bank has
positive impact on customer satisfaction.
H8: Appearance of the bank has positive impact on customer
satisfaction.
H9: It is expected that customer are satisfied with overall loan
and deposit services of bank.
1.5 Operational Definitions and Assumptions:
Customer satisfaction is the result of interaction
between the consumer’s pre-purchase expectations and post purchase evaluation.
More generally satisfaction is the state of liking or disliking the
services/product after experiencing it. Here, consumer/customer are any
individuals or households or organizations that use goods and services
generated within the economy. Also, the banking services includes: bank
accounts, personal loans, commercial loans, issuance of cards (debit, credit,
ATM) and processing of their transactions etc. The customer satisfaction
measurement variable can be defined as follows:
a. Employees: Employee characteristics and performance related variable directly
affect the satisfaction of customer. This includes:
i.
Responsiveness: The willingness of
employees to help customers and provide prompt service. It also includes the
speed of responses to complaints.
ii.
Friendliness: Friendliness helps to
increase quality of service /product. Employees individual attention giving,
caring to customer, etc are measured here.
iii.
Skill and knowledge: Skill is measured
by the way how employee performs their task and delivers to customers. The employees’
skill highly depends on their education level.
iv.
Timeliness: How fast the employee can
deliver the demanded services by their customers.
v.
Communication: Understandable,
acceptable, informing about facility and possible risks etc.
b. Product and Services: It includes all product and service (explained above) related factors of
the bank.
i.
Variety: Availability of same category
services/product in a multi form, benefit and prices. (i.e. Yuba bachat, child
saving etc.)
ii.
Price: The customer pays for receiving
product or services from the bank.
iii.
Special services: It includes services
like ABBS, online transaction etc.
iv.
Appearance of the bank: The color
combination, attractiveness of inside and outside decoration, parking style
etc.
v.
Service process: The step that should
be completed before getting product or services from the bank. (i.e. the
process to deposit, borrow loan etc.)
c. Image: Primarily this criteria includes,
i.
Credibility: It includes employees
trust worthy in transactions and other services, banks ability to make secure
transactions and assure security etc.
ii.
Technological excellence: What types of
technology is used by the bank. In what extent it serves the customers
expectations.
iii.
Customer and social welfare: The bank’s
activities for customers’ and social welfare. (i.e. stock ownership opportunity
for customers, donations to poor students in school etc.)
d. Access: Network expansion of the bank, branches location, as well as observed
troubles in the service system (strikes, damaged ATMs, etc.), availability of
service access (i.e. ATM both access, Bank service access, etc.) are included
in this criterion.
Chapter-2
Literature Survey and Theoretical Framework
2.1 Literature Review
Customer satisfaction is an applied term that
determines on how products and services supplied by a company meet or surpass
customer expectation. Following Cronin et al. (2000), conceptualize
customer satisfaction to be an evaluation of an emotion, reflecting the degree
to which the customer believes the service provider evokes positive feelings.
Customer satisfaction reflects the degree to which a consumer believes that the
possession or use of a service evokes positive feelings. Cronin et al.’s (2000)
various models and theories that have been developed to this end (Oliver, 1980;
Swan and Trawick, 1980; Tse and Wilton, 1988; Anderson and Sullivan, 1993;
Patterson et al., 1997), indicate that customer satisfaction is related to the
size and direction of disconfirmation, which is defined as the difference
between the post-purchase and post-usage evaluation of the performance of the
product/service and the expectations held prior to the purchase (Sharma and
Ojha, 2004).
In banking industry, being competitive is already a given factor. Customers
expect that banks should be strong enough even if there are uncertainties in
the country, most especially in the financial stream. In the long run, the
customer satisfaction can be the key element of the organization to prepare
another strategy (Gitman and McDaniel, 2005). Thereby it can enhance its
further success and long lifecycle.
The dream of every organizations and so the banks; having a satisfied customer will be injection
for its success and basis to continue its business lifecycle, if achieved
through continuous delivery of satisfactions by reducing resistance
and reluctance of the customers towards the bank’s offered products and
services. If not, just a respite
and waste
of time and fund.
However, keeping customers is also dependent
on a number of other factors. These include a wider range of product choices, greater
convenience, better prices, and enhanced income (Storbacka et al., 1994).
Whereas, Ioanna (2002) further proposed
that product differentiation is impossible in a competitive environment like
the banking industry. Banks everywhere are delivering the same products. For
example, there is usually only minimal variation in interest rates charged or
the range of products available to customers. Bank prices are fixed and driven
by the marketplace. Thus, bank management tends to differentiate their firm
from competitors through service quality. Service quality is an imperative
element impacting customers’ satisfaction level in the banking industry. In
banking, quality is a multi-variable concept, which includes differing types of
convenience, reliability, services portfolio, and critically, the staff
delivering the service.
The study showed that increased use of service
quality and professional behaviors (such as formal greetings) improved customer
satisfaction and reduced customer attrition. This is well documented in a study
by Leeds (1992), who documented that approximately 40 percent of customers
switched banks because of what they considered to be poor service. Leeds
further argued that nearly three-quarters of the banking customers mentioned
teller courtesy as a prime consideration in choosing a bank.
Several studies are conducted in this setting
regarding the customer satisfaction. In those studies, the contradiction occurs
in variables that affect the Customer satisfaction. In some studies, price and
variety of product/services are major factors affecting the customer
satisfaction with some other. While in some other studies there is an inverse
finding that there is no possibility to differentiate their price and services,
thereby they have less or no impact in Customer satisfaction.