Sei sulla pagina 1di 96

SERVICE QUALITY PERCEPTION OF CUSTOMERS

A STUDY UNDERTAKEN AT

INDIAN OVERSEAS BANK, PUTHENCAVU

Project report submitted in partial fulfillment of the requirements for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

2007-2009

of Mahatma Gandhi University Course Code: CC 435

Submitted By

SMITHA ANNA JACOB Reg. No. 83645

Under the guidance of

DR. ROSHNA VARGHESE Assistant Professor Department of MBA

DR. ROSHNA VARGHESE Assistant Professor Department of MBA SAINTGITS COLLEGE OF ENGINEERING DEPARTMENT OF MBA (SIM)

SAINTGITS COLLEGE OF ENGINEERING DEPARTMENT OF MBA (SIM) KOTTUKULAM HILLS, PATHAMUTTAM P.O,KOTTAYAM-686 532 (Affiliated to Mahatma Gandhi University Approved by AICTE)

[i]

SAINTGITS COLLEGE OF ENGINEERING Department of MBA (SIM ) (Approved by AICTE and Affiliated to

SAINTGITS COLLEGE OF ENGINEERING

Department of MBA (SIM)

(Approved by AICTE and Affiliated to Mahatma Gandhi University)

KOTTUKULAM HILLS, PATHAMUTTOM P.O.

KOTTAYAM-686532

Tel. / Fax No.91-481-2430349, 2436169, 2436170, 2435960

E-mail:saintgitsengg@sify.com

CERTIFICATE

This is to certify that the project work titled, “Service Quality Perception of Customers

A Study undertaken at Indian overseas Bank”, is a bonafide record work done by

Ms.

Smitha

Anna

Jacob,

fourth

semester

MBA

student

of

Saintgits

College

of

Engineering, Department of MBA(SIM), submitted in partial fulfillment for the award of

the Master Degree in Business Administration of Mahatma Gandhi University, Kottayam,

Kerala.

Dr. Roshna Varghese

Dr. (Col.) P.S. James

(Faculty Guide)

(Head of the Institution)

Date:

Place: Pathamuttom

Examiner I

Examiner II

Signature

Signature

Name

Name

Date

Date

DECLARATION

I undersigned hereby do declare that the project report entitled

Service Quality

Perception of Customers A study undertaken at Indian Overseas Bank” prepared

and submitted in partial fulfillment of the requirements of MBA Course, awarded by M.G

University, Kottayam, is my original work and not submitted for award of any other

degree are diploma and the work has not been published in any journal or magazine.

Place: Pathamuttom Date:

[iii]

Smitha Anna Jacob

ACKNOWLEDGEMENT

I would like to take this opportunity to express my gratitude to Saintgits Institute of

Management for guiding me in the right decision to take this project.

I am also grateful to Dr. ( Col.) P. S. James Dean, Saintgits Institute of Management for

helping me to do this project and guiding me in the right direction.

I extend my sincere thanks to Mr. K.G. Bhuvanendran Branch Manager, Indian Overseas

Bank (IOB), Puthencavu, my external project guide who provided whole hearted support

and guidance throughout the project. I thank him for all the assistance and cooperation.

I also thank all the employees of IOB, for providing me an opportunity and valuable

guidance and giving time from their busy schedule.

I have great pleasure to express my sincere thanks and indebtedness to my internal project

guide Dr. Roshna Varghese for her invaluable guidance and encouragement. She has

guided me through each phase of the project helping me to rectify and take corrective

actions wherever necessary.

I also thank all the faculty members of Saintgits Institute of Management who have helped

me to be on the right track and to build a deeper understanding on the topic and for the

successful completion of my project.

I also thank my family, friends and all those who directly and indirectly helped me in this

endeavour.

[iv]

Smitha Anna Jacob

CONTENTS

Chapter List of Tables

Title

Page No.

List of Figures

Executive Summary

Chapter 1

Introduction

1-5

1.1 Introduction

1

1.2 Statement of the Problem

2

1.3 Objectives of the study

3

1.4 Significance of the study

4

1.5 Chapter Scheme

5

Chapter 2

Industry and Company Profile

6-15

2.1 Industry Profile

6

2.2 Company Profile

11

Chapter 3

Conceptual Framework

16-24

3.1 Theoretical Framework

16

3.2 Literature Review

21

Chapter 4

Research Methodology

25-29

4.1 Introduction

25

4.2 Hypotheses of the study

25

4.3 Sampling Procedure

26

4.4 Data Collection

27

4.5 Variables of Interest

28

4 .6 Techniques of Data Analysis

28

4.7 Duration of the study

28

4.8 Limitations of the study

29

[vi]

Chapter

Title

Page No.

Chapter 5

Service Quality Perception - Analysis

30-77

5.1 Customer Profile

31

5.2 Service Quality Parameters

37

5.3 Overall Customer Perception

59

5.4 Factors Influencing Service Quality

61

5 .5 Hypothesis Testing

69

i. ANOVA: Job vs. Satisfaction Level

ii. Independent Sample t- test: Gender vs. Satisfaction Level

iii. ANOVA: Education vs. Satisfaction Level

iv. ANOVA: Age vs. Satisfaction Level

Chapter 6

Findings, Suggestions and Conclusion

78-85

6.1 Findings of the study

78

6.2 Suggestions of the study

82

6.3 Conclusion

84

Bibliography

86

Appendix

Questionnaire

[vii]

Table No

LIST OF TABLES

Title

Page No.

5.1 Age wise classification of Respondents

31

5.2 Gender wise classification of Respondents

32

5.3 Job wise classification of Respondents

33

5.4 Education wise classification of Respondents

35

5.5 Banking Duration of Customers

36

5.6 Income wise classification of Respondents

37

5.7 Exteriors of the bank is visually appealing

39

5.8 Interiors of the Bank

40

5.9 Appearance of Employees

41

5.10 Spacious Interiors

42

5.11 Error free service

43

5.12 Confidentiality in Transactions

45

5.13 Bank Informs Customers

46

5.14 Employees serve customers

47

5.15 Employees‘ knowledge

49

5.16 Employees‘ Politeness

50

5.17 Relationship between Employees and Customers

51

5.18 Employees‘ Expertise and Knowledge Level

52

5.19 Bank‘s Trustworthiness

54

5.20 Queuing time in bank

55

5.21 Timeliness of banking services

57

5.22 Helping mentality of Employees

58

5.23 Individualized attention of Employees

59

5.24 Overall Customer Perception

60

[viii]

Table No

Title

Page No.

5.25 Tangibility Parameters

62

5.26 Reliability Parameters

64

5.27 Responsiveness Parameters

65

5.28 Assurance Parameters

66

5.29 Empathy Parameters

67

5.30 Overall Service Quality Factors

68

5.31 Descriptive Statistics: Job Profile vs Satisfaction Level

71

5.32 ANOVA Result: Job profile vs. Satisfaction Level

72

5.33 Independent sample t-test: Gender vs. Satisfaction Level

73

5.34 Descriptive Statistics : Education Profile vs. Satisfaction Level

74

5.35 ANOVA Results: Education Profile vs. Satisfaction Level

75

5.36 Descriptive Statistics: Age Profile vs. Satisfaction Level

76

5.37 ANOVA Results: Education Profile vs. Satisfaction Level

77

[ix]

LIST OF FIGURES

Figure No

Title

Page No.

5.1 Age wise classification of Respondents

31

5.2 Gender wise classification of Respondents

32

5.3 Job wise classification of Respondents

33

5.4 Education wise classification of Respondents

35

5.5 Banking Duration of Customers

36

5.6 Income wise classification of Respondents

37

5.7 Exteriors of the bank is visually appealing

39

5.8 Interiors of the Bank

40

5.9 Appearance of Employees

41

5.10 Spacious Interiors

42

5.11 Error free service

43

5.12 Confidentiality in Transactions

45

5.13 Bank Informs Customers

46

5.14 Employees serve customers

47

5.15 Employees‘ knowledge

49

5.16 Employees‘ Politeness

50

5.17 Relationship between Employees and Customers

51

5.18 Employees‘ Expertise and Knowledge Level

52

5.19 Bank‘s Trustworthiness

54

5.20 Queuing Time in Bank

55

5.21 Timeliness of banking services

57

5.22 Helping mentality of Employees‘

58

5.23 Individualized attention of Employees

59

5.24 Overall Customer Perception

60

[x]

EXECUTIVE SUMMARY

The banks are the trusted place of customers and have come across many changes in their

functioning. There is a high degree of competition among the banks. In this regard, service

quality plays an important role. The banks should bring changes in their functioning.

Customer satisfaction is crucial for the future of any banking organisation.

The report is based on the customer perception on service quality. It was conducted for

Indian Overseas Bank, Puthencavu during the month June and July. The main objective of

the study was to identify the satisfaction level of customers on the service quality delivered

by the bank. The study was based on SERVQUAL model, a popular service quality model

that has been extensively applied. This model consists of 5 main parameters. They are

tangibility, responsiveness, reliability, assurance and empathy.

The research is

mainly based

on the primary data collected through scientifically

developed questionnaires. The questionnaire was framed on the basis of five dimensions of

SERVQUAL model. The questionnaire has been personally administered on a sample size

of 60. The sample was selected through random sampling. The collected data were

quantified and the customers‘ perception on service quality was assessed. For analysing

the data, tools such as t-test and ANOVA were used.

From the study, it was found out that the majority of the customers of the bank regards that

the service quality of the organization meets their expectations. They are satisfied with the

quality

of

service

offered

to

them.

Customers

are

very

much

satisfied

with

the

responsiveness expressed by the organization among the all service quality factors.

[xi]

CHAPTER 1 INTRODUCTION

1.1

Introduction

Service quality is a concept that has aroused considerable interest and debate in the

research literature because of the difficulties in both defining it and measuring it with no

overall consensus emerging on either. Service quality can be defined as the difference

between customer expectations of service and perceived service. If expectations are greater

than performance, then perceived quality is less than satisfactory and hence customer

dissatisfaction occurs (Parasuraman et al., 1985; Lewis and Mitchell, 1990).

Banking operations are becoming increasingly customer dictated. The demand for 'banking

supermalls' offering one-stop integrated financial services is well on the rise. The ability of

banks to offer clients access to several markets for different classes of financial instruments

has become a valuable competitive edge. With the phenomenal increase in the country's

population and the increased demand for banking services; speed, service quality and

customer satisfaction are going to be key differentiators for each bank's future success.

Thus it is imperative for banks to get useful feedback on their actual response time and

customer service quality aspects of retail banking, which in turn will help them take

positive steps to maintain a competitive edge.

Satisfied customers are central to optimal performance and financial returns. In many

places in the world, business organisations have been elevating the role of the customer to

that of a key stakeholder over the past twenty years. Customers are viewed as a group

whose satisfaction with the enterprise must be incorporated in strategic planning efforts.

Forward-looking companies are finding value in directly measuring and tracking customer

satisfaction (CS) as an important strategic success indicator.

[xii]

With better understanding of customers' perceptions, companies can determine the actions

required to meet the customers' needs. They can identify their own strengths and

weaknesses, where they stand in comparison to their competitors, chart out path future

progress and improvement. Customer satisfaction measurement helps to promote an

increased focus on customer outcomes and stimulate improvements in the work practices

and processes used within the company.

This study is an attempt to determine the customers‘ perception on the service quality

delivered by Indian Overseas bank, Puthencavu.

1.2 Statement of the Problem

The banks are the trusted places of the customers, and have come across many changes in

their functioning. There is a high degree of competition among the banks. In this regard,

service quality and customer satisfaction plays an important role. As a result companies

have moved from a product-centric to a customer centric position. Retention is a major

challenge, as customers can easily switch from one service provider to another at low cost

(Khalifa and Liu 2003). Considering the high costs of acquiring new customers, it is very

important to study the determinants of customer satisfaction (Van Riel, Liljander &

Jurriens 2001).

There can be a variation in the customer satisfaction level based on the demographic

factors such as gender, age, profession etc. The satisfaction of customers belonging to

different groups is very vital for the firm as it reflects their business. Thus the study of

relevance between satisfaction levels and demographic factors is very much relevant to the

organisation.

[2]

Better service quality typically can help to get higher market share and better returns. It is

desirable for service providers to uncover what attributes consumers utilized in their

assessment of overall service quality and satisfaction and which attributes are more

important.

All

five

dimensions

of

service

quality,

being

tangibles,

reliability,

responsiveness, assurance and empathy are effective in understanding the perception of the

customer regarding the service quality delivered by the firm. The satisfaction level of

customers can be determined from their response on the questionnaire regarding five

parameters of service quality. For credibility, the response was tested with valid statistical

tools such as t-test and ANOVA.

In a nut shell the awareness of service quality perception about the bank will help the bank

to

Control and improve performance on the service.

Give proper attention to customer needs.

Have the competitive advantage of better service quality over the competitors.

Attract new customers and retain existing customers.

1.3

Objectives of the Study

The main objectives of the study are

To study and analyse the performance of the organisation on the basis of the service

quality dimensions.

To understand about the overall customer perception on the service quality of the

organisation

To analyse the influence of demographic factors on service quality

[3]

1.4

Significance of the Study

Service quality can be defined as the difference between customer expectations of service

and perceived service. Since expectation serve as a benchmark to gauge the service level of

firms, the delivery of services that exceed customer expectations is one strategy that can

give a firm a competitive advantage. Therefore, it would seem beneficial for firms in a

dynamic economic environment like India, to have a measurement scale to examine its

service quality.

The services sector has been at the forefront of the rapid growth of the Indian economy,

contributing nearly 63 per cent of the GDP in 2007-08. The sector has come to play an

increasingly dominant role in the economy accounting for 59.6 per cent of the overall

average growth in GDP in the last eight years between 2000-01 and 2007-08. The prospects

for growth in the Indian services sector over the next year continues to be robust, according

to a survey by KPMG, conducted across the BRIC (Brazil, Russia, India and China)

countries in spring 2009. The survey revealed that 31.3 per cent Indian companies saw their

activity levels improving. Around 37 per cent forecast new order growth in one year‘s time,

compared with 16 per cent that anticipate a fall. Trade, transportation, financial services

and software services are the key services of the services sector.

The banking sector of India plays a significant role in the economic development of the

country. The size and composition of banking transactions mirror the economic happenings

in the country (Vaish, 1978). The banking system in India is the most extensive. The total

asset value of the entire banking sector in India is nearly US$ 270 billion. The total

deposits are nearly US$ 220 billion. Banking sector in India has been transformed

completely. Presently the latest inclusions such as Internet banking and Core banking have

made banking operations more users friendly and easy.

[4]

Only little has been done towards on understanding about the satisfaction level of

customers on the service hold from their bankers. This project is undertaken to assess the

customer perception of the service quality delivered by the bank with respect to each of the

service dimension in the SERVQUAL model.

1.5 Chapter Scheme

This report consists of 6 chapters.

Chapter 1

Introduction

Chapter 2

Industry and Company Profile

Chapter 3

Conceptual Framework

Chapter 4

Research Methodology

Chapter 5

Service Quality Perception - Analysis

Chapter 6

Findings, Suggestions and Conclusion

[5]

CHAPTER 2 INDUSTRY AND COMPANY PROFILE

This chapter will have details about the banking industry and Indian Overseas Bank inorder

to have a clear idea on the industry and the company where this project is conducted. The

chapter is divided in to two sections

2.1 Industry Profile

2.2 Company Profile

2.1 Industry Profile

Worldwide assets of the largest 1,000 banks grew 16.3 per cent in 2006/2007 to reach a

record $74.2 trillion. This follows a 5.4 per cent increase in the previous year. EU banks

held the largest share, 53 per cent, up from 43 per cent a decade earlier. The growth in

Europe‘s share was mostly at the expense of Japanese banks, whose share more than halved

during this period from 21 per cent to 10 per cent. The share of US banks remained

relatively stable at around 14 per cent. Most of the remainder was from other Asian and

European countries.

The United States has by far the most banks in the world, both in terms of institutions

(7,540 at the end of 2005) and branches (75,000). This is an indicator of the geography and

regulatory structure of the USA, resulting in a large number of small to medium-sized

institutions in its banking system. Japan had 129 banks and 12,000 branches. In 2004,

Germany, France, and Italy each had more than 30,000 branchesmore than double the

15,000 branches in the U K.

Banking in India originated in the last decades of the 18th century. The oldest bank in

existence in India is the State Bank of India, a government-owned bank that traces its

[6]

origins back to June 1806 and that is the largest commercial bank in the country. Central

banking is the responsibility of the Reserve Bank of India, which in 1935 formally took

over these responsibilities from the then Imperial Bank of India, relegating it to commercial

banking functions. After India's independence in 1947, the Reserve Bank was nationalized

and given broader powers. In 1969 the government nationalized the 14 largest commercial

banks; the government nationalized the six next largest in 1980.

Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that

is with the Government of India holding a stake), 31 private banks (these do not have

government stake; they may be publicly listed and traded on stock exchanges) and 38

foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs.

According to a report by ICRA Limited, a rating agency, the public sector banks hold over

75 per cent of total assets of the banking industry, with the private and foreign banks

holding 18.2 per cent and 6.5 per cent respectively.

In

the early 1990s, the then

Narsimha Rao government embarked

on

a

policy of

liberalization, licensing a small number of private banks. These came to be known as New

Generation tech-savvy banks, and included Global Trust Bank (the first of such new

generation banks to be set up), which later amalgamated with Oriental Bank of Commerce,

Axis Bank, ICICI Bank and HDFC Bank. This move, along with the rapid growth in the

economy of India, revitalized the banking sector in India, which has seen rapid growth with

strong contribution from all the three sectors of banks, namely, government banks, private

banks and foreign banks.

The next stage for the Indian banking has been setup with the proposed relaxation in the

norms for Foreign Direct Investment, where all Foreign Investors in banks may be given

voting rights which could exceed the present cap of 10 per cent, at present it has gone up to

[7]

49 per cent with some restrictions.

Currently, banking in India is generally fairly mature in terms of supply, product range and

reach-even though reach in rural India still remains a challenge for the private sector and

foreign banks. In terms of quality of assets and capital adequacy, Indian banks are

considered to have clean, strong and transparent balance sheets relative to other banks in

comparable economies in its region. The Reserve Bank of India is an autonomous body,

with minimal pressure from the government. The stated policy of the Bank on the Indian

Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been

true.

With the growth in the Indian economy expected to be strong for quite some time-

especially in its services sector-the demand for banking services, especially retail banking

mortgages and investment services are expected to be strong. In recent years critics have

charged that the non-government owned banks are too aggressive in their loan recovery

efforts

in

connection

with

housing,

vehicle

and

personal

loans.

http://en.wikipedia.org/wiki/Banking_in_India)

(Source:

Economic Backdrop and Banking Environment

The Indian economy, which is one of the fastest growing economies in the world, is poised

to maintain its leading position, despite the global financial crisis and economic slowdown.

India has managed to beat the global financial turmoil due to sound regulation, prudent

financial supervision and proactive policies.

India‘s growth is driven predominantly by domestic consumption and investment and the

Indian banking system has no direct exposure to the US sub-prime mortgage assets or to

the failed institutions. Thus, as also projected by the IMF, India will remain among the

[8]

fastest growing economies in the world. In the first half of the year that is 2008 high

inflation and spiraling crude oil prices were the major concerns, but the focus in the second

half shifted to sustaining growth and maintaining stability.

Real GDP growth is expected to moderate from 9.0 per cent in 2007-08 to 6.5 per cent - 6.7

per cent in 2008-2009. Agriculture and allied sectors are likely to grow by around 2.6 per

cent in 2008-09, which is only marginally lower than the average growth of 2.9 per cent

during 2000-01 to 2007-08, mainly due to stagnant food grains production.

Inflation based on WPI rose from 7.7 per cent at end-March 2008 to a high of 12.9 per cent

on 2 nd August 2008, reflecting high international crude oil and commodity prices coupled

with increase in price of manufactured products and primary articles. After remaining in

the range of 10-12 per cent between June and October 2008, inflation began to ease from

November 2008 onwards to touch 0.26 per cent by 28 th March 2009, mainly reflecting the

decline in prices of crude oil, metals, minerals and manufactured goods.

The focus of RBI‘s monetary and credit policy during the year 2008 was to control

inflation, support growth, maintain financial market stability, ensure comfortable liquidity

in the system to meet the required credit demand and limit the contagion from the ongoing

global turmoil. During the 2008-09, while the Bank rate was kept unchanged at 6 per cent,

Reverse REPO and more particularly the Repo rate and CRR were changed on a no. of

occasions. When inflation started rising due to increase in international commodity and oil

prices, the Repo rate was hiked from 7.75 per cent in April 2008 to a high of 9 per cent in

July 2008 and CRR was hiked from 7.50 per cent in March 2008 to 9 per cent in August

2008. Subsequently, when growth stalled and inflation started coming down due to drop in

crude oil and commodity prices, the Repo rate was cut five times to 5 per cent, the Reverse

Repo rate was reduced three times to 3.50 per cent and CRR was cut four times to 5.0 per

cent, between October 2008 and March 2009.

[9]

Deposit and lending rates of banks also moved more or less in tandem with key policy rates

as interest rates initially firmed up during 2008-09 up to October 2008, and subsequently

started declining after November 2008. The capital outflows and slowdown in economic

activity, particularly in the second half of the year, impacted money supply growth in the

system (M3) and saw moderation in the business of all scheduled commercial banks. While

growth in money supply (M3) moderated to 18.6 per cent in 2008-09 from 21.1 per cent a

year ago, deposit and credit growth of ASCB moderated to 19.8 per cent and 17.3 per cent

respectively in 2008-09 from 22.4 per cent and 22.3 per cent in 2007-08.

A stable banking and financial sector, falling inflation and prompted co-ordinated policy

action have helped India weather the crisis. On the upside, domestic demand especially

from rural areas and Government invested activity in the economy will help up the growth

momentum, making India the second fastest growing economy in the world.

(Source: State Bank of India Annual Report 2007-2008)

Trends in Banking Industry

With the advancement of technology, banking sector has become more easy, fast, accurate

and also time saving. ATMs, Mobile Banking, SMS Banking and Net Banking are only the

tip of an ice-berg. With all these devices and systems, there is a complete freedom to

experience.

Investments aimed at managing risk and regulation issues with banks gaining the ability to

identify, manage, and allocate risk exposures on across the enterprise to priorities business

decisions.

Developing

a portfolio

of shared

service

alliances

focused

on

providing

integrated cross-channel access and new range of services. In India, investments in

technologies

by

financial

services

organisations

are

increasing,

and

new

initiatives

emerging, albeit at a basic level .However, in the long run, it is evident that technology

[10]

investments in transaction and process automation will cease to be a differentiator. Banks

have traditionally performed the role of financial intermediaries.

As banks face the mutually interdependent forces of competition, regulation, technology,

and

customer

expectations,

a

picturesque

setting

for

the

tremendous

upheaval

and

opportunity emerges. This interdependency, in turn, is built upon mutually dependent

technological trends. Increase processing power: With increasing power of processing, the

cost of processing transactions has come down significantly. Radical advances that came

about in computing power in the latter half of the 90s has egged on banks to centralize their

processing operations, thus enabling multiple points of interaction with customers, paving

way to advancements like any-branch banking.

Increase in flexibility in defining business standards: Business standards are getting

redefined in tune with the changing technology standards. While a number of such

standards are in the process of being developed for the banking and financial services

industry, an industry wide consensus is yet to emerge.

Increase in modularity of software: Software is increasingly being built like 'Lego' blocks

structure i.e., applications created by constructing and combining well-defined modules.

2.2 Company Profile

Indian Overseas Bank (IOB; established in 1937) is a major bank based in Chennai

(Madras), with 1,400 domestic branches and six branches overseas. Indian Overseas Bank

has an ISO certified inhouse Information Technology department, which has developed the

software that 900 branches use to provide online banking to customers; the bank has a

target to expand online banking to 1200 branches by the end of financial year 2007-08.

IOB also has a network of about 500 ATMs all over India and IOB's International VISA

Debit Card is accepted at all ATMs belonging to the Cash Tree and NFS networks. IOB

offers internet Banking (E-See Banking) and is one of the banks that the Govt. of India has

[11]

approved for online payment of taxes.

IOB had the distinction of simultaneously commencing operations in three branches at

Karaikudi, Chennai, and Yangon (Myanmar). Since IOB aimed to encourage overseas

banking and foreign exchange operations, it soon opened its branches in Penang and

Singapore.

History

1937: Shri.M.Ct.M. Chidambaram Chettyar establishes the Indian Overseas Bank (IOB) to

encourage

overseas

banking

and

foreign

exchange

operations.

IOB

started

up

simultaneously at three branches, one each in Karaikudi, Madras (Chennai) and Rangoon

(Yangon). It then quickly opened a branch in Penang and another in Singapore. The bank

served the Nattukottai Chettiars, who were a mercantile class that at the time had spread

from Chettinad in Tamil Nadu state to Ceylon (Sri Lanka), Burma (Myanmar), Malaya,

Singapore, Java, Sumatra, and Saigon. As a result, from the beginning IOB specialized in

foreign exchange and overseas banking.

1960s: The banking sector in India was consolidating by the merger of weak private sector

banks with the stronger ones; IOB absorbed five banks, including Kulitali Bank (est. 1933).

1969:

The

Government

of

India

nationalized

IOB.

At

one

point,

probably

before

nationalization,

IOB

had

twenty

of

its

eighty

branches

located

overseas.

After

nationalization it, like all the nationalized banks, turned inward, emphasizing the opening

of branches in rural India.

1988-89: IOB acquired Bank of Tamil Nadu in a rescue.

2000: IOB engaged in an initial public offering (IPO) that brought the government's share

in the bank's equity down to 75 per cent.

Major Milestones

[12]

Indian Overseas Bank has an ISO certified in-house Information Technology department,

which has developed the software that 900 branches use to provide online banking to

customers; the bank has a target to expand online banking to 1200 branches by the end of

financial year 2007-08. IOB also has a network of about 500 ATMs all over India and

IOB's International VISA Debit Card is accepted at all ATMs belonging to the Cash Tree

and NFS networks. IOB offers internet Banking (E-See Banking) and is one of the banks

that the Govt. of India has approved for online payment of taxes.

IOB was the first bank to venture into consumer credit, as it introduced the popular

Personal Loan scheme. In 1964, the Bank started computerization in the areas of inter-

branch reconciliation and provident fund accounts. Indian Overseas Bank was one of the 14

major banks which were nationalized in 1969. In 1979, IOB opened a Foreign Currency

Banking Unit in the free trade zone in Colombo.

In the year 2000, Indian Overseas Band undertook an initial public offering (IPO) that

brought the government's share in the bank's equity down to 75 per cent. The equity shares

of IOB are listed in the Madras Stock Exchange (Regional), Bombay Stock Exchange, and

National Stock Exchange of India Ltd., Mumbai. Since its inception, IOB has absorbed

various banks including the latest Bharat Overseas Bank in 2007.

The Bank's IT department has developed software, which is used by its 1200 branches to

provide online banking to customers. Indian Overseas Bank also has a network of about

500 ATMs throughout India. Its International VISA Debit Card is accepted at all ATMs

belonging to the Cash Tree and NFS networks. IOB also offers Internet Banking; it's one of

the banks that the Govt. of India has approved for online payment of taxes.

Indian Overseas Bank offers investment options like Mutual Funds and Shares. It provides

a wide range of consumer and commercial banking services, including Savings Account,

Current Account, Depositary Services, VISA Cards, Credit Cards, Debit Cards, Online

[13]

Banking, Any Branch Banking, Home Loans, NRI Account, Agricultural Loans, Payment

of Bills / Taxes, Provident Fund Scheme, Forex Collection Services, Retail Loans, etc.

IOB has been committed to and involved in various social causes, the most prominent

being women empowerment - the Sakthi IOB Chidambaram Chettiar Memorial Trust and

IOB's Promotion of the Agricultural Seed Bank.

International expansion

1937-38:

IOB was international from its inception with branches in Rangoon,

1941:

Penang, and Singapore. IOB opened a branch in Ceylon

1946:

IOB opened a branch in Bangkok and re-opened others.

1947:

United Commercial Bank opened a branch in Malaya.

1948:

IOB opened a branch in Bangkok.

1949:

The Burmese government nationalized IOB‘s branch in Rangoon.

1963:

IOB, Indian Bank and United Commercial Bank established United

Asian Bank Berhad in Malaysia. (Indian Bank had been operating in

Malaysia since 1941 and United Commercial Bank Limited had been

operating there since 1948.) The banks set up United Asian to

comply with the Banking Law in Malaysia, which prohibited foreign

government banks from operating in the country. Also, IOB and six

Indian private banks established Bharat Overseas Bank as a Chennai-

based private bank to take over IOB's Bangkok branch.

1973:

IOB opened a branch in Seoul.

1977:

IOB opened a Foreign Currency Banking Unit in Colombo, Sri

Lanka.

1992: Bank of Commerce (BOC), a Malaysian bank, acquired United Asian

Bank (UAB).

[14]

1999:

Bank of Commerce (BOC) merged with Bank Bumiputra Malaysia to

2005:

form Bumiputra-Commerce Bank (BCB) Berhad. BCB integrates with CIMB.

2007:

IOB takes over Bharat Overseas Bank.

The banking sector plays a significant role in the economic development of the country.

The size and composition of banking transactions mirror the economic happenings in the

country. Studies have shown that the employment elasticity (to GDP growth) in the

services sector is higher than that in both agriculture and manufacturing sectors. Indian

Overseas bank plays an important role in the economic development of the country

[15]

CHAPTER 3

CONCEPTUAL FRAMEWORK

This chapter will have a review on literature and a theoretical background related to the

research problem. In this chapter the concepts of service quality, service quality dimensions

and concepts, formations of customer satisfaction, are described in order to give a clear

idea about the research area. This chapter is divided into two sections:

3.1 Theoretical Framework

3.2 Literature Review

3.1

Theoretical Framework

3.1.1.

Service Quality

Service quality is determined by the differences between customer‘s expectations of

services provider‘s performance and their evaluation of the services they received. Service

quality can be defined as ―the difference between customers‘ expectations for service

performance prior to the service encounter and their perceptions of the service received‖.

Several studies have been conducted to identify traditional service quality dimensions that

contribute most significantly to relevant quality assessments in the traditional service

environment (e.g. Parasuraman et al., 1985, 1988). Identification of the determinants of

service quality is necessary in order to be able to specify measure, control and improve

customer perceived service quality.

Parasuraman et al.‘s (1985) identified 10 detailed determinant of service quality through

focus group studies: They are Tangibles, reliability, responsiveness, communication,

access, competence, courtesy, credibility, security, understanding/Knowledge of customer.

Later these ten dimensions were further purified and developed five dimensions-tangibles,

[16]

reliability, responsiveness, assurance and empathy to measure service quality, SERVQUAL

(Parasuraman et al.1988).

Tangibles refer to physical facilities, equipment, and appearance of personnel. Reliability

means ability to perform the promised service dependency and accurately. Responsiveness

means willingness to help customers and provide prompt service. Assurance indicates

knowledge and courtesy of employees and their ability to inspire trust confidence. Empathy

refers to caring, individualized attention the firm provides its customers.

Measuring service quality in banking sector

Measuring Quality in the Services Sector and in particular in the Banking sector is more

difficult than measuring the quality of manufactured goods. This is mainly due to the

following:

i.

The

Services

Sector

as

a

whole

is

very

heterogeneous

and

what

is

very

heterogeneous and what may hold true for one service may not hold true for

another service sector. For example, the nature of banking services is very different

from, the nature of services provided by an airline or a hotel. Even within

banking

there

are a variety of dissimilar services like retail banking,

commercial

banking,

investment banking etc. This heterogeneity makes

standardized

service

quality

measurement very difficult. Most manufacturing

companies, on the other hand, have

been able to adopt standard measures to

improve the quality of goods produced.

ii. Services are intangible in nature and, unlike in the case of goods, there is no

‗real‘ product that the customer takes home. This is true of banking services

and most other financial services where the service offered is only what the

customer experiences fleetingly. Some service sectors like the hotel industry,

[17]

the tourism industry, etc. provide services that may be considered somewhat

more tangible.

iii

There is no scope for inspection before the service delivered. All services have

a

here-and-now attribute that makes standardised quality testing and control procedures

followed by manufacturing sector difficult to adopt. Unlike a good manufacturer,

a

bank

cannot inspect its services and products to weed out unsatisfactory

presented to the customer

ones

before

they

are

Banking Services: Technical Quality and Functional Quality

Service Quality can be thought of as having two dimensions: Technical quality and

Functional quality. Technical Quality refers to ‗what‘ the bank gives the customer.

Functional Quality refers to ‗How‘ the bank‘s services are provided to the customer.

Technical Quality: To ensure that it delivers technical quality , the bank must ensure that

Its products and services are closely aligned with customer needs.

Customers are adequately informed about the bank‘s products and services

The bank‘s staff, especially front-line staff , have thorough knowledge of the

bank‘s products and services

The bank‘s branch has a suitable mix of people with experience in banking,

finance,

accounting and legal aspects, s9o a

s

to

ensure that the

branch is

adequately equipped to deliver technical quality

The bank‘s staff has been adequately communicate with customer queries

The bank‘s staff is able to effectively communicate with customers –staff should

also be able to converse in the local language, if required.

The bank‘s staff is able to provide professional advice to its customers

The bank‘s staff, especially front line staff, has been adequately trained to deal

with ‗difficult‘ customers and with customer complaints.

[18]

Handling of customer grievances is the overall responsibility of a senior official

who is not directly involved with the routine branch banking operations.

Functional Quality: Functional quality is concerned with how the service is provided to the

bank‘s customer. A few elements that affect a banking service‘s functional quality include:

Attitude of the bank‘s staff members

Importance given to the bank‘s customers over routine work.

Perceived credibility of the bank‘s officials to customer queries

Ambience at the bank

Image of the bank as a whole

A bank must be equipped to deliver both Technical and Functional quality thus ensuring

that it provides its customers with total quality service. Relevant qualitative determinants

could be set up for a few technical and functional quality parameters, but most of these

remain difficult to quantify. A bank could set up appropriate policies and procedures, for

example recruitment policies, to create enabling conditions for providing technical and

functional quality to its customers. The ultimate focus should firmly be on providing quick

and cost-effective quality banking services.

3.1.2

SERVQUAL

The SERVQUAL scale is a principal instrument in the services marketing literature for

assessing quality (Parasuraman et al., 1991; Parasuraman et al., 1988). This instrument has

been widely utilized by both managers and academics to assess customer perceptions of

service quality for a variety of services (e.g. banks, credit card companies, repair and

maintenance companies, and long-distance telephone companies). Based on Parasuraman et

al.‘s (1988) conceptualization of service quality the original SERVQUAL instrument

[19]

included two 22-item sections that intended to measure (a) customer expectations for

various aspects of service quality, and (b) customer perceptions of the service they actually

received from the focal service organisation. In short, the SERVQUAL instrument is based

on the gap theory and suggests that a consumer‘s perception of service quality is a function

of the difference between his/her expectations about the performance of a general class of

service providers and his/her assessment of the actual performance of a specific firm within

that class.

The results of the initial published application of the SERVQUAL instrument indicated that

five dimensions of service quality emerged across a variety of services. These dimensions

include tangibles, reliability, responsiveness, assurance, and empathy Tangibles are the

physical evidence of the service (e.g. physical facilities, appearance of personnel, or tools

or equipment used to provide the service), reliability involves consistency of performance

and dependability (i.e. a firm performs the service right the first time and honours its

promises), responsiveness concerns the willingness or readiness of employees to provide

service (e.g. timeliness of service), assurance corresponds to the knowledge and courtesy of

employees and their ability to inspire trust and confidence, and, finally, empathy pertains to

caring, individualized attention that a firm provides its customers.

Subsequent research conducted in a variety of settings (e.g. a dental school clinic, a

business school placement centre, a tire store, and an acute care hospital) suggests that the

five SERVQUAL dimensions may not be universal across all services, and that it is

probably unnecessary to administer the expectation items every time SERVQUAL is

administered (Babakus and Boller, 1992; Carman, 1990).

3.2 Literature Review

Service quality is a very important for a firm. Many studies have been conducted on how to

improve the service quality of a firm.

Inferences of some of such studies are summarised

[20]

in this section

Aldlaigan and Buttle (2002), based on the technical and functional service quality schema

proposed by Gronroos (1984), developed a scale to measure service quality perceptions of

bank customers. Their study resulted in SYSTRA-SQ, which consists of service system

quality, behavioural service quality, service transactional accuracy, and machine service

quality.

From the focus group interviews, Berry et al. (1985) identified ten determinants of service

quality.

Virtually all

comments

consumers

made

in

these

interviews

about

service

expectations, Priorities and experiences fall into one of these ten categories. These are

reliability,

responsiveness,

competence,

security, understanding and tangibles.

access,

courtesy,

communication,

credibility,

Brown, Churchill, and Peter (1993) argue that because the SERVQUAL scales "scores"

are really difference scores (perception scores minus expectation scores); problems of

reliability, discriminant validity, and variance restrictions exist. They showed that while

SERVQUAL had high reliability, a non-difference score rated higher in reliability. Their

findings also showed that the scale "failed to achieve discriminant validity from its

components", and the distribution of the SERVQUAL scores were non-normal.

Cronin and Taylor (1992), for instance, concluded that a psychometrically superior

assessment of service quality can be obtained through the SERVQUAL performance items

alone,

rather

than

the

Parasuraman et al. (1988).

expectationsperformance

methodology

originally

used

by

Darby and Karni (1973) defined "credence properties," (such as competence and security)

as properties or characteristics that consumers often find extremely difficult to evaluate

[21]

after their purchase. Therefore, PZB (1985) concluded that consumers typically rely on

experience properties when evaluating service quality.

Gronroos (1990) postulated six criteria of perceived good service quality: professionalism

and

skills;

attitudes

and

behaviour;

accessibility

and

flexibility;

reliability

and

trustworthiness;

recovery;

reputation

and

credibility

and

flexibility;

reliability

and

dimensions

Attentiveness/helpfulness,

responsiveness,

care,

Availability,

Reliability,

Access, Flexibility, Aesthetics, Cleanliness/tidiness, Comfort and Security.

Mukherjee et al. (2003), presented the development of a theoretical framework for

measuring the efficiency of banking services, taking into account physical and human

resources, service quality and performance. Banks delivering better service are found to

have better transformation of resource to performance, using superior service delivery as

the medium.

Nantel (2000) proposed an alternative measure of perceived service quality in retail

banking that comprises 31 items with six underlying key dimensions. These dimensions

are: effectiveness and assurance, access, price, tangibles, service portfolio and reliability.

Nelson (1974) defined "search properties" as properties that can be determined before

purchasing (such as credibility and tangibles), and "experience properties" as properties

that can be determined only after purchase or consumption.

Sureshchanda et al. (2003), focuses on investigating the critical factors of customer

perceived

service quality in

banks

of

a

developing

economy-

India. Customers in

developing economies, seem to keep the ‗technological factors‘ of services such as core

service and systemization of the service delivery as yard sticks in differentiating between

good and bad service, while the ‗human factors‘ seem to play a lesser role.

[22]

Teas (1993) questions SERVQUAL'S discriminant validity. He notes that the service

quality expectations concept may have serious discriminant validity short-comings which

can cause the "perceptions-minus-expectations" service quality measurement framework to

be "a potentially misleading indicator of customer perceptions of service quality" (p.33).

He notes that SERVQUAL's lack of discriminant validity results in a significant part of the

variance

in

its

expectations

scores

being

"misinterpretations" of the expectation questions.

determined

by

the

respondent's

Vriens (2000) developed an application for measuring retail banking service quality, which

consists of 28 attributes including four service quality dimensions such as: accessibility;

competence; accuracy and friendliness; and tangibles. The accuracy and friendliness

dimension turned out to be the most important factor out of four determining banking

preference, followed by competence, tangibles, and accessibility.

Walker (1990) suggested that the key determinants are product reliability, a quality

environment and delivery system that work together with good personal service-staff

attitude, knowledge and skills.

[23]

CHAPTER 4 RESEARCH METHODOLOGY

4.1

Introduction

Research can be defined as the process of gathering information for the purpose of

initiating, modifying or terminating a particular investment or group of investments.

Research design is the arrangement of conditions for collection and analysis of data in a

manner that aims to combine relevance to the research purpose with economy in procedure.

Research design is the conceptual structure within which research is conducted. It

constitutes the blueprint for collection, measurement and analysis of data. The overall

research design can be split into four parts:

i. The sampling design which deals with the method of selecting items to be observed

for the given study;

ii.

The

observational

design

which

relates

observations are to be made;

to

the

condition

under

which

the

iii. The statistical design which concerns the questions of how many items are to

be observed and how the information and data gathered are to be analysed; and

iv.

The

operational

design

which

deals

with

the

techniques

by

which

the

procedures specified in the sampling. Statistical and observational designs can

be carried out.

4.2 Hypotheses of the Study

The hypotheses that were formulated for the purpose of the study includes

H A1 : There is a significant difference in the satisfaction level of the customers based on

their job classification regarding the service quality offered by the organisation.

H A2 : There is a significant difference in the satisfaction level of the customers based on

[24]

their gender regarding the service quality offered by the organisation.

H A3 : There is a significant difference in the satisfaction level of the customers based on

their education regarding the service quality offered by the organisation.

H A4 : There is a significant difference in the satisfaction level of the customers based on

their age regarding the service quality offered by the organisation

4.3

Sampling Procedure

4.3.1

Universe

Universe refers to the set of objects to be studied. Examples of universe are population of a

city, number of workers in factory (Kothari, 2008). The universe for this study includes all

the customers of Indian Overseas Bank.

4.3.2 Sampling Unit

Sampling unit is a geographical unit or a social unit which the researcher selects for the

study. The sampling unit for this study is Indian Overseas Bank‘s branch at Puthencavu.

4.3.3 Sample Size

Sample size refers to the number of items to be selected from the universe to constitute a

sample. The sample size taken up for the study was 60 respondents to analyse and study the

customer perception regarding the service quality. The respondents include students,

professionals, self employees in government and private organisations, business people,

professionals and retired people.

4.3.4 Sampling Method

Convenience sampling method was used for selecting the respondents. When population

elements are selected for inclusion in the sample based on the ease of access, it is referred

[25]

as

convenience

sampling.

From

the

IOB

Puthencavu

branch,

interviewed with a structured questionnaire

4.4 Data Collection

60

customers

were

The study ‗Service Quality Perception of Customers – With special reference to Indian

Overseas Bank‘ was done based on the collection of primary and secondary data.

Primary Data

Primary research is original data collected for the problem at hand, usually at a significant

cost. The primary data were collected using questionnaire.

Questionnaire: Questionnaire is a structured technique for data collection that consists of a

series of questions, written or verbal, that a respondent answers. Questions can be scaled on

one of the four scales- nominal, ordinal, interval or ratio, depending on the nature of the

variable. Questions can be either close ended or open ended. An open-ended question

leaves it to the respondent to answer as he chooses. Close ended questions have two

categories

such as

Yes

product/brand.

Secondary data

or No. Rating/Ranking type questions

are

used to

rank

a

Secondary data is collecting and possibly processing data by people other than the

researcher in question. The secondary data was collected from books on equities, websites,

previous project reports, company brochures, journals and newspapers.

4.5 Variables of Interest

The specific population parameters which are of interest are

Service Quality Parameters: These include tangibility, responsiveness, reliability, assurance and empathy.

Demographic factors like Age group, education, gender and job of respondents

4.6 Techniques for Data Analysis

[26]

For data analysis, SPSS (Statistical Package for the Social Sciences) is used. SPSS can be

used to perform statistical tests like independent sample t-test, ANOVA and Chi-Square.

ANOVA and independent sample t-test are used in this project. The tests were performed

to check the relationship between the satisfaction levels of customers with different

parameters. Percentage analysis, standard mean is also used to estimate the perception of

customers regarding service quality delivered by the organisation

4.7 Duration of the study

The study was undertaken for a period of 60 days. The study was commenced on June 1,

2009. During the period the following steps were taken:

1. Objectives were set and questionnaire was finalized

2. Data were collected and recorded.

3. Data were analysed and interpreted.

4. Reports were generated.

4.8 Limitations of the study

The major barrier of the study was the shortage of time. The investigator had to spend lot

of manual hours to identify clients. There was restriction in accessing some of the

documents

and

manuals.

It

was

also

not

possible

to

go

detail

into

technical

and

infrastructural facilities for the services. Again, it was not possible to go into background

and personal details of customers of IOB. Also, another major barrier was the element of

bias that was present in the minds of both the customers and the employees.

[27]

CHAPTER 5 SERVICE QUALITY PERCEPTION - ANALYSIS

Service quality is so important that companies have gone to great efforts to evaluate and

keep records of service quality levels. It is essential to determine how to achieve high

service quality and how to communicate the benefits of service quality. The aim of this

study is involves the use of SERVQUAL instrument in order to ascertain any actual or

perceived gaps between the customer expectations and perceptions of service offered.

The sample size of the study was 60 and was collected through questionnaires. The

questionnaire mainly prepared to know the service quality perception of the customers

about Indian Overseas Bank (IOB). Convenience sampling method has been adopted for

selecting the samples. The respondents selected for the study purpose was the customers of

IOB. The analysis of the data will give an idea of the factors that leads to customer

satisfaction.

The analysis part is divided into five sections. They are

1. Customer Profile

2. Service Quality Parameters

3. Overall Customer Perception

4. Factors Influencing Service Quality

5. Hypotheses Testing

[28]

5.1

CUSTOMER PROFILE

Customer profile includes the demographic factors of the respondents like age, gender,

income, education and for how many years they have been banking with IOB.

5.1.1 Age Group of Respondents

The age group is an important factor that determines the investment of customers. The

following table and figure shows the age wise classification of respondents.

Table 5.1: Age wise classification of Respondents

Age Group

Number of Respondents

Percentage

Between 15 and 25

4

7

Between 25 and 40

46

77

Between 40 and 60

7

11

Greater than 60

3

5

Total

60

100

Figure5.1: Age wise classification of Respondents

60 100 Figure5.1: Age wise classification of Respondents Out respondents, respondents‘ that is 77per cent were

Out

respondents,

respondents‘ that is 77per cent were in the age group between 25 and 40 and the least was from the age group greater than 60that is only 5per cent. It can be inferred that majority of those who come to bank for transactions are youth.

5.1.2 Gender Profile of Respondents

The customers of the organisation fall in either gender. The banking sector is a sector

total majority of the

of

the

which is having participation from both the genders. The following table and figure shows

the gender wise classification of respondents

[29]

Table 5.2: Gender wise classification of respondents

Gender

Number of Respondents

Percentage

Male

31

53

Female

28

47

Total

60

100

Figure 5.2: Gender wise classification of respondents

100 Figure 5.2: Gender wise classification of respondents Among the respondents, 53 per cent were male

Among the respondents, 53 per cent were male and the remaining 47 per cent females.

Thus, it is evident that mostly male members of the family comes to bank for money

transactions.

5.1.3 Job Profile of Respondents

The satisfaction level of a person is very much influenced by the job of the person. The

occupation of the customers can be classified as business men, government employee,

private employee, retired and unemployed. The following table and figure shows the

occupation wise classification of respondents.

Table 5.3: Job wise classification of respondents

[30]

Occupation

No. of Respondents

Percentage

Business

11

18

Govt. Employee

7

12

Private Employee

28

47

Retired

2

3

Unemployed

12

20

Total

60

100

Figure 5.3: Job wise classification of respondents

60 100 Figure 5.3: Job wise classification of respondents From the sample size of 60 ,

From the sample size of 60, majority of the respondents‘ that is 47 per cent are non government employees, 20 per cent are housewives, 18 per cent are business people, 12 per cent govt. employees and the least that is 3 per cent is retired people. It can be inferred that from the sample, private employees are the majority of the customers for the organisation. The trend indicates that the private employees are more interested in saving their money in banks than other groups.

[31]

5.1.4 Education

Education profile of a person is a determinant of the person‘s satisfaction level. When a

person is highly qualified, his expectation on service quality is also very high. The

following table and figure shows the education wise classification of respondents.

Table 5.4: Education wise classification of Respondents

Education

No. Of Respondents

Percentage

Matriculate

8

13

Higher Secondary

12

20

Graduate

23

38

Post Graduate

16

27

Doctorate

1

2

Total

60

100

Figure 5.4: Education wise classification of Respondents

100 Figure 5.4: Education wise classification of Respondents From the respondents, 38 per cent were graduates,

From the respondents, 38 per cent were graduates, 27 per cent were post graduates, 20 per

cent were PDC holders, 13 per cent were SSLC and 2 per cent doctorate holders. Thus, the

majority of the IOB customers are graduates.

[32]

5.1.5 Banking Duration of Customers with IOB

The banking duration of the customers with IOB refers to the loyalty of the customers with

the organisation. The loyal customers will be doing business with the organisation for a

longer period. The following table and graph shows the customer classification based on

the number of years they have been banking with IOB.

Table 5.5: Banking Duration of Customers

No. of Years

No. Of Respondents

Percentage

Less than 1 year

4

7

Between 1 and 3 yrs

8

13

Between 3 and 5 yrs

16

27

Above 5 yrs

32

53

Total

60

100

Figure 5.5: Banking Duration of Customers

Out

of

60 100 Figure 5.5: Banking Duration of Customers Out of the 60 respondents, majority of them

the 60 respondents,

majority of them that is 53 per cent have been with banking with IOB for more than 5 years

and only 7 per cent were less than 1 year. It can be inferred that majority of the IOB

customers are long time customers.

[33]

5.1.6

Income

Annual income of a person is an influential factor for his investments. The customer‘s

pattern of investment can vary with the annual income he has. The following table and

figure shows the income wise classification of respondents.

Table 5.6: Income wise classification of Respondents

Income

No. Of Respondents

Percentage

Less than 1 Lakh

11

19

Between 1 and 5 Lakhs

23

39

Between 5 and 10 Lakhs

16

27

Above 10 Lakhs

9

15

Total

60

100

Figure 5.6: Income wise classification of Respondents

100 Figure 5.6: Income wise classification of Respondents Among the respondents, 39 per cent of the

Among the respondents, 39 per cent of the respondents‘ income was between 1 and 5

Lakhs, 27 per cent was between 5 and 10 Lakhs, 19 per cent was less than 1 Lakh and 15

per cent had an annual income above 10 Lakhs. It can be inferred that majority of the IOB

customers belongs to middle class

[34]

5.2

SERVICE QUALITY PARAMETERS

The measurement of service quality should take into account customer expectations of

service as well as perceptions of service. The service quality measurement model that has

been extensively applied in this project is SERVQUAL model. This model has five generic

dimensions or factors for measuring service quality. They are tangibles, reliability,

responsiveness, assurance and empathy.

5.2.1 Tangibility

The tangibility is an important dimension on which the service quality is rated. The

tangibility stands for the physical facilities, equipment and appearance of personnel. Thus

tangibility refers to the tangible experience that the customer receives from the service

provider. The customer perception on the service quality is dependent on the tangible

experience that he receives. The tangibility thus evolves to be one of the major criteria for

assessing the customer perception

1. Exteriors of the bank

[35]

Exteriors of the bank include the external appearance of the bank like location of the bank,

parking facilities, building structure etc. The following table and figure shows the

satisfaction level of respondents on the exteriors of the bank.

Table 5.7: Exteriors of the bank is visually appealing

Satisfaction Level

No. of Respondents

Percentage

Highly dissatisfied

0

0

Dissatisfied

6

10

Neutral

34

57

Satisfied

18

30

Highly Satisfied

2

3

Total

60

100

Figure 5.7: Exteriors of the bank is visually appealing

100 Figure 5.7: Exteriors of the bank is visually appealing Out of the total respondents, 3

Out of the total respondents, 3 per cent was highly satisfied, 30 per cent were satisfied, 57

per cent were neither satisfied nor dissatisfied and 10 per cent were dissatisfied. It can be

inferred that majority of the customers are not much satisfied with the external appearance

of the bank. So the company must take efforts to improve its external appearance inorder to

make it more visually appealing.

[36]

2.

Interiors of the bank

The interiors of the bank refer to how the office room of the bank is arranged. The interior

must be properly arranged in a neat and convenient manner. The following table and figure

shows the satisfaction level of customers on the interiors of the bank.

Table 5.8: Interiors of the bank

Satisfaction Level

No. of Respondents

Percentage

Highly Dissatisfied

0

0

Dissatisfied

5

8

Neutral

14

23

Satisfied

32

54

Highly Satisfied

9

15

Total

60

100

Figure 5.8: Interiors of the bank

15 Total 60 100 Figure 5.8: Interiors of the bank From the total respondents, 15 per

From the total respondents, 15 per cent was highly satisfied, 54 per cent were satisfied, 23 per cent were neither satisfied nor dissatisfied and 8 per cent were dissatisfied. It can be inferred that majority of the customers are satisfied with the interiors of the bank. The main reason for this trend is due to the fact that the arrangement of employees‘ counter, customers‘ area etc in the bank are arranged in a proper order so that no inconvenience is created for a customer.

[37]

3.

Appearance of Employees

The appearance of employees in this context refers to both physical and emotional aspect.

The physical aspect refers to employee‘s external appearance like way of dressing, and

posture. The emotional aspect refers to employees‘ behaviour, politeness and discipline.

The following table and figure shows the satisfaction level of customers on the appearance

of employees.

Table 5.9: Appearance of Employees

Satisfaction Level

No. of Respondents

Percentage

Highly Dissatisfied

0

0

Dissatisfied

2

3

Neutral

18

30

Satisfied

27

45

Highly Satisfied

13

22

Total

60

100

Figure 5.9: Appearance of Employees

Total 60 100 Figure 5.9: Appearance of Employees From the 60 respondents, 22 per cent was

From the 60 respondents, 22 per cent was highly satisfied, 45 per cent were satisfied, 30 per cent were neither satisfied nor dissatisfied and 3 per cent were dissatisfied. It can be inferred that customers are satisfied with the appearance of employees. They are satisfied with employee‘s dress code and their behaviour.

4. Spacious Interiors of the Bank

[38]

Spacious interiors mean that the customers have enough and more space in their bank for

their transactions. The customers should not feel congested when they come to their bank.

This will directly affect their satisfaction level. The following table and figure shows the

customers satisfaction level on the interior space provided by the bank.

Table 5.10: Spacious Interiors

Satisfaction Level

No. of Respondents

Percentage

Highly Dissatisfied

0

0

Dissatisfied

1

2

Neutral

24

40

Satisfied

24

40

Highly Satisfied

11

18

Total

60

100

Figure 5.10: Spacious Interiors

18 Total 60 100 Figure 5.10: Spacious Interiors Among the total respondents, 18 per cent was

Among the total respondents, 18 per cent was highly satisfied, 40 per cent were satisfied, 40 per cent were neither satisfied nor dissatisfied and 2 per cent were dissatisfied. The majority of the customers had a neutral satisfaction level. The firm must take measures on its interiors arrangement to change the customers‘ satisfaction level from neutral to satisfy.

5.2.2 Reliability

Reliability refers to the ability to perform the promised service dependably and accurately.

While considering the service quality of a service the customers consider the reliability of

the service provider. The customers will be more inclined towards those organisations

[39]

which will give them better reliability. The reliability is a factor that the customer values

the most while doing an investment. The customers prefer only those banks which offer

them better reliability by performing the service accurately according to customer needs.

Thus, reliability is an important factor which influences the customer perception of the

service quality offered by the firm.

1. Error free service by employees

The employees must provide an error free service to its customers else it will cause of

wastage of both time and money. The following table and figure shows the satisfaction

level of respondents on the error free service by the employees.

Table 5.11: Error free service

Satisfaction Level

No. of Respondents

Percentage

Highly Dissatisfied

0

0

Dissatisfied

0

0

Neutral

5

8

Satisfied

37

62

Highly Satisfied

18

30

Total

60

100

Figure 5.11: Error free service

8 Satisfied 37 62 Highly Satisfied 18 30 Total 60 100 Figure 5.11: Error free service

[40]

Out of the total respondents, 30 per cent was highly satisfied, 62 per cent were satisfied and

8 per cent were neither satisfied nor dissatisfied.

It can be inferred that the customers are

satisfied with the services provided by the employees.

[41]

2.

Confidentiality in Transactions

Majority of the customers wish to maintain secrecy on their transactions. The bank must

make sure that a detail regarding their customers‘ transaction is not leaked out. The

following

table

and

figure

shows

the

satisfaction

level

of

the

customers

in

the

confidentiality that the employees maintains in their transactions.

Table 5.12: Confidentiality in transactions

Satisfaction Level

No. of Respondents

Percentage

Highly Dissatisfied

0

0

Dissatisfied

2

4

Neutral

11

18

Satisfied

33

55

Highly Satisfied

14

23

Total

60

100

Figure 5.12: Confidentiality in transactions

60 100 Figure 5.12: Confidentiality in transactions From the total respondents, 23 per cent was highly

From the total respondents, 23 per cent was highly satisfied, 55 per cent were satisfied, 18

per cent were neither satisfied nor dissatisfied and 4 per cent were dissatisfied.

It can be

inferred that employees‘ carry out customer transactions confidentially.

[42]

3.

Informs Customers about the bank’s financial operations

The customers are assets of an organisation. The firm must inform their customers about

their achievements and operations. The following table and figure shows the satisfaction

level of customers when the bank informs them about its financial operations.

Table 5.13: Bank Informs Customers

Satisfaction Level

No. of Respondents

Percentage

Highly Dissatisfied

1

2

Dissatisfied

10

17

Neutral

11

18

Satisfied

27

45

Highly Satisfied

11

18

Total

60

100

Figure 5.13: Bank Informs Customers

Total 60 100 Figure 5.13: Bank Informs Customers Out of the total respondents, 18 per cent

Out of the total respondents, 18 per cent was highly satisfied, 45 per cent were satisfied, 18 per cent were neither satisfied nor dissatisfied, 17per cent were dissatisfied and 2 per cent were highly dissatisfied. The bank must make efforts to inform customers about their achievements, profit margins etc to the customers whenever they occur.

5.2.3 Responsiveness

Responsiveness refers to the characteristic of the organisation of willingness to help

customers and provide prompt service. This is an important parameter as the customers

value the responsiveness of the organisation while considering the service quality provided

[43]

by the organisation. The customers are satisfied only if responsiveness of the organisation

is up to their expectation. Thus responsiveness is an important dimension by which the

customers‘ perception regarding the service quality can be quantified.

1. Employee serves Customers in a good manner

Customer requires assistance of employees in various transactions. The employees must

serve their customers inorder to carry out transactions completely. The following table and

figure shows the satisfaction level of the customers on how the employees treat them.

Table 5.14: Employee serves Customer

Satisfaction Level

No. of Respondents

Percentage

Highly Dissatisfied

0

0

Dissatisfied

1

2

Neutral

4

7

Satisfied

37

61

Highly Satisfied

18

30

Total

60

100

Figure 5.14: Employees’ serves Customer

60 100 Figure 5 .14: Employees’ serves Customer From the total respondents, 30 per cent was

From the total respondents, 30 per cent was highly satisfied, 61 per cent were satisfied, 7

per cent were neither satisfied nor dissatisfied and 2 per cent were dissatisfied. It can be

inferred that the customers are highly satisfied with the service provided by the IOB

[44]

employees.

[45]

2

Employee’s knowledge to respond to problems

Employees of a firm must be knowledgeable enough to resolve the problems faced by their

customer. The following table and figure shows whether the customers are satisfied with

the employees‘ knowledge to respond to problems.

Table 5.15: Employee’s Knowledge

Satisfaction Level

No. of Respondents

Percentage

Highly Dissatisfied

0

0

Dissatisfied

1

2

Neutral

8

13

Satisfied

30

35

Highly Satisfied

21

50

Total

60

100

Figure 5.15: Employee’s Knowledge

Total 60 100 Figure 5 .15: Employee’s Knowledge Among the total respondents, 35 per cent was

Among the total respondents, 35 per cent was highly satisfied, 50 per cent were satisfied,

13 per cent were neither satisfied nor dissatisfied and 2 per cent were dissatisfied. Thus the

majority of the respondents have the opinion that employees are knowledgeable to respond

to problems faced by the customers.

[46]

3.

Employees are polite to customers

Customers expect that the employees of a firm must be well mannered and respectful to

them. This directly affects the retention rate of customers of the firm and thereby

satisfaction level. The following table and figure shows the customers satisfaction level in

employees‘ politeness.

Table 5.16: Employees’ Politeness

Satisfaction Level

No. of Respondents

Percentage

Highly Dissatisfied

1

2

Dissatisfied

0

0

Neutral

2

3

Satisfied

35

58

Highly Satisfied

22

37

Total

60

100

Figure 5.16: Employees’ Politeness

Total 60 100 Figure 5 .16: Employees’ Politeness Out of the 60 respondents, 35 per cent

Out of the 60 respondents, 35 per cent was highly satisfied, 50 per cent were satisfied, 13

per cent were neither satisfied nor dissatisfied and 2 per cent were dissatisfied. It can be

inferred that the employees‘ behave to their customers in a polite manner.

4. Warm relationship between Employees and Customers

[47]

A firm must be able to maintain a good rapport with their customers as it affects their

satisfaction level on the service. The following table and figure shows the satisfaction level

of the customers in relationship between them and the employees.

Table 5.17: Relationship between Employees and Customers

Satisfaction Level

No. of Respondents

Percentage

Highly Dissatisfied

1

2

Dissatisfied

1

2

Neutral

7

11

Satisfied

33

55

Highly Satisfied

18

30

Total

60

100

Graph 5.17: Relationship between Employees and Customers

100 Graph 5.17: Relationship between Employees and Customers As per the available data, 30 per cent

As per the available data, 30 per cent was highly satisfied, 55 per cent were satisfied, 11

per cent were neither satisfied nor dissatisfied, 2 per cent were dissatisfied and 2 per cent

were highly dissatisfied. It can be inferred that there is a strong and healthy relationship

between the employees and customers of IOB.

[48]

5.2.4 Assurance

The assurance factor includes knowledge and courtesy of employees and their ability to

inspire

trust

and

confidence.

Thus

assurance

parameter

includes

the

organisations

competence, courtesy, credibility and security over the service offered.

The customer

values the assurance offered by the organisation while assessing the service quality. The

organisation needs to build trust and confidence in the minds of the customers so that they

will regard the organisation as their own and will be loyal to the organisation. Thus the

assurance dimension has high priority among the customers while assessing the service

quality delivered by the organisation.

1 Satisfied with Employees’ expertise and knowledge

The employees of a firm must be proficient in the industry that they are working as it

directly affects their work and the customers of that firm. The following table and figure

shows the customers‘ satisfaction level in employees‘ expertise and knowledge on banking.

Table 5.18: Employees’ Expertise and Knowledge Level

Satisfaction Level

No. of Respondents

Percentage

Highly Dissatisfied

0

0

Dissatisfied

1

2

Neutral

12

20

Satisfied

31

51

Highly Satisfied

16

27

Total

60

100

Figure 5.18: Employees’ Expertise and Knowledge Level

[49]

Out of the total respondents, 27 per cent was highly satisfied, 51 per cent were

Out of the total respondents, 27 per cent was highly satisfied, 51 per cent were satisfied, 20

per cent were neither satisfied nor dissatisfied and 2 per cent were dissatisfied. It can be

inferred that the employees have high expertise and knowledge in banking operations.

[50]

2. Trustworthiness of the bank

An organisation must be trustworthy to its customers. If an organization is trustworthy,

then their customers will also be loyal to that firm. The following table and graph shows

the satisfaction level of the respondents in the trustworthiness of the bank.

Table 5.19: Bank’s Trustworthiness

Satisfaction Level

No. of Respondents

Percentage

Highly Dissatisfied

1

2

Dissatisfied

0

0

Neutral

6

10

Satisfied

27

45

Highly Satisfied

26

43

Total

60

100

Figure 5.19: Bank’s Trustworthiness

Total 60 100 Figure 5 .19: Bank’s Trustworthiness Among the total respondents, 43 per cent was

Among the total respondents, 43 per cent was highly satisfied, 45 per cent were satisfied,

10 per cent were neither satisfied nor dissatisfied and 2 per cent were highly dissatisfied. It

can be inferred that the customers are highly satisfied with the banks trustworthy.

[51]

5.2.5 Empathy

Empathy refers to caring and individualized attention that the firm provides to its

customers. While considering the service quality the customers take into account the

individual attention and caring they receive from the organisation. They regard the service

of those firms better which provide them better caring. Thus in effect empathy refers to all

those factors including access, communication and understanding of the customers by the

organisation. While assessing the service quality, the customer regards the firm which

shows empathy as that which is having better service quality.

1 Standing in Queue

An organisation must avoid the situation of customers standing in a queue. The long

waiting time might lessen the satisfaction level of the customers. The following table and

graph shows the satisfaction level of the customers on whether the employees‘ make them

to stand in queue.

Table 5.20: Queuing time in Bank

Satisfaction Level

No. of Respondents

Percentage

Highly Dissatisfied

0

0

Dissatisfied

0

0

Neutral

5

8

Satisfied

35

59

Highly Satisfied

20

33

Total

60

100

Figure 5.20: Queuing time in Bank

[52]

Among the 60 respondents, 33 per cent was highly satisfied, 59 per cent were satisfied

Among the 60 respondents, 33 per cent was highly satisfied, 59 per cent were satisfied and

8 per cent were neither satisfied nor dissatisfied. It can be inferred that the employees

carryout the customers‘ transaction in proper time so that the customers need not stand in

queue for very long time.

[53]

2. Timeliness

Employees must be able to carry out the customers transactions within an appropriate time.

The following table and figure shows the satisfaction level of customers on the timeliness

of the employees.

Table 5.21: Timeliness of banking services

Satisfaction Level

No. of Respondents

Percentage

Highly Dissatisfied

1

2

Dissatisfied

1

2

Neutral

9

15

Satisfied

30

50

Highly Satisfied

19

32

Total

60

100

Figure 5.21: Timeliness of banking services

60 100 Figure 5.21: Timeliness of banking services As per the available data, 32 per cent

As per the available data, 32 per cent was highly satisfied, 50 per cent were satisfied, 15

per cent were neither satisfied nor dissatisfied, 2 per cent were dissatisfied and 2 per cent

were highly dissatisfied. It can be inferred that employees enact the customers‘ transactions

timely.

[54]

3.

Employees help Customers

Employees of a firm are expected to help their customers in order to carry out their

transactions efficiently. The following table and graph shows the customers satisfaction

level on the helping mentality of employees towards their customers.

Table 5.22: Helping mentality of Employees

Satisfaction Level

No. of Respondents

Percentage