Service Quality in the UK Retail Banking Sector - Literature review Example

The employees must be able to perform the promised service accurately and have the ability to convey trust and confidence. They should provide prompt services and individualized attention to customers. The importance of customer satisfaction in the current dynamic corporate environment is obvious.

It influences customers’ intentions to purchase again or gives them the reason for their intentions to switch. Happy customers are like free advertising (Naser & Jamal 2002, p.164). This is because it is an era of mature and intensely competitive pressures. It is imperative that retail banks maintain a loyal customer base. This can only get done through improved service quality. Service quality banking in UK retail banking sector Banks provide services, and they have difficulties in managing them. Most banks in the UK have adopted service quality as a way of satisfying the customer.

In the UK, the retail banking industry has more or less the same products and practitioners must pay close attention to superior service provision (Colgate & Hedge 2001, p.215). This is because service quality influences the customer decision-making process and purchase retention. The UK banking industry is going through turbulent times. Banks are functioning increasingly under competitive pressures that arise from within the banking system. Banking systems in the UK are characterized by rapid change and increasingly sophisticated customers.

It has become crucial that banks in the UK determine the service quality factors which are pertinent to the customers’ selection process. Customers in the UK have greater difficulty in selecting one institution from another. The current problem that banks in the UK are facing is difficulty in the determination of customers’ perception of service (Blanchard & Galloway 1994, p.18). To gain and retain competitive advantages in the rapidly changing public retail banking industry in the UK, it is vital for banks to understand fully what customers perceive to be the key dimensions of service quality.

They must also find out the impacts that the dimensions of service quality have on customers’ behavioral intentions. Factors affecting the level of service quality provided by UK retail banks Customer satisfaction leads to loyalty in banking. Growing expectations of the customer and increased cost of customer acquisition are the key factors that affect service quality in retail banking. For management to provide services of high quality, it is vital to be aware of what the consumer perceives as service quality (Johnson & Gustafsson 2000, p.79). Service quality deals with expectation and performance.

This leads us to conclude that customers have certain expectations regarding their experience with a service provider. These expectations evaluate the quality level of the services the customers receive. Customers evaluate the manner in which service gets delivered. Bank customers simply evaluate the services offered by making a comparison of their expectations with the bank's performance in terms of service delivery (Karatepe, Yavas & Babakus 2005, p.377). Personnel-related characteristics might also affect service quality.

This is because they reduce the number of barriers that may affect customers' trust in a particular financial institution. Bank personnel must show professionalism in their interactions and communication skills. Unless customers are able to understand the terms used by the retail bank employees, information received does not get considered valuable and the customer is then not convinced to end the buying process. Communication thus plays a vital role in the service delivery process. Employees must try and use appropriate terms so as to inspire trust and confidence (Lassar, Manolis, et al 2000, p.249). Banks must also be aware that customers pay serious attention to the physical layout of equipment and other furnishings.

This is because they seek physical comfort during their visits. Waiting areas hence become of great importance and ensure the flow of operations. The cleanliness and general atmosphere of the banks also have an impact on the customer. This must all get considered as part of service quality. Satisfaction As customers experience the services of service quality, there is satisfaction. Customers need to experience a service in order to decide whether they are satisfied or not. Quality of service provides customers with a benefit that eventually derives satisfaction.

Customer satisfaction combines affective and cognitive responses to service encounters. In retail banking, a higher level of customer satisfaction can get measured by looking at the positive emotional state that results due to a positive interaction experience (Lenka, Suar & Mohapatra 2009, p.57). There must be physical evidence of the comfort and efficiency of the service provided. The main goal is customer satisfaction should be trust gaining and not an increase in sales. Customers expect to feel comfortable with the bank.