Banking Customer Service Satisfaction in Australia - Research Paper Example

Banking Customer Service Satisfaction in Australia Student’s Name Institutional Affiliation Course Name Date of Submission Banking Customer Service Satisfaction in Australia Background of the Problem Customer satisfaction is the key to the success of any business. Bhave (2002) noted that the core reason for the existence of any business is to be able to attract and build customer loyalty. However, customer loyalty cannot be built if customers are not treated as king by ensuring that there needs are met in a timely and appropriate manner. Customer satisfaction is particularly critical to the success of Australian banks. Knight (2014) observed that Australia is a country that has witnessed rapid growth in the number of small retail banks in the recent past. This coupled with the growth of mobile banking services has resulted in increased level of competition in the industry for the number of customers available (Talukder, Quazi and Sathye, 2014). Therefore, the only way to achieve a sustainable competitive advantage is to ensure high level of customer satisfaction. The problem is that, whenever customers are not satisfied with the quality of banking services offered by a firm, the customers will simply switch their allegiance to competitors that are capable of satisfying their needs (Valverde, Del Paso and Fernández, 2007). Therefore, as the consumer needs and preferences continue to change and become complex, banks Australian banks have no option but to ensure that they become as innovative as possible so as to be able to offer consistently quality services and products that are tailored to consumer needs and preferences. Study Objectives The aim of this study is to evaluate the level of banking customer service satisfaction in Australia as a ways of discovering ways through which Australian banks can manage and improve the processes of delivering quality services to customers. The study begins by discussing the literature pertaining to the link between service quality and customer satisfaction by discussing the link between the two. The research also discusses the different models used in measuring the level of satisfaction. The research employs qualitative method in investigating the degree to which Australian banking customers are satisfied with the services they receive from banks. Data is gathered using questionnaires that are to be distributed randomly to get responses. Research Questions a. Do you use banking services? b. How often do you use banking services? c. How many times have you visited your bank over the last three months? d. How satisfied are you with the services you receive from the bank customer service representatives and tellers? e. How satisfied are you with the services you receive from, managers and supervisors? f. Are you satisfied with the waiting time for services? g. Do you receive your bank statement monthly? h. Are you satisfied with the manner and speed with which loans are processed? i. How many banks do you have accounts with? j. What do you expect banks to do to ensure that your needs are met? Significance of the Study This study has a lot of significance to the Australian banking industry. Firstly, the study will help banks understand whether or not they are meeting the needs of their customers and areas that require improvements to ensure that customers are satisfied. Secondly, the study will help Australian banks understand the kind of strategies that they need to adopt to ensure customer satisfaction so that they can attract and build strong customer loyalty and ensure competitiveness. Literature Review Concept of Customer Satisfaction The banking industry plays a critical part in ensuring the growth of an economy. The growth of most economies throughout the globe is spurred partly by the banking industry. The banking industry is particularly critical to the economy of a country as it offers people with the platform for saving or borrowing money that they can use to develop themselves (Oliveira and von Hippel, 2011). However, to stay in business, maintaining high level of customer satisfaction has become an area of increased focus by banks. Customer satisfaction means meeting or exceeding the needs of customers. Customers are currently viewed as the core assets since without customers, there would be no business. The Roy Morgan Research (2015) found that the customer needs and preferences are changing very fast and becoming more complex, especially with regards to the banking products and services. Regarding products, it has been found that customers require that banks offer them with a variety of banking products as this allows them choice. For instance, when it comes to the loan products, customers require banks to provide a variety of loan categories, such as emergency, normal loan, development loan, refinancing loans and school fees loans among others to ensure satisfaction. Similarly, with the increased customer awareness, customers are demanding that banks provide them with consistently high quality service delivery. Liberati and Mariani, (2012) noted that, because there are a variety of financial service providers to choose from, the modern day customers are choosing to open accounts only with those banks that guarantees consistent and quality service deliver. Of main concern to most customers has been that some banks have the tendency of keeping people queuing for a very long time. This not only cause exhaustion, but also make customers perceive such banks as not delivering quality services. Some customers have also expressed their concern that some banks deduct interests on their depositions without their informing them, factors that contribute to low customer satisfaction level (Oliveira and von Hippel, 2011). As such, to ensure high customer satisfaction, industry experts advice that banks must put the interest of their customers ahead of their own by ensure that they provide quality products and services all the time. However, to achieve this, banks must ensure that they become innovative as possible. According to Kofman and Murawski (2015), innovation is the key to sustainable competitive advantage in the banking industry. They maintain that, if a bank is not innovative, it cannot understand and respond to the market trends, thereby resulting in poor product and service delivery, whose consequence is low customer satisfaction level and poor performance. For instance, some banks in different parts of the world have been forced to become innovative to enhance the quality of service delivery to customers. Australian banks are cited in most literature as being among the most innovative in the world today. Most banks in Australia have partnered with the mobile service providers to offer mobile banking services notes Talukder, Quazi and Sathye (2014). This way, Australian banks have been able to eliminate long queues that were characteristic of banks in the past. Satisfying the needs of customers is important for many reasons. Firstly, satisfying the needs of customers is critical to banks because it helps build customer loyalty (Efrat, 2015). When banks have built loyalty with customers, this ensures repeated purchase of banking products and services, which helps promote growth. Additionally, customer satisfaction is beneficial for banks as it promotes the growth of a bank through referrals. It has been noted that customers who are satisfied with the services are more likely to recommend their banks to others than the unsatisfied customers. Such customers are also not likely to consider defecting to other firms because there is no need of doing so due to the satisfaction they get from their banks. Besides, it has been shown that, when customers are unsatisfied, they are more likely to discourage, instead of refer people to their banks of firms. Secondly, customer need satisfaction is necessary because it helps ensures competitiveness (Kofman and Murawski, 2015). Today, banks not only compete among themselves; rather they also compete even with the mobile banking services that are fast growing worldwide. Therefore, the only way to become competitive and succeed is to ensure that customers are satisfied with the products and services offered. Lastly, satisfying the needs of customers is beneficial to a company as it impacts positively on the cost incurred by a firm through retention. Liberati and Mariani, (2012) argue that companies that satisfy their customers befits immensely by avoiding the cost that they would otherwise spent in acquiring new clients. For instance, to acquire a new client, companies are forced to invest heavily on promotional expenses, such as advertising, which increases the cost of doing business. This argument is of great importance in the banking industry where clients are important for the long-term success of the businesses through relationship building. With increased retention through customer satisfaction, this cause a significant reduction in the marketing, fewer background checks on new clients and high staff productivity because the banking staff, such as loan officers are working with clients who are well-established and know to the company (Oliveira and von Hippel, 2011; Korauš, 2002). Models for Measuring the Level of Customer Satisfaction Measuring the satisfaction level of customers is not a new concept. Instead, the need to determine the level of customer satisfaction is something that began a long time ago. This was triggered by the recognition by firms of the need to maintain a high satisfaction level of customers to help spur growth and success of firms. As such, a number of tool have been developed to help researchers and firms in determining whether or not their products and services and meeting the needs of customers. Service quality model otherwise called ServQual is the most widely and commonly used customer satisfaction measurement tool. The tool was in 1985 by Parasuraman and colleague and has been accepted in the business world as representative approach for addressing customer satisfaction issues (Parasuraman and Berry, 1985). The ServQual is concerned mainly with determining the differences between customer expectation and perception. The model has 22 pairs Likert scale that is built around five service quality dimensions to help in measuring the quality of services delivered to customers. The five service quality perspectives include reliability, assurance, responsiveness, tangibility and empathy. As such, ServQual analyses customer satisfaction by comparing the expectations of a customer and the quality perceived by the firm. In this regard, whenever there is a positive gap score, this indicates that the customer expectations have been met or exceeded while a negative gap score indicates that customer expectations have not been met. The other model is The SERVPERF model developed in 1992 by Cronin and Taylor in criticism of ServQual model (Cronin and Talyor 1994). ServPerf model maintains that the level of customer satisfaction with a service or product is based solely on the performance and not the gap between expectation and satisfaction as suggested by ServQual model. Nevertheless, ServPerf model also consists of 22 perception items as is the case in ServQual model (Cronin and Talyor 1994). However, ServPerf model excludes expectations considerations, something that makes this model be considered more efficient in measuring customer satisfaction than the ServQual technique. Hypothesis H0: Most customers are satisfied with the quality of services received from banks H1: Loan customers less satisfied H2: Satisfaction level vary from one bank to another H3: Internet banking has the highest customer satisfaction Methodology Data Collection Data to be used in this study would be collected using simple sampling techniques of bank customers in the major cities in Australia. The sampling will not be limited to specific branches or city. To get the right picture of the satisfaction level based on the population of Australians that use banking services, a representative sample of 2,000 banking customers will be used in the study. Using a large population in the customer will help provide a clear picture of the extent to which Australian banking customers are satisfied (Othman and Owen, 2001). For purposes of this research, convenience sampling technique will be used. This sampling technique is found appropriate for use as it will enable me to be able to determine the sample that is used in the research. Using this sampling technique is also found appropriate since it would give all banking customers in Australia equal opportunity for selection as respondents. Additionally, convenience sampling technique is appropriate as it would eliminate bias in the selection of samples. Data Collection In this research, data will be collected through primary design. In this respect, I will collect the data in the field myself. The data will be collected through questionnaires. The respondents will be issued with questionnaires with 20 open-ended questions to enables me understand their level of satisfaction with the banking services and products in Australia. The questionnaire is divided into five sections. The first part of the questions will gather information about the respondents’ demographic profiles. The second part of the questionnaire will ask the respondents about their view of the service quality they receive from their banks. The third part of the questionnaire will deal with loyalty. The fourth section of the questionnaire asks respondents about issues to do with trust. The last part of the questionnaire will ask respondents questions dealing with satisfaction. Structuring the questionnaire in this form will enable me be able to establish the relationship between the independent variable and dependent variable. Before filling in the questionnaires, I will begin by explaining to the respondents the purpose of the research. This is important as it would enable the respondents feel at ease when responding to the questions (Shil, and Osman, 2007). At the same time, the confidentiality of the respondents will be maintained throughout the study. To achieve this, respondents will not be required to provide their names anywhere in the questionnaire as the main interest of the study is to gather data that can be of help for the Australian banking industry. Data Analysis Three techniques will be considered for analyzing the data. The research will first use factorial analysis as an appropriate data analysis method. This technique will allow me be able to define the different dimensions of customer satisfaction. The use of factorial technique for analyzing the data will make it easy for me to condense the information gathered from the field into smaller sets that can be interpreted easily. Parasuraman and Berry (1985) scale will be used as a reference point. However, the model will be modified to adapt to the Australian context. Secondly, I will consider using customer satisfaction index in determining the current level of customer satisfaction in the Australian banking industry. This will be expressed as a single percentage in single number so as to inform the Australian banking service providers where they stand with regards to how customers perceive the quality of their products and service provision. Using expectations of customers, I will obtain the actual level of customer satisfaction with banks by weighting on an average of 1 by doing a number of things. Firstly, I will calculate the weighting average given by the customer. Secondly, I will divide the weighting for individual customers to obtain the weighting on an average of 1. However, the priorities that rank higher for customers will be weighted more than 1 while those that ranks low on priority for customers will be weighted less than 1. This will be followed by calculating the averages of the scores as each individual score is expressed as a factor of the average obtained. Lastly, the averages will be expressed as a percentage to get the actual level of customer satisfaction. I will finalize by testing the relationship between independent and dependent variables using ANOVA test. Using ANOVA will help in determining the dependent variable, such as service quality and their effects on the independent variable (satisfaction level of customers). The test will be based on a significance level of 5%. References Bhave, A., (2002). Customer satisfaction measurement. Quality and productivity Journal, 3. http: //WWW.Symphonytech.com. Shil, N. C., & Osman, A., (2007). Quality function deployment for customer satisfaction in banking services, Daffodil International University Journal of Business and Economics, 2, 106-118. Cronin, J., & Talyor, S., (1994). SERVPERF versus SERVQUAL: Reconciling Performance –based and perceptions –minus-expectations measurement of service quality. Journal of Marketing, 58, 125-131. Efrat, Z. (2015). Cover story: Making the customer king. Retrieved from http://www.australianbankingfinance.com/banking/cover-story--making-the-customer-king/ Knight, E. (2014). Bank customers happy, now that they're appy. The Sidney Morning Herald, p. 1 http://www.smh.com.au/business/banking-and-finance/bank-customers-happy-now-that-theyre-appy-20140825-1083mk.html Korauš, S. (2002). Quality of services in the financial sector and types of client behavior. BIATEC, Volume X. Kofman, P., & Murawski, C. (2015). Policy Forum: The Murray financial system inquiry does Australia needs a new banking model? The Australian Economic Review, 48(2), 200–2002. Liberati, C., & Mariani, P. (2012). Banking customer satisfaction evaluation: A three-way factor perspective. Adv Data Anal Classif, 6, 323–336. Oliveira, P., & von Hippel, E. (2011). Users as service innovators: The case of banking services. Research Policy 40, 806–818 Othman, A., & Owen, L. (2001). The multi dimensionality of Carter model to measure customer service quality (SQ) in Islamic banking industry: A study in Kuwait finance House. International Journal of Islamic Financial Services, 3. Parasuraman, & Berry (1985). A Conceptual Model of Service Quality and Its Implications for Future Research. Journal of Marketing , 49 , 41-50. Roy Morgan Researc. (2015). Smaller banks continue to lead in customer satisfaction. Retrieved from http://roymorgan.com/findings/6428-smaller-banks-continue-to-lead-in-customer-satisfaction-201509022335 Talukder, M., Quazi, A., & Sathye, M. (2014). Mobile phone banking usage behaviour: An Australian perspective. Australasian accounting. Business and Finance Journal, 8(4), 81-104. Valverde, S. C., Del Paso, R. L., & Fernández, F. R. (2007). Financial innovations in banking: Impact on regional growth. Regional Studies, 41(3), 311-326, DOI: 10.1080/00343400600928350 Read More