Expectations of Customers of the Banking Sector - Research Paper Example

Expectations of Customers of the Banking Sector The quantitative phase and presentation of findings Executive Summary The objective of research as decided in the previous steps is to assess the expectations of the customers from the bank. In order to effectively meet this objective, it is necessary to design the research process in the correct manner. Designing of the research process is an important process and many things need to be done. The first step will be to collect the quantitative information that is required for analysis. The research design chosen shall be in alignment with the research objectives and the data needs. The choosing of research design includes deciding the technique for collecting the data, the design of the questionnaire used, the sampling technique and size, the method of data analysis and the tools required for the same. After this, ethical issues that arise of the chosen design shall be studied and taken care off. Quantitative Information Required The type of any information required for a research depends upon the research scope and objectives set earlier. The objective of this research is to assess the various expectations of a customer from a bank and their relative importance. For this purpose, it is necessary to have knowledge about the importance customers give to various factors that the researcher deems to be important. Based on secondary research, the researcher has identified 18 factors that are important from the point of view of a customer. These factors are: 1. The problems of the customers are given due attention from the bank employees 2. The employees are well dressed and look professional in their work practice. 3. The bank should be neat and clean. 4. Bank should have modern technology 5. The customer gets quick and efficient service from the bank 6. The bank employees possess expertise in their field. 7. Bank employees shall be competent to handle customer problems. 8. The Bank timings shall not be inconvenient. 9. Bank employees shall have sufficient knowledge of the services provided by them 10. Bank shall have enough branches at all the convenient place. 11. The branch where your account is located is easily accessible 12. The bank employees are always accessible for help 13. The transactions done through the bank shall be correct. 14. The electronic transactions provided by the bank are secure and verified by trusted third parties. 15. The staff of the bank shall be polite and courteous. 16. The customer shall get prompt service from the bank. 17. Banks provide a complete array of services that satisfy their financial goals. 18. The staff should show reasonable willingness to assist the customer In order to meet the objectives of the research, it is necessary to understand the importance, customers give to the above factors. It is necessary to have a quantitative representation of the expectation: Do they find a particular factor extremely important, relatively important or not important at all. Besides this, the researcher will also like to know the demographic details of the respondent. The demographic data will enable the researcher to have a clear picture of the sample. It is also important to note the overall satisfaction of the customer from the bank s/he deals with. The overall satisfaction level will give a clear picture of the banking scenario in the country. Formulation of Research Hypothesis Hypotheses are the speculation with respect to specific findings of the research (Wrem et. al., 2006). These are the assumptions that the author expects to be true. The purpose of the research is to verify if these assumptions hold true for the sample and the larger population. The hypotheses selected affect the research design, the questionnaire, the sampling techniques. Different people have different expectations from the bank. The author just intends to assess the relative importance of the various expectations in the minds of the customers. This can be useful to the banks in identifying the areas that they should focus upon. The research does not have any hypotheses. Research Design Type of Research There are 3 types of research: Exploratory Research: Exploratory research is one that is intended to provide broad knowledge about a particular industry, service, or area (Breneman et. al., 1998). The objective of this research is not to form any conclusive argument. This is the first step in a very large research project. Descriptive Research: Descriptive Research is often used to develop a snapshot of a particular phenomenon of interest. The main objective of such studies is to provide an opinion, attitudes, or behaviors of a set of people (McNabb, 2002). Causal Research: The purpose of this type of research is to identify cause-and-effect relationship amongst various variables under study (Reid & Bojanic, 2009). Research type for this project This research does not aim to identify any causal relationship. In order to identify the variables that need to be studied, an exploratory research will be done on the banking sector of the country. This part of the research will include the focus groups and small surveys. The objective of this research is to describe the characteristics of the research population, so this research is Descriptive Research. This part will include the full survey with a larger sample. The Research Design The research design chosen shall be in line with the research scope and objectives. The design chosen should be such that it presents the true picture to the researcher. The research design specifies the various parameters such as the samples, the measurement, the methods of assignment, the treatment etc (William, 2006). The two types of research design are experimental designs and the quasi-experimental designs. Experimental designs attempt to identify the affects of application of a particular control over a segment of people. This design is more suitable for studying cause-and-effect relationship amongst various variables. Non-experimental designs are useful to study the descriptive details of the sample. There are various methods in research designs: Surveys, Experiments, Secondary Data Studies, and Observation Techniques. Survey is a technique where data is collected from a sample of people using a questionnaire. Experimental research design is useful in identifying cause-and-effect relationship. Secondary data Studies make use of already available data to identify patterns or models. Observation techniques are sometimes used to record behaviour (Zikmund, 2007). This research that aims to assess the various expectations of the customers from a bank does not assign a particular group of customers under a particular condition. So, the research design is a non-experimental design. For the purpose of this research, the researcher proposes a survey for measuring the expectations of the customers from a bank. Questionnaire Design For the achievement of the research objectives, it is necessary that the questionnaire designed is correctly phrased, in correct order, and provide meaningful answers. Designing a correct questionnaire will reduce the non-sampling error in the research. Questionnaires can be of 2 types: questionnaire meant for the respondent to fill by self and survey questions that are administered by the interviewer (Brace, 2008). For the purpose of this research, the author proposes the self-administered questionnaire for the main Descriptive Research. This way, the author will be able to get maximum responses in less time. The author may however, administer some of the questionnaires to bank managers and a small number of customers himself in the exploratory phase. The purpose of this is to identify any drawbacks in the questionnaire and make note of any probable factors that might have been missed. The questionnaire that the author intends to implement has 2 sections. Section I The first section measures the importance of the various expectation parameters in the minds of the customers. It will have the 18 items in an appropriate order, and the customer will be asked to rate the importance of each item. This research is an attitudinal measurement research which measures the importance of various expectations (attitude) according to various customers. One of the simplest and most efficient mechanisms of measuring the attitudes of a sample is the use of Likert Scale. The Likert scale assumes that each item on the questionnaire has an “attitudinal value”, or “importance” (Kumar, 2005).This research makes use of a 5-point Likert Scale. The respondents to assess the importance of various factors on a scale of 1 to 5 with the following coding: 1: Very Important 2: Fairly Important 3: Neutral 4: Not So Important 5: Not At all Important The use of a likert scale will enable the researcher to have a quantitative assessment of the importance of the various expectations of a customer. Section II The second section will collect the demographic details of the customer. The collection of demographic data will enable the researcher to ascertain the authenticity of the responses. This will be done by collecting the data through the use of fixed-alternative questions. Since, the researcher has made use of self-administered surveys; open ended questions are not suitable. In case of Fixed-alternative questions both the specifications and the interrogatory part of the question are explicitly given to the respondent (Grooves, 2004). Fixed alternate questions have category that are mutually exclusive and totally inclusive; i.e., the categories should not overlap, and categories should explain all the possible range of answers Use of closed questionnaires reduce the time and cost of survey. This is because the possible set of answers is known beforehand. These are also simpler to the respondent as he just has to tick the applicable box (Brace, 2008). The questions will be: Gender Male Female The researcher wants to survey only those individuals that are above the age of 18, as people below that age do not have the necessary knowledge for dealing with the bank. Age 18-25 26-35 36-45 46-55 56 & above The education qualification will be classified as: Education 12th Graduate PG Masters Professional PhD The employment category of the respondent is classified as: Employment Student Self-Employed Government Employee Private Organization Retired Sampling Technique Due to budget and time constraints, it is not possible to conduct the survey on the entire population of bank customers. The population in our specific research is all the people in the country who have a bank account. In order to come to conclusions regarding the expectations, the researcher proposes to draw out a sample, and find out the conclusions from the same. The major types of samples are probability and non-probability samples. In case of probability sampling, elements of the population have a known probability of being selected in the sample. The advantage of using this type of samples is that they provide the researcher the ability to calculate the margin of error. This type of sample is more suitable when quantitative analysis is to be done. Non-probability samples are more suitable in case of qualitative research. This research is quantitative in nature, so we will be using a probability sampling technique (McQuarrie, 2005). Probability sampling techniques involve various methods: Random Sampling: Simple random sampling assures that every element of the population will have an equal chance of being selected. Systematic Sampling: Selecting an element from the population after every interval of k elements is known as systematic sampling. Stratified Sampling: In this technique the population is divided into subgroups or stratum having similar characteristics to draw out elements for the sample. This technique is more popular for the consumer market research (Avasarikar & Chordiya, 2007). Cluster Sampling: This technique is similar to stratified sampling but differs in the nature of the strata. In this method, the stratum chosen is a miniature representation of the entire population. It is used when the population is very widely dispersed over a large geographical area (Baker, 2003). For the purpose of this research the researcher proposes the implementation of a systematic sampling method. The sampling frame used will be every customer that leaves the bank. Every 3rd customer that leaves the bank will be asked to fill the survey questionnaire. The reasons for choosing this technique are many: It does not require gathering of customer information from banks prior to the survey. It is a less costly affair, and simpler to draw. The population of the bank customers does not have any periodicity. Data will be collected by personally asking the customers and explaining the need and the purpose of the survey. The researcher will be conducting the surveys at different locations, on different days, and different times, in order to reduce location, date and time-related biases. The researcher has chosen 5 banks that will be surveyed. Sample Size For deciding the sample size, it is necessary to choose a confidence interval. Confidence interval is a representation of the accuracy level of the results obtained. For the purpose of this research, a 95% confidence interval will be used. Based on the central limit theorem, we expect the population’s distribution to follow a normal distribution. The variance of the population in case of a five-point likert scale is 1.2 assuming a normal distribution (McQuarrie, 2005). The formula for calculating the sample size is: Where, n is the sample size, Z is the z-value at the 95% confidence interval, Var is the variance of the population E is the margin of error. In our case, the researcher has decided a margin of error of 10 percentage points. For a normal distribution, the value of z at 95% confidence interval ≈ 2. Var = 1.2 E = 0.10 Error: Reference source not found Thus the sample size for this research is 480 respondents. Often, some survey responses are found incomplete or inconsistent. In order to tackle such kind of responses, the researcher proposes to survey 550 customers. Data Analysis Techniques and SPSS Tools Once the data collection phase of the research is over, the researcher expects to move to analysis of data in order to infer useful conclusions from the survey responses. The various data techniques that will be used are: Study of Demographic profile of the respondents The first step that we will be doing in the data analysis will be the study of the demographic profile of the respondents. The data for this purpose is available in the responses of Section 2 of the survey. The various techniques that will be used for analyzing the data will mainly be the study of descriptive details of the respondents. Since all the questions are in categorical format, the best way to analyse the data will be to do a frequency distribution of all the variables, gender, age, education, and employment. Besides, use of graphical models such as bar graphs, or pie-charts will enhance the readability of the inferences. Expectations of the Customers To study the expectations of the customer, I propose the parameters: mean and variance of the scores of each of the 18 factors. Besides this, other technique that I propose to use is the factor analysis. The basic purpose of factor analysis is to establish the underlying dimensions of the data collected in a way that the degree of correlation between various variables is minimum (Birn, 2002). Factor analysis will enable the researcher to identify the key elements and reduce the data to that of only major useful factors. There is a possibility of multi-collinearity among the items. To reduce this, the ratings would be subjected to principal axis factoring with varimax rotation. In order to ascertain the reliability of the set of items received, the technique of Cronbach’s alpha will be used. Rule of thumb suggest that a cronbach alpha’s value greater than 0.70 indicates a reliable data set. SPSS The researcher intends to make use of SPSS 16.0 for the data analysis. The first step in analysis will be defining the variable properties in the variable view window of SPSS. The data will then be put manually in the Data View window of the software. The demographic details of the respondents will be analyzed by the command Frequencies, in the Descriptive Statistics tab of Analyze. In the frequencies function, the researcher will study the frequency of each category of the responses and make use of pie-charts to have a better understanding of the data. For the analysis of the various expectation factors, the first step will be to do the Factor analysis through the Data Reduction tab of the software. In the Rotation tab of the factor analysis window, varimax will be chosen, and number of iterations to 10. This then will give us the factors that are important and have minimum correlation between factors. After finding the key factors, the reliability of the data will be checked by the use of Cronbach’s alpha. The SPSS provides this through a method in the Scale tab of Analyze. At the same time, mean and standard deviation will be selected in the statistics button (Morgan et. al., 2001). Ethical Issues in the Research The research design for this research is a primary one. A primary research has to deal with a lot of ethical issues such as the respondent’s right to privacy, use of deception, the respondent’s right to be informed about the purpose of the research the need for confidentiality, the need for honesty while collecting the data, and the need for objective analysis of the data obtained. For ensuring an ethical researcher, the researcher proposes to apply each question to the 4 qualities of Diener and Crandall (1978): Is the question harmful to the participant? Is there a lack of informed consent in the question? Is there an invasion of privacy? Is deception being used in the question? I understand the importance of ethics in the research, and will follow complete honesty and objectivity in data collection and analysis technique. Expected Results The author expects to get some conclusive results from the data analysis. It is expected that the number of prominent factors is considerably less than that original 18. The reduced factors can be easily classified in various categories such as Tangibility, empathy, reliability etc. These are the factors that the bankers should focus upon while designing their services. Some of the most important factors that I believe shall figure in the final results will be: 1. The problems of the customers are given due attention from the bank employees 2. The employees are well dressed and look professional in their work practice. 3. The customer gets quick and efficient service from the bank 4. The bank employees are knowledgeable and possess expertise in their field. 5. Bank shall have enough branches at all the convenient place. 6. The bank employees are always accessible for help 7. The transactions done through the bank shall be correct. 8. The electronic transactions provided by the bank are secure and verified by trusted third parties. 9. The staff of the bank shall be polite and courteous. 10. Banks provide a complete array of services that satisfy their financial goals. It should be noted that this list is based on the intuition of the researcher. The final list of important expectations will be known after the data analysis. Conclusion This step has enabled the researcher to design his research in such as way that it meets his research objectives. A descriptive, non-experimental research design is chosen for the research. A survey questionnaire will be used to gauge the expectations of the customers. The survey will be administered to 550 respondents. The major techniques that will be incorporated are the Factor analysis and reliability test. The actual data collection and analysis promises to reveal some useful results. References Avasarikar, D.P., & Chordiya, S.B., 2007. Marketing Research. Nirali Prakashan. Baker, M.J., 2003. The Marketing Book, 5th ed. Butterworth-Heinemann Publishers. Birn, R., 2002. The international handbook of market research techniques. 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