Introduction
All of the service businesses are willing to improve their service quality in order to satisfy its customers. This is particularly important, nowadays, in the bank industry. Satisfaction is a very important concern for both customers and organisations, including Banks. It is, though a subjective concept, that has been defined in many different ways. Bitner and Hubbert (1994) defined customer satisfaction as the result of customers’ assessment of a service based on a comparison of their perceptions of service delivery with their prior expectations. Different customers have different expectations, based on their knowledge of a product or service (Reisig & Chandek, 2001).
The more satisfied the customers are, the more likely they would be to use the service again and recommend it to others. According to Stafford (1996), due to the fact that banks sell undifferentiated products, the only effective tool they can use to survive in the market is the quality of service. Quality is the meeting of the needs and expectations of customers, (Parasuraman et al. 1991).
Literature Review
The Bank
Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) is a multinational Spanish banking group. BBVA is the second largest bank in Spain and 7th largest financial institution in the Western world.
BBVA’s branch 1004 is a retail location of BBVA, in Barcelona, in c/Rambla Catalunya 98. The branch offers a wide array of face-to-face and automated services to its customers.
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Services provided by the branch include cash withdrawals and deposits from a demand account with a bank teller, financial advice through a specialist, safe deposit box rentals, bureau de change, insurance sales, etc. It also provides automated teller machines, telephone and online banking.
Most of the staff working in the branch are front line staff, which have direct contact with the client, either by phone or face-to-face. Front office personnel include: bank manager, bank tellers, financial advisors, telephone operators, and security guard.
The Research
In this paper, I am going to analyze customer service quality in BBA’s branch office 1004 in Barcelona. I am going to focus on the service delivered by fron office staff.
Participants
The participants of this study consisted of 60 customers selected by randomly sampling method. The customers were interviewed from 14th to 19th November 2011.
The SERVQUAL approach
In this research, I will use the SERVQUAL approach as an instrument to measure customer’s expectations and perceptions levels of service quality towards five service quality dimensions of fron office staff at BBVA’s branch 1004 in Barcelona.
Based on Parasuraman et al. (1988) conceptualization of service quality, the Servqual instrument is a concise 22 items scale questionnaire based on 10 quality factors. Each of the 22 items will be studied through both expectations and perceptions. The data on the 22 attributes is grouped into five dimensions: tangibles, reliabilty, responsiveness, assurance, and empathy.
Procedure
The SERVQUAL questionnaires (see Appendix 1) were distributed to 60 customers who agree to participate in the study between 14th and 19th November 2011. Customers were requested to respond the questionnaire upon they arrival to the branch, in a voluntary basis. If they had already used the service, I requested them to fill the questionnaire upon arrival. If they were using the service for the first time, they were asked to fill the perceptions questionnaire after using the service. All customers had been informed about the purpose of the study and the way they should respond to questions. The 22 items were scored following a 1 to 7 scale (7 for the highest expectation/perception and 1 for the lowest expectation/perception).
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I sometimes had to provide explanations or further examples to some questions.
Results of the Research and Discussion
Servqual Scores
Attributes | Statement | Expectation Score | Perception Score | Gap ScoreP-E | Average for Dimension |
Tangibles |
Dressing ppropriately | 1 | 5.60 | 5.7 | 0.01 | 0.49 |
Modern facilities | 2 | 5.29 | 6 | 0.71 | |
Service with smiling | 3 | 6.3 | 7 | 0.7 | |
Appealing materials | 4 | 3.80 | 4.36 | 0.56 | |
Average | | 5.24 | 5.76 | | |
Reliability |
Service as promised | 5 | 6.59 | 4.38 | -2.21 | -0.26 |
Interest in solving problems | 6 | 6.9 | 6.89 | -0.01 | |
Right service at first time | 7 | 5.02 | 6.72 | 1.7 | |
Service at time promise | 8 | 4.48 | 5.51 | 1.03 | |
Accurate information | 9 | 5.69 | 3.85 | -1.84 | |
Average | | 5.73 | 5.91 | | |
Responsiveness |
Exact moment of performance | 10 | 3.58 | 4.89 | 1.31 | 0.42 |
Willing to help | 11 | 6.20 | 5.29 | -0.91 | |
Prompt service | 12 | 4.35 | 5.56 | 1.21 | |
Ability to respond to customers’ requests | 13 | 5.51 | 5.60 | 0.09 | |
Average | | 4.91 | 5.33 | | |
Assurance |
Feel safe in transactions | 14 | 6.7 | 6.5 | -0.2 | 0.53 |
Product knowledge | 15 | 6.8 | 6.85 | 0.05 | |
Trustworthy, instils confidence | 16 | 5.03 | 6.03 | 1 | |
Required skills to perform service | 17 | 4.9 | 6.2 | 1.3 | |
Average | | 5.85 | 6.39 | | |
Empathy |
Individual attention | 18 | 4.86 | 4.92 | 0.06 | 0.438 |
Work at convenient hours | 19 | 2.20 | 3.00 | 0.8 | |
Communicate effectively | 20 | 6.37 | 6.25 | -0.12 | |
Customers’ best interests at heart | 21 | 4.36 | 5.2 | 0.84 | |
Understand specific needs | 22 | 5.62 | 6.23 | 0.61 | |
Average | | 4.68 | 5.28 | | |
Overall Score | | 5.28 | 5.73 | | 0.31 |
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Tangibility
Tangibility refers to the physical evidence of personnel, tools, and equipment used to provide the service. There are some global standards of facilities that companies try to follow.
The overall customer expectation is medium-high with a 5.24 average score. Perceptions are higher than expectations with an average of 5.76. The Average gap for Tangibility is 0.49. Question 3 shows both the highest scored perception and the highest scored expectation. The fact that customers expect front line staff to provide service with a smiling, involves that customers are predisposed to stablish a good relationship with staff and expect them to be kind. Tangibles are also part of the interpersonal factors, that Johnstons (1995) find to have tendency to delight. The difference between perceptions and expectations is positive but not very high. Customers have high expectations but also high perceptions for tangibility. Materials associated with the service appear to not have a great importance for the service, neither for expectations nor for perceptions.
Reliability
The reliability dimension refers to the ability to provide services dependably and accurately, accomplished always on time, using the same way and without errors (Dabholkar et al.1996).
Perceptions are lower than expectations, resulting in a negative gap of -0.26. Reliability expectation is at the lowest level in question 8 “The staff will provide the service at the time they promise to do so”. This may be because customers are doubtfull about the fact that front line staff in a bank will immediately give them the service they promise. Nevertheless, perceptions in this question are ranked with a higher score than expectations (5.51) proving that front office staff rarely fails in that point. Another critical question in this dimension is Question 5 “The staff can provide you the service as promised”. Expectations at this level are particularly high (6.59) but perceptions are rather low (4.38).
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This implies that expectations are not being reached, either because they are too high or because the customer service delivery is really poor in keeping promises. This rating is supported by a comment made by a customer “I was granted a partial loan that I could not finally repay. The initial contract didn’t state that I would have to meet so many requirements and provide the innumerable building permits they kept asking me”. The fact that things are not being done as promised, can sometimes be related to lack of information, that makes customers think that promises are not being reached. This relates to question 9, which shows a gap of nearly 2 points (-1.84).
Contracts are broad and admit multiple interpretations. Contract terms should be carefully explained to ensure that customers are really aware of them. Moreover, customer loyalty is a key concept for banks. The staff at retail banking is always trying to increase customer loyalty, and sometimes this can only be achieved at the expense of keeping their promises.
Responsiveness
The responsiveness dimension focuses on the willingness of staff to help customers and provide prompt service to customers such as quick service, professionalism in handling and recovering from mistakes (Zeithaml et al., 1988).
The overall satisfaction towards “responsiveness” is positive. Perceptions exceed expectations in 0.425 points. Question 11 “The staff will always be willing to help customers” received the highest ranking of expectations, at 6.20. Therefore, we may consider that customers expect good will from front line staff. Intentionality is a factor that is easy to perceive and convey. It is also an hygienic factor; this means that staff must, at least, transmit good intentions. Perceptions in this question, are 0.91 points lower than expectations (5.29).
This is supported by a customer that commented “The bank offered me a swap agreement. The floating interest rate interval we fixed didn’t finally help me at all, quite the contrary, it was really more benefitial to the bank”. Banks are companies that seek to make profit, and this profit may be gained at the expense of customer’s profit; consequently leading to a poor customer service perception. Another quey question is question 10 “Staff on a bank will tell customers exactly when services will be performed”. This question obtained a low expectation of 3.58. This may be related to the fact that customers don’t expect the bank to predict correctly. On the other hand, perceptions were higher (4.89) and this means that the front line staff is providing a better service than expected. However, question 12 “The staff will give you prompt service” obtained a higher score both in expectations and in perceptions. Thus, according to the ranking, the front line staff succeeds and is expected to succeed in respecting deadlines to a greater extent than predicting and passing on this deadlines.
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Assurance
Assurance is a dimension that takes into account the courtesy of employees and their ability to convey trust and confidence including competence, courtesy, credibility and security (Parasuraman et al., 1991).
Assurance obtained a high ranking in both perceptions and expectations. The overall gap was the highest amongst the dimensions (0.53).
This means that assurance is the dimension where expectations (that were already high) are exceeded by perceptions to a greater extent. Question 17 “The staff has the required skills to perform service” received the lowest expectation (4.9) whereas its perception was high (6.2).
This may be due to a certain belief that relates to the skill gap: According to the National Skill Development Corporation, front line staff in a branch lack knowledge of banking products, has poor communication skills and poor selling skills.
Empathy
The Empathy dimension represents the provision of caring and individualized attention to customers including access or approachability and ease of contact, effective communication and understading the customers (Parasuraman et al., 1991)
Empathy obtained a positive gap score of 0.43. Question 19 “The staff works at convenient ours for his customers” received the lowest expectation among all the questions of the survey. This may be due to the fact that front line staff at the branch office, only work part time (in the Morning).
Nevertheless, one loyal client at the branch commented, “If I need to, I can arrange a meeting at any time that will be convenient for me with my banker. Specially, when I need to sign something quickly.” The results indicate that the front office staff know the customer’s needs (6.23) and have them at heart (5.2).
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However, question 21 “Staff has the customers’ best interests at heart” was ranked with a low expectation (4.36).
This may be explained in connection to Question 11 “The staff will allways be willing to help customers”. Customers are skeptical that front line staff will allways try to help them and cover their needs. Front line office staff represent the branch and communication is vitally important. According to Crompton et al. (1991), staff should make customers feel like they belong. This statement is consistent with the definition of ‘empathy’.
Conclusions
Assumptions cannot be made about what customers want, even if costumers have been consulted (Johnston & Clark, 2008), especially in the context of banking, that has experienced such a change due to the crisis. After the financial crisis, Banks have to pursue holistic strategies and respond better to customers’ requirements to stay competitive in a tougher market environment (Roland Berger Strategic Consultants, 2011).
Thus, there is a special need to increment customer service in the banking industry.
This is certainly the case at the BBVA branch office 1004. The branch manager confirms that customers are now willing to pay more for good personal advice and high-quality services, even if they are becoming more price-sensitive. To remain competitive, and adapt itself to its environment, the branch has to analyse customers’ expectation and perception towards the service quality of his front office.
In this research, expectations are exceeded by perceptions by a gap of 0.3. Overall expectations and perceptions are high (5.28 and 5.73).
The result of customers’ expectation showed that “assurance” was the highly scored dimension followed by reliability, tangibles, responsiveness and empathy. On the other hand, most customers perceived “assurance” as the most well delivered dimension, followed by reliability, tangibles, responsiveness and empathy.
Further in detail, front office staff should improve to keep promises and ensure that these promises are being well communicated. The branch should concentrate on retaining customers and building a relationship with them. Loyalty of customers will provide a competitive advantage to the branch. Profit should not be the branch priority, specially when these profit is gained at the expense of customer’s profit.
Furthermore, front line office staff should strongly focus on demonstrating his willigness to help customers. Moreover, they should improve the predictions they make for deadlines. A good prediction shows good organization and planning.
The most critical point seen in the findings, is customer’s low expectation and perception of the convenience of staff’s working hours. This can be overcomed by using other channels such as teller machines, telephone and online banking. However, it is really positive that front office staff manage to arrange meetings when customers need to, so that they provide a highly customized service.
Because many banking products are undifferentiated commodities, the only method they can employ to differentiate themselves is to optimize their customer service. Deloitte & Touche and The Consumer Bank Association found that customer service is the major driver of costumer loyalty. An independent survey conducted by Genesys Telecommunications, showed 48% of customers indicated that customer service was the primary factor in choosing to stay with a bank branch.
Limitations
The study has several limitations that need to be taken into account in order to nuance the conclusions.
First of all, the sample of this study is limited to 60 customers. If the study had been conducted to more customers, the result would be more generalized. Moreover, it would be interesting to separate those customers that had already used the service from those who were using it for the first time. Results were not studied separately, since the majority of the respondents were regular customers. Regular customers tend to build a relationship with the branch and do not easily switch to other bank branches. Expectations for those who had already used the service are difficult to differentiate from their perceptions. To differenciate them, it would be useful to know how expectations are created. Do people answer the expectations questionnaire according to his estimate of what the service performance will be or according to what they thing it ought to be? Furthermore, the whole perception of an individual may be influenced by experiences (specially bad experiences) that happened only once or to somebody else.
According to Zeithaml et al (1993) banks’ services are evaluated through experiences and credentials and are therefore difficult to assess by customers. Customers are limited by their capacity to evaluate their expectations and perceptions since they do not have the required skills, expertise and knowledge to carry out the evaluation. This may explain why customers place a high premium on the image and reputation of the bank before purchasing, and have generally high expectations.
Perceptions are influenced by many factors. Kotler et al (1999) posit that individual’s consumption behaviour is influenced by personal characteristics like age and life-cycle, occupation, economic situation, lifestyle and personality and self-concept. It would have been interesting to analyze the different perceptions and expectations of each interviewed person to see which are the factors that are influencing them. This may be done using a clustering method.
Moreover, results may also be nuanced by the fact that respondents didn’t differenciate the service provided by front office staff from the service provided by the hole branch.
References
Survey
Dimensions | Level of Expectations | Level of Perceptions |
Tangibility | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
1. The staff dress appropriately and have attractive appearance e.g. elegant, smart, etc. | | | | | | | | | | | | | | |
2. The physical facilities and equipment are modern-looking. | | | | | | | | | | | | | | |
3. The staff provide the services with smiling. | | | | | | | | | | | | | | |
4. Materials associated with the service, eg: pamphlets, credit cards, informative documentation, etc. are visually appealing. | | | | | | | | | | | | | | |
Reliability |
5. The staff can provide you the service as promised e.g. maintain interests as stated, credit grant, etc. | | | | | | | | | | | | | | |
6. When customers have problems, staff shows a genuine interest in solving them, eg: demagnetized credit card, credit concession. | | | | | | | | | | | | | | |
7. The staff will provide the right service at the first time. | | | | | | | | | | | | | | |
8. The staff will provide the service at the time they promise to do so. | | | | | | | | | | | | | | |
9. The staff provide you accurate information. | | | | | | | | | | | | | | |
Responsiveness |
l0. Staff on a bank will tell customers exactly when services will be performed. | | | | | | | | | | | | | | |
11. The staff will always be willing to help customers. | | | | | | | | | | | | | | |
12. The staff will give you prompt service. | | | | | | | | | | | | | | |
13. The staff in a bank are always able to respond to customer’s requests. | | | | | | | | | | | | | | |
Assurance |
l4. The staff makes customers feel safe in their transactions. | | | | | | | | | | | | | | |
l5. The staff have product knowledge to inform and answer questions e.g, credit card’s conditions. | | | | | | | | | | | | | | |
l6. The staff in a bank is trustworthy and instils confidence to customers. | | | | | | | | | | | | | | |
l7. The staff have the required skills to perform service e.g. front office staff know how to open an account. | | | | | | | | | | | | | | |
Empathy |
l8. The staff will give customers individual attention (e.g. deal with bank transfer). | | | | | | | | | | | | | | |
l9. The staff works at convenient hours for its customers. | | | | | | | | | | | | | | |
20. The staff are able to communicate effectively with you. | | | | | | | | | | | | | | |
21. The staff has the customers’ best interests at heart. | | | | | | | | | | | | | | |
22. The staff understands the specific needs of their customers. | | | | | | | | | | | | | | |
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