International Journal Of Advancement In Engineering Technology, Management and Applied Science (IJAETMAS) ISSN: 2349-3224 || www.ijaetmas.com || Volume 03 - Issue 09 || September - 2016 || PP. 01-08

APPLICATION OF SERVQUAL MODEL TO EVALUATE THE SERVICE QUALITY OF PUBLIC SECTOR BANKS IN HARYANA STATE, INDIA. Mrs. Arti Raipuria Bansal*1 Dr. K.K. Garg*2 Dr. Jivan Chaudhary*3 *1

Research Scholar, Lingaya's University, Faridabad, Haryana, India *2 Professor, Lingaya's University, Faridabad, Haryana, India *3 Professor, Lingaya's University, Faridabad, Haryana, India

ABSTRACT: This research study is conducted to evaluate the quality of services received by the customers of public sector banks in the major cities of Haryana state. For this purpose, the data is collected primarily by administering the questionnaire based on SERVQUAL Model proposed and developed by Parasuraman, Zeithaml & Berry, 1988; 1991; 1994a; 1994b; to the customers of public sector banks located in Faridabad, Gurgaon, Panipat, Ambala cities of Haryana state of India. Four major banks namely, State Bank of India, Punjab National Bank, Bank of Baroda and Union Bank of India are selected as the representatives of public sector banks since they possess huge market share and assets in the Indian Banking Industry. The research statistical population consisted of all the customers of SBI, PNB, BOB, UBI in the cities of Haryana state. A sample size of total 400 respondents is taken, 100 customers from each one of the four selected banks were administered . This model is based on the comparison of perceptions and expectations based on the five service quality dimensions, i.e. Reliability, Tangibility, Assurance, Responsiveness and Empathy. The gap between the perception score and expectation score for each service quality dimension is evaluated accordingly and valuable rankings are given to the service quality dimensions based on the average gap score obtained. The reliability score i.e. Cronbach's Alpha for the collected data is 0.89 for all variables. Research Hypotheses is developed based on the research objectives and tested by using statistical software IBM SPSS-24 version. Multiple Regression Analysis was conducted to test the significance of service quality dimensions. The overall weighted SERVQUAL gap score is calculated to measure the service quality in public sector banks. The findings of this research study shows that public sector banks need to improve their quality in all the five mentioned service quality dimensions, but they need to focus more on Responsiveness, Tangibility and Empathy dimension. The paper also highlights the importance of service quality dimensions to the overall customer satisfaction. The study concludes that the public sector banks are very far in matching the gap between the perceptions and expectations of their bank customers. Also, various suggestions are provided in this study to improve the overall service quality of these banks so as to improve their customer satisfaction.

KEYWORDS - Banking, Public Sector Banks, Customer Satisfaction, Service Quality, SERVQUAL. Abbreviations : SBI - State Bank of India, PNB - Punjab National Bank, BOB - Bank of Baroda, UBI - Union Bank of India, ATM - Automated teller machine, RTGS - Real Time Gross settlement, Introduction : Due to globalisation, liberalisation, economic reforms and fierce competition, banking industry in India, like any other service industry, is facing tough competition. Today's customer is more aware, intelligent and demanding in terms of service quality that are offered by various banks. To be in front position constantly along with its peers in the competition, it is imperative for the banks to constantly upgrade their services and be exclusive to provide the best possible solution in terms of banking transactions, ATM services, mobile banking, internet banking, RTGS, branch banking services and many more. Public sector banks in India is known for its traditional, customer friendly, large market share, and better interest rates, but now the picture is completely changing. The private sector banks are emerging with new and advanced features in their banking services which makes the customer more demanding and it becomes necessary for the banks to incorporate the best management strategy for their customers not only to increase customer retention but also to attract the new customers to become their shareholders.

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International Journal Of Advancement In Engineering Technology, Management and Applied Science (IJAETMAS) ISSN: 2349-3224 || www.ijaetmas.com || Volume 03 - Issue 09 || September - 2016 || PP. 01-08 In this research study, the SERVQUAL model developed and proposed by Parasuraman, Zeithaml & Berry, 1988; 1991 is used and modified to evaluate the service quality of public sector banks by finding the gaps between the service quality perceptions and expectations of customers. In Indian banking industry, customer perceptions are of great importance. The customer's actual perception of service is based on the perception of the final outcome of service and the process through which the service is delivered. The customer expectations are the belief's about the service which serves as a standard against which service performance is analysed and which the customer thinks that the service provider should offer. The importance of service quality in service industry cannot be neglected. Literature Review : Arasli et al., (2005) reported that reliability , empathy, assurance and tangibility dimensions of service quality were predictors of customer satisfaction in the Greek Cypriot banking sector. The largest gap was obtained in the responsiveness-empathy dimension. Also, the reliability dimension had the highest effect on customer satisfaction. Additionally , Zhou (2004) reported that reliability and assurance were important predictors of satisfaction of bank customers in China. Jain, V, Gupta, S and Jain, S (2012) in their study “Customer Perception on Service Quality in Banking Sector: With Special Reference to Indian Private Banks in Moradabad Region” try to gain an understanding of customer perception regarding service quality and also to learn and understand the different dimensions of service quality in banks. The Sample size used is 100 and the sample area is Moradabad. The service quality model evolved by Zeithamal, Parsuraman and Berry (1988) has been used in the study. The analysis declares that among the private sector banks all the dimensions of service quality are equally important in determining customer satisfaction. Caruana (2002), Kang & James (2004), Tsoukatos and Rand(2006), HSU(2008), Wang et al. (2009), validated that service quality is undoubtedly, positively and remarkably related to customer satisfaction.

The Conceptual Model of the Research : Reliability

Perception

Tangibility Responsiveness

Perceived Service Quality

Assurance Empathy

Expectation

Figure 1: The Conceptual Model of the Research Research Objectives: The main objectives under the study are: 1. To analyse the service quality gaps in the public sector banks of India. 2. To study customer perceptions in terms of service quality dimensions of public sector banks. 3. To analyse customer expectations in terms of service quality dimensions of public sector banks. 4. To evaluate the overall service quality of public sector banks in India. 5. The ranking of service quality dimensions in order of importance from customer's point of view. 6. Understanding the level of customer satisfaction in public sector banks. Hypotheses of research: From the above mentioned conceptual model and objectives of research, the following hypotheses are formed:

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International Journal Of Advancement In Engineering Technology, Management and Applied Science (IJAETMAS) ISSN: 2349-3224 || www.ijaetmas.com || Volume 03 - Issue 09 || September - 2016 || PP. 01-08 Hypothesis 1: H0: There is no significant positive relationship between Reliability and Customer Satisfaction of Public Sector Banks. H1: There is a significant positive relationship between Reliability and Customer Satisfaction of Public Sector Banks. Hypothesis 2: H0: There is no significant positive relationship between Tangibility and Customer Satisfaction of Public Sector Banks. H1: There is a significant positive relationship between Tangibility and Customer Satisfaction of Public Sector Banks. Hypothesis 3: H0: There is no significant positive relationship between Responsiveness and Customer Satisfaction of Public Sector Banks. H1: There is a significant positive relationship between Responsiveness and Customer Satisfaction of Public Sector Banks.

Hypothesis 4: H0: There is no significant positive relationship between Assurance and Customer Satisfaction of Public Sector Banks. H1: There is a significant positive relationship between Assurance and Customer Satisfaction of Public Sector Banks. Hypothesis 5: H0: There is no significant positive relationship between Empathy and Customer Satisfaction of Public Sector Banks. H1: There is a significant positive relationship between Empathy and Customer Satisfaction of Public Sector Banks. Research Methodology: The descriptive research is employed as a main research method for this study. The research data is collected through self administered questionnaire which consists of 28 SERVQUAL questions (for E-Score and P-Score), SERVQUAL dimensions importance weights, demographic profile of customers. The sampling area is the four cities of Haryana state i.e. the selected cities for administration of survey are Gurgaon, Faridabad, Panipat and Ambala. The sample size is 400 respondents from public sector banks in Haryana state. The SERVQUAL scale includes five dimensions: Reliability, Tangibility, Responsiveness, Assurance, and Empathy. Within each dimension there are several items measured on a five-point Likert scale from strongly disagree to strongly agree, for a total of 28 items. The five-point scale used for the study is: 1

2

Strongly Disagree

3

4

5 Strongly Agree

The distribution of respondents were done as follows : Table 1 : Distribution of Respondents. SBI PNB No. of selected branches for survey 10 10 No. of respondents from each branch 10 10 Total no. of respondents from each bank 100 100

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BOB 10 10 100

UBI 10 10 100

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International Journal Of Advancement In Engineering Technology, Management and Applied Science (IJAETMAS) ISSN: 2349-3224 || www.ijaetmas.com || Volume 03 - Issue 09 || September - 2016 || PP. 01-08 Dimensions Reliability Tangibility Responsiveness Assurance Empathy

Table 2: SERVQUAL Dimensions of Service Quality Factors Ability to perform the promised service dependably and accurately. Physical facilities, equipments and appearance of personnel. Willingness to help customers and provide prompt service. Knowledge and courtesy of employees and their ability to inspire trust and confidence. Caring and individualized attention that the firm provides to its customers. Reliability Analysis: Table 3: Scale: All Variables

Case Processing Summary N % Cases Valid 400 100.0 Excludeda 0 .0 Total 400 100.0 a. Listwise deletion based on all variables in the procedure. Source : SPSS output Table 4 : Reliability Statistics for Public Sector Banks Cronbach's Alpha

N of Items .890

57

Source: SPSS output Data Analysis & Interpretation: First of all, the descriptive analysis is used to study the characteristics of the statistical sample and then multiple regression analysis is done to test the research hypotheses. Table 5: Demographic Profile of Respondents. Respondents Characteristics Category Public Sector Banks (n=400) Gender Male 67.75% Female 32.25% Total 100% Age 18-25 2.5% 26-35 28% 36-45 33.5% 46-55 23.75% 56 & above 12.25% Total 100% Qualification Undergraduate 3.5% Graduate 35% Postgraduate 53.25% Others 8.25% Total 100% Annual Income < 1 Lakh 0.25% 1 Lakh to 2.5 Lakhs 8% 2.5 Lakhs to 5 Lakhs 37.75% 5 Lakhs to 10 Lakhs 39.5% Above 10 Lakhs 14.5% Total 100% Occupation Student 1.5% Government Employee 22.25% Private Employee 38.5%

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International Journal Of Advancement In Engineering Technology, Management and Applied Science (IJAETMAS) ISSN: 2349-3224 || www.ijaetmas.com || Volume 03 - Issue 09 || September - 2016 || PP. 01-08

Total Frequency of Visit to Branch

Professional/Self Employed Housewife

32.75% 2%

Retired

3%

Daily Several Times in a week 2-3 times a week Once a week Several times in a month 2-3 times in a month Once in a month Several times in a year 2-3 times in a year Once in a year

100% 2.25% 6.5% 25.25% 21.5% 18.25% 13.75% 7.25% 2.75% 2% 0.5% 100%

Total Marital Status

Married Single

80.25% 19.75% 100%

0-3 Years 3-6 Years

11% 31.25%

6-10 Years

43.5%

above 10 Years

14.25%

Total Duration of Account Relationship

Total Source: survey

100%

Factor analysis for public sector banks: From the Factor Analysis , it can be inferred that from both among perception and expectation factors , nearly 61.24% and 65.50% of variance is explained by first five no. of components respectively. Component Matrix presents the five components extracted. they comprise 28 variables for perceptions & expectations respectively. The Scree plot shows that 5 out of 28 factors explains most of the variability since the line starts to straighten after factor 5. Communalities reveals, the Eigen values associated with every linear component before extraction after extraction. The Rotated Component Matrix, indicates factor loading for each variable onto each factor. Total variance are explained for perceptions and expectations of public sector banks. The value of KMO is .876 which is above 0.6 and therefore acceptable. The Bartlett's Test of sphericity relates to the significance of the study and it is less than 0.05. Correlation Analysis: The dimension Tangibility( β = .487 , p < 0.01 ) had the highest statistically significant standardized coefficient. Therefore this was the most important independent variable and had the highest impact on overall customer satisfaction. This was followed by the dimensions Reliability( β = .459 , p < 0.01 ), Assurance( β = .356 , p < 0.01 ), Empathy( β = .320 , p < 0.01 ). The least important independent variable in this regression model was Responsiveness( β = .305 , p < 0.01 ) meaning that this dimension had the smallest impact on the overall customer satisfaction. Testing of Hypotheses: The research hypotheses are tested by using ANOVA and t-test. Table 6: Testing of Hypothesis Hypothesis 1 Hypothesis 2 Hypothesis 3 Hypothesis 4 Hypothesis 5

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H0 is rejected H0 is rejected H0 is rejected H0 is rejected H0 is rejected

H1 is accepted H1 is accepted H1 is accepted H1 is accepted H1 is accepted

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International Journal Of Advancement In Engineering Technology, Management and Applied Science (IJAETMAS) ISSN: 2349-3224 || www.ijaetmas.com || Volume 03 - Issue 09 || September - 2016 || PP. 01-08 SERVQUAL gap analysis: The Mean Perception score is highest for Assurance dimension(3.415) and least for Responsiveness dimension.(2.295). This implies that the public sector banks need to improve majorly on responsiveness(2.295) dimension of service quality followed by Tangibility(2.458), Empathy(3.157), Reliability(3.273) and Assurance(3.415). The Mean Expectation Score is highest for Empathy dimension(4.92) followed by Assurance(4.865), Responsiveness(4.762), Reliability(4.653) and Tangibility dimension(4.551). The customer's expectations are highest for Empathy and lowest for Tangibility. Table 7 : SERVQUAL Dimension wise Average Gap Scores of Public Sector Bank Dimension

Average Gap Score -1.38

Reliability -2.093 Tangibility -2.467 Responsiveness -1.45 Assurance -1.763 Empathy

Average Gap Score 0 -0.5 -1

Average Gap Score

-1.5 -2 -2.5 Figure 2: Average Gap Scores of Public Sector Bank Interpretation: The average SERVQUAL gap score is highest for responsiveness(-2.467) dimension in public sector banks followed by tangibility(-2.093), empathy(-1.763), assurance(-1.45) and reliability(-1.38). It means that the expectations of customers of public sector banks are higher than their perceptions about the services the bank provides. The bank need to focus majorly on responsiveness dimension. The banking employees should respond properly in order to satisfy their customers queries. The tangibility factors like visually appealing physical facilities, accessible materials, ATM, internet banking facilities, mobile banking facilities, properly identified counters, facilities for senior citizens in terms of management of queue, solving queries, etc. should be well maintained. Overall weighted SERVQUAL gap score of public sector banks : The overall weighted SERVQUAL score for the four selected public sector banks is given below. Table 8: Overall Weighted SERVQUAL Score for public sector banks SERVQUAL Dimensions

Average Gaps

Importance Weights

Weighted Gap Score

Reliability Tangibility Responsiveness Assurance

-1.5775 -1.963 -2.267 -1.348

0.212 0.201 0.19 0.196

-0.33443 -0.394563 -0.43073 -0.264208

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International Journal Of Advancement In Engineering Technology, Management and Applied Science (IJAETMAS) ISSN: 2349-3224 || www.ijaetmas.com || Volume 03 - Issue 09 || September - 2016 || PP. 01-08 Empathy

-1.773

Overall Weighted Gap Score

0.201

-0.356373

-1.78

Interpretation: In public sector banks, the weighted SERVQUAL gap score is highest for responsiveness dimension whereas it is least for assurance dimension. It means that in public sector banks, the service quality is highest in terms of assurance dimension whereas it is lowest in terms of responsiveness dimension. The overall weighted gap score is -1.78. Conclusion: The main purpose of this research is to evaluate the service quality offered to the customers of public sector banks in Haryana state of India by using SERVQUAL model. The results of this study shows that the expectations of the bank customers are higher than the perceptions of the services offered. This means that the banks are unsuccessful in meeting their customer's expectations. The bank customers are not exactly satisfied with their bank. The hypotheses testing related to the five dimensions of service quality makes it clear that all the five dimensions of service quality is having effective influence on customer satisfaction. In all the five dimensions of service quality there exists gap and the bank is failed to meet their customer's expectations in all the five dimensions of service quality. It represents the customer dissatisfaction from the quality of services offered by the bank. As per the results obtained, the public sector bank management should emphasize more on responsiveness dimension i.e. their employees should properly respond to customer request. The bank employees should be well trained in explaining the various services which the bank provides. Also the public sector banks in India need to focus more on tangibility dimension i.e. the bank should maintain visually appealing physical facilities like counters, sufficient seating arrangement, ATM's, drinking water facility, parking space, forms and broachers, stationary available on counters.

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