Proceedings of the International Conference on Tourism, Hospitality and Marketing (IC16Mauritius Conference) ISBN - 978-1-943579-19-8 Ebene-Mauritius, 21-23 January, 2016. Paper ID: M624

The Banking Sector in Mauritius: An Assessment of Service Quality from Customer Perspective Jugurnath. B, Department of Accounting and Finance, Faculty of Law and Management, University of Mauritius, Mauritius. E-mail: [email protected] Nowbutsing. J, University of Mauritius, Mauritius. Ramen. M, Department of Accounting and Finance, Faculty of Law and Management, University of Mauritius, Mauritius. __________________________________________________________________________________

Abstract In this paper, we study whether Mauritian banks are using service quality as a weapon to compete on the market to satisfy customers. The goal set is to identify the interrelationships between service quality, customer satisfaction and customer loyalty in the retail banking sector in Mauritius. The study also aims to find out the most important attributes of service quality in retail banks, which can be used to evaluate the characteristics of banking service quality as perceived by customers. The study consists of a sample of 147 respondents. The results indicate that the perceptions of the Mauritian banking customers far exceed their expectations regarding the five dimensions of SERVQUAL model, which is a good indication. At the same time, the findings show that responsiveness, assurance and empathy are the important dimensions considered by the customers while assessing the quality of services rendered by the Mauritian banks. The major contribution of the study is that it extends the usage of SERVQUAL model. This study, fully focused on service quality issues, will help to understand service dimensions issues for the banking sector in Mauritius. __________________________________________________________________________ Key Words: SERVQUAL, Service Quality, Customer Satisfaction, Banking Sector in Mauritius

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Proceedings of the International Conference on Tourism, Hospitality and Marketing (IC16Mauritius Conference) ISBN - 978-1-943579-19-8 Ebene-Mauritius, 21-23 January, 2016. Paper ID: M624

1. Introduction The Banking sector has always been dynamic and resilient with high levels of competition. Banks use various strategies to protect their existing portfolio of customers and build upon new ones so as to ensure business growth. Quality and marketing tools are the essential factors that can contribute to the bank’s inner corporate objectives. In Mauritius, there has been a continual propagation of banks through time, where only a few commercial banks existed prior to its independence. At present, there are 21 banks, out of which 7 are local banks, 8 are foreign-owned subsidiaries, 1 is a joint-venture and 5 are branches of foreign banks. These banks are allowed to conduct banking transactions both onshore and offshore. The banks in Mauritius are licensed and regulated by the Bank of Mauritius (BOM), mandated by law as Central Bank to administer a strong regulatory framework. In order to create a harmonization in the Mauritian banking industry, BOM has issued guidelines under the name of Bank of Mauritius Act (2004), Banking Act (2004) and a series of rules that oversee the daily operations of banks. The banking sector has played a key function in the development of the Mauritian economy as they are expected to play in any other modern freeorientated economy. This industry employs more than 5,000 professionals, contributing to around 6% of GDP. For this study, only five of the most popular banks have been selected for this paper, namely the state bank of Mauritius (SBM) ltd, the Mauritius Commercial Bank (MCB) LTD, Barclays Bank Mauritius Limited, hongkong&shanghai bank cooperation (HSBC) ltd and bramer banking corporation ltd. Service Quality has become a substantial component of the banking industry – at least as a competitive tool. It becomes useful to measure the effectiveness of service quality correctly. Hence, this study assesses the service quality offered by commercial banks in Mauritius - from a customer’s perspective with emphasis on what customers expect on the level of quality presently offered and from their past experience. This study also examines the relationship between demographic factors of bank customers and service quality using the SERVQUAL model.

2. SERVQUAL Derived from two words namely service and quality, SERVQUAL is among the most popular instruments used to measure service quality from a customer’s perspective. SERVQUAL is a multi-scale instrument developed by Parasuraman, Berry and Zeithmal in 1985 and refined in 1991. Also known as the gap model, SERVQUAL is said to be one of the best ways to measure service quality by many researchers. According to Brown et al (1993), this service evaluation method has been proven consistent and reliable. The model is made up of five dimensions, namely: 

Tangibility – relates to the physical aspect related to the service. For instance a

bank’s physical appearance and the quality of the pamphlets it provides. 2 www.globalbizresearch.org

Proceedings of the International Conference on Tourism, Hospitality and Marketing (IC16Mauritius Conference) ISBN - 978-1-943579-19-8 Ebene-Mauritius, 21-23 January, 2016. Paper ID: M624



Reliability – refers to the potential of the providing efficiently and professionally the

promised service. 

Responsiveness – concerns with the enthusiasm to assist customers and provide

prompt service. 

Assurance – relate to the knowledge, competency, courtesy and ability of the

personnel delivering the service as well as the extent to which the system being used is secured and credible 

Empathy – refers to the extent to which the service provider cares for its customers

and its ability to provide for personalized service Based on the above, it is crucial that banks assess the 5 dimensions in order to identify the gaps in service quality by looking at the difference between customer expectations and perceptions. Through these gaps bankers can recognize their shortfalls and consequently address them in order to increase their competitive edge on the market.

3. Theoretical Framework 3.1 Service and Service Quality A review of the existing literatures shows that there is quite a wide disparity in definitions related to service. Proomprow (2003) came up with a very interesting play of words for SERVICE which goes as S for Satisfaction, E for Expectation, R for Readiness , V for Value, I for Interest, C for Courtesy and E for Efficiency. Many researches are of the view that services cannot be counted nor tested prior to delivery thus businesses “find it difficult to understand how customers perceive their services and evaluate them” (Parasuraman et al, 1985). The study pursue with the quality of service as a company’s business health is reflected by the quality of service it provides. As underlined by (Parasuraman et al, 1992, p5) “if the service quality is mediocre, the company is mediocre”. However, there is no single definition for service quality. It varies from people to people and from situation to situation. Service quality is a term used to express achievement obtained in a service. Parasuraman et al (1985) viewed service quality as the degree and direction of discrepancy between customers’ service perception and expectations. They argued that service quality involves not only the outcome but also the delivery process. Moreover, in a one of his researches conducted in 1988, these authors maintained that service quality is a function of the difference between service expected and customers, perceptions of the actual service delivered. On his part, Zeithaml (1987) described service quality as the consumer's judgment about an entity's overall excellence or superiority. It is a form of attitude, and results from a comparison of expectations to perceptions of performance received. Lewis (1989) defined service quality as meeting customers’ needs, requirements and how well the service delivered meets customers’ expectations. Also, Lewis and Mitchell (1990) pointed out that service quality is linked to the

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Proceedings of the International Conference on Tourism, Hospitality and Marketing (IC16Mauritius Conference) ISBN - 978-1-943579-19-8 Ebene-Mauritius, 21-23 January, 2016. Paper ID: M624

concepts of perceptions and expectations and that it is a requisite for the durability and development of any company. Through these elements, it can easily be recognized that service quality is one of the key drivers for a business to grow. Banks’policy makers have to understand that for an eventual increase in profits they will have to secure a better position on the market and to ensure customer loyalty, they need to use service quality as a competitive approach. 3.2 Customer Satisfaction Customer satisfaction relates to the customer’s feeling of fulfilment or disappointment resulting from comparing a product’s perceived performance in relation to his to her expectations (Kotler, 2000).From this definition, it is evident that to be able to satisfy customer needs, customer expectations have to be known. Service providers, in particular banks, have to provide the required products and services to match with customer needs. In today’s competitive market if banks fail to plan their marketing strategy with customers in the matrix, it is simply an eventual plan for their own failure. Customers are therefore among the main parameters for successful business. As mentioned by Mittal & Kamakura (2001) customer satisfaction is a key factor in formation of customer’s desires for future purchase. According to Zeithaml et al. (1990), customer satisfaction is the result of a customers’ perception of the service quality relative to the expectation. Moreover, Looy et al. (2003) defines customer satisfaction as the customer’s feeling regarding the gap between his or her expectations towards a company, product or service and the perceived performance of the company, product or service.

Later on, Zeithaml et al (2009) stressed on customer

expectations as beliefs about a service that serves as standards or reference points to which the performance of the service is judged. It was further affirmed by the same researcher that knowing what the customer expects is the first and possibly most critical factor in delivering quality service. ForJohnson et al , (1996) customer satisfaction can be interpreted as an overall evaluation of service quality attributes or service attribute performance. In order to combine the important elements pertaining to customer satisfaction, it seemed necessary to drawn up a chain of cyclic reactions.

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Proceedings of the International Conference on Tourism, Hospitality and Marketing (IC16Mauritius Conference) ISBN - 978-1-943579-19-8 Ebene-Mauritius, 21-23 January, 2016. Paper ID: M624

Figure 1: Construct of customer satisfaction

Better Service Quality

Expectati ons = Perceptio ns

Increase in employee s' satisfactio n Increas e in employ ees' benefits

Customer Satisfacti on

Increas e in compan y Profiit

Custom er Loyalty

The figure above illustrates that when service providers meet the expectations of their customers, it leads to customer satisfaction. This should in fact be the first milestone of any bank as it will gain from the outcome. Once a customer is satisfied, it is certain that he will come back to the service provider, hence resulting in customer loyalty and simultaneously helping the company with free marketing that the customer will do on his own. This can be supported by Zairi (2000) views on the fact that satisfied customers possibly share their experiences with five or six persons while unsatisfied customers might inform another ten. It thus costs twenty percent more to look for new customers than to maintain existing ones. Similarly, Naumann (1995) pointed out that retaining an existing customer costs about five times less in money and time & corporate resources than attracting new customers. Thus we hypothesize: 3.2.1 Hypotheses

H1: Demographic factors of respondents have an influence on the SERVQUAL mean score of banks. 5 www.globalbizresearch.org

Proceedings of the International Conference on Tourism, Hospitality and Marketing (IC16Mauritius Conference) ISBN - 978-1-943579-19-8 Ebene-Mauritius, 21-23 January, 2016. Paper ID: M624

3.3 Customer Perception and Expectation of Service Quality The main objective of delivering high service quality is to satisfy customers and as seen in Figure1 the ideal point resulting in customer satisfaction is where customer expectations equal to customer perceptions. The major challenge of service providers is the constant and ever changing expectations of their customers.According to Zeithamlet al (2009), customer expectations are beliefs about a service that serves as standards or reference points to which the performance of the service is judged. Knowing what the customer expects is the first and possibly most critical factor in delivering quality service. Getting what customers want wrong, can result in losing a customer to another company who meets the target, expending money and resources in wrong places and not surviving in a fiercely competitive market. Together with customer expectations come customer perceptions. It is another focal point of service quality on which service providers have to ponder on. Customer perception refers to the way in which customers feel about the services being provided. It is actually this element that shapes customers’ expectations from the company. Parasuraman et al (1985) believed that perception and expectation are strongly relative concepts. Berry et al.(1988) and Parasuramanet al. (1985) viewed quality as the customers’ perception of service excellence. This implies that customers shape their perception of the quality of service based on their past experience, word of mouth and even their closed ones experience. Moreover, Schneider and White (2004) stated that perceive service quality and service qualities are two concepts that deal together in the concept of marketing. Zeithaml et al., (2006) considered perceived service quality as a scale for firm to measure how much they were successful to cover their customer purpose. In the publication of Parasuraman et al., (1985) service quality was conceptualized as a gap between consumers’ expectations and perceptions.Thus service providers that are not able to meet their customer’s expectation will most probably experience a decline in customer retention and unfavourable corporate image. Thus we hypothesize: 3.3.1 Hypotheses

H2: There is a significant difference between customer perceptions and expectations 3.4 Impact of Service Quality and Customer Satisfaction on Banks As documented by Wang et al., (2003) and cited by Ahmad (2010) quality service and products to the customer, is essential for success and survival in today's global and highly competitive banking environment. Bloemer et al. (1998) wrote that bank customer satisfaction can be regarded as a bank fully meeting its customers’ expectations. To support this statement, Jamal et al (2002) defined bank customer satisfaction as a feeling or attitude formed by bank customers after service, which directly links to the various purchasing behaviours. Moreover, providing a high level of service to customers is the marketing weapon that banks can use to differentiate themselves on the market. It is a known fact that nearly all 6 www.globalbizresearch.org

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banks provide the same products to customers and that it takes only some days for new products to be copied. However the only additional effort on which they can clearly demarcate themselves is in providing an excellent service quality which would be impossible for competitors to copy. According to Roth and Van Der Velde (1991) there is a positive relationship between service quality level and financial performance implying that an enhancement of the service quality provided by organisations will result in an improved the financial status of the company. Bennet (1992) supported this by adding that the outcome of developed service quality is positive financial performance. The quality of the service being offered to a customer is actually a defining moment for the banks. As documented by Bitner et al.(1990) delivering high service quality results in customer satisfaction and loyalty, greater willingness to recommend to someone else, reduction in customer complaints, and improved customer retention rates. Thus we hypothesize: 3.4.1 Hypotheses

H3: There is a relationship between service quality and customer satisfaction in the Mauritian banking industry. It can be concluded that in this era of high competition, it is a must for banks to provide a high quality of service to satisfy their customers. Hence, for banks to know where they stand on the market, they have to constantly measure the quality of service that they offer. But due to the intangibility aspect of service, it is quite difficult to measure the quality of service being delivered to customers. Thus, a number of instruments have been devised by prior researchers and for the purpose of this study SERVQUAL will be used, one of the most famous and well appreciated models in the service industry. In this review, the importance of this model has been elaborated.

4. Methodology For the purpose of this study, the quantitative approach has been used through selfadministered questionnaire. The questionnaire comprises of three sections. Section A and B each comprises of a set of 22 questions. These questions are used to measure the five different SERVQUAL dimensions of service quality namely five questions to measure Reliability and Empathy and Four questions to measure Tangibility, Responsiveness and Assurance. Secondary data has been extracted from available research papers, dissertations, journal, and articles from Ebsco, Emerald, magazines and Internet. In order to determine the sample size, a number of similar past studies done has been taken into consideration; whereby it has concluded that a sample size of 200 is suffice for the purpose of this study. Moreover, the banks considered were mainly the 5 banks whose services are perceived to be commonly utilised by Mauritians. They are namely MCB SBM, HSBC, BBC and Barclays Bank.

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Proceedings of the International Conference on Tourism, Hospitality and Marketing (IC16Mauritius Conference) ISBN - 978-1-943579-19-8 Ebene-Mauritius, 21-23 January, 2016. Paper ID: M624

5. Results and Discussion The main analysis is concerned with the testing of hypotheses set as well as with the identification of the gap between customer expectation and perception on the level of service delivered by banks. SPSS 16.0 has been used to conduct three statistical analyses namely reliability analysis, descriptive analysis and statistical inference analysis to provide a complete picture of this study. Before carrying any data analysis, the reliability of the data has been checked using Cronbach Alpha and the reliability coefficient has turned out to be at least 0.7 for each of the five service quality dimensions as shown below: Table 1: Results of Reliability Test

5.1 Analysis of the SERVQUAL Model 5.1.1 Mean Expectation of the Service Quality Attributes Table 2: Mean Expectation of the service quality attributes

Table 2 shows that from the feedback provided by the 137 respondents it has been found that customers considered “show sincere interest in solving problem” (4.67) as most important. This has been followed by “right service at the first time” (4.58) both of which form part of the reliability dimension of SERVQUAL. The lowest score was allocated to “visual aspect of banks” (4.22) and to the quality of “pamphlet or statement are visually appealing” (4.35), both from the dimension tangibility. These scores indicate that, in general, customers do have high expectation from banks on all components making up service quality. 8 www.globalbizresearch.org

Proceedings of the International Conference on Tourism, Hospitality and Marketing (IC16Mauritius Conference) ISBN - 978-1-943579-19-8 Ebene-Mauritius, 21-23 January, 2016. Paper ID: M624

Thus, their expectations, though vary from attribute to attribute, are near to the maximum score of 5 on the 5-likert scale used. In fact these findings are consistent with Parasuraman et al (1988, 1990) findings. Berry and Parasuraman (1991) pointed out that the tangibility dimension is of least importance to customers as compared to other attributes. However, Gronroos (2007) believed that the tangibility aspects of banks help to ensure that customers get a satisfactory quality of service. It is also worth noting that the mean value of all of the 22 attributes is above 4 over a maximum of 5 points, implying that even if an attribute is perceived as less important customers do have a high level of expectation on same. PERFORMANCE ALONG SERVQUAL DIMENSIONS Figure2: Performance along the SERVQUAL dimensions Mean scores of the 5 Service Quality Dimensions

0.000 -0.500 -1.000 -1.500 -2.000 -2.500 Mean Scores

Tangibility

Reliability

-1.624

-2.013

Responsiven ess -1.884

Assurance

Empathy

-1.852

-1.896

The above chart gives a glimpse on the SERVQUAL scores of the five dimensions. After looking at each of the attributes, the mean expected score for each of 5 dimensions have been calculated and the highest negative score found was on reliability, followed by empathy, responsiveness, assurance and tangibility. This implies that the gap between the perceived and expected service quality is higher on the reliability dimension of banks than on other dimensions. In other words, bank customers believe that banks fall short on aspects such as providing right service at the first time. Moreover, it can also be deduced that customers are generally satisfied with the tangibility aspects of their banks. This is in line with research undertaken by Parasuraman et al(1988) who came forward with reliability dimension being the most important one of the five dimensions in terms of service quality. According to their research “little else matters to customers when a service is unreliable” and that “companies normally perform best on the least important dimension namely tangibles”. Hence, it is of

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Proceedings of the International Conference on Tourism, Hospitality and Marketing (IC16Mauritius Conference) ISBN - 978-1-943579-19-8 Ebene-Mauritius, 21-23 January, 2016. Paper ID: M624

high importance that bank management strives hard to improve all the dimensions of service quality in order to increase customer satisfaction COMPARING MEAN EXPECTATION AND PERCEPTION OF THE SERVICE QUALITY DIMENSIONS Figure 3: Comparison between mean scores of customer expectation and perception

The above figure shows the difference between the respondents’ expectation and perception on the level of service quality being provided by their banking services providers. This comparison shows that the expectations on each of the five dimensions are very high as compared to the perceptions. Moreover, expectation on the reliability dimension has the highest mean but unfortunately it is also the one whose mean perception has the lowest score. MOST IMPORTANT SERVICE QUALITY ATTRIBUTES Figure 4 illustrates the five attributes that the respondents have deemed to be most important out of the twenty two attributes set in the SERVQUAL model. We observed that reliability has an upper hand over the other dimensions. Figure 4: The 5 most important service quality attributes

LEAST IMPORTANT SERVICE QUALITY ATTRIBUTES

In the same line, the five least important service quality attributes as perceived by this sample have been identified and have been demonstrated in Figure 5 below. The results show that tangibility is one of the aspects that customers do not grant much importance. This is mainly due to the fact that banks normally invest quite a lot in its physical appearance. We also observed that “open at convenient hours” is least important for the respondents. This 10 www.globalbizresearch.org

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could be explained by the fact that nowadays banks provide a wide number of facilities through their ATM itself hence enabling the customers to satisfy most of their banking needs at their own pace. Figure 5: The 5 least important service quality attributes

BRIEF APPRAISAL ON THE PERFORMANCE OF THE FIVE BANKS STUDIED To have a complete and realistic appraisal, the performance of each of the five banks has been analysed. The gap between customer expectation and perception for each of the five service quality dimensions will be highlighted. Table 3: Gap on service quality dimensions per bank

Where tangibility aspects of banks are concerned it has been found that HSBC Ltd has the highest gap, followed by BBC Ltd, MCB Ltd, SBM Ltd and Barclays Bank Ltd. However, it does not mean that the other four banks are safe on this aspect as their gap varies only by a small unit. This is a clear indication that there is a problem where attributes such as physical equipment, visual appearance of bank materials and neatness of employees are concerned. HSBC Ltd as well as the other banks should try to manage and minimize this gap to improve their quality framework Surprisingly for empathy, MCB Ltd, one of the biggest banks in Mauritius, has the greatest gap followed by Barclays Bank Ltd, SBM Ltd, HSBC Ltd and BBC Ltd. This indicates that much effort must be done by MCB Ltd to recognize the feelings of its customers. Moreover, out of the 5 banks, BBC Ltd seems to be more caring towards its customers. Normally when a bank’s market share increases the policymakers tend to focus mostly on their profitability rather than being customer oriented. However, they should not 11 www.globalbizresearch.org

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forget that the business will not sustain without customers. Hence, necessary measures must be taken by the banks, MCB Ltd in particular, to prove that they have the customers’ interest at heart. Barclays Bank Ltd has the greatest gap concerning the approachability and ease of contact, followed by HSBC Ltd, MCB Ltd, BBC Ltd and SBM Ltd. The reason for it having the greatest gap may be due to its employees not being courteous with customers and employees having inadequate knowledge to answer customers’ questions. Unless actions are taken to reduce this gap, there will be inconsistencies in its service quality. Table 3 shows that SBM Ltd has an upper hand where the assurance aspect is concerned. According to the responsiveness aspect of the five banks in the sample, Barclays Bank Ltd is less responsive followed by HSBC Ltd, SBM Ltd , MCB Ltd , BBC Ltd. Barclays Bank Ltd having the greatest gap shows clearly it is not focusing on important factors such as willingness to help customers, providing prompt and efficient service, among others. Unless these inefficiencies concerning the responsiveness of banks are taken care of, the gap will continue to increase. Based on the feedback of our respondents, HSBC Ltd is again on the top of the list as it appears to be less reliable than the other 4 banks towards its customers. This is surely due to the lack of commitment as well as due to its employees not showing sincere interest in attending to customer needs. From the above table, we found the BBC Ltd is most reliable among the 5 banks. Low level of reliability can prove to be costly to banks as customers can easily switch to another bank thus proper actions have to be taken to remedy the situation promptly. On the overall, the SERVQUAL score is -1.86. This indicates that the perceived service is much less than the expected service. In light of the above analysis, it has been found that the respondents are of the view that among the five banks, HSBC Ltd has a lot to improve to be able to meet its customer expectations. 5.2 Hypothesis Testing 5.2.1 Analysing Demographic Factor And Service Quality Dimensions Hypothesis 1

H10: Demographic factors of respondents have no influence on SERVQUAL mean scores of bank H11: Demographic factors of respondents have no influence on SERVQUAL mean scores of bank Gender and Service Quality Dimensions Given the number of possible answers for gender, Mann-Whitney test has been used to conduct the test and the result is as displayed below.

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Proceedings of the International Conference on Tourism, Hospitality and Marketing (IC16Mauritius Conference) ISBN - 978-1-943579-19-8 Ebene-Mauritius, 21-23 January, 2016. Paper ID: M624

Table 4: Mann-Whitney test results on the impact of gender on service quality dimensions

On one hand Table 4 shows that the significant value for tangibility, assurance and empathy is greater than 5%, hence there is no significant difference in term of male and female perceptions. On the other hand, there is a significant difference in terms of responsiveness and reliability of bank services being provided to male and female. Residential Area and Service Quality Dimensions Similar to the above, Mann-Whitney test has been used to analyse the effect of residential area on the service quality dimensions. The idea is to find out whether there is a difference in the service quality of banks on respondents of living in rural and urban areas. Table 5: Mann-Whitney results on the effect of Residential Area on Service Quality Dimensions

Table 5 shows that statistically there is no difference at 5% significant level in the quality of service provided to respondents living in different residential areas Location of Bank and Service Quality Dimensions Below are the results of Mann-Whitney test conducted to find out whether there is significant difference in the service quality being provided at different bank locations. Table 6: Mann-Whitney results on the effect of location of bank on service quality dimensions

The significant values shown in Table 6 are all above 5%, hence it can be concluded that there is no significant difference in the service quality being provided by banks at their different branches. Based on the flow chart shown in Figure 2, we would now use Kruskal Wallis test to calculate the significant values for Age, Income Group, Level of Education and Occupation against the 13 www.globalbizresearch.org

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5 service quality dimensions. Kruskal Wallis test is a non-parametric test used to compare 3 or more groups of data. It is in fact an extension of the Mann-Whitney test. Age and Service Quality Dimensions The feedback of the 137 respondents based on their age range using Kruskal Wallis test and the results are tabulated below. Table 7 Kruskal Wallis results on the effect of age on service quality dimensions

The significant values shown in Table 7 are all less 5%, hence it can be concluded that there is significant difference in the service quality being provided by banks to customers of different age group. This could be seemed as rational as different age group has different ways of perceiving service quality. Income Group and Service Quality Dimensions Similarly, the 5 service quality dimensions have been tested by taking into consideration the different income groups of the respondents. Here also the Kruskal Wallis test has been used and the outcome is as set below. Table 8: Kruskal Wallis results on the effect of income groups on service quality dimensions

Given that the significant values are all less than 5%, it is statistically possible to say that there is a significant difference in the way different income group earners perceives service quality. Level of Education and Service Quality Dimensions Level of education is one of the most important factors to consider when analysing service quality. As such, given we had 3 groups of answers namely Primary, Secondary and Tertiary level respectively, Kruskal Wallis test has been used to obtain the inference. Table 9: Kruskal Wallis results on the effect of level of education on service quality dimensions

The information displayed in Table 9 shows that there is statistically a significant difference at 5% for reliability, responsiveness and empathy. Moreover, respondents of

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different level of education have the same experience where tangibility and assurance are concerned. Occupation and Service Quality Dimensions The last demographic factor to consider for this set of hypotheses is occupation of the respondents. The researcher wanted to find out whether same level of service quality is provided to respondents of different occupations. Table 10: Kruskal Wallis results on the effect of occupation on service quality dimensions

Table 10 shows that at a level of significant of 5%, all respondents did not experience same level of service at their banks.

There is significant difference where tangibility,

reliability and responsiveness are concerned as compared with the other two dimensions. From our testing results, it is evident that some demographic factors, such as for different age groups and different groups of income earners, do impact on the delivery of banking services. However, we also found that the SERVQUAL score is of -1.86, which indicates a general shortfall in term of service quality being received by this sample if respondents. Hence, we reject H0 in favour of H1. 5.2.2 Gap Analysis Between Customer Expectation and Perception on Service Quality of Banks

Table 11 below displays the gaps that exist between the perception and expectation of service quality in the Mauritian banking industry based on the 5 dimensions of SERVQUAL model. Based on the study of Parasuraman at al (1998), SERVQUAL score = Perception – Expectation. Hence, the higher the score, the better the service being received as it implies that actual service is near to what the customer is expecting.

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Table 11: Gaps between customer perception and expectation

Table 11 above shows the mean score of respondents’ expectation (ideal situation) and the mean scores of their perception (current situation). The quality gap has been calculated for each item in the 5 dimensions and it has been observed that respondents’ expectations exceed their perception. This actually represents Gap 5 of the Gap Model, discussed in the literature section, designed by Parasuraman et al. Parasuraman et al (1988) defined perceived service quality as a global judgment, or attitude, relating to the superiority of the service. Additionally, they link the concept of perceived service quality to the concepts of perceptions and expectations as perceived quality is viewed as the degree and direction of discrepancy between consumers' perceptions and expectations Hence the lower negative scores the higher level of perceived service quality, that is customer perceptions come closer to matching expectations. One of the main reasons for using SERVQUAL questionnaire is to be able to find out on which attribute service quality fails. Hence, the above outcome shows that the highest gap, among all the attributes, lies in the reliability dimension. Most particularly, the respondents are of the opinion that banks fail where sincere interest in solving problem is concerned. The second highest gap is still within the reliability dimension with the attribute “Right service the first time”. In the same flow, the lowest gap lies in the tangibility dimension where visual appeal of bank is concerned. This means that the customers are to some extent satisfied with the way banks are furnished. Hypothesis 2 According to Parasuraman et al (1985), service quality as perceived by the customer is the degree and direction of discrepancy between customer service perceptions and expectations. So in this section, we would analyse whether statistically there is a gap between

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Proceedings of the International Conference on Tourism, Hospitality and Marketing (IC16Mauritius Conference) ISBN - 978-1-943579-19-8 Ebene-Mauritius, 21-23 January, 2016. Paper ID: M624

customer perceptions and expectations in the quality of service being provided by banks in the Mauritian banking industry. The hypothesis set for this analyse is as follows: H2i0: There is no significant difference between customer perceptions and expectations related to dimension i H2i1: There is a significant difference between customer perceptions and expectations to dimension i (wherei = a, b, c, d, e for tangibility, reliability, responsiveness, assurance and empathy respectively) In the view of conducting this analysis, a very powerful statistical tool named Wilcoxon signed rank test would be used to detect if statistically there is significant difference between a paired set of data. Crichton (1997) supported that Wilcoxon Sign test is a statistical comparison of the average of two dependent samples. Also, the differences are approximately symmetric and that the data are measured on an ordinal, interval, or ratio scale. This is therefore appropriate for this study as our model used likert scale to capture respondents’ opinion. Moreover, according to Crichton et al (1997), paired data means that the values in the two groups being compared are naturally linked, and usually arise from individuals being measured more than once. This fits well for this part of our study as the difference between the scores received for perception and those for expectation would be clearly seen. So here, the respondents’ opinions on their perception and expectation would be considered as a set of paired data. Thus, given there are five service quality dimensions, we would be having 5 sets of paired data. The results of the test conducted have been stated below. Hypothesis 2a H2a0: There is no significant difference between customer perception and expectation related to tangibility aspect of banks H2a1: There is significant difference between customer perception and expectation related to tangibility aspect of banks Table 12: Wilcoxon test results on comparing customer perception and expectation related to tangibility aspect of banks

Wilcoxon test gave a significant value of 0.000 which is less than 5%, implying a difference between customer perception and expectation related to tangibility aspect of banks. 17 www.globalbizresearch.org

Proceedings of the International Conference on Tourism, Hospitality and Marketing (IC16Mauritius Conference) ISBN - 978-1-943579-19-8 Ebene-Mauritius, 21-23 January, 2016. Paper ID: M624

Moreover, this result is in line with Table 11 where we found that the mean expectation for tangibility is 4.37 which is higher than the mean perception of 2.74 hence showing the gap between customers’ expectation and perception on tangibility. As such, we can reject H2a0in favour of H2a1. Hypothesis 2b H2b0: There is no significant difference between customer perception and expectation related to reliability aspect of banks H2b1: There is significant difference between customer perception and expectation related to reliability aspect of banks Table 13: Wilcoxon test results on comparing customer perception and expectation related to reliability aspect of banks

The results from Wilcoxon test show a significant value of 0.000 which is less than 5%, implying a difference between customer perception and expectation related to reliability of banks.

Moreover, this result is in line with Table 11 where we found that the mean

expectation for reliability is 4.53 which is higher than the mean perception of 2.52 hence showing the gap between customers’ expectation and perception on reliability. As such, we can reject H2b0 in favour of H2b1. Hypothesis 2c H2c0: There is no significant difference between customer perception and expectation related to the responsiveness aspect of banks H2c1: There is significant difference between customer perception and expectation related to the responsiveness aspect of banks Table 14: Wilcoxon test results on comparing customer perception and expectation related to responsiveness aspect of banks

Wilcoxon test gave a significant value of 0.000 which is less than 5%, implying a difference between customer perception and expectation related to responsiveness of banks. Moreover, this result is in line with Table 11 where we found that the mean expectation for 18 www.globalbizresearch.org

Proceedings of the International Conference on Tourism, Hospitality and Marketing (IC16Mauritius Conference) ISBN - 978-1-943579-19-8 Ebene-Mauritius, 21-23 January, 2016. Paper ID: M624

responsiveness is 4.52 which is higher than the mean perception of 2.64 hence showing the gap between customers’ expectation and perception on responsiveness. As such, we can reject H2c0in favour of H2c1. Hypothesis 2d H2d0: There is no significant difference between customer perception and expectation related to the assurance aspect of banks H2d1: There is significant difference between customer perception and expectation related to the assurance aspect of banks Table 15: Wilcoxon test results on comparing customer perception and expectation related to assurance aspect of banks

Wilcoxon test gave a significant value of 0.000 which is less than 5%, implying a difference between customer perception and expectation related to assurance aspect of banks. Moreover, this result is in line with Table 14 where we found that the mean expectation for assurance is 4.52 which is higher than the mean perception of 2.66 hence showing the gap between customers’ expectation and perception on assurance. As such, we can reject H2d0 in favour of H2d1. Hypothesis 2e H2e0: There is no significant difference between customer perception and expectation related to the empathy aspect of banks H2e1: There is significant difference between customer perception and expectation related to the empathy aspect of banks Table 16: Wilcoxon test results on comparing customer perception and expectation related to empathy aspect of banks

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Proceedings of the International Conference on Tourism, Hospitality and Marketing (IC16Mauritius Conference) ISBN - 978-1-943579-19-8 Ebene-Mauritius, 21-23 January, 2016. Paper ID: M624

Wilcoxon test gave a significant value of 0.000 which is less than 5%, implying a difference between customer perception and expectation related to the empathy aspect of banks. Moreover, this result is in line with Table 11 where we found that the mean expectation for empathy is 4.52 which is higher than the mean perception of 2.62 hence showing the gap between customers’ expectation and perception on empathy. As such, we can reject H2e0 in favour of H2e1. 5.2.3 Analysing Relationship between Service Quality and Customer Satisfaction

With reference to the idea presented by Grönroos’s (2000), delivering high quality services is a prerequisite for achieving customer satisfaction and only through customer satisfaction can the company gain loyal customers. Based on a combination of literature review and empirical investigation, Oliver (1980) and Parasuraman et al (1988) suggested that service quality and consumer satisfaction are related, but distinct constructs. Their explanation of the difference between the two is that service quality is a long-term overall evaluation, whereas consumer satisfaction is a transaction-specific measure. Given the nature of the relationship between customer satisfaction and service quality, it seems vital to test the data collected for this study also to find out if here also the conclusion sustains. The hypothesis stipulated for this analysis is as follows: Hypothesis 3 H30: There is no relationship between service quality and customer satisfaction in the Mauritian banking industry. H31: There is a relationship between service quality and customer satisfaction in the Mauritian banking industry. To undertake this investigation, correlation analysis has been used to assess the association between service quality and customer satisfaction. The test has been conducted in such a way that the questions related to Tangibility, Responsiveness and Reliability have been grouped to represent the service quality element of the banks and customer satisfaction has been represented by questions relative to assurance and empathy dimensions. The results of the correlation analysis have been tabulated below. Table 17: Results of correlation between service quality and customer satisfaction

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Proceedings of the International Conference on Tourism, Hospitality and Marketing (IC16Mauritius Conference) ISBN - 978-1-943579-19-8 Ebene-Mauritius, 21-23 January, 2016. Paper ID: M624

The significant value is 0.000 which shows that there is a significant difference between customer satisfaction and service quality at 5% significant level. Hence, rejecting the null hypothesis. Moreover, there is a positive relationship between these two variables such that an increase of 1% in reliability, responsiveness and tangibility will lead to an increase of 52.3% in customer satisfaction.

6. Conclusion and Further Research It is very important that bank managers understand that service quality is made up of different dimensions and it being intangible makes it difficult to assess. All the service quality dimensions have a positive relationship with the way bank employees behave. Therefore, the staff needs to have ample knowledge, communication skills, and eagerness to help in giving quick services efficiently. Bank managers should realize the fact that training to employees is an investment, not an expense. Training of staffs with regards to service quality and knowledge in service quality dimensions should be regularly conducted in order for the staffs to feel more at ease, professional and confident while delivering the required service to customers. Business drivers can use the five dimensions discussed in this study to evaluate the level of service being delivered to their customers. Thus, enabling them to analyse their current situation and convert weaknesses into strengths to have a sharper competitive edge on the market. Bank staffs should keep in mind that customers evaluate service quality by comparing the quality of service they expected to receive against the quality of service they actually experience. Further research can be carried out to solely appraise the reliability dimension of banks. It would also certainly add value to the banking industry to find out about the financial impact on banks when more emphasis is laid on service quality. Finally, it would be interesting to assess service quality from the employees’ perspective as well.

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