The impact of service quality on customer satisfaction in the commercial banks case of SGBC and Eco-bank in the Kumba municipality

ABSTRACT

The purpose of this study was to determine the impact of service quality on customer’s satisfaction in commercial banks found in Kumba municipality. The study had as case study SGBC and Ecobank.  The researcher used four dimensions of service quality (reliability, responsiveness, assurance and empathy) to assess their effects on customer’s satisfaction. The research design was explanatory and survey research. 200 questionnaires were administered to customers of the two banks using both convenient and quotas sampling. Data collected through a questionnaire were analyses using SPSS and interpreted using both descriptive and inferential statistics. Results suggested that both reliability and assurance (.763 and .404 Pearson correlation coefficients respectively) have a strong positive influence on customer’s satisfaction of commercial banks while responsiveness and empathy (-566 and -267 Pearson correlation coefficients respectively) have a strong negative influence on customer’s satisfaction of commercial banks. Some of the recommendations of the research were that; staff and managers should innovate in their way of serving customers, staff should be able to help customers, seminars should be organized to inform bank staff of their rights, employees should be able to listen to customers. The limitations of the study could be the lack of time to carry the research in other banks, lack of finance. 

Key words: Tangibility, Reliability, Responsiveness, Assurance, Empathy, Customer satisfaction, SERVEQUAL model.

CHAPTER ONE

GENERAL INTRODUCTION

1.1 INTRODUCTION

This chapter is made up of the background of study, statement of research problem, research questions, objectives of study, research hypothesis, justification of study, significance of study, scope of study, operational definition of terms and organization of the work.

1.2 BACKGROUND OF THE STUDY

The origin of service quality can be dated right back to the 1920s when inspection activities were performed in the production. Frederick W. Taylor, father of scientific management employed the inspection as a justifiable action to have an effective and efficient quality control tool (Hounshell, 1985). In this emerging era of the formal marketing field, the marketing courses were started to be taught in the universities in the USA such as the University of Pennsylvania, University of Michigan, and New York University in the name of Marketing of farm products and Methods, Marketing of Products and Mercantile Institutions, respectively.

The attention was paid to the distribution of produced farm and agricultural goods in these courses (Bartels, 1951). The concept of service quality is also growing, East African countries are members of ISO (international organization for standardization) and certification has been on the increase in the region as a quality management measure. In East and Central Africa, Kenya has the highest number of ISO 9001 certifications with a total of 257, followed by Uganda with 44, Tanzania 12, Republic of Congo two, and Rwanda one.

Globally, the 2008 ISO survey reported 982,832 certifications in 176 economies, with China leading with 224,616 (ISO survey, 2008).  Recent years have shown increasing attention to customer satisfaction.

Today, there is fierce competition in the commercial banks of Cameroon due to the influx of new commercial banks and micro-finance agencies such as the cooperative societies not leaving out telecommunication companies like MTN which also offers banking services.

From 1990 to 210, the commercial banks of Cameroon had experienced bank liquidation, acquisition, and mergers due to the high competitive forces arising from the globalization of the economy and the frequent changing of monetary rules in Cameroon imposed by the World Bank, the bank of Central African States (BEAC), the banking commission for the six central Africa states (COBAC), and parliamentary enactments.

For banks to cope with these pressures, they need to secure reasonable profits that will ensure their sustainability through the creation of a larger customer base. As a result, banks in Cameroon in general and those of the Kumba municipality, in particular, are setting themselves strategies to ensure customer satisfaction and loyalty to raise reasonable profits that will ensure their sustainability (Beteck., 2019).

The bank’s vision is to achieve profitability, and a high degree of customer satisfaction is a necessary condition for achieving this lofty objective in the face of competition. This is why banks listen to customers’ requirements and complaints to provide them with the quality of products and services that will meet their satisfaction ((Beteck., 2019).).

Commercial bank’s offerings to their customers are similar and customer satisfaction remains the sole tool that differentiates between one bank’s market share and another, as such measuring customer satisfaction is important (Beteck., 2019).

Given the current level of competition, banks therefore, have the tendency to serve customers with related products. What is important to the customer now is the measure of the quality of what he/she is paying for.

This suggests that customer satisfaction is fully achieved if the products or services delivered meet some quality standards as perceived by the customers. The bank industry is amongst the service giving organisation in the world. It provides various services such as: Accepting deposit in the form of saving and current account, Extending loan and advance, Granting overdraft, Discounting of bills of exchange, Collection and payment of credit instruments, Foreign currency exchange, Consultancy and advisory in respect of investment, industry, trade, income and taxes, Bank guarantees, Remittance of funds, Credit and debit cards, ATM services, Home banking, mobile banking and online banking, Priority banking such as online bill payments.

In addition, customer expectation of service quality has increased proportionately Parasuraman & Ziethaml (1988) developed a model containing five service quality dimensions i.e Tangibility, Reliability, Responsiveness, Empathy and Assurance.

These instruments are known as “SERQUAL Five-Factor Model that is now commonly used for measuring service quality (Paul, Mittal, & Srivastav, 2016). This model defines quality as the divergence between customer’s expectation and perception of the service delivered to measure quality, Customers now demand high-quality services from banks such as:

Reliability; for example, how efficiently banks address customer problems and how accurately they maintain customers’ records, and timely delivery of services

 Responsiveness, how efficiently the bank addresses customers’ queries and provides solutions to their problems

Assurance, customers’ trust and confidence in the bank to render the best possible service

Empathy; being able to understand and share the feelings of customers

Banks aim to build a competitive advantage through high-quality service and by developing a loyal customer base. A satisfied customer base also helps in increasing market share (Khan & Marriam, 2014).

Many leading firm focus on providing quality services for creating differentiation and competitive advantage. This leads to a stronger brand image. Customer satisfaction is a psychological state.

Customers are highly satisfied when service quality exceeds their expectations (Paul, Mittal & Srivastav, 201ta). It is believed that satisfied customers keep a sustainable relationship with the company by regularly purchasing its product and services (Kashif, Suzana, Shukran & Rehman, 2015).

Several studies have found that services quality has a significant contribution to customer satisfaction (Loke, Taiwi, Salim & Downe, 2011).

A high-quality service leads to competitive advantage, satisfied customer base and improved bottom line for the company.

Many empirical and conceptual studies have been done on customer service quality and customer satisfaction. The finding of Mohammad and Alhamadani, (2011), indicated that service quality is an important antecedent of customer satisfaction. Accordingly, Messay (2012), “found that service quality is vital to business profitability, and survival”. Thus, from the findings of Messay (1996), the researcher understands that if service quality is going down in the organisation, it will have negative effects on the organisation’s profitability.

Therefore, this study assesses the impact of service quality on customer satisfaction in the case of commercial bankss in Cameroon. The study will help managers identify what kind of factors are highly influential to improve customer satisfaction, identify factors affecting the provision of quality services to customer and recommends solutions to the identified problem.

1.3 PROBLEM STATEMENT

Commercial banks  are facing lots of challenges due to increase in competition amongst them. As a result various strategies are formulated to retain the customer and increasing the service quality level has been considered key success factor. Service quality is particularly essential in the banking services context because it provides high level of customer satisfaction and hence it becomes a key to competitive advantage (Ahmossawi, 2001).

However, in Société Générale Cameroun (SGBC) and Ecobank of the Kumba Municipality in the commercial banks of Cameroon, there is a constant formation of long queues at the banking halls of the respective banks resulting to delay in crediting and debiting of accounts and the rendering of bank statements.

This has gradually developed a feeling of discontentment among customers of SGBC and Ecobank which if care is not taking might switch to telecommunication companies like MTN that renders fast mobile money account services.

Moreover, the initiation of accounts in SGBC and Ecobank is expensive with a minimum account rate of one hundred thousand francs. This might cause prospective customers through referrals (negative words of mouth recommendation) to switch to other micro-finance agencies like cooperative credit union with a base amount of fifty thousand francs for account initiation.

Further, the process of granting loans in SGBC and Ecobank is too procedural, slow and expensive. It requires a series of documents like the collateral security asset document, certificate of residence and nationality all of which requires money to be done. The loan if granted, the charges that accrue to it are worth a problem to customers with an interest rate twice that of savings account.

Furthermore, in SGBC and Ecobank, the rate at which the Automated Teller Machine (ATM), gets block is becoming boring and unreliable. Cash withdrawers cannot meet up with arrange programs because of “Horsepower out of use”. At times in SGBC and Ecobank internet unavailability leads to the shutdown of activities in the banks thereby failing customers’ transactions for the day.

Exceptionally in SGBC, the bank menus are not easily understood by customers in the Kumba municipality because they are written in French. Because of this language barrier accessibility to bank information becomes a problem. Customers cannot easily meet up with current changes.

Given all these discontentments among customers of SGBC and Ecobank, if care is not taking to redress the situation, the banks might suffer from loss of customers to competitors like the telecommunication companies (MTN) and micro-finance institutions like the cooperative societies and insurance companies.

When customers switch to other competitor, globally banks are faced with a highly competitive environment as they progress from product and sales-focused practices to a marketing Orientation where competition is based on customer-centered strategies that enhance customer satisfaction (Godson, 2009).

1.4 RESEARCH QUESTIONS

Research questions will be divided into two namely the main research questions and the specific research question.

1.4.1 Main Research Question

The main research question will be what is the impact of service quality on customer satisfaction in the commercial banks in the Kumba municipality?

1.4.2 Specific Research Questions

What is the effect of the service quality dimension “Reliability” on customer satisfaction in the commercial banks in Kumba municipality?

How does responsiveness affect customer satisfaction in the commercial banks in Kumba municipality?

What is the influence of the service quality dimension “assurance” on customer satisfaction?

What is the effect of empathy on customer satisfaction in the commercial banks in Kumba municipality?

1.5 OBJECTIVES OF THE STUDY

The objective of this work is divided into two general and specific objectives as seen below.

1.5.1 General Objectives;

The main objective of this study will be to evaluate the impact of service quality on customer satisfaction in the commercial banks in the Kumba municipality

1.5.2 Specific Objectives;

To assess how reliability, affects customers’ satisfaction in the commercial banks in Kumba municipality.

To determine the influence of responsiveness on customer satisfaction in the commercial banks in Kumba municipality.

To establish how assurance impacts customers’ satisfaction in the commercial banks in Kumba municipality.

To establish how the service quality dimension “empathy” affects customer satisfaction in the commercial banks.