Keywords

Service, Banking Industry, Customer Satisfaction, Banks.

Introduction

Prior to the advent of modern banks, the goldsmiths' principal role in banking was to hold other people's money in trust and to provide a loan against it. Over time, additional functions were added and the existing ones were enhanced. As a result, commerce has become so reliant on banking that even a brief pause in bank activity might have a devastating effect on the economy of a country. Several new financial services have been introduced into the Indian banking system, including merchant banking, leasing, home financing, venture capital, and financial services in general. From rural finance to international banking, banks provide a wide range of services. Because of India's shifting industrial, trade, and exchange rate policies, Indian banking is no exception to the global banking industry's diversity and technical advancement. In reaction to these changes, the bank's functions have developed.

The development of new technology has altered the way consumers engage with service providers significantly. Customer satisfaction is the most critical issue confronting the Indian banking industry. It is critical for all marketers. Customer happiness is seen as critical to success in today's highly competitive corporate climate. Numerous studies show categorically that the new generation of banks is customer-centric, recognizing and anticipating his desires and needs, providing him with a diverse selection of benefit arrangements, goods and services in order to meet his needs (Gani & Bhat, 2003). Civility, precision, and speed are the core elements of a bank's customer service (Ganesh & Varghese, 2003).

Consumer dissatisfaction occurs when expectations are exceeded by performance, and the perceived quality falls short of customer satisfaction (Parasuraman et al., 1985). As a result of the difficulties in defining and measuring service quality, the word has drawn considerable scholarly interest and sparked debate (Wisniewski, 2001). Customer impressions of service quality and preferences have a substantial influence on a bank's performance (Mouawad & Kleiner, 1996).

Service Quality

Based on their study into service quality, the authors of (Parasuraman et al., 1985). Discovered that businesses that place a high priority on customer satisfaction are more likely to have a positive bottom-line impact. It was discovered by (Brady & Cronin, 2001) that the service quality notion correlates to the structure of a third-order factor model that ties service quality perceptions to three distinct and actionable dimensions: the outcome, the interaction, and the environment. A customer's view of service quality is built on three underlying sub dimensions (Ibrahim et al., 2006).

Service Quality Dimensions

A preliminary research was carried out by Preethi (2000) in order to build a model of service quality. Customer expectations impact their impressions of the quality of the service they get, and the quality of the service itself is used to determine the quality of the service it provides, according to the findings of conversations on service quality. According to internet banking service quality may be broken down into three categories: customer service, product quality, and online system quality. These three categories are all subsumed under the umbrella term "quality of service." Consumer satisfaction is influenced by a number of factors, including reliability, responsiveness, accessibility, and accuracy. Increased profitability and productivity were shown to be linked to service quality, according the findings reveal that the service quality of international banks is often better than that of Indian banks, and that the quality of service varies across demographic characteristics. International banks' findings: (2006) examined the key factors impacting UK bank customers' perceptions of the quality of electronic services and assessed bank perception and actual performance E.I.M.J. According to the statistics, most customers had a positive opinion of e-SQ.

Objectives

1. To provide an overview of the significance of services and their function in the Indian economy, as well as the many services given by the Indian banking industry.

2. Customer satisfaction with the services of private and public sector banks will be assessed, and a relationship between service quality and customer satisfaction will be established.

3. To develop an empirical model that illustrates the link between service quality, customer satisfaction, and customer retention.

Hypotheses

H1: It does not seem that there is a significant difference in the level of service offered by public sector and private sector banks.

H2: In terms of customer satisfaction, there is no discernible difference between public and private sector banks.

H3: Customer happiness and loyalty are not predicted by service quality factors.

Need of the Study

The banking business has changed dramatically in recent years. Growing competition among banks, prompted by technological improvements and increased competition among banks, has forced commercial banks to develop innovative tactics for recruiting new customers and maintaining existing customers. With rising rivalry among banks, the quality of service provided and client happiness are critical to the banks' long-term viability and profitability. Measuring the quality of service and degree of satisfaction of bank clients has become necessary in the current environment. As a result, a research on customer satisfaction in banks is deemed required.

Research Design

The approach used in this research is based on primary data collected via the use of a well-structured questionnaire intended to elicit intelligent thoughts from both public and private sector bank customers in the Philippines. Using a suitable random sample approach, responses from customers of both public and private sector banks were acquired. It was decided to perform the research in two stages: first, a preliminary pilot study was done, and then the major study was carried out. Andhra Pradesh's five public and private sector banks have a different number of branches than the other four banks. As a result, effort was taken to guarantee that clients from each bank were selected in a proportional way. There are just a few selected public and private sector banks included in the study, with a sample domain consisting of five public sector banks and five private sector banks: These banks were chosen based on their branch network in the Krishna area. The replies will be collected by the following five public sector banks.

Determination of Sample Size

Following a thorough investigation, 250 surveys from public sector banks and 160 questions from private sector banks were obtained. After taking into account the pilot research, only 204 questionnaires were sent to clients of private sector banks out of the 300 questionnaires distributed to customers of public sector banks. There were a total of 504 persons that participated in the research; 300 were recruited from publicly-owned institutions and 204 from privately-owned ones.

Private sector banks with a similar number of branches are selected for the research in a similar manner to the public sector banks (Tables 1 and 2).

Literature Review

Several new financial services have been introduced into the Indian banking system, including merchant banking, leasing, home financing, venture capital, and financial services in general. From rural finance to international banking, banks provide a wide range of services. Because of India's shifting industrial, trade, and exchange rate policies, Indian banking is no exception to the global banking industry's diversity and technical advancement. As a result of these changes, the bank's roles have altered. According to Jindal (2010), Indian banks must rethink their commodities and customer service strategies in light of changing tastes and wants of a diversified client base in a competitive market. He was accurate in his assessment. As a nation's economy grows, the banker's role in commercial transactions grows as well. To maintain a competitive advantage and maintain satisfied customer relationships, service quality has become a hot subject in the face of increased competition. Consumer dissatisfaction occurs when expectations are exceeded by performance, and the perceived quality falls short of customer satisfaction (Parasuraman et al., 1985). The consumer serves as a publicist, promoting the virtues of banking with a certain institution. This is often referred to as consumer loyalty. Thus, a pleased client becomes a source of fresh business for a bank. As a consequence, the banking industry has expanded beyond traditional banking operations to include insurance, merchant banking, factoring, and consulting services in order to thrive in today's world of strong competition. It is consequently critical to correctly grasp consumer expectations and to offer real performances that surpass those expectations in order to create satisfied customers. Banks' client perceptions are influenced by the behavior of individual employees or authorities, according to (Purohit & Pathardikar, 2007). Only one of the five elements of SERVQUAL, staff dependability, was found to be lacking in all of the banks studied. Perceived as opposed to planned levels of service excellence are critical, as argued. As a result of this study, it seems that the sample banks' perceived service quality was lower than their planned service quality. A measure called SERVQUAL was created by Bose & Gupta (2013) to compare the quality of service offered by public sector banks in India with that provided by newly established private sector banks. Results showed that private banks provide better customer service than public sector banks. Additionally, Brige's study looked at the impact of technological advancements on bank-customer interactions in Latvia's banking sector in 2006. Aside from customer happiness, the author found that factors including brand image, social standing and word-of-mouth all play a role in determining client retention rates. Employed two separate studies, SERVQUAL and Technical/Functional Quality, to investigate the relationship between service quality and customer satisfaction. Two service quality indicators are compared for their ability to predict customer contentment. A study conducted explored the link between customer satisfaction and service quality metrics. The outcomes of the research suggest that customer satisfaction seems to be connected to both the core and relational components of service quality, while expertise appears to be adversely associated to customer satisfaction.

Data Analysis

The main data were analyzed using the SPSS V-15 computer software. The statistical methods used to analyze the data collected through questionnaires. Specifically, the Principal Component Method is used to analyze customer answers to various claims regarding service quality characteristics in order to determine factor segmentation. It is possible to investigate the relationship between many factors of service quality and customer satisfaction and loyalty by using multiple regressions. Public and private sector banks may benefit from doing a one-way analysis of variance to better understand how demographics and banking habits influence customers' views of service quality. Both commercial and public sector banks utilize a one-sample t-test to gather customers' views on many aspects of service quality features, customer expectations, levels of satisfaction, and loyalty (Lassar et al., 2000; Zeithaml et al., 2002).

T-test to Ascertain Respondents' Opinions based on their Expectations and Degree of Satisfaction

Two levels of assessment were devised by the researcher, namely customer expectations and satisfaction with the service quality of financial services. These emotions are quantified using Likert's five-point scale, which ranges from very dissatisfied to extremely glad. A parametric test was used to measure consumer expectations and satisfaction. The parametric t-test findings for public and private sector banks are provided below.

It was discovered that public sector bank counter services (mean=4.1833) were significantly better to those provided by private sector banks in terms of the availability of drinking water and bathroom facilities. It was discovered that the display of information on DD commissions, DD cancellation costs, and so forth. Has improved in both the public and private sectors, respectively.

As a result, it may be inferred that consumers anticipate public sector banks to provide more counter services than private sector banks. According to the above data, public sector bank questions and redressal (mean=3.5200), private sector bank queries and redressal (mean=3.7451), and t value=-2.281, p=0.05 are statistically significant @ 5% level. As a result, it may be inferred that clients demand more from private sector banks in terms of customer service and dispute resolution than they do from public sector banks. According to the above data, public sector bank questions and redressal (mean=3.5200), private sector bank queries and redressal (mean=3.7451), and t value=-2.281, p=0.05 are statistically significant at the 5% level. As a result, it may be inferred that clients demand more from private sector banks in terms of customer service and dispute resolution than they do from public sector banks (Table 3).

(Bhat & Gani, 2004) “What makes a quality service in banks: Customer speaks his mind”, Management and Change, Volume 7, No.2, 2003.

According to the data in the preceding table, the execution of standing orders is statistically significant at the 5 percent level in both banks of the public sector (mean=3.2033) and private sector banks (mean=3.4706), with a t value of -2.509 and a p-value of 0.05 for both public and private sector banks. The conclusion that private sector banks have a better level of customer satisfaction than public sector banks may be drawn as a consequence of this (Table 4).

The preceding table indicates that R=0.298 and R²=0.089. This means that service quality factors influence customer satisfaction by 8.9 percent in public sector banks. These results in the following ANOVA table verifying regression fit (Table 5).

According to the preceding data, F=4.051, p=0.000 are statistically significant at the 5% level. This demonstrates the critical importance of the seven service quality factors in predicting customer satisfaction levels in public sector banks. This raises the issue of determining the specific impact of each service quality component on customer satisfaction (Table 6).

In this research, tangibleness (t=-2.397, p=0.17), dependability (t=2.581, p=0.05), and the ability to build trusting connections with clients in public sector banks were shown to have an influence on customer satisfaction in public sector banks, as shown in the table above. In response to differences in service quality in terms of tangibility, dependability, and confidence-building, customers' levels of satisfaction vary significantly. It is concluded that in order to counteract the negative trend in public sector banks, improvements must be made in the tangibility variables, which include advanced computer/information technology to serve clients, visually appealing physical facilities, well-dressed and neat employees, adequate space for uncluttered movement and a conveniently located location (Table 7).

Practical Implications

Banks, as a service provider, has various facets. The functions and coverage of banks in general is very wide. Research pertaining to functions, customer satisfaction and CRM are considered vital ever as these lead to the overall growth of any organization. The quality of the service a firm provides is an essential part of satisfying the customer's specific expectations in any service industry. No industry is exempt, and banking is no different. Public, commercial and international banks have been battling it out since the introduction of the new economic strategy in 1991, and they've been doing so by delivering all the services their customers expect or require. Only happy customers may be maintained as clients. There must be a way to measure how satisfied customers are with the banks' services.

Customer happiness and loyalty are directly influenced by a wide range of service quality attributes. The researcher's objective is to determine whether or not bank consumers are aware of the numerous financial and non-financial services offered by the institution, how they perceive service quality dimensions, what they expect from banks' various services and what degree of customer loyalty they have to these services.

Conclusion

Customer satisfaction is much higher in the private sector; customer expectations, satisfaction levels, and bank loyalty are all strongly linked, as is the case with many other factors. Ultimately, consumer satisfaction with bank services is influenced by a variety of variables, including how successfully bankers and customers communicate with one another and the technology they use. In both public and private sector banks, prospective customers seek the best possible service at the lowest possible cost for normal banking transactions, according to a study.

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Received: 08-Feb-2022, Manuscript No. AMSJ-22-11384; Editor assigned: 10-Feb-2022, PreQC No. AMSJ-22-11384(PQ); Reviewed: 22-Feb-2022, QC No. AMSJ-22-11384; Revised: 24-Feb-2022, Manuscript No. AMSJ-22-11384(R); Published: 28-Feb-2022