A Study of the Perceived Service Quality and its Dimensions in Private Sector Banks

Abstract

The purpose of conducting this research was to explore how the of the private sector banks perceive the various dimensions of service quality. This research was mainly based on primary data which had been collected through a well-structured questionnaire (adapted from the PZB model of service quality). The questionnaire had been distributed to 300 respondents. This paper makes a useful contribution as there are very low number of studies that have been conducted in India on such dimensions like tangibility, reliability, responsiveness assurance and empathy. This research showed that perception of service quality varies from person to person and, bank managers need to conduct more researches in order to evaluate perceived service quality more strongly. Service sector is the lifeline for the social economic growth of a country. It is today the largest and fastest growing sector globally contributing more to the global output and employing more people than any other sector. For most countries around the world, services are the largest part of their economy. The real reason for the growth of the service sector is due to the increase in urbanization, privatization and more demand for intermediate and final consumer services. Availability of quality services is vital for the well being of the economy. The Indian Service sector covers a wide range of activities, such as transportation, communication, trading, finances, real estate and health, among others. Amongst these Indias financial sector is diversified and is expanding rapidly. It comprises of commercial banks, insurance companies, non-banking financial companies, mutual funds and other smaller financial entities. Ours is a bank dominated financial sector and commercial banks account for over 60 per cent of the total assets of the financial system. Indian Banking sector forms the backbone of the countrys economy. After nationalisation of banks in 1969 public sector banks came to occupy dominant role in the banking structure. Private sector banking in India received a flip in 1994 when Reserve Bank of India encouraged setting up of private banks as part of its policy of liberalisation of the Indian Banking Industry. Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector. Private Banks have played a major role in the development of Indian banking industry. They have made banking more efficient and customer friendly. In the process they have jolted public sector banks out of complacency and forced them to become more competitive. In these banks most of the shares are in the hands of private owners. Like any other financial services, the banking industry, too, is facing a market that is changing rapidly. New technologies are being introduced and there is always a fear of economic uncertainties. In developing countries like India, it has become very important that banks determine the service quality factors, which are pertinent to the customers selection process, as with increased competition, with the advent of international banking, the trend towards larger bank holding companies, and innovations in the marketplace, are now having greater difficulty in selecting one institution from another. In order to provide excellent service quality, identifying the underlying dimensions of the service quality construct is the first step in the definition and hence provision of quality service and thus should be a central concern for retail bank managers as well as service management academicians and practitioners. Maintaining effective customer service helps to build and maintain customer relationship that is the key success in current banking scenario. Better service quality typically can help to get higher market share and better returns (Slu & Mou 2003). It is desirable for service providers to uncover what attributes consumers utilized in their assessment of overall service quality.