Service Quality and Customer Retention in Malaysian Commercial Banks

Abstract

This conceptual paper explores the contribution of service quality on banks’ customer retention. Customer is the core factors to any business industry and there is no exception for the banking industry. Customers will only retain with the same bank provided there is a quality service. Service comes in the form of how the bank’s employee treats the customers and from physical facilities and other tangibles used in banking transactions. Contribution of service quality is indefinite and without it, firm’s business will lose out to other banks. Banks not only compete with other banks but banks’ branches as well. The importance of the banking business cannot be neglected as it has contributed to Malaysia Gross Domestic Products in term of service industry. Service is not similar with goods or physical products as it is intangible and only can be experienced during the process of selling or buying. Good quality service must be prioritized in helping retaining customers even with the Industrial Revolution 4.0 where it is “a mechanism that is controlled or monitored by computer-based”. Contribution of human capital which is cannot be separated in term of knowledge, friendly approach and ethical help in delivering quality service. One of the methods can be applied by the bank is the commitment of monitoring and servicing customer requirements to deliver high levels of service quality for total customer satisfaction.