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Volume-6, Issue-2, March-April 2016

International Journal of Engineering and Management Research
Page Number: 573-578

Service Quality of Public Sector Banks in India A Gap Between Perception

and Expectation
Dr. Jitendra Kumar Sahu1, Manabhanjan Sahu2
1
Assistant Professor - Management (S.M.I.T), Research Scholar (Berhampur University), Orissa, INDIA
2
HOD Mechanical Engineering and Training & placement Officer, S.M.I.T, Berhampur, Orissa, INDIA

ABSTRACT Technology has now brought in e-banking, automated

The Indian banking system consists of 26 public
sector banks, 20 private sector banks, 43 foreign banks, 56
regional rural banks, 1,589 urban cooperative banks and
93,550 rural cooperative banks, in addition to cooperative
credit institutions as on 1st February 2016. Within this
competitive banking ecosystem, the customers perception for
public sector banks valued a lot for it. The researcher in this
paper tries to describe a conceptual framework of service
quality of selected public sector banks in the city of
Berhampur. The researcher used SERQUAL questionnaire
having two parts i.e. Expectation and Perception. There are
22 questions under five dimensions of service quality. In
order to find the perceived service quality the mean score was
obtained which showed that Tangibility had the highest
value in expectation with 4.216 followed by Assurance,
Responsiveness, Reliability and finally Empathy at least.
Similarly on the perception side Empathy had highest
value with 6.355 followed by Tangibility, Responsiveness,
Reliability and finally Assurance. The maximum gap between
Perception and Expectation is for Empathy with 3.240
while lowest is for Assurance with 1.570. This research has
some limitations as the results shows the perceived service
quality of customer of one city only. The data can also be
collected from villages to find and improve the perceived
service quality of banks.
Keywords--- SERVQUAL, perceived service quality,
Assurance, Empathy, Responsiveness, Reliability,
Tangibles.
I. INTRODUCTION
Banking sector in India has made outstanding
progress since independence. It has undergone a major
transformation class banking to mass banking. The
banking accomplishments, to provide efficient customer
service at lower costs, facilitate through innovation and
communication aided by information technology.
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teller machines (ATM), electronic fund transfer,
anywhere-anytime banking, smart cards; net banking,
mobile banking etc. are no longer alien concepts to Indian
banking customers (Dasgupta, 2005). The customers are
able to choose their banker from a number of banks
offering wide range of services and delivering quality
service. The commercial banks in India are now becoming
more market oriented and customer friendly. Efforts are
being taken to improve their competitiveness through
enhanced service quality, which is vital for keeping their
customers well contented and satisfied. Customers are
viewed as a group whose satisfaction with the enterprise
must be incorporated in strategic planning efforts.
Evidence is mounting on placing a high priority on
customer satisfaction which is critical to improved
organizational performance in a global market scenario.
Meeting the expectations of the customers in all areas
relating to customer service has been of prime importance
for the banking sector in India.
Although public sector banks in India have slowly
adopted new technology, their diffusion has been
somewhat slow as compared with the newer, private sector
banks. There has been growing concern among the
customers availing public sector banking services in India.
A study (Kumar, 2005) revealed that big public sector
banks have poor record on customer service such as:
delays in attending to and indifference towards customers.
As India continues to move toward greater. economic
liberalization, there are moves to allow the public sector
banks even greater freedom with regards to their monetary
and credit policies (Kaushik, 1997). Issues concerning
service-quality in Indian public sector have to be studied
extensively, so that they could sustain and grow on the
face of stiff competition, by learning from their
counterparts in developed economies like the USA and
Europe (Kassem, 1998). To provide faster and more
efficient services, the Indian public sector banks have to
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realize the importance of customer care and satisfaction.
However, customer needs are normally hidden deep inside
the psyche of the customer and are hardly ever spelt out to
the banker (Davido and Uttal, 1989). Research findings
also revealed that there is a need to change the Indian
bankers attention, attitude and commitment, in order to
improve the service quality (Mathur, 1999). However, the
public sector banks in India have not yet geared up to take
up these gigantic tasks concerning the intensity and quality
of services delivered to customers.
II. OBJECTIVES OF THE STUDY
The main objectives of the present paper are to
describe a conceptual framework of service quality
involving both service provider and service receiver. Since
present paper is an attempt to investigate the service
quality issues from the perspective of the customers. The
current study was aimed at evaluating the service quality
of selected banks of India. To support the objective of the
study SERVQUAL technique was adopted by using 22
variables grouped under five dimensions, Tangibility,
Reliability, Responsiveness, Assurance and Empathy
using 7 points Likert scale. This was based on the
SERVQUAL tool developed by Parasuraman et al (1988).
To support the main objective the following also formed
part of the study.
1. To present a detailed usage of various service
quality dimensions in the banking sector in India;
2. To study the customers perception of service
quality of the selected banks in India.
3. To study the major factors responsible for
attainment of customer satisfaction
4. To analyze the service gaps and to draw
inferences thereof, concerning the importance of
different dimensions of service quality in these
studies.
III. REVIEW OF LITERATURE
There are a number of models described in the
literature that conceptualized the construct of service
quality (e.g. Garvin, 1988; Albrecht and Zemke, 1985;
Parasuraman et al., 1988; Lehtinen and Lehtinen, 1991;
Dabholkar et al., 1996). Parasuraman et al. (1985, 1988)
emphasized as Service quality is determined by the
difference between customers expectations of service
providers performance and their evaluation of the service
they received. The construct of service quality is a
multidimensional phenomenon that contains various
dimensions that make up the construct (e.g. Parasuraman
et al., 1988). Thus, service quality has been considered by
researchers as an attitude formed through long-term and
overall evaluation of a firms performance (Hoffman &
Bateson, 2001).
There are many research findings to the effect that
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service companies are benefited tremendously through
their loyal customers (Anderson and Zeithamal, 1984).
Gronroos (1982) argued that customers, while evaluating
the quality of a service, compare the service they expect
with perceptions of the services actually received by them.
Zeithaml et al., (1994) revealed that there could be a
transaction- specific quality judgment as well as a global
judgment reflecting the level of service. Service quality is
generally measured in two ways (Urbany et al., 1999): (i)
as an overall evaluation of quality of service (i.e. an
overall attitude towards the whole service experience); or
(ii) as consisting of a range of opinions about different
aspects of the service experience (e.g. perceptions of
Tangibility, Reliability, Responsiveness, Assurance, and
Empathy). Juran (1999) elaborated the customers
perception of service quality as: the features of services
which meet customers needs and necessities and thereby
provide customer satisfaction. Researches revealed that
customer satisfaction is often influenced by service
quality, object quality, price, and other situational and
personal factors (Muthukrishnan and Kardes, 2001).
Customers perceptions of services are based on
specific dimensions of services (Folkes, 1988) and are
partly shaped by how well they believe they are
performing their own roles in service delivery systems
(Zeithaml and Bitner, 2003). The customer often expects
the service to be provided in a specific way or by a specific
individual when delivering the service (Sureshchander et
al., 2001). Some customers are more demanding than
others, having greater sensitivity to, and higher
expectations of service. Perceptions are created after
experiencing the service. However, dissatisfaction may
occur if expectations are higher than the actual service
experienced by the customer. The perception of actual
service is low when the service providers misinterpret
customers expectations (Cristina Sousa, 2002).
Customer opinions and ideas, beliefs and thoughts
about a product or service benefit a firm significantly
(Urbany et al., 1989). The customer always attempts to
bridge the gap between his/ her imagination and
experiences about the product or service availed (Hoch and
Ha, 1986). This process is called by De Bono (1977) as
pattern-making system, in which a customer always tries
to make new images and information about the products or
services just to fit into what is already known.
Accordingly, an attempt has been made to highlight such
interactions by using traditional (5-dimensional) and
modified (10-dimensional) models of service quality, to
justify our present work on innovative service quality in
the banking sector.
3.1. SERVICE QUALITY AND ITS DIMENSIONS
Quality in service is an elusive concept because of
the intangibles nature of the service offering and the
definition of quality may vary from person to person and
from situation to situation. Even though a universally
accepted definition of quality does not exit till now, most
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writers on service quality supports a customers-centered
definition with the reservation that customer expectations
are not necessarily consistent or predictable. It is now a
fact that consumers of all products and services tend to
become more demanding due to the current marketplace
which is becoming more competitive. As a result, there is a
continuous increase in customer expectations and
customers successive demands within the improvement of
the quality of service (Parasuraman et. al., 1988). Thus,
banks as service organizations should always be able to
meet the needs and demands of those sophisticated
customers effectively and efficiently in order to retain
them. Service quality is a significant indicator to
differentiate an organization among the rest of the
competitors (Parasuraman et al., 1988).
3.2. FIVE DIMENSIONS OF SERVICE QUALITY
A. Tangibility:
It means the things which are physically observed
by the customers in the bank branch including large ATM
network, personnel, physical facilities, materials and
appearance. Able and skilled personnel, the quality of
banking products and services, brochures and cards may
represent tangibles. These qualities provide concrete cues
for customers to evaluate the capability of the service
provider.
B. Reliability:
Reliability refers to the trust in companys ability
of performing service in a proper way, such as acting
according to promises and declarations. A reliable service
means the banker is able to provide internet connection
that is working at desired level throughout the day without
significant failures; banker should not misuse the
cardholder information and there should be frequent
update of new technologies.
C. Responsiveness:
It refers to service providers willingness to help
customers and provide prompt service. It can be measured
by the amount of time needed to deal with customers
reported problems and the response duration once the
customer filed a service request.
D. Assurance:
Assurance is related to the knowledge and
courtesy of employees and their ability to inspire trust and
confidence.
Banker may demonstrate assurance to customers by
behaving courteously and by providing essential
knowledge to guide customers problems.
E. Empathy:
It refers to the caring, individualized attention the
service provider gives to its customers. Furthermore,
customers in the bank may come from different social
Table1. Average Gap Score on tangibility:
Parameters
modern equipments and size of ATM network
Location of branches and ATMs
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ISSN (ONLINE): 2250-0758, ISSN (PRINT): 2394-6962
background and hence the banker could emphasize
personalized attention on customers and understand
specific needs of customers based on their requirements.
3.3. Variables used for the Study:
The following variables are used for collection of
data:
1. The demographic variables in the study include age,
gender, educational qualification, marital status,
occupation and annual income.
2. SERVQUAL dimensions Tangibles, Reliability,
Responsiveness, Assurance, and Empathy.
IV. METHODOLOGY
The present study is concerned with the quality of
service rendered by public sector banks in Berhampur,
Odisha. The study was based on the primary data collected
from the 300 customers of selected banks using a
structured questionnaire with 22 statements under five
dimensions. Convenience sampling method was used to
select sample respondents. The responses have been
captured in 7 point Likert scale. 300 questionnaires were
distributed to the customers who had visited and having
accounts in the public sector banks in Berhampur and who
are willing to fill up the questionnaire. Finally 250 filled
questionnaires were received from the customers,
considered as sample respondents. For this study,
dimensions of service quality and gap analysis are adopted
as primary approaches.
4.1. LIMITATIONS OF THE STUDY:
The following are the limitations of the study
1. The study was based on the perception of customers of
only for public sector banks.
2. The study concentrates only on qualitative aspects.
3. Non-probability sampling technique was applied in the
selection of bank customers.
V. RESULTS AND DISCUSSION
5.1. Measuring service quality of Banks:
Servqual is a methodology designed to identify
the gaps between what customers expected from an
excellent product or service provider and what they
perceive the service to be from their current suppliers of
that product and service. The genetic questionnaire as used
by Parasuraman et al (1988) has been modified and used
here with 22 statements under 5 dimensions. The responses
have been captured in 7 point Likert scale and gap score is
calculated by deducting expectations from perception (E-
P).
Expectation (E) Perception (P) Gap (E-P)
E1 = 6.832 P1 = 4.400 2.432
E2 = 6.200 P2 = 4.232 1.968
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Usefulness of form and documents for customers E3 = 5.840 P3 = 4.016 1.824

Total 18.872 12.648 6.224
Average Gap Score (Total of E-P / 3 ) 6.291 4.216 2.075

Table2. Average Gap Score on Reliability:

Parameters Expectation (E) Perception (P) Gap (E-P)
Assistance in e-banking and e services E 4 = 5.592 P4 = 4.088 1.504
Value of time and commitment of on time E5 =6.320 P5 = 3.704 2.616
Problem solving E6 = 5.640 P6 = 2.512 3.128
Compatibility of bank website E7 = 6.608 P7 = 3.704 2.904
Updated information and technology on website E8 = 5.664 P8 = 3.184 2.480
No misuse of personal information E9 = 6.152 P9 = 3.848 2.304
total 35.976 21.040 14.936
Average Gap Score (Total of E-P / 3 ) 5.996 3.507 2.489

Table3. Average Gap Score on Responsiveness:

Parameters Expectation (E) Perception (P) Gap (E-P)
Cooperation of employees E10 = 6.264 P10 = 3.688 2.567
Knowledge and capacity of employees E11 = 6.552 P11 = 2.544 4.008
Willingness and attitude of employees E12 = 6.744 P12 = 3.424 3.320
Time bound and punctuality of employees E13 = 5.104 P13 = 3.808 1.296
Total 24.664 13.464 11.200
Average Gap Score (Total of E-P / 3 ) 6.166 3.366 2.800

Table4. Average Gap Score on assurance:

Parameters Expectation (E) Perception (P) Gap (E-P)
Confidence level of employees E14 = 6.528 P14 = 3.176 3.352
Safety of transactions E15 = 5.296 P15 = 4.200 1.096
Knowledge of employees on different schemes E16 = 5.136 P16 = 3.3.976 1.160
Security of credit and debit card information E17 = 5.176 P17 = 4.504 0.672
total 22.136 15.856 6.280
Average Gap Score (Total of E-P / 3 ) 5.534 3.964 1.570

Table5. Average Gap Score on Empathy:

Parameters Expectation (E) Perception (P) Gap (E-P)
Individual attention E18 = 6.344 P18 = 3.312 3.032
Convenience of operating hour E19 = 6.328 P19 = 4.880 1.448
Banking atmosphere E20 = 6.520 P20 = 2.656 3.864
Interest and attitude to assist E 21 = 6.312 P21 = 2.760 3.552
Ability to understand specific needs E22 = 6.272 P22 = 1.968 4.304
total 31.776 15.576 16.200
Average Gap Score (Total of E-P / 3 ) 6.355 3.115 3.240

The un-weighted score was calculated to normalize the total average score of each dimension.

Table 6: Un-Weighted Score:

Sl. No Categories Gap Score
1 Average Gap Score for Tangibles 2.070
2 Average Gap Score for Reliability 2.490
3 Average Gap Score for Responsiveness 2.800
4 Average Gap Score for Assurance 1.570
5 Average Gap Score for Empathy 3.240
Total un-weighted score 12.170
Average un-weighted score (Total un-weighted score / 5 ) 2.434

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Weights were assigned by the respondents to identify the level of importance to each dimension

Table 6: assigning weights:

Sl. No Dimensions Weights

1 The appearance of banks physical facilities, equipments, personnel and communication 20

materials
2 The banks ability to perform the promised services most accurately and effectively 21

3 The banks willingness to help customers and provide prompt services 20

4 The knowledge an courtesy bank employees and their ability to convey trust and confidence 19
5 The attention and caring attitude and ability of the banks 20

The weighted score highlights the area of improvement to satisfy the customers

Table 7: Weighted Score:

Dimensions Un-weighted score Weights Weighted score
Tangibles 2.070 .20 .414
Reliability 2.490 .21 .523
Responsiveness 2.800 .20 .560
Assurance 1.570 .19 .298
Empathy 3.240 .20 .648
Total weights 2.443

Fig. 1: Total average score on five dimensions in Banks in Bar diagram:

SERVICE QUALITY OF PUBLIC SECTOR BANKS

Perception Expectation Gap

6.291 6.166 6.355

5.996
5.534

4.216 3.964
3.507 3.366 3.155 3.24
2.8
2.489
2.075
1.57

Tangibility Reliability Responsiveness Assurance Empathy

Source: Prepared by the researcher based on compiled primary data.

An attempt was made to analyze the quality of and 2 points. This implies that the respondents rated
service provided by the banks based on customers these dimensions between agree and partially disagree
expectation and perception. Table 1 to 5 and 6 Exhibit that for the service rendered by their banks. Since the gap score
the level of expectation of the customers for five is very less in Assurance it reveals that customers are
dimensions, namely tangibility, reliability, responsiveness, highly satisfied with the security aspects associated with
assurance and empathy are rated between 7 and 5 the service. Under the rule of servqual, the larger the gap
points, where as their level of perception regarding the score is, the more is the dissatisfaction - Parasuraman
above five dimensions of service quality fall between 5 (1988). Empathy has maximum average gap score of
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3.240 which is higher than other four dimensions,
implying dissatisfaction of customers. Empathy means the
ease of access, approachability and efforts taken to
understand customers requirement. Hence the banker
should take adequate measures to pay attention on the
above aspects to understand the requirements of the
customers and to satisfy its needs.
VI. CONCLUSION
Service quality should be used as a strategic tool
to get a competitive advantage over the competitors. With
the increasing levels of globalization of the Indian banking
industry, and adoption of universal banks, the competition
in the banking industry has intensified. Any where and
any time banking now become a reality .Recognition of
service quality now acts as a competitive weapon. Analysis
of gap score reveals that in banks Empathy has maximum
average score of 3.240 among all five dimensions. The
factor analysis clearly indicates that among five
dimensions Reliability, Responsiveness, Empathy and development and validation, Journal of the Academy of
Tangibility are the major factors responsible for customer
satisfaction which stood at 90 percent regarding the
services provided by banks. Thus based on the percent
level of customer satisfaction, the banks have scope to
improve the quality of the service rendered to its customers
to ensure their loyalty
VI. SCOPE FOR FURTHER RESEARCH
The present paper is an analysis of consumer
perception and expectation, by the means finding the gap.
But this is specific to the public sector banks, the research
have further scope to explore of private sector banks, non
baking financial corporations, regional rural banks etc.
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