Academic journal article International Journal of Marketing Studies

Service Quality in the Banking Sector in Ghana

Academic journal article International Journal of Marketing Studies

Service Quality in the Banking Sector in Ghana

Article excerpt


In the contemporary business milieu and "era of customer", delivering quality service is a sine qua non in ongoing strategy of most business firms and constitutes integral ingredient for success and survival in present day's competitive environment. This study investigates the role that service quality plays in the Ghanaian banking sector and its impact on service delivery. A sample of 400 customers encompasses four major indigenous and foreign banks. SERVQUAL dimensions of service quality were used to structure the questionnaire. William L. Boyd, Myron Leonard, and Charles White's Standard Instrument for weighting of rating of service quality attributes was the sampling procedure adopted. Data collected was analyzed using one sample T- test of the mean weighted differences between perception and expectation of customers. This, in an attempt to determine whether there is a significant gap between expectation and perception at 5% level of significance. Empirical findings from this study show that gaps exist between customers' expectations and perceptions of service delivery in all the banks even though the banks performed better on the tangibility dimension. Despite this observation, the banks retained their customers. This study, therefore, concludes that where a gap exists between customer expectation and perception of service delivery, service quality is perceived as low and customer dissatisfaction results. However, dissatisfied customers did not necessarily defect. The study therefore confirms the theory that service quality is a necessary but not a sufficient condition for maintaining strong relationship with customers.

Keywords: service quality, SERVQUAL, customers' expectations and perceptions

1. Introduction

Nowadays, delivering quality service is an integral part of ongoing strategy of most business firms and constitutes essential ingredient for success and survival in present day's competitive environment (Ang and Buttle, 2006; Parasuraman et al., 1985; Zeithami et al., 1990; Chowdhary and Prakash, 2007; Ulwick and Bettencourt, 2008). The banking sector in developing countries for the last two decades (1990 - 2011) has been the subject of several regulatory changes resulting in increased competition among the banks (Anabila and Awunyo-Vitor , 2013; Sureshchander et al., 2003). Indeed, prior to the 1980s, the banking system in developing countries was largely dominated by state owned banks (Yavas et al., 1997). Developing countries face challenging environments. Some of these challenges have broadly been enumerated: lack of the necessary infrastructure (Njanike, 2008); extreme poverty especially in Sub - Saltaran Africa (Nkamnebe and Idemobi, 2011); high debts (Leow, 1999); prevalence of seller's market conditions (Yavas, et al., 1997); growing services sector (Malhotra 2004) and globalization with its attendant effect on local businesses among others. Relating specifically to the banking system the challenges include: high amount of bad debts and low profits and intense competition (Sureschander, 2002).

Some of the changes in consumer banking that have taken place in developing economies in the past decades including, inter alia, the economic crisis in the 1990s; credit crunch that started in late 2000s; cross border bank mergers; the change in banks operating hours; the introduction of telephone banking; rapid growth of internet banking; and the growth of spending power of the customers. (Munusamy et. al (2010) and banking (Ross 1999) branch networks being enabled by Automated Teller Machines (ATMs). In the decade following the post-liberalization reforms, the banking system in many developing countries responded favourably by absorbing the impact of these reforms (Saviani, 2000). Sureshchander et al., (2003), further postulate that maturing markets and global competition have compelled bankers in developing countries to consider the trade-off between attracting new customers and keeping old ones. …

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