Service Quality Perceptions in Financial Services - a Case Study of Banking Services

By Sharma, Alka; Mehta, Versha | Journal of Services Research, October 1, 2004 | Go to article overview

Service Quality Perceptions in Financial Services - a Case Study of Banking Services


Sharma, Alka, Mehta, Versha, Journal of Services Research


The services sector is the most important sector, which contributes largely to the national economy. In India, the banking service is an important component of services sector. The share of banking and insurance sector within the services industry has burgeoned from 2.78% of GDP in 1980 - 81 to 6.27% in 1997 - 98 (Economic Times, 2000). It has been so due to the increased significance of financial services in post - reforms era. In the recent years, a number of private sector and foreign banks have entered the Indian market and made it more competitive. The onset of competition from the private players and initiation of banking reforms since early 1990s have led to an increased emphasis on efficient customer service (Narsimham Committee, 1991). Moreover, the tough competitive arena in which these banks operate today, maintaining the quality of service is a pre - requisite for survival. Therefore, measurement of service quality has increasingly created an interest among the service providers (banks) and scholars alike. It is so because service quality is being used to position the banks in the market place (Brown & Swartz 1989). However, the service quality is hard to measure (Rust, Zahorik & Keiningham, 1995).

In case of banking services, the varied service products being offered and their interface with the information technology like banking on internet, electronic delivery channels, etc. help the banks in seizing the market and be the ultimate winners (Cooper & Edgett, 1996). This also forms an important aspect of service quality. Despite this understanding, conceptualization and measurement of service quality have been the most controversial and debated topics in service marketing literature. There has been considerable research as to how service quality should be measured (Babakus & Boller 1992; Brown, Churchill & Peter 1993; Parsuraman, Zeithaml and Berry 1985,1988, 1991 & 1994).

Various researchers have developed alternate concepts for service quality, like the Nordic perspective (Gronroos 1982,1984) and the American perspective (Parsuraman, Zeithamal and Berry, 1988). The Nordic perspective explains the service quality on two dimensions i.e. functional and technical quality. The American perspective on the other hand defines service quality on five dimensions, which are reliability, responsiveness, empathy, assurance and tangibility. It is so because the customers do not perceive quality as a uni - dimensional concept (Zeithamal, Parsuraman & Berry 1993). Later the increased interest in the multi - dimensions of service quality led to the development of another model (Rust & Oliver, 1994), which identified service quality as a three dimensional concept.

The present study however, is based upon the American perspective and the SERVQUAL/SERVPERF model by Parsuraman, Zeithaml and Berry (1988) (reflected in Figure 1).

The model explains the service quality on the basis of gap between the expected level of service and perceptions of the customers regarding the level of service received. The SERVQUAL/SERVPERF model is distinct from others because it determines more than one aspect of service encounters. This view supports the adoption of Rust and Oliver's (1994) view also, which states that the overall perceptions of service quality are based on various dimensions of service encounters. Various researches on service quality dimensions have increasingly led to a debate upon the dimensions. However, there is a wider agreement that the five dimensions i.e. reliability, responsiveness, empathy, assurance and tangibles are important aspects of service quality (Fisk, Baron & Bitner 1993).

In fact, the researchers have proved that the Nordic as well as American perspective define the customer's perception of the organization's technical and functional quality, service product, service delivery and service environment, which reliability, responsiveness, empathy assurance and tangibles are associated with the service experience (Brady & Cronin Jr. …

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