Service Quality On Customers’ Patronage. Selected Banks In Ogun State

TABLE OF CONTENTS

DEDICATION

ACKNOWLEDGEMENTS

ABSTRACT

CHAPTER ONE
1.1 Background to the Study
1.2 Statement of Problem
1.3 Research Questions
1.4 Objectives of the Study
1.5 Research Hypothesis
1.6 Justification of the Study
1.7 Significance of the Study
1.8 Scope and Delimitation of Study
1.9 Brief History of Banking in Nigeria
1.9.1 DEFINITION OF TERMS

CHAPTER TWO: LITERATURE REVIEW
2.1 An Overview of Service Quality
2.2 Conceptual Framework of Service Quality Service Quality
2.2.1 Perspective of Service Quality
2.2.2 Importance of Service Quality
2.2.3 Measures to Improve Service Quality.
2.2.4 Services Quality in Banking Sector:
2.2.5 Importance of Money Deposit Banks in Nigeria
2.3 Customer Expectations
2.3.1 How expectations are formed
2.3.2 Factors influencing adequate service quality expectations
2.3.3. Dynamics of Quality Service Expectation
2.4 Service Quality Perceptions
2.4.1 Dimensions of Customer Perceptions of Service Quality
2.5 Customer Complaints
2.5.1 Handling of Customer Complaints
2.6 Customer Loyalty
2.7 The Concept of Bank Services
2.7.1 Practical Strategies of Customer Service Delivery
2.7.2 Specific Strategies for Customer Care in the Banking Industry
2.7.3 Relationship between Service Quality and Customer Patronage
2.8 Theoretical Review
2.8.1 Gap Theory
2.8.2 Theory of Behavioral Intentions
2.8.3 Models for Measuring Service Quality
2.8.4 Explanation of Study Variables and Measurements
2.8.5 Customer Patronage
2.8.6 Factors that attracts Customer Patronage
2.9 Empirical Review

CHAPTER THREE: METHODOLOGY
3.1 Introduction
3.2 Research Design
3.3 Population of study
3.4 Sample Size and Sampling Techniques
3.5 Data Collection Methods
3.5.1 Data Collection Process
3.6 Data Processing and Analyses Techniques
3.7 Validity and Reliability of Instrument
3.8. Model Specification

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND DISCUSSION OF RESULTS
4.1 Introduction
4.2 Analysis of Socio-Demographic Characteristics of Respondents
4.3 Correlation Analysis
4.4 Hypotheses Testing
4.5 Multiple Regression Analysis
4.6 Discussion

CHAPTER FIVE
5.1 Summary of Research Findings
5.2 Conclusion
5.3 Recommendations
5.4 LIMITATIONS OF THE STUDY
5.5 Further Study

6.Bibliography

Appendix I

Appendix II

DEDICATION

This work is dedicated to Allah, the Creator, Provider and Sustainer of the Universe, who made it possible for me to complete this study in spite of all challenges.

ACKNOWLEDGEMENTS

My foremost appreciation goes to the Almighty God, who through his protection, mercies and grace enabled me to conduct this study to its successful conclusion.

Furthermore, I am also grateful to my father and mother for their care and sacrifice in ensuring that I succeed in my academic pursuit. Likewise, my heartfelt appreciation also goes to my darling wife for her support and perseverance throughout the course of this programme . I am equally indebted to my sisters, Aunty Iyabo, Mummy Ope and Mummy David for their prayers .

Subsequently, I also express my profound gratitude to my supervisor, Professor S. Momoh, and not forgetting the assistance of other lecturers, such as the Acting HOD, Dr. J.O. Ojenike, Dr. O.A Ikpefan, Dr J. K Obamiro Dr. K. Adetiloye, Mrs. M.Y. Okuneye, Mr. M. Dabiri, Mr. S.O Jolaosho, Mr.O A. Raji, Mr S.O Ake and Mr. O.A Sodiya, Mr A.O Akintaro and Mr J.O .Lasisi for imparting me with the desired knowledge , scrutinising my research work and offering the needed directions.

Lastly, Staff of Crescent University, Abeokuta whether academic or non academic, including friends and well wishers that contributed in diverse ways towards the success of this work, I pray that may Allah bless and reward everyone of them abundantly.

LIST OF TABLES

Table 3.1: Reliability Test to Measure Service Quality Dimensions

Table 4.1: Socio-Demographic Characteristics of Respondents

Table 4.2: Factors Responsible for Customer’s Waiting Period on Queue

Table 4.3: Level of Customers’ Satisfaction with Bank Service

Table 4.4: Factors Responsible for Customer Disloyalty

Table 4.4: Factors Responsible for Customer Disloyalty

Table 4.5 : Time Spent on Queue by Customers

Table 4.6: Bank Charges

Table 4.7 : Bank Transaction Facilities

Table 4.8: Reliability of Banks Services

Table 4.9: Reduction of Time Spent on Queues

Table 4.10: Rating of Service Delivery Channels

Table 4.11: Effectiveness of Bank Services

Table 4.12: Accessibility of Banks Services

Table 4.13: Patronage of Quality of Services Rendered

Table 4.14: Resolution of Customer Complaints

Table 4.15: Improvement in Service Quality

Table 4.16 Correlations Table of BSQ

Table 4.17 Model Summary

Table 4.18 ANOVA

Table 4.19 Regression Result

LIST OF DIAGRAM

Figure 1: BSQ Conceptual Model of Service Quality

ABSTRACT

This study analyse the effect of service quality dimensions on customers’ patronage of selected banks in Ogun State. It investigates the relationship between service quality dimensions and customers’ patronage using Bank Service Quality model dimensions, d etermine factors responsible for customers staying on queue for longer periods of time while awaiting bank services, assess the level of customer satisfaction about services rendered by money deposit banks with a view of identifying factors that were responsible for customer disloyalty in patronising banks.The study employed Simple random sampling to select six banks namely First Bank Plc, United Bank of Africa Plc, Guarantee Trust Bank Plc ,Access Bank, First City Monument Bank and Zenith Bank Plc for this study. Convenience sampling method was used to select 240 customers of the selected banks. The data were analysed through the use of Statistical Package for Social Science (SPSS),while Pearson’s correlation co-efficient and multiple regression analysis were used to test the hypotheses formulated whether significant relationship exist between service quality dimensions and customers’ patronage.

Result of the findings revealed that there is a positive strong relationship between the six service quality dimensions and customer patronage but only three independent variables namely effectiveness and assurance, price and tangibles have positive effects on customer patronage with the co-efficient of 0.739, 0.305 and 0.264 respectively at 1% level of significance. Thus, this study suggested to banks that they should focus more on the six attributes of service quality dimensions of BSQ model especially access, service portfolio and reliability that recorded negative values in order to enjoy strong patronage by customers. The study concluded that banks should improve their network interconnectivity, upgrade their systems especially Automated Teller Machines to accept deposits and cheques , resolve customer complaints on time, treat customers as king, ensure that their funds are safe and which should be invested in businesses that will yield profits.

CHAPTER ONE

1.1 Background to the Study

The goal of every organisation is to satisfy the needs and requirements of its stakeholders (Babatunde and Olukemi, 2012).Meeting the needs and the requirements of the stakeholders will not only ensure the survival of the organization, but also allow it to prosper. The customer is presumed to be one of the most important stakeholders in any organisation because without them, organisations are not likely to succeed . (Babatunde and Olukemi, 2012).

Banks must be financially stable and sound for any country to achieve economic growth, as these institutions are responsible for the safe keeping of depositors fund. (Rootman, Tait, and Bosch 2008). Therefore, any country wishing to attract investments must have a solid and profitable financial system (Goosen, Pampallis, Van Der Merwe and Mdluli 1999). These tasks cannot be achieved without the bank's ability to attract and retain customers.

Hence, service firms such as banks, may be able to effectively attract and retain customers by satisfying their needs and wants in order to create a competitive edge in an ever increasing competitive market place ( Sokefun, 2011).

Furthermore , Sokefun,(2011) believed that the corporate objective of any bank, which is maximization of shareholders wealth, can only be achieved if customers are satisfied and retained.

Therefore, the dynamic nature of the financial system is creating the need to focus more on the customer rather than the products in order to gain an edge. The banking sector has been characterized by the emergence of new forms of banking channels such as Internet banking, Automated Teller Machines (ATM), telephone banking, maturing financial market and global competition that are forcing banks to explore the importance of customer loyalty and maintaining lasting relationships with their customers.

In today's competitive era, any organization will not be able achieve success without paying adequate attention to satisfy her customers’ needs. According to Davoudian,(2010) superior service quality enables companies to distinguish themselves from competitors, attain sustainable competitive advantage, and improve their functionality.

Service quality has been proven to lead to customer loyalty while competitive advantage by banks can be gained through the delivery of high service quality to their numerous customers (Caruana, 2002).

Excellence in service quality is a key to achieve customer loyalty which is the primary goal of business organizations, due to the advantages of customer retention (Ehigie, 2006).

Good service quality is generally regarded as a way to retain existing customers and acquire new ones, reduce costs, enhance corporate image, generate positive word-of-mouth recommendation, and improve profitability (Cronin, Brady, and Hult,2000; Kang and James, 2004; Yoon and Suh, 2004).

Today, the increasing awareness among bank customers of their rights, changing demands and the high competition among commercial banks require constant improvement in service quality from the banks for customers’ patronage to be assured.

Bank customers have become increasingly demanding as they require high quality, low priced and immediate service delivery as they are tired of wasting time on long queues before being attended to (Sokefun, 2011).

The ability of the bank to attend to her customers as fast as possible, the more customers would keep their money with the bank and vice versa.

From the foregoing, it is believed that perceived service quality effectiveness tends to play an important role in high skill and technology-involving industry like banking service. Delivering quality service to customers is often regarded as a yardstick for success and survival in today’s competitive banking environment.

Nigeria being a developing economy, with an emerging banking sector which has a wide geographical reach catering for the needs of huge customers, offers an excellent scope for research about the effect of service quality on customers’ patronage in selected banks in Ogun State which can provide the basis for evaluating the effectiveness of banking services delivery.

1.2 Statement of Problem

The consolidation exercise carried out by the Central bank of Nigeria in ( 2004-2005) to reform the banking sector affected bank operations in Nigeria which led to their reduction in size from Eighty Nine before consolidation exercise to Twenty Five. (Soludo, 2004).The number of commercial banks presently is twenty-one due to acquisition of three commercial banks in 2014.

According to Shafie, (2004) some banks were unable to retain their customers due to low quality of service and lack of innovation in developing new products that will satisfy the needs of their customers. Consequently customers from the less efficient banks moved to other banks considered more efficient thereby swelling the population of customers in these banks. As a result, longer hours are required to complete banking transactions.

Sokefun,(2011) discovered that customers demands high quality, low price, immediate service delivery and are tired of wasting time on long queue before being attended to.

Meanwhile, Esangbedo,(1995) asserted that the required facilities available in banks are inadequate to render quality services to their numerous customers within a shortest period of time.

The inability of customers to express their feelings about the services rendered by banks is rampant and even when they express their dissatisfaction, the financial institution dos not respond quickly or accurately. They are made to feel at fault regardless of where the problem actually lies (Esangbedo,1995).

Similarly, banks forget the traditional rules of business, such as treating customers as king, listening to customers and rendering services that will meet customers’ expectations.

Singh, (2004) highlighted that banks need to identify their customers, know their needs and problems, and what their financial priorities are.

In addition to the above shortcomings, the banking industry also experiences customer turnover simply because of maltreatment by bank staff, high bank charges, and lack of quality service.

This study sought to analyse the effect of service quality dimensions on customers’ patronage in selected banks in Ogun State using the Bank Service Quality model.

1.3 Research Questions

i. What is the relationship between service quality dimensions and customers’ patronage in money deposit banks?
ii. What are the factors responsible for customers staying on queue for long periods of time in money deposit banks?
iii. What is the level of customer satisfaction about services rendered by money deposit banks?
iv. What are the factors responsible for customer disloyalty in patronising banks?

1.4 Objectives of the Study

The broad objective of this study is to empirically analyse the effects of service quality dimensions on customers’ patronage of commercial banks in selected banks in Ogun State.

The specific objectives are to:

i. Investigate the relationship between service quality dimensions and customers’ patronage using Bank Service Quality model.
ii. Determine factors responsible for customers staying on queue for longer periods of time while awaiting bank services.
iii. Assess the level of customer satisfaction about services rendered by money deposit banks.
iv. Identify factors that were responsible for customer disloyalty in patronising banks.

1.5 Research Hypothesis

The following hypotheses were tested:

H01: There is no relationship between service quality dimensions on customers’ patronage in money deposit banks.

Ho2: Bank service quality dimensions have no significant effect on customers’ patronage.

1.6 Justification of the Study

In Nigeria, not much attention is given to the notion of providing customers with good quality service, this makes some banks to render low quality services and thereby taking their customers for granted (Ogunnaike, 2010).

Presently in some banks, slow pace of service is still observed resulting in long queues, while bank customers are still treated with levity, difficulty in obtaining loan in our banks have persisted and in most times bank workers still exhibit poor attitudes in attending to customers (Sokefun,2011 ). The effect of these shortcomings noticed in banks, often leads to exchange of words between the bank staff and customers.

This study tends to find out the true positions of banks in respect of the service quality that they render to their customers, whether the quality of services were of good or low quality. It will also identify and proffer solutions to the causes of long queues and time spent by bank customers in bid to obtain bank services.

The outcome of this study will be used by the policy makers in banks such as Board of Directors, Management team’s on how to improve the quality of services rendered to their customers and enumerate better way of handling complaints that might arise.

Meanwhile, bank customers will be equipped with various ways to use in evaluating the quality of services rendered to them by their respective banks.

The sole aim of this work is to analyse the effect of service quality dimensions on customers’ patronage in the task of ensuring customers satisfaction through prompt and effective service.

1.7 Significance of the Study

This study will contribute to the performance of banks by examining how service quality dimensions can be used by money deposit banks in developing strategy that can lead to strong patronage due to high quality service. Douglas, and Connor.(2003) believed that the ability of a bank to provide good quality service will improve her ability to increase market share and profitability, while at the same time reducing the chances of their existing customer’s from patronising another bank.

Furthermore, Seyyed (2005) postulate that one of the direct effects of good quality service is increasing the organizations' ability to offer services to customers in an effective way. In addition, rendering better quality services to customers leads to repeat purchase and extending positive oral advertisements about organisational efficiency.

Secondly, this type of study is very essential to enlighten Nigerian bankers on the need to recruit the right caliber of staff, especially for customer-service roles.

Thirdly, it will propel banks to empower frontline staff with training on relationship management and other requisite communication skills in enhancing the quality of their service delivery to numerous customers.

According to Kheng, Mahamad, and Ramayah.(2010) delivering quality service to clients is a necessity for success and survival in today’s competitive world. Banks do business with customer’s money. So, the more satisfied customers are involved in a bank’s patronage, the higher the customer base and profitability. If a bank cannot provide adequate customer service, then the bank would be losing its customers.

Fourthly, the customers are better informed about better ways of channeling their displeasure on quality of bank services rendered to them by banks.

Finally, this study will also serve as a reference document for further studies in assessing service quality of banks through the use of Bank service quality model.

1.8 Scope and Delimitation of Study

This study focuses on the effect of service quality dimensions on customer patronage in selected banks in Ogun state between the period of 2010- 2016. However, this study will be limited to customers that patronise five selected banks in Abeokuta. This is based on the fact that substantial numbers of commercial banks are located in the state capital than other parts of the state.

Time constraints and the limited resources made it difficult to conduct the research for all the banks and it is also highly impossible to cover the whole state.

1.9 Brief History of Banking in Nigeria

The banking sector in any economy serves as a catalyst for growth and development. Banks are able to perform this role through their crucial functions of financial intermediation, provision of efficient payments system and facilitating the implementation of monetary policies. The earliest recorded banking activities in Nigeria were by Elder Demister Company and the African banking corporation in 1894. The banking activities of these corporations were later taken over in 1894 by the British West Africa and it remained until 1971, when the colonial bank opened offices in Jos, Kano, Lagos and Port Harcourt respectively.

The Bank of British West Africa later became Standard Bank of Nigeria Ltd. and now known as First Bank PLC. The colonial Bank was also renamed Barclays Bank. Its name change again to Union Bank of Nigeria limited on 12th March 1979.

It is astonishing to note that the first indigenous bank in Nigeria was the Industry and Commercial bank, which was established in 1929. It collapsed in 1931 and went out of business in 1936.

In addition the National Bank of Nigeria was opened in 1933. The African Continental Bank was formed in 1946 and later changed to WEMA Bank Plc. The British and French Bank that was established in 1947 later changed its name to United Bank of Africa in 1961.The growth of indigenous banking continued with the establishment of Bank of the North in 1959, while Cooperative Bank was established in 1962 by the emergence of the United Bank for Africa in 1949.

The first banking ordinance in Nigeria appeared in 1951 which ruled that no bank would be allowed to operate without a license from the government. The establishment of the central Bank of Nigeria in 1958 necessitated the takeover the issue of ensuring monetary stability and sound commercial banking operations in Nigeria.

Thus at as 31st December 1985, the number of commercial banks in Nigeria stood at 28 with a branch network of 1,297. However at the end of December 1986, the number of commercial banks rose to 29 with a total branch network of 1,369 by December 1990, a little over 3years into the inception of Structural Adjustment Programme, the number of commercial banks had risen to 58 with a total branch network of 2,013. The number however fell from 64 to 63 within a space of about ten years.

Prior to the consolidation exercise of 2004, the number of commercial banks stood at 89. After the consolidation exercise which was announced by the CBN on the 6th of July 2004 and ended in December 2005, Nigeria had only 25 commercial banks (Soludo, 2004).The number of commercial banks presently is twenty-one due to acquisition of three commercial banks in 2014 and additional one in 2015.

1.9.1 DEFINITION OF TERMS

i. Organisation: An organisation is a group of individuals working together to achieve one or more objectives.
ii. Bank: An establishment authorized by a government to accept deposits, pay interest, clear cheques make loans, act as an intermediary in financial transactions, and provides other financial services to its customers.
iii. Commercial bank: is a financial institution that provides services, such as accepting deposits, giving business loans and auto loans, mortgage lending, and basic investment products like savings accounts and certificates of deposit e.t.c.
iv. Customers: A person, company, or other entity which buys goods and services produced by another person, company, or other entity.
v. Service : A valuable action, deed, or effort performed to satisfy a need or to fulfill a demand.
vi. Service Quality: An assessment of how well a delivered service conforms to the client's expectations.
vii. Customer patronage: is defined as a situation when the customer wishes to consider, recommend, or make purchases from retailers in the future, the desire to buy from it, and the willingness to recommend to others in the future.
viii. Comparative advantage: the ability of an individual or group to carry out a particular economic activity (such as making a specific product) more efficiently than another activity.
ix. Customers switching: is defined as losing customers in term of how they switch or change from one service provider to another due to the results of dissatisfaction.
x. Market share: refers to a company's portion of sales within the entire market in which it operates.
xi. Profitability: the state or condition of yielding a financial profit or gain.
xii. Frontline Staff: is a term use to describe employees that work directly with customers.
xiii. Financial System: is the system that allows the transfer of money between savers (and investors) and borrowers.
xiv. Repeat Purchase: The buying of a product by a consumer of the same brand name previously bought on another occasion.
xv. Relationship Management: A strategy employed by an organization in which a continuous level of engagement is maintained between the organization and its customers.

xvi. Cross selling: is the action or practice of selling an additional product or service to an existing customer.

CHAPTER TWO: LITERATURE REVIEW

2.1 An Overview of Service Quality

Generally, service is seen as a valuable action, deed, or effort performed to satisfy a need or to fulfill a demand. Gronroos, (2000) defined service as a process consisting of a series of more or less intangible activities that normally, but not necessarily always, take place in interactions between the customer and service employees and/or physical resources or goods and/or systems of the service provider, which are provided as solutions to customer problems.

According to Schneider, and White (2004) quality can be defined as satisfying or exceeding customer requirements and expectations, and consequently to some extent it is the customer who eventually judges the quality of a product.

Furthermore, International standard Organisation (2005) defines quality as the totality of characteristics of an entity (product, service, process, activity, system, organization, and person) that bear on its ability to satisfy stated and implied needs”.

However in service, where production, delivery and consumption can occur simultaneously, the concept of quality refers to the matching between what customers expect and what they experience.

It is also worth noting that services have four key features that differentiate it from goods. They include intangibility, perishability, inseparability and heterogeneity (Hoffman and Bateson, 2002).

Furthermore, Venus, Hejazian, and Mitra .((2002), stated that banking services have two other characteristics more than the above mentioned four characteristics such as responsibility of trusteeship which refers to social responsibilities of financial services organisations in management of customer’s money and provision of advisory services while the second feature is about two-way flow of information between the banks and their customers.

A successful business organisation must acquire new customers and get existing ones that will continue to patronise its products and services for the organisational objectives to be achieved and guard against customers switching to other competitors for better quality service.

Negi,(2009) suggests that customer-perceived service quality received more attention in recent years, due to its specific contribution to business competitiveness, developing satisfied and loyal customers. This makes service quality a very important construct to understand by firms by knowing how to measure it and making necessary improvements in its dimensions where appropriate especially in areas where gaps between expectations and perceptions are wide.

Therefore, service quality is regarded as one of the vital tool for banks to achieve success in the market place with commonly undifferentiated services. It becomes imperative for banks to strive for improved service quality, if they want to distinguish themselves from other competitors (Shafie,2004).

Moreover, Daniel, Joseph, and Victor.(2013), opined that service firms recognized the need of not only attracting customers but also to forge ahead and maintain long term relationship with them in order to create a competitive edge in an ever increasing competitive market place.

Finn, and Lamb (1991), pointed out that satisfying customers’ needs through high quality service, enable business firms to not only retain their current customers, but also increase their market share.

In the same vein, Newman, and Cowling. (1996), asserted that excellent service quality is vital to business profitability and survival.

Furthermore, Ennew, and Binks.(1999),believed that service quality is a key determinant of overall satisfaction, which in turn leads to customer retention and loyalty.

Gronroos (1982) suggests that “the perceived quality of a given service is the result of an evaluation process since consumer makes comparison between the services they expect with perceptions of the services they receive”. Sequel to this therefore, he concludes that the quality of service is dependent on two variables: expected service and perceived service.

In addition, Bolton, and Drew. (1991), describe service quality as a form of attitude that results from the comparison of expectations with performance. Berry, Zeithaml and Parasuraman (1990) pointed out that since customers are the “sole judge of service quality”, an organisation can build strong reputation for quality service when it can constantly meet customer service expectations.

Quality is observed as a major factor in reference to customer acquisition and retention (Galloway, and Ho, 1996). Therefore, service quality can be used as a competitive tool by banks to build and maintain long term customer relationship and unique service differentiation. In other words, service quality is an important factor in services marketing.

Kotler, (2003) indicated that customer service perception generally describes customers’ feeling on the comparison of the perceived performance and their expectation on services. It is expected that organisations should be able to perform equal to or even higher than their customers’ expectations.

Perhaps that is why many firms and organizations pay attention to service quality as an important component for their competitive advantage because they believe that it is a mandatory factor for retaining and improving their level of competitiveness.

In addition, Fache,(2000) observed that one of the most important developments in the tourism industry is the growing attention to service quality from the customer’s perspective. Among all customer demands, quality service has been increasingly recognized as a critical factor in the success of any business (Gronoos, 1990 and Parasuraman,1988).

It is very vital to note here that, service quality is not only assessed as the end results but also on how it is delivered during service process and its ultimate effect on consumer’s perceptions (Douglas, and Connor, 2003).

The ability to provide a quality service will therefore, improve a commercial bank ability to increase market share and profitability, while at the same time reducing the chances of their existing customer’s from patronising another bank.

2.2 Conceptual Framework of Service Quality Service Quality

Gronroos (2007) defined service quality as the outcome of the comparison that consumers make between their expectations and perceptions. Johnston and Clark, (2005) use the term ‘service quality’ to describe how an organisation treats its customers.

Accordingly, service quality covers how customers’ requirements and desires are met, as well as how the service delivered matches customers‟ expectations. It can also be defined as a measure of how well a delivered service matches the customers’ expectations. Zeithaman and Bitner, (2003). Moreover, Service quality refers to meeting the needs and expectations of the customer (Smith, 1998).

Fogli (2006) define service quality as a global judgement or attitude relating to a particular service; the customer’s overall impression of the relative inferiority or superiority of the organization and its services.. Likewise, Grifvi (2001), sees service quality as the amount of difference between customer's perceptions from services and his/her expectations.

Furthermore, Akroush (2008) pointed out that service quality is the result of the comparison made by customers about what they feel service firms should offer, and perceptions of the performance of firms providing the services.

In the same vein, Schneider, and White (2004), defined service quality as customers’ assessment on the overall excellence or superiority of the services provided.

Most Banks have realized the significance of concentrating on quality of services as an approach to increase customer satisfaction and loyalty, and to develop their core competence and business performance (Kunst and Lemmink, 2000).

2.2.1 Perspective of Service Quality

The word quality means different things to people according to the context in which you want to look at it. Lovelock and Wirtz (2007) mentioned that David Garvin identifies the following five perspectives on quality:

Firstly, the transaction view of quality is synonymous with innate excellence i.e. a mark of uncompromising standards and high achievement. This viewpoint is often applied to the performing and performing of visual arts. It is argued that people learn to recognize quality only through the experience gained from repeated exposure and managers or customers will also know quality when they see it is not very helpful.

Secondly, the product- based approach sees quality as a precise and measurable variable. Differences in quality, it is argued, reflect differences in the amount of an ingredient or attribute possessed by the product or service. Because this view is totally objective, it fails to account for differences in the tests, needs, and preferences of individual customers or even entire market segments.

Thirdly, user based definitions which starts with the premise that quality lies in the eyes of the beholder. These definitions equate quality with maximum satisfaction. This subjective, demand oriented perspective recognizes that different customers have different wants and needs.

Fourthly, the manufacturing based approach which is concerned primarily with engineering and manufacturing practices.

Lastly, Value based definitions which define quality in terms of value and price by considering the tradeoff between perception and price; thereby regarding quality as “affordable”.

2.2.2 Importance of Service Quality

Service quality is increasingly recognized as being of key strategic value by organization. Superior service quality enables companies to achieve high customer satisfaction, customer loyalty and retention, enhance their financial performance, Information Technology capability to improve customer orientation, ensure success of the marketing strategy, increasing market share and customer base.

2.2.3 Measures to Improve Service Quality.

According to the research work carried out by Berry, Parasuraman and Zeithaml (1994), reliability, attention to customers’ complaints and concerns constitute some of the essential factors in enhancing service quality. Barry et al (1994) further identify prompts customer service delivery, teamwork, regular feedback from customers, and good working environment as other essential elements in achieving quality service delivery.

Likewise, Edvardsson(1998), presented thirteen propositions, which includes; that Managing Director should divide responsibility within the organization, quality should be placed as a key goal for leadership and company culture, organisation should identify exact customer needs, service quality improvement is everybody’s responsibility within an organization, organisations should focus on new service development and service design, organisations should improve and re-engineer the service continuously to prevent mistakes from happening, organisations should recognise that quality improvement drives productivity and profitability, organisations should guarantee the service to make it more distinct, organisations should compare their services with others, as well as learn from them,organisations should manage customers’ complaints effectively, as this will be a unique chance to correct quality failings , employee commitment, and systematic measuring of service quality for customers, employees, and owners.

In addition, Ghobadian (1993) mentioned that the key ingredients of service quality improvements were Market and customer focus strategies, motivated and well-trained frontline staff, a well designed process, development of responsibility and authority to front line staff, a clear definition of quality, effective external communications and Service quality measurement.

Armistead and Clark,(1992), and Martin,(1993) in their studies found that regular measurement of service quality levels, investment in service quality processes, and empowering employees to implement a high level of service quality were the important factor of ensuring high perception of service quality.

2.2.4. Services Quality in Banking Sector:

The dynamic banking sector of 21st century requires banks to have a vital identity in the provision of excellent services. Banks nowadays have to be of world-class standard, committed to excellence in customer’s satisfaction and to play a major role in the growing and diversifying financial sector ( Guo, Duff, and Hair, 2008).

There has been remarkable change in the way of banking in the last few years. Customers have also accurately demanded globally quality services from banks. With various choices available, customers are not willing to put up with anything less than the best. Banks have recognized the need to meet customer’s aspirations.

Consequently, service quality is a critical motivating force to drive the bank up in the high technology ladder. Banking industry is a demand driven industry, which constitute an important part of the service industry (Newman and Cowling, 1996).

Banks have to redefine their corporate image to emphasise service quality since it provides many advantages to a company such as allowing the company to differentiate itself from its competitors by increasing sales and market shares, providing opportunities for cross selling, improving customer relations thus enhancing the corporate image, reliability, responsiveness, credibility and communication results in the satisfaction and retention of customers and employee, thus reducing turnover rate (Newman, 2001).

Arasli, Mehtap-Smadi,and Katirchioglu,(2005) asserted that banks recognise that delivering quality service to customers is essential for the success and survival in today’s global and competitive environment.

2.2.5 Importance of Money Deposit Banks in Nigeria

The commercial banks over the years play a vital role to economic growth and development in Nigeria through financial intermediation, efficient payment system and introduction of new innovation in banking services. Some of the numerous advantages of commercial bank operations in Nigeria can be enumerated to; making savings possible in rural and urban areas, supply funds to the real sector of the economy, provides capital needed for development in form of short, medium term loans and overdraft to people that wanted to start a new business or for expansion which would generate employment opportunities, encourages investment, by providing direct loans to the government and individuals for investment purposes, provides managerial advices to small and medium scale entrepreneurs on how to manage their businesses, render financial advices to their customers, helps to enhance development of international trade, through acting as referees to importers, providing travellers cheques and letter of credits to their numerous customers and provision of annual reports, journals and statistical information about the money market and business trends of the economy.

2.3 Customer Expectations

The concept of expectations is recognized as very important, especially in terms of satisfaction with a service and product performance (Zeithaml, Bitner and Gremler, 2009).

Lately, expectations have been considered a particular feature of the service operations management field (Johnston and Clark, 2005). In addition, expectations issues have clearly emerged in relation to service quality concerns (Parasuraman, Zeithaml and Berry, 1988).

Researchers have defined customer expectations as what customers believe should happen, Johnston, and Clark,(2005), what customers hope for, Zeithaml, Berry and Parasuraman, (1993), what customers wish for, Edvardsson, Thomasson and John, (1994),what customers expect from an excellent service provider Zeithaml, Parasuraman and Berry( 1990), and what customers predict product and service performance to be like in the future (Liljander and Tore, 1995).

In summary, expectations are expressions of what customers believe a service provider should offer (should expectations), rather than would offer ‘should expectations’ are not the same as desired standards (Boulding, Kalra, Staelin,and Zeithaml, 1993). For instance, the customer may believe that an expensive hotel should have a swimming pool available for customers (should expectations), even though the customer may have no desire to use it.

It can be concluded from the above that the term expectations can be used to describe what customers think or believe a service organisation is capable of providing (should happen) and what customers predict about service events (will happen).

Therefore, it is important for organisations to be aware of customer expectations (Wilson, Zeithaml, Binter, and Gremler, 2008), as understanding and knowing customer expectations will lead to customer satisfaction (Dutta and Dutta, 2009).

2.3.1. How expectations are formed

Researchers have widely discussed how expectations are formed. Expectations can be based on image (Gronroos, 1990), word of mouth, past experience (Zeithaml, Bitner and Gremler,2009), market communication, traditional marketing mix and customer pre-attitudes (Leventhal, 2008), and customer needs (Edvardsson, Thomasson and John , 1994).

According to Leventhal, (2008) customer needs can be divided into three categories namely: those needs which will only be missed if not provided to the customers, needs which customers can predict and unexpected needs which lead to a good level of satisfaction.

Sometimes unrealistically high expectations occur especially, when customers perceive the business support services to solve their problems. This may be as a result of unrealistic marketing activities and strategies that instead of concentrating on the core service quality, emphasis is placed on social relationships, so consequently uncertainties emerges leading to mistrust(Lovelock and Wirtz 2007).

2.3.2 Factors influencing adequate service quality expectations

Zeithaml, Berry and Parasuraman (1993) identified a group of factors that could affect adequate expectations as follows:

1. Temporary service intensifiers - this refers to individual factors that form an urgent need for a service, such as emergency situations.
2. Perceived service alternatives - this refers to the availability of alternative service providers.
3. Customer self-perceived service role - this refers to how customers believe they are affecting service delivery by performing their own roles.
4. Situational factors - this refers to the conditions of service performance resulting from the service providers control.

2.3.3. Dynamics of Quality Service Expectation

1. Fuzzy expectation: it exists when a consumer expects the service provider to solve some problem but does not have a clear understanding of what should be done Gronroos, (2000).
2. Explicit expectations: refers to clear understanding by customers as to what should be done in advance. They can be classified under realistic and unrealistic expectations Gronroos,(2000).
3. Implicit expectations: refers to elements of service which are so obvious to customers that they do not consciously think about them but take them for granted Gronroos, (2000).

Implicit expectations may become relevant when they are not fulfilled: e.g. the customer may mistakenly expect that a support service like bank statement is free of charge. Implicit expectation should therefore be made explicit and it must be clarified whether they are realistic or not Gronroos, (2000).

2.4 Service Quality Perceptions

Researchers have defined customer perceptions as global judgments of customers relating to the superiority of a service, which is influenced by a number of factors including: (i) education level and social background (Parasuraman, Zeithaml and Berry , 1988; Sureshchandar,Rajendran and Aantharaman, 2002; O‟Neill and Palmer, 2003), (ii)consumers’ beliefs concerning the service received (Parasuraman, Zeithaml and Berry , 1985), (iii) consumer directed interactions with services (Bitner, Brown and Meuter , 2000), (iv)the evaluation of customers when interacting with the service at a specific moment in time (Cronin and Tayor,1994; Zeithaml, Bitner and Gremler, 2009), (v) consumer judgement of the actual service performance (Lewis, 1989), (vi) the process by which an individual selects, interprets and organizes stimuli into a coherent and meaningful image of the world Schiffman and Kanuk,(1987),and (vii) customers‟ opinions of the service or product (Foster, 2004).

In this regard, Zeithaml, Bitner and Gremler (2003) define perceptions as the assessment and evaluation that a consumer makes about the superiority of a service. Hence, customer perceptions will be based on the evaluation and judgement made on the quality or the actual performance in comparison to the perceived service.

Furthermore, it can be all too easy to put aside customer perceptions of a service on operational service quality, and there should be a match between service quality and the quality of the service as perceived by the customer (Johnston and Clark, 2005).

In considering formalizing customer perceptions, there are two relevant cases. Firstly, the case of the presence of customer knowledge and experience about the service provided. In such a case, experience becomes vital when the customer judges the service (O‟Neill andPalmer, 2003).

Experience is the subjective human process that involves reactions and feelings which are felt by the customer while the service is being perceived (Chen and Chen,2009).

[...]