Service Quality in Commercial Banks. The Shkodra Case

TABLE OF CONTENTS

CHAPTER I
Introduction
Literature Review
Methodology

CHAPTER II
Banking System in Albania
2.1 Banking System Developments in Albania
2.2 Banking System in Terms of Definition
2.3 The Role of Banks in the Economy and Their Functions
2.4 General Features of the Banking System in 2016
2.5 Bank Notions and Services
2.6 The Services That Banks Offer to the Customers
2.7 Characteristics of Banking Services
2.7.1. Tangibles
2.7.2. Indivisibility
2.7.3. Variability
2.7.4. Non-inventory
2.7.5. Financial responsibility
2.7.6. Double information
2.8 What Do We Mean by Quality of Service?
2.9 SERVQUAL Model: Service Quality Dimensions
2.10 Information Technology
2.11 Commitment by Management in Implementing Quality Banking Services
2.11.1 Information Quality Systems Services
2.12 Importance of Quality in Financial Terms
2.12.1. Benefits from Quality Improvements
2.12.2 Quality Improvement Model and Profitability
2.12.3. Quality on Return (ROQ)
2.12.4 Customer Satisfaction and Quality of Service
2.13 Total Quality Perceived by Gronroos
2.14 Characteristics of the Quality of Banking Services Today
2.14.1 Changing Customer Needs and Expectations
2.14.2 Increasing Integration in Quality of Service
2.15 Competition, the Quality of Services and Their Role in Economic Development

CHAPTER III
Discussion: Banking Sector, Crediting to economy and Their Impact on Economic Development
3.1 The role of lending to the economy
3.2 Crediting to the economy during 2006 - 2016

CHAPTER IV
Research Results
4.1 Empirical Analysis
4.2 General Information for Respondents
4.3 Characteristics of Service Quality Offered by Banks
4.4 What do Customers Expect from the Service Offered?
4.5 Improving the Quality of Services
4.6 What do Banks Expect in the Future from their Customers?
4.7 Conclusions of the Questionnaire

CHAPTER V
Conclusions and Recommendations

References

Abstract

The issue of service quality has been at the center of the ongoing academic and business interest since the late 1970s. Of course buyers have always been concerned about quality, but increasing competition in the current markets of many services has made consumers more selective in the service they choose.

The study focuses on banking services, their quality and customer satisfaction in the banking system: as a case study, services provided by banks in Shkodra have been taken. For the realization of the study a complete analysis was used based on the data collected from the questionnaire with the clients of the commercial banks operating in Shkodra. The data provided by the questionnaire analyzed the real level of banking services in Shkodra. These services are seen in terms of their diversity as well as the level of quality of services they offer to attract the customer. The study also highlights the gaps that these banks have in their services under contemporary conditions.

The purpose of this study is to confirm the theory that banks should do more to perceive the customer about the quality of services. Banks try to provide modern services, but the most important is to identify and perceive customer needs about services because what may be good for the bank may not be the good for the customer.

Key Words: Quality, Customer Satisfaction, Banking System, Banking Services, Profitability, Economic Development

CHAPTER I Introduction

Significant progress has been made in these 20 years of transition not only in terms of macroeconomic stability, but also in the implementation of deep structural reforms, including banking sector reform. Despite the unfavorable start of the albanian economy and the banking sector (Uruci, 2008), the albanian banking system was developed step by step by expanding with new private banks through privatization and restructuring of state-owned banks through the expansion of the banking system, the improvement of legislation and payment systems, the upgrading of technology and banking services, the increase of the lending level, the increase of the level of efficiency and the increase of other banking services. Changes in recent decades, political and legal changes, socio-economic changes, information technology development, high customer sophistication and globalization of markets have led the banking industry to undergo multiple changes (Zairi, 2000).

Recently, the banking industry is facing a high rate of change, both in terms of the number of operators operating in the market and the quality and distribution methods of products and services offered by commercial banks. These ongoing and successful improvements have resulted in a reassessment of the role of banking services in this industry. Over the past three years, the albanian banking sector has recognized two-dimensional and qualitative development. This can be noted in the growth of the number of foreign banks and new branches in the main cities of the country (Uruçi, 2006).

Despite the increase in number and growth of their activity for albanian banks, there is a lack of specialization, for example: investment banks, savings banks or commercial banks. All banking institutions cover almost the same activities with very little difference, which makes it quite difficult to divide them among them (Arasli, Smadi and Katircioglu, 2005). One of the biggest trends in the world economy today is the rapid growth of the service sector. The world economy is turning into a dominated service economy. Increasing demand for financial and professional services has also made it possible to increase the complexity of banking, insurance, investment, accounting and legal services services (Butcher, Sparks and O’Callaghan, 2001).

Financial services firms are increasingly relying on robust information technology to communicate with customers, to distribute financial services, to simplify account keeping, and to manage their businesses. It is evident that technology is no longer a supporting mechanism, but a key element in developing new services. The rapid growth of the economy is usually followed by rapid development and expansion of the banking system. The most important determinant of the activity of a particular bank is the level of quality of services provided to its clients. To better meet environmental requirements, organizations are increasingly focusing on a key factor such as quality of service, which serves as a powerful competitive edge. It is noticed that the quality of banking services is tending to affect a macroeconomic development (Caruana, 2002).

Taking into account aggressive market competition, internationalization of services, and globalization of the economy, commercial banks know very well that service quality is perhaps the most competitive tool they can use. The main task for banks is now to identify exactly what consumers perceive as service quality. It is difficult to determine, evaluate and measure the quality of service, taking into account the fact that due to competition, banks offer very similar services and products. Each bank should have the ability to attract new clients and especially to maintain existing ones by providing efficient services. It's the quality of service that makes the difference!

The essence of financial services is that it places emphasis on problem solving and providing solutions to the financial needs of customers. Customer needs are "a necessity" (Churchill and Surprenant, 1982). There is a gap between the quality assessment of the qualities offered by banks and customer expectations. Each corporation must first identify what the customers are, and secondly, develop strategies and plans to provide consumers with what they want. Through corporate feedback, corporations make it possible to find their specific needs and efficiently distribute product design and service funding to maximize customer satisfaction (Lim and Tang, 2000). Good service quality is key to achieving good profit performance. The corporation should distribute services that are useful to different customer segments. Operational skills-service-performance quality (C-SQ-P) facilitate decision-making for performance enhancement across the organization (Roth and Jackson, 1995).

Profit and growth are mainly stimulated by customer loyalty and loyalty is a direct result of customer satisfaction. The two pathways leading to securing profits in a financial institution are cost-effectiveness and differentiation. Effective banking services contribute to both because satisfied customers with an organization tend to stay longer for the benefit of services (Heskett, et al., 1997). Moreover, the cost of maintaining existing customers by improving services is significantly lower than the cost to win new customers.

Literature Review

Research has shown that the quality of services is widely recognized as a key factor in the success of any business (Parasuraman et al., 1988) and the banking sector in this case is no exception. The quality of services is widely used to assess the performance of the banking sector (Cowling and Newman, 1995). Banks have realized that customers will be loyal if they get greater value from their service than by competitor services (Dawes and Swailes, 1999), and on the other hand, banks can make big profits if they are able to are positioned better than their competitors (Davies et al., 1995). Therefore, banks focus on the quality of services, using them as a competitive strategy (Kotler, 2000). Generally, banks around the world offer services of the same nature (Kang and James, 2004) and strive to catch up with the innovations of competitors.

This implies that consumers can perceive differences in the quality of services (Ladhari, 2009). Customers also assess the performance of banks, particularly on the basis of personal contacts and interactions (Gronroos, 1990). The quality of service is essentially composed of two dimensions (Gronroos, 1984; Lehtinen and Lehtinen, 1982). The first is the technical dimension (Gronroos, 1984) or the one related to the result and the second is the functional dimension. Figure 1.1 shows the technical quality comparison with the functional quality according to Gronroos (1984).

Service quality measurement issues are being discussed over the last 15 years. Chang and San's (2005) studied the relationship between quality of services, customer satisfaction, and benefits in the banking industry. The end of the study shows that the performance rate developed in the SERVQUAL model and customer satisfaction in the benefit model are applied to the albanian banking industry.

Figure 1.1 Two Dimensions of Service Quality According to Gronroos

Abbildung in dieser Leseprobe nicht enthalten

Source: Gronroos, 1984

The study found that service quality is an event that precedes customer satisfaction and customer satisfaction is an event that precedes profitability. Moreover, Mengi, 2009 has also found evidence of the impact of the service quality on economic benefit and Ndubisi, 2006 states that a "direct and strong" relationship exists between quality of service, customer satisfaction, and profitability. The findings of the study reinforce the theory that consumer satisfaction is related to the performance of banks.

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Methodology

This study is based on a thorough understanding of the situation in the country and the climate of banks in Albania and especially in Shkodra - of the current state of banking services and familiarity with the main actors operating in the country. Throughout the study, the "bottom-up" approach has been used in order to obtain valuable inputs, suggestions and criticisms from the main players in the banking sector, as a result, the results of this study are based on the actual needs of the beneficiaries and interested parties, as well as their overall consensus. The information and data of this paper are referred to secondary and primary sources.

Secondary sources consist of the use of albanian and foreign literature, mainly Bank of Albania reports, the IMF, the World Bank, scientific bulletins, books of economic studies, economic journals. The above literature is attached to many materials obtained from websites. These data have helped in preparing the theoretical background. Primary sources consist in collecting information among questionnaires addressed to customers using commercial banks. The questionnaire is designed in such a way that, first, it provides information about the interviewees, it further consists of general questions about banking services, about elements that the client uses to assess the quality of a banking service, about how the bank attracts the client etc ..

The questionnaire consists of questions of the form of alternatives, a group of questions of form yes and no, questions to be assessed at a certain degree (very satisfied, very satisfied, little satisfied and not satisfied) and bottom question open so that respondents express their thoughts without reservations. This questionnaire was built in this way to be as flexible as possible and to provide as much information as possible. The organization of research started in June 2017 and lasted until September 2017 for the collection of secondary data. The questionnaire was developed during July, while the questionnaire was distributed in the first weeks of August. In the first week of September the processing of the information was done and conclusions were made that constitute the true purpose of this study.

CHAPTER II Banking System in Albania

2.1 Banking System Developments in Albania

In Albania, banking reforms have started at a slow pace. In the early 1990s, the country was characterized by a low level of financial intermediation and problems in money laundering. Efforts to harmonize banking activity in Albania with the reforms and developments of the new historical process began with the transition in the 1990s and further shifted towards a market economy. With the adoption of the Law on Bank of Albania in April 1992 and later of the Law on Banking System, the reform focused on the establishment and introduction of two-tier banking system by the Bank of Albania as the highest body responsible for the design and overseeing the implementation of monetary policy and supervision of the entire country's banking system and commercial banks, mainly of the universal type (Uruçi, 2006).

Over the last few years, the albanian banking system has been characterized by important developments. The increase in the number of banks in the system, the restructuring and privatization of state-owned banks, the establishment of new domestic-owned banks, in addition to the increase in investments in foreign-owned banks, have given the Albanian banking system a dynamic environment, where all banks are struggling to get a better position on the market.

By the end of 2016, the banking system consisted of 16 banks, of which 14 are banks and 2 are branches of foreign banks. The albanian banking system consists of 16 universal, private banks and dominant foreign capital, which accounts for about 92% of the banking system's holdings. At the end of 2016, the number of branches out of the albanian territory was 6, of which the National Commercial Bank had 2 and the Intesa Sanpaolo Bank 4. Based on the data of the Bank of Albania, these commercial banks have submitted a total of 66 requests for the approval of the directors appointed by them as part of the Law "On Banks in the Republic of Albania". None of these claims have been rejected.

The Law "On Banks in the Republic of Albania" provides that all banks from European Union countries and all other foreign banks have the opportunity to provide banking services in Albania through subsidiaries, without any distinction in the terms of licensing of these subsidiaries under conditions licensing requirements applicable to Albanian banks. As part of the implementation of the Stabilization and Association Agreement, this law provides that all foreign banks in Albania have the same treatment and the same conditions that each Albanian bank has in exercising its financial activity after licensing (Bank of Albania, 2016). Between providing these services to almost all banks, this has affected not only the speed but also the quality of the service. With regard to the expansion of the banking system within the territory of the Republic of Albania, Tirana remains the country with the largest number of branches and agencies, this can be explained by higher concentration of population and businesses in this part of Albania.

2.2 Banking System in Terms of Definition

"Bank" is called the financial institution, the establishment of which is licensed by special procedures and conditions, by the highest monetary authority of the country, with the main objective of collecting savings and free capital of individuals, companies, institutions, etc., in the form of monetary deposits of different types (of a certain interest) and, on the other, placing them through lending and lending (but with another interest) in the service of the economic activity of those who need additional capital (Rust and Zahorik, 1993).

The bank is an enterprise that performs the task of supplying customers with payment instruments and mediates the supply and demand for capital while simultaneously acting as a borrower and a lender (Spitzer, 1993). The commercial bank in the theoretical plan is the financial institution that provides the majority of financial services, particularly loans, deposits and payment services, and carries out the largest financial services for commercial companies. While in the legal and regulatory concept of banking activity, the bank is a legal entity based in the territory of the Republic of Albania, which carries out banking activities and other activities, according to Decree No.8269, dated 23.12.1997 "On the Bank of Albania" which is granted a license from the Bank of Albania. The Bank, therefore, represents a specialized financial institution that deals with precious capital trading and carries important economic functions (Uruçi, 2006).

2.3 The Role of Banks in the Economy and Their Functions

The adoption of the Law "On the Bank of Albania" and the Law "On the banking system in the Republic of Albania" marked the transition of the banking system from one level to a two-level banking system. The banking system in the Republic of Albania was organized with two levels. At the first level there is the Bank of Albania or the show and in the second level there are other (commercial and specialized) banks.

Figure 2.1 Scheme of the Albanian Banking System

Abbildung in dieser Leseprobe nicht enthalten

Source: BoA, 2016

All commercial and specialized banks have the main purpose of their profit-making activity (given as the difference between income earned by active transactions and payments made by passive operations and bank operating expenses). Specialized trading banks perform two main types of transactions: a) passive operations and b) active operations. In the first case, all actions for which the bank pays interest to third parties or makes expenditures from its own funds are included. Active actions, which include all interests that the bank collects, commissions and other income.

Commercial banks are licensed by the highest monetary authority of the Bank of Albania and are given a careful scrutiny of the documentation. Regardless of the form that a bank may have, it is required at the outset to have a larger capital than other companies, and, above all, the depositing of this capital is carried out before the liquidity license is issued to the Central Bank. In addition, licensed banks continue to be under the supervision of the country's highest monetary authority, particularly for their solvency, etc. Historically, the role of banks has been to accumulate economy savings in deposit form and make these savings available to the most demanding sectors of the economy, in the form of loans. Banks have a very important role as they orient the money in the direction of those who are most in need without forgetting and contributing to the economy of a state. The bank is created on the basis of a system that aims to deal with monetary deposits, saving customer savings and lending for financial purposes. The main functions of the banking system are:

- Commercial banks are essential for transmitting monetary policy to a country's economy. The absence of these banks would make the authorities' impact on the economy impossible, and consequently the economy would fluctuate, reducing the pace of development.
- The bank is a financial intermediary. It deals with the collection of deposits from multiple individuals and lends these loans. The essence of the banking business is therefore the processing of information to facilitate this cash flow and to be profitable.
- Banks realize a large volume of payments in the economy, for firms or individuals. Their existence makes it possible to reduce cash payments (to reduce money outside banks).

The above-mentioned functions of banks show their best role in a market economy, both in developing countries and in developed countries. Banks develop their activity with other people's money, making them more special but also sensitive to other businesses. Because bankruptcy of a bank would affect a large number of individuals. World experiences have shown that banking crises are a phenomenon that has accompanied and accompanies the development of the banking system, yet they are accompanied by high costs. As was the Asian crisis during 1980-1982 which was accompanied by a 55% share of GDP (Argentina) (Yee, Yeung and Cheng, 2010).

2.4 General Features of the Banking System in 2016

The albanian banking system was one of the sectors most affected by the effects of the global economic crisis. This crisis was primarily reflected in the financial system, especially during the last quarter of 2015. Public uncertainties about this system caused the withdrawal of part of the deposits, especially those in foreign currencies (Bank of Albania, 2016). Following the withdrawal of deposits in October-November 2015, resulted in a liquidity restriction of all banks operating in Albania. Meanwhile, 2016 was too vague for banks, lending was tightened for businesses and individuals, for the private and public sector. Banks considerably raise interest rates on loans, especially those in euro. They focused on the recovery of lost deposits and on the management of rapidly increasing non-performing loans. Loans in custody accounted for about 8.5 percent of the total loan in October 2016, or about 3.5 percent more than in June this year. Meanwhile, high provisions for non-performing loans have led to a significant fall in bank profits compared to previous years. The banking sector closed 2016 with a net profit of ALL 3.5 billion (Bank of Albania, 2016). The credit growth rate has experienced a drastic decline during the last three months of 2015. In February 2016, the annual growth rate of loan portfolio fell again reaching 28.5% compared to its 44.2% in September. The decrease in the level of credit has negative impacts on consumer demand for products as well as at the level of private investment, thus causing a slowdown in economic activity (Bank of Albania, 2016).

The credit growth rate in lek has not changed from its previous level (36%) even during the first two months of 2016, the growth rate of foreign currency lending has fallen to 23%. Private credit is reduced to both businesses and individuals. Business loans fell due to banks' uncertainty about lending back, which is based on the fact that the future of many businesses did not look very positive. During the first three months of 2016, the level of primary investment in treasury bills fell, while long-term financing remained unchanged. The Bank of Albania is trying to help banks by injecting liquidity through the Weekly Repurchase Agreements, but it does not seem to be enough to help stabilize interest rates on treasury bills. Bankers think that the Treasury Bond interest rates will continue to stay high until the liquidity situation of banks is stabilized.

2.5 Bank Notions and Services

"Bank" represents a specialized financial institution that deals with precious capital trading and which performs important economic functions. It carries on large scale for clients many traditional actions that have the character of services. The banker's role has already surpassed that of the money keeper and the credit distributor. He has become an interlocutor, consultant and permanent partner of clients as individuals and businesses. In this way, the banking sector provides financial services that are defined as activities related to the money that provide the customer with financial value (Garvin, 1984). Numerous authors have provided different definitions regarding services. According to Horovitz (1990) "Service is a useful job for a third person". This means that service represents a job performed by an organization that serves those who buy it. While Juran (1974) defines service as "An activity or action that a party can offer to another that is inviolable and does not result in ownership of something. Its production may or may not be related to a physical product". Banks provide products and services: "Services are defined as intangible benefits, purchased from customers that do not include benefits" and "A product is an offer that can satisfy a need or a wish" (Lovelock, 1994).

Although goods and services do not have a completely opposite character, services have some features that distinguish them from physical goods. Services differ from products as they are more variable, break down faster and their output is often simultaneous with their consumption (Philip and Hazlett, 1997). While services do not provide the opportunity to taste, feel, see, hear, or smell before they are purchased. In practice, it is difficult to find a good unaccompanied by services, or a service not supported by tangible benefits (Hallunovi, 2008). Services have become an important part of a bank's activity and their competition is often implied by the strength of the services they offer, which differentiate themselves with competitors.

2.6 The Services That Banks Offer to the Customers

Commercial banks in Albania offer traditional services for the client: deposits, accounts, transfers. Deposits have been the most well-known product on the part of the public, but in recent years efforts to minimize cash transactions (payroll and some business payments) through the banking system brought rapid development to other services such as loans , overdrafts, debit and credit cards etc.. Initially, a part of the users, mistrusted such services and tried to stay away from them, but gradually, providing a wealth of information about the advantages of these banking services educated the public and made the use of new services back to a routine.

Characteristic of the albanian banking system is that all the banks licensed to date by the Bank of Albania are of a universal type. Banks with their services are assisting individuals, public, budget and non-financial institutions, corporations and small and medium-sized enterprises. This serves to increase the productivity, profit and development of both their commercial and manufacturing activities, and therefore a strong bond between them is seen as a necessity. Banks not only run "currency trading" but at the same time are its manufacturing industry (Stafford, Prybutok, Wells and Kappelman, 2011). Banks offer a wide range of services, which can be divided into:

- Classic services, banks have historically provided;

- Modern services.

In the classic services include services such as current accounts, time deposits, foreign exchanges, the performance of utility payments etc .. So, those services that are served to users banks always, throughout history of functioning of banks. Whereas modern services include ATMs, on-line services, credit and debit cards, fax services, various forms of easing loans such as car purchase, holiday loans, education loans, overdrafts, etc.

2.7 Characteristics of Banking Services

2.7.1. Tangibles

It is the main and primary feature of services that differentiates it from physical wealth. Services can not be seen, touched or tasted as is actually the case with physical goods. It is very difficult to trade intangible products because from a customer's point of view, this feature makes it difficult to evaluate or compare services before the latter are tested, and moreover the customer can not return it after a bad experience.

2.7.2. Indivisibility

Services require a high level of interaction between customers and service providers. This feature highlights the fact that the service producer and customer are in touch at the moment of service delivery, as the services are "consumed" at the time of "production". So in this way the customer it is involved in the "production" process of the service.

2.7.3. Variability

It is impossible for a service industry or an individual service vendor to standardize output. Massive production of services is very difficult. Services are directly modified for each customer or for any new situation. Inputs and outputs of service assurance processes are highly variable, making it difficult to maintain a stable quality. In this way, services can be subject to quality variations, which can lead to customer insecurity about its sustainability (service quality).

2.7.4. Non-inventory

Non-inventory refers to the trading of services. As a result of their nature, failure to provide timely services or "unsold" services can not be restored and thus they can not be inventoried. The difficulty of non-inventorying services also creates difficulties in forecasting the services needed to meet market demand for services. Most obviously the impossibility of inventorying leads to the necessity for the firm to always be able to have the necessary capacities to provide the services required by the market. But not always these capacities are maximized, as a result of demand changes, and this non-exploitation poses a problem. According to Webster and Hung (1994), McKechnie also added two other features for financial services.

2.7.5. Financial responsibility

Organizations and their staff should be responsible for the custody and care of the funds that consumers have entrusted with "buying" their services. One way that organizations use to increase their confidence is to rely on tangible features that are easier to perceive and evaluate by the consumer (Brady, Cronin and Brand, 2002).

2.7.6. Double information

Financial services often include regular double transactions. Companies can use exactly this information collected during these transactions to influence buyer behavior. (Frost and Kumar, 2000).

2.8 What Do We Mean by Quality of Service?

Service quality plays a critical role for a bank's success. For example, if Bank X and Y operate with the same currency and offer the same interest rate. Naturally the question arises: What is the factor differentiating the offer in each of the banks? The answer that anyone would give is "Quality".

The quality assurance was standardized by the American Society of Quality in 1978 and provides this definition: "Quality is the set of features and characteristics of the product or service that carries its capabilities to satisfy the needs displayed". Another definition shows that service quality consists in how well the service can meet or exceed customer expectations (Crosby, 1979; Parasuraman, Berry and Zeithaml, 1985). The same authors determine the quality of the service as "Quality = Perception - Waiting". This indicates that service quality is the difference between consumer perceptions and expectations about the level of service provided. Quality is the subjective term for which every person or sector has its own definition.

In technical terms, quality can have two meanings: 1. Characteristics of a product/service that confirms their ability to meet the declared needs; 2. Product or service that is defective. According to Joseph Juran, quality means "fit for exploitation" according to Philip Crosby, it means "suitability in demand." In general, banks offer similar service packages that are easily coordinated with potential competitors' innovations. For this reason, banks have realized that focusing on quality of service is an important strategy to increase customer satisfaction and loyalty and at the same time to improve the institution's performance (Stafford, 1996). This statement implies that the quality of service is difficult to be copied by competitors (Devaraj, Matta and Conlon, 2001).

There is always the risk that, when quality is defined in too narrow, then quality improvement programs are too narrow purposes.2.9 SERVQUAL Model: Service Quality Dimensions

In the mid-1988s, Parasuraman, Zeithaml and Berry studied the determinants of quality of service in an extensive search undertaken by leading companies, employees and customers. They studied service quality determinants in extensive research undertaken in company leaders, employees, and simple customers. From this study, they concluded that service quality can be measured based on five dimensions, or determinants, which are: Elements of tangible, reliability, readiness, safety and sensitivity. From this study, they concluded that the quality of service can be measured based on five dimensions, or determinants, which are: Tangible Elements, Seriousness, Readiness, Security and Sensitivity. Each of the dimensions is explained below:

1. Tangible. Consumers, due to the lack of a physical product, often rely on the tangible evidence surrounding the service when evaluating it. Dimension tangible elements is associated with the appearance of physical facilities, equipment, printed materials as well as with the person of service employees. The dimension of tangible elements is related to the external appearance of physical facilities, equipment, written materials as well as the appearance of service employees.

2 . Seriousness. Generally, the severity dimension reflects the firmness, accuracy and correctness of the firm's performance. Does the firm offer the same level of service consistently, or the quality of service varies greatly from one service to another showdown? Does the firm offer the same level of service consistently, or the quality of service ranges heavily from one service standpoint to another? Does the firm keep its promises, so the exact charges, maintains the data accurately, and offers the service to the correct first time without making mistakes? Does the firm keep its promises, accurately bills, stores the data accurately, and does the service offer you the right time without making mistakes? Nothing can be more frustrating for customers than serious service providers. Such can not be more irritating to consumers than non-serious service providers.

3. Responsiveness. It reflects the commitment of a service firm to provide timely service. As such, the dimension of readiness associated with the will and willingness of employees to provide a service. Sometimes customers may face a situation where employees are more engaged in conversation with one while ignoring other customer needs. One such case is an illustration of the lack of willingness on the part of the firm. As such, the readiness dimension is related to the willingness and willingness of the employee to provide a service. Sometimes consumers may face a situation in which employees are more engaged in conversations with each other while ignoring customer needs. Such a case is an illustration of the lack of readiness on the part of the firm.

4. Security. The security dimension reflects the power of the firm, the curiosity it presents to its customers, and the security of its operations. Competence relates to the firm's knowledge and skills to perform the service that it undertakes to provide. Competence relates to the knowledge and skills of the firm to perform the service it undertakes to offer. Correction refers to the fact that as staff of the firm interacts with customers and customers' possessions. Cortection refers to how firm staff interacts with customers and consumers' possessions. So cortex reflects kindness, courtesy and appreciation for the customer or his possessions. Thus, courtesy reflects loving-kindness, courtesy, and appreciation for the customer or his possessions. While consumer sentiment reflects the security that he or she is not in danger, doubt or risk. Meanwhile, security reflects the consumer's feeling that he or she is not in danger, doubt or risk.

5. Sensitivity. Sensitivity is the ability to experience feelings of others as if they were your own.5. Knowing the customer. It is the ability to experience the feelings of others as if they were yours. Sensitive firms understand the needs of their customers and make their services accessible to their customers. Sensitive firms understand the needs of their customers and make their services accessible to their customers. Dimension of sensitivity implies that the firm recognizes the problems of customers and works by considering the best interests of their own, and just as much personal attention, individualized customer. Sensitivity dimension means that the firm recognizes customer problems and operates in consideration of the most interest their best, as well as paying individual attention to individualized customers.

Models SERVQUAL is an instrument for measuring how customers perceive the quality of a service. This instrument is based on five determinants of the above and a comparison of consumer expectations about how services should be provided and their experiences on how the service is currently offered. For a description of five determinants used 22 attributes and their customers to give estimates and expectations to these attributes (on a scale of 7 points from Liker "strongly agree" to "strongly agreeet an instrument for measuring how consumers perceive the quality of a This instrument is based on the above five determinants and a comparison of customer expectations on how the service should be provided and their experience of how the service is currently offered. expectations and definitions for these attributes (on a Likert scale of 7 points from "not at all" to "fully agree") then compare these estimates to obtain the numerical result, the discrepancy Perception - Reception. numerical result of inconsistency Perception the higher is the perceived level of quality service. The higher (the more positive) the result of perceptions minus expectation, the higher the quality level of service is perceived.

SERVQUAL can be used by companies to better understand the expectations and perceptions of their customers. SERVQUAL can be used by companies to better understand customer expectations and perceptions of their own. It is applicable across a wide range of industries and services can be easily modified to fit the specific requirements of a company. It is applicable across a wide range of service industries and can be easily modified to suit a company's specific requirements. It provides a framework for a review instrument that can be adapted or added as needed. It provides a skeleton for a review tool that can be adapted or added as needed. SERVQUAL results can be used to identify those components or aspects of a service for which the company is particularly good or bad. The results of SERVQUAL can be used to identify those components or aspects of a service for which the company is particularly good or bad. It can be used to monitor the quality of service over time, to compare with that of competitors, to compare performance between different branches within a company, or to measure customer satisfaction in a particular industry service. It can be used to monitor service quality over time, comparing it with competitors, comparing performance across different branches within a company, or measuring customer satisfaction in a particular industry of services.

Industrial organization or group may use the information collected in this way to improve its position by acting on the results and seeking to exceed customer expectations consistently. An organization or industrial group may use the information thus collected to improve its position by acting on the results and seeking to exceed the expectations of consumers continuously. In addition, results pending - perceptions, together with demographic data, can facilitate effective customer segmentation. In addition, the results (expectation - perceptions), along with demographic data, can facilitate effective segmentation of consumers.

Despite its wide application, the SERVQUAL instrument has been criticized because of its base, which is the comparison of expectations and perceptions for a given number of aMe throughout its broad application, the SERVQUAL instrument has been criticized because of its base, which is the comparison of expectations and perceptions for a given number of attributes. Some of the problems that relate mainly to the measurement of expectation expectations are:If expectations are measured after the experience of service or at the same time when this experience occurs (which happens often for practical reasons), then what is measured but the expectations are not really something that is influenced by experience.

1. If expectations are measured after the service experience or at the same time as this experience (which often occurs for practical reasons) then what is measured is not really expectations but something that has been influenced by the experience.
2. The Orientation of the Process - SERVQUAL focuses on the process of service delivery rather than facing the results of the service, thus limiting the value of the instrument. Orientation of the process - SERVQUAL focuses on the service delivery process rather than on service outcomes, thus limiting the value of the instrument.
3. Dimensionality - According to some researchers, five SERVQUAL dimensions are not universal. The number of dimensions that the instrument itself includes contextual and they are highly interconnected with each other. Dimensionality - according to some researchers, the five dimensions of SERVQUAL are not universal. The number of dimensions that this instrument encompasses are contextual and they are very closely related to each other.
4. Expectations - Some researchers suggest that measuring expectations is unnecessary. Expectations - Some researchers suggest that measuring expectations is unnecessary. Even if they are measured, they should be measured on a single scale. Even if they are measured, they should be measured on a single scale.
5. The length of the questionnaire makes customers get upset and tired. The length of the questionnaire makes consumers get bored and get tired. By combining the expectations and perceptions of the SERVQUAL questionnaire taken in total 44 evaluations about the quality of service, the completion of which could cause merzitjen customers. Combining the expectations and perceptions of the SERVQUAL questionnaire, a total of 44 assessments are made regarding the quality of the service, the completion of which can cause consumer boredom.

2.10 Information Technology

Permanently, banking institutions rely on collecting, processing, analyzing and providing information to meet customer needs. To meet the requirements as quickly as possible and to create a successful competitive edge, the emphasis is put on the evolution of information technology and the impact it has on banking institutions. In recent years, there has been a tendency to use and adapt at a fast pace technology that enables the automation of information retrieval processes to facilitate the performance of these processes to increase their accuracy and speed of service delivery, and also result in improved service quality. Through the information technology, new services have been implemented, the cost structure has been changed, customers have become more sophisticated in their requirements and the competitive pressure has increased significantly. New forms of services realized through the development of information technology are internet banking, on-line banking, smart cards and ATMs that meet customer requirements for more comfort, convenience, and high quality services.

2.11 Commitment by Management in Implementing Quality Banking Services

A key element that influences the implementation of quality and thus contributes to the overall growth of the quality of banking services is the management element. Although banks understand the importance of service quality, its implementation can be as difficult and complex as possible. And this process of implementation begins with the commitment of managers to quality.

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