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EFFECT OF SERVICE QUALITY ON BEHAVIORAL INTENTION OF
CHURN IN BANKS
Dr. Apar Singh, Assistant Professor
School of Management Studies, Punjabi University, Patiala, Email: aparsingh@gmail.com.
Jashanjeet Kaur, Research Scholar, School of Management Studies, Punjabi University,
Patiala. Email: jashanbuttar.90@gmail.com
Abstract
Service Quality by its very nature is an elusive, abstract and indistinct concept. Consumers do
not easily articulate their requirement; also, there are difficulties in delimiting and measuring
the concept. A handful of researchers have operationalized the concept. The premises of
‘Quality of service’ as the competitive edge in gaining market leadership has been well
recognized both in academic research and by leading service organization. However, it has
become increasingly important for organizations to find ways, not only to reach the top, but
to maintain that leadership in ever increasing competitive market place. In order to protect
their long-term interest, service organizations are seeking ways to forge and maintain service
quality. The changing focus of service quality from a mere competing instrument to that basic
core of service concept in meeting and exceeding customer expectation is an emerging
important issue in service organization. Banking services is no exception. The banking
industry, being very competitive, not only focuses on providing wide product lines to create
competitive advantages, but also emphasizes the importance of its services, particularly in
maintaining service quality. The factor analyzing technique was employed using Exploratory
Factor Analysis (EFA) and further, the Mean and Gap (P-E) in terms of customers'
expectations and perceptions for the various dimensions of service quality was analyzed.
Thereafter, the overall service quality gap between the individual service quality dimensions
of SERVQUAL were analyzed and lastly, to check the effect of Service Quality Perception
on Behavioral Intention of Churn, the Paired Sample T-Test was applied to analyze Gap
between Customers’ Expectations and Perceptions of Five Dimensions of Service Quality
with Intent to Churn and Least Intent to Churn attributes taken into consideration.
1. Introduction
Indian banking is the lifeline of the country and its people. Banking has helped in building up
the fundamental divisions of the economy and introduce another first light of advancement on
the Indian skyline. The sector has interpreted the expectations and desires of a large number
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of people into the real world. The banking structure of each economy is going to change with
the evolving condition. In Indian setting, Characterizing the idea of service quality, along
these lines, begins from customers, as quality is all that it infers for buyers, and the premise
of their perceptions. This concludes in the way that service quality is accomplished if client
expectations are satisfied, or surpassed. The service quality as the degree to which a service
lives up to customers’ needs or expectations. Service quality would thus be able to be
characterized as the distinction between customer expectations of service and perceived
service. On the off chance that expectations are more prominent than performance, at that
point perceived quality is less than acceptable and thus customer dissatisfaction happens
(Parasuraman, 1985). Customer churn is one of the growing issues of the present rapidly
developing and intensive banking sector. The central point of the banking unit has moved
from acquiring new customers to holding existing customers on account of the related
exceptionally high costs. Customer churn happens when customers or endorsers quit working
with an association or organization, generally called customer attrition. As Reichheld and
Sasser (1990) stated, "the longer organization keeps a customer, the more money it stands to
make". Long term customers purchase more, take lesser degree of an organization's time, are
less sensitive to cost, bring new customers and have no start-up expenses. As a result, a
climbing defection rate is a certain indicator of a diminishing flow of money from customers
to the banks. By probing for the root causes of customer parting, organizations or banks with
the longing and ability to learn can distinguish business approaches that should be refined,
win the customer back and re-establish customer connections on progressively stable ground.
In spite of the fact that customer parting is a standout amongst the most lighting up measures
for organizations to analyze, few even attempt to gain from defected customers (Reichheld,
1996).
Defining service quality is troublesome when contrasted with product quality because of
certain features exclusive to services including intangibility, inseparability, heterogeneity and
perishability. The investigations of Maleeha (2015), Lee et al. (2000), Gilbert and
Veloutsou (2006), Suleiman (2011) and Buttle (1996) propose service quality prompts
customer satisfaction. To accomplish an abnormal state of customer satisfaction, most
scientists recommend that an abnormal state of service quality ought to be conveyed by the
service provider as service quality is ordinarily viewed as a predecessor of customer
satisfaction. As service quality improves, the likelihood of customer satisfaction increments.
Service quality would thus be able to be characterized as the difference between customer
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expectations of service and perceived service. On the off chance that expectations are greater
than performance, at that point perceived quality is less than satisfactory and subsequently
customer dissatisfaction happens. (Parasuraman, 1985)
2. Review of Literature
The purpose of this section is to present a review of literature and research gaps relating to
the effect of service quality on behaviour intention of churn in banks:
In a period of developed marketplaces and rigorous competitive compression, companies
progressively apprehend that their most valued strength is the present customer base (Van
den Poel and Lariviere, 2004; Jones et al., 2000). The economic worth of customer
retention is usually known in literature. Consistent customers buy extra, endorse the business
through optimistic word-of-mouth, are a smaller amount of pricey (Ganeshetal.,2000), and
tend to be not as much as delicate to viable marketing activities (Colgate et al., 1996).
Customer defection, also known as customer churn, exit or attrition, is defined as the
summation of a sequence of intricate interconnected actions and complications, which come
upon over time and in due course gradually lead to parting (e.g. Bejou and Palmer, 1998;
Hocutt, 1998; Steward, 1998). While earlier studies have fixated on the impact of the
extensive evaluative ideas of service quality on customer retention (Mittal et al., 1998;
Zeithaml et al., 1996), the developing literature accentuates the need to regulate the
fundamental aspects and service difficulties, which either straight impact churn/defection.
Keaveney recognized 8 classes of service problems and non-service factors that effect a
client’s decision to leave a service: pricing (problems associated with fees, rates and charges);
inconvenience (incidents where the customer felt inconvenienced by the service provider’s
location, hours of operation, etc.); core service failure (due to mistakes or technical problems
associated with the service itself); service encounters (personal interactions between
customers and employees of service firms); response to failure (incompetence of service
providers to handle a situation appropriately); competition (attractive competitive offerings);
ethical problems (deceptive, immoral or unsafe behaviours of the service provider towards
the customer); and other (factors largely beyond the control of either the customer or the
service provider). Among these 8 classes, Keaveney (1995) recommended that 5 are the
largest and perhaps maximum significant based on the proportion of individuals that cited it
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as zones on for switching services, namely pricing, core service failures, ethical problems,
service encounter failures, and competition.
A comprehensive study was carried out by Parasuraman et al (1985) to identify the
determinants of perceived service quality. They have identified ten determinants of service
quality. The determinants are reliability, responsiveness, competence, access, courtesy,
communication, credibility, security, understanding/knowing the customer, and tangibles.
Subsequent research, analysis and testing by Parasuraman et al (1988) have condensed
these into five dimensions of service quality namely Tangibles, Reliability, Responsiveness,
Assurance and Empathy. Fein burg and de Ruyter (1995) supported this idea as they
postulate that the dimensions are instruments for measuring perceived service quality. They
also posit that consumer-perceived service quality is usually seen as a multidimensional
construct.
3. Objectives of The Study
To check the effect of service quality perception on behavioral intention of churn.
There is any relationship between Service Quality Perception and Behavioral
Intention of Churn.
To study which service failures, play the most important role in customers’ decision
to leave a service provider.
4. Research Methodology
4.1 Scope of the study: As the scope of the is concerned, this study compared and
analyzed customers of four banks including two public and two private i.e. SBI (State Bank
of India) and PNB (Punjab National Bank) from public and HDFC bank and ICICI bank from
private. Further the banks selected have large divergence in total assets as per the balance
sheet available from money control website.
4.2 Research Design: The study being undertaken is Descriptive in nature. The major purpose
of descriptive research is description of the state of affairs, as it exists at present, while
studying the research problem, scientific method is followed.
4.3 Sampling Unit: In this study, the sampling unit taken is CASA Account holders having
business above five lacs.
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4.4 Sampling Size: The sample size is so selected that it should be adequate enough to
represent the whole population, and also give the true picture. The total sample size was
restricted to 400.
4.5 Sampling Design: Keeping in Mind the nature of data required for the study, Probability
Random Sampling Method is used. The respondents for the survey to be selected from banks
of Patiala.
4.6 Data Collection: Questionnaire Method: The primary data is to be collected by
administering structured questionnaire to the banking customers which are CASA Account
holders having business above five lacs who belongs to Patiala.
4.7 Instrument used: All responses were coded and analyzed by computer using the
programming of Statistical Packages for Social Sciences (SPSS) version 23.
5. Data Analysis and Interpretation
Service Quality and Factor Analysis:
Apart from descriptive statistics, Exploratory Factor Analysis (EFA) was used to categorize
the measurement items into the valid factors through confirming the extracted factors that
were affecting service quality perceptions of respondents on the behavioral intention of churn
in selected banks. Thereafter, the reliability of all items was tested through Alpha value and
Communality values accordingly. Subsequently, items were factor analyzed using
Exploratory Factor Analysis (EFA) and these dimensions were evaluated based on the
customers’ Expectations and Perceptions. Further, these Mean and Gap (P-E) in terms of
customers' expectations and perceptions for the various dimensions of service quality and
here, Bartlett’s Test of Sphericity was also applied. Under EFA, the principal component
method with Varimax rotation method was applied. Once the factors were extracted than the
next step is to interpret and name the factors. Factor naming is done based on the membership
of various items in various factors. Then, Service Quality Gap Analysis was tested for all
variables concerned like, empathy, assurance, tangibility, responsiveness, reliability of
SERVQUAL SCALE. Thereafter, the overall service quality gap between the individual
service quality dimensions of SERVQUAL were analyzed and the results were extracted.
Lastly, to check the effect of Service Quality Perception on Behavioral Intention of Churn,
the Paired Sample T-Test was applied to analyze Gap between Customers’ Expectations and
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Perceptions of Five Dimensions of Service Quality with Intent to Churn and Least Intent to
Churn attributes taken into consideration.
5.A. Descriptive Statistics
Table 5.1: Descriptive Statistics
Variables Perception
Mean
Expectation
Mean
Gap
(P-E)
Present bank has operating hours
convenient to their customers.
3.91 4.09 -0.18
Present bank has employees who give
customers personal attention.
3.86 4.01 -0.15
Present bank gives customers individual
attention.
3.84 3.98 -0.14
Employees of present bank understand
specific needs of customers.
4.06 4.16 -0.10
Present bank has their customers best
interest at heart.
3.95 4.07 -0.12
Customer of present bank will feel safe in
their banking transactions.
4.22 4.32 -0.10
The behavior of employees in present
bank is increasing confidence in
customers.
4.16 4.30 -0.14
Employees of present bank will be
consistently courteous with customers.
4.15 4.22 -0.07
Employees of present bank have
knowledge to answer customer questions.
4.09 4.25 -0.16
The physical facilities at present bank are
visually appealing.
4.02 4.08 -0.06
Materials associated with service are
visually appealing.
4.13 4.24 -0.11
Present bank has modern equipment’s. 3.87 4.17 -0.19
The frontline employees at present bank
are neat in appearance.
3.63 3.85 -0.22
Employees of present bank give prompt
services to customers.
4.14 4.23 -0.08
Employees of present bank are always
willing to help customers.
4.04 4.11 -0.07
Employees of present bank tell customers
exactly when service will be performed.
3.97 4.06 -0.09
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Employees of present bank are never too
busy to respond to customers request.
4.01 4.12 -0.11
Present bank performs the service right at
the first time.
4.07 4.08 -0.01
Present bank insists on error free records. 4.23 4.27 -0.04
When present bank promises to do
something by certain time, it does.
4.18 4.22 -0.03
When customer has problem, present bank
shows sincere interest in solving.
4.13 4.24 -0.11
Present bank will provide the service at
the time they promise to do so.
4.14 4.19 -0.05
This part shows the Mean and Gap (P-E) in terms of customers' expectations and perceptions
for the various dimensions of service quality. The mean score for all the variables comes
close to 3.5- 4.5 which shows that all the variables of service quality are important for
retention of the customers. Also, there is very less deviation except two or three variables.
5.B. Exploratory Factor Analysis
Table 5.2: KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling
Adequacy. .898
Bartlett's Test of Sphericity Approx. Chi-
Square
10590.64
1
df 231
Sig. .000
Significance value of Bartlett’s Test of Sphericity from Table 5.2 is 0.00 that is less than 0.05
which stipulates that data is multivariate normal and acceptable for factor analysis. Moreover,
KMO value is 0.898 that indicates that data set considered to be highly suitable for factor
analysis.
Table 5.3.: Communalities
Initial Extraction
The behavior of employees in present bank is increasing
confidence in customers.
1.000 .918
Customer of present bank will feel safe in their banking
transactions.
1.000 .922
Employees of present bank will be consistently courteous
with customers.
1.000 .912
Employees of present bank has knowledge to answer
customer questions.
1.000 .935
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Table 5.3. shows the communalities values of all the 5 factor of service quality. Here, all the
values are above 0.5 which suggest that the data set was appropriate for further analysis.
Table 5.4.: Total Variance Explained
Comp
onent
Initial Eigenvalues
Extraction Sums of
Squared Loadings
Rotation Sums of
Squared Loadings
Tota
l
% of
Varian
Cumula
tive % Total
% of
Varian
Cumula
tive % .Total
% of
Varian
Cum
ulativ
Present bank gives customers individual attention. 1.000 .886
Present bank has operating hours convenient to their
customers.
1.000 .885
Present bank has employees who give customers personal
attention.
1.000 .862
Employees of present bank understand specific needs of
customers.
1.000 .915
Present bank has their customers best interest at heart. 1.000 .910
When present bank promises to do something by certain time,
it does.
1.000 .910
When customer has problem, present bank shows sincere
interest in solving.
1.000 .903
Present bank performs the service right at the first time. 1.000 .770
Present bank insists on error free records. 1.000 .764
Present bank will provide the service at the time they promise
to do so.
1.000 .768
Employees of present bank tell customers exactly when
service will be performed.
1.000 .753
Employees of present bank give prompt services to
customers.
1.000 .737
Employees of present bank are always willing to help
customers.
1.000 .796
Employees of present bank are never too busy to respond to
customers request.
1.000 .786
Present bank has modern equipment’s. 1.000 .775
The physical facilities at present bank are visually appealing. 1.000 .760
The frontline employees at present bank are neat in
appearance.
1.000 .869
Materials associated with service are visually appealing. 1.000 .874
Extraction Method: Principal Component Analysis.
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ce ce ce e %
1 9.88
5 44.930 44.930 9.885 44.930 44.930 4.579 20.812
20.81
2
2 2.97
4 13.520 58.451 2.974 13.520 58.451 3.656 16.619
37.43
1
3 2.36
0 10.729 69.179 2.360 10.729 69.179 3.531 16.050
53.48
1
4 2.19
8 9.992 79.171 2.198 9.992 79.171 3.485 15.841
69.32
2
5 1.11
4 5.065 84.236 1.114 5.065 84.236 3.281 14.914
84.23
6
6 .981 4.459 88.695
7 .301 1.368 90.063
8 .299 1.357 91.420
9 .265 1.206 92.626
10 .234 1.062 93.688
11 .205 .931 94.619
12 .181 .821 95.440
13 .159 .721 96.161
14 .146 .664 96.825
15 .130 .593 97.418
16 .119 .540 97.957
17 .109 .495 98.453
18 .083 .379 98.831
19 .080 .364 99.196
20 .073 .331 99.526
21 .062 .283 99.809
22 .042 .191 100.000
Extraction Method: Principal Component Analysis.
All the 5 factors in Table 5.4 accounted for 84.236 percent of the variance. Total variance
explained (84.236 percent) by these 22 components exceeds the 60 percent threshold
commonly used in social sciences.
Table 5.5.: Rotated Component Matrixa
Component
1 2 3 4 5
Present bank has operating hours
convenient to their customers.
.912
Present bank has employees who give
customers personal attention.
.911
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Present bank gives customers individual
attention.
.905
Employees of present bank understand
specific needs of customers.
.897
Present bank has their customers best
interest at heart.
.893
Customer of present bank will feel safe in
their banking transactions.
.914
The behavior of employees in present bank
is increasing confidence in customers.
.906
Employees of present bank will be
consistently courteous with customers.
.904
Employees of present bank has knowledge
to answer customer questions.
.882
The physical facilities at present bank are
visually appealing.
.902
Materials associated with service are
visually appealing.
.896
Present bank has modern equipment’s. .889
The frontline employees at present bank are
neat in appearance.
.884
Employees of present bank give prompt
services to customers.
.800
Employees of present bank are always
willing to help customers.
.796
Employees of present bank tell customers
exactly when service will be performed.
.791
Employees of present bank are never too
busy to respond to customers request.
.776
Present bank performs the service right at
the first time.
.844
Present bank insists on error free records. .835
When present bank promises to do
something by certain time, it does.
.459 .692
When customer has problem, present bank
shows sincere interest in solving.
.442 .687
Present bank will provide the service at the
time they promise to do so.
.449 .664
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 6 iterations.
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Rotated component matrix Table 5.5 represents the strength of relationship between the item
and factor and membership of the item under one factor. Here the membership of the item in
factor is determines by identifying the highest loading in one factor. The loading values
ranges between the 0 and 1. Value close to 1 indicated the highest factor loading. Another
important thing is that while determining the factor membership, negative sign of the factor
is being ignored. Generally, factor loading higher than 0.5 is acceptable but as per the Hair
(2006), for sample size of 400 factor loading of 0.40 is also acceptable.
5.B. Factor Naming
Once the factors extracted than the next step is to interpret and name the factors. Factor
naming is done based on the membership of various items in various factors as follows:
Factor 1
Table 5.6: Factor Loadings for variables of Factor
“Empathy”
Variables Factor
Loadings
Present bank has operating hours convenient to their customers. .912
Present bank has employees who give customers personal
attention.
.911
Present bank gives customers individual attention. .905
Employees of present bank understand specific needs of
customers.
.897
Present bank has their customers best interest at heart. .893
Variance % 20.812%
Cumulative % 20.812%
The first factor is a linear combination of items listed in table 5.6. All the items are
pertaining to the bank employees’ attentiveness, their ability to understand the customer
needs, promptness in services, problem solving and their easy accessibility. Considering
these items factor 1 is named as Empathy.
It refers to the individualized attention the service provider gives to its customers.
Furthermore, the variables included in this factor are Bank employees giving customers
individual attention, bank employees deal with customers in a caring fashion, bank
employees have the customer’s best interest at heart, bank has hours convenient to all
customers and bank employees understand the individual needs of their customers.
Factor 2
Table 5.7: Factor Loadings for variables of Factor
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“Assurance”
Variables Factor Loadings
Customer of present bank will feel safe in their banking
transactions.
.914
The behavior of employees in present bank is increasing
confidence in customers.
.906
Employees of present bank will be consistently courteous with
customers.
.904
Employees of present bank have knowledge to answer customer
questions.
.882
Variance % 16.619%
Cumulative % 37.431%
This factor is a linear combination of item listed in table 5.7. These items comprise of
variables related to the knowledge and courtesy of employees and their ability to inspire
trust and confidence. The factors are included in the assurance are employees instill
confidence in customers, bank employees make customers feel safe in their transaction, bank
employees are consistently courteous and bank employees have the knowledge to answer
customer Questions.
Factor 3
Table 5.8: Factor Loadings for variables of Factor
“Tangibility”
Variables Factor Loadings
The physical facilities at present bank are visually appealing. .902
Materials associated with service are visually appealing. .896
Present bank has modern equipment’s. .889
The frontline employees at present bank are neat in appearance. .884
Variance % 16.050%
Cumulative % 53.481%
This factor is a linear combination of item listed in table 5.8. These items comprise of
cleanliness in the bank’s premises and bank’s various materials like pamphlets, brochures
etc. As per the literature of service quality, all these items are a part of Physical Evidence
and hence named as Tangibility.
It means the things which are physically observed by the customers in the bank branch
including employees have a neat, professional appearance, the bank has modern equipment,
the bank has visually appealing material associated with the service and the facilities of
banks are visually appealing may represent tangibles. These qualities provide concrete cues
for customers to evaluate the capability of the service provider.
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Factor 4
Table 5.9: Factor Loadings for variables of Factor
“Responsiveness”
Variables Factor Loadings
Employees of present bank give prompt services to customers. .800
Employees of present bank are always willing to help customers. .796
Employees of present bank tell customers exactly when service
will be performed.
.791
Employees of present bank are never too busy to respond to
customers request.
.776
Variance % 15.841
Cumulative % 69.322
This factor is linear combination of items listed in Table 5.9 that represent availability of
various bank’s products such as mutual fund, insurance policies and locker facility. As the
items grouped in this factor represent the various banking product through which bank offer
exact required services to its customers with necessary competitive promptness and hence
this factor is named as Responsiveness.
It refers to the service provider willingness to help customers and provide prompt service. It
can be measured by the variables like bank employees provide prompt service to customers,
bank employees are always willing to help customers, bank employees are ready to respond
to customers request and bank employees are never too busy to respond to customer
questions.
Factor 5
Table 5.10: Factor Loadings for variables of Factor
“Reliability”
Variables Factor Loadings
Present bank performs the service right at the first time. .844
Present bank insists on error free records. .835
When present bank promises to do something by certain time, it
does.
.692
When customer has problem, present bank shows sincere interest
in solving.
.687
Present bank will provide the service at the time they promise to
do so.
.664
Variance % 14.914%
Cumulative % 84.236%
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This factor is a linear combination of item listed in table 5.10. These items epitomize the
philosophy of the bank so far as ethics are concern and it results in creating a good and
reliable service provider in the market. Therefore, this factor is named as Reliability.
Reliability refers to the trust in bank’s ability of performing service in a proper way, such as
acting according to promises and declarations. A reliable service means the banker is bank
employees provide services as promised, bank employees are dependable in handling
customer’s service problems, bank employees perform services right at the first time and
bank employees provide services at the promised time.
5.C. Service Quality Gap Analysis
5.C.1. Service Quality Gap Analysis in Empathy of SERVQUAL SCALE
A total of 5 variables are considered under dimension “Empathy” of SERVQUAL scale and
the analyzed service quality gap for each variable is listed below:
Table 5.11: Mean Comparison between expectation and perception and gap
analysis in “Empathy” of SERVQUAL scale
Empathy Perception
Mean
Expectation
Mean
Gap (P-E)
Present bank has operating hours
convenient to their customers.
3.91 4.09 -0.18
Present bank has employees who give
customers personal attention.
3.86 4.01 -0.15
Present bank gives customers individual
attention.
3.84 3.98 -0.14
Employees of present bank understand
specific needs of customers.
4.06 4.16 -0.10
Present bank has their customers best
interest at heart.
3.95 4.07 -0.12
The service quality gap (P-E) is negative for all the variables and the average ratings varies
between 3.5 and 4.5 for expected and perceived items of empathy. In both expectation and
perception items, the highest rating given by the bank customer is noticed with “Employees
of present bank understand specific needs of customers” (4.16) and (4.06) respectively and
the lowest rating given by the bank customer is noticed with “Present bank give customers
individual attention” (3.84) and (3.98) respectively for expectation and perception towards
the dimension of “Empathy”. The ratings given by the respondents vary between 1 (Strongly
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Disagree) to 5 (Strongly Agree). The above mean rating shows that, on average, the ratings
of the respondents fall between close to Agree and below Strongly Agree.
Regarding Service Quality gap, it is seen that large gap is notice with “Present bank have
operating hours convenient to their customers” (-.018) and the least service quality gap is
noticed with “Employees of present bank understand specific needs of customers” (-.10).
5.C.2. Service Quality Gap Analysis in Assurance of SERVQUAL SCALE
A total of 5 variables are considered under dimension “Assurance” of SERVQUAL scale
and the analyzed service quality gap for each variable is listed below:
Table 5.12: Mean Comparison between expectation and perception and gap
analysis in “Assurance” of SERVQUAL scale
Assurance Perception
Mean
Expectation
Mean
Gap (P-E)
Customer of present bank will feel safe
in their banking transactions.
4.22 4.32 -0.10
The behavior of employees in present
bank is increasing confidence in
customers.
4.16 4.30 -0.14
Employees of present bank will be
consistently courteous with customers.
4.15 4.22 -0.07
Employees of present bank have
knowledge to answer customer
questions.
4.09 4.25 -0.16
The service quality gap (P-E) is negative for all the variables and the average ratings varies
between 3.5 and 4.5 for expected and perceived items of assurance. In both expectation and
perception items, the highest rating given by the bank customer is noticed with “Customer of
present bank will feel safe in their banking transactions” (4.22) and (4.32) respectively and
the lowest rating given by the bank customer is noticed with “Employees of present bank
will be consistently courteous with customers” (4.15) and (4.22) respectively for
expectation and perception towards the dimension of “Assurance”. The ratings given by the
respondents vary between 1 (Strongly Disagree) to 5 (Strongly Agree). The above mean
rating shows that, on average, the ratings of the respondents fall between close to Agree and
below Strongly Agree.
Regarding Service Quality gap, it is seen that large gap is notice with “Employees of banks
have knowledge to answer customer questions” (-.016) and the least service quality gap is
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noticed with “Employees of present bank will be consistently courteous with customers” (-
.07).
5.C.3. Service Quality Gap Analysis in Tangibility of SERVQUAL SCALE
A total of 4 variables are considered under dimension “Tangibility” of SERVQUAL scale
and the analyzed service quality gap for each variable is listed below:
Table 5.13: Mean Comparison between expectation and perception and gap
analysis in “Tangibility” of SERVQUAL scale
Tangibility Perception
Mean
Expectation
Mean
Gap (P-E)
The physical facilities at present bank
are visually appealing.
4.02 4.08 -0.06
Materials associated with service are
visually appealing.
4.13 4.24 -0.11
Present bank has modern equipment’s. 3.87 4.17 -0.19
The frontline employees at present bank
are neat in appearance.
3.63 3.85 -0.22
The service quality gap (P-E) is negative for all the variables and the average ratings varies
between 3.5 and 4.5 for expected and perceived items of tangibility. In both expectation and
perception items, the highest rating given by the bank customer is noticed with “The
physical facilities at present bank are visually appealing” (4.13) and (4.24) respectively and
the lowest rating given by the bank customer is noticed with “The frontline employees at
present bank are neat in appearance” (3.63) and (3.85) respectively for expectation and
perception towards the dimension of “Tangibility”. The ratings given by the respondents
vary between 1 (Strongly Disagree) to 5 (Strongly Agree). The above mean rating shows
that, on average, the ratings of the respondents fall between close to below Agree to
Strongly Agree.
Regarding Service Quality gap, it is seen that large gap is notice with “The frontline
employees at present bank are neat in appearance” (-.022) and the least service quality gap is
noticed with “The physical facilities at present bank are visually appealing” (-.06).
5.C.4. Service Quality Gap Analysis in Responsiveness of SERVQUAL SCALE
A total of 4 variables are considered under dimension “Responsiveness” of SERVQUAL
scale and the analyzed service quality gap for each variable is listed below:
Table 5.14: Mean Comparison between expectation and perception and gap
analysis in “Responsiveness” of SERVQUAL scale
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Responsiveness Perception
Mean
Expectation
Mean
Gap (P-E)
Employees of present bank give prompt
services to customers.
4.14 4.23 -0.08
Employees of present bank are always
willing to help customers.
4.04 4.11 -0.07
Employees of present bank tell
customers exactly when service will be
performed.
3.97 4.06 -0.09
Employees of present bank are never too
busy to respond to customers request.
4.01 4.12 -0.11
The service quality gap (P-E) is negative for all the variables and the average ratings varies
between 3.5 and 4.5 for expected and perceived items of tangibility. In both expectation and
perception items, the highest rating given by the bank customer is noticed with “Employees
of present bank give prompt services to customers” (4.14) and (4.23) respectively and the
lowest rating given by the bank customer is noticed with “Employees of present bank tell
customers exactly when service will be performed” (3.97) and (4.06) respectively for
expectation and perception towards the dimension of “Responsiveness”. The ratings given
by the respondents vary between 1 (Strongly Disagree) to 5 (Strongly Agree). The above
mean rating shows that, on average, the ratings of the respondents fall between close to
below Agree to Strongly Agree.
Regarding Service Quality gap, it is seen that large gap is notice with “Employees of present
bank are never too busy to respond to customers request” (-.011) and the least service
quality gap is noticed with “Employees of present bank are always willing to help
customers” (-.07).
5.C.5. Service Quality Gap Analysis in Reliability of SERVQUAL SCALE
A total of 4 variables are considered under dimension “Reliability” of SERVQUAL scale
and the analyzed service quality gap for each variable is listed below:
Table 5.15: Mean Comparison between expectation and perception and gap
analysis in “Reliability” of SERVQUAL scale
Reliability Perception
Mean
Expectation
Mean
Gap (P-E)
Present bank performs the service right
at the first time.
4.07 4.08 -0.01
Present bank insists on error free
records.
4.23 4.27 -0.04
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When present bank promises to do
something by certain time, it does.
4.18 4.22 -0.03
When customer has problem, present
bank shows sincere interest in solving.
4.13 4.24 -0.11
Present bank will provide the service at
the time they promise to do so.
4.14 4.19 -0.05
The service quality gap (P-E) is negative for all the variables and the average ratings varies
between 3.5 and 4.5 for expected and perceived items of tangibility. In both expectation and
perception items, the highest rating given by the bank customer is noticed with “Present
bank insist on error free records” (4.23) and (4.27) respectively and the lowest rating given
by the bank customer is noticed with “Present bank performs the service right at the first
time” (4.07) and (4.08) respectively for expectation and perception towards the dimension of
“Reliability”. The ratings given by the respondents vary between 1 (Strongly Disagree) to 5
(Strongly Agree). The above mean rating shows that, on average, the ratings of the
respondents fall between close to below Agree to Strongly Agree.
Regarding Service Quality gap, it is seen that large gap is notice with “When customer has
problem, present bank show sincere interest in solving” (-.011) and the least service quality
gap is noticed with “Employees of present bank are always willing to help customers Present
bank performs the service right at the first time” (-.01).
5.C.6. Gap Analysis with SERQUAL Dimensions
In this section, the overall service quality gap between the individual service quality
dimensions of SERVQUAL were analyzed and the result extracted is given below:
Table 5.16: Mean Comparison between expectation and perception and gap
analysis of SERVQUAL scale Dimension
S.No. Service
Quality
Dimension
Perception Expectation Service
Quality
Gap
(P-E)
‘t’
Value Mean SD Mean SD
1. Empathy 19.69 3.78 20.36 3.54 -0.67 4.92
2. Assurance 12.46 2.12 12.81 2.03 -0.35 4.26
3. Tangibility 15.63 2.87 16.34 2.79 -0.71 5.26
4. Responsiveness 20.37 3.54 20.89 3.19 -0.52 3.64
5. Reliability 20.78 3.31 21.02 3.18 -0.24 1.83
The above table explained the mean score and standard deviation of Perception and
Expectation pf customers in view of SERVQUAL dimensions like Empathy, Assurance,
Tangibility, Responsiveness and Reliability. From the result, it is inferred that large service
quality gap is noticed with Tangibility (-.071) and the least service quality gap is notices with
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Reliability (-.024) which revealed that the expectation level is more than the perception level
in view of service quality.
5.C.7. Effect of Service Quality Perception on Behavioral Intention of Churn: Paired
Sample T-Test to Analyze Gap between Customers’ Expectations and Perceptions of
Five Dimensions of Service Quality: Intent to Churn and Little Intent to Churn
H0: There is no significant relationship between Service Quality Perception and Behavioral
Intention of Churn.
In this part, in view of finding association between the type of churn of the respondents and
their level of perception on service quality dimension of SERVQUAL, paired sample ‘t’ test
is applied since it has only two attributes and the result obtained from the analysis is shown in
the table below:
Table 5.17: Association between the service quality perception of the respondents
and their behavioral intention of churn
S.No. Service
Quality
Dimension
Mean Score of Service Quality
Dimensions with Type of Bank
of Respondents
‘t’-Statistics
Intent to
churn
Little Intent
to churn
1. Empathy 19.43 21.10 3.63
2. Assurance 12.34 13.09 2.82
3. Tangibility 15.37 17.06 4.83
4. Responsiveness 20.58 21.85 3.11
5. Reliability 20.13 21.67 3.55
From the above table it is revealed that there is a significant association found between the
type of churn of the respondents and their level of perception on all service quality
dimensions of SERVQUAL scale as the ‘t’ value is statistically significant at .5% level of
significance in public and private sector banks. Highest mean score (21.85) is found with
“Responsiveness” of service quality dimension under little Intent to churn category and least
mean score (12.34) is found with “Assurance” under Intent to churn category of respondents.
In the above table, it has been examined that gap between expectation and perception of the
customers is significant in the intent to churn and little intent to churn. Therefore, the null
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hypothesis has not been accepted. This shows that there is a significant effect of service
quality perception on behavioral intention of churn.
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