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CUSTOMERS PERCEPTION ON PHYSICAL FACILITIES AND PROCESSES IN BANKS -

A CASE STUDY OF STATE BANK OF INDIA

K. RAMA MOHANA RAO1 & S. GANGADHARA RAMA RAO2

1Professor, Dept. of Commerce and Management Studies, Andhra University, Visakhapatnam, Andhra Pradesh, India

2Lecturer, School of Management Studies, Jawaharlal Nehru Technological University, Kakinada, Andhra Pradesh, India

ABSTRACT

The intensifying competitive environment in the banking sector forcing the public sector banks to become more

and more customer focused in their operations. The quality and adequacy of the physical facilities at bank branches plays

an important role in customer satisfaction and quality perceptions of the customers. Recognizing this, many banks

redesigned their branch structures to create better ambiance, comforts and facilities to the visiting customers. The banks

however need to know to what extent the physical infrastructure provided at bank branches could create quality perceptions

to customers. This paper is an attempt to study the customers perceptions on physical facilities provided by SBI at its

branches and customer interactions with bank employees based on survey research.KEYWORDS: Servicescape, Physical Environment, Ambiance, Empathy, Courtesy

INTRODUCTION

Customers have an important role to perform in the service production and consumption process, as customers are

co-producers of service. The generated service quality greatly depends upon the customers ability to participate in service

process and also on the ability to perceive the quality generated. Physical environment is one of the major influencer of the

employee as well as consumer behavior in the interactive process. The moods and emotions of the interactive people are

greatly influenced by physical environment as well as physical facilities. Several authors refer to the physical facilities, i.e.

the servicescape, as a quality indicator (e.g. Ward et al., 1992; Baker et al., 1994; Baker, 1998; Aubert-Gamet and Cova,

1999; Baker et al., 2002). Servicescape is a widely used term to describe the physical surroundings of a service company. It

includes the exterior and interior design, ambient conditions such as temperature, noise, odour, as well as tangible parts of

the service such as business cards, brochures, and other communication material (e.g. Bitner, 1992; Wakefield and Barnes,

1996). Ward et. al. (1992) compare the servicescape with a products packaging. In analogy to packaging it is expected that

tangible surrogates are important in creating expectations about the intangible service performance and thus can be used for

inference making (Levitt, 1981; Rushton and Carson, 1989; Ward et. al., 1992). Since services usually involve

simultaneous production and consumption, in many cases the customer has to enter the service facilities and has to bewithin the servicescape before he/she can make the purchase decision. Therefore, the servicescape offers a multitude of

easily accessible cues to customers seeking an information searching shortcut (Baker, 1998). Physical evidence provides

tangible cues to customer to develop service quality expectations (K. Rama Mohana Rao, 2011). Environmental

psychologists have argued that people respond to their environment holistically, rather than to individual stimuli.

Therefore, the reaction to the overall environment is more than a sum of its individual stimuli (Bell et al., 1978; Holahan,

1982; Ittleson et. al., 1974). Bitner (1992) stated that the dimensions of the physical surroundings include all of the

objective physical factors that can be controlled by the firm to enhance (or constrain) employee and customer actions. Bank

physical evidence includes all tangible elements that are attached to services. Examples in this respect would be physical

International Journal of Sales & Marketing ManagementResearch and Development (IJSMMRD)

ISSN 2249-6939Vol. 3, Issue 1, Mar 2013, 53-60

TJPRC Pvt. Ltd.


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Customers Perception on Physical Facilities and Processes in Banks - A Case Study of State Bank of India 55

should remember that customer is the ultimate judge of the performance of the service provider. In fact, service

organization should focus on exploring new ways of presenting a service outlet by encouraging customers participation in

introducing refinements and modifications in the physical environment. The beginning is definitely to know the opinion of

the customers on the physical environment. Since the customer interaction with the physical environment is a vital input in

shaping the first impression on the bank and also the quality perception of customers, an attempt is made to know the

opinions of the respondents on the physical environment of the bank. The opinion of the respondents is elicited on physical

environment of the bank using ET Scale (Excellent to Terrible). The data presented in the Table 1 shows that 83.7 per cent

of the respondents rated the exterior of the bank as good, 10.3 per cent of the respondents rated the exterior either very

good or excellent. Ambiance represents the surroundings of service outlet and an atmosphere in the service outlet that

persuades the employees as well as customers to get involved pleasantly and comfortably in the service production and

consumption process. This is the reason why ambiance is considered as an important characteristic of a servicescape. The

study revealed, as many as 63.3 pre cent of the respondents rated ambiance as good, while 22.7 per cent rated it as

average. The layout of the bank branch was rated as good by 67 per cent of the respondents and 20.3 per cent of the

respondents rated the layout as average. As far as signage is concerned, 55.3 per cent of the respondents rated it as good

and 38.7 per cent rated it as average. The interactive system designed by the bank is rated as average by the majority of

the respondents (54 per cent). While 25.7 per cent of the respondents rated the interactive system as good and 4 per cent of

the respondents rated as very good, 15.7 per cent of the respondents rated the interactive system as poor. The facilities for

interaction also rated by the majority as average and more than 20 per cent rated the facilities for interactions as poor. The

process designed for service production and delivery by the bank was rated average by as many as 49.3 per cent of the

respondents. A little over 77.3 per cent rated the tangibles present in the bank service outlet as good. Further, the table

reveals that there is a significant difference among the zones on the factors of physical environment. The factors such as

Ambiance (mean 3.12, F=4.731) and Layout (mean 3.21, F=4.7) differ significantly in customer opinion. Signage (mean

3.41, F=3.908) and Tangibles (mean 3.16, F=4.177) are the other factors got significant differences in the zones. It can be

inferred from the table, that the exterior of the bank, secured positive rating as the mean value of the factor was 2.95. The

other factors though were not rated negatively, but failed to secure positive rating as the mean value of the factors varied

between >3 and


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56 K. Rama Mohana Rao& S. Gangadhara Rama Rao

The objective of any service organization shall be providing the total quality service system to ensure quality

perceptions to the customers at every movement they experience in the service production and consumption process. The

opinion of the respondents indicates the gap between desirable and available. The management of the bank needs to focus

its attention on those areas where the majority of the respondents rated negatively. It is also essential to strengthen further

the areas where the majority gave positive ratings. Creating the feeling of excellence in every service movement is the

most challenging task to every service organization and particularly to the banking organization.It demands continuous

improvement with the support of research and technology adaptation besides feedback from customers. The opinion on the

documents of the bank is obtained from the respondents and the data is presented in Table 2. A little over 88 per cent of

the respondents revealed that the documents of the bank are simple. As many as 63.0 per cent of the respondents either

agree or strongly agree to the statement that the documents are understandable. The majority of the respondents (64.7 per

cent) were not convinced to the statements documents are user friendly. Their response was neutral for the statement the

documents seeking unnecessary details.

Table 2: What is your Opinion on the Documents of the Bank? (n=300)

ParticularsStrongly

Agree Agree Neutral DisagreeStrongly

Disagree

Simple19 246 24 11 -

(6.33) (82.00) (8.00) (3.67)

Understandable19 170 98 13 -

(6.33) (56.67) (32.67) (4.33)

User Friendly12 82 194 11 1

(4.00) (27.33) (64.67) (3.67) (0.33)

Unnecessary

details

10 30 225 33 2

(3.33) (10.00) (75.00) (11.00) (0.67)

Figures in parenthesis indicate percentage to the total.

Source: Primary Data

Customer Employee Interactions

Face to face interaction is considered as the best form of interaction due to several reasons. It provides anopportunity to eliminate communication gaps between the individuals much better than any other interactive system.

Frontline employees of the banking organization interact with customers to know their problems and to provide necessary

services to the best satisfaction of the customers. Customers will have different sets of needs, wants, ego systems, time

pressure, situational pressures, adaptability, temperament, understanding, skill, knowledge and participative abilities.

Similarly, employees also are human beings with varied needs, wants, ego systems, situational pressures, temperaments,

styles, abilities and involvement levels. When employee and customer are interacting, the best result will come out only

when they are working positively with high level of understanding and involvement in service process. Service

organizations give priority to train the people in order to develop interactive abilities. Many problems in the service

organizations will be solved when the employees are good in customer interactions.

Employee to customer interaction is the key issue in interactive marketing. The respondents were asked to give

their opinion on the interactive behavior of the employees of State Bank of India. The respondents were asked to give their

rating on the following statements. The ratings of the respondents are collected on five point agreement scale which

varied from strongly agree to strongly disagree. Table 3 reveals that the majority of the respondents gave positive rating to

the statements employees of the branch are skillful, employees are presentable and employees are service oriented.

The majority of the respondents preferred neutral position for the statements employees are courteous, employees are

empathetic, employees are communicative, employees understand customer problems, employees extend support at

time of necessity, employees suggest right things, employees are discriminative, employees are egoistic and


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employees have gender bias. The opinion is divided almost equally between neutral and agreement in the case of the

statement employees have no time sense. As many as 43 per cent of the respondents either disagree or strongly disagree

to the statement employees of the branch are responsive. About 51.40 per cent ventilated their disagreement to the

statement employees are giving individualized attention. The opinion is highly divided among agreement, neutral and

disagreement for the statement employees understand customer problems. The large number of respondents (41 per cent)

preferred neutral to the statement employees are communicative, while 33.3 per cent of the respondents either disagree

or strongly disagree to the statement.A further insight in to the table reveals that there is a highly significant difference

between the zones on interactive behavior of employees. The statements such as employees of the branch are responsive

(mean 3.04, F=26.297), employees are courteous (mean 3.24, F=7.805), employees are giving individualized attend

attention (mean 3.31, F=5.136), employees understand customer problems (mean 3.09, F=7.238) and employees are

presentable (mean 2.05, F=31.874) attracted different opinions among zones. The following are the other statements

attract different opinion among the zones employees are communicative (mean 3.04, F=3.774) and employees are

discriminative (mean 2.66, F=3.417). It can be inferred from the above, that the opinion of the respondents on interactive

behavior of the employees in almost all the factors is not significantly positive and in some factors it is either neutral or

negative.

Table 3: Interactive Behavior of the Employees (n=300)

ParticularsStrongly

AgreeAgree Neutral Disagree

Strongly

Disagree

Mean

/ SDF

Employees of the branch are responsive11 98 61 129 1 3.04 26.297**

(3.70) (32.70) (20.30) (43.00) (0.30) 0.958

Employees are courteous6 26 160 107 1 3.24 7.805**

(2.00) (8.70) (53.30) (35.70) (0.30) 0.694

Employees are empathetic8 18 147 125 2 3.32 1.040

(2.70) (6.00) (49.00) (41.70) (0.70) 0.751

Employees are communicative14 63 123 96 4 3.04 3.774*

(4.70) (21.00) (41.00) (32.00) (1.30) 0.878

Employees are giving individualized

attention

- 62 84 152 2 3.31 5.136**

(20.70) (28.00) (50.70) (0.70) 0.802

Employees understand customer

problems

2 82 108 102 6 3.09 7.238**

(0.70) (27.30) (36.00) (34.00) (2.00) 0.845

Employees extend support at the time of

necessity

5 102 104 84 5 2.94 3.000

(1.70) (34.00) (34.70) (28.00) (1.70) 0.867

Employees suggest right things11 85 178 25 1 2.37 1.476

(3.70) (28.30) (59.30) (8.30) (0.30) 0.676

Employees are skilful4 234 52 10 - 2.23 0.225

(1.30) (78.00) (17.30) (3.30) 0.519

Employees are presentable5 148 133 14 - 2.52 31.874**

(1.70) (49.30) (44.30) (4.70) 0.614

Employees are service oriented5 138 131 21 5 2.61 2.191

(1.70) (46.00) (43.70) (7.00) (1.70) 0.716

Employees are discriminative4 110 170 15 1 2.66 3.417*

(1.30) (36.70) (56.70) (5.00) (0.30) 0.609


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Table-3:Contd.,

Employees are egoistic4 38 221 35 2 2.98 2.413

(1.30) (12.70) (73.70) (11.70) (0.70) 0.569

Employees have gender bias4 49 189 57 1 3.01 2.545

(1.30) (16.30) (63.00) (19.00) (0.30) 0.649

Employees have no time sense7 118 113 62 - 2.77 2.583

(2.30) (39.30) (37.70) (20.70) 0.801


*P


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The quality of physical facilities is another important dimension that influences interactive behavior. The mean

value of the opinion of the respondents on quality of toilets was 3.27, while it was 2.28 for drinking water, 2.28 for gum,

2.11 for pins, 2.23 for writing pads and 2 for facilities for sitting. The other variables secure a mean value of less than two.

It indicates from the above, that the respondents are unhappy with the quality of toilets, gum, parking place, drinking water

and facilities for sitting. However, in the case of other facilities also the opinion of the majority is not favorable in terms of

adequacy.

Table 5: How do you Rate the Physical Facilities Provided by the Bank? (n=300)

Particulars

Adequacy Quality

Adequate Moderate LessVery

LessNil Mean Adequate Moderate Less

Very

LessNil Mean

Ventilation60 229 11 - - 1.84 28 264 8 - - 1.93

(20.00) (76.33) (3.67) (9.33) (88.00) (2.67)

Moving Space59 209 27 5 - 1.93 37 240 19 4 - 1.97

(19.67) (69.67) (9.00) (1.67) (12.33) (80.00) (6.33) (1.33)

Facilities for

Sitting

61 206 26 7 - 1.93 37 230 29 4 - 2.00

(20.33) (68.67) (8.67) (2.33) (12.33) (76.67) (9.67) (1.33)

Writing pads36 159 88 17 - 2.29 29 186 71 14 - 2.23

(12.00) (53.00) (29.33) (5.67) (9.67) (62.00) (23.67) (4.67)

Toilets6 70 124 84 16 3.11 4 50 117 119 10 3.27

(2.00) (23.33) (41.33) (28.00) (5.33) (1.33) (16.67) (39.00) (39.67) (3.33)

Drinking

Water

31 182 64 17 6 2.28 25 191 62 18 4 2.28

(10.33) (60.67) (21.33) (5.67) (2.00) (8.33) (63.67) (20.67) (6.00) (1.33)

Air

Conditioning /

Fans

69 212 12 7 - 1.86 36 243 12 9 - 1.98

(23.00) (70.67) (4.00) (2.33) (12.00) (81.00) (4.00) (3.00)

Lighting75 215 10 - - 1.78 51 239 9 1 - 1.87

(25.00) (71.67) (3.33) (17.00) (79.67) (3.00) (0.33)

Counters

Layout

53 222 21 4 - 1.92 45 235 20 - - 1.92

(17.67) (74.00) (7.00) (1.33) (15.00) (78.33) (6.67)

Pins42 152 96 8 2 2.25 40 195 59 4 2 2.11

(14.00) (50.67) (32. 00) (2.67) (0.67) (13.33) (65.00) (19.67) (1.33) (0.67)

Gum42 125 105 22 6 2.42 30 182 66 17 5 2.28

(14.00) (41.67) (35.00) (7.33) (2.00) (10.00) (60.67) (22.00) (5.67) (1.67)

Parking Place25 117 120 35 3 2.58 28 159 81 30 2 2.40

(8.33) (39.00) (40.00) (11.67) (1.00) (9.33) (53.00) (27.00) (10.00) (0.67)

Security57 222 10 11 - 1.92 37 239 14 9 1 1.99

(19.00) (74.00) (3.33) (3.67) (12.33) (79.67) (4.67) (3.00) (0.33)


Source: Primary Data

CONCLUSIONS

The findings of the study drives to the conclusion that though majority of the customers are satisfied with the

physical facilities and interactive processes, there are gaps to be addressed to improve quality in performance as far as

physical environment and interactive processes are concerned. The exterior of the bank branches need to be improved.

User friendly documents need to be designed. As far as the interactive behavior of the employees is concerned the study

revealed that the interactive skill of the employees, their presentability, service orientation and so on need to be focused for

better employee customer interactions. The problems faced by the customers in communicating their problems and

drawing immediate attention of the employees on the consumer problems are an indication of the concern of the customers.

The survey revealed that the customers are unhappy with the facilities for sitting, parking place, maintenance of toilets, etc.

at bank premises. Thus, the State Bank of India needs to improve the physical environment, simplify the systems,


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procedures and documents and reduce customer interactive time significantly. Though the consumers are not seriously

grievous, they really unhappy with the kind of interactions with the bank.

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