A Major Research Project Synopsis On

Influence of perceived service quality on attitudinal loyalty of customers in Commercial (public & private) retail banking: An empirical study

A research dissertation submitted to DAVV Indore In partial fulfillment of MBA (Batch 2009-2011)

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Penal SUBMTTED BY:

Mr.Gaurav Rajput Mohammad Israr Ansari

Prof-B.K. tripathi

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Mrs.Aradhana

Roll no.09155035

Chouksey

prof-Kapil

Sharma

INTRODUCTION India which is among largest economy of the world has wide network of banks to cater the banking and financial services need of its population. It has altogether 88 scheduled banks which include 27 public sector banks, 31 private sector bank and 38 foreign banks. They have combined network of over 53000branches and more than 45000 ATMs because only SBI has 21000 ATMs. ( wiki.answers.com) Banking industry play a very important role in Indian economy but one of the most important banking sector is retail banking. Retail banking refers to a banking providing services to a customer directly at home. Retail banking is a banking service that is geared primarily toward individual consumers. Retail banking is usually made available by commercial banks, as well as smaller community banks. Unlike wholesale banking, retail banking focuses strictly on consumer markets. Retail banking entities provide a wide range of personal banking services, including offering savings and checking accounts, bill paying services, as well as debit and credit cards. Through retail banking, consumers may also obtain mortgages and personal loans. Although retail banking is, for the most part, mass-market driven, many retail banking products may also extend to small and medium sized business. In the services marketing literature, it is generally agreed that service quality, customer satisfaction and loyalty are important constructs. In the retail banking customer satisfaction is the most important factor & the perceived service quality is vice versa. This affect the attitudinal loyalty of customer towards there particular sector from which they are getting services.These are especially critical in people-intensive sectors like retail banking industry. In todays competitive business world many firms are focusing their efforts on achieving and maintaining a loyal customer base. This research study helps us to know about the attitudinal loyalty in retail banking about the perceived service quality. The research study mainly focused on the customer satisfaction in perceived service quality. Customer satisfaction plays a vital role for the success of any business. The study basically

pointed out about the loyal customer towards the services provided in retail banking. The research study helps us to know about what are the main factors of affecting customer behavior regarding the overall perceived quality. The concept of satisfaction, service quality and loyalty are related to each other.

LITERATURE REVIEW Retail banking refers to banking in which banking institutions excute transaction directly with consumers, rather than corporation or other banks, services offered include :saving and transactional accounts, mortgage, personal loan, debit cards, credit cards, and so forth.(Investopedia financial dictionary)

According to Albert Caruana (2002 ) the main effect of repurchaging by customers is depend on service loyalty. With the help of this research we can find out the difference between service quality and customer satisfaction. Appropriate measures are identified and a postal survey is undertaken among 1,000 retail banking customers. A response rate of 20.5 per cent is obtained. Results indicate that customer satisfaction does play a mediating role in the effect of service quality on service loyalty.

With the help of research of Roger Hallowell , first of all we identify the relationship of customer satisfaction to customer loyalty, and customer loyalty to profitability, using multiple measures of satisfaction, loyalty, and profitability. An estimate of the effects of increased customer satisfaction on profitability (assuming hypothesized causality) suggests that attainable increases in satisfaction could dramatically improve profitability.

With the help of the research of Josee Bloemer we can identify how image, perceived service quality and satisfaction determine loyalty in a retail bank setting at the global construct level, as

well as the level of construct dimensions. At the global level the results of a large-scale empirical study reveal that image is indirectly related to bank loyalty via perceived quality.

CONCEPTUAL FRAMWORK: As we all know that every business needs loyal customer. Loyal customers is the base of any business. Now a days retail banking plays a vital role in providing services to customer. Attitudional loyalty is the main aspect of customer satisfaction. When the customers are satisfied with the services they are getting in terms of good quality makes him loyal towards their specific business sectors. So its very essential to know about the impact of perceived service quality on attitudinal loyalty in retail banking particularly. Most of the Financial institutions, particularly the retail-banking sector, are facing extensive competition. For this reason like other services sector the concept of loyalty is also important to banking sector. Researchers (e.g. Caruana 2002, Bloemer et al., 1998) argued that loyalty could be achieved through satisfaction. Consequently customer satisfaction has achieved increasing focus of research, especially in banking sector. Now a days banking sector has been facing strong competition and this is one of the most important reason of having increasing focus on banking sector. By applying those attributes one bank can achieve competitive advantage over its competitors. As a result of the intense competition many financial institutions are now focusing on developing customer satisfaction and customer retention through improving quality of their services. To comply with the theoretical aspects and also find out the satisfaction-loyalty constructs and their antecedents in the retail-banking sector the researchers decided to carry on this research.

OBJECTIVES OF THE STUDY

To analyze the relationship between perceived service quality and customer loyalty.

To compare the customer loyalty of both the banks on the basis of their socio demographic profile. To compare the level of perceived service quality between HDFC bank and SBI.

RESEARCH METHODOLOGY In this research I will collect the data in Indore, from the two commercial banks, first one is state bank of India(SBI) and another one HDFC bank. The Survey Method has been chosen to carry out the research. The researcher divided the whole work mainly into two parts like, Secondary Research and Primary Research. The design of the questionnaire will be primarily based on multiple item measurement scales (like Likert Scale) taken from previous research. The questionnaire will tested on a small sample of 5 respondents and based on this minor changes can make to improve the clarity of the questionnaire. Data Collection: Primary Data The data would be collected through questionnaire using survey method . Secondary Data The secondary data would be collected from various journals, research papers, magazine, government publications and newspapers. Sampling Type The type of sampling technique used is simple random. Sample Size In the city of Indore with sample size of 50 respondents.

Formulation of sample size : For a survey design based on a simple random sample, the sample size required can be calculated according to the following formulaFormula: n= t x p(1-p) m Description: n = required sample size t = confidence level at 95% (standard value of 1.96) p = estimated prevalence of malnutrition in the project area m = margin of error at 5% (standard value of 0.05)

Limitation: with the help of this formula the sample size is 245. But I have taken 50 respondents due to time limitation.

Data Analysis: Using 5- point Likert Scale and Statistical Tool will be: chi-square test Regression analysis Correlation analysis

References
1. Avkiran, N.K. (1994), Developing an instrument to measure customer service in

branch banking. International Journal of Bank Marketing, 12, 6, 10-18.

2. Bahia, K and J. Nantel (2000), A reliable and valid measurement scale for the

perceived service quality of banks, International Journal of Bank Marketing, 18, 2, 84-91.

3. Berry, L.L. and A. Parasuraman (1991), Marketing Services, The Free Press, New

York.

4. Bloemer, J., K. D. Ruyter, and P. Pascal (1998), Investigating drivers of bank

loyalty: The complex relationship p between image, service quality and satisfaction, The International Journal of Bank Marketing, 16, 7, 276-286.

5. Caruana , A. (2002), service loyalty: The effects of service quality and the

mediating role of customer satisfaction, European Journal of Marketing, 36, 7/8, 811-828.

6. Colagate , M. and R. Hedge (2001), An investigation into the switching process in

retail banking services, International Journal of Bank Marketing, 19, 5, 201-212.

7. www.wiki.answers.com / Investopedia financial dictionary