CUSTOMER SATISFACTION ON RETAIL BANKING

AN EMPIRICAL STUDY OF SEYLAN BANK PLC.

 CONTENTS
 Chapter 1 - Introduction

 Chapter 2 – Literature Review

 Chapter 3 - Conceptual Framework and Hypotheses

 Chapter 4 - Methodology

 Chapter 5 - Data Presentation

 Chapter 6 - Conclusions
 CHAPTER 1 - INTRODUCTION
1.1 Overview
 The success of any business is primarily based on its Customers. Therefore, Customers’ Satisfaction plays the
most sensitive role in carrying out the business and achieving the business excellence.

 Unlike in the past there is an intense rivalry between the banks to grab the market share by attracting Customers
due to the increasing competition.

 Attracting as well as the retaining the existing Customers is a challenge faced by the banks as their external
environment is rapidly changing due to the change and development of technology and life-styles of the people.

 Continuous in-depth study is required to satisfy the Customers with regard to their banking needs to attract, retain,
maximize the transactions, and earn profits, the ultimate objective of any business organization whilst facilitating
the economic development through efficient money circulation.

 To succeed amidst competition with the other banks in Sri Lanka the Seylan bank is compel to satisfy their
customers which will always assure its competitive advantage to retain the existing customers, to increase number
of transactions among the existing customers and also to get diverted the customers of other banks to Seylan bank.
1.2 Problem

 Presently only the personnel mostly in cities and suburbs of Sri Lanka are involved in banking and it is
approximately 32% of the population who are eligible to deal with the banks.

 The statistics based on the numerous surveys conducted proves that even 72% of the retail Customers who are
using the baking services are not very much satisfied with the services provided by the banks (CBSL, 2016).

 Customers have to face many difficulties in dealing with the banks, such as rigid formalities, opening hours,
distance to travel to get the banking services, time waited in ques inside the banks etc.

 The Accuracy Speed, Convenience and Satisfaction of Customers have badly affected to which invariably
affects the volume of banking transactions.

 The above reasons may in turn resulted approximately 68% to be away with the banks and to handle their
money transactions without the involvement of banks.

 The above situation limits the banking activities and money circulation to a greater extent. It invariably affects
the economic development of the country as well.
1.3 Objectives

The objectives of the study are;

a. To identify, the key determinants which lead to the Customer Satisfaction on retail
banking services.

b. To test empirically, the degree of impact of variables involved with regard Customer
Satisfaction on retail banking.

c. To recommend and introduce Strategies and Methods to enhance Satisfaction on

retail banking among the Customers.

d. To improve the Accuracy, Speed and Convenience of Retail Banking services

provided at present.

e. To attract new Customers who are not using banking facilities at present and thereby
enhancing the market share on banking.
1.4 Research Questions

This study will provide answers to these questios;

a. How Customer Convenience, Benefits, Quality Services, Banking

Overheads affects the level of Customer Satisfaction?

b. Why the bank needs to ensure Satisfaction of the Customers to ensure success?

c. Why Customer Satisfaction is important to enhance Money Circulation and

Economic Development of the country?

d. What improvements are necessary to enhance the present level of

Customer Satisfaction?
1.5 Significance

This study will enable;

a. To improve the present banking structure and facilities provided to the

Customers and thereby motivating them to expand the banking transactions.

b. To attract new Customers and thereby enhance the market share for banking.

c. To deeply analyze the present needs and wants of the Customers and introduce
Speedy, Accurate and Convenient methods to suit the present days context.

d. To achieve operational efficiency by introducing more sophisticated and

effective methods.
Cont.

e. To reduce cost of operations, wastage and inefficiencies, to a greater extent.

f. To fill the knowledge gap with regard to the Satisfaction of Customers on banking
which invariably affect the efficiency, effectiveness and productivity of the banking
sector.

g. To encourage the relevant authorities to initiate a suitable change and development

programme as it affects the money circulation and economic development of the
country.
 CHAPTER 2 - LITERATURE REVIEW

There have been a number of reviews that have examined the significance of different quality
measurements in deciding Customer Satisfaction on retail banking worldwide.

 According to Sheth and Parvatiyar (1995), the customers use is important because it builds
customer habits whilst reducing customer uncertainty.

 “Customers overall impression of the relative inferiority/superiority of the organization and its
services influence on Customer Satisfaction” (Bitner and Hubbert, 1994). Accordingly, most
organizations are very much concerned on satisfaction of the customers to attract and retain them to
ensure the success of the business.

 In 2009, Sørensen proposed that the general purpose of customer orientation is to give a strong
premise of insight relating to present and future customers in dealing with official activities.
 CHAPTER 3 - CONCEPTUAL FRAMEWORK AND HYPOTHESES

3.1 Conceptual Frame work

The model developed and presented here shows the selected variables involved with Customer Satisfaction
with regard to the retail banking.

Customer Convenience (+)

(+)
Customer Benefits

Customer Satisfaction
(+)
Quality Services

(-)
Banking Cost

Here the Customer Convenience, Customer Benefits, Quality Services and the Banking Overheads are taken
as independent variables whilst Customer Satisfaction is taken as the dependent variable
3.2 Hypotheses

Based on the above conceptual framework the following Hypotheses will be tested:

H1:

H0: Customer Convenience is not related with Customer Satisfaction

H1: Customer Convenience is related with Customer Satisfaction

H2:

H0: Customer Benefits are not related with Customer Satisfaction

H1: Customer Benefits are related with Customer Satisfaction

H3:

H0: Quality Services are not related with Customer Satisfaction

H1: Quality Services are related with Customer Satisfaction

H4:

H0: Banking Overheads are not related with Customer Satisfaction

H1: Banking Overheads are related with Customer Satisfaction

 CHAPTER 4 - METHODOLOGY

4.1 Overview of the Procedure

 This being a study primarily focused to determine the Customer Satisfaction on Retail Banking a causal model to
capture such behavior is developed and tested as procedure described below was followed.

 A questionnaire was administered among the selected sample of 180 customers (Appendix ‘B’) in three Seylan bank
branches representing City, Suburb and Rural segments as the type of customers and their expectations differs due to
the context they are in.

 Also, the data with regard to the Personality types of the customers too collected through the questionnaire (Appendix
‘C’) as Satisfaction is strongly correlated with the type of person.

 Further, in-depth interviews and observations were conducted with 18 customers in their destinations to obtain a
deeper understanding. In addition, company policies, employee support programmes, compensation schemes etc. and
archival records available were reviewed.
4.2 Sample

Sample was selected to represent the customers in the city, suburb and rural areas and to extract
the data required for both qualitative and quantitative analysis by the following means:

a. A sample of 180 customers from City, Suburb and Rural areas were selected on random
stratified sampling method for the questionnaire survey as shown in Appendix ‘B’.

b. A sample of 18 (10% of the above) customers from City, Suburb and Rural areas were
selected by employing a stratified random sampling method, for the in-depth interviews as
shown in Appendix ‘C’.
4.3 Measures

Part ‘A’ of the questionnaire is completely set aside for the collection of the following data
on personal and related characteristics of respondents:

a. Age
b. Gender
c. Civil status
d. Employment category
e. Number of dependents in the family
f. Income per month
g. Number of accounts you have with Seylan bank
h. Number of fixed deposits you have with Seylan bank
i. Distance between the residence and the closest Seylan bank branch
j. Distance between the residence and the closest Seylan bank ATM
 Under part ‘B, C, D, E, and F’ of the questionnaire, Customer Convenience, Customer
Benefits, Quality Services, Banking Cost and Customer Satisfaction were measured
respectively by using a 5-point Likert scale developed by the researcher (2017).

 Under part ‘G’ of the questionnaire, Personality types of the customers were analysed by using
Bortner’s Personality Analysis (1966) is conducted to observe the impact of personality type
on the Customer Satisfaction.

 By employing multi-methods, it is expected to use different data required for different

purposes of the study and also enable triangulation to take place and thereby minimize the
‘method effect’.
4.4 Data Evaluation

 Personal characteristics were explained pictorially

 Except for personal characteristics, ‘Customer Satisfaction’ was ranked on a five-item Likert
type scale and the following weightages were given.

Strongly agree - 5
Agree to some extent - 4
Uncertain - 3
Disagree to some extent - 2
Strongly disagree - 1
 CHAPTER 5 - DATA PRESENTATION

5.1 Analysis Based on Descriptive Statistics

A descriptive measure is a single number that provides information about a set of sample data. In
descriptive measures mean indicates the central point (the average) of the data values while standard
deviation measures the dispersion of data around the mean.

5.1.1 Personal details

Distribution by Age

It was found that 52.5% (26.67% + 25.83%) of

customers are from 35-45 age category. However,
considerable percentage (18.33%) represents the 30-
35 age category as well. It was also revealed that ages
above 45 years are relatively low.
Distribution by Gender

The pie chart above denotes that 74.17 % of the

customer population is male and 25.83% of them
are female.

Distribution Civil Status

It was revealed that 55% are married, whilst 31.67% are

single among the customer population. In addition, it was
found that 6.67% each are widowed or divorced
personnel is among them.
Distribution by Employment Category

The statistics above show that the majority of customers (57)

are employed in the private sector. It also revealed that 57 of
them are employed in public (25) and business (32) sectors as
well.

Distribution by number of dependents in the family

The above data depicts that 55% of the customers have 2-4
dependents and 30% have 4-6 dependents in the family.
5.2 Analysis Based on the Testing of the Model

5.2.1 Results Based on Correlation Analysis

5.2.1.1 Correlation between Customer Convenience and Customer Satisfaction

Correlations

Customer_Satisfaction Customer_Convienience

Customer_Satisfaction Pearson Correlation 1 .004

Sig. (2-tailed) .966

N 120 120
Customer_Convienience Pearson Correlation .004 1
Sig. (2-tailed) .966

N 120 120

Pearson correlation coefficient is 0.004 and it is closer to zero. Therefore,

weak positive relationship can be seen between Customer Satisfaction and
Customer Convenience. The p-value is 0.966 which is greater than 0.05.
Therefore, there is no any evidence to reject null hypothesis at 5% level of
significance. It implies that there is no significant relationship between
Customer Satisfaction and Customer Convenience.
5.2.1.2 Correlation between Customer Benefits and Customer Satisfaction
Correlations

Customer_Satisfaction Customer_Benefits

Customer_Satisfaction Pearson Correlation 1 .038

Sig. (2-tailed) .677

N 120 120
Customer_Benefits Pearson Correlation .038 1
Sig. (2-tailed) .677

N 120 120

Pearson correlation coefficient is 0.038 and it is closer to zero.

Therefore, weak positive relationship can be seen between Customer
Satisfaction and Customer Benefits. The p-value is 0.677 which is
greater than 0.05. Therefore, there is no any evidence to reject null
hypothesis at 5% level of significance. It implies that there is no
significant relationship between Customer Satisfaction and Customer
Benefits.
Correlation between Quality Service and Customer Satisfaction
Correlations
Customer_Satisfaction Quality_Service

Customer_Satisfaction Pearson Correlation 1 .079

Sig. (2-tailed) .394

N 120 120

Quality_Service Pearson Correlation .079 1

Sig. (2-tailed) .394

N 120 120

Pearson correlation coefficient is 0.079 and it is closer to zero.

Therefore, weak positive relationship can be seen between Customer
Satisfaction and Quality Service. The p-value is 0.394 which is greater
than 0.05. Therefore, there is no any evidence to reject null hypothesis at
5% level of significance. It implies that there is no significant
relationship between Customer Satisfaction and Quality Service.
Correlation between Banking Cost and Customer Satisfaction

Correlations

Banking_Cost
Customer_Satisfaction
Customer_Satisfaction Pearson Correlation 1 .081

Sig. (2-tailed) .378

N 120 120

Banking_Cost Pearson Correlation .081 1

Sig. (2-tailed) .378

N 120 120

Pearson correlation coefficient is 0.081 and it is closer to zero.

Therefore, weak positive relationship can be seen between Customer
Satisfaction and Banking Cost. The p-value is 0.378 which is greater
than 0.05. Therefore, there is no any evidence to reject null hypothesis at
5% level of significance. It implies that there is no significant
relationship between Customer Satisfaction and Banking Cost.
 CHAPTER 6 – CONCLUSIONS
6.1 Findings
6.1.1 Based on Correlation Analysis

H1: Customer Convenience is related with Customer Satisfaction

There is a weak positive relationship can be seen between Customer Convenience and Customer Satisfaction. It implies that there is no
strong relationship between Customer Convenience and Customer Satisfaction.

H2: Customer Benefits are related with Customer Satisfaction

Weak positive relationship is exist between Customer Benefits and Customer Satisfaction. It implies that there is no strong relationship
between Customer Benefits and Customer Satisfaction.

H3: Quality Services are related with Customer Satisfaction

There is a weak positive relationship can be seen between Quality Service and Customer Satisfaction. It implies that there is no strong
relationship between and Quality Service Customer Satisfaction.

H4: Banking Overheads are related with Customer Satisfaction

Weak positive relationship is exist between Banking Cost and Customer Satisfaction. It implies that there is no strong relationship
between Banking Cost and Customer satisfaction.
6.1.2 Based on Personality Analysis

 It was revealed that the ‘Type B’ personalities are more satisfied with the bank
rather ‘Type A’. Also found that the percentage of ‘Type A’ customers from city
area are significantly greater than ‘Type A’ customers in rural area. Similarly, it
was found that the percentage of ‘Type B’ customers from rural area are
significantly greater than ‘Type B’ customers in city area.

 Satisfaction among ‘Type B’ customers were found greater. This may due to fewer
expectations and contended with what is provided with of ‘Type B’ personalities
compared to ‘Type A’ personalities who are much more demanding despite of the
facilities provided at present.
6.1.3 & 6.1.4 Based on Qualitative Analysis Based on Descriptive Statistics

6.2 Recommendations

The following recommendations are made to increase the level of satisfaction and to promote banking
among the people of Sri Lanka which will lead to economic development.
a. To establish branches and ATMs at every village for easy access and provide with ATM cards to
all. Also, introduce money deposit machines together with ATM machines.
b. To carry out the awareness programme on e-banking and mobile banking and promote the same
further to increase the Customer Convenience.
c. To introduce door step service to those who request on a nominal fee.
(E.g. Busy, Sick, Elderly customers etc.)
d. To keep open at least 50% the branches till 0700 pm of the day covering the areas where there are
high volume of transactions.
(Cont.)
e. To keep open at least 30% the branches during the public holidays and weekends as well covering the areas
where there are high volume of transactions.

f. To minimize paperwork and speed up the processes with regard to all operations, such as Accounts, Loans, Fix
deposits etc.

g. To ensure accuracy and inform all transactions by SMS to build up the confidence.

h. To provide ample parking facilities at the branches.

i. To reduce the bank charges to a minimum level.

j. To provide quick service without wasting their valuable time in queues for long time.

k. To be flexible with rules and regulations depending on the circumstances and provide a friendly service.

l. To offer better packages with their savings accounts (Eg. Gifts, Vouchers depending on the volume and number of
transactions).

m. To offer attractive interest rates with regard to Fix deposits, Savings, Loans and Overdrafts.
(Cont.)
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Higher Customer Satisfaction enhanced money circulation

A way for economic development.

Thank you.

Have a good day!

PART B – CUSTOMER CONVIENIENCE
V

PART C – CUSTOMER BENEFITS

PART D – QUALITY SERVICE
PART E – BANKING COST
PART F – CUSTOMER SATISFACTION
PART G - PERSONALITY
Sample for Model testing and Personality analysis Appendix ‘B’

Category City branch Suburb branch Rural branch Total

· Current account holders 20 20 20 60

· Savings account holders 20 20 20 60

· Fix deposit holders 20 20 20 60

Total 60 60 60 180
Sample for In-depth interviews Appendix ‘C’

Category City branch Suburb branch Rural branch Total

· Current account holders 2 2 2 6

· Savings account holders 2 2 2 6

· Fix deposit holders 2 2 2 6

Total 6 6 6 18
PERSONALITY TYPES

 Type ‘A’ personalities always in a state of anxiety movement or

urgency, feeling of impatience, strive to do two or more things at once,
cannot cope up with leisure time, and obsessed with monitoring and
evaluating.

 Type ‘B’ personalities never suffers from sense of time urgency with its
accompanying impatience, feel no need to display their achievements
unless such exposure is demanded by the situation, play for fun and
relaxation rather than to exhibit superiority and can relax.