Assessing Service Attitude- Service Quality Measures Taken by islamic bank in pakistan.pdf

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IOSR Journal of Business and Management (IOSR-JBM) e-ISSN: 2278-487X. Volume 8, Issue 1 (Jan. - Feb. 2013), PP 61-68 www.iosrjournals.org Assessing Service Attitude: Service Quality Measures Taken by Islamic Banks in Pakistan Agha Tahir Ijaz1, Asghar Ali2 1 Principal, Punjab Group of Colleges – Lahore, Pakistan 2 Manager, Research & Development Centre Punjab Group of Colleges – Lahore, Pakistan Abstract: In the past few years there has been an enormous change in the perception of owning custo
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   IOSR Journal of Business and Management (IOSR-JBM)   e-ISSN: 2278-487X. Volume 8, Issue 1 (Jan. - Feb. 2013), PP 61-68   www.iosrjournals.org    www.iosrjournals.org 61 | Page   Assessing Service Attitude: Service Quality Measures Taken by Islamic Banks in Pakistan Agha Tahir Ijaz 1 , Asghar Ali 2   1  Principal, Punjab Group of Colleges  –   Lahore, Pakistan 2  Manager, Research & Development Centre  Punjab Group of Colleges  –   Lahore, Pakistan Abstract:  In the past few years there has been an enormous change in the perception of owning customers for life by the local and multi-national companies in Pakistan. This could be possible when foreign companies entered into Pakistani market especially in the banking sector. Quality Customer Services is considered most important tool to have positive image in the mind of customers and to get positioned in their hearts by owning their greater concerns beyond their expectations. The purpose of this study was to assess service attitude and  service quality measures of Islamic Banks in Pakistan. Population of the study is all five Islamic Banks listed with State Bank of Pakistan (2012). Total 250 customers, 100 Management Trainee Officers and 25 Branch  Managers constituted the sample using convenience sampling technique and an adapted SERVQUAL instrument of service quality containing five dimensions of service quality; tangibles; reliability; assurance; responsiveness and empathy was used to assess the service quality measures which was found reliable at 0.86 Cronbach’s alpha. Mean scores and One-way ANOVA were used for significance and variance analysis. Results revealed that Islamic banks managers showed greater satisfaction about service quality followed by MTOs but customers were not satisfied with the service quality of Islamic banks and significance difference of opinion found among customers, management trainee officers and managers which showed true image of service attitude. Islamic  Banks customer service measures needs urgent improvement in order to ultimate survival in the banking sector.  Keywords:   Service attitude; Service quality; Islamic Banks I.   Introduction Pakistani financial sector a backbone of economy was seriously lacking service attitude as compared to  prevailing practices in the world but now due to rapid advancement and growth in financial services practices of customer services have been changed in the last few years. Presently Banking Industry is very competitive and owing to retain maximum market share. Now this sector has a challenging business environment in financial services and it is important for new entrants to develop their customer services to gain and retain their customers. There is a growing popularity of Islamic banking in the Pakistani financial market and in order to survive, it is important to build service quality attitude, attract and satisfy their customers using emerging  practices because Islamic banks working in Islamic countries facing strong competition not only from Islamic  banks but also from non-Islamic banks (Naser & Moutinho, 1997). Islamic Banks have managed to grow in  banking markets with new Islamic products which attracted a large number of customers and this leads to the competitiveness of this market which urged these new established Islamic banks to develop their service and  products in order to improve customers’ perception and satisfaction. In the existent decade, because of challenging competition, process innovation, dynamic business environment, technology advancement, and developments in overall operations, a paradigm shift is taking place in the banking sector (Al-Eisa&Alhemoud, 2009) which indicates a strategic focus towards contemporary customer services in order to retain competitive advantage. Inception of Islamic banking showed extra ordinary performance in the world by supporting financial sector (Darrat, 1988) and emergence of this system proved more stable as compared to conventional banking system in Pakistan (Khan, 1986). Most of the studies conducted in the world in the times of Islamic banking start up showed a positive perspective of service quality satisfaction by the customers but banks could not sustain and develop their level of services according to the needs of the era. Metawa and Almossawi (1998) suggested that banks should develop customer service standards to maintain profitable relations. Service quality has become a necessary reflection of an organizational performance, as customers’ expectation and awareness has been changed in many markets (X. Frei, Kalakota, & Marx, 1997). High quality services creates customers loyalty, satisfaction, complain reduction and higher customer retention and constant improvement in service quality is considered a leading factor for growth and success in the banking sector of Pakistan (Shabbir, Aslam, Capusneanu, Barbu, & Tanveer, 2012). Islamic banks are growing their network very rapidly which shows a  potential growth of this sector as compared to conventional banks in Pakistan and according to SBP(12) Islamic  banks are not only making interest free banking transactions but also following the true practices of Islamic   Assessing Service Attitude: Service Quality Measures Taken by Islamic Banks in Pakistan www.iosrjournals.org 62 | Page   economy. Much research has been conducted before on different aspects of service quality measurement in  banking sector of Pakistan but this study shows the true picture of current level of service quality as perceived  by customers’, banks employees and branch managers. Difference of opinion as managers and employees representing banks service side and customers at the same time on the other side gives the ultimate reflection of current level of service quality measures taken by Pakistani Islamic bank. Results of this study could be helpful for the Islamic banks to build service quality attitude by taking some serious steps on the ba sis of customers’  perceptions. The objective of this study was to assess service quality as perceived by customers, banks employees and branch managers of Islamic Banks in Pakistan. II.   Review of Literature 1.1    Understanding Service quality in Banking Sector  Naeem, Akram and Saif (2009) concluded that an important factor that contributes a lot in todays’ modern, successful and emerging banking business is the quality of services and quality of service depends heavily on the quality of the personnel dealing with customers (Imran, Samad, & Masood, 2011). The word quality is perceived differently according to different researchers but generally it is the thing which meets customers’ expectation in every business enterprise and observed as a major factor in reference t o customer acquisition and retention (Galloway & Ho, 1996). Raza, Zia, Naqvi, and Ali (2012) describe quality as measure of excellence; observable and interpretable attributes; or the adherence to measureable and verifiable standards. Shabbir, Aslam, Capusneanu, Barbu, and Tanveer (2012) Conventional service quality was defined as the  beliefs or attitude about the degree of service excellence offered in the banks physical location but later in 1980s, new dimension of service quality was explored which revealed the customer emotional response associated with experience with the products or services (Westbrook & Reilly, 1983). In services sector concept of service quality is totally different than manufacturing sector and measurement of service quality in services sector is quite difficult it could only be measure by the perceptions of concerned stakeholders according to certain established standards (Karatepe, Yava, & Babakas, 2005). Service quality is obvious and certain tool for differentiation and to gain competitive position (Caruana, 2002) to compete in the banking sector (Curry & Penman, 2004) and banks should better understand their customers and to continuously evaluate their service quality in order to maintain their market share (Khan, Hassan, & Shahid, 2008) because customer satisfaction influences customer decisions (Cohen, Gan, Yong, & Choong, 2006;Richins, 1983). Hanson (2000) explored that organizations should build certain service quality standards to raise the level of services by adopting it as strategic concern and the relationship between service quality and customer satisfaction has been explored by the many researchers in the world. Naeem, Akram, and Saif (2009) concluded that customer satisfaction is always placed at centre in all business ventures and among many factors that contribute towards customer satisfaction, service quality is one of them. Ahmad, Rehman, and Saif ( 2010) concluded that Islamic banks customers want greater service quality as compared to conventional banks because now customers are well aware about their role so they demand excellent services and customer satisfaction is the only way to keep them loyal otherwise they switch to other banks (Qureshi, Khan, & Zaman, 2012) and their expectations are meeting with the performance of the product or service then the result is satisfaction otherwise dissatisfaction occurs (Davis & Heineke, 1998). In Pakistan due to uniform policies of central bank, all conventional and Islamic banks are required to follow certain same standards but how these standards of customer services are implemented, that is the most important concern of banking policy makers (Naeem et al., 2009). 2.2 Service Quality Assessment    Montes, Fuentes, and Fernandez ( 2003) research conducted on service quality perceptions has mainly focused on two dimensions: consumer behaviour and organizational behaviour. Researchers like Parasuraman, Berry, Zeithamletc are considered innovator of the research in the area of consumer behaviour and their contribution have reached at remarkable level. Perception of customers is identified by their level of satisfaction towards particular products or services and customer satisfaction is measured in terms of service quality and service features (Rustam, Bibi, Zaman, Rustam, & Haq, 2011). Advancement in information and communication technology has changed the ways of service delivery to customers (Dabholkar & Bagozzi, 2002;Surjadjaja, Ghosh, & Antony, 2003) service quality could be measured in terms of automated services (Parasuraman, Zeithaml, & Malhotra, 2005) in an electronic delivery of services, banks can promote quality of their services and customer relations (Mols, 2000). From the last few years, service quality has achieved dominant importance because of its relationship to profitability, customer retention, loyalty, operation and customer satisfaction (Cronin & Taylor, 1992;Seth, Deshmukh&vrat, 2005) There are many studies which  provided assessment and investigation of service quality and its dimension in the banking sector. Parasuraman et al. (1988, 1991a,b) developed SERVQUAL instrument to investigate service quality dimension and many researchers has been used it to measure service quality . It contains 22 items that are assembled into five   Assessing Service Attitude: Service Quality Measures Taken by Islamic Banks in Pakistan www.iosrjournals.org 63 | Page   dimension, these are Tangibles, Reliability, Responsiveness, Assurance and Empathy. These dimensions are explained below. 2.2.1 Tangibles Tangibles dimension refers to physical facilities, equipment, service material and appearance of  personnel (Parasuraman, Zeithaml, & Berry, 1988). It is the most important aspect of service quality as customers’ perception about tangibles has more impact than other service (Parasuraman, Zeithaml, & Berry,1985). 2.2.2 Reliability It is the ability to perform the promised service dependably and accurately in a perfect manner (Parasuraman et al., 1988) and it is the result of continuous improvement (Parasuraman et al., 1991). Reliability is an important factor of product quality along with good personal service, employees’ attitude, knowledge and s kills and it evaluates the promises of banks and its timely execution from customers’ perspective  (Ahmad A. , Rehman, Saif, & Safwan, 2010). 2.2.3 Responsiveness This dimension includes willingness of employees to help customers promptly, understanding their specific needs and wants, individual attention provided by staff, paying attention to customers’ problems and customers’ secrecy, safety and security in their transactions (Kumar & Kee, 2009;Parasuraman et al., 1988). 2.2.4 Assurance It indicates the knowledge and courtesy of employees and their ability to inspire, build trust and confidence (Parasuraman et al. 1988). Assurance is an integral aspect of service quality followed by reliability and responsiveness and it has very strong impact on customer satisfaction which leads to word of mouth outcome (Arasli & Katircioglu, 2005). 2.2.5 Empathy    This dimension shows the strength of relationship with customers and it indicates caring, individualized attention the firm provides to its customers (Parasuraman et al. 1988) and it is reported that empathy is least preferred dimension of service quality in the banking sector. 2.3    Review of Service Quality Studies on Banking Sector in   Pakistan Brief findings of the studies conducted on Pakistani banking sector are given below. No. Author(s) Year Major Findings 1 Shabbir et al. 2012 “Customer perception about service quality dimensions is relatively high on the assurance level in Islamic banks and tangibles in conventional banks. Lowest in technology and responsiveness area in Islamic banks. Overall Islamic banks  providing high service quality”.  2 Qureshi et al. 2012 “Tangibles and responsiveness has a positive impact while assurance has significant negative impact on expected service quality of conventional banks. Tangibles, reliability and assurance have a significant positive impact on expected service quality while there is a negative impact on responsiveness and empathy in Islamic banks”.  3 Raza et al. 2012 “Customers, employees and managers were not satisfie d with the overall service quality provided by the Pakistani banks. However, tangibles were relatively at top whereas assurance was at the lowest position. Reliability and empathy were almost at same level and banks failed in responsiveness”.  4  Naeem and Arif 2011 “Assurance posted relatively higher contribution in satisfying the customers. Favourable perceptions regarding remaining dimension of service quality were not proved to be instrumental in satisfying customers. Positive relationship found between service quality and customer satisfaction”.     Assessing Service Attitude: Service Quality Measures Taken by Islamic Banks in Pakistan www.iosrjournals.org 64 | Page   5 Ahmad et al. 2011 “Customers of Islamic banks are more satisfied then Commercial  banks. Significant difference in the level of satisfaction between male and female customers in Islamic Banks no difference in Commercial Banks found on the basis of gender”.  6 Rustam et al. 2011 “Islamic banking products and services had a good potential within Pakistani corporate sector”.  7 Ahmad et al. 2010 “Perception of customers of Islamic banks regarding service  quality is higher than the perception of customers of conventional  banks. Significant difference in perception of service quality among customers of Islamic banks on the basis of gender but there is no difference in service quality perception in conventio nal banks on the basis of gender”. 8 Ahmad et al. 2010 “There is strong positive relationship between service quality and customer satisfaction in Islamic banks as compared to conventional banks”.  9 Naeem et al. 2009 “Service quality was proved to be a strong predictor of customer satisfaction in case of foreign banks as compared to public sector  banks. Service quality if managed effectively, can contribute significantly towards customer satisfaction”.  10 Ahmed and Rehman 2008 “Most important variable i nfluencing customer choice are customer services, convenience, online banking facilities and overall banks environment”.  11 Naeem et al. 2008 “Majority of the banks operating in Pakistan are at the initial stage whereas almost one fifth claim having TQM fully implemented. The situation reflects the level of efforts put by  banks management operating in Pakistan and initiatives taken by them in respect of quality management”.   2.4 Current Study Most of the studies conducted on service quality of banking sector in Pakistan, discuss only perceptions of customers. This study gives the true picture of service quality as perceived by Islamic banks managers, their  point of view about service quality offering in their branches, then MTOs (Management Trainee Officers)  perceptions about service quality on their side and finally revealed the perceptions of customers, who are the actual stakeholders and determined the actual level of service quality which reflects exact service attitude of managers and officers at Islamic banks of Pakistan. This study was intended to assess the perceptions of managers, management trainee officers and customers about the service quality measures taken by Islamic  banks in terms of tangibles, reliability, responsiveness, assurance and empathy as dimensions of service quality. Finally, the study chased the following objectives: i.   Assess the perceptions of managers, MTOs and customers regarding service quality measures taken by Islamic banks in Pakistan. ii.   Compare the perceptions of managers, MTOs and customers regarding service quality measures taken by Islamic banks in Pakistan. iii.   Compare the perceptions of managers, MTOs and customers regarding service quality measures taken by Islamic banks in terms of back ground variables. To achieve the research objectives, the study answered the following questions: i.   What are the perceptions of managers, MTOs and customers regarding service quality measures taken by Islamic Banks in Pakistan? ii.   Is there any significance difference of opinion among of managers, MTOs and customers regarding service quality measures taken by Islamic banks in Pakistan? iii.   Is there any significance difference of opinion among of managers, MTOs and customers regarding service quality measures taken by Islamic banks in terms of back ground variables?
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