A Research Proposal on Customer Satisfaction on Commercial Bank of Nepal

Chapter-1

Introduction

1.1  Background

Banking sector in Nepal is facing a rapidly changing market. This is also known as the late effect of world financial crisis. In addition, the impact of the economic problems and financial crisis among the financial institutions creates a great challenge for the overall banking sectors. At this situation aiming for the customer satisfaction is the most challenging task for banks. Through the satisfied customers, a bank can easily measure the effectiveness of the business, its potential and position in the industries and the areas that are needed to polish and improve. But gathering a satisfied customer is not an overnight miracle but with the full of patience and bountiful of effort.

It is a well known fact that no business can exist without customers. So they must be satisfied.  More than any other, banking is a customer oriented services industry and Nepalese banks have started realizing that business depends on client service and the satisfaction of the customer. Customer satisfaction is the key factor for customer retention and thereby the banks success. So identifying and improving the factors that can limit the satisfaction of customer is the crucial step for the bank which wants to be a step forward than its competitors.

Customer satisfaction is an ambiguous and applied concept and the actual manifestation of the state of satisfaction will vary from person to person and product/service to product/service. The state of satisfaction depends on a number of both psychological and physical variables which correlate with satisfaction behaviors such as return and recommend rate. The level of satisfaction can also vary depending on other options the customer may have and other products against which the customer can compare the organization's products. Among several factors; Quality, Timeliness, Efficiency, Ease of Access, Organizational environment, Commitment to the Customer and Innovation, Behavior of employees, Willingness to solve problems, friendliness, knowledge level, communication skills etc. are some major factors that affect the satisfaction of customer. These factors are used for measurement and continuous improvement of customer satisfaction.

Machhapuchchhre Bank Ltd was founded in 1998 as the first regional commercial bank to start banking business from the western region of Nepal with its head office in Pokhara. It is one of the full fledged commercial bank operating in Nepal; and it ranks in the top most among the private commercial banks. With its past success and experience MBL is striving to facilitate its customers’ needs by delivering the best of services in combination with the state of the art technologies and best international practices. But its business environment is not same as it was in the past. Its business environment is more complex with the entrance of powerful competitor, rapid change in customers’ service/product expectations, increasing employee turnover, possible cross sales and with many other factors. So, before moving to the something new and continuing existing one, it is necessary to identify the factors affecting the satisfaction and its current level.  

1.2 Statement of the Problem

Customers have expectations and criteria when they judge whether the provided banking services is satisfactory or not. At the same time, due to the high competition in a banking sector, the perception of customers and potential customers are also divided according to the services that they want to achieve. The proper identification of customer satisfaction helps to retain customers and to increase brand awareness, profitability and effectiveness of bank’s services. These are the major customer oriented opportunities and challenges for the banking sector in Nepal, so the Machhapuchchhre Bank Ltd’s. Among the different problems regarding customer satisfaction, followings will be the major concern of this study.

i.        What are the factors affecting the customer satisfaction of MBL?

ii.      How the MBL can gather the customer satisfaction, which is the same focus of other competing banks?

iii.    What are the most satisfactory factors that are provided by competing banks to its customers?

iv.    What types of product/services are expected by MBL’s customer in future?

1.3 Objective of the Study

General objectives:

i.        To identify, if any, possible way to increase customer satisfaction.

ii.      To explore the factor affecting the customer satisfaction of Machhapuchchhre Bank Ltd.

Specific objective:

iii.    To explore and analyze critically the customer satisfaction of Machhapuchchhre Bank Ltd.

1.4 Research Hypotheses

The following are the possible alternative hypotheses in this study.

H₁: Competency of the bank has positive impact on customer satisfaction.

H₂: Responsiveness of the bank has positive impact on customer satisfaction.

H₃: Timeliness of the bank has positive impact on customer satisfaction.

H₄: Online banking of the bank has positive impact on customer satisfaction.

H₅: Communication of the bank has positive impact on customer satisfaction.

H₆: Credibility of the bank has positive impact on customer satisfaction.

H₇: Customer and Social welfare program of the bank has positive impact on customer satisfaction.

H₈: Appearance of the bank has positive impact on customer satisfaction.

H₉: It is expected that customer are satisfied with overall loan and deposit services of bank.

1.5 Operational Definitions and Assumptions:

Customer satisfaction is the result of interaction between the consumer’s pre-purchase expectations and post purchase evaluation. More generally satisfaction is the state of liking or disliking the services/product after experiencing it. Here, consumer/customer are any individuals or households or organizations that use goods and services generated within the economy. Also, the banking services includes: bank accounts, personal loans, commercial loans, issuance of cards (debit, credit, ATM) and processing of their transactions etc. The customer satisfaction measurement variable can be defined as follows:

a.      Employees: Employee characteristics and performance related variable directly affect the satisfaction of customer. This includes:

i.        Responsiveness: The willingness of employees to help customers and provide prompt service. It also includes the speed of responses to complaints.

ii.      Friendliness: Friendliness helps to increase quality of service /product. Employees individual attention giving, caring to customer, etc are measured here.

iii.    Skill and knowledge: Skill is measured by the way how employee performs their task and delivers to customers. The employees’ skill highly depends on their education level.

iv.    Timeliness: How fast the employee can deliver the demanded services by their customers.

v.      Communication: Understandable, acceptable, informing about facility and possible risks etc.

b.      Product and Services: It includes all product and service (explained above) related factors of the bank.

i.        Variety: Availability of same category services/product in a multi form, benefit and prices. (i.e. Yuba bachat, child saving etc.)

ii.      Price: The customer pays for receiving product or services from the bank.

iii.    Special services: It includes services like ABBS, online transaction etc.

iv.    Appearance of the bank: The color combination, attractiveness of inside and outside decoration, parking style etc.

v.      Service process: The step that should be completed before getting product or services from the bank. (i.e. the process to deposit, borrow loan etc.)

c.       Image: Primarily this criteria includes,

i.        Credibility: It includes employees trust worthy in transactions and other services, banks ability to make secure transactions and assure security etc.

ii.      Technological excellence: What types of technology is used by the bank. In what extent it serves the customers expectations.

iii.    Customer and social welfare: The bank’s activities for customers’ and social welfare. (i.e. stock ownership opportunity for customers, donations to poor students in school etc.)

d.      Access: Network expansion of the bank, branches location, as well as observed troubles in the service system (strikes, damaged ATMs, etc.), availability of service access (i.e. ATM both access, Bank service access, etc.) are included in this criterion.

Chapter-2

Literature Survey and Theoretical Framework

2.1 Literature Review

Customer satisfaction is an applied term that determines on how products and services supplied by a company meet or surpass customer expectation. Following Cronin et al. (2000), conceptualize customer satisfaction to be an evaluation of an emotion, reflecting the degree to which the customer believes the service provider evokes positive feelings. Customer satisfaction reflects the degree to which a consumer believes that the possession or use of a service evokes positive feelings. Cronin et al.’s (2000) various models and theories that have been developed to this end (Oliver, 1980; Swan and Trawick, 1980; Tse and Wilton, 1988; Anderson and Sullivan, 1993; Patterson et al., 1997), indicate that customer satisfaction is related to the size and direction of disconfirmation, which is defined as the difference between the post-purchase and post-usage evaluation of the performance of the product/service and the expectations held prior to the purchase (Sharma and Ojha, 2004).

In banking industry, being competitive is already a given factor. Customers expect that banks should be strong enough even if there are uncertainties in the country, most especially in the financial stream. In the long run, the customer satisfaction can be the key element of the organization to prepare another strategy (Gitman and McDaniel, 2005). Thereby it can enhance its further success and long lifecycle.

The dream of every organizations and so the banks;  having a satisfied customer will be injection for its success and basis to continue its business lifecycle, if achieved through continuous delivery of satisfactions by reducing resistance and reluctance of the customers towards the bank’s offered products and services. If not, just a respite and waste of time and fund.

However, keeping customers is also dependent on a number of other factors. These include a wider range of product choices, greater convenience, better prices, and enhanced income (Storbacka et al., 1994).

Whereas, Ioanna (2002) further proposed that product differentiation is impossible in a competitive environment like the banking industry. Banks everywhere are delivering the same products. For example, there is usually only minimal variation in interest rates charged or the range of products available to customers. Bank prices are fixed and driven by the marketplace. Thus, bank management tends to differentiate their firm from competitors through service quality. Service quality is an imperative element impacting customers’ satisfaction level in the banking industry. In banking, quality is a multi-variable concept, which includes differing types of convenience, reliability, services portfolio, and critically, the staff delivering the service.

The study showed that increased use of service quality and professional behaviors (such as formal greetings) improved customer satisfaction and reduced customer attrition. This is well documented in a study by Leeds (1992), who documented that approximately 40 percent of customers switched banks because of what they considered to be poor service. Leeds further argued that nearly three-quarters of the banking customers mentioned teller courtesy as a prime consideration in choosing a bank.

Several studies are conducted in this setting regarding the customer satisfaction. In those studies, the contradiction occurs in variables that affect the Customer satisfaction. In some studies, price and variety of product/services are major factors affecting the customer satisfaction with some other. While in some other studies there is an inverse finding that there is no possibility to differentiate their price and services, thereby they have less or no impact in Customer satisfaction.

2.2  Theoretical Framework

There are several variables that affect the Customer Satisfaction level. In this study only organizational factors are considered to measure customer satisfaction of MBL. It is expected that those independent variable have more variability with dependent 

Chapter-3

Methodology

Methodology refers the steps that will be adopted in this study. The more systematic method gives the more actual results for the study. The method for this study includes research plan and design, description of sample, data collection procedure and data analysis plan.

3.1 Research Plan and Design

A research design is the planned specification of methods and procedures for acquiring the information needed to structure to solve the problems.

The research design used in this study is descriptive. It includes survey and fact finding enquiries to fulfill different objectives. It will use the available data from primary and secondary sources. Structured questionnaire will be used to gather the information through primary sources.

3.2 Description of the Sample

In this study customer is the single sampling segment. The sample size of thirty five despondence will be used by considering the budget and time constraints. Among them twenty five respondents will be the customer of MBL and remaining ten respondents will be the customer of any other two banks. The entire respondents to meet the determined sample size will be selected randomly in six days of data collection. But, definitely the more effort will be given to include the respondents as explained above (i.e. male and female, those who know well about the quality of services provided by MBL and its competitors and the like).