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service quality and core banking

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Original research presentation

  1. 1. Assessing the impact of Core Banking & Service Quality On Customer Satisfaction In CBE (Bishoftu Branch) By: Endalkachew Abebe
  2. 2. Background of the Study  Banking industry is marked by aggressive competition and     ever-changing customer demands. As a result, banks need to adopt themselves to the changing environment. the growth in ICT made the world banking industry enter into new phenomena. Application of ICT is a recent phenomena in Ethi. Many banks use different ICT like ATM, Core Banking, Mobile Banking, and etc… that improve the service quality in order to increase customer satisfaction.
  3. 3. Contd…  Core Banking is an integrated application that supports real time multi-Banking and MultiChannel strategies  It enables customers to be a customer of the bank rather than being a customer of a particular branch  enable banks to strengthen and extend their relations with credit card providers  customers will enjoy reduced waiting time and a greater choice of banking channels and services  currently there are 13 banks who have acquired CORE banking application in Eth.
  4. 4. Contd…  Berry et al., (1990), defined service quality as the discrepancy between customers’ expectations or desire and their perceptions.”  Service quality is not objectively measured according to some technical standards but is subjectively felt by customers and measured relative to customer-determined standards
  5. 5. Contd…  Service quality is “more difficult for consumers to evaluate than product quality; this is due to a lack of tangible evidence associated with the service”  According to Philip Kotler (2005), customer satisfaction is a person's judgments of a product's perceived performance (or outcome) in relationship to expectations.
  6. 6. Organizational Background  established in 1942  Pioneer to introduce modern service  first bank to introduce ATM in Ethiopia  has more than 4 million account holders  has12,800 talented and committed employees  is the leading African bank with assets of Birr 155 billion as of June 30th 2012
  7. 7. Statements of the Problem  Satisfying customers is the major mission.  As customers are satisfied - organizations achieves higher sales, profit, market share , gain loyalty and vice versa  Nevertheless, banks in Ethiopia have little care about their customers. They use more obsolete and traditional technologies that cause dissatisfaction
  8. 8. Contd…  This is also true for CBE  Though CBE has been providing many kinds of banking services since its establishment in 1942, it couldn’t go further in satisfying its customers until the last decade.  The bank applied core-banking technology in 2004 E.c to integrate the services delivered in its all branch banks and to improve the quality of its services.
  9. 9. Contd…  The application of this technology is believed to have many contributions for the bank.  The purpose of this study was to examine the impact of core banking and service quality on customer satisfaction.
  10. 10. Significance of the study  important to the bank to assess whether its application of core banking service enhance the level of customer satisfaction and identifies the position of service quality at the bank.  Identifies issues related to the application of core banking and service quality and thus provide feedback to managers.
  11. 11. Contd...  Result of this research project can be used as a base point for further studies in the related issues.
  12. 12. Objectives of the study 1. General objective  To assess the impact of Core Banking and service quality on Customer Satisfaction in Commercial Bank of Ethiopia Bishoftu Branch.
  13. 13. Contd… 2. Specific objectives  To assess the changes that comes after the application of core banking service  To identify the impact of core banking on customer satisfaction in the banks  To identify the impact of service quality on customer satisfaction in the banks  To analyze the customer satisfaction level in CBE  To provide some recommendation for the bank
  14. 14. Research questions  What are the changes that have come after the application of core banking service?  How satisfied are customers with the application of core banking service in CBE Bishoftu branch?  How satisfied customers are with service quality in CBE Bishoftu branch?  What is the level of customer satisfaction in CBE Bishoftu branch?  What must be done to further improve the services in CBE Bishoftu branch?
  15. 15. Scope of the study  Delimited to the changes that come after the introduction of core banking in the bank.  the project focus area is only CBE Bishoftu branch.
  16. 16. Limitation of the study  Not be considered as a representative of the whole service quality of CBE; that is the generalizability of the finding and the conclusion drawn will be limited to CBE Bishoftu branch.  Moreover, since this project is designed to be completed in four months time, it may not present detailed data to the intended level.
  17. 17. Conceptual framework for the impact of core banking and service quality on customer satisfaction Reliability Assurance Responsiveness Empathy Tangibles Core banking }→ Customer satisfaction
  18. 18. Research methodology A. Research design  Descriptive-correlational form of research design to provide solutions to the research problems  It involves gathering data that describe events and then organizes, tabulates, depicts, and describes the data collection.
  19. 19. B. Types of data A. Primary data  information gathered from customers of the bank  Questionnaire that have both open end and closed end question were prepared and delivered to customers B. Secondary Data  information gathered from websites, books, and journals, periodicals released by the bank and articles etc.
  20. 20. C. Population of the study  current account holder =5000  saving account holder=25,00 Sub total=30,000  all one time customers
  21. 21. D. Sample and sampling techniques  probability -stratified sampling techniques.  proportion allocation method was used to determine the sample size  n0=n*p0/N,
  22. 22. Contd…  Based on the above formula the researcher took a sample of 20 customer from c/a =5000 100 customer from s/a=25,000 Sub total=30,000=120 all one time customers=average customer per day=1000 customer (i.e. using 10 percent of 1000 customer per day) =100  total sample size= 220 customers.
  23. 23. E. Method of data collection self-administered questionnaire F. Reliability test  a questionnaire of 25 respondents was taken and Cronbach alpha has been employed to evaluate the reliability scale of construct and dimension of each construct. Reliability scale of the overall service quality was 0.842.this means that it has high reliability
  24. 24. G. Method of data analysis Descriptive statistics - Frequency, Percentage, Mean, Standard deviation Inferential statistics -correlation and regression  analysis of data was carried out using SPSS version 20.0.
  25. 25. Data Analysis  Two Hundred Twenty questionnaires (220) were distributed to the respondents and out of these 210 of them were collected with a response rate of 95.5 percent.  However, only 200 responses were valid with complete answers.
  26. 26. Background information of Respondents 10 % 41.5 % 18 % 58.5 % 39 % 1.5 % 45 % 1.5 % 3.5 % 25 % 28.5 % 33 % 15.5 % 79.5 %
  27. 27. Mean & Standard deviation result
  28. 28. Pearson correlation Customer satisfaction Assurance Pearson Correlation Sig. (2-tailed) N .877** .000 200 Responsiveness Pearson Correlation Sig. (2-tailed) N .349** .000 200 Empathy Pearson Correlation Sig. (2-tailed) N .867** .000 200 Tangibility Pearson Correlation Sig. (2-tailed) N .715** .000 200 Reliability Pearson Correlation Sig. (2-tailed) N .850** .000 200 Core banking Pearson Correlation Sig. (2-tailed) N .737** .000 200 Correlation is significant at the 0.01 level (2-tailed)
  29. 29. Regression Analysis Regression model for core banking Model 1 R R2 Adjusted R Square Std. Error of the Est. .737a .543 .541 .296 Regression model for service quality model
  30. 30. Impact of service quality & core banking on customer satisfaction 1. Impact of core banking on customer satisfaction  Model (Constant) Core banking Unstandardized Coefficients Standardized Coefficients B Std. Error .202 .047 .737 Sig. 6.143 15.337 .000 .000 Beta 1.239 .719 T Dependent Variable: customer satisfaction  Source: own survey, 2013
  31. 31. 2. Impact of service quality on customer satisfaction Model Unstandardized Coefficients B T Standardized Coefficients Std. Error Sig. Beta (Constant) .110 .117 .936 .351 Reliability .311 .042 .325 7.425 .000 Assurance .437 .053 .459 8.177 .000 -.004 .021 -.006 -.202 .840 Empathy .300 .057 .302 5.275 .000 Tangibles -.072 .043 -.084 -1.687 .093 responsiveness Dependent Variable: customer satisfaction Source: own survey, 2013
  32. 32. Analysis of open ended question  Majority of the respondent states their opinion regarding core banking service. From their suggestion it can be inferred that network problem is the big issues.  It is a major obstacle in the check clearing operations, quick transfer of fund, cash withdrawal and etc.  Temporary failures in core banking services are not corrected immediately.
  33. 33. Finding, Conclusion and Recommendations 1. Discussion of findings  Majority (58.5 percent) are male,  Majority (39 percent) aged in the range of 18-30 years,  Majority (45 percent) are degree holders,&  Majority (79.5 percent) of the respondents visits the bank once in a month.
  34. 34. Contd…  The results of the descriptive statistical analysis customers were most satisfied with the assurance (Mean=4.34) followed by reliability (Mean=4.32), empathy (Mean=4.29) and tangibility (Mean=4.26) customers were less satisfied with responsiveness (Mean=3.83) customers are satisfied with the application of core banking (Mean=4.28)
  35. 35. Correlation result there is a positive and sig. r/s b/n: Ass. and customer satisfaction(.877**), Resp. customer satisfaction(.349**) and Emp. and customer satisfaction(.867**), Tan. and customer satisfaction(.715**), Rel. and customer satisfaction(.850**), Core banking and customer satisfaction(.737**).  Correlation is significant at the 0.01 level (2-tailed)
  36. 36. Contd…  Highest relationship  Ass. and customer satisfaction (.877**),  Lowest relationship Resp. and customer satisfaction (.349**)
  37. 37. Regression result  Reliability has a positive and significant effect on customer satisfaction  Assurance has a positive and significant effect on customer satisfaction  Responsiveness has a negative & insignificant effect on customer satisfaction.
  38. 38. Contd…  empathy has a positive and significant effect on customer satisfaction  tangibility has a negative and insignificant effect on customer satisfaction  core banking has a positive and significant effect on customer satisfaction
  39. 39. Overall regression results  Coefficient of determination-R2 is the measure of proportion of the variance of dependent variable about its mean that is explained by the independent or predictor variables  The independent variables (ser. Qual.) accounted for 87.9 percent of the variance in customer satisfaction (R2 = 0.879)  The independent variable (core banking) accounted for 54.3 percent of the variance in customer satisfaction (r2 =0.543)
  40. 40. Conclusion  customers of bank were satisfied by core banking and the five service quality dimensions  customers were most satisfied with the assurance dimensions of service quality  customers were less satisfied by responsiveness dimensions of service quality
  41. 41. Contd…  correlation result shows positive and significant relation ship between  core banking and customer satisfaction all service quality dimensions and customer satisfaction
  42. 42. Contd…  Regression results shows that Reliability , Assurance and Empathy have positive and significant impact on customer satisfaction Tangibility and Responsiveness has no positive and significant impact on customer satisfaction core banking has positive and significant relationship with customer satisfaction
  43. 43. Recommendations  Reliability  The bank managers should enhance reliability on the bank by: fulfilling the service as promised, performing the service exactly at the first time, showing a keen interest in solving customers problems, providing the service at the promised time and by insisting on error free record.
  44. 44. Contd…  Empathy One way of addressing this could be by: treating customer with great respect, giving individual attention to customers, serving customers based on their specific needs and treating customers in a friendly manner
  45. 45. Contd…  The bank should create some mechanism to minimize the network problem or to find other techniques that unstop the service at the time of disconnection of the network.
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