Service Quality: A Case Study of a Bank
called SERVQUAL, which was originally used for assess-
ing customer perceptions of service quality in service and Research Objective/Questions
retailing organizations (Parasuraman, Zeithaml, and The objective of this research was to identify underlying
Berry 1994a). For each item, a difference score Q (repre- dimensions of service quality in the banking industries
senting perceived quality along that item) was defined and to assess the importance of each of these dimen-
as Q = P – E, where P and E are the rating on the corre- sions in the banking industries with the following
sponding perception and expectation statements, hypotheses.
respectively. In 1993, it was argued that “SERVQUAL • H01: The mean of each dimension of service quality
failed to achieve discriminate validity from its component does not differ across banks.
and the nondifference score measure did not exhibit
• H02: The mean of each dimension of service quality
these problems (Parasuraman, Zeithaml, and Berry
does not differ among the branches of the same bank.
1994b). Moreover, it displayed better than discriminate
and nomological validity properties. In sum, it was the • H03: The five dimensions of service quality are
preferred alternative” (Brown, Churchill, and Peter 1993). related to the overall service quality.
Cronin and Taylor (1992; 1994) argue that measuring
service quality using a performance-minus-expectations
(SERVQUAL) basis is inappropriate and suggest that a
performance-only (SERVPERF) measurement is a better
method. Parasuraman, Zeithaml, and Berry (1994a), Survey Instrument
however, contend that the SERVQUAL scale using the The service quality questionnaire was obtained from
expectations/performance gaps method is a much richer the marketing department of bank A. It had been used
approach to measuring service quality and augment several times in the past and was developed by aca-
their earlier assertion (Parasuraman, Zeithaml, and demic experts. The questionnaire was developed to
Berry 1985; 1988; 1993) that service quality is a multi- identify underlying dimensions of bank quality and to
dimensional rather than a unidimensional construct. assess consumers’ perceptions of the importance of each
Unfortunately, the conceptualization and measure- of these dimensions. The questionnaire covered the five
ment of service quality is not bereft of controversy. dimensions of service quality, including the overall
Although the debate on service quality began in 1985 in service quality of the bank. Each question was rated
the marketing literature, it was given a major boost by using a Likert-type scale of 0 (poor) to 10 (excellent).
Cronin and Taylor (1992). Subsequent work on service This questionnaire has been used effectively in both
quality (Parasuraman, Zeithaml, and Berry 1993; public and private sectors.
Cronin and Taylor 1994; Avkiran 1994; Teas 1994; SERVQUAL was originally used for assessing customer
Newman and Cowling 1996; Yavas, Shemwell 1997) perceptions of service quality in service and retailing
notwithstanding, the debate has not yet reached a point organizations (Parasuraman 1993). For this research,
of resolution. In its wake, however, it has raised many a nondifference score measure was used and the score
issues for both academics and practitioners by providing for each dimension of service quality was computed by
important but somewhat conflicting insights into the taking the average score in items making up the
conceptual, methodological, analytical, and practical dimension, in this case three items per dimension. The
issues related to the service quality concept. service quality questionnaire is shown in the Appendix.
The five dimensions of service quality mentioned
previously (tangibles, reliability, responsiveness, assur-
ance, and empathy) were the basis for this research. For Sampling and Data Collection
this research, a nondifference score measure was used Two large regional banks in Nebraska were selected
for each dimension of service quality in order to achieve (bank A with three branches and bank B with two
discriminate validity from its component. branches). To get the cooperation of management and
Service Quality: A Case Study of a Bank
lowering customers’ banking costs and increasing their Avkiran, N. K. 1994. Developing an instrument to measure customer
service quality in branch banking. International Journal of Bank
investment potential. This could also open up the possi-
Marketing (12 November): 10-18.
bility of increased profits for banks, for when perceived as
Bagozzi, R. P. 1981. Evaluating structural equation models with
more service and customer oriented, they will, in effect,
unobservable variables and measurement error: A comment.
become a useful and pleasant way to “shop.” Journal of Marketing Research 18: 375-381.
In essence, this article argues for continued decen-
Barret, P. 1997. Banks lend an ear to service: Improved customer
tralization of banking services, which would allow service. Marketing 16 (January): 16-20.
convenient access and yet the old-fashioned service of Berry, L. L., V. A. Zeithaml, and A. Parasuraman. 1985. Quality
a smaller community. Keeping these smaller branch counts in services, too. Business Horizons. (May-June): 44-52.
locations presentable and up-to-date technologically Brown, T. J., G. A. Churchill, and P. J. Peter. 1993. Improving the meas-
are important factors. The idea of increasing multiple urement of service quality. Journal of Retailing 69, no. 1: 127-139.
maintenance expenses, in terms of staffing, technol- Cronin, J. J., and S. A. Taylor. 1994. SERVPERF versus
ogy, and the cosmetic upkeep of many branches, must SERVQUAL: Reconciling performance-based and perceptions-
be regarded as a cost of doing business. If the staff minus-expectations measurement of service quality. Journal of
Marketing 58 (January): 125-31.
inside is pleasant and well-informed, in an aestheti-
cally pleasing environment, then customer satisfaction Cronin, J. J., and S. A. Taylor. 1992. Measuring service quality: A
reexamination and extension. Journal of Marketing 56 (July): 55-68.
will be high.
Many financial institutions are trending in this Dubroff, H. 1998. Competition is at the heart of credit union-bank
squabble. The Business Journal 15, no. 3: 51-60.
direction, even in the face of large banking organiza-
tions merging. It will be difficult to merge these two Johnston, R. 1997. Identifying the critical determinants of service
quality in retail banking: Importance and effect. International
trends, and in the end, a choice may have to be made Journal of Bank Marketing 15, no. 4: 111-116.
between service quality and economies of scale.
Johnson, R. A., and D. W. Wichern. 1982. Applied multivariate
Access has been improved through online banking, statistical analysis. Englewood Cliffs, N. J.: Prentice-Hall.
though convenience has come at the expense of individu-
Lewis, R. C., and B. H. Booms. 1983. The marketing aspects of service
alized service. Online banking has not been a universal quality. In Emerging Perspectives on Services Marketing, eds. L. Berry,
conversion. Not everyone is convinced of Internet security, G. Shostack, and G. Upah. Chicago: American Marketing: 99-107.
and banks must aggressively deal with this issue to Lovelock, C., and L. Wright. 1999. Principles of service marketing
enhance perceptions of safety, reliability, and security. and management. Upper Saddle River, N. J.: Prentice Hall.
The five-dimensional structure could possibly serve Nowak, L. I. 1997. Partnering relationships between banks and
as a meaningful framework for tracking a firm’s serv- their research firms: The impact on quality. International Journal
ice quality performance over time and comparing it of Bank Marketing 15, no. 3: 83-90.
against the performance of competitors. The wording Newman, K., and A. Cowling. 1996. Service quality in retail
of some individual items may need to be customized banking: The experience of two British clearing banks.
International Journal of Bank Marketing 14, no. 6: 3-11.
to each service setting. Items on some dimensions
should be expanded if that is necessary for reliability. Parasuraman, A., V. A. Zeithaml, and L. L. Berry. 1994a. Reassessment
of expectations as comparison standard in measuring service quality:
Thus, the banking industries must continuously Implications for further research. Journal of Marketing 58, 111-124.
measure and improve these dimensions in order to
Parasuraman, A., V. A. Zeithaml, and L. L. Berry. 1994b.
gain customers’ loyalty. Alternating scales for measuring service quality: A comparative
assessment based on psychometric and diagnostic criteria.
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