ABSTRACT
The banking system has seen various degrees of innovations
in recent times. These have been as result of new technologies, economic
uncertainties, fierce competition, more demanding customers and the changing
climate which lead to an unprecedented set of challenges. Increased product
varieties, diffusion and competition couple with highly enlightened consumers
require that bank marketers solicit views on how their units meet customer
satisfaction. The study examined service delivery and customer satisfaction at
Lower Pra Rural Bank in Takoradi. The quantitative research design was
employed. Stratified random sampling method was used to sample a total of 285
respondents from the two branches of the bank. Data obtained from respondents
were coded and analyzed using descriptive statistics such as frequencies,
percentages, means and standard deviation. Questionnaires were employed in the
collection of data to address the research objectives. The study discovered
clients’ wants employees of the bank to inform clients as to when service will
be performed and also demand Lower Pra Rural Bank to have more convenient
branches i.e. sub branches, outlets and further operate in extended hours to
all its customers without the customers spending much time in queues. It further
found that majority of the customers are very loyal to Lower Pra Rural Bank
Limited. The study therefore recommends that management of the Lower Pra Rural
Bank Ltd in Takoradi should liaise with stakeholders to put up more branches in
its catchment areas to ease the congestion at the current banking halls.
CHAPTER ONE
INTRODUCTION
In the banking sector, perceived service quality has remained
a very essential part of the customer’s experience. As a result of this, most
banks assess their service quality on a regular basis, in order to enhance
customer satisfaction. As indicated by Swar and Sahoo (2012), customers are
satisfied when firms are able to deliver services that meet the expectations of
the customers. High perceived quality therefore, leads to a more satisfied
customer. Some studies have pointed out that, customer satisfaction is highly
dependent on service quality. Service quality is a very influential variable in
customer satisfaction, and thus very crucial for banking sector to maintain and
improve their market share.
The study therefore presents the background to the study,
which provides the rationale and motivation for undertaking the study. The problem
statement which also presents the gap in literature which the study seeks to
fill. Objectives of the study, research questions are also presented in the
chapter. The scope, significance and limitations are also presented. The
chapter concludes with the organisation of the rest of the research work.
Background to the Study
The banking system has seen various degrees of innovations in
recent times. These have been as result of new technologies, economic
uncertainties, fierce competition, more demanding customers and the changing
climate which lead to an unprecedented set of challenges. Increased product
varieties, diffusion and competition couple with highly enlightened consumers
require that bank marketer solicits views on how their units meet customer satisfaction. Due to the above most firms especially banks
must provide excellent services in order to meet the dynamic banking needs of
their customers. In order to maximize customer satisfaction, rural banks alike
must look at the quality of their service.
Rural banking in Ghana today is revolutionizing to embrace
the needs of customers in their strategic orientation. Beside their dominance
in the rural areas under their catchment areas, rural banks are now in major
cities that are within the mandated 40 kilometre radius. The banks are opening
more mobilization centre in urban areas. However, the challenge is that as
rural economies undergo fundamental change, so does the universal banks.
Banking deregulation in recent years has encouraged the evolution of new
financial institutions and nationwide branching of existing ones (Addeah,
2001). The larger financial institutions by virtue of their flexible policy
regulations are extending their services and products from the cities into
these towns and semi-urban centres competing with the rural and community
banks. It is thus a common activity to witness the rural communities flooded
with commercial banking and micro financing institutions (Bank of Ghana [BoG],
2011). To raise funds to fulfill their mandate of meeting financial needs of
the rural communities, rural and community banks have to re-strategise and
expand into the economically vibrant areas.
However, unlike the universal banks which have the freedom to
raise equity capital and open branches without constraints, rural banks are
constrained by two main factors: It is permitted to operate within forty
kilometers radius from its head office and equity capital can only be sourced
from its shareholders mainly from its catchment area (Association of Rural Banks [ARB], 2002). These characteristics place restriction
on the competitiveness of rural banks in the financial services sector.
Many rural and community banks therefore find themselves
disadvantaged by the recent economic and financial change as well as
deregulations in the other financial institutions. This policy restriction
poses as a regulatory burden on the banks making it difficult for them to
compete with the other financial institutions. The above demands that, the
rural banks improved the quality of service delivery in order to attract and
satisfy the banking needs of their customers.
Satisfied customers become royal and provide sustained
revenue for the rural banks (Swar & Sahoo, 2012). Satisfied customers also
attract potential clients into rural banks. To these effects all organization
strive for customer satisfaction. High patronage of services depends on the
satisfaction customers derive from a service. Sales are directly related to
customer satisfaction as increase in sales requires improvement in the quality
of service delivery; as this will encourage continuous patronage.
Generally, it is believed that services which continuously
and consistently delight customers make them happy and satisfied. In such
situation, they become loyal customers and will continue to demand the service
which in turn will result in profit and growth of an organization. As a
consequence, there is a shift in quality focus from the original producers’
point of view, which goes under different names such as “service-based quality”
(Garvin, 1984), “objective and subjective quality” (Summers, 2005), and
“operations management quality” (Steenkamp, 1990) towards the customers’ base
quality, recognizing quality as a subjective matter (Summers, 2005).
Subjective quality has received much preference and
attention, especially in free-market economies (Kondo, 2000), so as to win
customers.
But, customer satisfaction in dynamic owing to the
unpredictable nature of clients. What satisfied a customer yesterday may seize
to become a tool for satisfaction tomorrow. There is therefore the need for
rural banks to determine the relationship between the quality of service
delivery and customer satisfaction. According to Saravan and Rao (2007),
service quality remain critical in the service industry, as businesses strive
to maintain a competitive advantage in the marketplace and achieve customer
satisfaction. The financial services, particularly banks, compete in the
marketplace with generally undifferentiated products; therefore service quality
becomes a primary competitive weapon (Stafford, 1996). Literature has proven that
providing quality service delivery to customers retains them, attracts new
ones, enhances corporate image, lead to positive referral by word of mouth, and
above all guarantees survival and profitability (Negi, 2009; Ladhari, 2009).
Despite the criticality of service quality to businesses,
measuring service quality poses difficulties to service providers, because of
the unique characteristics of services: intangibility, heterogeneity,
inseparability and perishability (Bateson, 1985; Douglas & Connor, 2003).
In view of this, services require a distinct framework for quality
clarification and measurement. Among the prominent frameworks, SERVQUAL model
developed by Parasuraman et al (1985, 1988) is most preferred and widely used
model for measuring service quality in the service industry.
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