The Quality of Private Banking Services as Perceived by Polish Customers Dorota Bednarska-Olejniczak1 1
Department of Marketing Management, Wroclaw University of Economics, Komandorska 118/120, Wroclaw, Poland
[email protected] Annotation: As a result of economic transformations in Poland the market for private banking services has developed dynamically for the last decades. The banks in search of advantage over their competitors have started to adopt the rules of relationship marketing , which highlight the role of the integrity of three areas; the customer service, the quality and marketing. One of the youngest and the most dynamically developing areas of bank„s activities in Poland is private banking. This particular type of banking has emerged from retail banking as a result of particular characteristics and needs of target market, differing greatly from those of an average customer. The core characteristics of private banking are defined by L. Dziawgo - private banking is an individualized and complex financial and extra-financial service of wealthy customers. In a highly competitive market of private banking services the survival and success of the bank mainly depend on an ability to create long-term relations with customers, thus building their loyalty. As proved by empirical research, the first step in this process is delivering the customers high quality services, which contributes to their feeling of satisfactions. Taking into account the crucial role played by creating the quality in gaining advantage over competitors and attracitve and perspective character of still unexperienced Polish private banking market, the authors have decided to carry out research. Its target is to recognize the quality of the banks offer as proposed to wealthier individual customers. The research was carried out between 11.06 and 30.08.2008 in cooperation with the market research institute IMAS. In the research the modified method SERVPERF was applied. The basic assumption of this method is that the measurement of quality should cover only a direct measurement of a factual quality of the company as perceived by purchasers(as opposed to SERVQUAL where differences between the perceived and expected quality are measured). This method„s basic assumptions developed by J.J. Cronin and S.A. Taylor in the nineties of the twentieth century have been altered due to specific chracteristic of private banking servicesdifferent questions and quality criteria were used. The following article will present the results and practical advice on the issue of the quality of services in Polish banks. Key words: private banking services, services quality JEL classification: G2, M3
1 Introduction As a result of economic transformations in Poland, the market for private banking services has developed dynamically over the last decades. Not only the number of banks has increased, but also the rules of their functioning have altered. Increased competition has stimulated them to explore marketing techniques and adjust their offer to customer expectations. Seeking competitive advantage, the banks adopted the rules of relationship marketing, accentuating the integrity of three areas: customer service, quality of service and marketing. One of the latest and most dynamically expanding areas of banks' activities in Poland is private banking. This particular type of banking has emerged from retail banking as a result of particular characteristics and needs of the target market, widely different from the standardized requirements of the average customer. The core characteristics of private banking are defined by L. Dziawgo [5, p.15]: - private banking is an individualized and complex financial and extra-financial service addressed to wealthy customers. In a highly competitive market of
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private banking services, the survival and success of the bank is closely related to its ability to create long-term relations with customers, thus building their loyalty. As proved by empirical research, the first step in this process is delivering high quality services, with the purpose of enhancing customer satisfaction. Professional literature presents definitions of quality[3,p.99; 9,p.78; 18 p.4; 6,p.7] which, despite considerable terminological disparity, are generally consistent in the idea that quality relates to the satisfaction of customer requirements. Academic interest in the notion of quality of service dates back to the 1980s and 1990s. The earliest studies of the quality of service can be foud in the works of W. E. Sasser, P. R. Olsen, D. D. Wyskhoff [21, p.78]Ch. Gronroos[8], U. I J. Lehtinen [13], R. C. Lewis and B. H. Booms [14]. These authors express the notion of quality of service as a function of two variables, namely: requirements of service recipients and their actual experience observed (felt) in the course of service rendering[see: 16, p.78]. Such approach can also be found in the universally accepted definition of service quality postulated by V. Zeithaml, L. Berry and A. Parasuraman, which holds that “quality of service is the degree, to which customer requirements are met. A service is of desirable quality if it results in satisfying or exceeding the requirements of the customer”[23, p.19]. This definition of quality of service is also reflected in popular methods of service quality evaluation, most of all, in the most widely used methods of SERVQUAL and SERVPERF. SERVQUAL is based on the gaps in quality perception model designed by A. Parasuraman, V. Zeithaml and L. L. Berry[23]. The model is established on the assumption that measurement of service quality should be evaluated from customer perspective, since service quality (SQ) is a result of comparison between customer expectations (E) related to the service with the actual product of the service process, i.e. their perceived performance (P). The method, however, was met with criticism. Some researchers suggested that it would be more advisable to analyze service quality solely on the basis of perceived service1, alternatively supplemented by past perceptions of quality and the level of satisfaction in service or product[11, p.38]. J. J. Cronin and S. A. Taylor developed this approach and postulated an alternative method of service quality evaluation (1990s). Their SERVPERF model is based on the assumption that quality measurement should only measure direct and actual performance of the individual service renderer as perceived by the recipient[22, pp. 96-97]. The model emphasizes the relation between the level of service and the ideal quality of service, thus rejecting the subjective category of customer expectations [7, p.237] (quality in this approach refers to perfection of performance, while its evaluation is related to the “ideal” or perfect performance[20, p. 204]). The SERVPERF method is typically employed in those cases, where customers tend to express maximum level of expectations in relation to each of the criteria under study – in such case, limiting the analysis to measuring only the perceived (“experienced”) quality, with no regard for expectations, serves to evaluate effective performance of the company under study and determine areas that need improvement[10, p. 201]. The measurement instrument in this method is based on modified SERVQUAL questionnaire of 22. questions, but the questionnaire is used only once – the step of expectation evaluation is omitted. The closer are the evaluations of individual criteria to the maximum scores, the higher is the quality of service.
2 Data and Methodology Taking into account the crucial role of service quality in gaining competitive advantage in banking, as well as attractive and perspective character of Polish private banking market in its early development stage, the authors find it useful to present research results on the subject. 1
This type of argumentation can be found in the following sources: M. Mazis, O. Antola, R. Klippel [15]; G. Churchill, C. Suprenant [1]; RWoodruff, E. Cadotte, R. Jenkins [19]; J. J. Cronin, S. A. Taylor[2] [cited after:] J. Kudła, K. Opolski, [11] p. 38
Electronic copy available at: http://ssrn.com/abstract=2172783
The aim of the research was to recognize the quality of the banking offer addressed to wealthy individual customers. The research was carried out between 11.06 and 30.08.2008 in cooperation with the market research institute IMAS International, Ltd. The research was based on a modified method SERVPERF. The basic assumption of this method is that the measurement of quality should cover only a direct measurement of the actual quality of the company as perceived by purchasers (as opposed to SERVQUAL approach, where differences between the perceived and expected quality are measured). This method's basic assumptions, developed by J.J. Cronin and S.A. Taylor in the 1990s, have been altered to respond to specific characteristic of private banking services - different questions and quality criteria were used. The research group consisted of 103 people using private banking services on the Polish market. Due to significant problems in accessing respondents and their general unwillingness to answer questions about services used, snowball sampling has been applied. The research has been conducted in the form of direct interviews. This paper presents the results and practical recommendations on the issue of the quality of services in Polish banks.
3 Results The set of quality assessment attributes used in the research was designed after thorough analysis of features specific for private banking services, as well as stages of advisory process and the role of financial advisors in private banking services. A number of criteria was adopted from other research studies presented in professional literature2. The attributes were grouped into five dimensions, adapted from SERVQUAL methodology (see Table1).
III. RESPONSE TO EXPECTATIONS
II. RELIABILITY
I. MATERIAL
Table 1. The set of dimensions and attributes employed in the research of private banking service quality Dimension No. Attribute 1. High standard of premises, comfortable setting of service 2. Premises offering confidentiality of service 3. Modern equipment 4. Good manners and elegance of bank personnel /personal advisor 5. Visual appeal of printed material (leaflets, correspondence) 6. Clarity and legibility of forms, documents, agreements, etc. 7. Clearly expressed interest in problems voiced by customers
2
8. 9. 10. 11. 12.
Keeping up deadlines and time limits as declared Providing proper standard of service on the spot (no margin for error) Maintaining accurate and impeccable documentation and records Declaring precise deadlines/timeframes for service rendered Readiness and willingness to respond immediately to customer needs (such as promptly answered e-mails and callbacks) 13. Prompt contact with customer in crisis situations (such as sudden deterioration of financial indexes) 15. Keeping the customer informed on current range of services and any
Such as (among others): mystery shopping research on quality of customer service in private banking, conducted in 2007/2008 by GFMP Management Consultants in: [4]; mystery shopping research on quality of personal advisory services offered to affluent customers in private banking, conducted in July/August 2004 r. by zeb/rolfes.schierenbeck.associates (presented in: [17 pp. 14-20]); and research on quality of private banking services conducted by W. Lassar, Ch. Manolis and R. D. Winsor in 2000 (presented in: [12, pp. 244-271]).
IV. EXPERTISE AND TRUST
16. Proper, trust-inducing manners and conduct of the personnel/advisor 17. Providing customers with sense of security in relation to capital entrusted to bank 18. Polite and friendly behavior of personnel/advisor in relations with the customer 19. Knowledge and expertise of personnel/advisor to resolve customer problems in professional matters
V. EMPATHY AND CONVENIENCE
projected changes (timeframe, cost of service, etc.)
14. Adjusting the service and offer range to requirements of individual customers 20. Individualized (customized) approach to customers 21. Convenient opening hours 22. Convenient access to services via Internet and/or other electronic communication channels 23. Convenient parking space 24. Special attention for private banking customers 25. Willingness to act in the best interest of the customer 26. Striving on the part of personal advisor to learn and understand specific financial and practical needs of the customer 27. Offering supplementary, non-financial benefits (booking tickets, organization of meetings and parties, airport VIP lounges, etc.) 28. Margin for negotiating prices and dues Source: Own research based on study results
In line with the adopted research procedure, the appraisal of private banking service quality employed a 5-grade scale, with 1 representing the lowest score (unsatisfactory/bad quality), and 5 – top score (utmost/best quality). Partial scores collected from respondents were used to calculate general non-weighted Servperf index for the group under study. Its value was established at 4.32. Index calculation was performed in two stages. In the first stage, 28 partial indexes were calculated for each of the attributes under study, representing mean arithmetic value of all scores for each attribute (sum of respondent scores divided by total number of responses). In the second stage, mean arithmetic value of partial indexes was calculated. Since the SERVPERF method relates the perceived quality of service to the „ideal quality‟, then the closer is the perceived service quality to the maximum score, the better its perception as reported by customers – in this research, the ideal score equals 5 (representing a potential situation where all respondents declare highest scores for each of the attributes under study, i.e. the ideal or model rendering of service). The overall Servperf index obtained in the course of the study can be regarded positive, showing that private banking customers perceive this range of services as good, though not ideal. The most important question in this context is: what factors affected this result? To address this question, we need to evaluate the scores of individual attributes under study that constitute the service quality assessment. Results of partial indexes (calculated as mean arithmetic values of scores presented by responders in relation to each individual attribute) are shown in Table 2. They are presented in increasing order, from lowest to highest score of quality
Table 2. Overview of partial Servperf indexes calculated for each of the attributes used in assessment (graded by responder value)
Attribute under evaluation 23. Convenient parking space 27. Offering supplementary, non-financial benefits 13. Prompt contact with customer in crisis situations 28. Margin for negotiating prices and dues 21. Convenient opening hours 25. Willingness to act in the best interest of the customer 2. Premises offering confidentiality of service 5. Visual appeal of printed material 1. High standard of premises, comfortable setting of service 26. Striving on the part of personal advisor to learn and understand specific financial and practical needs of the customer 24. Special attention for private banking customers 15. Keeping the customer informed on current range of services and any projected changes 3. Modern equipment 6. Clarity and legibility of forms, documents, agreements, etc. 11. Declaring precise deadlines/timeframes for service rendered 20. Individualized (customized) approach to customers 7. Clearly expressed interest in problems voiced by customers 4. Good manners and elegance of bank personnel /personal advisor 16. Proper, trust-inducing manners and conduct of the personnel/advisor 14. Adjusting the service and offer range to requirements of individual customers 12. Readiness and willingness to respond immediately to customer needs 9. Providing proper standard of service on the spot (no margin for error) 19. Knowledge and expertise of personnel/advisor to resolve customer problems in professional matters 17. Providing customers with sense of security in relation to capital entrusted to bank 8. Keeping up deadlines and time limits as declared 10. Maintaining accurate and impeccable documentation and records 18. Polite and friendly behavior of personnel/advisor in relations with the customer 22. Convenient access to services via Internet and/or other electronic communication channels
Servperf by mean value of responses 3.602 3.685 4.124 4.175 4.214 4.216 4.218 4.248 4.255 4.267 4.301 4.304 4.337 4.337 4.353 4.359 4.36 4.392 4.398 4.408 4.422 4.451 4.466 4.5 4.569 4.569 4.618 4.709
Source: Own research based on study results.
The results clearly show that customers attribute the highest score to those features of private banking that offer convenient access to services via Internet or other electronic communication channels (index of 4.71, i.e. significantly higher than total score). This may suggest that positive evaluation of private banking services is largely based on remote access to banking services. Distribution of banking services, similarly to other marketing instruments, is aimed at creating value for the customer. Employing modern technology in this respect helped the banks increase the range of benefits offered to customers, especially in
regard to the ease of access. Taking into account the potential risks involved in electronic access to banking services (the risk of hacking, unauthorized access to confidential financial data, complexity of procedures resulting in potential operation errors, etc.) and potential problems of technical nature (login problems, delays in accessing the service, server failures, etc.), the high score attributed by the respondents to this particular attribute clearly shows that Polish banks are regarded as competent and capable of managing their electronic distribution channels – this is reflected in customers‟ opinions. Two other notable attributes receiving high score are: polite and friendly behavior of personnel/advisors (4.62) and keeping up deadlines and time limits as declared (4.57). The lowest scores were reported in relation to such attributes as: offering supplementary nonfinancial benefits (i.e. concierge services) – index of 3.69, and convenient access to parking space – 3.6. Quality of service in this respect is perceived as adequate, but far from desirable. These two elements of service belong to the category of ease of access (similarly to the attribute of electronic access channels). As such, from the viewpoint of product-service structure, they do not refer to the core service of banking, but to the level of extended services. The concierge service, for example, is an element of service providing affluent customers with a range of supplementary (often unexpected) benefits – such as support in organization of travel, booking tickets for cultural events, offering access to airport VIP lounges, etc. It must be noted that provision of services that require direct contact with personal advisor – politeness and friendliness (score 4.62), expertise and knowledge (4.47), willingness to respond to customer‟s needs (4.42), adjusting the service to individual requirements (4.41), trust-inducing behavior (4.4), appearance (4.39), striving to learn and understand specific financial and practical needs (4.27) and prompt contact in crisis situations (4.12) were perceived in a good light. In responders‟ opinion, these aspects of service were at least satisfactory. Scores of remaining attributes ranged between 4.17 and 4.5, which – considering the adopted scale of 1-5, should be evaluated as positive. The results show that banks provide more than satisfactory level of services associated with private banking in most of the attributes under study.
4 Conclusions The results of service quality evaluation research show that the subsector of private banking in Poland is perceived by customers as good, in terms of quality. Ease of access to services (via Internet and other channels) ranked best in the range of attributes under evaluation, closely followed by attributes associated with the intermediary personal advisor) – such as knowledge, expertise, behavior and personality traits. In customers‟ view, provision of most attributes of banking service in that respect was at least satisfactory. The results obtained in the course of study seem to corroborate the ability of Polish banks to properly shape and manage the range of services associated with private banking, suggesting that the present course of action adopted by banking institutions in this respect is proper and should be maintained.
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