quality in retail banking

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Quality in Retail BankingR.F. Blanchard

TSB Bank plc, and

R.L. GallowayLeicester Business School, De Montfort University, Leicester, UK

IntroductionThe UK financial services sector has seen a growing intensity of competition

within the marketplace, particularly over the last decade.This competition emerged in the 1970s (de Moubray, 1989) when banks and

building societies based their major competitive strategy on the traditionalmarketing mix elements of product, price, promotion and place. However thisled, in the eyes of the customer, to homogeneity rather than distinction, with anapparently common market concept and perceived competitive strategy basedon full product lines (Howcroft, 1991).

In a developing environment of consumer awareness (Lewis and Entwistle,1990) leading to a greater degree of consumer sovereignty, no organizationcan afford to neglect customer needs (Goodstadt and Marti, 1990). Coupled witha widely reported over-capacity within the Financial Services marketplace, akey differentiator leading to competitive advantage is obviously necessary.

There is considerable support for the argument that this should be quality ofservice (Berry et al., 1989; Edwards and Smith, 1989; Ross and Shetty, 1985).That the banks are failing in this is evidenced by The Association of BritishChambers of Commerce, which, in a 1992 survey of its members, found banks tobe sterile and uncommunicative in their customer relationships, while in 1992 aConsumers Association survey found 10 per cent of customers unhappy withthe service of their accounts, twice the number reported in 1990. The UK banksare not unique in t his. Raddon (1987) reported t hat 40 per cent of thosecustomers switching financial institutions in the USA did so because of serviceproblems, while Grubbs and Reidenbach (1991) reported a figure of 25 per centclosing accounts for the same reason.

The banks are not unaware of this and most are addressing the issue of

quality of service in one way or another, though the evidence cited abovesuggests that these attempts have had little impact on customer perception.

This article describes work carried out during 1991 and 1992 within the TSBto determine the perceptions of both customers and staff of the requirements ofa quality service in retail banking. TSB Bank plc is the sixth largest bank in theUK with a network of 1,400 branches and 7 million customers.

International Journal of Service

Industry Management, Vol. 5 No. 4,

1994, pp. 5-23. MCB Universit y

Press , 0956-4233

The authors wish to thank T SB Bank plc for assistance in carrying out the research describedand for permission to publish.

Received August 1993Revised May 1994


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FrameworksWhile a universally accepted definition of quality is still not available themajority of writers on service quality support a customer centred definition (e.g.Eiglier and Langeard quoted in Le Blanc and Nguyen, 1988; Garvin, 1983;Gummesson, 1988; Kathawala and Elmuti, 1991; Lewis, 1989; Oakland, 1986)with the reservation that customer expectations are not necessarily consistent orpredictable (Haywood-Farmer, 1987; Peters, 1985). The definition produced byHowcroft (1991) that service quality in banking implies consistently anticipatingand satisfying the needs and expectations of customers covers most of the issuesraised. In particular, it is customer centred, but in requiring the definition ofneeds it does not presume upon the customers prior knowledge or technical

competence, while in allowing for expectations it implies that the service shouldtake account of this prior knowledge and experience. It also implies anawareness of the dynamic nature of customer expectations in requiring thatthese be anticipated. In view of its comprehensive coverage it is the one favouredby the authors. This, of course, implies that banks, in seeking to provide a highquality service, should identify these needs and expectations and establish theway in which customers prioritize them.

Most aut hors agree that service consists of an outcome and a processelement, where outcome is the a chievement (or not) of some end by t hecustomer (for example, cash from a cash dispenser, an appropriate insurancepolicy or loan) and process is the interaction between the customer and theservice unit. The variation in tangibility of the service, and the presence of the

customer in the process, frequently make it difficult to define the boundarybetween the two. Th e situation is furt her complicated by the fact tha tperception of quality is heavily influenced by expectation (Lyth and Johnston,1988). Despite t his the process or functional element is perhaps the mostimportant in creating immediate impressions of quality. This division alone istoo imprecise to be of much value in the design of services and fu rt herclassification of service quality has been addressed by a number of authors.Lehtinen and Lehtinen (in Le Blanc and Nguyen, 1988) identify the t hreedimensions of:

(1) physical quality equipment, premises, tangibles;

(2) corporate quality image and profile of the organization;

(3) interactive quality customer contact with service personnel and othercustomers.

Grnroos (1988) identifies the five key determinants of service quality as:

(1) professionalism and skills (technical (outcome related));

(2) reputat ion and credibility (image related);

(3) behaviour and attitudes;

(4) accessibility and flexibility; and

(5) reliability and trustworthiness.


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The first of these being technical (outcome related) and the last four are

functional (process related).

The most widely reported framework is that proposed by Parasuraman etal. (1988) as the basis of SERVQUAL, consisting of the five dimensions ofservice quality tangibles, reliability, responsiveness, assurance and empathy.

These in turn are a consolidation of ten dimensions as shown in Table I.

The models proposed by Grnroos and by Par asur aman et al. have asubstantial superficial attraction. They appear to address a complex issue and

break it down into a reasonable but not excessive number of components.

Difficulties arise on closer examinat ion. The elements are far too closely

interlinked to form the basis of a rigorous analysis of the service situation, andthey do not map unambiguously onto the basic classification of outcome,

process and expectation.

Figure 1 shows this mapping. The model of Lehtinen and Lehtinen shows

the most unambiguous linkage, but even this can be questioned. In service

encounters with very low tangible content (e.g. entertainment) the interaction

is the outcome, and there are no doubt occasions when corporate image is what

is being bought. Professionalism and skill and accessibility and flexibility

(Grnroos) and tangibles and reliability (SERVQUAL) all have obvious

elements of both p rocess a nd outcome. Even empat hy which, at least in

Financial Services, is a process issue, may well be a primary outcome when the

service is mainly personal (e.g. counselling or less formally, hairdresser or

bartender).If service quality is t o be measured, less ambiguous par ameters are

necessary, and it appears that the fundamental ambiguity lies in the overlap of

process and outcome. These are not separate dimensions since dimensions are

by definition orthogonal and, at least in principle, measurable. Likewise the

SERVQUAL dimensions are not true dimensions. These issues are addressed

again later in the context of the data collected.

Table I.SERVQUALDimensions

SERVQUAL Components

Tangibles Tangibles

Reliability Reliability

Responsiveness Responsiveness

Assurance CompetenceCourtesyCredibilitySecurity

Empathy AccessCommunicationUnderstanding


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Parasuraman et al. also propose a model of the determinants of service qualitywhich identifies five opportunities for quality failure to arise (service gaps).This model is shown in Figure 2.

The model can be perceived as a process for the design of a service:management develop an understanding of customer expectations, use this to setup relevant qua lity specifications, ensure that the service is designed andoperated to those specifications, and ensure that customers are correctlyinformed of the service standards. It also provides a framework for analysing

quality failures by identifying the gaps in this process which cause a mismatchbetween customer expectation and customer experience (perceived service).Since this is a general model of the service process it does not suffer from theproblems of defining and measuring service quality and does not require arigorous definition of service quality to enable it to be used.

Methodology

The art icle describes two linked sets of data. The first, collected in March/April1991 by the consultancy Research International Specialist Units Ltd, consisted

Figure 1 .Classification of SomeService Dimensions

Outcome

Tangibles

Expectation

Corporate imageReputation and credibility

Premises

Professionalism and skillAccessibility and

flexibilityReliability and

trustworthiness

Tangiblesreliability

Assurance

InteractiveBehaviourand attitudes

Process

ResponsivenessEmpathy

Source: Lehtinen and Lehtinen, Grnroos, SERVQUAL


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of a questionnaire completed during interview with 439 current/deposit accountcustomers of the bank. Respondents were recruited outside a quota sample(reflecting size and location) of 71 bank branches and interviewed at home. Thesample itself was a quota sample reflecting lifestage (the categories,representing age/status, being youth, independent, family, empty-nester/retired), sex and socioeconomic class of the banks customers. Four-hundred-and-one valid replies were analysed. The questionnaire covered a verywide range of issues and only the relevant part of the questionnaire is shown inAppendix 1. The 31 aspects covered were generated during panel discussionswith 50 customers.

This was followed in late 1992 by a survey of staff. This took the form of fivestructured interviews with management and four focused discussion groups,each with eight members of staff. The managers were selected randomly, whilethe discussion groups were selected to reflect the balance of back and frontoffice functions. In order to maximize the likelihood of uninhibited discussion,management were not present during the discussion groups nor were records ofthe discussions made available to them. The views of a total of 39 staff werethus obtained. This research was carried out by Front Line Market Researchunder the direction of the authors. The discussion guide used is shown inAppendix 2. The models proposed by Parasuraman et al., as described above,

Figure 2 .Service Gap Model of

the Service Process

Management perceptionof expected service

Gap 1

Service quality

specification

Gap 2

Service delivery

Gap 3

Communicationto customer

Expected service

Perceivedservice

Gap 5

Gap 4


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were considered the most widely verified and applicable models and weretherefore initially used as a framework for developing and analysing the data.

FindingsCustomer PerceptionsRelative importance weights were calculated for each of the 31 attributes andare shown in Table II.

These attr ibutes were then related to the SERVQUAL dimensions and towhether they represented process or outcome issues as shown in Table III. This

RelativeRank Attribute importance

1. Privacy of discussions 100

2. Politeness of counter staff 92

3. Willingness to help 90

4. Way staff treat customers 86

5. Cash in machines 77

6. Speed and efficiency of transactions 72

7. Staff listen 71

8. Tills open at busy times 64

9. Staff available to help 57

10. Informing of account changes 54

11. Way mistakes are handled 50

12. Clarity of staff answers 49

13. Charges clear and explained 46

14. Attitude of bank when lending 41

15. Person for questions 38

16. Availability of enquiries desk 35

17. Return/replace cash card 32

18. Queue at branch 32

19. Opening hours 29

20. Appearance of branch 29

21. Taking time to match product/need 28

22. Staffs product knowledge 27

23. Overdraft charges 2724. Ease of getting to branch 26

25. Queues at cash machines 19

26. Ease of understanding letters 18

27. Informed of progress of applications 14

28. Relevant direct mail 11

29. Telephones answered quickly 10

30. Getting right person on phone 8

31. Speed of mortgage confirmation 5Table II.Customer Ranking ofService Attributes


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relationship was established subjectively by the authors in discussion, but it issuggested that in most cases the association is self-evident.

The dat a show quite clearly that the SERVQUAL dimensions are notexclusive, at least from the viewpoint of customers expression of needs, andthere is certainly room for discussion of the relative balance of the elements (forexample on item 10, to what extent should the provision of information beconsidered a tangible?), but in general the attributes identified as important by

SERVQUAL Process/ Attribute dimension outcome

1. Privacy of discussions Tan/ass Process

2. Politeness of counter staff Ass Process

3. Willingness to help Res Process

4. Way staff treat customers Res/ass Process

5. Cash in machines ATan/rel Outcome

6. Speed and efficiency of transactions Tan/red Process/outcome

7. Staff listen Res/emp Process

8. Tills open at busy times Rel/res Process

9. Staff available to help Rel/res/emp Process

10. Informing of account changes Rel/emp Process/outcome

11. Way mistakes are handled Res/ass Process/outcome

12. Clarity of staff answers Emp Process/outcome

13. Charges clear and explained Emp Process/outcome

14. Attitude of bank when lending Res/ass/emp Process

15. Person for questions Tan/rel/res Process

16. Availability of enquiries desk Tan/rel/res Process

17. Return/replace cash card Tan/rel/res Outcome

18. Queue at branch Tan/rel//res Process

19. Opening hours Tan/res Process

20. Appearance of branch Tan/ass Process

21. Taking time to match product/need Res/ass Process22. Staffs product knowledge Res/ass Process

23. Overdraft charges Tan Outcome

24. Ease of getting to branch Tan/emp Process

25. Queues at cash machines Tan/emp Process

26. Ease of understanding letters Rel/res/ass Process

27. Informed of progress of applications Rel/res/ass Process/outcome

28. Relevant direct mail Tan/res Outcome

29. Telephones answered quickly Tan/rel/res Process

30. Getting right person on phone Tan/rel Process

31. Speed of mortgage confirmation Tan/rel/res Process

ass = assurance; res = responsiveness; emp = empathy; tan = tangibles; rel = reliability

Table III.Relationship of

Attributes toSERVQUAL

Dimensions


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customers fit conveniently into the SERVQUAL dimensions without unduestrain.

By weighting the SERVQUAL dimensions by the relative weights given tothe attributes by customers, it is possible to develop a crude ranking. This isshown in Table IV.

This clearly shows the expected pat tern that service customers att achconsiderably more significance to the process elements of the service, ratherthan the outcomes, when judging quality. Indeed, when the two alternatives ofprocess and outcome are weighted in this way, the ratio is 82 per cent process to18 per cent outcome. This has obvious implications for service design.

What is less clear is the utility of the more detailed breakdown into

SERVQUAL dimensions. Responsiveness is seen as the most important ofthese, but in referring back to the original customer-determined issues, this isseen to contain elements of interpersonal behaviour (willingness to help; stafflisten; way staff treat customers) and much harder issues such as tills open atbusy times. The dimension is not focused on specific issues which either thecustomer or the service designer are likely to address. This might not matter ifthe SERVQUAL dimensions represented some underlying structure, but theirambiguity and overlap suggests that this is not the case.

A rigorous basis for analysis would require a classification of service qualitywhich avoids ambiguity, by being based on genuinely orthogonal dimensions,and allows for variation between different types of service to be represented bymeasurement of the magnitude of a particular dimension. The authors suggest

that the basis for one such dimension, the process/outcome distinction, hasalready been described and has been widely recognized as a key issue in servicedesign. However it seems more reasonable to regard this as a dimension ratherthan a dichotomy, with a particular aspect of any service being located at someintermediate point between the two extremes. This is consistent with Figure 1and explains the substantial overlap between process and outcome necessary toaccommodate most attempts to classify service quality. Two other potentialcandidates are:

(1) Subjective/objective, which provides a measure of the degree to which thequality of that aspect of the service under consideration can beobjectively specified. For example, the availability of cash in cash

SERVQUAL dimension Relative weight

Responsiveness 100

Assurance 70

Empathy 52

Tangibles 47

Reliability 44

Table IV.Ranking of SERVQUALDimensions byCustomers


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machines is entirely objective since it is either there or not, whereas suchissues as staff listen to me or politeness of sta ff are far moresub jective. One customers politeness might be anothers obse-quiousness. The issue here is not so much whether the aspect can bemeasured but the degree to which customers perceptions are consistent.Speed/efficiency of transactions can be measured but customers ideas ofwhat constitutes fast are variable. For example a study of customerperceptions of service in a supermarket (Harridence, 1992) found that theelderly tended to prefer a slower checkout service since it increased theopportunity for social interaction. The establishment of a value for thisdimension would assist the service designer by indicating the nature and

appropriateness of control measures and the need for allowing discretionto service personnel, as well as indicating opportunity/need for customerselection and training. This dimension in particular links to the issue ofprior expectations, and the greater the subjective content of the serviceencounter, the greater contribution expectations would be expected tomake to perceived service quality.

(2) Soft/hard. This terminology is derived from the systems field and widelyused in discussion of service issues. It is used here in the sense that hardrepresents physical aspects of the service while soft representsinterpersonal interaction. The authors suggest that this dimension isorthogonal to both the process/outcome dimension and thesubjective/objective dimension, although there is perhaps morecorrelation with the latter in that objective aspects are more likely to behard. Thus premises, equipment, and tangibles involved in thetransaction are hard, whereas staff att itude is soft. It is widely recognizedthat soft issues are more difficult to deal with The soft side is harder(Vandermerwe, 1993) thus a measure of the relative importance of softissues will give an indication of the likely difficulty of managing andimproving service quality.

An element which has been considered and rejected is the tangible/intangibledimension as this is well covered by subjective/objective and soft/hard.

Seeking to apply these three dimensions to the attributes identified asimportant begs the question of measurement, another property of a tr uedimension. At this stage no more than a three-position scale has been attemptedwith each attribute being assigned to either the mid point, or one extreme, ofeach dimension, the values being assigned subjectively by the authors. Therat ionale behind the assignment is in most cases self-evident (i.e. privacy ofdiscussions is a process issue, but criteria for judging privacy are reasonablyobjective and the issue is hard in that privacy depends on fixed facilities; waystaff treat customers is again process, and while some forms of staff behaviourmight be universally considered unacceptable, the influence of the customersperceptions and at titudes makes this highly subjective. Concerned withinterpersonal interaction, it is self-evidently soft). Where a mixed


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subjective/objective value has been assigned this is because the resolutiondepends heavily on customer perception, but there are reasonably wellestablished norms, i.e. certain types of behaviour would generally be recognizedas polite. Given the subjective nature of this ass ignment, it was consideredinappropriate to attempt a more precise measurement than the 50:50 pointchosen. The results are shown in Table V.

Weighting these by the relative weights given to the attributes by customersyields the breakdown shown in Table VI. This effectively plots the location ofthis particular service within a three-dimensional matrix. This yields the

Process/ Subjective/ Soft/ Attribute outcome objective hard

Privacy of discussions P O H

Politeness of counter staff P S/O S

Willingness to help P S/O S

Way staff treat customers P S S

Cash in machines O O H

Speed and efficiency of transactions P/O S/O S/H

Staff listen P S S

Tills open at busy times P O H

Staff available to help P S/O H

Informing of account changes P/O O H

Way mistakes are handled P/O S S

Clarity of staff answers P/O S S

Charges clear and explained O S/O S/H

Attitude of bank when lending P S S

Person for questions P O H

Availability of enquiries desk P O H

Return/replace cash card O O H

Queue at branch P S/O H

Opening hours P O H

Appearance of branch P S/O H

Taking time to match product/need P S/O S/H

Staffs product knowledge P O S/H

Overdraft charges O O HEase of getting to branch P S/O H

Queues at cash machines P S/O H

Ease of understanding letters P S/O S/H

Informed of progress of applications P/O S/O H

Relevant direct mail O S/O H

Telephones answered quickly P O H

Getting right person on phone P O S/H

Speed of mortgage confirmation P S/O HTable V.Service Attributes andDimension


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interesting result that although process issues dominate perception of servicequality, as has been widely reported, this does not carry with it the frequently-made assumption that quality issues are therefore soft and difficult to define. Infact issues which can be classed as objective seem marginally more importantthan those classed as subjective, while hard issues are almost as important assoft issues in this case.

Staff PerceptionsThe structured discussions and interviews were designed to establish the staffsperception of customer expectations and their perception of how well thesewere met. Discussion leaders reported a st rong sense of part icipat ion and

consensus in a ll groups. Analysis was carr ied out by classifying relevantquotations. Staff perception of customer expectations is shown in Table VII.

While it is not possible to rank these, responsiveness and assurance amongthe SERVQUAL dimensions are clearly more prominent than t he othersshowing a very close ag reement between staff perception and customerexpectation.

When these are linked to the three dimensions of process/outcome,subjective/objective and soft/hard the results shown in Table VIII are obtained.

Again, although weighting is not possible, a very close agreement withcustomer expectations is apparent.

Staff perceptions of possible causes of service failure were classified usingthe Gap model shown in Figure 2. It was found that all comments could be

unambiguously assigned to part icular gaps and the outcome is shown in TableIX.

% %

Process 83 Outcome 17

Subjective 47 Objective 53

Soft 53 Hard 47

Table VI.Location of Servicewithin Dimensions

Expectation SERVQUAL dimension

Not to have to wait to be served Responsiveness

Polite friendly staff Assurance

Cash in ATMs Reliability/tangible

Not to be dealt with by staff distracted by other business Responsiveness/assurance

Not to be dealt with by staff who lack confidence/knowledge Assurance

Not to be kept waiting for an appointment Reliability/responsiveness

Privacy Assurance/tangible

Welcoming environment Assurance/empathyTable VII.

Staff Perception ofCustomer Expectations


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The low incidence of gap 1 issues is not surprising given the very closeag reement between customer expectat ions and the banks perceptions ofcustomer expectations (while it might be argued that gap 1 is really a seniormanagement concern, a much wider awareness would be expected in a norganization seeking to promote quality). Gap 5 identifies the importance ofmanagement acquiring accurate information about customer expectations andusing this information as a first step in developing service quality. As describedabove, extensive research had been undertaken by the bank and it is apparentthat a clear understanding of customer expectations was emerging.

Gap 2 arose largely from the perception that there was no published set ofservice standards : we dont have any s et down, we just try and offer thecustomer the best serv ice we can. The fact that it was not p ar ticularlydominant may be explained by the profusion of local standards that werediscovered and the very clear perception of customer expectations expressed bystaff. This may suggest that a high level of awareness of customer needs amongservice personnel could reduce the need for formal s tandards, but in theauthors opinion a lack of standard service guidelines across the branch

Process/ Subjective/ Soft/ Expectation outcome objective hard

Not to have to wait to be served P S/O H

Polite friendly staff P S/O S

Cash in ATMs O O H

Not to be dealt with by staff distracted P O S/Hby other business

Not to be dealt with by staff who lack P S/O Sconfidence/knowledge

Not to be kept waiting for an appointment P/O S/O H

Privacy P O H

Welcoming environment P S/O H

Table VIII.Staff Perception ofCustomer Expectations

Number Percentage

Gap 1 Customer expectation/management perception 10 7.6

Gap 2 Management perception/quality specification 34 26.0

Gap 3 Quality specification/service delivery 53 40.5

Gap 4 Service delivery/external communications 24 18.3

Gap 5 Expected service/perceived service 10 7.6Table IX.Classification of StaffPerceptions


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network does have strategic implications regarding the closing of gap 2. Whileinformal s tandards are encouraging, such initiatives need to be replaced byintegrated standards consistent with the organizations s trategic objectives,particularly in a multi-location organization where inconsistency can give riseto problems. That causes problems when our customers go elsewhere and yousay it will be all right but the other branch dont do it. The preponderance ofindications of gap 3 problems reinforces the susceptibility of this gap to servicefailure and occurs when there is a difference between service specification anddelivery. Inconsistencies of service delivery are influenced by inexperience, theperceived lack of importance placed on the role of front-line personnel and theneed to develop further awareness of the internal customer-supplier chain.While staff clearly understood its importance, the potential vulnerability ofservice delivery could be reduced by building teamwork and shared values inorder to enable the component parts of the customer-supplier chain to becomemore congr uent. Customer contact is not seen as valued: everyone sees it(counter service) as like a lower down job and conflict between front andback office staff was frequently felt: staff need educating as to what theservice centres (back office) do and service centres need educating as to whatbranches do.

Gap 4 was pr imarily concerned with the organizations failure to com-municate effectively with customers: our adverts dont tell people anythingabout what we do, do they?. This is a criticism which could be applied toalmost all corporate advertising. As Zeithaml et al. (1990) mention, byneglecting t o inform customers of those areas where the organization isundertaking to enhance service quality, it may be forgoing opportunities toinfluence customer service perceptions and thus reduce gap 5. This failureapplied both to services and to processes: they [the customers] dont want anyproblems [but] they dont realize the bank procedures we have to go through.Consequently service perception could be enhanced by educating customersand thus influencing expectations.

DiscussionThe authors acquired this work part way through, after the original customersurvey had been carried out, and therefore had no influence on the structure ofthis phase. The original intention had been to analyse the data using the

SERVQUAL classification and link this to staff perceptions using the Gapmodel. The failure of the SERVQUAL model to provide any particularly usefulinsights into how service might be improved led to the at tempt to develop analternative model of greater utility. It may well be that had the original surveybeen conceived within the SERVQUAL model this model might have provedmore useful, but this does not affect the validity of the analysis produced, basedas it was on clearly articulated customer concerns. The quality of the data mustbe considered good since the data collection was designed and administered byprofessionals in the field of opinion research.


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The implications of the findings for retail banking are clear. Customersoverwhelmingly consider the process elements of the service when evaluatingquality. They are seeking a responsive service with a high level of assurance.One that gives an impression of competence and credibility, one that can betrusted. What is of interest is that the staff, at least in this bank, demonstrateda clear and accurate perception of customer expectations and recognized theneed to meet these.

The staffs perception of the reasons for service quality failure correspondedwell with this situation, in that relatively little importance was attached to gap1 (perception of customer requirements). It is perhaps surprising that gap 2(service standards) was not considered more important given the apparent

absence of established service standards, but if, as was the case here, staff feelthat they have a clear perception of customer expectations, it is probable thatthe need for standards is seen as less important. However the need forconsistency, par ticularly in a multi-location organ ization, would seem tooverrule an ad hocapproach. The most significant cause of service qualityfailure was the perceived failure of the organization to value the primarycustomer contact role sufficiently (gap 3). Whether by accident or design, aculture appears to have developed in which this role is seen as the lowest statusand lowest paid in the organization. Gap 4 (external communications) reflectsthe staffs perception that customers are not well informed about services orprocedures. This was both positive (advertising does not make clear the servicewhich is available) and negative (customers are unsure of banking procedures,

tariffs etc.) and suggests scope for customer education as a simple means ofimproving quality by narrowing this gap.

Of the models considered, the gap model of Parasuraman et al. proved to fitthe data perfectly and provided an excellent framework for analysis. It provideda clear and unambiguous basis for the classification of staff perceptions of thecauses of service failure and indicated clearly the means and responsibilities forreducing or eliminating those causes. In the opinion of the authors, this model isgeneral enough to be very widely applicable, and sp ecific enough to giveactionable diagnostic information.

The SERVQUAL dimensions were less convincing. While superficiallyattractive they did not readily align with customer statements of expectationsand in many cases customer statements involved at least two of the SERVQUALdimensions. This interdependence is, of course, widely recognized, but as aresult the use of the ter m dimension is invalid, and the lack of clarity itintroduces does substantially reduce the value of the model. There arepar ticular problems with reliability which appears to qualify the other fourattributes as well as being an independent issue, i.e. the requirement for cash tobe available in ATMs at all times is quite clearly a reliability issue, while thepoliteness of staff is an assurance issue, but how reliably should staff be polite?Perhaps reliability is a prerequisite for quality service in all cases and thereforein a different category to the other dimensions which may or may not besignificant in a particular service.


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As a result of these shortcomings the authors propose a model based on thethree dimensions of process/outcome, subjective/objective, and soft/hard. Theseare, at least in principle, measurable, and are in the authors opinion probablyorthogonal. This model has the advantage of allowing service attributes to beallocated a value within each dimension, and provides a classification whichavoids overlap and ambiguity. A more important question is: does it assist inunderstanding service quality? In the authors opinion, its application to thecustomer data presented in this case demonstrates a potential utility which atleast warrant s further investigation. The model clearly demonstrated thatprocess is far more important than outcome in determining customerperceptions of service quality, but it also demonstrated that, in the case of thisparticular service, subjective and objective, and hard and soft, issues wereabout equally balanced. This s uggests that although interpersonal andsubjective issues are important, and a proper balance of attention in design andmonitoring is necessary, addressing the hard and objective issues could morereadily provide, and monitor, a high quality service in a fairly prescriptive andreproducible manner. In other words, objective and hard aspects of this serviceare as important as the subjective and soft aspects but can be much morereadily identified and specified. It is suggested that the use of these threedimensions to analyse customer perceptions/requirements can direct the servicedesigners at tention to those areas which are important for a good qualityservice and identify their relative importance and ease of atta inment. It isfurther suggested that these three dimensions may well form the basis for auseful and rigorous classification of services.

Further work is obviously required on the model proposed. This oneexample, while significant in size and scope, was not set up to test such a model,and the results are at best indicative of potential. Future work should includeinvestigat ion of other service activities, but more importantly, should includedevelopment of a methodology which can assign values to the three dimensionsproposed during the data collection phase. This would enable both thetheoretical basis behind the model (are the dimensions really orthogonal?) andits generality to be tested.

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Institutions, Dow Jones-Irwin, Homewood, IL.Consumers Association (1992), Current Accounts Which?, November, pp. 6-13.

de Moubray, G. (1989), Quality of Service The Key to Competitive Advantage, Journal ofChartered Building Societies Institute, Vol. 43 No. 194, pp. 19-22.

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Garvin, D.A. (1983), Quality on the Line, Harvard Business Review, September-October, p. 68.

Goodstadt, P. and Marti, R. (1990), Quality Service at National Westminster Bank The

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Grnroos, C. (1988), Service Quality: The Six Criteria of Good Perceived Service Quality, Reviewof Business, Vol. 9 No. 3, pp. 10-13.

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Appendix 1

Part B Strength of Feeling RatingS2. I now want to show you the list of statements again.

Thinking about your dealings with TSB, I would like you to read each statement and write in

a score of between one and ten to describe how strongly you would feel about each aspect of bank

service if it were to change for the better or worse.

You will see from the questionnaire that a score of ten would mean you feel very strongly about

this aspect of service if it were to change. A score of one indicates you do not feel at all strongly

about the aspect of service.

Please write in the box on the right of each statement the number that relates to how strongly

you feel about each statement if the quality of service from TSB changed.


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The scores in between show varying degrees of st rength of feeling. You may choose any

number from 1-10, but please give 10 only to those you feel really st rongly about.

HAND QUESTIONNAIRE TO RESPONDENT

1 2 3 4 5 6 7 8 9 10I feel not at all strongly about I feel very strongly about

WRITE IN(1-10)HERE

1. Willingness to be helpful ns (62)2. Speed of dealing with transactions at counters effectively3. Number of people usually in front of me in a queue in branch ns (64)4. Tills available at busy times ns (65)5. The way staff treat customers ns (66)6. Staff listening to me ns (67)7. Availability of appropriate person in branch with time to dealwith m y questions ns (68)

8. Cash in cash machines ns (69)9. Length of queues at cash machines ns (70)

10. Opening hours ns (71)11. Ease of getting to branches ns (72)12. Staffs product knowledge ns (73)13. Taking time to find the right service/account for my needs ns (74)14. Privacy to discuss personal financial matters ns (75)15. Attitude of bank when lending me money ns (76)16. Overdraft charges ns (07)17. Getting the right person on the phone ns (08)18. The way mistakes are handled ns (09)19. Bank charges clearly defined and explained ns (10)20. Return or replacement of cash machine card ns (11)21. Speed of written confirmation of mortgage offer ns (12)22. Being kept informed on progress of any application for a service ns (13)23. General appearance of branch ns (14)24. Receipt of informative leaflets and brochures ns (15)25. Keeping you up to date on your accounts ns (16)26. Politeness of counter staff ns (17)27. Ease of understanding letters ns (18)28. Availability of enquiries desk ns (19)29. Staff available to help ns (20)30. Ability of staff to answer queries in plain English ns (21)31. Telephones answered quickly ns (22) Figure A1.Strength of Feeling

Rating Sheet


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Appendix 2Discussion Guide: Staff Research

(1) What is the current understanding of customer service levels

q how is good/bad/indifferent service gauged

by customer

by staff

(discuss any differences which emerge)

q what standards of customer service have been laid down by TSB and why (discussin detail)

to what extent do staff feel they have been provided with official guidelines on

TSBs expectations of them in this area how effectively have these guidelines been communicated to staff

are the guidelines which have been provided adequate or do they requirefurther clarification

on what basis do staff feel the guidelines have been determined

to what extent are they based on customer standards/expectations

are customers aware that TSB rates customer service very highly and has

specific expectations of staff how would customers be aware of this

q how satisfactory do staff consider the general level of customer service to be withinTSB

(2) How important is service perceived to be from staff and customer positions

q what priority do staff feel TSB places on customer service/meeting customers

expectations

q what effort does TSB make to find out what customers want

q what priority do st aff feel they place on customer service relative to their other

responsibilities as employees of TSB, what aspects do they feel are most important

q what effort do they make to find out what customers want

q what p riority do customers place on customer service, what a spects are most

important to them

q is it a reasonable expectation that staff and customers should place similar emphasis

on customer service or are the perspectives of the two sides bound to differ

(3) Are there any specific areas of concern for staff about gaps which exist betweencustomers expectations of service and the actual service they receive

q list and discuss all areas of which staff are awareq why do these gaps exist

q are customers expectat ions realistic if not, how can TSB staff overcome customer

disappointment and att empt to persuade them to change their expectation

q are the Banks expectations of staff realistic in context of Service Quality

are standards of performance clear and attainable

do staff feel empowered to undertake their role

q how is TSBs record in providing customer service felt to compare with tha t of

competitors (if anything is known about this)


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who, if anyone, is achieving a better level of customer service and how are theymanaging to achieve this

is it felt that other measures of success suffer to any extent (or do they improve)if a high priority is placed on customer service can customer service, in fact,be pursued too energetically with negative consequences

to what extent does the Bank respond to changes in customers expectations

q what specific customer service issues, if any, do staff consider should have been moreeffectively addressed by TSB and what are perceived to be the problems hinderingdelivery here

(4) Are there any problem areas known to have been overlooked/not addressed throughTQM/Service Quality

q what are theseq how important is it that these problem areas should be addressed immediately and

why is this felt to be the case

(5) To what extent has Service Quality been implemented for internal customers

q how successful has this proved

(6) How do staff feel the Bank treats them

q do staff feel they share common objectives with the Bank in terms of Service Quality(and any other areas)

q is there a culture of teamwork achievement and shared values amongst peers/a senseof staff and management working together

q to what extent do staff feel that Senior Management are fully committed to ServiceQuality

how clearly have they demonstrated this

is this perceived to be a long-term commitment

q how many opportunities do staff have to discuss views with Senior Management

does Senior Management encourage this

are staff views on Service Quality considered

(7) Do staff have any solutions which they feel would help them deliver service to a standardwhich is closer to customer requirements

q what changes would they propose

q how would these be effected

q how would staff feel about an appraisal/reward scheme in the context of ServiceQuality (would this be congruent).

quality in retail banking

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