The objective of this chapter is to convey the importance of services offered online by the HSBC bank along with their relevant quality. The chapter involves discussion of the relevant issue, interpreting the intention & the research problem along with identifying the limitations or barriers of the current study. 1. 1 Background Globalization and deregulations have contributed to increase the competition in the current market because it allows the companies to cross borders easily and enable them to compete internationally.
As a result of this high competition companies have to increase their productivity and reduce their cost continuously. Therefore organizations could use information technology as a method to achieve their above expectations. (Fredriksson, 2003). The current technological advancements have assisted banks in modifying the services they offer online. Present consumers have increased the level of usage of suitable & self-service options. However the existence & the application of internet has also become a reason for major changes in day today activities of individuals namely banking & online shopping.
Additionally the level of usage of internet has also gone up within the recent past (Fredriksson, 2003). As per the records of the UK Central Bureau in UK, within the very first quarter in the year 2005, it is noted that 51% of the total population within the age range of 16 – 74 has applied online banking services. Which includes online banking services are appearing to be an attractive option to substitute the methods of increasing number of customers such as visiting service outlets or phoning call centers.
There are certain factors for consumers to prefer online services such as less human contact and saving of limited time, easiness (Nupur, J. 2010) and greater controllability of the service process (Bateson, 2000; Dabholkar, 1996). When looking at the online services, the customers could easily assess & match the favorable outcomes of the online services along with their rivalry (Santos, 2003). However the switching costs of the internet are very low and because of that it is essential for the service providers to retain their customers in the Internet space (Reichheld, 2000).
In order to retain their e-customers the service providers need to have a sound knowledge regarding how customers feel and assess the quality of the electronically offered services. Experienced and successful business organizations who have engaged in providing e-services have realized that website presence and low price are not sufficient to determine the survival in the business. They have identified that the electronic service quality has also become an important factor in determining the success or failure in the business (Yang, 2001; Zeithaml, 2002).
Even though there was ample literature on the electric service quality (Herington, C. & Weaven, S. 2008. ) Only several thesis studies have been conducted to assess the service quality offered through internet (Cox & Dale, 2001). When looking at the banking sector, during the second half of 1990s, the operating process of the banking industry has experienced a key transition due the arrival of the Internet (Gunasekaran& Love, 1999). In today’s world the banks make huge investments in the Internet infrastructure.
As such consumer satisfaction & retention of consumers has become an important factor so as to fulfil the effectiveness in online banking. Hence it reflects the importance of developing a long term relationship with consumers since it assist in generating favorable outcomes. (Bauer, Hammerschmidt& Falk, 2005). In addition since the present customers have high demands, It has persuaded financial service oriented entities to pay more attention towards consumers.
Banks need to focus on acquiring new customers as well as retaining existing customers in order In order to convert E banking into a profitable trade (Reichheld&Schefter, 2000). As per Mols (2000) the commencement of E banking services might alter the way banks create & maintain their relationship with consumers. As such consumer expectations & attitude of consumers will be increased along with the use of the internet. Therefore these changes would arise the importance of the service quality in future. Accordingly gathering a good knowledge regarding the service quality issues within the new delivery channel becomes very important.
Furthermore delivering high quality services can be identified as a method that companies used to enhance their customer relationships. According to Gronroos (2000) customer satisfaction can be identified as the only way to gain loyal customers to the company whereas to do so the company needs to deliver high quality services as a prior condition to achieve the customer satisfaction. Due to the fact that the financial organizations particularly banks provide highly undifferentiated products and services, the service quality has become the main tool for competing in this market.
(Shang, T. & Liu, C. 2010) In general, high-quality services are accepted as a crucial factor that helps to provide banks in a competitive position in the market thus allowing the organizations to achieve higher profits and higher customer retention (Shang, T. & Liu, C. 2010) As per the facts mentioned above it is noted that an advanced level of consumer service is required to survive in the banking industry which involves a high level of rivalry (Wang, Lo& Hui, 2003).
Hence it implies that an entity needs to have a sound understanding with regard to the factors that consumers apply to assess the quality of service so as to monitor & upgrade the performance service along with widening the entire quality of service. A considerable number of studies have been conducted in order to elaborate the main service quality aspects along with consumer requirements within the traditional banking trade that includes individual connections among consumers & bank staff members. Keyoor Purani, (2008)
Nevertheless insufficient researches have been carried out in order to identify key service quality attributes and customer requirements in Internet banking which involves impersonal interaction between the customers and the bank Employees. This could imply the fact that there is not an accurate measurement instrument available to measure online service quality (Cox & Dale, 2001). Thus, it is very essential for online banking providers to have a sound understanding in relation to their own consumer attitudes of the online banking service quality & the factors that are
identified by consumers as essential in a sound financial service offer via internet. Based on their expectations and requirements, customers would determine the extent of the level satisfaction of the provided E-banking services. Therefore E-banking service providers need to identify those expectations and requirements in order to improve their service and gain competitive advantage in the market. 1. 2 Research site The selected base company for the study is HSBC bank PLC and it has been selected with the intention of examining the quality of services in relation to consumer satisfaction.
HSBC is considered as one of the biggest banks in Britain which hold more deposits compared to loans (loan: deposit ratio of 90%). Hence HSBC has been identified as the bank with low risk which is capable of performing its own functions compared with other available banks. At the same time HSBC was able to maintain company’s share price via credit crunch which has distinguished the bank from other competing banks in the current banking trade. 1. 3 Problem Discussion There are several factors available which are considered by the customers in determining the service quality of the provided E-banking services.
It could be response and efficiency of the service providers, website design and ease of use or it could be security and privacy issues. In fact customers have different anticipations and requirements. They consider different aspects of the service delivery process as important in order for them to be satisfied with the service. However this study is interested in finding out some common requirements among the customers, overall valid anticipations of the users of online banking services.
The process which delivers services through online is quite different from that of traditional banking services since it involves low human touch among both consumers & banking staff. As such the factors that use in assessing the quality of services offered online will be different. As per Li, Tan and Xie (2002), since the differences in online & traditional services, which creates difficulty in testing the quality of online services. Even if there are considerable number of studies has been conducted in relation to assessing traditional banking services (Weaven, S.
2008) studies carried out in relation to measures of quality of services offered online is basic (Santos, 2003). As per the Fredriksson (2003), the application of online banking continuously upgrades during the years Therefore it has become very important to understand how to determine the essential qualities of a high-quality service delivery over the Internet in order to stay competitive on the market. When banks have the required knowledge about the factors that assess the quality of online services, they offer and as well as the entire satisfaction on their consumer portfolio against each & every criterion.
This wills also help them to make required alterations & to take necessary actions to upgrade the entire service quality. 1. 4 The purpose of this study In order to have an understanding of the quality of service offered online by the HSBC bank & as well as to establish a model that includes several service quality criteria which could be adopted in measuring the quality of those services. 1. 5 Research Questions In order to fulfil the purpose stated above, the research questions of this study are defined as follows; Does the HSBC bank able to satisfy their online customers by proving quality service?
1. 6 Research Objective 1. To identify online service quality dimensions that Banks can use to evaluate online banking services 2. To recognize what are the online service quality aspects that lead to customer satisfaction 3. To recognize online service quality dimensions which lead to customer dissatisfaction 1. 7 whole Research Approaches Overall approaches of the research can be clarified as follows Figure 1. 1 : whole Research Approaches 1. 8 Structure of the Research There are five chapters in this study and it can be described as follows and drawn Chapter 01: Introduction
The chapter one describes the selected thesis topic and the relevant reasons for selecting such topic along with thesis objectives, the purpose of the research, background details of the online service quality & consumer satisfaction so as to give a brief understanding to the readers regarding the selected topic. Chapter 02: Literature Review The theoretical framework of the selected topic is discussed under the second chapter so as to establish a model to assess the quality of online banking services offered by the bank.
The very first section involves describing the significance of the service quality & consumer satisfaction through providing a summary of the significance of this thesis study to the readers. Apart from that second section involves a description of the theoretical framework on SQ (E S- QUAL & E recs – QUAL) . Chapter 3: Research Methodology The techniques adopted in conducting the thesis study were described in chapter three. This involves certain theoretical aspects of the thesis strategy namely case study research and survey research. At the same time both Qualitative Approaches and Quantitative Approaches have been discussed.
Additionally this chapter involves describing the techniques used in collecting required data namely interviews, Documentation review, Questionnaires, and, mathematical model and sample selection methods for the research. Chapter 04: Data Analyze and Presentation Fourth chapter describes the findings of data and discussions. This chapter also covers the thorough analysis which is carried out systematically based on the collected primary and secondary data. All measurable scales are developed based on the service quality and customer satisfaction. Chapter 5: Summary and Conclusion
The chapter involves the conclusion derived from the observations & analysis section. Additionally all the recommendations were also included along with certain guidelines for future research studies while describing the reliability factor. Figure 1. 2: Structure of the Research Source: Developed By the Researcher, 2012 CHAPTER 02 Literature Review The academic and abstract structure of the study which involves comprehension of the services, standard of services, e-services, standards of e-service, e-banking services andonlinee systems, standard of online systems and aspects of customer contentment is described in the second chapter.
The researchers also present two prototypes to the readers which are the SERVQUAL and E-SQ (E-S-QUAL and E-RecS-QUAL) models, which has been the base on which the research work has been structured. 2. 1 Introduction This section presents the academic methodology and the conceptual structure employed in the study of the area of online standard of service in relation to customer contentment. The review of the literature provides supporting evidence in the attainment of the key proposals and examined in the earlier chapter. The sources for the literature review are secondary information.
The literature review is structured in general to answer the research problem. A systematic literature review is valuable to the research process as it provides a coherent and sound flow of concepts with recent and appropriate references which assists and facilitates the development of the other sections of the report. This literature review has been carried out by referencing ninety two research papers, books, white paper, journal articles, which are pertinent to standards of online service and customer contentment. Figure 2. 1:Data sources selection for the Literature Review
2. 2 Traditional Services Quality Zeithaml et Al. , (2000); have reported that several scholars have explored the area of standards of service and identified its value for making it distinct and unique in order to gain an edge over the competition over the last twenty years. According to Zeithamlet. al. , (2000, p. 5), the view of academics in the early years was that the standard of service is determined from the expectations of the consumers on what standard of service a firm should provide when matched with the standard of service actually provided by the firm.
Gummesson (1979) was the foremost researcher to propose that the idea of the standard of the service was directly connected to reliance and perceptions. Gronroos (2005) subsequently advanced the concept of “Total Perceived Service Quality” which describes the manner in which the variation between the anticipated service and the service actually obtained is viewed by the consumer. Figure 2. 2:Total Perceived Quality. Source: Gronroos C. (2000), The standard of service was acknowledged as a gauge of the congruence between the services anticipated by the consumer compared with the actual service provided.
, Zeithaml (2000, p. 15) explained standard of service as “the assessment in the aggregate of a service by contrasting that firm’s delivery of service with the consumer’s customary anticipation of the manner in which companies in that industry should deliver service. ”. Attempts have been made by various scholars to describe the features of the standards of service. According to Santos (2003), there are two key approaches to describe the aspects of the standards of service.
The first approach looks at the standard of service from the quality of its role i. e. the way or process whereby the service is delivered, while the second looks at the technical aspect i. e. on the results of the service delivered. Gronroos (2000) indicates that the second approach attempts to describe the standard of service with the aid of certain attributes for a particular service. Ghosh (2004) portrays the standard of service in five to ten aspects (receptiveness, dependability, guarantee, perceptible and understanding).
These five features of describing the standards of service have been incorporated in the SERVQUAL mechanism devised by Parasuraman et Al (2005) This model has been structured to gauge the standard of service centered on the variance of customers’ anticipation and outlook on the process and the outcome for a specific service (termed the disinformation technique). This instrument is a most recognized and commonly employed model in the area of Service Marketing and Management 2. 2. 1 Frequency of Dimension on Internet Banking Quality Source : International Journal of Bank Marketing- 2008
2. 3 Theoretical models to measure customers perceive the quality of a service 2. 3. 1 SERVQUAL Gronroos (2000) indicates that SERVQUAL is a model for determining the impression of consumers on the standard of a service. He adds that around the middle of the 1980’s, Berry and his associates Parasuraman and Zeithaml initiated research into the determinants of standards of service and the way it is assessed by the consumers. It was through this study that the SERVQUAL technique for the gauging of the standard of service was constructed.
At the outset, there were ten variables incorporated in the model, which was subsequently reduced to five, namely perceptibility, dependability, receptiveness, guarantee and understanding. (Dina& Allard. 2008) The attributes which comprised the original ten variations of the SERVQUAL instrument are given in the Table 2. 1 below. Table 2. 1:Variables of the standard of service (SERVQUAL instrument) Source : Dina& Allard. (2008) Table 2. 2: Final five service quality dimensions Source : Dina& Allard. (2008)
The model is constructed on the concept of the disconfirmation prototype where the service anticipated by the buyer is contrasted against the buyer’s actual experience of the service. Generally, the five features of the SERVQUAL tool are expressed through the employment of twenty two characteristics, and the participants involved in the exercise have to indicate on a seven point “Likert Scale” which varies from “Strongly disagree” to “Strongly agree” their expectation of the service and how they viewed the service” (Dina& Allard.
2008) The rationale behind the SERVQUAL tool is built on the idea of the “Region or Zone of Tolerance” advocated by Berry and his collaborators. This idea stems from the presumption that the anticipation of consumers on a given service is not built on a particular level of service. (Godwin J, 2008) Instead, the actual experience could be within certain parameters for it to be treated as acceptable.
The parameters of the consumers Zone of Tolerance are shaped by a Preferred level- the level which the consumers deem the service ought to be and an Adequate level – the tolerable service level that is good enough for the consumer. According to Gronroos (2000), the delivery of service within the parameters of the “Zone of Tolerance” is regarded as good service. Although this SERVQUAL technique has been applied extensively in the field of research, there are conflicts in its usage in varied service businesses.
It was found in certain research work that the five variables of the technique have not shown consistency in its results in the services of dissimilar businesses. Hence, Gronroos (2000) advices that the SERVQUAL instrument should be applied judiciously, with the group of variable and contributing factors selected and tailored to the particular situation. 2. 4 Standard of e-services. According to Santos (2003), standard of e-service is an appraisal and evaluation of the e-service provided in the cyber market in totality.
Yang (2001): Zeihaml (2002) have observed that firms who have established themselves and been effective in delivering e-services nave now realized that apart from the factors of website appearance and low costs, the major factor determining the success of the e-service is the standard of the e-service. Santos emphasizes that the main cause for the higher significance of the quality of the e-service is due to consumers having the facility over the internet by evaluating various e-service products than through the conventional avenues.
Hence, Santos ( 2003) declares that consumers of services on the web demand levels of service which are either on par or even better than in the conventional service industry. The need and value placed on the offering of high standard of e-services has been released by the firms in the market at large. Nevertheless, the complex nature of the e-service quality, its determinants and its measurements does not lend itself to easy analysis. Cowling & Wayne (2007), have proposed models and techniques for the gauging of the standard of e-services.
However, Cox & Dale (2001) have indicated that there is a need for more research work to be carried on the services offered through the web as the studies done are insufficient. More recently, two methodologies have been recognized in the study of e-services. Gronoos (2000); Zeihaml et al (2000) have proposed the research study of e-service quality to be on the lines of the available theories of standards of service , while the second proposal of Szymansji & Hise (2000) favours the use of experiential research and the evolving of fresh classes of e-services.
Van Riel and Jurriens (2001) have found that the SERVQUAL tool has been tested by some scholars on varied e-services such as a web based service, retail service on the net and electronic banking. Nevertheless, there has been uncertainty among researchers as to whether the SERVQUAL tool could be employed for the gauging of the standards of online services. Bienstock (2007) advocates that research on whether the meaning and the comparative value of the five standards of service vary when their network and interface with technology than with the service workforce is a requirement.
Since the SERVQUAL instrument variables and determinants were structured for conventional businesses where there is interaction direct between the consumer and the workforce, several academics argue that the variables in the model and their roles would need to be enhanced and perfected before they are exercised to give correct outcomes in the online service industry. (Godwin J, 2008) To ensure the encapsulation of the entire structure of the quality of e-service, Zeithaml proposes that further dimensions be added.
In the study carried out by Yang (2001), seven variables on the standards of service which link with the variables on the SERVQUAL scale has been proposed. The variables are dependability, receptiveness, accessibility, facilitative, perceptiveness, trustworthiness and security. While there is widespread use of the existing techniques for measurement of standards of e-service, certain scholars have put forward fresh variables and determinants which are exclusively for online services. (Godwin J, 2008)
As an illustration, in a latest research carried out by Kaynama and Black (2000), seven variables of quality were adopted in the standard of online services of twenty three travel firms. These were drawn from the variables in the SERVQUAL model namely receptiveness, subject and intention (stemming from reliability), approachability, routing, pattern and arrangement (derived from perceptible), setting (stemming from the guarantee) and tailored and differentiated (derived from empathy) (Hyde, 2009). 2. 4. 1 Assessing online Service quality using E-SQ (E-S-QUAL and E-RecS-QUAL) Model
The model that has been constructed exclusively for gauging online services (e-services) and which is akin to the SERVQUAL scale is the E-SQ model. Although the model was first brought out in 2000, it was checked and improved in 2002 by Parasuraman, Zeithaml and Malhotra through an investigative study on the impressions of standards of service of consumers in relation to shopping online. The model was developed through three phases, the first of which involved employment of the qualitative technique with six focus groups, each of which consisted of six to seven members.
The variables identified for the gauging of the standards of e-service at this phase were eleven in number namely dependability, receptiveness, approachability, adaptability, ease of steering, adeptness, guarantee/trust, security/confidentiality, knowledge of price, site appeal and individualized and tailored to meet the demands. (Hyde, 2009). Description of the eleven variables determining the standard of e-service is set out in the Table 2. 3 given below:
The instrument illustrated above is similar in most features with the SERVQUAL model developed by Parasuraman, Berry & Zeithaml (2003). However, it also incorporates additional variables which are exclusive to the online service industry. The variables of quality namely dependability, receptiveness, approachability, guarantee and tailoring are the main quality determinants of the SERVQUAL model for conventional businesses in the service arena. These five variables encompass similar outlook characteristics as seen in the conventional quality of service assessments.
Nonetheless, according to Zeithaml et al (2000) the approachability and dependability variables have features which incorporate elements to tackle matters which are unique to the online service arena. Parasuraman et al (2005) noticed while conducting the study that there was information that was lost or not available in some areas. Their investigation led them to the finding that the missing information was connected to the area of service. Thus, they segregated the items and constructed a distinct e-service recovery scale (-RecS-QUAL).
The remaining elements made up the e-core service quality scale (E-S-QUAL). The E-S-QUAL scale comprised of four variables having twenty two characteristics and the E-RecS-QUAL comprised of three variables having eleven characteristics. Consequent to the modification and enhancement of the scales, they were subject to experiential tests through questionnaires issued to a sample of individuals who browse the net and most often visit the web sites in the USA which have the most hits namely amazon. com and walmart. com (Parasuraman, 2005). Figure 2. 4:E-S-QUAL Dimensions and Their Description
Source : Parasuraman, (2005). Table 2. 2: E-RecS-QUAL dimensions and their description. Source : Parasuraman, (2005). 2. 4. 2 E-service quality The quality of the E service can be defined by encompassing every aspect of consumers’ interactions through a web site. The extent to which a Web site facilitates efficient and effective shopping, purchasing and delivery (Parasuraman et al. 2005). According to Santos (2003), the quality of e-service can be considered as a sort of comprehensive consumer assessment as well as a judgement related to e-service delivery at a virtual marketplace.
The business world recognizes the significance of delivering services which are existing online. As pointed out by Santos (2003), Consumers can easily compare and evaluate numerous services via internet rather than conventional channels and it is caused to increase the importance of e-service. Kenova and Jonathan (2006) recognize that it’s difficult to define the quality of online services even there is an increased awareness of it and major problem would be how to measure it actually. When developing a valid scale, the quality of e-service would be an important fact.
As per Mekovec et al. , (2007), it has been created a special concentration to measure the quality of e service since the significant growth in global, regional markets as well as to investigate the magnitudes of e- service. Under this situation, some important researches have been carried out by focussing the online service quality and its evaluations as well as measures. Furthermore, some scales have been developed by former academic researchers and scholars in order to assess the E service quality and some of them are listed below,