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MASTER THESIS “IMPROVING CUSTOMER SATISFACTION OF RETAIL BANKING SERVICES AT GP.BANK” 1 TABLE OF CONTENT 2 ABBREVIATION GP.Bank GP.Bank HR Commercial banks Global Petro Commercial Joint Stock Bank Human Resource LIST OF TABLES LIST OF FIGURES Figure 2.1: Time duration customers have used GP.Bank services………… 38 Figure 2.2: The number of banks customers have transactions with………….39 Figure 2.5: Final research model……………………………………………… 47 4 FOREWORD In recent years, Vietnam banking industry has seen robust growth and development in banking services of commercial banks (CMs) Developing retail banking services has played the trend for CMs to enhance their presence, increase market share and improve their competitiveness Many banks put a focus on expanding their retail banking by launching new branches and transaction offices to better meet increasing demand of customers International banks i.e Standard Chartered, HSBC, ANZ, Citibank etc are also setting new directions, which involves putting their presence in highly potential market of retail banking in Vietnam In such a highly competitive market of retail banking, customers are key factors determining the existence and development of banks If a bank manages to have excellent customer service, gain customers’ attention and loyalty, that bank is very likely to succeed Customer-oriented strategy has become the most crucial and highest priority one Attracting new customers, building long-term & sustainable relationships and strengthening relationships with current customers have become top concerns of CMs Global Petro Commercial Joint Stock Bank (GP.Bank), previously known as Ninh Binh Rural Commercial Joint Stock Bank, has been restructured to become urban commercial bank operating in Hanoi since 2005 As a new entrant to the market, GP.Bank’s set of retail banking customer is still modest and not as diverse as other CMs Therefore, it is really necessary to have a study of customers, their characteristics as well as their expectations toward retail banking services The thesis topic “Improving customer satisfaction of retail banking services at GP.Bank” aims to evaluate factors affecting customer satisfaction and propose solutions to improve customer service quality THE NECCESSITY AND MEANING OF RESEARCH TOPIC There are currently more than 100 credit institutions, which comprises of 48 local commercial banks and 53 branches of foreign banks, competing severely with each other In such a highly competitive market, customers are determinant factor for banks’ success Besides, according to a statistic of State Bank of Vietnam, currently there is only 20% of the number of adult customers using banking services It indicates that the market of retail banking is still highly potential Success and customer recognition will come to those banks that build good customer service and gain customer trust In addition, GP.Bank is a relatively young bank, which was established in 2005, GP.Bank’s customer base is not as strong as other competitors are Currently, there is no profound and thorough report about personal customers and their satisfaction available It should also be noted that GP.Bank’s strategy also shifts to focus more on retail banking in the next years Therefore, it is highly necessary to conduct a research on customer satisfaction of GP.Bank’s retail banking and figuring out what determines their satisfaction RESEARCH OBJECTIVES: Based on the current operation and strategy of GP.Bank, the thesis is conducted with the aims to: - Study and evaluate factors determining customer satisfaction in GP.Bank’s - retail banking services Propose solutions to improve customer satisfactions when using GP.Bank’s retail banking services RESEARCH OBJECT AND RESEARCH SCOPE Research object: Customer satisfaction of GP.Bank’s retail banking customers Research scope: customer satisfaction of GP.Bank’s retail banking services and factors impacting on customer satisfaction when using retail banking services RESEARCH METHODOLOGY: 4.1 Data collection - Primary data: the author conducts questionnaire survey and in-depth interviews - Secondary data Books, documents and other publications relevant to research topic Articles published on newspaper and specialized magazines Research papers of well-known organizations, institutions and universities 4.2 Research design: Quantitative and qualitative research would be conducted to evaluate customer satisfaction toward GP.Bank’s retail banking services and determine factors impacting on customer satisfaction - Quantitative research: conducting - sample size of 500 Qualitative research: GP.Bank’s staff and senior managers and interview questionnaire survey with estimated customers 4.3 Analysis of data collected After synthesizing data collected from survey and interviews, findings about customer satisfaction toward GP.Bank services would be drawn Solutions to improve customer satisfactions would be proposed accordingly CHAPTER 1: THEORETICAL BASIS 1.1 Service 1.1.1 Service definition As economy grows, service industry accounts for a increasingly big part in the national economy structure There has been an abundance of research studying the subject matter of service; different researches have come up with different definitions of service According to Kotler & Armstrong (2004), “service is an act of performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything Its production may or may not be tied to a physical product” This definition points out a distinctive attribute of service, which is intangible Approaching the subject from another perspective, Zeithaml and Britner (2000) focused on how the service is created and transferred from service provider to service user Zeithaml and Britner (2000) defined service as an activity, a process and a method to conduct a work to create value to customers in response to their needs and expectations In this thesis, service is understood as retail banking service provided by GP.Bank’s retail banking group to individual customers Retail banking refers to the division of a bank that deals directly with retail customers Retail banking services include checking and savings accounts, loans and mortgages, safe deposit boxes, certificates of deposit, money orders and bank drafts and travelers checks, which might be delivered to customers via conventional banking or internet/mobile banking 1.1.2 Service characteristics Service has certain unique characteristics which distinguish it from physical products Fitzsimmonds and Fitzsimmonds (2004) introduced distinctive characteristics of service Intangibility: When buying a product, the customer is able to see it, feel it, and test its performance before purchase In contrary, the customer can only feel the service when they use and interact with the service Simultaneity: services are created and consumed at the same time and, thus, cannot be stored is a critical feature in the management of services This is a striking difference between service and tangible products, in which production and usage are separated The inability to inventory services precludes using the traditional manufacturing strategy of relying on inventory as a buffer to absorb fluctuations in demand The simultaneous production and consumption in services also eliminates opportunities for quality-control intervention A product can be inspected before delivery, but services must rely on other measures to ensure the quality of services delivered Heterogeneity: It refers to the variation in performance of services People perform most services and people are not always consistent in their performance Performance may vary from one individual or service to another within the same organization or in the service one individual provides from day to day and from customer to customer Thus services are much more difficult to standardize than tangible goods The combination of the intangible nature of services and the customer as a participant in the service delivery system results in variation of service from customer to customer The interaction between customer and employee in services, nevertheless, creates the possibility of a more complete human work experience Thanks to robust development in information technology, many of the services in retail banking are conducted automatically However, the introduction of automation may even strengthen service personalization Routine impersonal tasks are eliminated, thereby permitting increased personal attention to the remaining work At the same time, personal attention creates opportunities for variability in the service that is provided The development of standards and of employee training in proper procedures is the key to ensuring consistency in the service provided Perishability: Since service production and service usage are conducted at the same time, it cannot be stored Service only exists during the period of time it is provided Thus service cannot be mass-produced and then stored for future sale It perishes by the time the service provision ends Thanks to strong development of information technology, nowadays many bank services are conducted via Internet and phones However, the planning to have sufficient resource to meet customer demand during peak times, yet not to waste resources during low times has been always a problem to managers Customer Participation in the Service Process: The presence of the customer as a participant in the service process requires an attention to facility design that is not found in traditional manufacturing operations The presence of the customer on-site requires attention to the physical surroundings of the service facility that is not necessary for the factory For the customer, service is an experience occurring in the front office of the service facility, and the quality of service is enhanced if the service facility is designed from the customer’s perspective An important consideration in providing a service is the realization that the customer can play an active part in the process 1.2 Service quality 1.2.1 Service quality definition Service quality has been defined in different ways by researchers Parasuraman et al (1988) defines service quality as a difference between customer expectation of service and customers’ perceptions of the actual service Kasper et al (1999) defines service quality as the degree to which the service offered can satisfy customer expectations Gronroos (1978) suggests that service quality is made of two components – technical quality and functional quality Technical quality refers to what the service provider delivers during the service provision while functional quality is how the service employee provides the service These definitions differ in their approach, yet they all agree that customers are the sole judges of service quality If they perceive it to be good, then it is and vice versa 1.2.2 Factors determining service quality Most of researchers share the same opinion that customer satisfaction is rarely influenced by single factor, it is instead influenced by multiple factors of service package 10 Conclusion of chapter From the basis of research findings in chapter 2, the author proposed solutions to improve customer satisfaction in chapter As research findings revealed, customer satisfaction is mostly determined by factors with descending levels: Responsiveness, Empathy and Assurance Thus, the key solutions will be proposed to improve these factors It can be noticed that there are solutions having impacts on improving not only one factor, instead they have impacts on other factors also The human resource solution is one example of this The human resource solution aims to improve recruitment quality, training quality as well as management of human resource, whereas human resource is one of the most crucial input elements of banking sector Thus, it can be concluded that human resource solutions can have impacts on all factors: Responsiveness, Empathy and Assurance Besides, solutions to standardize banking procedures and boost the application of information technology in the banks have great impacts on creating a transparent, clear and effective working environment; hence the variables in Responsiveness, Assurance, Empathy and Reliability can be improved Once again, it shows that one solution can improve more than factor at the same time When applying these solutions, GP.Bank can opt to implement the solutions which is the most feasible and the most effective Since responsiveness factor is ranked as the most important factor determining customer satisfaction, the solution to enhance this factor should be prioritized Besides, as the quality of human resource plays an extremely important role in the success of any retail banking services, the solution to improve human resource should be implemented first and foremost In addition, many detailed steps in the solution to improve human resource quality just require the review and develop of procedures and shall not incur huge cost as other solutions i.e upgrade core banking system, the solution regarding human resource is the most feasible one In chapter 3, the author proposed a number of solutions to improve customer satisfaction Instead of applying all solutions simultaneously, GP.Bank can choose 77 some of the most important solutions, which are also feasible and suit with GP.Bank’s situation the most 78 CONCLUSION Customer satisfaction is an important and necessary factor, which are the objectives that banks are now pursuing Along with the increasingly strong competition in the retail banking market, understanding of customer needs and factors affecting “IMPROVING customer satisfaction CUSTOMER becomes SATISFACTION more OF necessary Thesis RETAIL BANKING SERVICES AT GP.BANK" is written with the aim to research and seek an understanding about customers and customer satisfaction, support the implementation of more effective marketing activities as well as complete development policy of the Bank The research process begins with understanding the theoretical basis of service, service quality, customer satisfaction and models to evaluate customer satisfaction Based on theoretical research, the author selected and used SERVPERF model of Cronin and Taylor (1992) Quantitative study was conducted on a sample of 172 respondents The collected data is presented through descriptive statistics, reliability analysis, factor analysis and regression analysis These analyses are done in combination with analysis of market sectors, information from interviews with customers and bank employees Research findings revealed that customer satisfaction is influenced most by three factors: responsiveness, empathy and assurance Based on the research findings, the author proposed a number of solutions to enhance customer satisfaction The solutions to improve customer satisfaction in GP.Bank will primarily focus on solutions to enhance key factors affecting customer satisfaction Responsiveness, Assurance and Empathy However, it should be noted that all these factors are related and affected significantly by human factors Therefore, the author firstly proposed solutions to improve the quality of human resources at GP.Bank After that, the main solutions to enhance factors - Responsiveness, Assurance and Empathy are presented Finally, the solutions to improve remaining factors in the research model - Tangible and Reliability are proposed 79 Customer satisfaction is formed and influenced by many factors Therefore, creating customer satisfaction should be done on a regular and long-term basis Since business environment is always changing, so the application of research results need to be done flexibly and adjust accordingly Finally, the research findings can serve as reliable input data for the bank to understand more about customer behavior & their expectation as well as to develop effective marketing policies Research limitations The research has made positive contributions to GP.Bank by understanding customers and identifying the level of customer satisfaction with GP.Bank’s services However, due to time constraints, the thesis still has some limitations on research subjects and research scope Research objects are customer satisfaction of GP.Bank’s retail banking The authors used a random sampling method, so it is likely that the customers participating in the interviews and survey not represent for the whole set of GP.Bank’s customers If given more time, the author will conduct stratified sampling method of GP.Bank’s customers to seek a more profound and thorough understanding Research scope: is just limited to customers using GP.Bank services in Hanoi, thus an overall assessment of customer satisfaction for GP.Bank’s customers nationwide has not yet been established In addition, the study only takes into consideration the time and number of banks customers have, does not take into account other information about customers, such as gender, age, occupation, income, marital status Therefore, a deeper understanding of the needs and desires of customers in retail banking services has not been firmly established yet 80 REFERENCES Vietnamese references AC Nielsen, Report of retail banking market in Vietnam, 2023 Documents and material in the program of MBA PGSM Tô Ngọc Hưng (2008), Commercial Banks, Statistic Publication, Hanoi Nguyễn Văn Tiến (2012), Management of Commercial banks, Statistic Publication, Hà Nội Nguyễn Văn Tiến (2012), Bank and Monetary, Statistic Publication, Hanoi Report of business performance of GP.Bank in 2011; 2012; 2013 website: http//www.gpbank.com.vn Documents and material in the program of MBA -– PGSM GSO, Report of economic and society, website: https://gso.gov.vn/default.aspx?tabid=621&ItemID=13843 English references Tài liệu tiếng Anh Anderson E A and Sullivan M W (1993), “The Antecedents and Consequences of Customer Satisfaction for Firms”, Marketing Science, Vol 12, Spring, pp 125 Avkiran N K (1994), “Developing an Instrument to Measure Customer Service Quality in Branch Banking”, Inter J Bank Mark, Vol 12, No.6, pp 10-18 Bendapudi,N and Berry, L.L.(1997), “Customer’s motivation for maintaining relationships with service providers, Journal of Retailing”, Vol 73(1), p 15-38 Deng, Z., Lu, Y, Wei, K K., Zhang, J (2009), “Understanding customer satisfaction and loyalty: An empirical study of mobile instant messages in China”, International Journal of Information Management, Vol 30, p 289–300 Fitzsimmonds and Fitzsimmonds, Service Management 4th Edition, 2004, McGraw Hill P.21-25 81 Filip, A and Constantinescu, M (2007), “Customer Retention and Customer Loyalty in the Financial Services Industry: Definitions, Importance and Benefits”, Revista Românde Marketing, Anul 2, Nr 1: 221-237 Gremler, D., & Brown, S (1996), “Service loyalty: Its nature, importance and implications In B Edvardsson, S W Brown & R.Johnston (Eds.), Advancing Service Quality: A Global Perspective”, International Service Quality Association (pp 171-180) New York, NY Gronroos, Christian (1982), “Strategic Management and Marketing in the Service Sector”, Jelsingfors: Swedish School of Economics and Business Administration Hallowell R (1996), “The Relationships of Customer Satisfaction, Customer Loyalty, and Profitability: An Empirical Study”, International Journal of Service Industry Management , Vol 7, No 4, pp 27-42 10 Kayis B, Kim H and Shin H T (2003), “A Comparative Analysis of Cultural, Conceptual and Practical Constraints on Quality Management Implementations: Findings from Australian and Korean Banking Industries”, TQM and Business Excellence, Vol 14, No.7, pp 765-777 11 Kevin Cacioppo, (1995) Measuring and Managing Customer Satisfaction: "The gulf between satisfied customers and completely satisfied customers can swallow a business", Harvard Business Review, November/December 1995 12 Levesque T and McDougall G H C (1996), “Determinants of Customer Satisfaction in Retail Banking”, International Journal of Bank Marketing, Vol 14,No 7, pp 12-20 13 Nguyen N (1991), “Un Modèle Explicatif de L’Évaluation de la Qualité d’un Service:Une Étude Empirique”, Recherche et Applications en Marketing, Vol 2, p.83-98 14 Oppewal H and Vriens M (2000), “Measuring Perceived Service Quality Using Integrated Conjoint Experiments”, International Vol.18, No 4, pp.154-69 82 Journal of Bank Marketing, 15 Parasuraman, A., Valerie A Zeithaml, V.A and Berry, L.L (1988), “SERVQUAL: a multiple-item scale for measuring consumer perceptions of service quality”, Journal of Retailing, Vol.64 No 1, pp.12-40 16 Rust R and Zahorik A (1993), “Customer Satisfaction, Customer Retention andMarket Share”, Journal of Retailing, Vol 69, No 2, pp 193-215 17 Tse, D.K., and Wilton, P C (1988), "Models of Consumer Satisfaction Formation: An Extension," Journal of Marketing Research, 25 (May), p.204-12 10Tình hình kinh tế - xã hội năm 2013 https://gso.gov.vn/default.aspx?tabid=621&ItemID=13843 18 Services, etc., value added (% of GDP) http://data.worldbank.org/indicator/NV.SRV.TETC.ZS 19 Wang Y, Lo H-P and Hui Y V (2003), “The Antecedents of Service Quality and Product Quality and Their Influences on Bank Reputation: Evidence From the Banking Industry in China”, Managing Service Quality, Vol 13, No 1, pp 7283 20 Zalatar, WF 2012, Quantifying Customers: ‟Gender Effects on Service Quality Perceptions of Philippine Commercial Banks, International Conference on Asia Business Innovation and Technology Management”, Procedia, Social and Behavior Sciences, Vol 57, pp 268-274 21 Zeithaml and Britner, (2000), “Services Marketing”, McGraw-Hill Companies, 83 Anex – Questionaire Dear valued customers, Thank you very much for using our services during the past time So as to provide you with highest satisfaction, please let us better understand of your requirements by completing this survey form at your earliest convenience All of your precious comments are highly appreciated and useful for improving our services How long have you been using our services? less than year 5-6 years 1-2 years more than years 3-4 years How many banks you have accounts/transactions with? 1-2 banks 7-8 banks 3-4 banks more than banks 5-6 banks Please give your comments on determinants of satisfaction by ticking one box on each line given below No Criteria The bank has modern and advanced equipment and machinery Bank material and document are interesting Bank staffs are nicely dressed Transaction centers/Branches are beautifully decorated, creating relaxing ambience for customers The bank’s ATM network is widespread and convenient for customers Bank staffs perform transactions correctly right from the 1st time The bank provides services at the committed time 84 Totally agree Quite Agree Agree Quite Disagree Totally disagree The bank always notify customer of the time when their requirements are completed The bank renders services accurately and without faults 10 Internet banking operates stably 11 Bank staffs are always willing to help customers 12 Bank procedures are simple and quick The bank proactively responds to customer requirements 13 14 15 16 17 18 19 20 21 22 The bank’s hotline operates 24/7 The bank handles promptly requests sent via Internet Personal information is well protected Customers feel secure when making transactions via Internet Bank staffs receive timely and sufficient guidance from senior managers when exceptional cases arise Customers feel secure when dealing with bank staffs Bank staffs pay attention to customers’ demands Bank staffs always put customers’ request as the top priority Bank staffs always understand each and every single need of customers Overall, are you satisfied with GP.Bank’s services? Very satisfied Quite dissatisfied Quite satisfied Very dissatisfied Satisfied 85 What you think about the following statements? No Criteria Totally agree Quite Agree Agree Quite Disagree Totally disagree I will use GP.Bank’s services when selecting the services many other banks also offer I will continue to use GP.Bank’s services Tôi khách hàng trung thành GP bank THANK YOU FOR YOUR SUPPORT AND COOPERATION 86 Annex – Factor Analysis KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy .856 Approx Chi-Square Bartlett's Test of Sphericity 1042.128 df 231 Sig .000 Communalities Initial Extraction Tangible 1.000 249 Tangible 1.000 620 Tangible 1.000 605 Reliability 1.000 572 Reliability 1.000 479 Reliability 1.000 576 Reliability 1.000 336 Responsiveness 1.000 524 Responsiveness 1.000 654 Responsiveness 1.000 534 Responsiveness 1.000 540 Responsiveness 1.000 562 Assurance 1.000 694 Assurance 1.000 615 Assurance 1.000 474 Assurance 1.000 525 Empathy 1.000 459 Empathy 1.000 457 Empathy 1.000 620 Extraction Method: Principal Component Analysis Total Variance Explained Compo Initial Eigenvalues Extraction Sums of Squared Rotation Sums of Squared Loadings Loadings nent Total % of Variance Cumulative Total % 5.751 26.140 26.140 5.751 87 % of Cumulative Variance % 26.140 26.140 Total 3.863 % of Cumul Variance ative % 17.560 17.560 2.347 10.668 36.808 2.347 10.668 36.808 2.764 12.565 30.125 1.366 6.208 43.016 1.366 6.208 43.016 2.557 11.623 41.748 1.143 5.195 48.211 1.143 5.195 48.211 1.259 5.721 47.469 1.063 4.830 53.041 1.063 4.830 53.041 1.226 5.572 53.041 923 4.194 57.235 897 4.078 61.313 857 3.895 65.208 830 3.774 68.982 10 776 3.527 72.509 11 769 3.496 76.005 12 704 3.202 79.207 13 517 2.349 89.515 14 477 2.169 91.684 15 433 1.970 93.654 16 413 1.879 95.533 17 363 1.649 97.182 18 318 1.445 98.626 19 302 1.374 100.000 Extraction Method: Principal Component Analysis Rotated Component Matrixa Component Assurance 688 Assurance 633 Assurance 629 Assurance 615 Responsiveness 574 Empathy 563 Empathy 538 Reliability 710 Empathy 686 Reliability 741 Reliability 712 Reliability 683 Tangible 601 Tangible 626 Tangible 517 Assurance 479 Responsiveness 531 Responsiveness 598 88 Responsiveness 472 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization a Rotation converged in 15 iterations 89 Annex – Factor Analysis KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy .827 Approx Chi-Square Bartlett's Test of Sphericity 779.667 df 136 Sig .000 Communalities Initial Extraction Tangible 1.000 692 Tangible 1.000 606 Reliability 1.000 570 Reliability 1.000 478 Reliability 1.000 576 Responsiveness 1.000 578 Responsiveness 1.000 612 Responsiveness 1.000 639 Responsiveness 1.000 559 Responsiveness 1.000 635 Assurance 1.000 889 Assurance 1.000 609 Assurance 1.000 476 Assurance 1.000 529 Empathy 1.000 483 Empathy 1.000 477 Empathy 1.000 601 Extraction Method: Principal Component Analysis Total Variance Explained Compon Initial Eigenvalues Extraction Sums of Squared Rotation Sums of Squared Loadings Loadings ent Total % of Cumulative Variance % Total % of Cumulative Variance % Total % of Cumulat Varianc ive % e 4.616 27.155 27.155 4.616 27.155 27.155 3.269 19.227 19.227 2.218 13.045 40.201 2.218 13.045 40.201 2.476 14.568 33.795 1.300 7.647 47.847 1.300 7.647 47.847 2.217 13.043 46.838 90 1.039 6.114 53.961 1.039 6.114 53.961 1.149 6.759 53.597 1.036 6.092 60.053 1.036 6.092 60.053 1.098 6.456 60.053 835 4.910 64.963 792 4.656 69.619 734 4.319 73.938 722 4.249 78.187 10 633 3.722 81.909 11 562 3.305 85.214 12 542 3.190 88.404 13 472 2.779 91.184 14 438 2.577 93.760 15 395 2.323 96.084 16 351 2.063 98.147 17 315 1.853 100.000 Extraction Method: Principal Component Analysis Rotated Component Matrixa Component Responsiveness 705 Responsiveness 664 Responsiveness 639 Responsiveness 627 Responsiveness 605 Empathy 762 Empathy 728 Emphathy 699 Assurance 692 Assurance 687 Assurance 602 Assurance 509 Tangible 563 Tangible 561 Reliability 515 Reliability 489 Reliability 527 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization a Rotation converged in 10 iterations 91 ... thành khách hàng dịch vụ ngân hàng bán lẻ Việt Nam tương đối thấp so với nước khác Do vậy, tác giả đặt thêm giả thuyết để nghiên cứu trung thành khách hàng H7: Sự hài lòng khách hàng cao khách hàng. .. nhất, yếu tố ảnh hưởng nào? Từ H1 - H6? H1 H2 Chất lượng dịch vụ .Hài lòng 29 H3 H6 *- Sự hài lòng thể thơng qua bảng câu hỏi với khách hàng? 2.2.2 Research methodology In order to carry out... researchTrên sesearch GP.Bankpers of service and customer satisfactiond GP.Bank, the author uses recủa khách hàng Thêm vào đó, để kết nối In primary research, the author uses both qualitative and quantitative
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