Abstract

The aim of this research study is to determine the satisfaction level of banking customers regarding quality of different services provided by their bank and their trust with the respective bank. Service quality is studied within a range of different dimensions. An effort is also made to find out which service quality dimensions may enhance customer satisfaction and customer trust in a better way.

Respondents are chosen from a range of varying demographic features using convenient sampling. Banks from both public and private sector are selected for sampling. Survey questionnaires were distributed among 166 customers of different banks. An 83% (140 respondents) valid response rate is yielded. Descriptive statistics, factor analysis, reliability analysis, frequency analysis for demographics, correlation and regression analysis are used to analyze the data.

Findings indicate that service quality have significant and positive association with customer satisfaction but customer trust has no reliant impact on service quality and customer satisfaction. There was a reverse relation between these two variables.

Banking sector is a significant sector in Pakistan’s economy and has seen extraordinary growth and intense competition during the last decade. Therefore this study has been specifically conducted to look into this phenomenon and seek empirical justification in this regard by considering service quality as the main contributory factor towards customer satisfaction and retain customer trust.

Furthermore, it was recommended that the financial institutions must adopt a win-win trust building strategy through which they provide value to the customer and customer remains loyal to the organization. The value provided must be keeping in view the satisfaction of the customers.

 

Keywords: banking sector, customer trust, customer satisfaction, service quality.

 

 

TABLE OF CONTENTS

 

Letter of Transmittal…………………………………………………………………………2

Acknowledgement………………………………………………………………….………..3

Executive Summary…………………………………………………………………….…...4

Table of Contents…………………………………………………………………….…..….5

1. Introduction……………………………….……………………………….…………...7

1.1  Background………………………………………………….………….…….……..7

1.2  Purpose of the Study…………………………………………………….………..... 8

1.3  Problem Statement…………………………………………………...……………...8

1.4  Research Questions……………………………………………………………….....8

1.5  Limitations of the Study………………………………………………………..........8

1.6  Methodology of the Study……………………………………………………….......9

1.7  Structure of the Study………………………………………………………………..9

 

2. Literature Review……………………………………………………………………..10

 

3. Theoretical Framework………………………………………………………………18
4. Methodology……………………………………………………………………….….20

3.1 Population………………………………………………………………………20

3.2 Sample…………………………………………………………………..….…..20

3.3 Sampling Technique……………………………………………………………21

3.4 Research Design……………………..………………………………………....21

3.5 Instruments Used ………………..…………………………………………......21

3.6 Statistical Procedure Used……………………………………………………...21

 

 

5. Findings & Discussion …...………………………………………………………….22

5.1  Factor Analysis……………………………………………………………..……..22

5.2  Reliability Analysis…………………………………………………………..……25

5.3  Descriptive Analysis…………………………………………………………...….26

5.4  Frequency Analysis……………………………………………………….....….…27

5.5  Regression Analysis………………………………………………………..…...…31

6. Conclusion…………………………………………………………………...………. 37

7. Recommendations……………………………………………………………………..38

8. Implication for Future Research……………………………………………………..39

References……………………………………………………………………..…………..40

 

 

 

 

 

 

 

 

 

 

 

 

 

1. INTRODUCTION

 

1.1  Background

Banks are key players in financial markets operations and play an important role in keeping a country’s economy running smoothly. In today’s highly competitive corporate environment, quality of services is an essential element for enhancing customer satisfaction and customer trust. These are important factors in improving the performance of banks and in determining their success, i.e. better profitability and a bigger market share.

Privatization of banking sector in Pakistan during the past few decades has resulted in higher customer expectations. Now customers demand better quality services from financial institutions. It has boosted the competition among various commercial banks particularly those in private sector. This motivates them to deliver premium quality services to their customers in order to gain competitive advantage i.e. more satisfied and loyal customers (Wisniewski, 2001; and Grace, 1996).

The idea of “service quality” as a tool for gaining competitive advantage and lead in a market-driven system has been well recognized by the financial institutions. However in current highly competitive corporate environment it has become increasingly important to not only become the market leader but also to maintain that top position (Zenithal et al, 1996 and Bolton& Drew, 1991).

Researchers all over the globe claim that offering quality services give a sustainable competitive advantage to any business. It enables them to fulfill not only the present needs of their customers satisfactorily but also to anticipate their future needs. This ability to anticipate the future needs of customers allows them to delight their customers through quality services on consistent basis. Subsequently it enhances customer satisfaction and customer loyalty level towards these organizations (Gantasala & Prabhakar, 2010 Wisniewski, 2001 Zenithal, 1988.

Banks must consider various antecedents (tangibles, reliability, assurance and empathy) of service quality in order to have delighted customers (B. Sharp, & A. Sharp, 1997) and to enhance their performance and profitability (Hackl et al., 2000 Anderson et al, 1994 Lewis, 1993).

Although much empirical evidence could be found in the literature worldwide investigating the relationship between service quality and customer satisfaction, this domain has not been much considered in Pakistan’s context. A lot of research on service quality and its association with customer satisfaction has been conducted in developed countries. Therefore this study contributes to the literature by studying this phenomenon in the banking sector of a developing country i.e. Pakistan.

 

 

1.2  Purpose of the Study

The purpose of this study is to examine the relationship between customer satisfaction and service quality in service sectors with respect to the service quality dimensions  

A research like this is essential to measure and improve service delivery and design, because it will provide management with data that they can use in making implications about the customers. (Wilson et al. 2006). Thus the results of this study should be proved useful for academics; business in the field of marketing and management researchers of customer satisfaction and service quality especially in service sector organizations. 

 

1.3  Problem Statement

Service quality and customer satisfaction have been proven from past researches to be positively related (Baker-Prewitt, 2000 Kuo, 2003 Gera, 2011) but no study had tested the service quality dimensions directly to see if it is related to customer satisfaction, thus, there is a need to test the direct relationship between each of the service quality dimensions and customer satisfaction. Trust is one factor that moderating their relationship no study had tested this factor so there is a need to test the relationship between service quality, trust as a moderator and customer satisfaction with service provider in different service sectors.

 

1.4  Research Questions

1        H1: Is there a significant relationship between service quality and customer satisfaction

2. H2: Is trust has a reliant effect between service quality and customer satisfaction

 

2.1  Limitations of the Study

Because of the broad nature of this area of study, I could not access all the literature concerning customer satisfaction and service quality because it would have been very large. Thus, I limited part within the literature, thereby around the relationship between customer satisfaction and service quality dimensions. Although this topic concerns both the employees and customers, I focused on customers because I am interested in viewing this subject from the customer perspective and customers who consume services. Also the topic can be viewed from a manufacturing and/or service sector; but I was limited to study it with the service sectors since service quality is best evaluated from the service sectors. 

 

 

2.2  Methodology of the Study

The technique of the study is to gather quantitative data by filling questionnaires from different customer of public and private banking sector. The probability convenient sampling was used to interpret all the results and findings. Unit of analysis was individual (customer).

 

2.3  Structure of the Study

Chapter one presented the Introduction, the next chapter will be to present existing literature and theoretical frame work on the relationship between customer satisfaction and service quality. The chapter that follows; chapter three, will be the methodology of the research where the research design and research methods will be explained. Then the empirical findings and analysis will come in chapter 4; chapter five will presents the conclusion, implications and suggestions.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3. LITERATURE REVIEW

 

The impact of service quality on customer satisfaction with service provider in the context of banking sector is a widely discussed topic in the literature. This section targets popular journals, magazines and various text books that contain fruitful information on various service quality dimensions as well as customer satisfaction with service provider.

2.1 SERVICE QUALITY

Services are a continuous process of on-going interactions between customers and service providers. In order for a company’s offer to attain the customers there is a need for services and these services rely on the different kinds of product and it differs in the various organizations. Service may be described in different ways depending on which area the term is being used. According to Kotler and Keller (2009) services may be illustrated as “any untouchable act or presentation that one party offers to another that does not result in the ownership of anything”. According to Kotler, et.al (2002) Service can also be described as an insubstantial offer by one party to another in exchange of capital for delight. The characteristics of an item or services leads to the first class quality which can easily satisfy stated wants. It is clear that quality is also related to the value of a tender, which could convince satisfaction or dissatisfaction on the behalf of the consumer. Thus service quality may intend to be the way in which customers are serving as a part of organization which could be good or poor. According to Parasuraman (1988) argued service quality as “the dissimilarity between customer hope and perceptions of service”. They argued that evaluation of service quality as the difference between perceived and expected service was a suitable way and could make management to identify gaps to what they offer as services.

According to Scullion and Nicholas (2001) & Unsal and Movassaghi (2001) & Zeithaml (2002) quality means developing such system that assure whether the actual outcomes are meeting with perceived results or not and customer service means to keep customers satisfied providing them what they need and want while protecting the organization. Services offers number of benefits to customers like enhance quality, easy to utilize and decreases the business charges. Service is a facility which supplies some public demand. A service quality has increasing rapidly and has emerged as the leading edge of the service industry. According to Zeithaml, et.al (1996) higher service quality is one of effective means of getting competitive advantage and discriminating strategies. Higher service quality considerably increases a firms overall profitability, its price superior and its perceived and actual market share. A good service quality may be delivered partially or even fully through customer service provider while maintaining good relationship management system of quality.

 

 

 

A brief explanation of service dimensions is given below.

2.1.1 Tangibles

Those things which have a physical existence and can be seen and touched. According to Blery, E., Batistatos, N., Papastratou, E., Perifanos, I., Remoundaki, G., & Retsina, M. (2009). Service quality, tangibles can be referred to as Information and Communications Technology (ICT) equipment, physical facilities and their appearance (ambience, lighting, air-conditioning, seating arrangement) and lastly but not least, the services providing personnel of the organization. These tangibles are deployed, in random integration, by any organization to render services to its customers who in turn assess the quality and usability of these tangibles.

2.1.2 Reliability

Reliability means the ability of a service provider to provide the committed services truthfully and consistently(Blery et al, 2009).Customers want trustable services on which they can rely.

2.1.3 Assurance

According to Blery et al, (2009)Assurance is developed by the level of knowledge and courtesy displayed by the employees in interpreting the services and their ability to introduce trust and confidence in customer.

2.1.4 Empathy

Empathy means taking care of the customers by giving attention at individual level to them. It involves giving ears to their problems and effectively addressing their concerns and demands.(Blery et al, 2009).

2.2 CUSTOMER SATISFACTION

A customer can be a consumer, but a consumer may not necessarily be a customer. According to Solomon (2009) a customer is the person who does the buying of the products and the consumer is the person who finally consumes the product. According to Kotler and Keller (2009) when a consumer/customer is happy with either the product or service it is called satisfaction. Satisfaction can also be an individual feeling of pleasure or disappointment that results from comparing a product’s perceived performance or outcome with their expectations. As a matter of fact, satisfaction could be the pleasure derived by someone from the consumption of goods or services offered by another person or group of people; or it can be the state of being happy with a situation. Satisfaction varies from one individual to another because it is need. “One man’s music may be another’s man noise,” an old proverb stated describing utility; thus highlighting the fact that it is sometimes very difficult to satisfy everybody or to determine satisfaction among group of individuals. According to Tse and Wilton (1988) customer satisfaction is defined as “the consumer’s response to the evaluation of the perceived difference between prior expectations and the actual performance of the product or service as perceived after its consumption” hence according to Fornell (1992) considering satisfaction as an overall post-purchase evaluation by the consumer”.

According to Schiffman and Karun (2004) customer satisfaction may be termed as “the individual’s perception of the performance of the products or services in relation to his or her requirment”. Customer satisfaction includes the feature in development of customer’s desires for upcoming purchase (Mittal & Kamakura, 2001). According to Jamal and Naser (2002) customer satisfaction is basically a good experience of any product. According to Parasuraman, et.al (1991) Customer satisfaction is the distinction between expectation and performance, but this distinction is based on quality and satisfaction. It is the decision which made after purchasing or experiences the product whether it fulfills our expectation or not.

According to Oliver (1993) service quality is a more prime decision, which can lead to a detailed evaluation, customer satisfaction. Many studies find that higher level of customer satisfaction lead to greater customer loyalty (Anderson and Sullivan, 1993). Positive word of mouth from satisfied customers attract the new customers and enhances the firms overall reputation while the dissatisfied customers obviously have the contrary effect (Anderson 1994, Fornell 1992). Finally According to Aaker and Jacobson (1994) & Anderson, et.al (1994) firms which providing finer quality enjoying the higher economic growth.

2.3 TRUST

According to Arjun and Morris (2001) if a consumer would like to trust on his/her own organization, and trust the product that company provides than we can say that this is a customer trust. Trust can decrease the consumer's uncertainty, because the consumer not only knows that product can be value trust, but also thinks that trustworthy, secure and sincere  utilization setting is the important  link of  the customer trust on specific brand. Trust as a major module in the literature. For example according to Zaltman & Moorman (1988) trust has been found to increase firms’ readiness to openly discuss one another’s requirement, According to Zaheer (1998) reduce conciliation cost, According to  Zand (1972) promote legitimate information exchange. According to Schurr & Ozanne (1985), boost teamwork build up long-term introduction (Doney and Cannon, 1997) & (Ganesan, 1994) and According to Jap (1999) enlarge firm performance. A great number of researches in the services literature have documented the importance of trust in maintaining satisfactory service provider/ customer relationships.

2.4 RELATIONSHIP BETWEEN SERVICE QUALITY & CUSTOMER SATISFACTION

According to Cronin and Taylor (1992) customer satisfaction has been considered to be based on the customer’s knowledge on a particular service meet, it is in line with the fact that customer satisfaction is governed by service quality, because service quality comes from outcome of the services from service providers in organizations. According to Wilson, et.al (2008) in relating customer satisfaction and service quality, researchers have been more accurate about the meaning and measurements of satisfaction and service quality. Satisfaction and service quality have certain things in common, but satisfaction generally is a broader concept, whereas service but if we talk about quality it focuses specifically on dimensions of service. According to Zeithaml, et.al (2006) although it is stated that other factors such as price and product quality can influence customer satisfaction, apparent service quality is a component of customer satisfaction. It has been proven from past researches on service quality and customer satisfaction that Customer satisfaction and service quality are associated from their definitions to their affairs with other aspects in business. According to Parasuraman, et.al (1985) service quality determines customer satisfaction in their study, projected that when professed service quality is high, then it will lead to increase in customer satisfaction.

According to Lewis (1993), Sivadas & Baker-Prewitt (2000) the meaning of customer satisfaction depicted by used a national random telephone survey of 542 shoppers to study the relationship between service quality and customer satisfaction within the retail department store framework. One of the results was that service quality effect qualified attitude and satisfaction with department stores. They found out that there is association between customer satisfaction and service quality.

According to Sivadas, et.al (2000) and Su, et.al (2002) in their study of customer satisfaction and service quality, found out that; these two variables are correlated, confirming the definitions of both variables which have always been linked. They also said that service quality is more conceptual because it may be affected by perceptions of value or by the experiences of others that may not be so good, than customer satisfaction which reflects the customer’s impression about many encounters and experiences with service firm.

According to Zeithaml, et.al (1996) service quality plays a significant role in to en-large profitability ratio, market share and price premium. The whole business firmly depends on quality if the quality is good then in result customer satisfaction comes. Many organizations successes is only due to their best quality similarly number of organization just finished due to consistently providing bad quality. The features of products are also important. According to Zeithaml (2002) and Bitner (2003) customers are most important stakeholders in organizations and their Satisfaction level is a prior to any organization.

Few researcher studies, have been recognized to identify service quality scope and their connection with customer satisfaction Moreover, in current studies of customer service quality, According to Wolfinbarger and Gilly (2002) “knowledge seekers frequently move directly from the production of goods to the reasons involved, and thus not giving enough considerations to consumers viewpoint and think about their experiences” Thus, our exploratory research anticipates to cover the body of existing knowledge relating to service quality and customer satisfaction in multiple ways. First, we establish a conceptual framework by integrating the relationship of customer service quality and their satisfaction with service provider. Secondly, we examine major service quality dimensions leading to satisfaction and dissatisfaction correspondingly. The results suggest that primary drivers of satisfaction are closely related to higher service quality and key drivers of dissatisfaction are tied to lower service quality. Customer satisfaction focuses on great interest to organizations. The quality of service has become a characteristic of customer satisfaction. Services sector generates more active customers in result of this organizations is trying to improve their services. They use new technology in machines and their employees are trained. Service quality can be improved by improving service delivery, increased efficiency, and optimization.

According to Lee and Yoo (2000) customer satisfaction is based upon the intensity of service quality provided by the service provider. Here according to Wilson, et.al (2008) “service quality acts as a determinant of customer satisfaction”. Other authors have brought out theories relating to customer satisfaction and service quality in their researches (Wang & Hing-Po, 2002) measured service quality in China’s mobile phone market and highlighting on the vibrant relationship among service quality and customer satisfaction and their influence on prospect behaviors after the key drives of customer value and customer satisfaction are identified. There are number of factors through which we can enhance/enlarge our services and moving towards customer satisfaction like a company should listen to their customers first and must know about their desire expectation (what actually they want). We cannot improve our services until we know about customer demand during the improvement organization should come across at all complaints about their service as an opportunity to improve. Their aim should be resolved any complaint quickly and efficiently (give feedback in short time). A mutually beneficial decision should always be the pleasing outcome. It is very important to ensure that their staff that they are an important part of your success. If an organization act upon on all these factors than they will be able to achieve customer satisfaction easily.

According to Bitner, et.al (1990) and Parasuraman, et.al (1988) there is a close relationship between service quality and customer satisfaction. According to Oliver (1993) service quality is a more particularly a finding, which can lead to an extensive estimation, customer satisfaction. The question is: how we can easily achieve customer satisfaction? According to Johnston (1995) to gain customer satisfaction is not easy, first we have to maintain our standards of quality then we able to attain goals. Some service quality features may not be significant for customer satisfaction but can extremely lead to dissatisfaction when they are performed improperly.

Drawing upon Herzberg, et.al (1995) research on work inspiration, Johnston (1997) has further classified all dimensions into increasing (satisfaction), hygiene (dissatisfaction), and dual factors. The quality factor plays an important role which goes ahead towards customer satisfaction if they are delivered properly, but will not necessarily cause dissatisfaction if not present. In dissimilarity, hygiene factors are those which will lead to customer dissatisfaction if they fail to convey, but will not result in satisfaction if present. According to Johnston (1995) dual factors are those that will have a force on both satisfaction and dissatisfaction. Identified politeness, reaction, care, and responsiveness as the main source of satisfaction in banking services, and integrity, reliability, responsiveness, availability, and functionality as the main source of dissatisfaction. In addition, according to Mittal, et.al (1998) have discovered that the positive performance of a service quality features has less brunt on overall consumer satisfaction than negative performance of that same attribute. This “asymmetric effect” suggests that it is necessary to carefully inspect service quality attributes having both negative and positive contributions, and to grant more attention to those relevant negatively-performed attributes to increase customer satisfaction.

2.4.1 Tangibles and Customer Satisfaction

According to Jabnoun and Al-Tamimi, (2003) found that banks with better ambience enhance customer satisfaction in a better way. Association between service quality and customer satisfaction in banking sector of Pakistan is examined by Zineldin (2005). He found that by combining tangible and intangible attributes of premium quality in products and services provided by banks, they may create a strong and long-term relationship with their customers.

This service quality dimension comprises of bank ambience, service equipment, human resources (staff) and the means of communication. In simple words tangibles are about creating foremost impressions. All organizations desire that their consumers get an exceptional and positive foremost impression. Focusing on this particular dimension will help them to gain maximum benefit. (Swar & Sahoo, 2012).

According to Ladhari et al, (2011) concisely explain the idea of tangibles role in banking sector. Service quality is key tool to achieve customer’s attention. Varying behaviors and attitudes of customers demand high service quality to attain their perception of service.

Service quality has linear relationship with success and profitability of business. General Electric (GE) has invested heavily in quality service and in return they earned huge profits every year. GE considered both tangible and intangible aspects of service quality equally important in the success of organization (Tax & Brown, 2012).

2.4.2 Reliability and Customer Satisfaction

The association between dimensions of service quality and customer satisfaction was investigated by Ibáñez et al. (2006). They found a significant relationship between reliability of services on the satisfaction level of customers.

The literature reveals an increased degree of positive relationship between service quality, customer satisfaction and performance (both financial and non-financial) where face-to-face dealing between customer and employee is the only focus. Technology expansion has had a great impact on the choice of service delivery standard and services marketing strategies. This has yielded many prospective competitive advantages including augmenting of productivity and enhanced revenue creation from new services (Muyeed, 2012).

2.4.3 Assurance and Customer Satisfaction

In addition to tangibles, reliability and responsiveness; assurance has been identified as a significant dimension of service quality by Parasuraman et al, (1988). They propose that all of these dimensions significantly enhance customer satisfaction. It is believed that if the employees of financial institutions display trustworthy behavior, the satisfaction level of customers can be enhanced significantly. It may also positively influence repurchase intension of customers (Ndubisi, 2006 and Ndubisi & Wah, 2005).

 

2.4.4 Empathy and Customer Satisfaction

A positive and significant relationship is found between empathy and customer satisfaction by Iglesias and Guillén (2004). It was proposed in another research study, that customers may remain unsatisfied with service quality if a gap is left in empathy. It was also established by Al-Marri et al, (2007) that customer satisfaction is significantly impacted by empathy. It makes customers contended and in the long-run serves as an important predictor in improving the financial performance of the organization.

According to Wieseke et al, (2012) empirically investigated the role of empathy in service quality and its impact on customer satisfaction. It was established that customers treated emphatically are more often visitors and disposed to forgive any mistakes that may occur. Empathy creates an emotional relationship with customer, providing customer a touch of importance for business. This leads to retention and creation of new customer’s pool.

According to Juneja, (2011) has also studied the correlation between service quality dimensions and customer satisfaction in Pakistan banking industry. It was found that customer trust can be won through empathy. Empathy can play role in improvement of service quality, customer trust and finally satisfaction

According to Karatepe, (2011) explored the service environment impact with empathy and reliability on trust. Trust works as a moderator between quality and customer satisfaction. Empathy can change the behavior or pattetrn of customer trust ultimately.

 

2.5 TRUST AS A MODERATOR

Trust is a pillar of any relation in business. Customer satisfaction is based on trust. Trust plays a significant role in the association of service quality and customer satisfaction. According to Palmatier (2008) “Trust is one of the most generally positive predecessor in terms of strengthening the relation of service quality and customer satisfaction, as well as relating to positive growth rates in the upcoming era.” According to Mohr and Spekman (1994) service quality has been found to be positively related to satisfaction. Trust build a strong relation between these two variables in that way if customer has trust on specific product then it will eventually satisfy his/her needs and wants. It is proved that trust and customer satisfaction have strong effect. Service quality has strong impacts on the personal living region, marital status, disposable income and purchase expense monthly. Our economic condition is not so good and inflation increased day by day so the purchasing ability of consumer decreased day by day. If consumer trusted on specific brand then whatever the situation is they will definitely trying to buy that one unless it is not available nearby. so we can say that the consumer choose the shopping goods whether influenced by trust and customer loyalty seem to be unusually important.

According to Anderson and Narus (1990) trust represent that the features and the quality of product has value and it also carry out the need of customers. By trusting on specific company product, customer’s confidence increase and through this factor customer satisfaction also increased. If the product has good quality then customer trust build on that product it may be positive (repurchase of that product and positive word of mouth) or negative (quality did not meet with the perceived requirement and negative word of mouth) and he used to purchase that product and it will ultimately increases customer satisfaction. According to Guenzi, Johnson & Castaldo (2009) trust is played an influential part of structuring and managing relationship between service quality and customer satisfaction with service provider. In one of the few studies conducted in this context, Guenzi and his age group found that customers have an intrinsic need to trust in their service provider to deliver the desired service outcome Therefore, we contribute to the literature by further examining the role that trust plays in driving service quality relating to satisfaction perspective (Palmatier et.al, 2006 and Guenzi et.al, 2009). According to Jones, Taylor, Becherer and Halstead (2003) when customers are provided with superior quality services they are more liable to provide positive WOM (word of mouth) to family as well as friends.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4. CONCEPTUAL FRAMEWORK

 

The main objective of this section is to summarize the main points which we got after reading the literature review and also elaborate a contribution we have in this research. General idea from this literature review is to show that there is a relationship between customer satisfaction and service quality also that trust could be strengthen or weaken their relationship. Our theoretical framework treats service quality as an independent variable that has an impact on dependent variable customer satisfaction and trust is playing a moderating role. In this research customers are those who consume the services and their satisfaction depend on the services provided to them by the enterprise. While in this research customer satisfaction is the contentment of customer which they feel after utilizing good service quality by the service provider of the enterprise. According to Ziethaml, et.al (2006) “Apparent service quality is an important element of customer satisfaction”. According to Sivadas and Baker-Prewitt (2000), Wang, et.al (2002), Kuo YF (2003), and Liang & Zhang (2009) it has been proven also that here is a relationship between customer satisfaction and service quality. According to Wilson, et.al (2008) Satisfaction and service quality have many things in common, but satisfaction generally is a broader concept, whereas service quality focuses particularly on parameters of service. Although according to Zeithaml, et.al (2006) it is stated that other aspects such as price and product quality can affect customer satisfaction, professed service quality is a factor of customer satisfaction This point generate an assumption that service quality could have a direct relationship with customer satisfaction. The question that arouse from this assumption is that; Is there a significant relationship between service quality and customer satisfaction?

Also it is proven that according to Guenzi, Johnson & Castaldo (2009) customers have an inherent need to trust in their service provider to deliver the desired service outcome Therefore, we contribute to the literature by examining the role that trust plays in driving service quality relating to customer satisfaction. According to Jones, Taylor, Becherer & Halstead (2003)when customers are provided with better quality services they are more likely to provide positive word of mouth to family and friends and if they are not provided with better quality services it would lead to a dissatisfaction. From this point, the question that arouse is that; does trust have a reliant effect between service quality and customer satisfaction.

Service Quality

Satisfaction with service provider

Trust

 

 

 

 

 

 

Figure 1: The relationship between customer satisfaction and Service quality for this study

If customers concur that they are satisfied and give the reasons for satisfaction as service quality and positive word of mouth or trust on particular product of a company then a conclusion could be drawn that service quality has a significant relationship with customer satisfaction and trust is playing a major role in this relationship. Based on these, the research hypotheses were on the fact that service quality had important relationship with customer satisfaction and trust has been moderating the impact of service quality on customer satisfaction with service provider.

The following hypotheses tested:

H1: Is there a significant relationship between service quality and customer satisfaction

H2: Is trust has a reliant effect between service quality and customer satisfaction

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3       METHODOLOGY

For the current study, the following research design was used:

Research Design

This research was frequently based on the questionnaire, the quantitative data was formulated so, result was shown in the form of bar graphs based on the percentage of response for each option of answer of the questionnaire.

3.1  Type of study

The type of study we used in this research was explanatory study .This study is used to relate the variables and explain the relationship between them. We were provided with two variables one is service quality (Independent variable) and other is satisfaction with service provider (Dependent Variable) and we were asked to find out its relationship w-r-t banking sector.

3.2  Extent of researcher Interference

The extent of researcher’s interference in this research is minimum and the study in which the researchers do minimum interference this study was known as Field study

3.3  Study Setting

This study was done through questionnaire therefore in this research the interference by researcher was minimum which means it was a field study .This study setting was known as non-contrived study and the unit of analysis of our research was individual (customer).

3.4  Time Setting

The time setting of our research was cross sectional because only once the data had been collected for this research

3.5  Population

The population selected for this study were the customers of both public and private banks (HBL, MCB, UBL, Allied Bank, NBP, BOP and Faysal Bank) in the city of Lahore.

 

3.6  Sample

The samples were selected from the banking sector, Lahore. We had randomly selected 166 customers who are ordinary or visiting customers of their respective bank.

3.7  Sampling Technique

For the purpose of this research, the samples were selected through convenient sampling. All the customers were selected within the area of their particular bank where over qualified for the samples were asked to respond to the questionnaire.

3.8  Instrument(s) Used

The instruments used for this research study was questionnaire with the response based on a Likert scale. Each question offered a 5 scale optional answer for each question that stood for

1=Strongly Disagree

 2=Disagree

3=Neutral

4=Agree 

5= Strongly Agree    

The questionnaire was filled by the 166 customers of bank. Who were selected as the samples there were no right or wrong answers and responses to each question by each participant were recorded in the SPSS software

3.9  Statistical Procedure Used

Raw data of the questionnaire was computed directly into the Statistical Package of Social Sciences (SPSS), which was employed to compute the data gain in the study.

The percentage of respondents who choose each option on the Likert scale for each question was used to illustrate into bar graph.

 

 

5. Data Analysis, Result & Discussion

 

The research was conducted to check the relationship between service quality and satisfaction with service provider (customer) and customer trust as a moderator. So to test this relationship a survey was conducted in which users of different public and private bank like HBL, MCB,Meezan Bank and many others are requested to fill up the questionnaire. A sample of 166 users has been collected.

 After the data collection the data has been entered into the software named as SPSS Software and after entering the data the analysis has been performed on it.

 

5.1 Factor Analysis Test for All Three Variables Separately

A sample of 166 questionnaires has been collected from the users of banks. The first test has been performed on the data named as factor analysis test. Firstly this test has been performed on each variable separately however after this; a test has been performed on all three variables.

 

Service quality Variable

 

Table 1.1

 

 

KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.		.704
Bartlett's Test of Sphericity	Approx. Chi-Square	103.569
	Df	6
		.000

 

In the above table you can see the value of Kaiser-Meyer-Olkin Measure of Sampling Adequacy which is .704 this shows that the test has been passed because the value of KMO Test must be ≥ 0.7... On the basis of results the first service quality has passed the factor analysis test.

 

 

 

 

 

Table 1.2

 

 

Component Matrixa
	Component
	1
sq1	.557
sq2 (r)	.767
sq3	.774
sq4 (r)	.738
Extraction Method: Principal Component Analysis.
a. 1 components extracted.

 

The following table 1.2 shows that the question SQ2 and SQ4 are given by respondents are reversed so that the coding of these questions is reversed. We do factor analysis and after doing this analysis a table would appear named as component matrix this table would appear below the KMO and Bartlett's Test table and in the component matrix all the questions of that variable named as service quality (SQ) exists and after the analysis we came to know that which questions have reverse coding.

 

Customer Trust Variable

 

Table 1.3

 

KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.		.849
Bartlett's Test of Sphericity	Approx. Chi-Square	396.368
	Df	15
		.000

 

In the above table 1.3 you can see the value of Kaiser-Meyer-Olkin Measure of Sampling Adequacy which is .849 this shows that the test has been passed because the value of KMO Test must be ≥ 0.7... On the basis of results the second variable customer trust has passed the factor analysis test.

 

Table 1.4

 

Component Matrixa
	Component
	1
t1	.802
t2	.872
t3	.830
t4	.799
t5	.703
t6
Extraction Method: Principal Component Analysis.
a. 1 components extracted.

 

The following table 1.4 shows that T6 was the question which did not understood by the respondents or this was a question which destroy our results so to avoid these scenarios we do factor analysis and after doing this analysis a table would appear named as component matrix this table would appear below the KMO and Bartlett's Test table and in the component matrix all the questions of that variable named as customer trust exists and after the analysis a blank space would left in front of that question so we came to know that which question were not understood by the respondents or they find difficulty in interpreting it .

 

Satisfaction with service provider (customer) Variable

 

Table 1.5

 

KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.		.667
Bartlett's Test of Sphericity	Approx. Chi-Square	92.722
	Df	6
		.000

 

In the above table 1.3 you can see the value of Kaiser-Meyer-Olkin Measure of Sampling Adequacy which is 0.667 this shows that the test has been passed because the value of KMO Test must be ≥ 0.7... On the basis of results the third variable satisfaction with service provider (customer) has passed the factor analysis test

 

Table 1.6

 

Component Matrixa
	Component
	1
s1	.732
s2 (r)	.505
s3	.731
s4	.791
Extraction Method: Principal Component Analysis.
a. 1 components extracted.

 

The following table 1.6 shows that after doing the factor analysis on the satisfaction with service provider (customer) variable we came to know that all questions of that variable was understood by the respondents because no blank space would appear in front of the questions after the factor analysis but the question s2 have reverse coding means respondents give reverse response of this question.

 

5.2 Reliability test

After doing factor analysis on the data, it has been filtered .Then reliability test would be performed on the data. This test was always performed on the entire three variables.

The reliability test of all variables is given below.

 

 

 

  Table 1.7

 

Reliability Statistics
Cronbach's Alpha	Cronbach's Alpha Based on Standardized Items	N of Items
.839	.848	13

 

In the above table 1.7 you can see that Cronbach's Alpha value of all the three variables are 0.848 which means that the data has been reliable because the value of Alpha must be ≥0.7 which shows that data has been reliable.

 

 

5.3 Descriptive Analysis for Variables

 

 In this analysis we checked the value of mean and we interpret it according to our scale that we used in the questionaire. As we use the likert scale in the questionaire such as 1=Strongly disagree, 2=agree 3=Neutral, 4=agree, 5=Strongly agree

 

Table 1.8

 

Statistics
		sssss	tttttt	sqqqqq
N	Valid	166	166	166
	Missing	0	0	0
Mean		3.6611	4.0060	3.5151
Std. Deviation		.64726	.69541	.71388
Minimum		1.25	1.20	1.50
Maximum		5.00	5.00	5.00

 

 

The above table 1.8 shows that the value of mean for   service quality is 3.5151 which means that the average response by the respondents would approximately lie between the neutral and agree.The value of standard deviation must be closer to one however when we see in the table 1.8 we came to know that the value of standard deviation of service quality is .71388 which is less than 1 (≤1) which shows that the data of our research is not scattered However the customer trust Variable has mean value of 4.0060 which is considered as  4 it would be interpret in such a way that the response of the respondents lies between the neutral and agree. Moreover when we see standard deviation value of satisfaction with service provider (customer)in the table, it is 0.69541  which is less than one (≤1) which shows that the data of our research is not scattered. Furthermore when we see the satisfaction with service provider (customer) (s) variable in the above table the mean value of the variable is 3.6611 it is interpreted in a way that the respondents response lies between the neutral or agree and the value of standard deviation is 0.64726 which is less than one (≤1) which shows that the data of our research is not scattered.

 

5.4 Frequencies Analysis for Demographics

 

Table 1.9

 

 

		sssss	tttttt	sqqqqq
N	Valid	166	166	166
	Missing	0	0	0
Mean		3.6611	4.0060	3.5151
Median		3.5000	4.0000	3.5000
Mode		3.50	3.80	3.25

 

The table 1.9 shows the value of mean, median and mode. As we discussed above about the value of mean, moving ahead median shows that what the value of our results exist in between as you see in the table the value of median for satisfaction with service provider (customer) is 3.5000, for customer trust 4.0000 and for satisfaction with service provider (customer) 3.5000

It shows that the responses of the respondents towards the questionnaire lie between neutral to agree. As Mode is the most repeated value of the data as you can see the value of mode in the table 1.9  as satisfaction with service provider (customer)is 3.50 ,customer trust 3.80 and service quality 3.25 shows that the response of respondents lies between the neutral and agree.