Demographic Differences in the Perception of Jordanian Banking Sector Service Quality - Research Proposal Example

DEMOGRAPHIC DIFFERENCES IN THE SERVICE QUALITY OF JORDANIAN BANKS   Abstract This study seeks to determine whether or not there are demographic differences in the perception of Jordanian banking sector service quality. Survey data was coded according to gender, age, occupation, income, education, and religion, and then analyzed using ANOVA and post-hoc Tukey tests. We found no gender, income, or education-based differences in the perception of service quality in the Jordanian banking system, but we did find differences in perception by religion, age, and occupation. Our study, the first of its kind, can help banks attract and target people from specific demographic groups. Key Words: Demographic, Service, Banking, Quality, Jordanian. INTRODUCTION Service quality has become increasingly important in the banking sector. While it has no uniform definition, it usually encompasses both the perception and the expectation of quality (Tam, 2004). As a service industry, banks are confronted with the task of understanding the differing perceptions of their customers so that a suitable standard of service can be developed. Jordan has witnessed a growth in the banking sector with intensified competition, making it necessary for individual banks to understand the different perceptions of service quality. Banks need to identify the different parameters influencing service quality and develop their strategies, so that customers can be attracted and retained in the competitive environment (Mualla, 2011). Service Quality gets impacted due to different demographic factors such as gender, marital status, income, age, occupation, and education have an impact on service quality measures with respect to banking (Tam,2004;Gupta and Bansal, 2011). The research thereby concentrates and looks at evaluating how the different demographic factors have an impact on customers using the banking services in Jordan. To evaluate how demographics have an impact on service perception the research will specifically look at factors like age, gender, religion, income, education, and employment status so that the impact it has on the banking sector can be identified LITERATURE REVIEW Parasuraman, Zeithaml, and Berry (1988) define service quality as the gap between the expectations of the customers and the service standard which has been delivered. It is subjective: as Gefen (2002) shows, the same service standard can be consistent with levels of service quality that differ from one person to another. Sultan and Wong (2010a) show that service quality reflects perceptions which differ from one of ten factors to another, based on the different needs and requirements of customers.Cronin and Taylor (1992, 1994) move another step forward by showing how the five perceived service quality standards can also be identified through the use of the SERVPERF model. The aspect of service quality in the banking system needs to be examined and find out so that the manner in which perceptions influence service quality can be determined. The use of different models and techniques will help to understand the role it has and will help to thereby develop appropriate strategies based on it Avkiran (1994) used the BANKSERV evaluation, which is based on the SERVQUAL model, to show that the four dimensions which impact bank personnel service quality are presentation, credibility (which relates to trust between the bank’s staff and clients), communication (which relates to verbal as well as written interactions between bank staff and clients), and customer accessibility (which relates to the adequacy of staff to serve clients). Raven and Welsh (2004) identify gender as one specific demographic factor that results in a difference between service qualities in the banking sector. It was seen through the study that men expect a higher level of service quality as compared to women with reference to expectations, assurance and reliability. Havinal et al. (2013) used the SERVPERF scale to find out the manner in which variabls like gender, age, nativity, level of education, annual income and occupation have on service quality. It was analyzed that education, income and occupation has an impact on service quality Seiler et al. (2013) conducted a study to find how customer demographics impact service value, customer satisfaction, and customer loyalty in the private banking industry. It was analyzed that customer satisfaction impacts customer loyalty directly whereas service value does not have a direct impact on customer loyalty. Gagliano and Hathcote (1994) identify different demographic characteristics like race, marital status, and income results in the perception of people regarding the service quality and standards. Stafford (1996) identified the different elements of service quality and highlighted how demographic characteristics have a role in shaping service standards in developing countries. This was supported by Caruana (2002) who identified loyalty, service quality and customer satisfaction as the main dimensions which impact service quality in the banking sector. Erol and El-Bdour (1989) find how service quality is examined in the Jordanian banking system and identified that people differentiates between the services of the different banking system based on the different services that are provided by the banking system. Since, people look to differentiate between the different facilities offered by conventional and Islamic banking systems such as foreign exchange, safety deposit boxes, night depository, and travelers’ checks it results in different service quality standards based on which people look to select banks. Naser et al. (1999) identifies people’s perception of Islamic banks was positive due to strong brand name and confidence. People had a strong preference for Islamic banks due to their strong brand image and reputation despite them having fewer facilities in comparison to other private banks. Saleh and Zeitun (2006) used the performance evaluation methodology to assess the concepts of profit maximization, capital structure, and liquidity test to monitor the performance of the Jordan Islamic Bank for Finance and Investment (JIBFI), and the Islamic International Arab Bank (IIAB) in Jordan. It was identified that banks focused on improving service quality and short term investments were given priority, improving their profitability and ensuring that the overall level of service quality was highly dependent on the different service parameters. Need for the Study The Jordanian Banking system is witnessing a growth of 8% due to increase in people using different banking facilities (Havinal &Sirigeri, 2013). The population is also growing at a rate of 5% which an opportunity to understand the different dimensions through which service quality can be improved so that more and more people can be attracted and retained (Havinal &Sirigeri, 2013). This will help the economy to ensure better growth rate in the banking sector and will provide an opportunity through which people will start to have moe and more bank accounts and use different features for their daily activities. The Jordanian banking industry is witnessing strong competition from local and international players. To ensure that they are able to sustain and enhance their customer base, they must focus on service quality so that customer expectations and perceptions can be met. With the increase in the number and popularity of banking services, banks need to make sure that they are doing whatever is necessary to maximize levels of satisfaction (Havinal &Sirigeri, 2013). This requires that bankers understand the manner in which demographic variables have an impact on service quality. Hence, this study has been developed to determine whether there are demographic differences in the perception of Jordanian banking sector service quality. This will thereby help to achieve the following objectives To study the demographic profiles of the Jordanian banking customers, To study how demographicvariables affect the Jordanian banking customers perceptions about banking service quality. METHODOLOGY The research is exploratory in nature. Asystematic random survey was conducted between September 2013 and January 2014 in six major cities (population is ≥10,000 people) in Jordan. These cities are Amman, AzZarqa, Irbid, Al Karak, Ar-Ramtha, and Jerash. The paper-based structured survey questionnaires were distributed to2000 households’ letter boxes and these were distributed following systematic random sampling following the suggestions of the current literature(Gilbert et al., 2004; Othman and Ownen, 2001).There were 974 completed questionnaires(with a response rate of 48 per cent), where eleven completed responses were found faulty due to consumers’ selections of extreme answers. These were excluded. Thus, a total number of 963 responses entered for further data analyses. The questionnaire includedfifty-four items, measuring perceived service quality on a seven point Likert-type scale (“strongly agree” to “strongly disagree”). The perceived service quality items wereadapted from the Carter measure (Othman and Owen, 2001) and the Banking Service Quality (BSQ) measure (Abdullah et al., 2011). To identify demographic differences in the perceptions of service quality, an ANOVA test was carried out for Age, Religion, Gender, Occupation, Education, and Income factors.Any significant factors were further tested with a post-hoc Tukey test to find out if significant differences existed due to groupings of the items. The prime reason for choosing the post-hoc Tukey test was that it is the best possible pairwise test available for sample sizes which are unequal. The analysis was performed using SPSS v.20. RESULTS The results of the ANOVA were as follows: Dimensions Differences Existed or Not Post Hoc Tukey Test Age Yes No Gender No No Education No No Religion Yes No Income No No Occupation Yes No Age Significant differences were observed across ages. However, the post hoc Tukey test did not identify any differences between specific groups for these 6 items, possibly due to the small sample size in the upper income ranges as shown in the appendix. Gender No significant difference was observed between males and females, signifying similar perceptions and expectations of bank service quality. Education No significant difference was observed between people from different educational backgrounds. Religion Significant differences were observed across religions. However, the post hoc Tukey test did not identify any differences between specific groups for these 6 items, possibly due to the small sample size in the upper income ranges as seen in the appendix. The difference occurred due to religion as Islam people have a different view about service quality in banking whereas others have a different perception about banking resulting in service difference to exist Income No significant difference was observed between people with different incomes. Occupation The analysis highlights there were two significant occupational differences on service quality perception based on age and occupation; however, there were no significant differences between the individual groups within the occupational dimensions. This clearly highlights the manner in which difference exists between perceptions of quality standard in the service banking industry. DISCUSSION The findings from the study are as follows: No difference existed in the perceptions of service quality, based on gender, income and education. Difference existed in the perceptions of service quality, based on religion, age and occupation. Customers within the age group of 20 – 39 demand more facilities and services from the banking sector. People look at assurance, brand name, and other additional features when making decisions about particular banks. Middle- and higher-income people with education have a higher demand for better services and facilities. Limitations of the Study The research carried out has certain limitations which are as follows: There is an unequal distribution of groups within the demographic factor which has thereby made the result to be skewed slightly. Several groups of people were under represented in the study: old age groups, less educated people, Christians, higher-income subjects, and the unemployed. The survey’s low response rate could result in biases that prevent general conclusions. Future Implication of the Study The results obtained from the study can be used by banks to develop their marketing strategies, so that they are able to attract their target customers. Unlike other studies, this study does not find gender differences in the perception of service quality, but it does find occupational differences and a difference based on income in the way people choose banking services. Conclusion We examined the manner in which demographic factors impact service quality in the Jordanian banking sector. Customers of Jordanian banks differ in their perceptions of service quality, based on age, religion, and occupation.No difference existed in the perceptions of service quality, based on gender, income and education. These findings will help banks understand their customers and develop strategies to meet their needs by having better service standards. References Abdullah, F., Suhaimi, R., Saban, G., &Hamali, J. (2011). Bank Service Quality (BSQ) IndexAn indicator of service performance. International Journal of Quality & Reliability Management, 28(5), 542. Avkiran, N. K. (1994). Developing an instrument to measure customer service quality in branch banking.International Journal of Bank Marketing, 12(6), 10-18. Cronin, J., & Taylor, S. (1992). Measuring service quality: a re-examination and extension.Journal of Marketing, 56(3), 55-68. Cronin, J., & Taylor, S. (1994). SERVPERF versus SERVQUAL: reconciling performance-based and perceptions-minus-expectations measurement of service quality. Journal of Marketing, 58(1), 125-131. Erol, C., & El-Bdour, R. (1989).Attitudes, behaviour, and patronage factors of bank customers towards Islamic banks.International Journal of Bank Marketing, 7(6), 31-37. Gagliano, K. B., &Hathcote, J. (1994). Customer expectations and perceptions of service quality in retail apparel specialty stores. journal of services marketing, 8(1), 60-69. Gefen, D. (2002). Reflections on the dimensions of trust and trustworthiness among online consumers.ACMSigmis Database, 33(3), 38-53. Gupta, K., & Bansal, J. (2011). Effect of Demographic Variables on Customer Perceived Internet Banking Service Quality. Paradigm, XV, 83-92. Havinal, V., &Sirigeri, J. (2013).Prioritizing Service Quality Dimensions in Private Sector Banks.International Journal Of Marketing, Financial Services & Management Research, 2(6), 176-188. Jain, S. K., & Gupta, G. (2004). Measuring service quality: SERVQUAL vs. SERVPERF scales. Vikalpa, 29(2), 25-37. Mualla, N. D. (2011). Assessing the Impact of Sales Culture on the Quality of Bank Services in Jordan.Jordan Journal of Business Administration, 7(1). Naser, K., Jamal, A., & Al-Khatib, K. (1999). Islamic banking: a study of customer satisfaction and preferences in Jordan. International Journal of Bank Marketing, 17(3), 135-151. Othman, A., & Owen, L. (2001). Adopting and measuring customer service quality (SQ) in Islamic banks: a case study in Kuwait finance house. International Journal of Islamic Financial Services, 3(1), 1-26. Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1988). SERVQUAL: A multiple-item sales for measuring customer perception of service quality. Journal of Retailing, 64(1), 12-40. Raven, P., & Welsh, D. H. (2004). An exploratory study of influences on retail service quality: a focus on Kuwait and Lebanon. journal of services marketing, 18(3), 198-214. Saleh, A. S., &Zeitun, R. (2006). Islamic Banking Performance in the Middle East: A Case Study of Jordan. Faculty of Commerce-Economics Working Papers, 157. Seiler, V., Rudolf, M., &Krume, T. (2013).The influence of socio-demographic variables on customer satisfaction and loyalty in the private banking industry.International Journal of Bank Marketing, 31(4), 235-258. Stafford, M. R. (1996). Demographic discriminators of service quality in the banking industry.journal of services marketing, 10(4), 6-22. Sultan, P., & Wong, H. Y. (2010). Service quality in higher education–a review and research agenda. International Journal of Quality and Service Sciences, 2(2), 259-272. Tam, J. L. (2004). Customer satisfaction, service quality and perceived value: an integrative model. Journal of marketing management, 20(7-8), 897-917. Appendix 1 ANNOVA Test: Age Gender Religion Income Occupation Education Items F Sig. F Sig. F Sig. F Sig. F Sig. F Sig. Banking services are governed by Islamic laws 0.57 0.84 1.12 0.29 0.03 0.88 1.46 0.16 0.85 0.57 1.12 0.29 I do not receive interest for my saved money 1.04 0.41 3.32 0.07 0.02 0.88 1.62 0.10 0.43 0.92 3.32 0.07 The bank offers products that are permitted by Islamic laws 1.02 0.42 0.68 0.41 1.25 0.26 1.72 0.08 0.19 1.00 0.68 0.41 The bank does not charge interest for loans 2.26 0.01 0.00 0.99 1.71 0.19 0.66 0.74 0.53 0.85 0.00 0.99 The bank maintains the provision of profit-loss share in products 0.90 0.53 0.55 0.46 2.18 0.14 1.25 0.26 0.36 0.96 0.55 0.46 The staff of this bank are polite 1.18 0.30 0.38 0.54 0.07 0.79 0.88 0.55 1.31 0.23 0.38 0.54 The staff of this bank are confident 1.22 0.27 0.27 0.60 4.94 0.03 1.70 0.08 1.35 0.21 0.27 0.60 The bank has an effective customer complaint process 0.86 0.57 0.74 0.39 2.48 0.12 0.54 0.85 0.70 0.71 0.74 0.39 The bank uses customer’s feedback to improve its service delivery processes 0.93 0.51 0.10 0.75 4.14 0.04 1.00 0.43 1.02 0.42 0.10 0.75 The bank provides financial advices 1.41 0.17 0.00 0.97 3.89 0.05 1.82 0.06 1.06 0.39 0.00 0.97 The bank has a comfortable interior design 1.78 0.06 0.78 0.38 2.68 0.10 1.31 0.23 1.39 0.19 0.78 0.38 The bank provides easy access to account information 2.70 0.00 1.38 0.24 9.33 0.00 1.96 0.04 1.02 0.42 1.38 0.24 The bank has a skilled management team 1.34 0.20 1.05 0.31 0.06 0.81 1.53 0.13 0.67 0.73 1.05 0.31 Accessing to banking services is easy (e.g. ATMs, Online banking etc.) 2.18 0.02 0.14 0.71 0.82 0.37 1.60 0.11 1.50 0.14 0.14 0.71 The bank is secure 1.98 0.03 0.01 0.93 0.01 0.92 0.79 0.63 1.69 0.09 0.01 0.93 The bank provides efficient services 1.65 0.09 0.02 0.89 0.61 0.43 0.52 0.86 1.38 0.19 0.02 0.89 The staff of this bank keep accurate records 1.82 0.05 0.24 0.63 0.04 0.84 0.49 0.88 2.01 0.04 0.24 0.63 The external appearance of the bank is attractive 1.28 0.24 0.00 0.96 0.04 0.85 0.86 0.56 1.56 0.12 0.00 0.96 The bank provides effective services in shortest possible time 1.42 0.17 0.01 0.93 0.24 0.63 0.83 0.59 0.38 0.95 0.01 0.93 The bank’s opening hour of operation is useful 2.35 0.01 0.03 0.86 0.06 0.80 0.95 0.48 1.07 0.38 0.03 0.86 The bank provides services at time it promised to do so 1.22 0.28 0.00 0.97 0.42 0.52 1.61 0.11 1.15 0.32 0.00 0.97 The bank provides quality services across its all branches 1.35 0.20 0.33 0.57 0.61 0.44 0.87 0.55 2.18 0.02 0.33 0.57 The bank provides services right at the first time 0.98 0.46 0.14 0.71 2.98 0.09 1.80 0.07 1.72 0.08 0.14 0.71 The overdraft privileges on current account is attractive 1.18 0.30 1.62 0.20 0.00 0.98 1.59 0.11 1.18 0.31 1.62 0.20 This bank is conveniently located 1.02 0.43 0.39 0.53 0.00 0.97 2.30 0.02 1.91 0.05 0.39 0.53 The bank is well known 0.81 0.62 3.06 0.08 1.68 0.20 2.35 0.01 1.13 0.34 3.06 0.08 The bank has a greater impact in society in terms of asset management 0.84 0.59 0.00 0.97 0.92 0.34 0.55 0.84 0.41 0.93 0.00 0.97 The bank has a good parking allocation 0.75 0.67 0.01 0.91 1.50 0.22 0.85 0.57 1.91 0.05 0.01 0.91 The bank maintains confidentiality of its customers 1.01 0.44 1.46 0.23 0.17 0.68 1.76 0.07 1.48 0.15 1.46 0.23 I have confidence in Bank’s operations 0.74 0.69 3.96 0.05 0.87 0.35 1.14 0.33 1.15 0.32 3.96 0.05 The bank offers profitable products 0.96 0.48 0.02 0.88 0.01 0.94 0.77 0.64 0.73 0.68 0.02 0.88 The bank promotes ethical activities in society 1.17 0.31 0.57 0.45 1.60 0.21 1.31 0.23 0.15 1.00 0.57 0.45 The bank charges a low service fee 0.65 0.77 0.24 0.63 0.72 0.40 1.02 0.42 1.31 0.23 0.24 0.63 The staff of this bank has knowledge of customer’s needs 0.80 0.63 0.00 0.98 0.10 0.75 0.78 0.63 0.61 0.79 0.00 0.98 The bank offers innovative products 0.83 0.61 1.03 0.31 0.00 0.98 1.56 0.12 1.26 0.26 1.03 0.31 The bank offers a wide range of products 0.96 0.48 1.16 0.28 1.77 0.18 1.43 0.17 1.23 0.27 1.16 0.28 The staff of this bank are competent to answer customer queries 1.54 0.12 0.01 0.92 0.65 0.42 0.85 0.57 0.80 0.61 0.01 0.92 The staff of this bank are helpful 1.33 0.21 0.09 0.77 0.46 0.50 0.94 0.49 1.48 0.15 0.09 0.77 The staff of this bank are pleasant 1.25 0.26 0.20 0.65 2.69 0.10 1.19 0.30 1.18 0.31 0.20 0.65 The staff of this bank are smart 1.37 0.19 0.61 0.43 0.97 0.32 1.13 0.34 1.46 0.16 0.61 0.43 The staff of this bank are supportive 1.26 0.25 0.03 0.87 1.42 0.23 1.05 0.40 0.87 0.55 0.03 0.87 The bank provides credit on favourable terms 1.54 0.12 0.05 0.82 0.00 0.95 0.99 0.45 0.93 0.50 0.05 0.82 The bank has adequate branches in convenient locations 1.21 0.28 0.07 0.79 0.31 0.58 1.41 0.18 0.40 0.93 0.07 0.79 The bank provides excellent counter services 1.19 0.29 0.94 0.33 0.05 0.83 1.23 0.27 1.05 0.40 0.94 0.33 The staff are able to fulfill individual needs 1.59 0.11 1.08 0.30 1.45 0.23 1.41 0.18 1.33 0.22 1.08 0.30 The bank provides caring attention ( 1.14 0.33 1.20 0.27 3.78 0.05 1.34 0.21 1.11 0.35 1.20 0.27 The bank provides highly standardized services 1.39 0.18 0.03 0.86 0.00 0.99 1.20 0.29 0.86 0.56 0.03 0.86 The bank’s technological capability is high 1.34 0.20 0.27 0.60 1.29 0.26 1.19 0.30 1.18 0.30 0.27 0.60 The bank allows customers to realize unexpressed needs 1.53 0.12 0.24 0.63 3.50 0.06 0.75 0.67 0.73 0.68 0.24 0.63 I trust on this bank’s services 1.84 0.05 0.02 0.89 0.08 0.78 0.72 0.70 0.37 0.95 0.02 0.89 My transactions are safe with this bank 1.86 0.05 0.24 0.63 1.48 0.22 1.17 0.31 0.50 0.88 0.24 0.63 I can depend on the employees of this bank 1.88 0.04 0.31 0.58 2.89 0.09 2.08 0.03 0.96 0.47 0.31 0.58 The staff of this bank communicate in an understandable way 1.48 0.14 0.05 0.83 2.26 0.13 2.20 0.02 0.17 1.00 0.05 0.83 I am satisfied with the employees of this bank 1.35 0.20 0.01 0.91 2.28 0.13 1.94 0.04 0.64 0.76 0.01 0.91 Overall, I am satisfied with the bank’s products 1.36 0.20 0.37 0.54 1.96 0.16 2.23 0.02 1.11 0.35 0.37 0.54 Read More