Client satisfaction in Indian banks: an empirical study

Abstract

Purpose

The purpose of this paper is to identify the factors impacting customer satisfaction in Indian banks and analyze their effects the level of customer satisfaction through a regression analysis. The primary contribution of this study is the analysis and resulting insights on the critical factors impacting client satisfaction within the Indian retail banking sector.

Design/methodology/approach

A 28 item questionnaire was prepared based on literature review and discussions with current customers of Indian banks. The questionnaire was then sent out to current customers of 13 retail banks in India. In total, 420 completed questionnaires were received, out of which 400 were found to have been accurately and completely answered. The 28‐item instrument has been empirically tested for unidimensionality, reliability and validity using Cronbach alpha and exploratory factor analysis.

Findings

A factor analysis suggests that there are five factors driving customer satisfaction: “service quality”, “ambience/hygiene”, “client participation/involvement”, “accessibility” and “financial”. Subsequent multiple regression analysis revealed that “service quality”, “ambience and hygiene”, and “client participation and involvement” in that order are the most important factors impacting client satisfaction.

Practical implications

The identified dimensions are expected to bring clarity to the issue of customer satisfaction in retail banking, to aid retail bankers in improving specific parameters of service in order to increase overall customer satisfaction. This would help the management of the banks to create strategies and action plans to retain their current customers and to attract new customers.

Originality/value

The results from the current study are crucial because previous studies have produced scales that bear a resemblance to SERVQUAL, a generic measure of service quality, which may not be solely adequate to assess the perceived quality of service in the Indian banking sector. In contrast, the present study captured customers' satisfaction levels in a 28‐item questionnaire exclusively designed, keeping in mind the unique nature of the Indian banking sector.

Citation

Gupta, A. and Dev, S. (2012), "Client satisfaction in Indian banks: an empirical study", Management Research Review, Vol. 35 No. 7, pp. 617-636. https://doi.org/10.1108/01409171211238839