International Journal of Management (IJM) Volume 11, Issue 11, November 2020, pp. 1291-1299. Article ID: IJM_11_11_122 Available online at http://iaeme.com/Home/issue/IJM?Volume=11&Issue=11 Journal Impact Factor (2020): 10.1471 (Calculated by GISI) www.jifactor.com ISSN Print: 0976-6502 and ISSN Online: 0976-6510 DOI: 10.34218/IJM.11.11.2020.122

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COMPARATIVE ANALYSIS OF ELEMENTS OF QUALITY OFFERED IN PRIVATE SECTOR AND PUBLIC SECTOR OF INDIA

Prateek Laddha Symbiosis Institute of Business Management, Bangalore, Symbiosis International (Deemed University) (SIU), Electronics City, Hosur Road, Bengaluru, Karnataka, India

ABSTRACT In today’s generation service quality in both private as well as public banks are treated as most important factor and asset for satisfying customer which indeed increases the customer loyalty and retention rate of customers. The aim of this research paper to do a comparative analysis of the service quality in both private as well as public sector banks. Moreover, we tried to build a relationship between various service factors like responsiveness, assurance, empathy, reliability and tangibility to the customer satisfaction. Prior research suggests that there is difference between customer expectations and customer actual experience with respect to different sector. By realizing the gap between perceived and actual service quality, customer satisfaction in banking sector can be improved Key words: Service quality, customer satisfaction, assurance, tangibility, banking sector. Cite this Article: Prateek Laddha, Comparative Analysis of Elements of Quality Offered in Private Sector and Public Sector Banks of India, International Journal of Management, 11(11), 2020, pp 1291-1299. http://iaeme.com/Home/issue/IJM?Volume=11&Issue=11

1. INTRODUCTION The Indian service sector include wide range of sectors like hotels and restaurants, banking, insurance, education, railways, telecommunication, public administration, retail trade, wholesale trade and many other services. Evolution Of Banking Industry: The banking industry is divided into 3 phase the Pre- Independence phase i.e. before 1947, The After Independence Phase i.e.1947-1991 and The LPG(1991) era and beyond. In Pre-Independence phase the banking started with the of Hindustan which was in Kolkata (back then known as Calcutta) in 1770 by Alexander & Co. but the bank has ceased

http://iaeme.com/Home/journal/IJM 1291 [email protected] Comparative Analysis of Elements of Quality Offered in Private Sector and Public Sector Banks of India it’s operations in 1832 because of the fall of Agency House of Alexander and Co. “The Bengal Bank” and “General ” were also started in 1775 by East India Company. The stopped its operations in 1791 because of not able to earn profits and The Bengal Bank also stopped its operations a little latter. Later on the Bank of Bengal and were merged into one entity. The new body which was known as “The ” later changed its name to “”. In 1935, The was started by the recommendation given by the Hilton Young Commission. During this phase the consumer confidence was low so most of the lending was done through money lenders or unorganized players. Phase 2:- Post Independence Era – One of the major changes that happened in this era was the Nationalization of Banks. So in 1949, the of India – Reserve bank of India was Nationalized and within the span of 20 years 14 commercial banks were nationalized during the period of Congress Government headed by Smt. Indira Gandhi. In 1975,the recommendation given by , RRBs(Regional Rural Banks ) were started with aim to serve the rural people and reach the unserved people of the country. The main reason behind this to reach the masses as most of the population resided in rural areas of the country. In this era other specialized banks were also started to boost the economy of the country. Third Phase has bought the major changes in Indian Economy as Government has opened up gates for the Foreign and Private Investors to invest in India. This led to private investors entry in banking sector of India. In this Era RBI gave license to many private banks. Later in this period many mergers have been happened to increase the efficiency of banks. In this present scenario Banking sector in India consists of a Central bank which is also known as regulatory bank of India -Reserve bank Of India along with 18 public sector banks, 22 private sector banks, 40+ foreign banks, 50+ regional rural banks, 150+ urban cooperative banks and 94,000+ rural cooperative banks. This study majorly focused on services provided by Private and Public Sector banks. The Banking Sector Structure of India Nowadays the excellent customer satisfaction is not an optional strategy for banking institutions which may or may not be adopted by the banks to differentiate one from other. The customer satisfaction is the key factor which created the link between profitability and service quality in banking sector which will further help in successful targeting of “quality” customers and the retention of those customers. Banking sector over the globe has recognized how crucial is the customer satisfaction for enduring and developing the relationship with customers which will help the institutions to increase their profits. The previous research suggests that the major reason behind customer switching banks is the customer dissatisfaction (Manrai and Manrai ,2007). The variety of reasons could be responsible for dissatisfaction. In the proposed model we will try to bridge the gap between customer expected service performance and actual service performance. So when the expected service level offered by the organization is high than the actual service then the service quality is considered as low and if the expected service level offered by the organization is low than the actual service then the service quality is considered as high. The major focus of this paper to find out the elements which will help the bank to increase their service quality and match the expectations of customers. The main aim of this paper is to find out which sector is lagging in which service quality factor By running the regression model taking the dependent variables as responsiveness we have generated the few questions will be act as an independent variables so with the help of

http://iaeme.com/Home/journal/IJM 1291 [email protected] Prateek Laddha the model we can find out which question have a maximum significance and will be taken is the most important factor for the responsiveness and same will go with the other factors. In the end we have generated the regression model for the customer satisfaction where the customer satisfaction act as a dependent variable and all the other factors considered as assurance, responsiveness, empathy, reliability and tangibility will it is the independent variable so while running the model will get the significant value of each variable and we can find out which factor affects the most. So that we can give suggestions to our bank employees to work on that factor to Improve customer satisfaction.

2. NEED FOR THE STUDY With the current scenario where customer satisfaction plays a major role and there are banks who are lagging in some of the parameters of the service quality parameters that are used in SERVQUAL model. So to provide a better satisfaction to customers and enhance the customer experience the research about this topic is necessary.

3. OBJECTIVES OF THE STUDY  The main objective is to come up in which area the bank is lagging and what measures can be taken to enhance the service quality.

4. METHODOLOGY The below figure is the research model of the study. It demonstrates how the customer satisfaction can be predicted with the help of 5 factors.

 Reliability Private Bank  Assurance  Responsiveness  Tangible  Empathy

Type Of Bank Customer Sasfacon

 Reliability Public Bank  Assurance  Responsiveness  Tangible  Empathy

Figure 1

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4.1. Instrument Analysis For the research we have used the quantitative method for collection of data. The survey has been floated to random people so that the views of different people can be captured. We have used survey as the source for collection of data because it is easier than any other medium as well as data can collected at much better pace. The population of our study is India . We have adapted Questionnaire as a tool from previous research papers. Now a days there is fierce competition in banking sector to be ahead of the competition the study has been done to find:  What are the important factors on which the customer satisfaction depends the most?  What is the satisfaction level of customers in both the sectors?  Which sector is ahead in which dimension and how it can be further improved? The study used a set of questionnaires which were further used to analyze the service quality public sector and private sector banks. The questions were further divided in 6 sets. All the items were put on a fivepoint likert scale ranging from strongly disagree to strongly agree.  General Information to capture diversity of the respondents. - 3 questions  Questions based on reliability – 4 Questions  Questions based on responsiveness – 4 Questions  Questions based on assurance – 5 questions  Questions based on empathy – 4 questions  Questions based on tangibility – 4 questions We have created the liner regression model using R software. We have run the model for 6 times.  Model 1 -> Factors affecting Reliability  Model 2 -> Factors affecting Responsiveness  Model 3 -> Factors affecting Assurance  Model 4-> Factors affecting Empathy  Model 5-> Factors affecting Tangibility  Model 6-> Factors affecting Customer Satisfaction

Hypothesis Hypothesis 1 – Reliability is a significant factor in affecting customer satisfaction. Hypothesis 2 - Responsiveness is a significant factor in affecting customer satisfaction. Hypothesis 3 – Assurance is a significant factor in affecting customer satisfaction. Hypothesis 4 – Empathy is a significant factor in affecting customer satisfaction. Hypothesis 5 – Tangibility is a significant factor in affecting customer satisfaction.

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4.1.1. Data Analysis Demographic details has been summarized in Table 1

Table 1 Frequency Percentage Gender Male 86 54.77% Female 71 45.23% Age Below 25 115 73.24% 25-34 32 20.38% 34-45 0 0% Above 45 10 6.3%

The above table provide data on age and gender of the respondents. The sample include total of 157 customers. Female customers are 45.23% of total customers while male customers are 54.77% of total customers. The largest group of respondents corresponds to below 25 of age (73.24%) Mean and Standard deviation of level of customer satisfaction along with all the dimension for both the sectors has been summarized in Table 2

Table 2 Public Banks Private Banks Overall Mean Std Deviation Customer 3.63 3.73 3.69 0.60 Satisfaction Reliability 3.62 3.79 3.71 0.62 Responsiveness 3.72 3.63 3.67 0.84 Assurance 3.95 4.02 3.99 0.68 Empathy 3.37 3.72 3.57 0.69 Tangibility 3.68 4.01 3.87 0.84

Customers are more satisfied with the Assurance as service quality factor in both the banks. Public sector banks lags in Empathy as service quality and Private sector ban lags in Responsiveness as service quality. If we compare both the banks on different dimensions, we can say that except of responsiveness Private sector banks are ahead of Public sector banks. Based on the previous papers 16 items are selected on which the analysis can be done. These 16 items are showed in Table 3 along with the mean scores.

Table 3 Sr. No. Service Quality Public Sector (Mean) Private Sector (Mean) Reliability 1 Does your bank promise to do 3.59 3.79 something by a certain time, it does so? 2 When you have a problem and your 3.40 3.64 bank shows sincere interest in solving it. 3 Your bank delivers error-free records 3.84 3.81 Responsiveness 4 The employee in your bank gives 3.69 3.79

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prompt service 5 Employees in your banks are always 3.62 3.81 willing to help you 6 The employee in your bank will tell 3.67 3.35 you exactly when the service will be performed Assurance 7 The behavior of employees in your 3.51 3.90 bank will instill confidence to you 8 You feel safe in your transaction with 4.48 4.29 your bank. 9 Employees in your bank are 3.75 3.86 consistently courteous with you. 10 Employees in your bank have the 3.60 3.92 knowledge to answer your questions Empathy 11 The employee of your bank 3.56 3.52 understands your specific need. 12 Your bank has operating hours 3.46 3.90 convenient to all its customers. 13 Your bank gives you individual 3.24 3.70 attention. Tangibility 14 Your bank has modern-looking 3.40 4.03 equipment. 15 Your bank’s employees are neat 3.87 4.05 appearing. 16 Your bank’s physical facilities and 3.77 3.89 amenities are satisfactory.

Regression Model

Table 4 Coefficients Estimate Std. t value intercept Multiple Adjusted Error R square R square Reliability 0.8303 0.827 (intercept) 0.26012 0.13357 1.947 Does your bank promise to do 0.27717 0.02546 11.643 *** something by a certain time, it does so? Your bank delivers error-free records 0.36065 0.02763 13.054 *** When you have a problem and your 0.29641 0.02767 10.017 *** bank shows sincere interest in solving it. Responsiveness 0.9156 0.914 Intercept 0.34630 0.10359 -3.343 The employee in your bank gives 0.34585 0.03483 9.929 *** prompt service Employees in your banks are always 0.37138 0.03608 10.293 *** willing to help you The employee in your bank will tell 0.38398 0.02507 15.314 *** you exactly when the service will be performed Assurance 0.8806 0.8775 Intercept -0.2 0.15356 -1.439 The behavior of employees in your 0.26485 0.02879 8.243 *** bank will instill confidence to you

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You feel safe in your transaction with 0.32444 0.04030 8.050 *** your bank. Employees in your bank are 0.23360 0.02583 9.045 *** consistently courteous with you. Employees in your bank have the 0.24065 0.02919 9.199 *** knowledge to answer your questions Empathy Intercept -0.009481 0.126748 -0.075 0.848 0.845 The employee of your bank 0.392802 0.033008 11.900 *** understands your specific need. Your bank has operating hours 0.297212 0.023165 12.830 *** convenient to all its customers. Your bank gives you individual 0.311287 0.023678 13.146 *** attention. Tangibility 0.9157 0.9141 Intercept -0.08289 0.09990 -0.83 Your bank has modern-looking 0.33623 0.02555 13.16 *** equipment. Your bank’s employees are neat 0.39201 0.02626 14.93 *** appearing. Your bank’s physical facilities and 0.29346 0.02851 10.29 *** amenities are satisfactory. Customer Satisfaction Intercept 0.01984 0.18129 0.109 0.7431 0.7346 Rate your bank in terms of Tangibility 0.08695 0.03865 2.249 * Rate your bank in terms of Empathy 0.22657 0.04836 4.685 *** Rate your bank in terms of Assurance 0.28871 0.04845 5.959 *** Rate your bank in terms of 0.12942 0.03547 3.649 *** Responsiveness Rate your bank in terms of Reliability 0.24143 0.04905 4.923 ***

Models:  Model 1 -> Factors affecting Reliability Reliability= 0.26012 + 0.277(Bank promise to do something by a certain time) + 0.36065(Error Free records) + 0.2964(Bank shows sincere interest in solving problem  Model 2 -> Factors affecting Responsiveness Responsiveness= 0.34630 + 0.3485(Prompt Service) + 0.37138(Willing to help) + 0.38398(Bank will tell exactly when the service will be performed)  Model 3 -> Factors affecting Assurance Assurance = -0.2 + 0.26485 (Employees behavior instill confidence in customer) + 0.3244(Feel safe while doing transaction) + 0.23360(Employees consistently courteous nature) + 0.24065(Employees have knowledge to answer questions)  Model 4-> Factors affecting Empathy Empathy = -0.009481 + 0.3928(Bank understands specific need) + 0.2972(Operating hours convenient to all its customers) + 0.31128(Individual attention)  Model 5-> Factors affecting Tangibility Tangibility = -0.08289 + 0.33623(Modern-looking equipment) + 0.3920(Neat appearing) + 0.2934(Physical facilities and amenities)  Model 6-> Factors affecting Customer Satisfaction Customer Satisfaction = 0.01984 + 0.08695(Tangibility) + 0.22657(Empathy) + 0.28871(Assurance) + 0.12942(Responsiveness) + 0.24143(Reliability)

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All the questions that were asked in a questionnaire are significant at 99.99% significance level, so we are going to compare the coefficients of all the questions and will analyze the question with highest coefficient value will be most important factor for that service quality factor. So, we will use the same procedure for Model 1-5.  In Model 1 for Reliability – “Error free records” is the most important of all. So, customer believes that bank should have more of error free records if bank wants to work on reliability factor.  In Model 2 for Responsiveness – “Bank will tell exactly when the service will be performed” is most important of all.  In Model 3 for Assurance – “Feel safe while doing transaction” is most important of all.  In Model 4 for Empathy – “Bank understands specific need” is most important of all.  In Model 5 for Tangibility – “Neat appearing” is most important of all.  In Model 6 for Customer Satisfaction – Tangibility is not significant at 99.99% and rest all the values are significant. So, all the null hypothesis is not rejected except for Hypothesis 5 because Tangibility is not significant factor.

4.3. Structural equation modeling Model 1 -> Factors affecting Reliability Reliability= 0.26012 + 0.277(Bank promise to do something by a certain time) + 0.36065(Error Free records) + 0.2964(Bank shows sincere interest in solving problem) Model 2 -> Factors affecting Responsiveness Responsiveness= 0.34630 + 0.3485(Prompt Service) + 0.37138(Willing to help) + 0.38398(Bank will tell exactly when the service will be performed) Model 3 -> Factors affecting Assurance Assurance = -0.2 + 0.26485 (Employees behavior instill confidence in customer) + 0.3244(Feel safe while doing transaction) + 0.23360(Employees consistently courteous nature) + 0.24065(Employees have knowledge to answer questions) Model 4-> Factors affecting Empathy Empathy = -0.009481 + 0.3928(Bank understands specific need) + 0.2972(Operating hours convenient to all its customers) + 0.31128(Individual attention) Model 5-> Factors affecting Tangibility Tangibility = -0.08289 + 0.33623(Modern-looking equipment) + 0.3920(Neat appearing) + 0.2934(Physical facilities and amenities) Model 6-> Factors affecting Customer Satisfaction Customer Satisfaction = 0.01984 + 0.08695(Tangibility) + 0.22657(Empathy) + 0.28871(Assurance) + 0.12942(Responsiveness) + 0.24143(Reliability) All the questions that were asked in a questionnaire are significant at 99.99% significance level, so we are going to compare the coefficients of all the questions and will analyze the question with highest coefficient value will be most important factor for that service quality factor. So, we will use the same procedure for Model 1-5. In Model 1 for Reliability – “Error free records” is the most important of all. So, customer believes that bank should have more of error free records if bank wants to work on reliability factor.

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In Model 2 for Responsiveness – “Bank will tell exactly when the service will be performed” is most important of all. In Model 3 for Assurance – “Feel safe while doing transaction” is most important of all. In Model 4 for Empathy – “Bank understands specific need” is most important of all. In Model 5 for Tangibility – “Neat appearing” is most important of all. In Model 6 for Customer Satisfaction – Tangibility is not significant at 99.99% and rest all the values are significant. So, all the null hypothesis is not rejected except for Hypothesis 5 because Tangibility is not significant factor.

5. RESULTS AND DISCUSSION Public banks are lagging in almost all the factors except for tangibility so public banks should work on reliability responsiveness assurance and empathy which help them to improve their overall customer satisfaction. As per the model 1 the most important factor for reliability as error-free records so the public Bank started to maintain records which have less errors and which are more accurate. As per model 2 to improve the responsiveness rating the customer believes that if bank is able to tell exactly when the service will perform is one of the most important factor for increasing the rating for responsiveness service factor so public banks should work on this this area where they can exactly tell how much time will they take to complete the service for this they can use an analytical tool to analyze the time taken to solve previous problems and how much time taken to solve these problems which further help the banks to predict the exact duration to solve a particular problem or service . As per model 3 the factor which is most important to increase the rating in assurance service is how much customer feel safe while doing transaction. So public banks should be able to develop customer confidence while doing any transaction. Public bank can work on security factors. As per model 4 to increase the rating in empathy public banks should understand the specific needs of the customer so employees should listen to the customer problems and try to solve the problems in in time. employees should know what exactly customer needs and how to solve the problem or what service they should we should give to customers. As per model 5 to increase the rating in tangibility service area the employee should be neat appearing so private banks should work on that. To increase the customer satisfaction banks should work on reliability, assurance, responsiveness and assurance service factors. As per the model tangibility is not significant at 99.99% so that factor need not to be considered. So banks should look for error free records, should be able to tell customers how much time will it take to provide any service to the customer , customer should feel secure while doing any transaction , how much employees are able to understand the customer’s problem and are they able to deliver what exactly customer needs.

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[3] Kumar, M., Kee, F.T., & Manshor, A.T. (2009). Determining the relative importance of critical factors in delivering service quality of banks – an application of dominance analysis in SERVQUAL model. Managing Service Quality, 19(2), 211–228. [4] Parasuraman, A., Zeithaml, V.A., & Berry, L.L. (1985). A conceptual model of service quality and its implications for future research. Journal of Marketing, 49, 41-50. [5] Parasuraman A, Zeithaml VA, Berry L (1988)."SERVQUAL: a multiple-item scale for measuring customer perceptions of service quality", J. Retailing.64: 12-40. [6] Mensah (2010). Customer Satisfaction in the banking industry: A comparative Study of Spain and Ghana Unpublished PhD Dissertation [7] Zeithaml, V.A. and Bitner, M.J. (1996), Services Marketing, International edition, McGraw Hill,London. [8] Ladhari, R. (2008), “Alternative measure of service quality: a review”, Journal of Managing Service Quality, Vol. 18 No. 1, pp. 65-86. [9] Jamal, A. and Naser, K. (2003), “Factors influencing customer satisfaction in the retail banking sector in Pakistan”, International Journal of Commerce & Management, Vol. 13 No. 2, p. 29. [10] Kumar, M., Kee, F.T. and Charles, V. (2010), “Comparative evaluation of critical factors in delivering service quality of banks: an application of dominance analysis in modified SERVQUAL model”, International Journal of Quality & Reliability Management, Vol. 27 No. 3, pp. 351-77. [11] Dr. Snehalkumar H Mistry Professor, C. I. (2013, July). Measuring Customer Satisfaction In Banking Sector: With Special Reference To Banks Of Surat City. Asia Pacific Journal Of Marketing & Management Review Vol.2 (7),.

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