The impact of service quality on the performance of firms in the banking sector

Abstract

This study has examined the impact of service quality on the performance of firms in the banking sector. The study sought to determine the performance of firms in the banking sector, determine the relationship between service quality and bank performance and to establish ways of enhancing quality service and performance of firms in the banking sector. The study used a quantitative research approach. The research adopted the descriptive research design. Convenience sampling was used to select 381 respondents who made up the sample for the study. Data was collected using semi structured questionnaires. The study revealed that most of the participants agree that the Banks have up - to - date equipment and technology as regards tangibles. The study also found that banks show great concern in solving problems or complaints. It was also found that firms in the banking sector ensure privacy and confidentiality of customer’s information. The study found out that the five service dimensions tangibles, responsiveness, reliability, assurance and empathy enhance performance of banks. The effect of service quality dimensions on bank perfomance was estimated using descriptive statistics, correlation and regression analysis techniques. The findings also indicate that Pearson correlation coefficient for customer perception is significant (p < .001 for a two-tailed test) with the service quality dimensions. However, the study established that customers were satisfied with their current service provider and most have thought of changing their current banks to other banks due to dissatisfaction of services. In conclusion, the study showed that (1) there is a positive relationship between service quality and bank performance, (2) firms in the banking sector offer a wide range of products and services and (3) all the service quality dimensions (tangibles, responsiveness, reliability, assurance and empathy) are important with responsiveness, assurance and empathy having more emphasis. The research advises that firms in the banking sector should continuously address their customer’s needs. Firms in the banking sector should pay much attention to the customer complaints in order satisfy customers’ expectations. In competitive environments, the banks can have a competitive edge by providing superior quality services to enhance customer perception and improve bank performance. It is hoped that future studies will be conducted on service quality practices adopted by other serviceoriented organisations such as hotels and hospitals.