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Antecedents of customer
satisfaction: a study of Indian
public and private sector banks
Vinita Kaura

Customer
satisfaction

167

Faculty of Management Studies,

Mody Institute of Technology and Science, Lakshmangarh, India
Abstract
Purpose The purpose of this paper is to examine the effect of service quality, perceived price and
fairness and service convenience on customer satisfaction. It also aims to compare multiple regression
models between public and new private sector banks.
Design/methodology/approach A cross-sectional research on 445 retail banking customers
through a questionnaire is conducted. The population of the study consists of valued retail urban
customers of banks in Rajasthan, India, who frequently visit bank premises for transactions, have
accounts in at least two banks and have availed of at least one information technology based services.
Responses are analysed using regression analyses.
Findings Dimensions of service quality are employee behavior, tangibility and information
technology. Dimensions of service convenience are decision convenience, access convenience, transaction
convenience, benefit convenience and post-benefit convenience. For public sector banks, except
tangibility, all antecedents have positive impact on customer satisfaction. For private sector banks
except tangibility and benefit convenience all antecedents have positive impact on customer satisfaction.
Significant difference in beta coefficient is found between public and private sector banks regarding
employee behavior, decision convenience, access convenience and post-benefit convenience.
Research limitations/implications This study has taken into account a specific category of retail
banking customers. Thus, it limits generalization of results to other banking populations.
Practical implications This study highlights the importance of service quality, service convenience
and price in satisfying customers. Bank managers can focus on these factors to satisfy customers.
Originality/value The paper emphasizes the significance of service quality, price and SERVCON
on customer satisfaction for Indian banking sector. It compares the multiple regression models for
public and private sector banks.
Keywords Service quality, Service convenience, Price, Customer satisfaction, India
Paper type Research paper

Introduction
Indias economic and industrial scenario underwent a dramatic shift after the
dismantling of the much discredited license/permit/quota raj and adoption of economic
liberalization in 1991. After the deregulation and liberalization in 1991, the forces of
competition have become fairly dominant in the Indian banking system. The customer
has been the ultimate beneficiary of the inexorable progression of larger markets with
more competition. At the same time, banks are finding it increasingly difficult to stop
their lucrative customers from defecting. Banks, considered to be the backbone of every
economy, are no exception to the delicate task of anticipating and fulfilling the needs of
Thankful acknowledgement is extended to the Editor, International Journal of Bank Marketing,
anonymous reviewers, Dr Vishal Vyas, Associate Professor, Mody Institute of Technology and
Science, Lakshmangarh, India and Dr Rano Ringo, Assistant Professor, Department of Humanities
and Social Sciences, IIT Ropar for their valuable insight in the development of this paper.

International Journal of Bank

Marketing
Vol. 31 No. 3, 2013
pp. 167-186
r Emerald Group Publishing Limited
0265-2323
DOI 10.1108/02652321311315285

IJBM
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168

their customers. It is worthwhile to mention the role of retail banking in emerging

economies due to the rapid advances in information technology, entry of new
generation private sector banks and financial market reforms.
The competition between the new private and public sector banks has resulted in
a greater need for service providers to identify the drivers of customers satisfaction.
New generation private sector banks have been able to create a niche in the retail
banking due to technology and innovation.
The survival of banks depends on customer satisfaction. Attracting a new customer
is usually more costly than to retain a current customer. Thus, customer retention is
more vital than customer attraction. Retention of customers requires their satisfaction
and the delivery of services in the way they want. There are several studies conducted
worldwide to assess the level of customer satisfaction.
Fram and McCarthy (2011) provided an insight into the action required by trust
officers to improve customer satisfaction during a time of difficult economic and
regulatory conditions in the USA. Padmavathy et al. (2012) have developed a multiitem scale for measuring the customer relationship management effectiveness in
Indian retail banks and examined its relationship with customer satisfaction, customer
loyalty and cross buying. Shainesh (2012) studied the underlying mechanisms by
which consumers develop trust in service providers and investigated the impact of
consumers perceptions of trustworthiness and trust on their loyalty intentions for
Indian retail banking. It also studied the differential impact of consumers
trustworthiness beliefs on two distinct aspects of a service, namely the front line
employees and management policies and practices.
The marketing literature is replete with studies which have examined the
relationship of service quality with customer satisfaction. Even in the banking sector
research has examined the impact of service quality on customer satisfaction and
loyalty (Ndubisi and Wah, 2005; Lenka et al., 2009; Bedi, 2010; Ganguli and Roy, 2011;
Kaura and Datta, 2012). In the recent studies, researchers have studied the impact of
service convenience on customer satisfaction (Seiders et al., 2007; Colwell et al., 2008;
Aagja et al., 2011). But, hardly any research is conducted on Indian banking sector
which has studied the impact of service convenience on customer satisfaction.
According to Dutta and Dutta (2009), for Indian banking services evaluation, there is
not much differentiation in the price (due to regulations by RBI). Therefore, the main
differentiator for banking service evaluation would be other dimensions;
systematization of services, servicescape and social responsibility. But, now due to
deregulation, there is differentiation in prices; moreover price fairness is playing a lead
role in differentiating the services of the service provider. But, hardly any research is
conducted on the Indian banking sector which has studied the impact of price on
customer satisfaction.
So, there is need to consider service quality, service convenience and perceived
price and fairness as drivers of customer satisfaction in Indian retail banking sector.
According to Colwell et al. (2008) continuum of convenience needs to be investigated
further and research on convenience should investigate other contexts outside of the
cellular and internet services. Most of the studies have used SERVQUAL model
dimensions. But except tangibility all are related to the human factor (Sureshchandar
et al., 2001; Lenka et al., 2009). The effect of information technology on customer satisfaction
needs empirical investigation. This study makes an attempt to address all these gaps.
In the recent studies in banking sector, effort is made to compare sub-samples but
difference in the regression results for the two sub-samples is not addressed much.

Bedi (2010) studied the difference in regression results between public and private
sector banks in India but did not check it empirically.
Ladhari et al. (2011) compared perceptions of bank service quality among Tunisian
and Canadian customers and determined which dimensions of service quality make the
greatest contribution to overall customer satisfaction and loyalty. In the Canadian sample,
empathy and reliability were found to be the most important predictors of satisfaction and
loyalty, while in the Tunisian sample, reliability and responsiveness were the most
important predictors of satisfaction and loyalty. Pinar et al. (2012) examined bank brand
equity from consumer perspectives by comparing the consumer-based brand equity
dimensions of local and global banks in Turkey across state, private and foreign banks.
Baumann et al. (2012) investigated investing and borrowing behavior in retail banking
between ethnic groups, specifically the Caucasians vis-a`-vis the Chinese. Literature
indicates that hardly a few studies are conducted to compare multiple regression models.
With this backdrop, the objectives of this study are twofold:
(1)

to study the impact of perceived price and fairness, service quality and service
convenience on customer satisfaction for both public and new private sector
banks; and

(2)

to compare multiple regression models between public and new private sector
banks.

The remainder of the paper is organized as follows: the next section highlights the
literature review followed by research methodology. Finally, results and discussion of
analysis are presented followed by managerial implications.
Literature review
Customer satisfaction
Customer satisfaction is generally considered among the most significant long-term
goals of firms (Cooil et al., 2007). The marketing concept suggests that a satisfied buyer
will be more likely to repurchase or at least consider repurchasing than those who are
dissatisfied (Keith, 1960). According to Reichheld and Sasser (1990), repeat customers
cost less to serve than new buyers, benefiting a firms cost structure. Additionally,
maximizing customer retention rates and minimizing customer defections are primary
strategic objectives for most firms, as evidenced by the recent emphasis on customer
relationship management (Ching et al., 2004). Customer satisfaction is so vital to an
organization that it is relevant to investigate the drivers of customer satisfaction.
Service quality and customer satisfaction
Service quality has received substantial attention in service literature. Because of its vital
importance, it has provoked considerable interest and debate in the research literature.
Dimensions of service quality as identified by Gronroos (1984) are functional, technical
and corporate images. Parasuraman et al. (1988) focus on five dimensions of service
quality, i.e., reliability, responsiveness, assurance, empathy and tangibility.
In banking services, Sureshchandar et al. (2001), Lenka et al. (2009), Dutta and Dutta
(2009), Bedi (2010) and Kaura and Datta (2012) have used different dimensions of
service quality in the Indian context. Sureshchandar et al. (2001) have proposed five
dimensions of service quality: core service, human element, non-human element,
tangibles and social responsibility. Lenka et al. (2009) used human aspect, technical
aspect and tangible aspect of service quality. Dutta and Dutta (2009) used SERVQUAL

Customer
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dimensions. Bedi (2010) used reliability, responsiveness, assurance, empathy,

tangibility, product availability and product convenience. Reliability, responsiveness,
assurance and empathy are part of human aspect of service quality. Moreover, human
behavior plays a key role in delivering services. Information technology is not
considered as a dimension of service quality in the traditional SERVQUAL model.
Kaura and Datta (2012) used people, process and physical evidence as dimensions of
service quality. Therefore, this study proposes human behavior, information
technology and tangibility as dimensions of service quality.
Researchers have found that improved service quality increased customer
satisfaction in the Indian banking sector (Lenka et al., 2009; Bedi, 2010, Kaura
and Datta, 2012). Brown et al. (1996) and Lemmink and Mattsson (1998) found
that positive employee behavior increased customer service encounter satisfaction.
A study conducted by Kaura and Datta (2012) found that people factor has a positive
impact on customer satisfaction in the Indian banking sector. A study conducted by
Lenka et al. (2009), Kaura and Datta (2012) found that better tangible aspects of
service quality of the bank branches enhance customers satisfaction. Technologyenabled services provide constant, reliable and quality service and improved
technical aspects of service quality increase customer satisfaction (Bitner et al., 2000;
Lenka et al., 2009; Kaura and Datta, 2012).
Thus, this research argues that service quality dimensions (employee behavior,
tangibility and information technology) have a positive influence on customer satisfaction:
H1-1a. Employee behavior has a positive impact on customer satisfaction.
H1-1b. Tangibility has a positive impact on customer satisfaction.
H1-1c. Information technology has a positive impact on customer satisfaction.
Perceived price and fairness and customer satisfaction
In the service context perceived price is playing a significant role in decision making.
Customers perception of price has been studied in terms of price perception
(Munnukka, 2005; Varki and Colgate, 2001), price fairness perception (Bolton et al.,
2003) and price equity (Bolton and Lemon, 1999). Diller (2008) has explained the
deficiency of conceptualization of price fairness perception. Ranaweera and Neely
(2003) developed their own measurement scale for measuring price fairness. Herrmann
et al. (2007) considered both price offer fairness and price procedure fairness for
measuring price fairness. Price fairness construct is used by different authors
according to the type of industry.
Price is an important element in consumers purchases; therefore it has a large
influence on consumers satisfaction judgments (Cronin and Taylor, 1992; Voss et al.,
1998; Singh and Sirdeshmukh, 2000; Jiang and Rosenbloom, 2005; Herrmann et al.,
2007; Han and Ryu, 2009). In banking industry, price structure is complex and difficult
to understand, and therefore, transparency plays an important role in customer
satisfaction. According to Yieh et al. (2007), the perceived price fairness has a positive
impact on customer satisfaction.
This study, therefore, proposes that the perceived price and fairness has a positive
influence on customer satisfaction:
H1-4. Perceived price and fairness has a positive impact on customer satisfaction.

Service convenience and customer satisfaction

Different authors have given different types of service convenience. According to
Anderson (1971) time and effort saving are the two aspects of convenience. Brown
(1989) proposed five types of convenience: time, place, acquisition, use and execution.
Shopping convenience has been examined by Seiders et al. (2000), who developed a
convenience framework related to consumer shopping speed and ease. Berry et al.
(2002) conceptualized five dimensions of service convenience: decision convenience,
access convenience, transaction convenience, benefit convenience and post-benefit
convenience. Seiders et al. (2007) developed the SERVCON scale and empirically
validated the service convenience construct. Service convenience dimensions as
proposed by Berry et al. (2002) were used by Colwell et al. (2008) through SERVCON
scale in Canadian cellular and internet services. Aagja et al. (2011) also used SERVCON
scale in the Indian organized food and grocery retail context. This study also uses
SERVCON dimensions proposed by Colwell et al. (2008). Service convenience was
found to be a significant predictor of overall satisfaction (Seiders et al., 2007; Colwell
et al., 2008; Aagja et al., 2011).
This study, therefore, proposes that service convenience dimensions (decision
convenience, access convenience, transaction convenience, benefit convenience and
post-benefit convenience) have a positive influence on customer satisfaction:
H1-3a. Decision convenience has a positive impact on customer satisfaction.
H1-3b. Access convenience has a positive impact on customer satisfaction.
H1-3c. Transaction convenience has a positive impact on customer satisfaction.
H1-3d. Benefit convenience has a positive impact on customer satisfaction.
H1-3e. Post-benefit convenience has a positive impact on customer satisfaction.
Research methodology
Population and sample of study
The urban customers of retail banking in both public and new private sector banks in
Rajasthan were/have been chosen for the present study. These customers fulfill the
following criteria.
Frequent visits in bank premises for transactions: since all bank customers
may not possess sufficient knowledge of various banking operations, only those
customers who frequently visit banking premises for transactions are considered
suitable for study. The present study considers at least two bank visits of customers
in a month.
The maintenance of accounts in at least two banks: as the objective of the present
study is to compare public and new private sector banks in terms of service
convenience, customers who have accounts in at least two banks are considered for the
study so as to draw credible conclusions from the comparisons.
Subscription to at least one IT-based service (ATM facility, mobile banking, internet
banking): customers who are subscribing and using at least one IT-based service are
considered for the study.
Valued customers: this study considers the following criteria for customers to be
considered as valued customers.

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Those who are customers of banks as part of the social responsibility criterion of the
government (student account/below poverty line account/National Rural Employment
Guarantee Act account) or beneficiaries of the welfare-oriented schemes of the
government have been kept outside the purview of the present study.
According to bank officials, top valued customers do not visit bank premises
as they are provided services at their doorstep or their assistants do the banking
on their behalf. These customers are high net worth customers of banks. That is the
primary reason of their being kept outside the present study. The way, top valued
customers are dropped from the study, the bottom layer of valued customers are also
dropped from study.
The customers who maintain a minimum average balance of Rs. 1,00,000 in their
accounts in terms of deposit or who have availed themselves of a loan of at least Rs.
1,00,000 are part of this study. They have a law abiding spirit as well. The customers
who have a law abiding spirit are not defaulters and follow all rules and regulations
of banks. The prerequisite of a valued customer is a law abiding spirit.
This study is conducted in the state of Rajasthan. Bikaner, Sri Ganganagar, Alwar
and Udaipur from west, north, east and southern region of Rajasthan ensures
representativeness of the entire state.
The State Bank of India and its associate banks, nationalized banks and new
private sector banks are selected for the study. For the selection of banks, the judgment
criterion is the number of functioning branches of banks in Rajasthan. The top three
banks with reference to the number of functioning branches in Rajasthan are
considered from the perspective of both public and new private sector banks.
Survey instruments were administered personally and 486 customers were contacted.
Out of these questionnaires, 41 were rejected because of missing data or high
response bias, and this left an overall sample size of 445. Out of the total acceptable
sample (445), 234 respondents were from public sector banks and 211 were from
new private sector banks. The respondents were selected from public and new private
sector banks through quota sampling. Quotas were based on public and new
private sector banks. Within the quota, customers were selected on the basis of
purposive sampling.
Demographics
This data are skewed toward those educated males in the 36-45 age category who
have more than three years transaction with banks, and who earn more than Rs. 40,000
per month.
Table I shows the demographic profile of the respondents.
Measure
Customer satisfaction was measured using a three item scale developed by Cronin
et al. (2000). Service convenience was measured using a 17 item scale developed
by Colwell et al. (2008). The scale has five dimensions: decision convenience,
access convenience, transaction convenience, benefit convenience and post-benefit
convenience. Perceived price and fairness was measured using a six items scale.
Three items were adapted from Roger (1996), and three items were developed by
author. Service quality was measured using 15 items scale. Items were based on scale
by Lenka et al. (2009) and Sureshchandar et al. (2001). The scale has three
dimensions: employee behavior, tangibility and information technology. The
description of items is given in Table II.

Public sector bank

Number
%
Age
25 years or less
26-35
36-45
46-55
56 and above
Total
Education
High school
Intermediate
Graduation
Masters degree
Others
Total
Employment
Public
Private
Self-employed
Total
Years of transaction with
3 years or less
More than 3 years
Total
Income per month
Rs. 20,000 or less
21,000-40,000
More than Rs. 40,000
Total
Gender
Male
Female
Total

New private sector bank

Number
%

Overall banking sector

Number
%

9
38
69
88
30
234

3.8
16.3
29.5
37.6
12.8
100

28
31
99
48
5
211

13.27
14.69
46.92
22.75
2.37
100

37
69
187
117
35
445

8.3
15.5
42
26.3
7.9
100

20
31
29
137
17
234

8.55
13.25
12.39
58.55
7.26
100

15
23
48
97
28
211

7.11
10.90
22.75
45.97
13.27
100

35
54
77
234
45
445

7.88
12.13
17.30
52.58
10.11
100

50
32.05
17.95
100

36
86
89
211

17.06
40.76
42.18
100

156
163
126
445

35.06
36.63
28.31
100

18.80
81.20
100

111
100
211

52.61
47.39
100

144
301
445

32.36
67.64
100

44
82
108
234

18.80
35.05
46.15
100

30
72
109
211

14.22
34.12
51.66
100

74
154
217
445

16.63
34.61
48.76
100

210
24
234

89.74
10.26
100

201
10
211

95.26
4.74
100

411
34
445

92.36
7.64
100

117
75
42
234
this bank
44
190
234

Source: Own processed

Results
The responses obtained were analyzed using SPSS. The normality condition of data
are checked before using data for analysis. The data fulfills the normality condition.
The acceptable range for normality is skewness and kurtosis lying between 1 and 1
(Chan, 2003). According to Hair et al. (2009), for sample size o30, significant
departures from normality can have substantial impact on results. But, for sample size
of more than 200, this effect may be avoided, unless they are violating other
assumptions. On the basis of reviewed literature, the data fulfills normality and other
assumptions and can be used for analysis.
Reliability
To establish internal consistency, Cronbachs a value for reliability was calculated.
All values were above 0.60, which may be considered as reliable. Value of Cronbach a is
shown in Table III.

Customer
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173

Table I.
Demographic profile of
public sector, new private
sector and overall banking
sector customers

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174

Table II.
Description of items
used in study

Construct Measurement items

Employee behavior
EB1
Employees of this bank are always willing to help me
EB2
The behavior of employees of this bank instills confidence in me
EB3
Employees of this bank are consistently courteous with me
EB4
Employees of this bank welcome me with smile
EB5
This banks employees give me individual attention
EB6
This banks employees have my best interest at heart
EB7
This bank has employees who give me personal attention
Tangibility
TAN1
This bank has modern looking equipments
TAN2
This banks physical facilities like furniture are comfortable
for me to interact with service provider
TAN3
This banks employees are neat appearing
TAN4
Materials associated with the service
(such as pamphlets, advertisement board or statement) are visually appealing at
this bank
Information technology
IT1
IT banking services save my time
IT2
IT banking services provide privacy in my banking transactions
IT3
IT banking services provide accurate account information
IT4
IT banking services satisfy most of my banking needs
Decision convenience
DC1
The information I receive from this bank makes it easy for me to choose what to buy
DC2
Making up my mind about what service I want to buy is easy
DC3
The information that I receive from this bank is clear and easy to understand
DC4
The service provider let me know the exact interest rate or service charges or special offer
Access convenience
AC1
The service provider is available when I need to talk to him
AC2
The service provider is accessible through various ways (online, telephone, in person, ATM)
AC3
The hours of operation of the service provider are convenient
AC4
Location of this bank branches are easy to access
Transaction convenience
TC1
I find it easy to complete my service purchase with this bank
TC2
I am able to complete the purchase of my service quickly with this bank
TC3
It takes little effort to deal with this bank during purchase
Benefit convenience
BC1
I am able to get the benefits of this service with little effort
BC2
The time required to receive the benefits of service is reasonable
BC3
Products of this bank are easy to use
Post-benefit convenience
PBC1
My service provider quickly resolves problem/s I have with the service
PBC2
It is easy for me to obtain follow up service from the provider after my purchase
PBC3
When I have questions about my service, my service provider is able to resolve my problem
PPF1
This bank pays reasonable interest rates on deposits
Perceived price and fairness
PPF2
This bank charges reasonable service fees
PPF3
This bank charges reasonable interest rates on loans
PPF4
This bank has transparency in its service charges
PPF5
There are no hidden charges in the services offered by bank
PPF6
Bank keeps customers informed of any change in prices
Customer satisfaction
CS1
My choice to avail this bank service is a wise one
CS2
I did the right thing when I chose this bank for its services
CS3
Services of this bank are exactly same what I need

Variable
Employee behavior
Tangibility
Information technology
Perceived price and fairness
Decision convenience
Access convenience
Transaction convenience
Benefit convenience
Post-benefit convenience
Customer satisfaction

No. of original items

No. of items retained

Cronbachs a

7
4
4
6
4
4
3
3
3
3

7
3
4
5
4
3
3
3
3
3

0.93
0.79
0.72
0.93
0.83
0.89
0.93
0.91
0.69
0.89

Exploratory factor analysis

Construct validity (convergent and discriminant) is checked through exploratory
factor analysis. High loading on one factor and no cross loading reveal convergent and
discriminant validity, respectively. Factor analysis is performed on 15 items scale of
service quality, six items of perceived price and fairness, 17 items scale of service
convenience and three items scale of customer satisfaction. The principal component
method is used to extract factors with an initial setting for eigenvalues 41.0 (Field,
2005). Orthogonal rotation (varimax) is applied to reduce potential multi-colinearity
among the items. High loading on the same factor and no substantial cross loading
confirm convergent validity and discriminant validity, respectively. Items TAN4,
PPF2 and AC2 were dropped from the service quality scale, perceived price and
fairness scale, and service convenience scale, respectively, because of low communality
value. Factor analysis results of service quality scale, perceived price and fairness
scale, service convenience scale and customer satisfaction scale are shown in Table IV.
Table V demonstrates inter-construct correlation.
Regression analysis and comparison of regression coefficients
The results of regression analysis for the public sector banks and private sector banks
are presented in Table VI and Table VII. Table VIII indicates comparison of regression
coefficients between public and private sector banks.
The results for public sector banks indicate that R2 is equal to 0.798. This
indicates that 79.8 percent of variance in customer satisfaction is explained by
independent variables. F-statistic is 98.10, which is significant at 1 percent
significance level. The results for private sector banks indicate that R2 is equal to
0.721, and this indicates that 72.1 percent of variance in customer satisfaction can be
explained by independent variables. F-statistic is 57.61, which is significant at
1 percent significance level. Therefore, both models can be said good overall.
In addition to the significance of the overall regression equation, the significance of
individual regression coefficient is examined to identify which individual variables
significantly relate to the dependent variable.
The multi-colinearity diagnostics statistics show that tolerance value is not below 0.10
and VIF does not exceed the recommended limit of 10. Therefore, the relationship of
independent variables does not create problems in explaining customer satisfaction.
The results show that employee behavior has a positive impact on customer
satisfaction for public sector banks (b 0.554, t 12.89, po0.01) and private sector
banks (b 0.359, t 7.50, po0.01). b coefficient for employee behavior is found more

Customer
satisfaction

175
Table III.
Reliability test
(Cronbachs a)

Table IV.
A summary of
factor analysis

(a) Service quality scale

Factor 1:
Factor 2:
employee behavior
information technology
Variable
Loading
Variable
Loading
EB7
0.889
IT4
0.747
EB6
0.870
IT2
0.739
EB2
0.839
IT3
0.731
EB1
0.831
IT1
0.637
EB4
0.822
EB3
0.815
EB5
0.761
Eigenvalue
5.02
2.27
2.16
Percent of
variance
35.92
16.23
15.46
Total
variance
explained
67.61
(b) Perceived price and fairness scale
Factor 1: perceived price and fairness
Variable
Loading
PPF6
0.949
PPF3
0.932
PPF4
0.932
PPF5
0.906
PPF1
0.754
Eigenvalue
4.02
Percent of
variance
80.576
Total
variance
explained
80.576
Factor 3:
Tangibility
Variable
Loading
TAN1
0.880
TAN3
0.818
TAN2
0.802

(continued)

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(c) Service convenience scale

Factor 1: decision
Factor 2:
convenience
transaction convenience
Variable
Loading
Variable
Loading
DC1
0.874
TC1
0.919
DC3
0.841
TC2
0.890
DC2
0.834
TC3
0.873
DC4
0.587
Eigenvalue
2.72
2.70
2.65
Percent of
variance
17.01
16.87
16.59
Total
variance
78.03
(d) Customer satisfaction scale
Factor 1: customer satisfaction
Variable
Loading
CS2
0.944
CS1
0.911
CS3
0.878
Eigenvalue
2.49
Percent of
variance
83.00
Total
variance
explained
83.00
1.97
12.31

2.44
15.25

Factor 3: benefit
convenience
Variable
Loading
BC2
0.892
BC3
0.877
BC1
0.859

Factor 4: access
convenience
Variable
Loading
AC1
0.879
AC4
0.837
AC3
0.823

Factor 5: post-benefit
convenience
Variable
Loading
PBC3
0.776
PBC2
0.761
PBC1
0.736

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Table IV.

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Table V.
Inter-construct
correlations

EB
EB
IT
TAN
DC
AC
TC
BC
PBC
PPF
CS

1
0.417**
0.067
0.398**
0.491**
0.390**
0.412**
0.364**
0.163**
0.762**

IT

TAN

1
0.138**
1
0.281**
0.185**
0.229**
0.101*
0.173**
0.147**
0.250**
0.146**
0.238**
0.09
0.103* 0.041
0.463**
0.121*

AC

TC

BC

1
0.218**
0.119*
0.115*
0.088
0.091
0.429**

1
0.425**
0.285**
0.351**
0.008
0.553**

1
0.420**
0.263**
0.052
0.482**

PBC

PPF

CS

1
0.332** 1
0.153** 0.132** 1
0.461** 0.447** 0.333**

Notes: *,**Significant at the 0.05 and 0.01 level, respectively

Unstandardized
coefficients
B
SE

Table VI.
Regression analysis
results for the public
sector banks

DC

Constant
EB
IT
TAN
DC
TC
BC
AC
PBC
PPF
R
R2
Adjusted R2
F

3.488
0.582
0.138
0.002
0.156
0.245
0.128
0.089
0.090
0.176
0.893
0.798
0.790
98.10**

0.036
0.045
0.036
0.032
0.038
0.035
0.032
0.034
0.032
0.039

Standardized coefficients
b

0.554
0.128
0.003
0.152
0.223
0.140
0.092
0.089
0.153

96.158**
12.898**
3.889**
0.075
4.127**
7.003**
4.050**
2.630**
2.779**
4.508**

Collinearity
statistics
Significance Tolerance VIF
0.000
0.000
0.000
0.940
0.000
0.000
0.000
0.009
0.006
0.000

0.490
0.836
0.820
0.669
0.894
0.757
0.740
0.874
0.784

2.043
1.196
1.219
1.495
1.119
1.321
1.351
1.145
1.276

0.000

Notes: Dependent variable: CS. **Significant at the 0.01 level

for public sector banks than private sector banks. The b coefficient for public sector
banks (0.554) is significantly greater than private sector banks (0.359) at 1 percent
significant level (z 3.38, po0.01). The findings related to information technology
reveal that it has a positive impact on customer satisfaction for public sector banks
(b 0.128, t 3.88, po0.01), and for private sector banks (b 0.230, t 5.66, po0.01).
There is no significant difference between public sector banks and private sector banks
with reference to b coefficient for information technology. The b coefficient for private
sector banks (0.230) is not significantly different from public sector banks (0.128) at
5 percent significant level (z 1.69, p40.05). Tangibility does not show the impact
on customer satisfaction for both public sector banks (b 0.003, t 0.075, p40.01) and
private sector banks (b 0.004, t 0.095, p40.01). There is no significant
difference between public sector banks and private sector banks with reference to
b coefficient for tangibility. The b coefficient for public sector banks (0.003) is not
significantly different from private sector banks (0.004) at 5 percent significant level
(z 0.121, p40.05).

Unstandardized
coefficients
B
SE
Constant
HB
IT
TAN
DC
TC
BC
AC
PBC
PPF
R
R2
Adjusted
R2
F

3.596
0.339
0.225
0.004
0.251
0.175
0.064
0.302
0.204
0.231
0.849
0.721

Standardized
coefficients
b

Significance

0.359
0.230
0.004
0.261
0.195
0.058
0.284
0.209
0.245

84.032**
7.501**
5.662**
0.095
5.985**
4.789**
1.398
7.292**
4.987**
6.288**

0.000
0.000
0.000
0.924
0.000
0.000
0.164
0.000
0.000
0.000

0.043
0.045
0.040
0.045
0.042
0.037
0.046
0.041
0.041
0.037

0.708
57.61**

0.554
0.128
0.003
0.152
0.223
0.140
0.092
0.089
0.153

0.606
0.842
0.877
0.732
0.835
0.810
0.915
0.789
0.918

1.651
1.188
1.140
1.367
1.198
1.235
1.093
1.268
1.089

0.036
0.045
0.036
0.032
0.038
0.035
0.032
0.034
0.032

Private sector banks

b
SE
0.359
0.230
0.004
0.261
0.195
0.058
0.284
0.209
0.245

0.045
0.040
0.045
0.042
0.037
0.046
0.041
0.041
0.037

Customer
satisfaction

179

Table VII.
Regression analysis
results for the private
sector banks

0.000

Public sector banks

b
SE
HB
IT
TAN
DC
TC
BC
AC
PBC
PPF

Collinearity
statistics
Tolerance
VIF

z
3.383**
1.694
0.121
2.064*
0.527
1.418
3.691**
2.252*
1.880

Notes: *,**Significant at the 0.05 and 0.01 level, respectively

The findings related to decision convenience show a positive impact on customer

satisfaction for public sector banks (b 0.152, t 4.127, po0.01) and private sector
banks (b 0.261, t 5.98, po0.01). b coefficient for decision convenience is found more
for private sector banks than public sector banks. The b coefficient for private sector
banks (0.261) is significantly greater than public sector banks (0.152) at 5 percent
significant level (z 2.06, po0.05). The findings related to transaction convenience
show a positive impact on customer satisfaction for public sector banks (b 0.223,
t 7.00, po0.01) and private sector banks (b 0.195, t 4.78, po0.01). There is no
significant difference between public sector banks and private sector banks with
reference to b coefficient for transaction convenience. The b coefficient for public sector
banks (0.223) is not significantly different from private sector banks (0.195) at 5 percent
significant level (z 0.527, p40.05). The results show that benefit convenience has a
positive impact on customer satisfaction for public sector banks (b 0.140, t 4.05,
po0.01), but it does not show significant impact on customer satisfaction for private
sector banks (b 0.058, t 1.39, p40.01). There is no significant difference between

Table VIII.
Comparison of regression
coefficients between
public and private
sector banks

IJBM
31,3

180

public sector banks and private sector banks with reference to b coefficient for benefit
convenience. The b coefficient for public sector banks (0.140) is not significantly
different from private sector banks (0.058) at 5 percent significant level (z 1.41,
p40.05). The empirical findings indicate that access convenience shows a positive
impact on customer satisfaction for public sector banks (b 0.092, t 2.63, po0.01) and
private sector banks (b 0.284, t 7.29, po0.01). b coefficient for access convenience is
found more for private sector banks than public sector banks. The b coefficient for private
sector banks (0.284) is significantly greater than public sector banks (0.092) at 1 percent
significant level (z 3.69, po0.01). Post-benefit convenience shows a positive impact on
customer satisfaction for public sector banks (b 0.089, t 2.77, po0.01) and private
sector banks (b 0.209, t 4.98, po0.01). b coefficient for post-benefit convenience is
found more for private sector banks than public sector banks. The b coefficient for private
sector banks (0.209) is significantly greater than public sector banks (0.089) at 5 percent
significant level (z 2.25, po0.05).
Perceived price and fairness shows a positive impact on customer satisfaction for
public sector banks (b 0.153, t 4.50, po0.01) and private sector banks (b 0.245,
t 6.28, po0.01). There is no significant difference between public sector banks and
private sector banks with reference to b coefficient for perceived price and fairness at 5
percent significant level (z 1.88, p40.05).
Discussion
The result shows that employee behavior has a positive impact on customer satisfaction for
both public sector banks and private sector banks. This finding is consistent with the
previous findings. Bedi (2010) found that reliability, responsiveness, assurance and empathy
have a significant effect on customer satisfaction for public sector banks, and reliability,
responsiveness and assurance have a significant effect on customer satisfaction for private
sector banks. These dimensions are related to the human aspect of service quality.
The personalized attention and politeness of employees toward customers
contribute to their satisfaction. Customers avail themselves of banking services
from a specific bank because of their personal contact with the employees, and if the
employees switch to other banks, they may also switch their business to other
banks. b coefficient for employee behavior is found more for public sector banks
than private sector banks. It signifies that for public sector bank customers,
employee behavior plays more significant role in their satisfaction than private
sector bank customers. In public sector banks, employees are experienced and deal
with customers in a mature way. They rely more on social bonding, and this helps in
contributing toward customer satisfaction. Culture consciousness of Indian
customers confirms social expectations of society. Indian customers feel the need
for affiliation to any group or community, and this core value links them to society.
This concept is well addressed by public sector banks.
Corroborating the earlier findings, our results showed that information technology
increased customer satisfaction (Aagja et al., 2011). Information technology has
a positive impact on customer satisfaction for both public sector banks and private
sector banks. Technological innovations ATM facility, core banking, internet and
mobile banking are contributing toward the satisfaction of the customers of public
sector banks. The use of latest technological tools facilitates this and can yield
increased customer satisfaction. b coefficient for both banks is not significantly
different. According to Lenka et al. (2009), higher levels of occupation, education and
income tend to reinforce the use of modern technology, but Indian customers embrace

culturally valued human relationship due to traditionalism. This is the reason that
there is no difference in b coefficient of information technology to satisfy the customers
of public sector banks and private sector banks. Tangibility does not show an impact
on customer satisfaction for both public and private sector banks. There is no
significant difference between public and private sector banks with reference to b
coefficient for tangibility. It shows that bank customers focus more on transparency in
prices, convenience and the behavior of employees than on the visual appearance of the
material associated with the service. The previous research work on Indian banking
sector by Bedi (2010) and Hazra and Srivastava (2009) found that tangibility did not
show an impact on customer satisfaction for customers of private sector banks.
The previous research findings found that decision convenience has a significant
impact on customer satisfaction (Aagja et al., 2011; Colwell et al., 2008). Our results
confirm these findings. If employees give all information to customers that are required
to make correct decision regarding their purchase, then customers have a sure reason
to be satisfied. b coefficient indicates that decision convenience plays a more
significant role in customer satisfaction for private sector bank customers than public
sector bank customers. Private sector banks provide decision convenience through
help desks, notice boards, informatory televisions, etc. The number of customers in
private sector banks is less than public sector banks. Moreover, private sector banks
are entertaining only valued customers. In this way, they are providing decision
convenience in such a way that it contributes more to customer satisfaction than
public sector banks. Transaction convenience shows a positive impact on customer
satisfaction for both public and private sector banks, but there is no significant
difference between public and private sector banks with reference to b coefficient for
transaction convenience. Customers are satisfied with the services when they can
complete their service purchase quickly and with less effort. For public sector banks,
benefit convenience has a positive impact on customer satisfaction but for private
sector banks, benefit convenience does not show an impact on customer satisfaction.
But, there is no significant difference between public and private sector banks with
reference to b coefficient for benefit convenience. Access convenience shows a positive
impact on the customer satisfaction of both public and private sector banks. Easy
accessibility to bank branches and ATMs contributes to the satisfaction of customers.
b coefficient for access convenience is found more for private sector banks than public
sector banks. The customers of private sector banks are given as much access
convenience as possible, and highly valued customers are given services at their
doorstep. Vast ATM network, availability of employees over phone, convenient location
of bank branches, etc., ensure access convenience for their customers. Post-benefit
convenience shows a positive impact on customer satisfaction (Colwell et al., 2008;
Aagja et al., 2011). Our study confirmed these notions. When customers are assured
that their problems would get resolved in time, then it leads toward their satisfaction.
b coefficient for post-benefit convenience is found more for private sector banks than
public sector banks. Private sector banks are listening to customers complaints and
resolving them immediately. For example, Housing Development Finance Corporation
(HDFC) bank runs the program, voice of the customer, for effective complaint
resolution and process improvement (HDFC Bank, 2011-2012). Private sector banks
take proactive steps to deal with customers problems related to banking services and
provide post-benefit convenience which further leads to customer satisfaction.
Perceived price and fairness shows a positive impact on customer satisfaction for
both public and private sector bank customers but there is no significant difference

Customer
satisfaction

181

IJBM
31,3

182

between public and private sector banks with reference to b coefficient. Customers
are satisfied when they are assured that the charges of the banks are reasonable and
transparent irrespective of the type of bank.
Conclusion
This study has developed a comprehensive understanding of the antecedents of
customer satisfaction in the Indian retail banking sector. It contributes to the literature
in many ways. The impact of service convenience, service quality and perceived price
and fairness on customer satisfaction is studied. However, these drivers are found to be
influencing satisfaction in different ways for public and private sector banks. Earlier
studies have mainly focussed on SERVQUAL dimensions to measure service quality;
this study focusses on employee behavior, tangibility and technology dimensions of
service quality. Moreover, it highlights the importance of service convenience and
perceived price and fairness in measuring customer satisfaction. It reiterates the
importance of employee behavior in customer satisfaction for both public and private
sector banks. More importantly, this study compares the regression coefficients
between public and private sector banks. For bank professionals, this study explains
the importance of service quality, perceived price and fairness, and service convenience
in satisfying customers for public and private sector banks. This study suggests the
following strategies for public and private sector banks for customer satisfaction.
Strategies for public sector banks
(1)

(2)

(3)
(4)

Technology-based interactive system is not user friendly for customers. For

toll free numbers, it is advisable to avoid cumbersome automatic voice
interaction system. Customers feel frustrated when they have a long circle of
choices and they have to select one choice. Moreover, they are forced to listen to
music. Public sector banks should open more ATMs and they should not be out
of order. It will help in providing access convenience to customers.
More advanced training should be provided to employees to provide uniform
services to overcome the problem of heterogeneity. When new software is
introduced, employees should be given training prior to its implementation.
Trust among customers for public sector bank is a major advantage and
should be utilized during promotional activities.
Public sector banks have a bureaucratic environment which leads to delay in
decision making. Employees should be given autonomy in making decisions.
It will help in taking decisions quickly and expedite the banking process.

Strategies for private sector banks

(1)

(2)

The inclination of private sector banks toward social responsibility, financial

inclusion programs and penetration in rural areas will go a long way in
gaining respect in the eyes of customers.
Private sector banks have the policy of recruiting relationship officers whose
chief responsibility is to provide services at the doorstep of customers. If public
sector banks refuse loan to a customer due to incomplete documents, private
sector banks are eager to provide loan to these customers.

Limitations and scope of the study

The antecedents of customer satisfaction were selected with the belief that they are
relatively important to the study population. Nevertheless, customer perceptions may

differ among different cultures. In quantitative analysis, structural equation modeling is

not used, but it is superior to multiple regression analysis when multiple relations are
studied together. This study has taken into account valued customers who visit bank
premises frequently and have accounts in at least two different banks. These customers
are availing themselves of at least one information technology-based service as well.
Thus, it limits generalization of results to other banking population. Demographic
variables are considered controlled variables for the current study, but they have their role
in explaining customer satisfaction.
From the results obtained in this study and keeping in mind the limitations of this
study, some possible suggestions are offered for further research. The current study
has been carried out in the Indian state of Rajasthan. It opens the door to conduct
similar studies in other states and in other service industries to get more insight
about the study. The current study focusses on a specific category of customers.
A comparative study is required to be carried out to know the difference between
valued customers and occasional customers. It is found that the employee behavior of
service quality has a positive impact on customer satisfaction. Therefore, there is
a need to understand the role of trust as a moderator variable between employee
behavior and customer satisfaction. The relationship among service quality, service
convenience and price needs empirical investigation for future studies.
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Corresponding author
Vinita Kaura can be contacted at: kaura2005@rediffmail.com

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