Perceived overall service quality and customer satisfaction: A comparative analysis between local and foreign banks in Malaysia

Abstract

Purpose

Foreign and local banks in Malaysia are competing in terms of skilled staff, innovative products and services, rendering quality services and customer satisfaction. The purpose of this paper is to examine the overall service quality and customer satisfaction of both foreign and local banks.

Design/methodology/approach

The data used to test the hypothesis were collected from 748 foreign and local bank customers in Malaysia. The research model was analysed using a structural equation modelling technique.

Findings

Results show that knowledge and staff competencies, as well as convenience of the bank is more significant for local bank customers while bank image and internet banking are important components for foreign bank customers. The results also reveal that foreign bank customers have higher satisfaction as compared to local bank customers.

Research limitations/implications

No analysis is undertaken of any difference in the service quality dimensions between banks of different size. Further research on banking services could usefully test services quality dimensions across banks of different sizes.

Practical implications

The findings serve as a valuable reference for local banks understand service quality challenges they may face from foreign banks in this competitive industry. Findings suggest that, to provide high-quality services, financial institutions need to heighten customer satisfaction differentiation strategies.

Originality/value

The outcomes of this study enhance the knowledge on the performance of both local and foreign banks in Malaysia as well as customer satisfaction, which are invaluable to all bank managers and industry players in improving their services.

Full text

International Journal of Bank Marketing
Perceived overall service quality and customer satisfaction: A comparative
analysis between local and foreign banks in Malaysia
Sedigheh Moghavvemi, Su Teng Lee, Siew Peng Lee,
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To cite this document:
Sedigheh Moghavvemi, Su Teng Lee, Siew Peng Lee, (2018) "Perceived overall service quality
and customer satisfaction: A comparative analysis between local and foreign banks in Malaysia",
International Journal of Bank Marketing, https://doi.org/10.1108/IJBM-06-2017-0114
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Perceived overall service quality
and customer satisfaction
A comparative analysis between local and
foreign banks in Malaysia
Sedigheh Moghavvemi and Su Teng Lee
Faculty of Business and Accountancy, University of Malaya,
Kuala Lumpur, Malaysia, and
Siew Peng Lee
University of Tunku Abdul Rahman, Petaling Jaya, Malaysia
Abstract
Purpose –Foreign and local banks in Malaysia are competing in terms of skilled staff, innovative products
and services, rendering quality services and customer satisfaction. The purpose of this paper is to examine
the overall service quality and customer satisfaction of both foreign and local banks.
Design/methodology/approach –The data used to test the hypothesis were collected from 748 foreign
and local bank customers in Malaysia. The research model was analysed using a structural equation
modelling technique.
Findings –Results show that knowledge and staff competencies, as well as convenience of the bank is more
significant for local bank customers while bank image and internet banking are important components for
foreign bank customers. The results also reveal that foreign bank customers have higher satisfaction as
compared to local bank customers.
Research limitations/implications –No analysis is undertaken of any difference in the service quality
dimensions between banks of different size. Further research on banking services could usefully test services
quality dimensions across banks of different sizes.
Practical implications –The findings serve as a valuable reference for local banks understand
service quality challenges they may face from foreign banks in this competitive industry. Findings suggest
that, to provide high-quality services, financial institutions need to heighten customer satisfaction
differentiation strategies.
Originality/value –The outcomes of this study enhance the knowledge on the performance of both local
and foreign banks in Malaysia as well as customer satisfaction, which are invaluable to all bank managers
and industry players in improving their services.
Keywords Satisfaction, Service quality, Internet banking, Bank ownership, Foreign bank, Local bank
Paper type Research paper
Introduction
In general, foreign banks face stricter limits on the availability of banking licences, restrictions
on the number of branches, and restriction on the extent of foreign ownership of individual
banks. However, in response to the trend of globalisation and internationalisation, the Central
Bank of Malaysia has opened its banking sector doors to foreign banks. Over the last few
years, the number of foreign banks and their branches operating in Malaysia has increased
over time. Entry of foreign banks has made Malaysian banking competitive and posed great
challenges to banks operating in Malaysia not just on the financial performance, but also on
skilled staff, innovative products, service quality and customer satisfaction. On the other
hand, the increasing competition also leads to rising demands and expectation of customers.
As the number of banks increases, the customers are able to choose their bankers that offer
better quality services. Hence, these two types of banks are offering new and/or innovative
products and services at regular intervals to satisfy customers. Given this expansionary trend
of banks, it is fair to accept that all these changes have some impact on service quality and
International Journal of Bank
Marketing
© Emerald Publishing Limited
0265-2323
DOI 10.1108/IJBM-06-2017-0114
Received 6 June 2017
Revised 11 July 2017
Accepted 30 August 2017
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0265-2323.htm
Service quality
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customer satisfaction. In the competitive banking industry, product differentiation is difficult
to achieve as most banks offer similar products and services. Therefore, bank management
need to differentiate their organisation from competitors through service quality (Stamenkov
and Dika, 2015) to increase customer satisfaction and loyalty as previous studies suggested
that providing good services are perceived as being high quality, increases the level customer
satisfaction (Kassim and Abdullah, 2010; Ladhari et al., 2011; Zameer et al., 2015). Local and
foreign banks in Malaysia are expanding their products and services just to satisfy their
customers’needs and loyalty. However, there is a lack of study, which compares their services
and customer satisfaction.
Prior studies have found that banking service quality determines customers’perception
of the overall banking service quality, and also as a tool to create a sustainable competitive
advantage (Meuter et al., 2000; Jun and Cai, 2001; Stamenkov and Dika, 2015). When
customers assess the quality of the service, they may use different standards which are
likely to vary in their importance ( Joseph et al., 1999; Malhotra et al., 2005). Considering the
importance of service quality, several models were proposed to measure service quality
perceptions (Bahia and Nantel, 2000; Guo et al., 2008; Kassim and Abdullah, 2010; Vera and
Trujilo, 2013; Paul et al., 2016). The most widely used measurement is the SERVQUAL
model developed by Parasuraman et al. (1985). However, the SERVQUAL model has been to
a major criticism recently (Kitapci et al., 2013).
To retain customers and maintain long-term customer interest, banks have to
recognise customers’needs, by serving them well. Studies on bank service quality have
been carried out in many countries, such as in Australia (Al-Hawari and Ward, 2006),
Singapore (Kwon and Lee, 1994), China (Guo et al., 2008), Malaysia (Nelson and Chan, 2005;
Amin et al., 2013), Mexican (Vera and Trujilo, 2013) and Pakistan (Kashif et al., 2016;
Ali and Raza, 2017). Though studies on understanding the nature and dimensions of
service quality have been carried out in many countries, results indicate that the
SERVQUAL model and its measurement scale are shifting in conformity to different types
of services and across nations.
In addition, a comparative study of service quality and customer satisfaction in Zambian
local and foreign banks shows that expectation of both customers is different
(Sichinsambwe et al., 2017). Despite a large number of studies on banking service quality,
there are only a few studies that compare bank service quality among local and foreign
banks (Sawant, 2016; Singh and Arora, 2011) operating in Malaysia. To the best of our
knowledge, studies investigating the origin on service quality of foreign banks operating in
the Malaysian banking sector are completely missing from the literature. Previous studies
only focus on conventional banks and Islamic banks on service quality and customer
satisfaction in Malaysia (Hoq and Amin, 2010; Amin et al., 2013), while there is a lack of
study on the comparison between local and foreign banks customers’satisfaction. This
study makes an attempt to address the research gap by comparing overall customers’
perceived service quality and customers’satisfaction between local and foreign banks in
Malaysia. This study sets forth to measure service quality by applying the five dimensions
(convenience, knowledge and competency of staff, image, core products, and internet
banking) to explore the impact these dimensions have on perceived overall service quality.
For the purpose of this study, internet banking dimension is included as technological
innovations demand that a bank distinguishes itself from its competitors (Kassim and
Abdullah, 2010). Kumar et al. (2009) and Manshor et al. (2011) found that convenient banking
facilities contribute towards customer satisfaction. Thus, convenience dimension was also
included in this study. These dimensions are built from an exploratory study of this
research. Finally, this study also aims to examine the moderating roles of bank ownership,
customers’gender and age. The findings can provide valuable reference information for
local and foreign banks to manage their services and enhance their service quality.
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An overview of banking industry in Malaysia
The beginnings of banking can be traced back to the nineteenth century. Central Bank of
Malaya was established in January 1959 to oversee all commercial bank activities through
the Banking Ordinance 1958, which was later replaced by the Banking Act 1973. Thereafter,
in line with the formation of Malaysia on 16 September 1963, it was then renamed to the
Central Bank of Malaysia. The first foreign bank, Standard Chartered Bank, was established
in 1875, a member of the Standard Chartered Group. In 1997, foreign banks controlled only
16.7 per cent of banking assets. The growth of the foreign banks is relatively slow (see Table I).
This was due to deliberate of government policy which foreign banks have been
prohibited to open new branches since 1971. While the oldest local bank in Malaysia was
Malayan United Bank Berhad, Kuala Lumpur ( formerly known as Kwong Lee Bank,
Sarawak), the first local bank in Peninsular Malaysia was Kwong Yik Bank Berhad, Kuala
Lumpur (formerly known as The Kwong Yik (Selangor) Banking Corporation Ltd). For a
start, both foreign and local banks were like an office without proper banking hall.
Transactions were done manually, until the boom of technology in all facets of banking.
Today, banks are competing with each other by offering additional services that add value
to their customers.
The major changes in the Malaysian banking system were aftermath of the Asian
Financial crisis. The banking sector was hit by the crisis; many small local banks
experienced financial difficulties. To strengthen the positions of local banks in the
domestic market, the Central Bank of Malaysia implements merger programme in 1999.
Through merger, capital size and business scale will be built-up, thereby lifting the local
banks to international levels of efficiency. The trend towards building bank capital size
No. Name Ownership
1 Affin Bank Berhad Local
2 Alliance Bank Malaysia Berhad Local
3 AmBank (M) Berhad Local
4 CIMB Bank Berhad Local
5 Hong Leong Bank Berhad Local
6 Malayan Banking Berhad Local
7 Public Bank Berhad Local
8 RHB Bank Berhad Local
9 Bangkok Bank Berhad Foreign
10 Bank of America Malaysia Berhad Foreign
11 Bank of China (Malaysia) Berhad Foreign
12 Bank of Tokyo-Mitsubishi UFJ (Malaysia) Berhad Foreign
13 BNP Paribas Malaysia Berhad Foreign
14 Citibank Berhad Foreign
15 Deutsche Bank (Malaysia) Berhad Foreign
16 HSBC Bank Malaysia Berhad Foreign
17 India International Bank (Malaysia) Berhad Foreign
18 Industrial and Commercial Bank of China (Malaysia) Berhad Foreign
19 J.P. Morgan Chase Bank Berhad Foreign
20 Mizuho Bank (Malaysia) Berhad Foreign
21 National Bank of Abu Dhabi Malaysia Berhad Foreign
22 OCBC Bank (Malaysia) Berhad Foreign
23 Standard Chartered Bank Malaysia Berhad Foreign
24 Sumitomo Mitsui Banking Corporation Malaysia Berhad Foreign
25 The Bank of Nova Scotia Berhad Foreign
26 The Royal Bank of Scotland Berhad Foreign
27 United Overseas Bank (Malaysia) Bhd. Foreign
Table I.
List of licensed
commercial banking
institutions
in Malaysia
(Central Bank of
Malaysia, 2015)
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will also be complemented through specialisation. As banks are specialising into specific
products and services, they develop the scales and skills, reduce costs and increase service
quality. As of the year 2000, domestic banking institutions have been consolidated into ten
banking groups. In 2015, there were only 8 local banks along with 19 foreign banks.
Foreign banks are said to have wider connection, bigger capital and reserves as
compared to local banks, while local banks are said to have a better understanding of
local culture. Customers may differ in these two types of banks and even if they have the
same customers, their expectations are different. This research looks into areas such as
convenience, knowledge and staff competency, image, core product and internet banking
towards the overall service quality.
Related literature and hypotheses development
Convenience
According to Berry et al. (2002), the perceptions of service, convenience affects customers’
evaluation of the service and perceived service quality. For example, the intense competition
among banks with the opening of new branches has made it convenient for customers to go
to the nearest bank branch. Similarly, convenient operating hours and ATMs are located at
safe and convenient places also strengthen product/service availability. Kumar et al. (2009)
found that the convenience factor plays a substantial role in delivery of bank service quality
in Malaysia.
Bank users always look for convenience when performing banking transactions (Dhar
and Kushwah, 2009). Besides operating during lunch hour, the bank should also open up
more counters to assist customers to complete their transactions with a shorter waiting
period. A recent study indicates that service, convenience, enhances customer’s satisfaction
from the decision convenience perspective, convenience, accessibility, transaction
convenience, benefit convenience and post-benefit convenience (Kaura et al., 2015). Based
on the empirical results, customers expect banks to provide a variety of channels to enhance
service convenience, which encourages repeat patronisation. Previous study was conducted
by comparing the convenience variable between conventional and Islamic banks in
Malaysia found that conventional bank should improve their services towards elderly,
pregnant ladies and disabled customers, while Islamic bank should provide more ATMs
facilities to ease banking transaction (Taap et al., 2011). The same assumption applied to the
banking industry in Pakistan, where researchers proved that convenience was ranked as a
third important contribution in determining the overall service quality after customer focus
and employee service variables (Muhammad Awan et al., 2011). Though convenience is a
known contributing factor, it is still tested in this model as convenience is based on
customers’terms and not the terms of the bank. Customer expect to have less waiting
hours in the bank, open tellers and longer working hours, which make the process faster for
them or convenient location for the bank and ATMs, and parking space. Hence, the
following hypothesis:
H1. Convenience has a positive impact on overall service quality.
Knowledge and staff competency
Competence was one of the constructs in the SERVQUAL model developed by
Parasuraman et al. (1985) but collapsed into assurance and empathy that represents the
employee’s behaviour, which determines the service quality rendered. A previous
survey conducted in the telecommunication industry proved that a knowledgeable
employee enhances customer’s satisfaction (Loke et al., 2011). In the banking industry,
customers assume that bank employees will offer solutions professionally according
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to the problems encountered by customers. Researchers have successfully examined
competency through conflict handling, which, in turn, increased customer satisfaction
(Zafar et al., 2012). Therefore, employees’expertise or technical, intellectual, social
and commercial skills that are valued by bank customers significantly contribute to
enhancing service quality. Empirical results from Kumar et al. (2010) indicated that
Islamic banks must adhere to the Islamic principles as part of the improvement in
overall service quality and trustworthiness among customers. Hence, this variable is
viewed as highly important when a customer seeks for competent employees into
giving out services, either in the form of consultation or selling of a product
(Ali and Zhou, 2013; Taap et al., 2011; Muhammad Awan et al., 2011). Hence, the
following hypothesis:
H2. Knowledge and staff competency have a positive impact on overall service quality.
Image
A favourable image of the bank could be defined as having a clean environment and
modern equipment in all branches, bank employees’formal attire and politeness,
financial stability and word-of-mouth of the services offered. According to Heijes (2008),
bank users in China tend to select a foreign bank service provider due to the international
brand and worldwide image that represent their high social statuses. Hence, brand
marketing or advertising activities will increase the awareness of the standard or
quality of products and services offered by the bank (Vyas and Raitani, 2014). A study
examines the effect of bank image in determining the selection of bank provider indicated
that students in Ghanaian viewed bank reputation as a second important attribute
on service quality (Narteh, 2013). An interesting study by Amin et al. (2013) revealed
that customer satisfaction will contribute to the positive image of a bank provider.
If a customer experiences high satisfaction in the service, they are more willing to
recommend the particular bank provider to their families and friends. Moreover,
previous researchers also agreed that image of the bank is a significantly important
construct in the service quality within the global financial service industry (Camgöz
Akdag and Zineldin, 2011). Consequently, a good reputation among the bank users
will also reduce switching behaviour and form a long-term relationship. Thus, the
following hypothesis:
H3. Image has a positive impact on overall service quality.
Core product
Besides providing assistance on bank transaction and consultation, core products offered
by bank provider will also differentiate the competitive value among the customers. The
latest study showed that perceived price of the core product, particularly the interest rates
on deposit accounts, will influence customer satisfaction and loyalty (Kaura et al., 2015).
Customers are frequently comparing the bank providers when it comes to interest rates
for savings account, current account or any other bank account for maximum benefit.
Past researchers discovered that foreign Islamic banks in Malaysia are more aggressive
in introducing attractive financial products as compared to local Islamic banks (Ahmad,
2013; Hassan et al., 2013; Sufian, 2010). Foreign banks are capable of mobilising their
funds from home country and thus, able to provide a variety of service packages to fulfil
customer needs. For example, innovative banking products can result in higher interest
paid or more flexible loan negotiation package. Multinational organisations ranked core
product as the most important factor in perceived service quality because bank provider
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should propose a wide range of service package according to the business activities of the
company (Silva Fragata and Muñoz-Gallego, 2010). Hence, the following hypothesis:
H4. Core product has a positive impact on overall service quality.
Internet banking
Internet banking is gaining its popularity in the banking industry, a new dimension expected
by bank customers. Besides having tangible equipment such as conveniently located ATMs
facilities, bank users are also looking at advanced technology to carry out their banking
transactions anytime, anywhere. Previous researchers mentioned that online service quality is
based on ease of use, website interactivity, customisation to customers’needs, assurance and
responsiveness (Butt and Aftab, 2012). Among the five key dimensions, assurance has a
significant effect in the online context. The increasingly critical role of technology has raised
concern in the banking industry. This is in line with a survey carried out by Camgöz Akdag
and Zineldin(2011) that proves that bank reputation is influenced by the speed of services and
safety issue. Internet banking could effectively reduce waiting time if one were to perform the
same transaction at the counter and allow bank users to receive immediate updates on their
account information. Having secured online transactions increases customers’loyalty and
confidence and hence lead to customer retention (Samutthana and Roche, 2014). Although
past research works failed to show the impact on the quality of online service on customer’s
satisfaction, the importance of internet banking cannot be denied (Azizi et al., 2014). Therefore,
the bank’s image will improve if the banks were to relook into the overall service quality
within the online context, not just the physical facade. This is in line with Sun (2010) where
online service quality of a bank can leave a positive impression and be the bank’scompetitive
advantage in the banking industry. As a result, good service quality is perceived; customers
will be happier and loyal towards the bank provider. This finding is further supported by past
researchers where significant relationship is found between online service quality and
customer satisfaction (Ganguli and Roy, 2011; Samutthana and Roche, 2014). Hence, the
following hypothesis:
H5. Internet banking has a positive impact on overall service quality
Relationship between overall service quality and customer satisfaction
Many efforts have been made to improve the service quality, as the gap between customers’
expectation and actual delivery can influence the organisation’s competitive advantage.
In order to improve organisational performance, organisations must ensure that their
service quality meets the expectation of their customers. In the telecommunication industry,
tangibility is less important as compared to reliability, assurance, empathy and
responsiveness (Loke et al., 2011). However, a group of researchers led by Eren et al.
(2013) proved that overall service orientation mediated by customer satisfaction is highly
important in determining bank financial stability. Hence, the bank must strive to achieve the
level of customer satisfaction to secure long-term growth.
Few researchers believed that the superior value of a firm can be maintained when
technical and functional qualities are combined (Gronroos, 2000; Rahman et al., 2012).
Employees’technical ability and knowledge, quality of technical solutions given,
computerised system and machine are categorised as technical dimension, while
functional quality includes behaviour, attitude, accessibility, appearance, customer
contact, internal relationship and service mindedness (Akhtar et al., 2011). Furthermore,
researchers have proved that outstanding service quality can be attained when different
crucial elements are combined. For example, customers prefer banks that provide personal
attention, effective problem handling and friendliness attitude are service quality
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fundamentals. Hence, responsiveness, assurance and empathy are equally important
when training front desk staff.
In the Islamic banking context, compliance contributes significantly in determining
the overall service quality. Muslim bank user prefers Islamic products and services
that follow Islamic principles, such as zakat and infaq as fair and honest. Based on
Misbach and Hadiwidjojo’s (2013) study, compliance was not a stand-alone variable in
customer satisfaction. Responsiveness, service system and reliability were rated
as important factors as well. Therefore, it is important for Islamic bank to have
branches at strategic locations, promise error-free transaction and deliver first-hand
information when assisting customers.
Previous studies indicated that measurement of service quality may be different
depending on the type of industry. In 2003, overall service quality is represented by human
skill, tangible and empathy variables ( Jabnoun and Hassan Al-Tamimi, 2003). However, the
concept of service quality has been expanded to customer focus, employee service,
convenience, empathy and service architecture (Muhammad Awan et al., 2011). In addition,
researchers examine customer satisfaction from the analytical hierarchical process
perspective, such as responsiveness, competency, safe transaction, competitive service and
knowledge. In their analysis, the causal relationship between overall service quality and
customer satisfaction was confirmed and established.
Perception of service quality is linked to customer behavioural intention, such as
switching behaviour. Vyas and Raitani (2014) concluded that, overall service quality acts
as second factor in determining customer retention. Customers tend to compare the service
quality and will not hesitate to change to another service provider. Hence, bank should
improve customer experience through services rendered to prevent customers from closing
their existing account and switch to other competitors. Last but not least, the bank should
pay more attention on the causal relationship between service quality and customer
satisfaction for survivability (Ali Gillani and Awan, 2014; Ariffin et al., 2014; Sabir et al.,
2014; Akhtar and Zaheer, 2014; Rizwan et al., 2014; Siddique et al., 2011). Likewise, physical
facilities, employee attitudes and technology are the main concerns among banks to improve
customers’bank experience:
H6. Overall service quality has a positive relationship with customer satisfaction.
Moderating roles of local bank, foreign bank, age and gender
Service quality, an intangible measurement that is difficult to standardise or evaluate as
compared to product quality. In the last two decades, service quality studies have indicated
that none of the service quality measurement was generalisable due to different customer’s
profile, industry and country. Hoang et al. (2010) explained that the dissimilarity in
customer’s perceptions of service quality was due to service culture difference. Grönroos
(2007) defined the concept of service culture as “a culture where an appreciation for good
service exists, and where giving good service to internal as well as ultimate, external
customers are considered by everyone a natural way of life and one of the most important
values”. Researcher indicated that foreign organisation carries out three distinct values in
terms of ownership-specific, location-specific and internalisation advantages. In particular,
job relevant knowledge, skills and technology refer to ownership-specific benefit; location-
specific advantages refer to resources and assets organisation have in home country; and
achieve effective resources (input) and results (output) cost when organisation
internalisation their operation and manufacturing system. Therefore, foreign banks are
believed to perform differently as compared to local banks.
An interesting finding from previous research results that Bangladesh bank users rated
foreign bank performance, highly in terms of internet banking service and convenience
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dimension (Siddique et al., 2011). However, they feel more secure and have better
communication with the local banks rather than the foreign banks. This may due to English
language proficiency in their country, which may be relatively lower. Moreover, the
researcher mentioned that employee attitudes might influence by organisation cultural
background, thus affect customer’s satisfaction (Hoang et al., 2010). Social exchange theory
suggests that customers’perception of service quality is formed in accordance with the way
they are being treated. Hence, the bank should provide training to assist foreign staff to
adapt to the culture of the host country. For example, conduct Malay language classes to
encourage foreign employees to have conversed in the basic Malay language with
customers. A case study was conducted among Malaysia’s domestic banks indicated that
Public Bank Berhad outperformed CIMB and Maybank (Appannan et al., 2013). Based on
the research results, responsiveness was rated as the most important attributes, followed by
communication and attentiveness in determining customer service satisfaction. Thus,
researchers concluded that employee knowledge and service attitude are the basic factors
that contribute to the overall service quality among domestic banks.
According to Ariffin et al. (2014), Malaysian bank users have more tolerance with service
quality delivered by local bank as compared to foreign bank. Customers have higher
expectations when it comes to a foreign service provider in the banking industry.
Researchers found the zone of tolerance for bank’s service quality between local and foreign
banks is significantly large, specifically tangible factor. Customers assume that foreign
bank should introduce advanced technology and innovative products into the host market
by adopting their global scale management strategies. Compared to a local bank,
multinational foreign bank must actively design a variety of service packages or corporate
banking products, such as foreign exchange services, financial advisory services and trade
finance (Ahmad, 2013; Sufian, 2010). Hence, foreign bank should enhance organisation’s
competitive advantage by fully utilising their assets and resources in the global platform as
strategic positioning has become an important factor in the banking industry to maintain its
existing customers and attract potential customers.
Some customers may choose foreign banks over local banks if they have the intention to
proceed with some cross-border transactions. Banking with foreign bank may give them the
perception that these transactions will be easier in addition to higher perceived knowledge,
staff competency, image, core products and internet banking attribute offered by foreign
banks. A list of licensed domestic and foreign banks in Malaysia banking industry is as
follows. There are 8 local banks and 19 foreign owned banks authorised to provide banking
services for customers in Malaysia:
H7. Local or foreign bank moderates the relationship between convenience, knowledge
and staff competency, image, core products and internet banking attributes with
overall service quality.
Next, previous researchers suggest that demographic variables such as age, gender and
income might influence the perception of customer on overall service quality (Al-jazzazi and
Sultan, 2014; Ali Gillani and Awan, 2014; Kaura et al., 2015; Mandal, 2015; Rombe and
Ponirin, 2014). This is because previous researchers findings focus on certain dimensions
might not apply to other population. For example, reliability was not significant in
customer’s satisfaction among students for the service quality provided by the Islamic bank
(Kashif et al., 2015). Hence, future researchers are not encouraged to involve students as
respondents to increase generalisability of the results. Students rarely choose a bank based
on their preference, but rather, based on the availability of the banks near the campus.
In addition, working adults are the main customers who have accounts or interested with
banking products and thus might view the importance of dimensions differently as
compared to younger customers like students.
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Recent studies proved that personality traits play an important role in determining
customers’perception on bank service quality (Al-hawari, 2015). Highly conscientiousness
customers are less likely to change and switch banks, elderly customers may emphasis
less on the service quality once they are familiar with their current bank provider. Besides,
customers who scored high in openness to experience and extraversion factors are less
focus on service quality in selecting bank providers. For example, the male is more willing
to explore and change different service provider as compared to female bank users.
Ironically, Yavas et al. (2014) failed to show that gender could moderate the relationship
between image and customer loyalty. However, researchers’recommended further
research to be conducted as their respondentswerenotdistributedequally,wherethe
majority of the respondents were female. For that reason, it is important to understand
customer profile and customise a customer service package to keep valued customers and
maintain their loyalty.
Although employee’s attitude is viewed as the most significant factors in determining the
overall service quality among bank users of Asokore Rural Bank Ltd, Ghana, researchers do
admit that their analysis might generate different results in another country (Richard and
Mensah, 2014). Reason being, most of the participants in their investigation were female and
aged between 24 and 34 years old. Moreover, technology-related factors such as online
banking service will increase the perception of overall service quality among female aged
between 25 and 34 years in the Malaysian context ( Jjan and Abdullah, 2014). Therefore,
other banks must carefully design and provide personal attention if most of their customers
are male and not in their youthful age. A study in the banking industry in Bangladesh
revealed that male customers focused more on the core product quality, for example, paid
interest as promised will contribute to higher customers’perception of service quality
(Fatima and Razzaque, 2014).
Due to globalisation effect, customers have more autonomy and choices in selecting bank
service provider. In such situation, the bank must be capable of fulfilling the expectation
and various needs of customers. Customers are more willing to continue using the services
only when the bank can provide distinct and services valued by them. Last but not least, age
and gender can act as the key factors when customising training programme for bank
employees. Consequently, bank employees, especially, frontline staff could provide effective
service within a short period upon understanding the customers’profile and characteristics.
Hence, the following hypotheses:
H8. Age of bank customers moderates the relationship between convenience, knowledge
and staff competency, image, core products and internet banking attributes with
overall service quality.
H9. Gender of bank customers moderates the relationship between convenience, knowledge
and staff competency, image, core products and internet banking attributes with overall
service quality.
Method
Measurement
The measurement was adopted from previous literature with some minor modification
to suit the needs of the study. We used a seven-point Likert-type scale (strongly agree
7—strongly disagree 1) and asked respondents to indicate their level of agreement with
each statement. The research model (Figure 1) shows the relationship between the
independent and dependent variables.
Items related to convenience were adopted from Kumar et al. (2009). The measurement
items of internet banking were derived from Kassim and Abdullah (2010). Bank image items
Service quality
and customer
satisfaction
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were adapted from Ladhari et al. (2011) and Nguyen and Leblanc (2001). Items for core
products were adapted from Host and Knie-Andersen (2004). Staff competency was adapted
from Rakstis (1996) and Kumar et al. (2009), and measure required skills and knowledge in
performing a service. With regard to overall service quality, the items adapted from Cronin
et al. (2000). Finally, customer satisfaction indicators were measured by adapting items from
Hoq and Amin (2010).
A pre-test of ten respondents was conducted to measure the ease of answerability and we
asked the respondents to evaluate the questions in terms of understanding and wording.
Based on the comments from the respondents, minor changes were made to make the
questions simpler and more comprehensible. Pilot test of 30 respondents was conducted to
check on the reliability of the construct and the appropriateness to the research objectives.
Based on statistics book the sample of 30 is suitable for the pilot test (Browne, 1995).
Sample
Data were collected from 900 bank customers who have accounts at any local or foreign
bank (as listed in Table I) and have experience with online banking transactions based on
convenience sampling. We approached the customer who walk-in and out at the entrance of
banks within the Klang Valley area of Malaysia. Customers were asked to complete a
questionnaire before they entered or when they exit from the bank. As previous research
shows customers who answered the questionnaire before entering to the bank are able to
provide reliable feedback related to their overall impression of the bank service quality
(Culiberg and Rujsek, 2010). We distributed 900 questionnaires to different branches of the
banks, and received 748 completed questionnaires.
Data analysis
Demographics
As shows in Table II, the gender of the bank customers was almost equally apportioned,
where 48 per cent were males and 52 per cent were females. The majority of them
(67 per cent) were between 21 and 40 years old. Almost 80 per cent of them preferred online
banking, 72 per cent preferred ATMs, 67 per cent tellers at the bank and 16.7 per cent phone
banking which is the least preferred among them. Approximately 40 per cent of the bank
customers argued that they have been with their respective banks for between one and four
years. About the types of accounts they have with their banks, 93 per cent of the
respondents said that they have a savings account, and 48 per cent of the respondents have
a current account. Almost 23 per cent of the customers are in business, 23 per cent
housewife, 31 per cent students and 14 per cent employees. About 58 per cent of them have
incomes higher than RM6,000. From the total of 748 customer 51 per cent are using local
bank, while 49 per cent are using services from foreign bank in Malaysia (see Table II).
Convenience Customer
Satisfaction
Overall service
quality
Bank ownership
Age Gender
Knowledge and
Competency of staff
Image
Core products
Internet Banking
H1
H2
H3
H6
H4
H5
Figure 1.
Research model
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The results of the reliability test show that Cronbach’sαfor all variables exceeded
0.7, which indicate the high internal consistency related to each of the constructs
(see Table AI). There are two main groups in our respondents based on bank ownership:
local and foreign banks. Therefore, before we proceed to further analyse, we examined
whether bank customers have different perceptions related to the constructs
(mean comparison) and we compare local and foreign banks in terms of their
convenience, knowledge and staff competency, bank image, core product, internet
banking, overall service quality and satisfaction. The comparison between the means and
standard deviation shows that local and foreign bank customers have different perception
for most of the construct (see Table III). Local (mean ¼4.85) and foreign (mean ¼4.73)
Demographic variables %
Age
Under 20 0.7
21–30 26.5
31–40 40.8
41–50 24.2
50+7.9
Gender
Male 47.9
Female 52.1
Most preferred way of transaction
ATM 72
Teller at bank branches 67.5
Internet banking 80.3
Phone banking 16.7
Types of customers
Business 22.5
Housewife 22.3
Students 30.9
Employee 14.0
Others 8.2
Income
Below RM2,000 8.3
RM2,001–RM4,000 18.2
RM4,001–RM6,000 14.4
RM6,001–RM8,000 7.5
RM8,001–RM10,000 18.0
RM10,001 or above 33
Bank customer
Local 51
Foreign 49
Bank account type
Savings account 93.9
Current account 47.5
Duration of using the bank’s service
Less than one year 1.6
1–4 years 40.8
5–10 years 37.6
More than 10 20
Table II.
Demographic
characteristics of
bank customers
Service quality
and customer
satisfaction
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bank customers have close perception on knowledge and staff competency; because
employee of both banks is locally educated. However, they have different perceptions on
the convenience factor. Local bank customers (mean ¼4.53) think that local banks are
more convenient compare to the foreign banks (mean ¼3.97). Reason being, local bank
has more branches which they can provide necessary conveniences for their customers.
Customer believed that local bank (mean ¼4.77) provides more product compare to
foreign bank (mean ¼4.14). This is because local bank may offer Islamic products as an
alternative better to its customers. Results show that foreign bank has higher mean value
related to bank image, internet banking, overall service quality and satisfaction. The mean
comparison between local bank and foreign bank’s customer perception of bank image
shows that foreign bank (mean ¼5.30) have a better image among the customer compare
to the local bank (mean ¼4.59). Foreign bank has better internet banking (mean ¼5.56),
overall service quality (mean ¼5.40) and customer are more satisfied with their service
(mean ¼5.30).
To confirm the model and test the relationships, we run the confirmatory factor analysis
and through structural equation modelling, AMOS 18 (Hair et al., 2009). SEM is the ultimate
multivariate procedure which is able to measure constructs validity and the relationships
between the independent and dependent variables (Hair et al., 2009). First, we checked
the measurement model (confirmatory factor analysis) and we deleted few items to improve
the model and the results of the final model shows that the value of χ
2
is 1,303.343.197,
χ
2
/df ¼3.267, the comparative fit index (CFI) ¼0.937, root mean square error of
approximation (RMSEA) ¼0.055, Tucker Lewis index (TLI) ¼0.927, goodness of fit index
(GFI) ¼0.897 and adjusted GFI ¼0.872, which are within the acceptable level therefore
measurement is acceptable.
We evaluate the convergent and discriminant validity of the measurement.
The convergent validity assessed through loading of each item on their underlying
construct (Gefen et al., 2000). The composite reliabilities of all constructs were higher than
0.757, and the average variance extracted (AVE) to all the constructs was higher than
0.50 (see Table IV ). Thus, the results suggest evidence of convergent validity in this study.
In order to evaluate discriminate validity, we compared the square root of each construct’s
AVEs with inter-construct correlation (Chin, 1998) and the results show that all items
loading significantly on their predefined constructs and inter-construct correlations were
below than the square root of AVE for all the constructs. These analyses provided evidence
of discriminant validity.
Constructs Respondents Mean SD
Convenience Local 4.53 0.95
Foreign 3.97 0.57
Knowledge and staff competency Local 4.85 0.93
Foreign 4.73 0.52
Bank image Local 4.59 0.99
Foreign 5.30 0.53
Core product Local 4.77 0.89
Foreign 4.14 0.58
Internet banking Local 5.19 0.98
Foreign 5.56 0.67
Overall service quality Local 4.95 0.87
Foreign 5.40 0.49
Satisfaction Local 5.01 0.85
Foreign 5.30 0.50
Table III.
Differences between
local and foreign
banks
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Structural model
The structural model examined the research model and all the relationships in the model
were tested. The proposed structural model was tested for an overall model fit. The final
model with χ
2
871.154 ( χ
2
/df ¼3.340), degree of freedom ¼407, GFI ¼0.893; TLI ¼0. 924;
CFI ¼0.934; RMSEA ¼0.056; indicated that the model fits the data very well. Among the
five predictors of overall service quality, knowledge and staff competency, bank Image, core
product, internet banking were positive and significant, thus, supporting H2-H5. This result
shows that knowledge and staff competency, bank image, bank core product and internet
banking are important determinants of bank overall service quality, which, in turn, has a
significant effect on customer satisfaction. The effect of convenience towards overall service
quality was not significant; therefore, H1 was not supported (see Table V ). This shows that
convenience is not significant predictors of service quality among the bank customers.
Moderating effect of bank ownership, gender and age
In this study, there are three main moderators, namely bank ownership, gender and age,
which influence the relationships between independent and dependent variables.
The subsample analysis is commonly used in structural equation modelling to detect the
effects of categorical or continuous moderating variables (Hair et al., 2006). Following
the previous research, this this study runs the multi-group analysis to examine the
moderating effects of the categorical variables of bank ownership, gender and age.
Therefore, for the bank ownership, the data split into two data sets as local (n¼375) and
foreign banks (n¼373); for gender, the data divided in two group female customers
(n¼390) and male customers (n¼358). We divided the respondents in two groups, 40 years
old and below and above 40 years old. We measure the effect of age since some researchers
believe that age can affect individual behaviour and the way that they perceive and deal
with certain behaviour. The results of the multi-group analysis and the difference in the
χ
2
value (Δχ
2
) between the sub group and main data revealed that age, gender and bank
Constructs CR AVE 1 2 3 4 5 6 7
Convenience 0.811 0.765 0.874
Staff knowledge 0.851 0.697 0.467** 0.834
Bank image 0.868 0.825 0.183** 0.416** 0.908
Core product 0.757 0.711 0.604** 0.596** 0.226** 0.843
Internet banking 0.916 0.801 0.287** 0.407** 0.514** 0.350** 894
Overall service quality 0.878 0.767 0.293** 0.526** 0.645** 0.350** 0.650** 0.875
Satisfaction 0.862 0.745 0.268** 0.583** 0.595** 0.411** 0.556** 0.697** 0.863
Notes: CR, composite reliability. AVE, average variance extracted. Values on the diagonal are the square root
of AVE. **po0.01
Table IV.
Co-relations,
composite reliability
and average
variance extracted
Bank Hypotheses βSE CR pSupport
H1 Convenience →Overall service quality 0.014 0.023 0.382 0.703 No
H2 Knowledge and staff competency →Overall service quality 0.382 0.062 6.279 *** Yes
H3 Bank Image →Overall service quality 0.233 0.023 6.840 *** Yes
H4 Core product →Overall service quality 0.158 0.047 2.562 0.010 Yes
H5 Internet banking →Overall service quality 0.497 0.030 12.970 *** Yes
H6 Overall service quality →Satisfaction 0.919 0.041 21.608 *** Yes
Notes: β, standardized regression weight; SE, standardized error; CR, critical ratio. ***po0.001
Table V.
Hypothesis testing
on bank overall
service quality and
customer satisfaction
Service quality
and customer
satisfaction
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ownership moderate the relationship between the convenience, knowledge and staff
competency, bank image, core product and internet banking towards overall service quality.
Regarding the relationship between convenience, knowledge and competency of the
staff, bank image, core product and internet banking towards overall service quality,
the value of χ
2
difference (Δχ
2
) support the moderating effect of bank ownership, gender and
age thus H7-H9 are supported. As shown in Table VI, the results of the comparison between
local and foreign banks show that there is a significant difference between local and foreign
banks in terms of their convenience, knowledge and staff competency and bank image.
The findings (Table VI) indicate that convenience and staff knowledge and competency
towards overall service quality are stronger among the customer of local bank compare to
customer of the foreign bank. This may indicate the perception of bank customers in general
that a foreign bank is more knowledgeable and with higher competencies as compared to
local banks, hence, customers do not consider them as an important factor when it comes to
foreign banks. Bank image, core products and internet banking are found to be more
important for the customer of a foreign bank. To explore the satisfaction level among
the local and foreign bank customers, we measured the effect of bank ownership on the
relationship among the overall service quality and customer satisfaction and the results
show that foreign bank customer are more satisfied with the service and quality compared
to the local banks.
Examining the moderating effect of gender on the determinants of the overall service
quality shows that gender did not moderate the effect of convenience and staff knowledge
towards overall service quality, which suggest that the effect is the same among the male
and female customers (see Table VII). The results revealed that the gender did not affect the
relationship between the convenience and overall service quality and the effect remains
non-significant, while the effect of staff knowledge towards overall service quality remains
significant for both groups. Gender moderates the relationship between image, core product
and internet banking. The effect of bank image is stronger among female while the internet
banking has more value towards perceived service quality for male. The effect of core
product is not significant for male while it is important for the female. Findings reveal that
male customer emphasises more on online banking while female are more concern about
bank image and core product.
Examining the moderating effect of age among two groups of customers’shows that the
effect of convenience, bank image and staff knowledge is the same among the younger and
older customers, while the effect is different for core product and internet banking among
young and old customers. Results show that core product and internet banking are more
Bank Hypotheses βSE CR pSupported
Local Convenience →Overall service quality 0.216 0.059 3.301 0.041 Yes
Foreign Convenience →Overall service quality 0.110 0.021 2.042 ***
Local Knowledge and staff competency →Overall service quality 0.400 0.088 4.576 *** Yes
Foreign Knowledge and staff competency →Overall service quality 0.281 0.067 3.067 0.002
Local Bank image →Overall service quality 0.170 0.032 3.875 *** Yes
Foreign Bank image →Overall service quality 0.324 0.024 4.590 ***
Local Core product →Overall service quality 0.077 0.081 0.862 0.389 No
Foreign Core product →Overall service quality 0.140 0.035 1.580 0.114
Local Internet Banking →Overall service quality 0.292 0.053 4.868 *** Yes
Foreign Internet banking →Overall service quality 0.565 0.036 7.145 ***
Local Overall service quality →Overall satisfaction 0.890 0.047 17.92 *** –
Foreign Overall service quality →Overall satisfaction 0.926 0.124 7.246 ***
Notes: β, standardized regression weight; SE, standardized error; CR, critical ratio. ***po0.001
Table VI.
Hypothesis testing
for local and
foreign banks
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important among the customers under 40 years old. These results suggest that the younger
adults are searching for different product and service compare to the older group.
The importance of internet banking among younger customers suggests that using
technology is easier and desirable for them since they are more familiar with information
technology (Table VIII).
Conclusion
The first objective of this study is to examine any difference between local and foreign
banks in Malaysia on perceived overall services and customer satisfaction. Our results show
that foreign banks respondents have significantly higher means of perceived overall service
quality and customer satisfaction than local banks respondents. This might imply that in
general, foreign banks perceived higher level of overall service quality. It is also possible
that foreign banks are efficient and have more resources, and/or good connections with the
industry due to their international bank image, hence can provide higher quality of services.
This suggests that it is important for local banks to improve service quality in a sustainable
manner, in order to generate competitive advantage and to be able to maintain it over time.
With regards to the relationship between perceived overall service quality and customer
satisfaction, the results show that customers experience on perceived overall service quality
is significantly positive affect customer satisfaction in both groups of banks. Nevertheless,
foreign banks respondents show a higher level of overall satisfaction than their local bank
counterparts. This suggests that banks should emphasise on customer perception of the
overall service quality to enhance customer satisfaction.
Bank Hypotheses βSE CR pSupported
40 ⩽Convenience →Overall service quality 0.015 0.029 0.345 0.730 No
Above 40 Convenience →Overall service quality 0.042 0.042 0.509 0.610
40 ⩽Knowledge and staff competency →Overall service quality 0.375 0.072 5.192 *** No
Above 40 Knowledge and staff competency →Overall service quality 0.392 0.128 3.295 ***
40 ⩽Bank image →Overall service quality 0.233 0.026 6.253 *** No
Above 40 Bank image →Overall service quality 0.240 0.050 3.057 0.002
40 ⩽Core product →Overall service quality 0.190 0.056 2.619 0.009 Yes
Above 40 Core product →Overall service quality 0.066 0.084 0.559 0.576
40 ⩽Internet banking →Overall service quality 0.566 0.036 12.359 *** Yes
Above 40 Internet banking →Overall service quality 0.298 0.056 4.439 ***
Notes: β, standardized regression weight; SE, standardized error; CR, critical ratio. ***po0.001
Table VIII.
Hypothesis testing on
the effect of age
Bank Hypotheses βSE CR pSupported
Male Convenience →Overall service quality 0.016 0.010 0.333 0.739 No
Female Convenience →Overall service quality 0.035 0.037 0.609 0.543
Male Knowledge and staff competency →Overall service quality 0.388 0.094 4.547 *** No
Female Knowledge and staff competency →Overall service quality 0.385 0.082 4.516 ***
Male Bank Image →Overall service quality 0.150 0.029 3.283 0.001 Yes
Female Bank Image →Overall service quality 0.280 0.035 5.542 ***
Male Core product →Overall service quality 0.029 0.062 0.345 0.730 Yes
Female Core product →Overall service quality 0.261 0.066 2.981 0.003
Male Internet Banking →Overall service quality 0.550 0.040 10.230 *** Yes
Female Internet banking →Overall service quality 0.473 0.046 8.310 ***
Notes: β, standardized regression weight; SE, standardized error; CR, critical ratio. ***po0.001
Table VII.
Hypothesis testing on
the effect of gender
Service quality
and customer
satisfaction
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The second objective of this study is to propose a measure of service quality and to
determine which dimensions of service quality have greater impact on perceived overall
service quality. This study is a preliminary attempt to explore the relationship between
service quality dimensions (convenience, knowledge and competency of staff, image, core
products, and internet banking), perceived overall service quality and customer
satisfaction. The results of the validity show that the indicator variables contributing to
the composite variables which support the validity of the service quality construct.
However, the results can be different in other context and culture which can be an area for
future research. Our results indicate that the “core product”dimension had no significant
relationship with perceived overall service quality in both foreign and local banks, but
there were different between the two groups for the other dimensions. In the foreign banks
sample, “internet banking”was the most important predictor of perceived overall service
quality, followed by “bank image”. The image of the bank is more important for the
foreign bank customer, since they will commit the international trade name with the best
reputation, and the ease and user-friendly internet banking are a must for foreign banks.
This result is consistent with the Heijes’s (2008) finding, which indicated that bank users
in China tend to select a foreign bank service provider due to the international brand and
worldwide image that represent their high social statuses. In the local banks sample,
“knowledge and staff competency”and “internet banking”were the most important
predictors of perceived overall service quality. Local bank offers the range of service
conceptualised to the local market; therefore, the knowledge and staff competency can be
important factors for their customer. This finding highlights the importance placed by
customers on the service provided to them through internet banking, since it facilitates
their banking transactions anytime, anywhere which will decrease waiting time and
non-necessary visit of the related bank. Besides, convenience of the bank is also an
important factor in local bank customers as customers tend to select a bank that is
convenient to them. For example, local banks with most branches, located near them are
their preferred choice or ease of parking.
With regards to the moderating variables, the finding confirms the mediating role of
bank ownership between perceived overall service quality and customer satisfaction.
These suggest that it is the importance of local and foreign banks to differentiate their
quality of services in order to provide higher levels of customer satisfaction for customers.
Since the banking industry is highly competitive and banks are offering similar services,
customers become harder to detect quality differences among similar service offering.
In such environment, building a corporate image significantly different from other banks
within the same industry is a fruitful strategy. This study also included respondent
gender and age as moderating role between service quality dimensions (convenience,
knowledge and competency of staff, image, and internet banking) and perceived overall
service quality. The results show that male and female customers in different age have
different perception of bank image, core product and internet banking. Bank image and
core product are more important for female customers, while internet banking is more
important for male. Core product and internet banking are important between the younger
customer compare to the older group.
The Malaysian Government has opened its banking sector doors for foreign banks which
creates the competitive environment for the local bank. Foreign bank is able to provide
better service and various products compared to the local bank, which can attract the
customer and create loyalty. The results of this study show that foreign bank customers are
more satisfied with the quality of their service, which creates warning for the local bank
and policy makers. If the local bank cannot compete with the foreign bank, they will lose
their market and customers. Local bank needs to improve their product and service to be
able to compete in the market.
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To strengthen competitiveness, both local and foreign banks need to focus more on the
online system quality of ease of use, accuracy and security. Additionally, bank management
should regularly provide training for bank staff. Regular staff training will increase staff
knowledge and competency in providing high quality of service.
There are, however, limitations to this study. This study is a preliminary attempt to
explore the relationship between service quality dimensions, perceived overall service
quality and customer satisfaction among different types of banks. Hence, the findings of this
study may not be generalisable to other contexts. Future research should explore how
the model works across service categories. No analysis is undertaken of any difference in the
service quality dimensions between banks of different sizes. Further research on banking
services could usefully test service quality dimensions, across banks of different sizes.
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Appendix
Constructs Item Mean SD
Cronbach’s
α
Factor
loading
Convenience Bank branches are located in a convenient location 4.53 0.95 0.817 0.729
The bank extends its working hours in order to
meet customer needs
0.639
Number of open tellers during peak hours is adequate 0.655
Waiting time for receiving services is not too long 0.685
The bank provides the necessary convenience for
customers (e.g. parking area and special counters
for elderly/disabled customers)
0.644
ATMs are conveniently located (e.g. shopping malls,
government departments, etc.)
0.732
Bank service is easily accessible by telephone 0.595
Knowledge and
competency of the
staff
Bank’s staff telling customers exactly when services
will be performed
4.79 0.76 0.822 0.746
Bank’s staff able to conduct a transaction
immediately or in a short waiting period
0.721
Bank’s staff able to explain bank’s products and
services to customers
0.683
Advices and recommendations given by bank’s
staff solved my problem(s) and match my needs
0.775
Bank staff knowledge is up to date 0.815
The personnel know their job scope and
authority well
0.686
Core product The bank offers a wide range of saving accounts
and investment/retirement plans
4.46 0.82 0.819 0.739
The bank offers a wider choice of loan maturity
period and interest rates
0.740
The bank is innovative in launching new products
to match the unique needs of its customers
0.765
Bank offers Islamic products as alternative
to customers
0.690
The fees and charges of the bank are reasonable 0.812
Image I will continue to patronise my bank even if the
service charges are increased
4.95 0.86 0.880 0.779
I am likely to pay a little bit more for using the
services of my bank
0.812
To me, my bank would rank first among the
other bank
0.828
The bank I patronise reflect a lot about who I am 0.825
My bank has a good reputation in this country 0.692
My bank does what it promises to its customer 0.736
Internet Banking The online banking has adequate security features 5.19 1.02 0.929 0.844
The online banking is fast for making transactions 0.901
It is easy to learn how to operate online system 0.902
The online system makes appropriate confirmation
concerning the completion of transactions
0.890
I received confirmation of every online transaction
by SMS
0.766
The online banking system has a user-friendly
interface
0.887
(continued )
Table AI.
Mean scores,
Cronbach’sαand
factor loading
(748 respondents)
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Corresponding author
Su Teng Lee can be contacted at: stlee@um.edu.my; leesuteng@gmail.com
Constructs Item Mean SD
Cronbach’s
α
Factor
loading
Overall service
quality
My bank always delivers excellent overall service 4.95 0.87 0.915 0.849
The services offered by my bank are high quality 0.878
My bank delivers superior service in every way 0.861
My bank offers me a complete range of products 0.789
The personnel provide a friendly atmosphere 0.831
The bank insists on error-free records 0.831
Customer
satisfaction
The services of this bank meet my expectations 5.01 0.85 0.883 0.827
I did the right thing when I chose this bank for
its services
0.861
I am satisfied with the quality of the bank’s services 0.859
I am satisfied with the various bonus link
programmes of the bank
0.614
I am satisfied with the interactions that I have had
with the bank
0.818
The bank satisfies my needs 0.830
Note: Scores based on a seven-point scale ranging from 1 ¼strongly disagree to 7 ¼strongly agree Table AI.
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Service quality
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