Bangladesh University of Professionals

A Dissertation Proposal on “The Level of Customer Satisfaction

on Mobile Banking in Bangladesh: Application of SARVQUAL
Model”

Proposal Submitted to:

Mohammad Ali

(Assistant Professor, FBS, BUP)

Proposal Submitted by:

Ainoon Nahar Akhi

Id: 19020017

Batch: 20

(MBA Professional)

Date: 09/01/2021
Abstract:

The rapid increase in the number of mobile phone users and the growing popularity of mobile
banking services in Bangladesh had a twofold outcome: it allowed financial institutions to tap
into the areas of the market previously untouched by banking services, but it also brought
along for their marketers the challenges of customer retention. The existent literature names
the perceived service quality as a powerful antecedent of customer satisfaction and retention.
But, as the field is relatively new in Bangladesh, the major challenges for marketers are to
understand what customers perceive as quality dimensions in mobile banking services, and
what impact these dimensions have on customer satisfaction and retention. Although the
literature on service quality is abundant, very little research has been conducted on the
evaluation of the quality of services delivered through non‐branch banking. This research
aimed at applying SERVQUAl model to examine the relationship between mobile banking
services and customer satisfaction. Here I will use customer satisfaction as the dependent
variable and the five dimensions of service quality; namely, tangibles, reliability,
responsiveness, assurance and empathy, as the independent variables. Results showed that the
four variables tangible, reliability, responsiveness, and empathy would correlate with
satisfaction significantly.

Keywords: mobile technology, mobile banking, service quality, customer satisfaction,

SERVQUAL.
Introduction:

Modern management science philosophy considers customer satisfaction as a baseline

standard of performance and a possible standard of excellence for any business organization.
Especially, banks due to similar services compete together in order to achieve customer
satisfaction. They try to create eases for their customers. E- Banking is a new system that
most banks have used to achieve this objective. This system opens multiple routes to the
customer service (e.g., ATM machines, telephones, Internet and mobile phones). Although,
advancements in e-banking technology have already transformed the modern world, E -
banking is still an innovation in creating products and services through electronic channels
with low cost. These products and services include billing, credit, deposit management and
electronic payment of products and services such as electronic money (Samadi and eskandari,
2012). Many researchers have studied E -banking (Rexha et al., 2003; Poon, 2007; Eriksson
and Nilsson, 2007; Udo et al., 2010;Gilaninia and Mosavian, 2010; Zaribaf et al., 2011). A
new approach in the field of banking services is the supply of financial and banking services
with mobile phones. Mobile banking is as a wireless communication channel for creating
value by customers in banking transactions (Taghavi Fard and Torabi, 2011). Mobile-
banking is a new concept that emerged in the global economy in the recent years and has
created new streaming in the fields of commerce and trade. Therefore, the attention of some
researchers have focused on this concept (Lee et al., 2003; Laforet and Li, 2005; Tobbin,
2007; Gu et al, 2009; Laukkanen and Kiviniemi, 2010; Lee et al., 2011; Taghavi Fard and
Torabi, 2011; Singh, 2012; Zhou, 2012). Being influenced by the high rate of technological
penetration among customers and by the impetus to accommodate more and more people
under the framework of formal banking services, the banking industry in Bangladesh has
inevitably changed itself by adapting information technology for the provision of quick and
quality consumer services in the form of online, e‐banking, ATM services etc. But the
majority of population is economically marginal and lives in villages, and bringing them
inside the branch banking systems is both expensive and technologically incompatible.
Bankers are considering non‐branch banking, known as mobile banking, as the perfect
platform to take financial services to the country’s largely unbanked population in an
efficient and low‐cost manner. Uttam Nayak, the group country manager of VISA for India
and South Asia, recently commented that mobile banking is going to be significantly
important for financial inclusion in Bangladesh (Fazrul, 2014). Mobile banking refers to a
system that enables bank customers to access their accounts and general information on bank
products and services through mobile devices. Because of its different nature, consumers in
the financial service market do not perceive mobile banking as alternative to branch banking
except in the case of quick money transfers. Educating consumers on the benefits of mobile
banking as well as improving the quality of the services are the key to success in capitalizing
the potential opportunities of this sector. Understanding service quality, which is the
antecedent of customer satisfaction, as well the rate of market penetration of the mobile
banking services can help marketers devise effective marketing strategies for capturing
potential opportunities.
SERVQUAL model is one of the instruments used to measure the quality of services. This
scale has been tested and/or adapted in a great number of studies conducted in various service
settings, cultural contexts and geographic locations. This paper will apply SERVQUAL
model to study the quality of the mobile banking services rendered by Bangladeshi banks.
The main purpose of the study is to examine the relationship between qualities of MB
services and satisfaction of customers with SERVQUAL approach.

Rationale of the Study:

The purpose of the study is to predict mobile bank loyalty intent based on service quality.
The proposed model is based on the comprehensive and critical literature review presented
above. The study conceptualizes reliability and responsibility, assurance and security,
convenience, efficiency, and easiness to operate as five dimensions of mobile banking service
quality.

Research Questions:

R.Q.1: How does tangibility of the mobile banking service help to satisfy the customers?
R.Q.2: How does reliability of the mobile banking service help to satisfy the customers?
R.Q.3: How does responsiveness of the mobile banking service help to satisfy the customers?
R.Q.4: How does assurance of the mobile banking service help to satisfy the customers?
R.Q.5: How does empathy of the mobile banking service help to satisfy the customers?

Research Objective:

The objective of this research is to find the Relationship of Mobile Banking service Quality
with the customer satisfaction.
Literature Review:

Mobile banking in Bangladesh

An appropriate banking environment is considered a key pillar as well as an enabler of

economic growth (Koivu, 2002). Mobile banking is considered as an alternative and
innovative method to access banking services via a channel through which the customer
interacts and completes bank related transactions such as checking the balance, checking the
account status, transferring money and selling stocks (Kim et al., 2009; Luo et al., 2010). But
no clear guidelines are given in the literature regarding the appropriateness and quality
environment for mobile banking explicitly in the Bangladeshi context. This study is an effort
in this direction. Bangladesh is a fast growing economy with young demographics. The
mobile phone penetration rate in this country is one of the highest in Asia after China and
India. The number of subscribers has reached more than 100 million in 2013 out of the 160
million representing the total population. Affordable call rates, wide connectivity, and
available internet connection through mobile phone have made this device an inevitable
friend of Bangladeshi people. Banking services through mobile phones represent a recent
addition of the financial service delivery system. Dutch Bangla Bank Ltd (DBBL), one of the
leading commercial banks in Bangladesh was the first mover as it launched this service on
March 31, 2011. By 2013, at least 15 other commercial banks have started offering this
service, and by the end of the year there were 13.2 million accounts of registered users doing
monthly transaction of over TK66 billion through 182,000 agents across the country (pi
Strategy Consulting, 2014).

Historically, there has been a dearth of consumer behavior studies in general and in the
service industry in particular from the Bangladeshi perspective. The recent spread of
consumer culture has made young researchers interested to study the consumer behavior in
depth. Deb et al. (2011) have studied the dimensions affecting the adoption of mobile
banking in Bangladesh and found that the handset operate ability, convenience, and security
are the prime influencing factors, while reliability, cost, confidentiality, network procedure,
and knowledge also have a significant influence.

Service Quality and Customer satisfaction

Banking industry has realized the significance of customer-cantered philosophies and is

turning to quality management approaches to help managing their businesses. Many scholars
and service marketers have explored consumers’ cognitive and affective responses to the
perception of service attributes in order to benefit by providing what consumers need in an
effective and efficient manner. Consumer satisfaction is considered the primary intervening
constructs in the area of service marketing because ultimately it leads to the development of
consumer loyalty or re-patronization of a product or service (Ravichandran et al., 2010).
Service quality and customer satisfaction are very important concepts, which must understand
by companies that want to grow while keeping their competitive edge. In the modern
competitive environments, delivering high service quality is the key for a sustainable
competitive advantage. Customer satisfaction has a positive effect on an organization’s
profitability. Satisfied customers of any business repeat purchase, show brand loyalty, and
give positive word of mouth. Many models have been developed to measure service quality
delivered by firms in numerous businesses. It is important to review service quality models
because of its relation with customer satisfaction. Thus, service quality has become a major
area of interest of practitioners, managers and researchers because of its impact on customer
satisfaction, customer, and of course, company profitability (Zekiri, 2011).

SERVQUAl Model

Service quality is one of the important attributes of service providers as they regard
measuring the service quality from consumers’ perspective as a top priority construct. Service
quality is an indispensable factor for customer, cost reduction, customer loyalty, customer
relationship and retention, profitability so on. Many have suggested that quality results from a
comparison of perceived performance with expected performance based on the so-called
“disconfirmation theory”. Indeed, this notion was the basis for the SERVQUAL model,
which views service quality as the gap between the expected level of service and customer
perceptions of the level received. Berry, Parasuraman and Zeithaml (1988) are the creators of
this instrument that is used to measure the customer perceptions of service quality (Islam,
2012). Therefore, the evaluation of service quality results from comparing the perception
about received services with prior expectations of what those services should provide.
Mobile banking
services quality

Tangibles

Reliability

Satisfaction
Responsiveness

Assurance

Empathy

Figure 1: Theoretical Framework

 1. Tangibility alludes to physical facilities, equipment, representatives and specialized
instruments.

2. Reliability alludes to the capacity to satisfy the promises effectively and without a

doubt.

3. Responsiveness alludes to the specialist co-op’s aim and eagerness to help the clients
and to diagram the prompt administrations.

4. Assurance alludes to the workers’ learning and humbleness and capacity to pass on

trust and earnestness.

5. Empathy alludes to accommodating individual care and thoughtfulness regarding the

client.

Theoretical Framework

Figure 1 presents the study conceptual framework as well as showing the hypotheses
relationships between the constructs. I used the customer satisfaction as the dependent
variable and the five dimensions of service quality - tangibles, reliability, responsiveness,
assurance and empathy- are the independent variables.
Research Methodology:

Design

Research Questions Research Objective Information Research Tasks to be

Requirements Method to performed
be Used
How does tangibility The objective of this Mode of Qualitative Primary Data
of the mobile research is to find requirement Method (Interview)
banking service help the Relationship of collection and
to satisfy the analysis. Quantitative Secondary data
Mobile Banking Method (Article
customers?
service Quality with Experience of review,
How does reliability
the customer people. Website
of the mobile review, etc.)
banking service satisfaction.
Primary Data
help to satisfy the Structure of Data
(Interview)
customers? security.
Psychological
trend in between
support provider
How does
and support taker
responsiveness of
the mobile banking Statistical
service help to Techniques.
satisfy the Psychological
customers? related Challenge.

How does assurance

of the mobile
banking service
help to satisfy the
customers?

How does empathy

of the mobile
banking service
help to satisfy the
customers?
Procedure & Expected Result:

The current study is going to use a mixture of statistical techniques to achieve the intended
objective. First, descriptive statistics will be employed to analyze the profile of the
respondents, which is necessary in analyzing the result. Second, Pearson's correlation
coefficient will use to measure the relationship between services quality and customers
satisfaction. Then, regression analysis will use to estimate the cause and effect relationship
between the variables of services quality and customers satisfaction.

Most of the studies related to service quality of technology based service delivery are about
online (or internet based) services (Collier and Bienstock, 2006; Parasuraman et al., 2005;
Santos, 2003; Van Riel et al., 2001; Wolfinbarger and Gilly, 2003). Even for banking, most
studies have examined the service quality related to the specific technologies like internet
banking, ATM banking and self‐service technology (SST) (Al‐Hawari et al., 2005; Curran
and Meuter, 2005). With the emergence of mobile banking as an alternative financial service
delivery channel in Bangladesh where mobile penetration rate is high and the competition
level of this channel is intensifying, there is a need to identify the service quality dimensions,
as perceived by customers in the case of mobile banking services and develop a scale for
measuring the service quality in the case of mobile banking customers. This study, therefore,
seeks to explore the dimensions of mobile banking service quality and to develop a scale for
measuring the service quality offered to mobile banking customers.

Significance of the Study:

The proposed model is based on the comprehensive and critical literature review presented
above. The study conceptualizes reliability and responsibility, assurance and security,
convenience, efficiency, and easiness to operate as five dimensions of mobile banking service
quality.