Chapter 1: Introduction

Customer satisfaction is very important for greater profitability and managing companies more effectively. As financial institutions become more vulnerable to globalization, the companies trying to stable their positions by satisfying their clients and create competitive advantage. Increasing rate of customer satisfaction add value to increase the share of a target market. There are so many factors on which the satisfaction of a customer is dependent. These factors are very influential and crucial for the financial institution to be maintained and it is a very tricky thing as well. If these factors dispositioned slightly, may caused customer dissatisfaction and cause loss of profitability in the perspective of commercial organization. In this research the factors will be enlightened by using research tools and technique.

1.1. Background of the study In this section, some areas are discussed from which the background of the study can be understood. The topics include the global banking service, customer satisfaction and service quality. In the end of this section, problem discussion which is arising from the earlier discussed issues are given from where the motive of this research will be founded. 1.1.1. Banking service In the world, the business activity is divided into two main segments, which are product and service oriented business. You may find some hybrid one also, where product orientation service orientation are mixed together to serve a target market. Banking service is one of the prominent services of the world. Its importance is also very high. Banking organization supports and guide other business in the formation of capital, making transaction, exchanging foreign currency, loan settlement etc. moreover, banking organization help other commercial organization to reduce several types of risks, such as credit risk, liquidity risk etc. In UK and Bangladesh, there are lots of banks operating their business. These banks can be categorized based on their ownership

structure and diversity of their operation in the world. A bank can be national, multinational and international.

Among the global banking organization, the Hong Kong and Shanghai Banking Corporation (HSBC) is one of the major multinational banks in the world. This bank has a very unique position in the world of banking. After facing such a catastrophic recession, the bank was not fallen down; rather it became first among the worldwide operation based on profitability. The main strength of this bank is underlying in its service quality, which derived new customer and retain existing customer. In this research paper, the level of satisfaction of the customers of HSBC will be analyzed and determined. This research will identify the customers view to the several service output of HSBC.

1.1.2. Customer satisfaction Lets consider some facts to understand the importance of customer satisfaction, customers with problems usually do not react, and a very tiny portion of them complain. Moreover, a person with a problem tells many people than that of a satisfied customer. The implication of the introductory statement is customer satisfaction is important, as a satisfied customer will give better prospects for a banking institution. Moreover, cost of keeping a current customer is lower than the cost of acquiring a new customer. These facts highlights the crucial role of satisfying customers which brings employee satisfaction, hence the profit maximization of the company. Because retaining a current employee costs less than cost of hiring and training a new one.

Therefore, a commercial organization such as a banking organization need to know the extent of customer satisfaction, or to what length the service need to be designed to satisfy their customer. There is certain meaning of customer satisfaction in marketing context. Anders Gustafsson, Michael D. Johnson, & Inger Roos (2005) brought customer satisfaction definition as customers overall evaluation of the date. This satisfaction has positive influences on retaining customers among different variety of services and products. In service based enterprises: service directly affects customer satisfaction.

Customer satisfaction can be sourced from three factors which are used to define the term by Ingrid FeclikovaA, (2004). She describe the three factors as the outcome of received service based on the expectation, deciding the purchase and finally the fulfillment of need or want.

In the following figure, the correlation between customer expectation and customer satisfaction is depicted. In this way, satisfaction is what is we want to achieve sourced from our expectation. The implications of the following figure are, if the customer is satisfied then they might have less expectation. And the satisfaction means not going wrong resulted decrease rate of compliant of service and products. So the less expectation customer will be more satisfied with the use of innovative features and it also increases the loyalty to the product or services. In the opposite direction, customer may unaware about the improvement or development of the product or services, but may critical about the losses caused from the existing quality. These customers are less satisfied and expect more.

New features

Potential for increased CS. Requires creativity and innovation backed by market research.

Customer Satisfaction

Available features
These include optional features added in product generations, i.e. normal product development.

Required features
Customers are generally unaware of improvements but critical of losses in existing quality.

Customer Expectations
Figure 1: Correlation between customers expectation and customer satisfaction (Ingrid FeclikovaA, 2004)

To be successful in the market, both in local market and global market, the main ingredients of success is customer satisfaction. Jochen Wirtz (2003) found some results of customer satisfaction in his study. The outcomes of customer satisfaction are repeat purchase, loyalty, positive word of

mouth and increased long term profitability. Therefore companies should measure their customers satisfaction to fortify their strength and improve their weaknesses.

1.1.3. Service quality Service quality is the result of the comparison that customers make between their expectations about a service and their perception of the way the service has been performed (Gronroos, 1984; Parasuraman et al., 1985, 1988). A number of experts define service quality differently. Parasuraman et al. (1985) define it as the differences between customers, expectation of services and their perceived service. If the expectation is greater than the service performance, perceived quality is less than satisfactory and hence, customer dissatisfaction occurs. Lewis and Mitchell (1990), Dotchin and Oakland (1994), and Asubonteng et al. (1996) define service quality as the extent to which a service meets customers, need and expectation.

1.1.4. Problem discussion In a competitive market place, understanding customers needs become crucial. This trend forces the companies to move from a product centric to customer centric position. In addition, customer retention is influenced by customer satisfaction. Retention is an important issue in banking industry, as customer has lots of alternatives to choose, so they can switch to another bank. Considering the high cost of acquiring new customer and sometimes high customer turn over of many banking services, it is important to study determinants of customer satisfaction.

Customer satisfaction is the key factor in determining how successful the organization will be in customer relationship (Reichheld, 1996), for this reason, it is very important to measure it. The achievement of true customer satisfaction involves: customer oriented culture, an organization that centers on the customer, employee empowerment, process ownership, team building and partnering with customer and suppliers.

To keep the customer of HSBC bank, retaining customers will be a most important aim. Customer satisfaction will be used as the main tools for retaining customer. And as discussed earlier, service quality is the dominating factor for satisfying customer.

1.2. Aim of the study The aim of the research is to measure the level of service of quality customers expect to get from HSBC and also the level of service the customers perceive that they are getting. Then the results of both are compared and a gap between the expectation and perception of the level of quality of services are measured to find out where HSBC stands in the perception of the customers and thus an implied insight on the overall customer satisfaction.

1.3. Objectives of the Study The objectives of the research based on the problem discussion are written belowy y y To identify the expectation on the dimensions of quality of service To identify the perceived quality of service on the dimensions of quality of service To find out the gap between the expected and perceived quality by the customers towards the service provided. y To suggest ways of improving the current standard that accommodates a rapidly growing customer volume.

1.4. Organizational Framework of the Research Report This research paper is divided in to chapters for better presentation and understanding also. There are total eight chapters, which are covering all the required aspects of this dissertation. In the first chapter, some general overview of research problem and objectives of the research are discussed. In the second chapter, a detailed review of literature of several topics which are related and relevant to research problem, are given. That chapter will give the reader the theoretical foundation or historical base of the research problem. In the following chapter, research methodology of the research is elaborated, which includes research strategy, sample

design and data collection etc. in the fourth chapter, a overview of HSBC in two targeted country, United Kingdom and Bangladesh both given for the understanding of a reader of this research paper about the operation and performance of the famous banking organization. After the four initial chapters, the subsequent chapters are mainly of research findings. Chapter five and six will give the research analysis and finding from UK and Bangladesh in two different chapter. Final two chapters will conclude the paper with specific recommendation.

1.5. Limitations of the Study In conducting the research, the researcher has to face some restrictions and limitations, which may influence the researh or cause deprivation from the desired outcome or satisfaction. These limitations are sourced from uncontrollable research environmental elements where the research nothing to do. The limitations of this researh are-

The survey for the study is limited by the size of the sample. So there exists the chance of occurring error.

The information gathering or the survey method is concentrated on a specific branch of HSBC that doesnt ensure the total scenario of United Kingdom and Bangladesh both operations.

y y

As the sample size is very small, geographical or regional differences could not be made. Due to time constraint it was really difficult to ensure for my part to include more branches and customers.