Service quality, customer satisfaction, and loyalty in the banking sector

Abstract

The purpose of this paper is to understand the moderating role of organizational culture in the relationship between service quality, customer satisfaction, and loyalty in the banking sector using data from the Ghanaian banking sector. The idea is to understand the relative importance of the various service dimensions to customers patronizing banking services in Ghana and to ascertain what drives customer satisfaction and whether this satisfaction has implication on their loyalty. The study used a survey and relied on Partial Least Squares Structural Equation Modeling (PLS-SEM) to study the relationship between service quality and its impact on customer satisfaction and customer loyalty. The result indicates that the reliability, ambiance, and social factors, all have a significant positive relationship to the satisfaction of customers doing business with these banks. However, assurance and responsiveness of the employees seem to have no significant relationship with the satisfaction of customers. It is also important to indicate that organizational culture seems to strengthen the positive relationship between the service quality dimensions and customer satisfaction. The results further indicate that customer satisfaction has a direct positive relationship with customer loyalty. Reliability, ambiance and social factors remain the three most important drivers of customer satisfaction in the banking sector in Ghana. It is, therefore, important for bankers to consistently undergo training and education in order to deliver more reliable services to customers. Managers should also make efforts to groom employees, provide attractive promotion materials, provide directions to the banks, makes sure the banking halls are neat for customers whiles waiting and the provision of enough parking spaces for customers. One limitation of this work is that the data focused on only the Ghanaian banking environment. The research shows the importance of the service quality constructs such as reliability, ambiance, and the social factors on customer satisfaction and loyalty in the banking sector. The organizational culture seems to strengthen the positive relationship between empathy, reliability, tangibles and customer satisfaction. It is therefore important for banks to continue to build cultures that will commit employees to their work, feel the sense of ownership of quality in order to contribute meaningfully. The work illustrates and provides some insights and builds on the literature in the area of service quality, customer satisfaction and loyalty from a developing country’s environment using the Stimulus- Organism- Response (SOR) Model. In addition, our work further highlights the importance of the moderating role of organizational culture in the relationship between the service quality dimensions and customer satisfaction.