“Young clients’ attitudes to service quality at retail banks in a developing country”

The aim of this paper is to investigate service quality as perceived by younger customers of retail banks in a developing country. The objectives include identifying customers’ levels of satisfaction and loyalty to their banks and to identify the levels of service quality associated with such satisfaction and loyalty. The instrument used to collect data via a survey of retail bank customers was an adaptation of the SERVQUAL questionnaire. A total of 448 students were surveyed, using a mix of systematic and quota sampling, with data being collected on university campuses. Data were analyzed using descriptive statistical techniques. The main conclusions were that most young customers are reasonably satisfied with, and loyal to, their banks. There was little difference, on all the service quality constructs, between the different banks, and between expectations and perceptions of service quality. However, there was no evidence of any bank providing a service that delighted their customers or exceeded their expectations and so all banks are at risk from a competitor who adopts strategies to meet these goals. The study has contributed to knowledge by focusing on attitudes to service quality of young bank customers in a developing country, an aspect that has been under-researched.

Introduction  Harris (2003) maintains that to be successful in business today requires a commitment to excellence in customer service.He also makes it clear that many companies, including retail banks, talk about the importance of providing excellent customer service and yet do little to initiate its offering.In addition, Ferrell and Hartline (2005) reported that companies pay little attention to discovering customer needs and finding better ways to solve customer problems.Each year, retail banks send their staff to canvass at universities, asking students to open a student account with them.The literature does not show whether students receive what they are promised by the retail banks.The objective of this paper is to create an understanding of the attitudes of young customers towards levels of service provided by retail banks in a developing country.

Retail banking and the youth in South Africa.
The retail banking industry in South Africa is dominated by four banks, namely Absa, First National Bank (FNB), Standard Bank and Nedbank.All banks have basic chequeing account packages for young customers.One of the reasons why the retail banks are now specifically targeting younger people is because it is this target market who will underwrite the future of their business.According to Ernst and Young (2011), it costs retail banks as much as six times more to attract a new customer as it does to retain an existing one.Since it is not as easy to attract a customer away from another bank, it makes sense to target potential customers who have not yet opened a banking account.And once that customer is signed up, good service quality is necessary to ensure that the young customer, then, remains with the bank.The study's focus is thus on banking for younger customers, namely those aged 18 to 26 years old, who fall within the Generation Y cohort, the phrase for people born between 1980 and 2003 (also known as Millennials) (Broadbridge et al., 2009;Hurst & Good, 2009).This group have confidence, self-reliance and passion, and want to achieve work-life balance and fast success in their jobs (Broadbridge et al., 2007;Mokhlis, 2014).However, because of the socio-economic inequalities in South African society (UNDP, 2015), South African Millennials may be different to those of Western Millennials (Dicey, 2016).Deloitte (2016) identified the opportunity for career progression as the strongest driver for South African Gen Ys.Gen Ys have been raised in a consumption-driven society and have more money at their disposal than any similar group in history (Morton, 2002).With their ambition and wealth, they are an important target market for retail banks, and thus, at this influential age, understanding their attitudes is critical.Their varying attitudes towards retail banking are important for marketers, as these attitudes can give an indication of behavioral tendencies.However, the attitude-behavior link may not al-ways be accurate, as there are other variables which may affect behaviour, such as which bank to choose (Sarker, Bose and Khan, 2012).

1.2.
Reasons for choosing a bank.Jantan, Kamaruddin and Hoe (1998) reveal that a customer's bank selection may include size of waiting lines, bank employees' friendliness, speed of processing, parking facilities, ATM, availability of credit, and interest on savings, whereas Awan and Shahzad Bukhari (2010) found that the main reasons for customer's selection of a bank is a location convenient to home or place of business, length of bank-customers relationships, and quality of services.Factors such as size of bank's assets and availability of a large branch network also influence customers' choices (Maiyaki, 2011).Attractiveness of bank's branches and loan charges tend to be less influential.Meyer (cited in Anani, 2010) identified that retail banking customers wanted to be treated as valued customers, wanted convenient branches, were influenced by the level of fees, and that quality of services provided by retail bank drives customer contentment with the bank.
Clearly there are many factors that convince customers to remain loyal to a bank once they have made an initial commitment.Thus, understanding loyalty and the key factors influencing new, young customers is important.

Customer loyalty.
Marshall (2010, p. 71) describes loyalty as "a means of maintaining or increasing a customer's patronage over the long term, thereby increasing the value of the customer to the firm", while Bose and Rao (2011, p. 545) described it as "a customer's intention to continue to carry out business with the organization of their choice by means of repeat purchasing".Van Tonder (2016) adds that due to the importance of customer loyalty in organisational prosperity, knowledge of its antecedents becomes critical to ensure that customers are maintained.
Loyal customers generate competitive advantage through on-going purchasing and word-of-mouth recommendations (Thomas, 2013).Loyalty has both behavioral and attitudinal dimensions.The behavioral repurchase consists of repeated purchase of services, while attitudinal loyalty refers to attitudinal commitment or favorable attitude toward a product resulting in repeat purchasing behavior (Auka, Bosire and Matern, 2013).Tong (2015) maintains that when customers' feelings, or attitudes, about their expressed demand or expectation have been fulfilled, customer satisfaction has been achieved.Harris (2007, p. 2) states that "customer satisfaction recognizes the difference between customer expectations and customer perceptions".Customer satisfaction can be improved by generating an enjoyable customer experience, whilst also helping to solve customers' problems.According to Kotler & Keller (2006), in order to improve the lifetime value of a customer, focus should be placed on customer satisfaction.Bruhn & Georgie (2006) state that customer satisfaction is the customer's appraisal of a service in terms of whether the firm is capable of providing the service that will meet the customers' desires and expectations.

Customer satisfaction.
Customer satisfaction measurement allows a retail bank to understand the issues that cause contentment or discontent with a service occurrence.Once a retail bank is able to understand how satisfied their customers are, and why, it can focus its time and resources more successfully.Measuring customer contentment assists the retail bank to focus on their customers, better understanding their needs (How to measure customer satisfaction, 2007).
As shown in Figure 1, satisfaction and service quality are inter-related.Satisfaction is viewed as a broader concept, whereas service quality focuses on the dimensions of services.Satisfaction is influenced by perceptions of service quality, product quality and price, as well as situational and personal factors (Zeithaml, Bitner and Gremler, 2006).To achieve customer satisfaction, all these factors need to be taken into consideration.In this light, the importance of high-quality customer care becomes obvious.When customers consider that a retail bank has treated them poorly, they may take public actions aimed at hurting it (Tripp and Gre'goire, 2011).This emphasizes the importance of the banks' employees to customer satisfaction.Anani (2010, p. 33) stated that the linkage between the retail bank employees and the retail bank verifies the linkage of the customer to the retail bank.In other words, "unhappy employees are not likely to make a customer feel valued".
1.5.Service quality.Olaleke (2010) states that service quality is a focused evaluation that reflects the customer's perception of elements of service, such as interaction quality, physical environment quality, and outcome quality.Machado and Diggines (2012) defined service quality as a customer's evaluative judgement about the degree of superiority of service performance.Wilson, Zeithaml, Bitner and Gremler (2013) stated that service quality is a focused evaluation that reflects the customer's perception of reliability, assurance, responsiveness, empathy and tangibles -this approach is adopted in this paper.
Clearly banks cannot compete on bank charges alone.They have to differentiate themselves and quality of customer services is a way that is difficult to imitate.Brink and Berndt (2009, p. 55) also stated that "Highquality customer service is the key to improving relationships with customers, and an enhanced relationship with one's customers can ultimately lead to greater customer retention, customer loyalty and, more importantly, profitability".Stevens (2011) states that customer service is imperative, because once customers receive superior customer service, they refer other people via word-of-mouth.High morale and efficiency of employees is reflected in happiness shown to their customers, which makes each customer feel genuinely special and valued, thereby building a long term relationship.
1.6.Service quality in retail banking.The quality of service offered by retail banks to their customers can vary enormously.There is, however, an accumulation of facts showing that quality programs can lead to real improvements in customer satisfaction, business growth and profitability.
Grace and O'Cass (2004, p. 451) and Arasli, Mehtap-Smadi and Katircioglu (2005) state that outstanding service quality leads to improved customer satisfaction, improved customer retention and a favorable overall image for the retail bank (Al-Hawari, 2006).Moreover, the provision of outstanding service quality is considered a top priority by all retail banks, as a means of responding to both customers' desires and increased competition, and establishing a competitive advantage (HowCroft, 1991).
It also improves financial performance of the retail bank in terms of interest margins, return on assets, profit per employee and capital sufficiency (Bates, Bates and Johnston, 2003).Machado and Diggines (2012) confirm that good service quality increases revenue and enhanced organizational reputation.According to Venetis and Ghauri (as cited in Möller, 2007), service quality is a technique used to entice new customers and increase market share (Stafford, 1996).Moreover, service quality is one of the most important ingredients of customers' contentment in the banking industry (Cohen, Gan, Yong and Choong, 2006).On the other hand, Ernst and Young (2011) reveal that poor service quality is the major foundation of customer attrition.
In conclusion, the outcomes of the KPMG 2009 customer satisfaction survey on banking corroborate that service delivery is the principal factor influencing customers to build a long-term relationship, and, thus, loyalty, with a bank (Lamikanra, 2009).

Measuring customer service.
As highlighted above, retail banking should prioritize the provision of high quality service to its customers (Sarker et al., 2012).Wilson et al. (2013) define service quality as a comparison between the service quality the customer expects to receive and the service quality they perceive that they have received, in terms of the dimensions of reliability, assurance, responsiveness, empathy and tangibles, as illustrated in Figure 2.  (Lotz, 2009).Customers perceive service quality in terms of multiple factors rather than in a one-dimensional way (Zeithaml et al., 2006).The SERV-QUAL model is probably the most accepted method of assessing service quality, measuring the 'Gap' between the expectations and perceptions of service quality in service organizations (Parasuraman, Zeithaml and Berry, 1985).SERVQAL measures service quality in terms of five dimensions.Tangibility.Tangibles relate to the appearance of facilities, equipment, personnel, and communication materials (Bateson and Hoffman, 2011).Since the tangible and visual elements will be critical to efficiency, as well as to overall perceptions of the firm and the brand, service companies use tangibles to enhance their image and convey quality service to customers.
Reliability.Lovelock and Wirtz (2011) define reliability as the ability to perform dependably, accurately and consistently.Reliability is also about performing the service right the first time.This component is the most important to customers.
Responsiveness.Responsiveness reflects a service firm's commitment to provide its services in a timely manner.As such, the responsiveness dimension concerns the willingness and readiness of employees to provide a service (Bateson and Hoffman, 2011).
Assurance.Arasli, Mehtap-Smadi and Katircioglu (2005) identify assurance as an employee's knowledge, courtesy and ability to inspire trust and confidence in the customer in situations where the customer faces high level of risks or feels uncertain about their ability to evaluate the service.
Empathy.Empathy involves treating a customer as an individual; being able to experience another's feeling as one's own.It includes features such as approachability, sensitivity and an effort to understand others' needs (Zeithaml et al., 2006).It includes access at any time, honest communication and understanding of the consumer's problem.
There has been extensive support for, and use of, the SERVQUAL instrument in the field of banking.For example, as far back as the 90's, Cronin and Taylor (1996) and Cowling and Newman (1996) applied SERV-QUAL to the banking sector.More recently, for example, SERVQUAL has been applied in ban-king sector research by Varadi, Mavaluri and Boppana (2006), Mesay (2012) and Ndikubwimana and Berndt (2016).

Research methodology
The purpose of the study was to investigate service quality at four retail banks in Durban, South Africa, with specific emphasis on service quality, satisfaction with customer service and customer loyalty.This exploratory research employed a cross-sectional, descriptive survey to collect quantitative data to measure the three constructs in a retail banking environment.

Sampling.
A mix of quota and systematic sampling was used in order to achieve a degree of representativeness.The characteristics required in the sample (young customers, university campus, bank and an equal spread by gender) were ensured by sampling respondents from undergraduates on university campuses until adequate representation of each category was achieved.Based on a random starting point, interviewers selected every seventh member (both male and female) of the population that entered a campus.Once the interviewer had completed an interview, they would then select the next seventh person, in order to spread selections to avoid interviewing a group of friends (Maylor and Blackman, 2005   the attitudes y were questheir specifservices proo their bank.
the reasons r respective

Perceptions and expectations of service quality.
In order to investigate the respondents' opinions of service quality further, the SERVQUAL instrument was used to compare expectations and perceptions of the five constructs making up service quality (Zeithaml et al., 2006).The scores for each of the questions for each of the five dimensions, and the gaps between expectation and perception, are given in Table 5.It is interesting to note that eighteen of the 22 questions, and four of the five dimensions resulted in negative gaps, but these gaps are so small that it can be implied that overall the respondents' expectations were met.This implies that the banks are mostly providing a service that satisfies these younger customers.

Discussion and implications
From the above findings, it can firstly be seen that service issues account for a large proportion of the reasons for choosing a bank, even though 'bank charges' is the most frequent single reason given.'Well situated location', 'Friendly personnel', 'ATMs in a safe location', '24 hour access', 'Speed of process', 'Easiness of processes and 'Favorable loan experience' can all be seen as related to the quality of service that customers receive.These issues account for 46% of reasons, and 'Friends and family influence' and 'Advice from friends' could also be related to good service levels.Thus, it is not unreasonable to assume that quality service accounts for about half the reasons for choosing a specific bank.
As shown by the gaps between expectations about, and perceptions of, service quality, there is very little difference between what customers expect to receive in terms of service quality, and what they actually get.When looking at the findings of the 'satisfaction' measures, it can also be seen that there is little differrence in satisfaction levels between the different banks.
They all scored much the same, slightly under or slightly over a 'good' score, with none scoring 'excellent', which we are sure most banks would wish for.Overall, therefore, customers can be assumed to be satisfied with their banks -this finding is supported by the overall finding of a relatively high level of loyalty by the respondents towards their banks.However, the one area of risk for banks is that over 40% of respondents would not continue to do business with their bank if it did not handle a complaint as expected or if it did not meet their expectations.
The result of these findings is that customers are quietly satisfied with their banks, but that they are not 'delighted', which is often stated as the goal of good quality service (Weinstein, Clasen, Lorenzo and Roberson, 2015).It appears as if all banks are offering much the same level of service, with none going out of their way to be exceptional and to delight customers.Customers' expectations are very rarely exceeded, which is what is required to 'delight' customers.Thus, there is a potential risk of easily losing customers to a competitor who does, in fact, outperform them by providing exceptional service, which exceeds customers' expectations, leaving them thrilled and delighted.Such a high level of satisfaction could result in the changing of loyalties, increased sharing of positive experiences through word-of-mouth and switching of banks, with the resultant gaining of market share by the 'exceptional' bank.
Considering the above scenario, it is, therefore, essential for a bank that wants to gain market share to be dissatisfied with their current service quality levels.Service strategies should be aimed not at just matching customer expectations, but at exceeding their expectations, and at the same time, performing customer services at levels higher than their competitors.Such a competitive strategy would require service quality and satisfaction levels to be significantly higher than those of their competitors.
Although most service quality gaps were slight, the gaps analysis in Table 5 does provide some guideline for such service quality improvement strategies.The most obvious area for improvement is in queueing (EMP22), which scores below 3 (good).Customers obviously dislike queuing, especially in an era of instant gratification, and when such queuing is unnecessary when doing Internet banking.Over and above the queuing issue, all aspects need to be improved, with the aim being to get the perception scores significantly above the expectation scores, i.e., gap scores of +0.5 or higher should be aimed for on all the constructs.This will mean a review and improvement of all facilities, systems and processes to improve tangibles, reliability and responsiveness, and training and development and introduction of staff motivational systems to improve reliability, responsiveness, assurance and empathy.
Some specific aspects of customer service that could be considered to ensure younger customers are 'delighted' with the service they receive are:  Customize services to younger clients specific needs. Ensure staff understand the differing needs of younger customers, e.g., few younger customers pay sufficient attention to saving. Employees need to increase their ability to show empathy for young customers, showing that they are interested and concerned with young customers' growth, e.g., when young customers open a student account, the retail bank employee should also advise the new customer about the importance of investments and other product/services offered. Retail banks should ensure that their employees have the social skills needed to serve young customers, who may not yet have built loyalty to their bank, so being mistreated can easily cause a young customer to immediately switch banks.

Limitations
The main limitations of this study are geographic and demographic.Firstly, it only studied respondents in the greater Durban area and second it focused only on university students who are by definition better educated and can be expected to have different knowledge, awareness and attitudes to banking than their less educated colleagues.These limitations are not fatal, as the study was essentially exploratory and has established a benchmark for young, educated retail bank customers.Further research can build on this class of customer.

Recommendations for further research
As mentioned in Limitations, further research with a wider scope should be considered, especially broadening the study to a national base.Since this study focused only on university students, who are obviously better educated than the general population, future research should look at whether the perceived and expected service quality levels differ between more educated and less educated young customers.Future studies could also investigate service quality according to other types of young customer characteristics, e.g.rural versus urban upbringing.
Qualitative research is also recommended that will explore, in depth, service delivery and its impact on young customers at retail banks.It was noted that some of the respondents wanted to elaborate more about the service delivery they receive and, thus, greater understanding of the phenomenon could be achieved.
The study hinted that the empathy dimension may be relatively more important than reliability, responsiveness, assurance and tangibles in retail banking, which may highlight the fact that care and individual attention is the most important factor in service delivery for retail bank young customers.This should be studied further.

Fig. 2 .
Fig. 2. Customer perceptions of superiority and customer contentment Source: Zeithaml, Bitner and Gremler (2006, p. 107).1.7.1.Customer expectations and perceptions of service.In general, expectations are what customers want: for example, what customers wish for, what they expect from an excellent service provider, and what they think should happen in the next service encounter(Lotz, 2009).Customers perceive service quality in terms of multiple factors rather than in a one-

2 .
The Dimensions of service quality.

Table 1 .
). Quota sample for study 2.2.Data collection.A questionnaire was developped from the standard SERVQUAL questionnaire, adapted from the literature to also cater for satisfaction and loyalty measures.The questionnaire started with a brief introduction, with a Letter of Informed Consent.Thereafter, the questionnaire consisted of four sections, covering 'satisfaction', 'expectations', 'perceptions' and 'loyalty'.Prior to data collection, ethics approval

Table 5 .
Expected and perceived scores per question