Service Quality and Consumer Perception on Retail Banking Facilities and Employees’ Courtesy in Malaysia and New Zealand

Service quality and consumer perception are the issues being focused solicitously by the business community today. With the expansion of the banking sector and extensive market formation, scopes of different acuity and satisfaction level for consumers seem to impose a mingle game of their perception on service quality especially in retail banking. However, this study is focused on the service quality and consumer perception on retail banking facilities and employees’ courtesy in Malaysia and New Zealand. for this purpose, a total of 293 respondents participated in this study. Factor analysis was performed to identify the influencing dimensions of service quality, hence revealing two such factors: banking facilities and employees’ courtesy. in order to test the hypotheses vis-à-vis the effect of these two attributes of service quality, structural equation modeling was then employed. The study discovers that while banking facilities exert a significant positive influence on consumer perception, employees’ courtesy does not. The findings of the present study are expected to hold significant implications for the managers in the retail banking sector in enhancing the service quality and customer perception. The findings also expectantly reveal the most obvious implication considering banking service providers to further improve their services quality with greater efficiency and as a way to better compete in the current marketplace. However, few limitations and suggestions for possible future studies are put forward in this regard.


Introduction
The consensus of customer perception and service quality in banking system has increased worldwide nowadays.When competition strengthens as well as banks and financial institutions start to offer almost similar products and services, it is the service quality that can influence the performance of a bank and determines its competitiveness and success.Fundamentally, quality has been defined as the fitness and features or services which meet customer needs and thereby provide customer satisfaction (Juran and Godfrey, 1999).According to Garvin (1984), the meaning and understanding of quality varies depending on the variety of dimensions and perspectives.He proposed that quality can be viewed from the transcendental approach, product-based, value-based, user-based or manufacturing-based approach.On the other hand, Kotler (1991) clearly explained about service quality by focusing on insubstantial benefit provided by the services provider to customer, which can be tangible product or service as an independent form.However, service quality has been progressively recognized as a significant and essential feature in the success of any business or commerce (Parasuraman et al., 1988) and therefore, the banking sector in this case is not exception.Usually, the retail banks execute transactions directly with consumers, rather than corporations or other banks.Thus, it can be noted that customers can perceive differences in the quality of service (Chaoprasert and Elsey, 2004;Ghasemi et al., 2012). in fact, given the significance of retail banking industry in Malaysia and New Zealand, it is important to distinctively identify as how service quality is perceived by customers.Moreover, it is critical to determine which elements of service quality are more important to different customers.Therefore, the purpose of the study is to evaluate customer perception about retail banking services offered by the retail banks.The outcome of the study will show the present status of service quality in banking industry in Malaysia and New Zealand.

Literature Review
An attempt is made is to assess the degree of customer perception on service quality in retail banking in Malaysia and New Zealand.The academic published works are devoted to establishing the causal link between service quality and customer's positive perception (Levesque and McDougall, 1996;Ghasemi et al., 2012).Specifically in Malaysia, the cultural difference of consumers influences its applicability because of the various ethnic diversities in the country.However, Karatape et al. (2005) suggested that service quality measures developed in one culture may capture service quality sentiments in another culture.Besides, the awareness of Malaysian customers and their concern towards banking services is perceptible and the relationship between service quality and customer satisfaction deem significant.in contrary, New Zealand has a sophisticated banking industry with many retail banks operating together in its financial market.

Banking Facilities
Since service quality is widely used to assess the performance of banking services (Cowling and Newman, 1995), facilities are also considered as the measurement of service quality.Thus, retail banks require concentrating and focusing on service quality (Chaoprasert and Elsey, 2004).However, banking facilities involves few components such as banks' retail branch facilities, maintenance, service type, helping tendency to the customers, convenience and facility construction (Brown et al., 1993;Ghasemi et al., 2012). in fact, there are strong linkages between banking facilities and overall customer satisfaction (Anderson and Sullivan, 1993).Essentially, banking facilities and positive perception are interrelated to each other and there is a strong causal relationship for customer satisfaction.Additionally, there has been considerable debate as to the basic dimensions of service quality (Brown et al., 1993;Cronin and Taylor, 1992), the measurement of these dimensions (Parasuraman et al., 1993;Smith, 1995;Brown and Bitner, 2007), and the components of customer satisfaction (Hausknecht, 1990).At the same token, customers' positive perception and satisfaction are also related to the service offering.Considering with these circumstances, the core component comes to the picture is banking facility whereby Ueno (2010) stated that superfluous banking facility provides bigger satisfaction to the customers.

Employee Courtesy
Employee courtesy is considered the core for customer relation and the performance is seen significantly key components for the success.These are therefore very essential and valuable elements in the financial institutions especially in banking sector.Concerning these activities and issues, Hart et al., (1990) stated that, the major reason why customers change the service providers is unsatisfactory courtesy and their performance on problem resolution.When customers face a problem, they may respond by switching to a new service provider, attempting to remedy the problem by complaining or may show the loyalty by staying with the same service provider anticipating that things will get better (Hirschman, 1970).Thus, customer complaint handling can have an influence on customer satisfaction and retention (Fornell and Wernerfelt, 1987;Ueno, 2010).However, to do that complaint handling, courtesy of retail banks' employees is very important, in fact, the customer service unit plays an important role on performance measured by the bank customers especially from the front desk. in fact, performance evaluations are an important part of the employee review process especially in the banking (Hart et al., 1990;Ghasemi et al., 2012).Employees should expect to be evaluated on their job performance, not their personality or job title.Thus, performing service right the first time by showing the sincere interest in solving customers' problem bring instant goodwill of the bank, which may impact a positive perception to the customers.However, neat-appearing with prompt service gradually earn the sophisticated consumer perception on retail banking service quality as well.

Perception on Retail Banking Service
Banking service is solidly associated with customers where customers' positive perception, which refers satisfaction, has been an increasing focus of research (Holliday, 1996).This is mainly because of the fact that banking sector is increasingly experiencing a growing level of competition.Few studies have investigated the bank selection criteria or the reasons on the basis of which customers choose to bank with specific banks (Khazeh and Decker, 1992;Levesque and McDougall, 1996;Ghasemi et al., 2012;Ueno, 2010).The main criteria were found like perceiving convenient services, availability of branches, internet banking facilities, online bill payment and so on.However, the consequence of this increased competition is that many financial institutions are now focusing on increasing customer satisfaction and customer retention through improved quality of their services.While customer satisfaction is the goal of the service provider, various measures are used due to the banking industry studies.However, customer satisfaction can and should be viewed as an attitude (Shahin and Samea, 2010;Yi, 1990).for example, in retail banking there is an ongoing relationship between the service provider and the customer.Here, customer satisfaction is based on an evaluation of multiple interactions.for this investigation, satisfaction is considered as a composite of overall customer attitudes towards the service provider that incorporates a number of measures.Therefore, retail banks should put more coherent efforts to improve their long-term competitive position and be truly responsive on customers' wants and facilities which bring the positive consumer perception as well as customer satisfaction.However, the current research seeks to examine the customer perception on service quality in banking industry as a whole.in fact, this research has some specific objectives as well:


To measure the service quality in retail banking industry for Malaysia and New Zealand.

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To determine the overall perception level for the customers of both countries.

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To identify the factors that influence consumer perception in terms of service quality in retail banking industry.

Conceptual Framework
Based on the previous academic literatures; this research concentrates on conceptual framework of consumer perception on service quality.This framework emphasizes on couple of independent variables derives from service quality which are underlying with the level of overall satisfaction in retail banking.However, the detailed framework is given below:

Method
This research has employed a quantitative research method.Since this is a primary data research, the data is obtained through questionnaire survey.Respondents were the bank customers of both countries New Zealand and Malaysia, approved from this research committee obtained from both countries.However, this research is fully based on a questionnaire survey to critically examine the banking service quality with an in-depth observation from the customer perspective.The structured questionnaire contains some open-ended questions and some close-ended questions as well.The questions were categorized and structured under the independent variables chosen and discussed in the literate review.On the other hand, by using 'Survey Monkey' webmaster tool, the overseas responds were also recorded to the system for New Zealand respondents.for this electronic interview, the website requires login for authentic user.However, the sampling frame for conducting the principal component analysis comprised 293 bank customers which were taken from different races comprising both male and female.Moreover, a 5-point Likert scale was used ranging from 'very dissatisfied' to 'very satisfied' was used.

Banking Facilities Employee Courtesy
Positive Perception on Retail Banking

Descriptive Analysis of Demographic Profile
Descriptive statistics includes frequencies of the respondents from both country Malaysia and New Zealand. in our findings we use frequency, and we separated our variables into categorical variables and continuous variable for descriptive analysis.The categorical variables are gender, age, ethnicity, marital status academic qualification, employment, etc. From the Table 1, we can see the total respondents of 293 (100 percentage) from both countries of Malaysia and New Zealand consisting 178 (61.09 percentage) and 115 (38.91 percentage) respondents respectively.However, this Table 1 gives a clear picture about the demographic profile of the respondents.

Reliability Coefficient
Reliability coefficient tested by using Cronbach's alpha (α) analysis of 18 items on bank service quality. in accordance with the Cronbach alpha test, the total scale of reliability for this study varies from .90 to .98,indicating an overall higher reliability factors.The Cronbach alpha of this study is 0.927, which is substantial in every perspective, as the highest reliability value that can be achieved is 1.0.

Factor Analysis
The results obtained from 293 respondents have been thoroughly analyzed and the outputs of the results have been clearly explained in this section.Applying SPSS, the principal component analysis (PCA) was carried out to explore the underlying factors associated with 18 items of service quality.The constructs validity was tested applying Bartlett's Test of Sphericity and The Kaiser-Mayer-Olkin Measure of sampling adequacy analyzing the strength of association among variables.Result for the Bartlett's Test of Sphericity and the KMO reveal that both were highly significant and eventually concluded that this variable was suitable for the factor analysis (Table 3).
However, all the factors extracted from the analysis along with their eigenvalues, the percent of variance attributable to each factor, and the cumulative variance of the factor.From this table it indicates that the first factor accounts for 37.408% of the variance and the second cumulative variance is 31.789%after rotation.It is obvious that, Factor 1 to 2 is significant because the factors that have latent roots or eigenvalues greater than 1 are considered as significant, and all factors that have eigenvalues less than 1 are considered insignificant and are ignored.All two components account for 69.197% of the total variance.

Confirmatory Factor Analysis (CFA)
Factor analysis assumes that the covariance between a set of observed variables can be explained by a smaller number of underlying latent factors.Typically in our study a transformation method such as Varimax rotation was used to improve the interpretation result.in contrast the path diagram will be utilized that will represents a clear hypothesis about the factor structure.Models of this kind are called restricted or Confirmatory factor analysis (CFA) models.

Banking Facilities
From the Exploratory Factor Analysis (EFA), we have retained 10 measuring items for Banking Facilities.We could retain all these items after conducting Confirmatory Factor Analysis (CFA).The default model fit indices of Banking Facilities were adequate.The examination of the modification indices revealed that the measurement errors were between e2 and e5, e7 and e8, e8 and e9, e9 and e10, as well as e7 and e9.The logical possibility for the correlation was allowed; therefore, these measurement errors were allowed to be related (Figure 2). in fact, the relative chi-square is also called the normed chisquare.This value equals the chi-square index divided by the degrees of freedom.This index might be less sensitive to sample size.The criterion for acceptance varies across researchers, ranging from less than 5 (Schumacker and Lomax, 2004).However, after adding this parameter, the measurement model fit indices of price showed an adequate fit: χ²/d.f.= 2.84 (χ²=85.192,d.f=30); CFI=0.978 and RMSEA= 0.079.

Figure 2: Confirmatory Factor Analysis for Banking Facilities Employee Courtesy
As like Banking Facilities, from the Exploratory Factor Analysis (EFA), we have retained 8 measuring items for Employee Courtesy.However, it was retained after conducting Confirmatory Factor Analysis (CFA) as usual.The default model fit indices of Employee Courtesy was very satisfactory.The examination of the modification indices revealed that the measurement error was only between e2 and e3 and that measurement error was allowed to be related (Figure 3).After adding this parameter, the measurement model fit indices of price showed an adequate fit: χ²/d.f.= 2.91 (χ²=55.362,d.f=19); CFI=0.980 and RMSEA= 0.081.The test statistic here is the critical ratio (C.R), which represents the parameter estimate divided by its standard error, as such, it operates as a z-statistic in testing that the estimate is statistically different from zero.Nonsignificant parameters, with the exception of error variances, can be considered unimportant to the model; in the interest of scientific parsimony, given an adequate sample size, they should be deleted from the model.On the other hand, it is important to note that nonsignificant parameters can be indicative of a sample size that is too small (Byrne, 2001).

Hypotheses Testing
The structural equation model was examined to test the relationship among constructs.Goodness-of-fit indicates for this model was: χ²/d.f.= 2.78 (χ²=814.384,d.f=293); CFI=0.904 and RMSEA= 0.078.Figure 4 depicts the full model.Of these two paths hypothesized in the model, one path was significant at p < 0.05 (H1).That means, banking facilities directly affects on consumer perception and satisfaction in retail banking.It is logical that customer satisfaction and positive perception of consumers are very much dependent on the banking facilities.More facilities and benefits are achieved; the satisfaction will grow on that specific bank.Our results also revealed that the second hypothesis of employee courtesy was not significant since at p > 0.05 (H2).Here the p-value is 0.212. in fact, from the Figure 4, we can see the relationship is -0.08 (minus 0.08), which indicates the minimal negative effect.Actually this negative relation is nearly neutral.However, it can be said that there is no effect of employee courtesy on customer satisfaction of retail banking customers and consumers.It is perhaps because of the customers are not really concerned on employees' performance as far as they can get the proper facilities from their retail banks.Another reason can be the customers do not bother on behaviour and performance rather than service features.At the same way by observing to the Figure 4, we can conclude that Banking facilities and Employee Courtesy have positive correlation between them since the value is 0.25, means the hypothesis three (H3) is also accepted like hypothesis one (H1).The Overall picture is captured in Table 5 bellow.
In addition, the customer satisfaction model fits the data very well (adjusted R2 = 0.71).With one exception, all the explanatory variables were significant which suggests that, in retail banking, customer satisfaction is driven by a number of factors, including but not limited to, service quality dimensions.

Discussion
Service quality nowadays is taking a major part it academic research.The primary objective of this study was to identify the service quality in retail banking in both countries in Malaysia and New Zealand. in that sense, this is a combined research which shows the overall consumer perceptions on their banking activities.The analysis of the 18 items comprising various aspects of service quality and service features suggest that in retail banking.Features such as banking facilities and employee courtesy contributed to customer satisfaction and positive perception.The importance of these findings is that positive attitudes towards a retail bank are driven by service quality components, such as the employee-customer relationship, as well as other features and benefits of the service.The results also show that a service problem which is not resolved has a substantial impact on the customer's attitude towards the service provider.in this particular research, the overall results are primarily beneficial to academics and practitioners in Malaysia and New Zealand by offering an insight into the customer perception on service quality in banking industry all together.Therefore, the findings of this study will assist the banking industries or financial services company in what they can produce their services and how they want to promote their services as well.The findings will also assist banking industries and financial institutions' managers to provide their service more efficiently, making changes to crucial attributes that elicit the individual's perception about service quality in banking industries.for the researcher, this study contributes to existing body of knowledge by providing an investigation of customer perception on service quality in banking industry in Malaysia and New Zealand as well.Additionally, the findings of the study will be able to hold significant implications for the managers in the retail banking sectors in enhancing the service quality and customer satisfaction.The findings also reveals the most obvious implication considering banking service providers to further improve their services quality with greater efficiency and as a way to better compete in the current marketplace.With this, the major contribution of this study is identifying the features and dimensions of service quality in retail banking in both Malaysia and New Zealand context.
However, in this research, there are few limitations have been identified.The major constraint was perhaps limited variety of retail banks covered under this study.Besides, the knowledge of all respondents is not same in terms of banking industry; they may not be aware what is exactly happening behind the scene of the retail banks that they consume the service.On the other hand, the results from this study have come out only from Malaysia and New Zealand retail banking circumstances; therefore, this does not represent the overall banking perception as a whole.Obviously, the result may vary in terms of changing the locations.However, for the further study, the approach should incorporate constructs or items beyond service quality to capture the domain of factors that drive customers' positive perception.Also, the study provided insights and implications for managers in retail banks who want to improve customer satisfaction and consumers' perception on banking service.

Figure 1 :
Figure 1: Service Quality and Perception Level in Retail Banking

Figure 3 :
Figure 3: Confirmatory Factor Analysis for Employee Courtesy

Figure 4 :
Figure 4: Structural Full Model of Consumer Perceptions on Service Quality in New Zealand and Malaysian Retail Banking

Table 1 .
Demographic Profile of the Respondents