CUSTOMER SATISFACTION IN NEPALESE COMMERCIAL BANKS

(Published in Journal of Management and Development Review, 2004)

by
Thaneswor Gautam, M.B.A.
Sanjaya Dhital, M.B.A, MS(IT)

Correspondence: Thaneswor Gautam, Lecturer, Nepal Commerce Campus, Minbhavan,

Baneswor, Kathmandu, NEPAL. Email: thaneswor@wlink.com.np Phone: 0097714782505
 INTRODUCTION

Theoretical Concept of Customer Satisfaction

Customer satisfaction is a long-term strategy. Just as it is difficult to radically alter

perceptions of product quality over a short time horizon, so too is difficult to quickly cultivate
a reputation for superior customer service. Consequently customer satisfaction is as
competitive advantage that is sustainable over the long term (Schnaars, 1991). In the past few
years, subject of satisfaction and dissatisfaction has received a great deal of attention from
academic researchers. Engel & Blackwell (1982) defined satisfaction as an evaluation that the
chosen alternative is consistent with prior beliefs with respect to that alternative.

Satisfaction implies a conscious and deliberate evaluation of outcomes (Engel & Blackwell,
1982). If expectations are matched, the outcome, of course, is satisfaction. When alternative
is perceived as falling short in significant ways, dissatisfaction is the result. Satisfaction and
dissatisfaction, of course, represent extreme points on a continuum. High satisfaction or
dissatisfaction also is a motivation for sharing with others (Engel, Blackwell, & Miniard,
1990)

Many theoretical frameworks have been applied to explain customer satisfaction. The most
prominent paradigm is "expectancy disconfirmation paradigm" from social psychology. That
paradigm holds that consumers form expectation of products or services prior to their
purchase. These expectations are then either confirmed or disconfirmed after the product or
service is purchased or used (Schnaars, 1991).

There are many ways to improve customer satisfaction. Some strategies are: building
relationships with customers, superior customer service, unconditional guarantees, efficient
complaint handling. Customer satisfaction leads to competitive advantage in market place by
differentiation, product quality, speed, unified corporate purpose etc. ( Schnaars, 1991)

The service management literature argues that customer satisfaction is the result of a customer’s
perception of the value received in a transaction or relationship – where value equals perceived
service quality relative to price and customer acquisition costs (see: Blanchard and Galloway, 1994;
Heskett et al., 1990) – relative to the value expected from transactions or relationships with
competing vendors (Zeithaml et al., 1990).

Customer satisfaction surveys are now increasingly administered by many service industries. Growth
of service industries compared with manufacturing industries and the demand for total quality

2
management for both industries has increased customer satisfaction survey. Along with the increased
research in customer satisfaction has been a corresponding increase in the diversity of measurement
scales used in customer satisfaction surveys (Devlin et al., 1993).

A review of the literature revealed over 40 different scales used to measure consumer product or
service satisfaction, from retail to airline settings (Haddrell, 1994). With such a large number of
alternative scales available. Almost all studies of customer satisfaction share a common characteristic
that has been noted by a number of researchers (Oliver, 1981; Peterson and Wilson, 1992;
Westbrook, 1980; Yi, 1990). That is, “virtually all self-reports of customer satisfaction possess a
distribution in which a majority of the responses indicate that customers are satisfied and the
distribution itself is negatively skewed” (Peterson and Wilson, 1992, p. 62).

Peterson and Wilson (1992) offered various explanations for this phenomenon. These include: (1)
individuals could in fact be very satisfied with what they consume and purchase; (2) satisfaction is
caused by factors (such as expectations, performance), therefore its antecedents may influence the
shape and level of the observed distributions (see also: Bearden and Teel, 1983; Cadotte et al., 1987;
Oliver, 1980, 1981); (3) satisfaction may possess a distribution that is different from what we know
as a normal distribution; and (4) the level and shape of customer satisfaction ratings are a function of
the research methodologies employed.

Customer Satisfaction issues in Nepalese Banking Sector

The number of commercial banks is increasing in Nepal due to the attractive market
opportunity available in the country, especially after the advent of democracy. Nowadays, the
performance of these commercial banks has come under question in terms of customer
satisfaction. This study is designed to explore answer to this problem.

The number of commercial banks including regional banks stood at seventeen at the end of
2003. Most of the commercial banks have their branches in Kathmandu valley. Their city
branches are located in and around New-road, Kantipath, and Kamaladi. It is, therefore, quite
imperative to assess their performance in terms of customer satisfaction.

The main problem to be dealt with by the present research is the “question of performance in
terms of customer satisfaction”. Thus, the specific problems can be clearly explained by
finding answers to the questions -- a) What is the state of “customer orientation” of Nepalese
commercial banks? b) What is the comparative situation of customer satisfaction in these

3
banks? c) What are the factors that can lead to customers toward satisfaction? d) What are the
factors that lead to customers toward dissatisfaction?

The main objective of the study is to assess the commercial banks'performance in terms of
"customer satisfaction". Moreover, the specific objectives of the study are: a) to investigate
the level of satisfaction of customers of Nepalese commercial banks; b) to analyze the
comparative performance of commercial banks in terms of customer satisfaction; and c) to
analyze the reasons behind customers'satisfaction or dissatisfaction.

METHODS

Sample and Population

All the Nepalese commercial banks were taken as the population of the study. Ten
commercial banks, including the main branch and another city branch were selected as the
sample for the study. The selected sample seems representative and large enough to
generalize the total population although three running commercial banks and one branch of
Agricultural Development Bank established before 1998 could not be covered in this study.

Generally, customers of commercial banks are depositors, borrowers, and others who get
banking services. However, the present study could not cover all the customers of commercial
banks. It covers only the depositor type of customers.

Instruments

A standard structured questionnaire was designed to collect the required information where
five point Likert type scale, multiple-choice scale, ranking scale, and other demographic
nominal information were used. The measure consists of three sets of questions. The first set
was related with satisfaction, while the second set was rank items, and the third set included
multiple choices among three to four alternatives. Some supplementary demographic data
places were also furnished. The data collection measure is included in appendix.

Data Collection Procedure

Two days, especially Monday and Friday, are known as pick-days in commercial banking
sector. Therefore, these two days were not used for data collection so that high reliability of
responses could be maintained. Thirty-five structured questionnaire were administered for

4
each main and city branch of the sample banks. The motorcycle parking and exit gate were
used for the data collection place. Orientation on how to administer the questionnaire was
given to data collectors before hand. During the data collection process, the data collectors
first explained the respondents about the questions in the questionnaire and requested to
provide with factual information. The questionnaire was prepared in Nepali as well as in the
English language to enhance the reliability of the study.

Tools

SPSS version 9.0 was used to tabulate and analyze the valid responses. At the beginning, a
comprehensive data file was created. Then, variables and their labels were defined. Data were
entered and commands were operated by using user friendly menu of SPSS program. Few
statistical tools such as Mean, Standard Deviation, Person'
s Correlation, ANOVA, Chi
Squire, Kruskal-Wallis ANOVA, were used for the analysis.

Mean is arithmetic average and standard deviation is measure of dispersion or variation

(Fallik & Brown, 1983). Person'
s correlation shows a relation that exists between two or more
variables (Wolff & Pant, 1999). ANOVA is a statistical technique that is used to compare two
or more groups to determine whether there are any mean differences among them. The
comparison of group differences is made by computing a statistic called an F-ratio The ratio
is calculated by dividing the '
between treatment variance'by '
within treatment variance'
(Gravetter & Wallnau, 1987). Chi-square statistic is calculated by collecting observed values
for each of the categories and examining the differences between the observed and expected
values (Gupta, 1991). The Kruskal-Wallis test is a non-parametric version of one-way-
ANOVA for independent samples, calculation based on the sum of ranks of the combined
groups. This test calculates Chi-square statistic to show the variance between groups (SPSS,
1999).

RESULTS

Nature of Respondents

A total of 331 customers'pinions were collected in this study. Out of the total respondents,
small-current account holders, who keep an average balance of less than Rs. of 500,000 in
their accounts figured 79. Big current account holders, who keep an average balance of more

5
than Rs. 500,000 in their accounts numbered 117. Similarly, the number of small saving
account holders, who keep an average balance of less than Rs. 100,000 was 68. Big saving
account holders, who hold more than Rs. 100,000 in their account numbered 67.

Result shows that the big-current account holders are the highest and the big-saving account
holders are the lowest in number. The reason behind this may be the provision of official
accounts that usually come under the second category. The differences between both accounts
holders was found significant χ2 (df=1, p < 0.01). The official account holders were 190 and
personal account holders 141 in number. It is, therefore, obvious that there are more official
current account holders.

Customer Satisfaction in Nepalese Commercial Banks

Questionnaire was designed in a way to collect two kinds of basic information on customer
satisfaction. First, to what extent the respective commercial banks are conducting some
program to satisfy their customers. And, second about actual level of customer satisfaction
provided by these banks to their customers. These two elements were found highly correlated.
The Person'
s Correlation Coefficient of these two responses (r=0.6974) was found significant
at 0.01 level of significance.

From the observation of general descriptive of mean and standard deviation of the above
stated two scales, customer perception on banks'satisfaction program and the perceptual
customer satisfaction is average in Nepalese commercial banks. Both scales were five point
Likert-type-scale anchored by Negligible=1 to outstanding=5. The status of mean and
standard deviation is presented in the following table-1.

Table-1
Mean and Standard Deviation
of Customer satisfaction in Nepalese Commercial Banks
S.N. Variables Mean Std. dev. Min. Max. Label
01 Program 3.56 0.89 1 5 Bank's program
02 Satisfaction 3.64 0.98 1 5 Customer Satisfaction

The above table-1 shows the overall mean and standard deviation of two responses – banks'
program for customer satisfaction and the actual level of satisfaction received by customers.
The mean satisfaction is slightly higher than the mean program perception. In general,
customers were found "undecided" or "slightly-satisfied" with the present services of

6
Nepalese commercial banks. Standard deviation was found less than 1. Hence, the
information provided by customer is near to the average. Frequency figures of these two
elements are presented in the following figure-1.

Figure-1
Perceived Programmes and Customer Satisfaction of
Nepalese Commercial Banks
Perception of customers on Customer Satisfaction in Banks
120
banks' programme 33.2%
Negligable 100 35%

No.of Customers
2% Little
Outstandi- 21.8%
6% 80
ng 15%
60

40 7.6%
20 2.4%
Fair
0
42%

Neutral

Slightly-
satisfied

satisfied
dissatisfie

dissatisfie
Slightly-

Very-
Very-

Adequate
d

d
35%
Labels

The respondents perceived that their bankers are neither neglecting them nor are they
conducting some outstanding customer satisfaction program. Similarly, the existing level of
customer satisfaction in these commercial banks was found moderate -- neither so low nor so
high. Highest number of respondents replied in neutral—neither satisfied nor dissatisfied.
Hence, it is better to compare positive responses with the negative ones.

The above pie chart shows that 50% of the respondents responded positively while only 8%
gave negative answer. It is, therefore, convincing that Nepalese customers think that the
current banking activities are good enough to satisfy them. Similarly, customer satisfaction
level with regards to overall commercial banking was also found quite good. Out of the total
55% respondents stood in satisfaction side, while 10% went to the dissatisfaction side. It is,
therefore, clear that customer of Nepalese commercial banks are satisfied.

Customer Satisfaction: A Comparative Analysis

It is essential to analyze the comparative satisfaction and program perception of customers of

Nepalese commercial banks. Therefore, descriptive analysis was designed that provides the
results of mean and standard deviation collected from the selected samples. As explained
earlier, five point Likert type scale anchored by 1="strongly disagree" to 5="strongly agree"
was used for both items. One-way-ANOVA were calculated to find out whether there is any
significant differences among the commercial banks'status on the ground of above stated two
variables -- program perception and customer satisfaction.

7
The ANOVA result could not show any difference among Nepalese commercial banks on the
basis of first variable -- customers'perception on satisfaction program provided by the banks.
However, the analysis revealed significant differences among commercial banks on the basis
of customer satisfaction. Consequently, the second variable -- level of customer satisfaction
in Nepalese commercial banks -- has been discussed below.

As presented in table-2 below, comparative customer satisfaction in three commercial banks -

- Nepal SBI, Everest, and Himalayan -- was found high. Contrary to this, the customer
satisfaction was found at low level in three banks -- Rastriya Banijya, Indosuez, and Bank of
Kathmandu. Rest of the banks'performance on the basis of customer satisfaction was found
in average level.

Table-2
Summaries of Mean and Standard deviation
of customer satisfaction in Nepalese Commercial Banks
S.N. Commercial Banks Mean Std.dev. Cases
01 Nepal Bank 3.5313 0.9832 32
02 Rastriya Banijaya Bank 3.2121 1.1390 33
03 Nepal Arab Bank 3.5938 0.9108 32
04 Grindlays Bank 3.6857 0.9632 35
05 Indosuez Bank 3.4000 1.1428 35
06 Himalayan Bank 3.8235 0.7966 34
07 Nepal SBI Bank 4.0645 0.8538 31
08 Nepal Bangladesh Bank 3.7647 0.8896 34
09 Bank of Kathmandu 3.4848 0.8704 33
10 Everest Bank 3.9063 1.0273 32
For entire Population 3.6435 0.9815 331
Note: five point Likert type scale anchored by 1="strongly disagree" to 5="strongly agree"

One-Way-Analysis of Variance was calculated to find out whether the difference among the
banks is significant or not. The analysis shows the variance of customer satisfaction of ten
Nepalese commercial banks. Results of ANOVA show that there is a significant difference
between customer satisfaction of Nepalese commercial banks at ninety-five percent level of
confidence (p<0.02, df. 9). Therefore, we can conclude that there is a significant difference in
the customer satisfaction in Nepalese commercial banks. As per the customers'report, Nepal
SBI was found the best and Rastriya Banijya Bank was the worst. From the customers'view
point, Everest & Himalayan Bank were found to be among the best, and Indosuez & Bank of

8
Kathmandu among the worst. The main reason behind this may be customers'perception on
waiting time, environment, interest and some other variables. An attempt is made in the
forthcoming sections to find out the reasons behind the reported customer satisfaction.

Strengths and Weaknesses of Banks on Satisfaction Criteria

Eight satisfaction criteria were assumed to find out the comparative strengths and weaknesses
of Nepalese commercial banks. They were a) interest rate, b) fast & correct, c) reliability, d)
good employee behavior, e) pleasant office environment, f) located near from customers
place, g) timely information, and h) targeted for poor people.

A list of eight criteria was given to customers in one section of the questionnaire. Customers
were requested to rank them, especially, to assign "1" for the best, "2" for second best, and
similarly "8" for the worst one. They were allowed to use 1-8 number in the assigned boxes
but were not allowed to use one number repetitively. They had to use one number at one time
so that they had to put all the numbers (1 to 8) in the given boxes.

Out of eight ranked criteria, only four criteria were found significantly different among
Nepalese commercial banks. Analysis of these criteria is discussed in following paragraph.
Table-3 shows the mean-rank of Nepalese commercial banks based on the four customer
satisfaction criteria -- employee behavior, reliability, fast-correct function, and service to poor
people.

Table-3
Mean Rank of Nepalese commercial banks on four major criteria
S.N. Commercial Banks Employee Reliable Fast & Targeted
Behaviour correct for poor
01 Nepal Bank Ltd.(NBL) 202.11 147.39 186.86 103.95
02 Rastriya Banijya Bank (RBB) 216.98 139.80 214.86 141.11
03 Nepal Arab Bank (NABIL) 165.06 157.27 160.33 196.98
04 Grindlays Bank (NGB) 167.57 137.49 154.14 161.96
05 Nepal Indosuez Bank (NIB) 171.30 204.54 210.14 144.96
06 Himalayan Bank (HBL) 158.26 142.60 170.46 191.29
07 Nepal SBI Bank (NSBI) 123.63 191.21 155.92 180.31
08 Nepal Bangladesh Bank (NB) 160.66 169.85 133.16 174.91
09 Bank of Kathmandu (BOK) 151.73 158.27 126.61 183.71
10 Everest Bank (EVR) 140.39 213.70 145.66 181.70
Note: Rank scale used 1=Most important, 2=second, 3=third..., 8=Least important.

9
Each bank'
s comparative strength and weakness is analyzed here on the basis of the above
reported mean rank values of four customer satisfaction criteria. Two non joint-venture banks
-- Nepal Bank Ltd. (NBL) and Rastriya Banijya Bank (RBB) were found strong in terms of
reliability and serving the poor people but they were found weak in terms of employees'
behavior, and fast-correct functioning.

In the case of first generation joint-venture banks -- Nepal Arab Bank (NABIL), Nepal
Grindlays Bank (NGB), and Nepal Indosuez Bank (NIB) -- the situation was found quite
different. Customers described NGB as a reliable bank but it was found to be in average in
terms of other criteria such as employees'behavior, fast-correct functioning, and ability to
serve poor people. NABIL was found to be in average level in terms of other criteria but weak
in serving poor people. Nepal Indosuez Bank (NIB) was found strong in terms of serving poor
people to some extent but was found weak in fast-correct, reliability, and employee behavior.

In the case of second-generation joint-venture banks, HBL was found weak in its ability to
serve the poor. NSBI was found strong in terms of employees'behavior but it was found weak
from reliability point of view. All the three banks NB, BOK, and EVR were found strong in
terms of fast-correct functioning but BOK was found weak in serving the poor people, while
EVR was found weak on reliability ground.

Data were analyzed by using kurskal-wallis ANOVA (chi-squire test on rank differences), a
very useful test for non-parametric data to find the significant differences among the mean
rank. Those criteria, which were found significant from the test are discussed below. These
four criteria are: a) good employee behavior, b) reliable for future, 3) fast-correct function,
and 4) serving poor Nepalese people.

Table-4
Kruskal-Wallis One-Way-ANOVA of
Nepalese commercial banks on four customer satisfaction criteria
Source df. Chi-square Significance Corrected Significance
normal Chi-square
Employee behavior 9 23.4744 .0052 24.0630 .0042
Reliable 9 25.1407 .0028 26.4743 .0017
Fast & Correct 9 29.6814 .0005 30.4862 .0004
Targeted for poor 9 26.1505 .0019 28.7254 .0007

10
The above table-4 shows the significant differences among Nepalese commercial banks based
on the four main strength & weakness criteria. The observed result of analysis found
significant at 0.01 level of significance. Therefore, it can be concluded that Nepalese
commercial banks are significantly different in terms of four main criteria -- employee
behavior, reliability, fast functioning, and serving poor people. Strength and Weakness Profile
is designed in the following table-5 that makes the above discussion further apparent.

Table-5
Comparative Strength and Weakness of Commercial Banks
Label Employee Reliable Fast & Targeted
Behaviour correct for poor
Very Good +3 NSBI RBB BOK NBL
Good +2 EVR NGB NB RBB
Satisfactory +1 BOK NBL EVR NIB
Neutral 0 others... others... *others.. others...
Not satisfactory -1 RBB NSBI NBL BOK
Bad -2 NBL NIB NIB HBL
Very Bad -3 NIB EVR RBB NABIL
* Rest of the banks
As shown in the above table-5, three second-generation joint-venture banks -- NSBI, EVR,
and BOK -- were found strong in terms of employee behavior but RBB, NBL, and NIB were
found weak on that criterion. Two non joint-venture banks, RBB and NBL, and one joint-
venture bank NGB were found strong on reliability ground. Three Joint-venture banks --
NSBI, NIB and EVR -- were found weak in terms of reliability. In this comparative study,
second generation joint-venture banks, BOK, NB, and EVR were found strong in terms of
fast-correct functioning but two non joint-venture banks and one first generation joint-
venture--NBL, RBB, and NIB were found weak on fast-correct functioning ground. The same
set which was found weak on fast-correct functioning NBL, RBB, and NIB were found strong
in serving the poor people. But three joint-venture banks BOK, HBL, and NABIL were found
weak on the same ground.

In conclusion, non joint-venture banks were found more reliable. They were also found
capable to provide service to the poor Nepali people. However, they were found weak in
terms of employee behavior and fast-correct functioning. On the contrary, newly established
joint-venture banks were found good in terms of employee behavior and fast functioning. But,
they were found weak in terms of reliability and capability to serve the poor Nepali people.

11
The result of the first generation joint-venture banks was found mixed type. It is, therefore,
very hard to reach a conclusion about them.

Some Other Aspects: A Comparative Study of Banks

Three important aspects of commercial banks are discussed in this section. These aspects are:
a) account opening reason of customers, b) office environment of banks for customers, and c)
customers'waiting time in these banks.

Reasons for opening bank accounts in Nepalese commercial banks

A question was included in the questionnaire to collect information on '

why customers open
deposit accounts in the Nepalese commercial banks?'In the questionnaire, four alternatives
were provided to the customers and were requested to select one out of them. These four
alternatives were: a) near, b) compulsion, c) facility, and d) attractive. The collected data were
tabulated in cross-table for analysis purpose. The cross table is presented in the following
table-6.

Table-6
Reason for opening deposit a/c in Nepalese banks
LABELS
BANKS Near Compulsion Facility Attractiveness

1.0 2.0 3.0 4.0

Nepal Bank Ltd.(NBL) 1 14 7 8 3 32
Rastriya Banijya Bank (RBB) 2 7 7 10 9 33
Nepal Arab Bank (NABIL) 3 4 2 12 14 32
Grindlays Bank (NGB) 4 1 5 18 11 35
Nepal Indosuez Bank (NIB) 5 7 9 12 7 35
Himalayan Bank (HBL) 6 7 4 15 8 34
Nepal SBI Bank (NSBI) 7 6 3 15 7 31
Nepal Bangladesh Bank (NB) 8 7 8 8 11 34
Bank of Kathmandu (BOK) 9 9 3 9 12 33
Everest Bank (EVR) 10 9 2 15 6 32
71 50 122 88 331
21.5% 15.1% 36.9% 26.6% 100%

Based on the above information, it is obvious that majority of the customers opened account
in NBL because it was located near to their location. RBB customers reported relatively equal

12
in all the alternatives, thus, the result found equivocal. In case of joint-venture banks, more
customers reported that they opened account in those banks either because of facilities or
because they found the banks attractive in some ways compared to other banks. More
customers cited "facility" as a reason for opening deposit account in NGB, NIB, HBL, SBI,
and EVR. In case of NABIL, BOK, and NB, majority of the customers said that they opened
account as they found these banks attractive.

Analysis of office environment for customers in Nepalese commercial banks

A separate question was designed in the questionnaire to collect the customers'opinions on the
respective environment of the Nepalese commercial banks. The question was prepared in three
equal interval scale anchored by "1" Good, "2" Normal, and "3" Bad. The customers were
asked whether the office environment for customers, e.g., waiting room, toilet, water etc., were
good, normal, or bad. Mean and standard deviation of the reported responses for each bank are
presented in the following table-7.

Table-7
Mean and Standard deviation of office environment in Nepalese commercial banks.
S.N. Commercial Banks Mean Std.dev. Cases
01 Nepal Bank Ltd.(NBL) 2.1250 .5536 32
02 Rastriya Banijya Bank (RBB) 2.0606 .6093 33
03 Nepal Arab Bank (NABIL) 2.0000 .7620 32
04 Grindlays Bank (NGB) 1.6571 .5392 35
05 Nepal Indosuez Bank (NIB) 1.8571 .6011 35
06 Himalayan Bank (HBL) 1.8824 .6860 34
07 Nepal SBI Bank (NSBI) 2.0645 .7273 31
08 Nepal Bangladesh Bank (NB) 1.4706 .5633 34
09 Bank of Kathmandu (BOK) 1.6970 .4667 33
10 Everest Bank (EVR) 1.5000 .5080 32
For entire Population 1.8278 .6400 331
Note: used three point continuous scale anchored by 1=good, 2=average, and 3=bad

As shown in the above table, it is clear that four banks -- EVR, NB, GB and BOK -- were
found good in office environment in their customers'view. On the contrary, four banks --
NBL, RBB, NABIL, and NSBI were found bad in office environment. Two banks -- NIB and
HBL -- were found to be in the average. Out of these ten banks, environment of NB was
found to be the best and environment of NBL was found to be the worst.

13
One-way ANOVA was used to find out whether these banks were different in terms of office
environment for customer. The calculated one -way ANOVA of ten Nepalese commercial
banks on office environment shows the significant difference among the banks. The result
proved the difference statistically significant at 99 percent confidence level. It is, therefore,
very safe to conclude that the environment vary from one commercial bank to another.

Waiting time analysis of Nepalese commercial banks

In the administered questionnaire, two separate items were designed to collect the required
information about customer waiting time. In the first item, customers were requested to
provide maximum and minimum waiting time in deposit counter. In the second, they were
asked to report maximum and minimum waiting time at cash counters. Most of the customers
spent the same time for both depositing and withdrawing money. Consequently, the average
maximum and average minimum waiting time were tabulated in the data file. The following
table-8 shows the summary of mean and standard deviation for maximum and minimum
waiting time.

Table-8
Mean and Standard deviation of
Maximum and Minimum waiting time in Nepalese commercial banks.
in Minutes
Maximum waiting time Minimum waiting time
S.N. Commercial Banks Mean Std. dev. Mean Std. dev
`01 Nepal Bank Ltd.(NBL) 30.0000 20.5175 7.7188 5.2501
02 Rastriya Banijya Bank (RBB) 39.5455 21.1159 8.5152 5.8155
03 Nepal Arab Bank (NABIL) 45.7813 41.9121 7.7188 6.4119
04 Grindlays Bank (NGB) 42.2857 29.2641 7.2286 6.4264
05 Nepal Indosuez Bank (NIB) 44.4286 29.0985 12.2000 8.5811
06 Himalayan Bank (HBL) 45.4412 25.4465 9.2059 7.5790
07 Nepal SBI Bank (NSBI) 21.7742 15.9973 5.0000 4.0332
08 Nepal Bangladesh Bank (NB) 22.0882 14.9289 5.0588 4.2990
09 Bank of Kathmandu (BOK) 42.4242 21.7270 6.0606 4.1226
10 Everest Bank (EVR) 25.0000 14.2557 4.3125 2.4814
For entire Population 36.06 26.23 7.35 6.16

The above table-8 shows a clear picture of waiting time in Nepalese commercial banks.
NSBI, NB, and EVR were found the best in terms of both maximum and minimum waiting
time. Their waiting times standard deviation was also relatively lower than others. In these
three banks -- NSBI, NB, and EVR -- maximum waiting times were observed around 22, 22,
and 25 minutes and minimum waiting times 5, 5, and 4 minutes respectively.

14
From the acquired mean and standard deviation values, NABIL, NIB, and HBL were found in
worst group in terms of maximum waiting time analysis. From the same group, two banks,
NIB, HBL, and RBB were also found to be the worst ones in terms of minimum waiting time.
These banks'maximum and minimum waiting time seem almost double of those that were
reported as the best. However, it is essential to statistically test the differences among these
banks. For this purpose, one-way-ANOVA was calculated. The acquired result showed
Maximum waiting time F ratio 5.34 and Minimum waiting time F ratio 5.57 and both of them
were found statistically different at 0.001 level of significance. Thus, it is apparent that the
commercial banks under study are significantly different in terms of customers'waiting time.
In view of this fact, we can categorize these banks in three groups -- good, average, and bad --
in terms of waiting time. Three banks -- NSBI, NB, & EVR -- were found good and three
banks-- NABIL, NIB, and HBL bad in terms of maximum waiting time. Others were found
in-between the two groups. Similarly, if the minimum waiting time is considered, the same
banks -- NSBI, NB, and EVR were found best and RBB, NIB, and HBL were found the
worst.

DISCUSSION

This study clearly showed that customers are more satisfied with the second-generation joint-
venture banks. To be more specific, customers were found satisfied with those banks where
customers had to spent less time on waiting, and the employees'behavior was good. The
study of the cases of NSBI and EVR apparently shows these two banks better in both the
categories.

Customer were also found satisfied with HBL but the reason behind it may be quite different.
Customers reported that they opened account in this bank because of its facilities like credit
card, automatic teller machine etc. NB bank and BOK were also found good in fast-correct
functioning. EVR, NB, NGB and BOK were found good in office environment. NSBI, NB, &
EVR were found good in terms of customers waiting time. Almost all of these commercial
banks except NGB fall under second-generation joint venture category. It is, therefore, safe to
conclude that second generation banks are more successful in their customer satisfaction
performance than the first generation and non-joint venture banks. However, they have less
ability to serve poor Nepalese people and were also found less reliable for future.

RBB, NBL, and one joint-venture bank-- NGB were found strong on reliability ground. NBL,
RBB, and NIB were found strong in terms of their services to the poor. It is, therefore,

15
ascertained that NBL and RBB are reliable and they are also serving the poor Nepalese
people.

Findings might have high implication in Nepalese commercial banking sector. The reputed
and matured commercial banks are weak in terms of customer satisfaction, which indicates
that their level of competency in the banking market is low. They should invest more
resources to enhance customer satisfaction.

This research is very important for future researchers. It is quite a bold step to enquire into the
customer satisfaction in large banking sector. The study also fulfills some requirements of
social audit of Nepalese commercial banks in terms of customer satisfaction. The
management of the sampled banks may also benefit from this study as the outcome of this
study, though not very complete, raises many vital issues of the commercial banks in terms of
their customers'banking service desires.

The study covers only the level of satisfaction of the defined customers. Lack of adequate
relevant literature in Nepal has impeded the study to some extent, as improper theorization on
customer satisfaction could not be avoided due to the lack of such literature in Nepalese
context. Though the researcher collected opinions of customers without any bias, the study
may not be representative enough because of the small sample. However, this research
provides some clues about the facts.

This study is the first of its kind so far. Any other similar study conducted in Nepalese context
with a focus on customer satisfaction is nonexistent. This study, therefore, may be very
valuable for academicians as well as for practitioners. On the one hand, this study may help to
know the actual performance of commercial banks in terms of customer satisfaction while on
the other, it suggests some guide-lines for future research. However, there are many
limitations of this study. Observation techniques, focus group survey, and other qualitative
research will be more fruitful to analyze the problem more rigorously in future.

16
 BIBLIOGRAPHY

Bearden, W.O. and Teel, J.E. (1983). “Selected determinants of consumer satisfaction and complaint reports”,
Journal of Marketing Research. Vol. XX, February, pp. 21-8.
Blanchard, R.F. and Galloway, R.L. (1994). “Quality in retail banking”. International Journal of Service
Industry Management, Vol. 5 No. 4, pp. 5-23.
Cadotte, E.R., Woodruff, R.B. and Jenkins R.L. (1987). “Expectations and norms in models of consumer
satisfaction”, Journal of Marketing Research, Vol. XXIV, August, pp. 305-14.
Devlin, S.J., Dong, H.K. and Brown, M. (1993). “Selecting a scale for measuring quality”, Marketing Research:
A Magazine of Management and Applications. Vol. 5 No. 3, pp. 12-17.
Engel, James F., Blackwell, Roger D, and Miniard, Poul W. (1990). Consumer Behavior.USA: The Dryden
Press
Engel, James, F., Blackwell, Roger D. (1982). Consumer Behaviour. Japan: The Dryden Press
Fallik, F. & Brown, B. L. (1983). Statistics for behavioral sciences. Homewood: Dorsey Press.
Gravetter, F.J. & Wallnau, L.B. (1992). Statistics for Behavioral Sciences: A first Course for Students of
Psychology and Education.USA Belmount CA: West Publishing Company.
Gupta, S.C. (1995). Fundamentals of Statistics. Delhi: Himalaya Publishing House
Haddrell, V.E. (1994). A comparison of question scales used for customer satisfaction measurement.
Unpublished Masters thesis, University of Auckland USA.
Heskett, J.L., Sasser, W.E. and Hart, C.W.L. (1990). Breakthrough Service. USA, NY: The Free Press.
Oliver, R.L. (1980). “A cognitive model of the antecedents and consequences of satisfaction decisions”, Journal
of Marketing Research, Vol. 17, September, pp. 46-9.
Oliver, R.L. (1981). “Measurement and evaluation of satisfaction processes in retailing setting”, Journal of
Retailing, Vol. 57, Fall, pp. 25-48.
Peterson, R.A. and Wilson, W.R. (1992). “Measuring customer satisfaction: fact and artifact”, Journal of the
Academy of Marketing Science, Vol. 20, Winter, pp. 61-71.
Schnaars, Steven P. (1991), Marketing Strategy: A customer-Driven Approach. USA, NY: The Free Press.
SPSS Inc. (1999). SPSS Base 9.0Application Guide. USA, Chicago IL: SPSS Inc.
Westbrook, R.A. (1980). “A rating scale for measuring product/service satisfaction”, Journal of Marketing, Vol.
44, Fall, pp. 68-72.
Wolff, H.K. & Pant, P.R. (2003). A Handbook For: Social Science Research and Thesis Writing. Kathmandu:
Budda Academic Publisher and Distributor.
Yi, Y. (1990), “A critical review of customer satisfaction”, in Zeithaml, V.A. (Ed.), Review of Marketing, 1990,
American Marketing Association, Duke University.
Zeithaml, V., Parasuraman, A. and Berry, L.L. (1990), Delivering Quality Service, New York, NY: The Free
Press.

17
 QUESTIONNAIRE

1. How far you are satisfied from this bank'

s service?
Choose one best among five figures

Negligible Normal Outstanding

2. In your experience, how much effort is this bank doing to make you satisfied?

Negligible Normal Outstanding

3. Rank the following factors which makes you satisfied. Assign 1=for the best 2=for
second best ..... 8 = for the last.

Near from my place Good office environment

Timely information to customer Service oriented for poor people
Good employee behavior Reliable for future
Rate of interest on deposit Fast and correct function

4. Please write down the answer or check one best alternative.

Account holder a) Person b) Office
Account type a) Small Current b) Big Current c) Small Saving c) Big Saving
Distance a) Near b) Normal c) Far
Service a) Good b) Normal c) Bad
Office env. for customer a) Good b) Normal c) Bad
The reason for opening a/c a) Near b) Required c) Facility d) Attractive
Waiting time for Deposit Maximum ..........minutes. Minimum ...................minute
Waiting time for Withdrawal Maximum .........minutes. Minimum ...................minute

18