Sarah Khurshid Report

COMPARATIVE STUDY OF CUSTOMER
SATISFACTION FROM BANKING SERVCES IN

UNITED ARAB EMIRATES
THESIS SUBMITTED
FOR
MASTER OF BUSINESS ADMINISTRATION
SUPERVISOR
Dr. Suchi Dubey
STUDENT NAME
Sarah Khurshid
081114
ACKNOWLEDGEMENT
I would like to take this opportunity to express my gratitude to Allah (SWT) for giving
me the strength, patience and perseverance to work hard and pursue my educational goals
and I would like to express deep appreciation to my supervisor Dr. Suchi Dubey and all
the faculty lecturers who have dedicated their valuable time and guidance throughout the
whole MBA program, without whom I would not have finished the program.
Special thanks to my parents, family members and friends for their encouragement and
understanding throughout the duration of my pursuit of this MBA program. Their
encouragement and understanding have been crucial for my timely completion of this
study.
TABLE OF CONTENTS
II
Page
ACKNOWLEDGEMENT............................................................................................... II
LIST OF TABLES ............................................................................................................V
LIST OF FIGURES ........................................................................................................ VI
ABSTRACT....................................................................................................................VII
CHAPTER 1.0 : INTRODUCTION.................................................................................
1.1 INTRODUCTION…………………………………………………………………...
1.2 BANKING SECTOR OF UNITED ARAB EMIRATES……………………………
1.3 SIGNIFICANCE AND OBJECTIVES OF STUDY………………………………...
1.4 RESEARCH QUESTONS/ HYPOTHESES……………………………………….
CHAPTER 2.0 : LITERATURE REVIEW…………………………………………
2.1 MEANING OF SERVICE…………………………………………………………..
2.2 DEFINITION OF SERVICE QUALITY…………………………………………
2.3 THE SERVQUAL MODEL…………………………………………………………
2.4 CRITICISM OF THE SERVQUAL

MODEL…………………………………………………………………………………
2.5 SERVICE QUALITY IN BANKS USING SERVQUAL MODEL……………….
2.6 CUSTOMER SATISFACTION……………………………………………………
CHAPTER 3: RESEARCH METHODLOGY……………………………………….
3.0 PURPOSE OF STUDY…………………………………………………………….
3.1 INSTRUMENTATION………………………………………………………….
3.2 VARIABLES AND MEASUREMENT…………………………………………...
III
3.3 POPULATION AND SAMPLING……………………………………………….
3.4 RESEARCH TOOL USED………………………………………………………
3.5 LIMITATIONS OF THE RESEARCH……………………………………………
CHAPTER 4: FINDINGS & DATA ANALYSIS…………………………..……….
4.1 DATASET (U.A.E)……………………………………………………………….
4.2 SAMPLE PROFILE……………………………………………………………..
4.3 RELIABILITY ANALYSIS…………………………………………………......
4.4 RESULTS FROM FACTOR ANALYSIS ……………………………………
CHAPTER 5: CONCULSION AND SUMMARY……………………………………
5.0 DISCUSSION OF MAJOR FINDINGS…………………………………………
5.1 SIGNIFICANCE AND FUTURE IMPLICATION OF THE

STUDY………………………………………………………………………..……….
5.2 LIMITATIONS OF THE STUDY ……………………………….……………….
APPENDICES…………………………………………………………………………..
APPENDIX A- QUESTIONAIRRE……………………………………………………..
APPENDIX B- RESULT TABLES FOR SAMPLE…………………………………..
BIBLIOGRAPHY………………………………………………………………………
IV
LIST OF TABLES
Pages
Table 1.1
Reliability Statistics
Table 1.2 KMO Bartlett’s Test
Table 1.3 Total variance explained

Table 1.4
Communalities
Table 1.5
Rotated Component Matrix
Table 1.6
Component Score Coefficient
Table A Descriptive Statistics- Gender
Table B Descriptive Statistics- Age
Descriptive Statistics- Qualifications
Table C
Table 2.1 Anti Image Matrix
Table 2.2 Correlation Matrix
Table 2.3 Reproduced Correlation
V
LIST OF
FIGURES
Figure 1 Scree Plot (SAMPLE SIZE 1)
VI
ABSTRACT
COMPARATIVE STUDY OF CUSTOMER SATISFACTION FROM BANKING

SERVICES IN UAE
Supervisor: Dr. Suchi Dubey
Faculty: Faculty of Management Sciences
Customer satisfaction is one the most important outcomes of any marketing effort. Henry
Ford, an American industrialist and founder of the Ford company has said:
“There isn’t any secret of success, it lies in the ability to get the other person’s point of
view, and seeing things from his angle”
The above saying clearly shows how customer views, opinion and perception of services
or goods is important for the success and profitability of any firm.
Due to globalization, advancement of technology and the shift from being a seller’s
market to a buyer’s market has created intense competition between firms and
organization to win the loyalty and hard earned dollar of the consumers. Consumer
nowadays have many choices and options on hand to choose from which is makes it
important for organizations to be concerned with the quality of the services they choose
to deliver to the customers. This stands true for the banking sector too which are
increasingly becoming more customer oriented, offering highly customized services to
customers to retain existing customers and to win new prospects.
The following study compares the customer satisfaction in banking services ofa
country, namely UAE using the SERVQUAL model. UAE has different ethnicities
residing and as well as different cultures are prevalent both which affect the
perception of customers about service quality
VII
The SERVQUAL scale is one the widely used instruments for measuring service quality
and customer satisfaction. For the purpose of the study a Web based questionnaire had
been designed based on the five dimensional SERVQUAL model. A quantitative research
was carried by distributing the questionnaires electronically through social networking
sites and email with a sample size of 89 from the geographic region. An in depth analysis
was conducted on the data obtained from the questionnaires comparing the service quality
of banks and level of customer satisfaction in UAE.
VIII
1.0 INTRODUCTION:
1.1 Introduction and background:

Peter Drucker, legendary management consultant had defined quality as,
“Quality in a service or product is not what you put into it.

It is what the client or customer gets out of it.”
In today’s world with increasing technological advancements and increased

proliferation of brands and product categories, quality has become an important
issue for most consumers and plays a significant role in their lives. It is regarded an
important strategic tool for all organizations. With the need of coming up with
innovative & optimal solutions to fulfill customer needs, it becomes necessary to
measure service quality so as to improve it and come up with better ways to serve
the customer.
“Quality” comes from the Latin word “Qualitas” which refers to the nature of the
person or object. In the past quality meant accuracy and perfection (Al-Dharakah,
2002) 1
Banks are financial institutions as well as financial intermediaries who connect

customers with budget deficit to those with surplus funds. The bank’s main roles
include collecting deposits, lending directly to customers of indirectly through
capital markets according the laws and regulations of the government.
Banks provide a broad range of services to its clients for example home loads, ATM
services, credit cards, savings accounts, checking accounts, business loans and
mortgages. These services are specific for specific market segments i.e individuals
and corporate customers.
The history of banking is closely linked with the history of money. Deposits mainly
comprised of agricultural products like grain, rice and wheat along with precious
metals like gold and silver. Modern banking can be traced back to the Medieval
times and early Renaissance in Italy and other European regions.\
The Bardi and Peruzzi families dominated banking in the late 14th century. The most
1
Mohammad, AlHamdani (2011), Middle Eastern Finance and Economics Issue 14
9
illustrious bank of that era was Medici Bank founded by Giovannie Medici in 1397.
As banking began to spread in rest of Europe a number of innovations were brought
in particularly Amsterdam and London during the 16th century. Traditional banking
roles of accepting deposits and lending, exchanging and transferring funds were
combined with the issuance of debt in lieu of gold and silver. The advent of new
practices promoted industrial and commercial growth providing a safe and yet
convenient means of payment.
During near end of the Second World War the Bretton Woods system was
introduced in 1944 along with the creation of two organizations namely The
International Monetary Fund and World Bank. These institutions started lending to
Third World countries which led to the abandonment of the Gold standard as
bankruptcy became rampant.
A number of notable technological advancements were introduced in retail banking.

In 1950 machines for MICR (machine readable characters) was patented in the
United States of America for application on cheques. In 1960 first Automated Teller
Machines were developed, thus banks too were heavily investing in technology with
an effort to automate manual processes. By 1970s the electronic payment system
was developed with SWIFT payment network being established in 1973 which is
now today’s electronic funds transfer, transferring money from one place to another
in matter of seconds.
Global banking and investment in capital markets proliferated during the 80s after
the markets were deregulated. This enabled banks to access capital banks in new
ways which led to the trend of banks acquiring financial institutions dealing with
investments and stock brokers creating banks which offer versatile services.
Today, technology has equipped banks with tools that can differentiate similar
products on the basis of delivery channels. A bank essentially thrives on the way it
maintains relationships with its retail and corporate customers, other banks and
financial institutions. The advent of technology in banking, however, has changed
the way these relationships are initiated and nurtured. Technologies, such as Internet
banking and MA-CUGs (member administered closed user groups), are providing
platforms through which corporations can do banking efficiently and effectively.
10
Banks are using technology as a strategic tool to take relationship management to
the next level - the bank as a partner of the customer.2
It is more of a buyer’s market than a seller’s market. The consumer is now a product
seeker as he/she has a wide range of services to choose from. Thus the most
important factor that is essential for today’s successful and modern banking is the
quality of services.
1.2 Banking sector in United Arab Emirates
The banking sector is well established and stable in the UAE despite the recession
hitting in 2008, the banking sector has contributed approximately 7.1% of the
nation’s GDP in 2007. The most financial services were offered by Abu Dhabi and
Dubai which constitute nearly 40% and 41 % of the banking sector of UAE,
showing that the banking industry in UAE is highly fragmented. The UAE has a
large number of banks as compared to its population mainly 21 local banks, 25
foreign, 2 specialized and 50 representative offices of other foreign banks.
The financial turmoil had put local banks to test as they absorbed individual and
corporate impairments along with Dubai’s debt restructure and slump in the real
estate market which has reduced lending appetite.
Credit growth has remain sluggish after the recession with a marginal increase of
1.4% (USD 264.6 million) in 2010.Moreover credit facilities extended to private
sector had also slumped. The banking sector is highly exposed to the construction
sector as well as the speculative real estate market both which contribute significant
amounts the banks’ portfolio. In conclusion the banking sector’s profitability has
been greatly affected because of the real estate slump with rising cost of domestic
debt and reduced access to international financial markets poses some serious
challenges to the banking industry.
In a recent survey conducted banks expressed surprised at the results which stated
only 15% of the customers would recommend banks to their peers. According to
2
Chaudary, Singh, & Prabhat (2006) “Impact of Technology on Banking Connectivity”
11
research out by Ethos Consultancy in its Seventh Yearly Bank Benchmarking Index
for superior quality of services, most of the banks in UAE are still not emphasizing
on the value of good customer service.
The research was conducted in a span of three months in 2011 (starting from June
to August) Within this time period, researchers made almost two hundred call centre
calls, four hundred branch visits to banks & two hundred website interaction
observations . The consultancy based its report on 920 research related exchanges,
with each bank receiving 20 branch visits, 12 call centre calls and 8 website
interactions. The study focused mainly on twenty three UAE retail banks, consisting
of eighteen local & five International banks. The banks under study were operating
in either Abu Dhabi, Dubai or Sharjah. Results indicated that less than half of
respondents were satisfied with the personal, online and call centre banking services
with 41 per cent extremely dissatisfied with banks’ website services. (Report, 2012)
In the presence of such a highly competitive market , it is important for banks to

consider the contribution of customers and market sectors towards the success &
profitability & which customer relationships are profitable. More focus on client
satisfaction, quality of service and innovation in products offered, will lead to the
creation of new categories of interest income, charges, commissions and possibly
FX-related profit. 3
1.4 Significance and objectives of the study:
Thus , the common challenge that the two countries are facing is that of quality of
services, providing optimum customer satisfaction and generate loyalty and delight
among existing customers. Hence its necessary that banks develop a customer
focused approach for profitability and survival. There is already an awareness that
prompt, efficient services which deliver greater value to the consumer will tempt
existing consumers to induce other potential customers to try the banking services
offered.
3
Moukahal (2011) , “A Middle East Point of View” pg.12
12
“A company can achieve strong reputation for quality service only when it
consistently meets customer service and expectations." 4
Considering the implications of quality of services and satisfaction of customers this

study is intended to study the effect of service quality on customer satisfaction in
UAE.
Many authors (Babakus and Boller , 1992); (Carman, 1990) have disconfirmed the
5- dimensional structure of service quality, stating that it doesn’t seem to be
completely generic and largely depends on the type of industry which is under study
and it does not apply to every cultural context ( Cui & others,2003)
Therefore the objectives of the study is not only to compare the quality of services
and satisfaction level of customers in the banking sector of the two regions but also
identify the benefits of this relationship and glimpse of the banking culture of the
two regions and how they differ from each other.
The research and findings of this study would be applicable to all regions providing
a view of where each of them stand with respect to the efficiency and efficacy of
financial services rendered by their financial institutions.
Service quality offers the way of achieving success to organization offering almost
identical services like banks where differentiating oneself on the basis of service
quality and achieving high satisfaction is only way to financial success.
1.5 Hypothesis/ Research Question
Underlying this study are various hypotheses. Our research question to study the
level of importance of the underlying dimensions of the SERVQUAL model in
U.A.E and to attempt to compare and justify the differences and results.
H1: Tangibility is related to service quality of banking services in UAE

H2: Reliability is related to service quality of banking services in UAE
H3: Assurance is related to service quality of banking services in UAE
4
Berry, Zeithamal and Parsuraman (1990) , Sloan Management Review pg.29
13
H4: Responsiveness is related to service quality of banking services in UAE
H5: Empathy is related to service y in of banking services UAE
2.0: LITERATURE REVIEW:
2.1 Meaning of Service
There are different meanings & definitions of the word “service” given by
researchers . For example, Ramaswamy (1996) described service as business
transcations that take place between the giver and the recipient which results in the
production of a result which satisfies the need of the customer.
Whereas Zeithmal & Bitner defined service as a performance & process.Modern

definitions of services mainly focuses on the fact that services have no tangible
output although many services do result in the creation of tangible goods. The most
simplest definition perhaps was given by the Economist,
“anything that cannot be dropped on your foot”
Adrian Palmer(2004) in his book states that services is the production of an

intangible benefit which in its own right night be an element of a tangible product,
which satisfies some kind of identified consumer need. Service was defined by
researchers like Lakhe & Monhanty (1995) as a assembly system where an
assortment of inputs are processed & refined to give useful output which not only
beneficial in the economic sense but important for supporting human life and
providing pleasure.
Another eminent researcher further defined service as a process comprising of

intangible and inseparable activities that take place in customer – service provider
interactions or between physical & tangible resources of the provider, which in turn
offers affordable and quality solution to customer problems & needs. (Gronoos,
2003)
Services occur because of contact between providers of services and the

consumer.(Gronoos, 1990; Deighton ,1992;Zeithaml & Bitner, 1996) Factors like
physical environment and tangible aspects are integral in the process of production
14
as well as consumption of services. (Collier,1994;Gronroos,1990; American
Marketing Association, 1996)
2.1 Definition of Service Quality:
Although the concept of service has been studied vigorously for years, there is no
agreement as to what actually is meant by quality in services partly because
researchers’ different perceptions and having focused on different aspects of service
quality .
As stated by Reeves & Bednar (1994) , there is no uniform or universal definition to

describe quality of services and as to what makes up the model of quality.
Service quality has been defined by Robinson (1999) as
“an attitude or global judgment about the superiority of a service”.
According to Gronoos (1990) it’s the result of differences between expectations of

customers about the service and their perception of the service that is actually
delivered to them.
In the traditional notion, the most familiar definition of quality in services is the
one where customer’s perception of excellent service is deemed as “quality”. (Berry,
Parsuraman & Zeithmal, 1988; Parsuraman, Zeithmal & Berry, 1985) According to
this definition customer perceive service quality on the basis of their prior
experience and the current experience. Many scholars agree with the fact that
customer is the judge for service quality.
In fact Bitner and Hubbert (1994) defined service quality as the overall impression
about the superiority or inferiority of organizations and the services they provide and
deliver.
Fogli (2006, page 4) defines quality of services as attitude or judgment with
reference to a particular service and the overall impression of the customer regarding
15
the organization’s standing as well as the inferiority or superiority of the services
provided by such an organization. Therefore, quality of services is a judgment made
based of the cognitive and emotional processes of customers, Similarly Parsuraman,
Berry and Zeithmal (1985) defined quality as the degree of inconsistency between
the perception of customers about the service and their expectations.
Walfried (2000) defined service in more business oriented manner as a set of
characteristics that meet the clients' needs, strengthen the bonds between the
organization and them, and enhance the clients' value as well.
Service quality is extremely important with respect to banking industry where each
bank offers identical range of products. Service quality becomes the only
differentiating factor for banks to build competitive advantage. Liberalization
coupled with deregulation of the financial sector in Pakistan and UAE has resulted
in the banking system to become integrated which results in intense competition
between banks vying for customers.
In terms of banking industry a customer can be defined as a user or potential user of
banking services. A customer would include an account holder or a person carrying
out casual business transactions with a bank, or a person who, on his own initiative,
may come within the banking fold (Talwar Committee Report 1976).
Service quality in banks implies consistent anticipation of customer expectations

and satisfying those needs and expectations.(Howcrof, 1991) Service quality
therefore is one of the most critical factors affecting the success and profitability of
an organization. A financial institution like a retail bank can differentiate itself from
direct & indirect competitors by delivering superior quality and efficient services to
its retail banking customers.
It was believed that maintaining outstanding quality in services rendered is crucial

to the business profitability and survival.(Newman & Cowling ,1996) . Because of
greater supply of services and products available to customers in the two regions, its
vital for banks to improve their services continuously. In order to survive the
competitive banking industry new strategies and innovative products and services
need to be developed to attain optimum customer satisfaction. This is the reason
why service marketing in the banking sector is an important area of research in
16
marketing and finance literature.
Mohammad & Shirley (2009) laid emphasis on the importance of maintaining the
service quality in banks which often considered as the core of strategic business
competition.
Shemwell (1998) also agreed that in the current world’s intense competition,
rendering superior service quality is extremely important which in turn results in
satisfied customers. Moreover Huseyin (2005) believed that good knowledge about
the core characteristics and advantages of excellent service quality would help banks
to perform better in the international market and contribute towards their success.
Thus, the quality of banking services is the overall assessment of the integrated
services that are offered by a bank to its clients and customers who are considered
rational and independent, and services are designed to suit their specific needs.
Standord (1994) observed quality of services to be as a vital issue in the banking

industry. Whereas a positively correlated relationship was found between superior
quality of services and better profitability by Van der Velde et al. (1991). Likewise,
it was also reported that enhancement in the quality of services rendered was directly
related to increase in market share. (Bowen & Hedges,1993)
2.2 The SERVQUAL Model:
According to Gronoos (1984) quality of services comprised of two distinct aspects,

one being the functional & the other being the technical one. Most scholars are
adamant that since the technical aspect of services cannot be judged or measured,
customers tend to judge and perceive service by examining the functional aspect of
services. Given the complex nature of services many divergent views have to put
forth to conceptualize and measure service quality.
Researchers Swan and Combs (1976) stated that consumers consumers usually
evaluate products on the basis of a set of limited features & attributes some which
could be integral towards the study of satisfaction and some attributes could be not
important in determining satisfaction but is highly related in shaping customer
17
dissatisfaction especially when service quality perceived is inferior.
18
The comparative study of the service quality of the two regions in question will be
done using the disconfirmation approach. In this methodology the service quality is
considered excellent when consumer expectations meet the service delivery. In the
disconfirmation model a great of deal of emphasis is place in discerning the gap
between the expectations of customers and their perception about the services
received. ( Palmer, 2004)
The most imminent research in this model was done Parsuraman, Berry and
Zeithmal (1985) who were strong advocates of organization learning more about
customer expectations and needs through rigorous market research. The
researchers’ opinion was the quality of services can be defined as the discrepancy
between the expectations of the customer and the perception of the customer about
the service delivered. Therefore if the expectations of the customer were much
greater than their perception about the service delivery then it results in lower
satisfaction. Thus the gap of quality of services comes into existence.
Nevertheless they were most likely to be the earliest researchers to suggest that the
concept of quality prevalent for physical goods cannot be applied to the service
sector because of the complex nature of services. Services being inherently
heterogenous, intangible, inseperable and perishable services require an entirely
different framework for the measurement of quality.
Thus taking into consideration the definition of service quality given by

Parsuraman, Zeithmal & Berry, the gap model of perceived quality of services was
created, Based on the traditional definition of service quality Parsuraman, Berry and
Zeithmal developed the gap model of perceived service quality which identifies 5
gaps where there may be difference in customer expectations and performance.
i. Disparity between expectation of customers and perception of the

management.
ii. Disparity between perception of the management team and specifications for
quality of services.
iii. Disparity between those specification on quality and the execution of
service.
19
iv. Disparity between delivery of the service and communicating the service
features and attributes externally.
v. Disparity between service perceived by customers and service expected by
customers.
Parsuraman et al. (1985) who were developers of the above disparity model had
then proposed ten service dimensions to define service quality namely :
• Tangibility
• Reliability
• Responsiveness
• Competence
• Courtesy
• Credibility
• Security
• Access
• Communication
• Understanding.
From the 10 dimensions, Parsuraman (1988), Zeithmal (1990) created a 22 item

SERVQUAL instrument which was ultimately conceived to study the five broad
service quality dimensions namely as Yong(2000) describes:
1. Tangibles – Describes the physical appearance of facilities and equipment,

including appearance and tidiness of employees and other materials used to deliver
the service.
2.Reliability – Describes the skill and capability to deliver the service in an accurate
& prompt manner.
3. Responsiveness –describes the competency of employees and personnel in

assisting customers and delivering the service promptly.
4. Assurance – It encompasses the skills, knowledge & businesss etiquette of the
employees and their potential to win trust and confidence of the customers.
20
5. Empathy – It comprises of being compassionate and sympathetic with the needs
of the customer and providing individual attention to customers. It includes
accessibility to the personnel and their communication level with customers.
The perception about the quality of services represents an encompassing portrayal

of services and judgement about the inferiority or superiority of the services
delivered (Sureshchandar, 2002).
Many researchers such as Juwaheer & Ross (2003), Walker (2006) including
Parsuraman stated that the above mentioned service quality dimensions of reliability,
responsiveness, empathy, assurance are very important service characteristics.
Reliability is the skill to provide the service accurately and in a prompt

manner(Wong & Sohal, 2003)
Responsiveness is defined as the willingness to provide the service promptly and

quickly. (Johnston, 2006). Assurance refers to competence, expertise, and security in
delivering services ( Juwaheer and Ross, 2003).
The construct of the SERVQUAL scale is service quality rather than object quality.
The innovators Parsuraman, Berry and Zeithmal further developed the SERVQUAL
model in numerous publication namely.
(Parsuraman et al. 1988, 1997,1990; Zeithmal et al.1990;1993;1996; Berry and
Parsuraman ,1991 )
Through further research they confirmed that the effect of the service quality
dimensions would differ from one service category to another but reliability was the
far most important dimension.
Great deal of emphasis has been placed on the cognitive and emotional processes
through which customers form opinions and expectations about the quality of
services offered. Two definitions were suggested to define expectation of customers.
Two standards for expectations were proposed. The first definition represented
expectations as the future events being predicted by customers. (Swan and Trawick,
1981).
21
The other definition stated that customer expectations were nothing more than
normal expectations of future events which were either what the customer desired or
considered as ideal. The former is mostly used in literature related to satisfaction but
the latter is used in the literature related to quality of services.( Parsuraman et
al.,1988)
Zeithmal, Berry & Parsuraman (1993) had suggested 3 levels of expectations on the
basis of which quality of services is assessed, they are namely:
• The level of service desired by customers which represents what the
consumer actually wants from the service.
• The level of service which is considered as adequate by customers, meaning
which is the minimum standard consumers are ready to accept.
• The “predicted” level of service , which consumers expect will actually be
delivered. 5
This led to the suggestion of the concept of “zone of tolerance” which comprises of
a varying number of service performance which the consumer deems is satisfactory.
(Parsuraman & Berry, 1991).
If the perception of service falls below the desired level of service it does not
necessarily mean the service is low quality but it is still acceptable to consumer as
long as it does not fall below the adequate level of service. It suggests a gap exisits
which can be reduced by improving the service quality dimensions.
However to produce a definite impact on the perceived quality, performance would

have to move beyond the zone of tolerance otherwise any increase within this area
would only produce marginal effect. (Strandvil, 1994; Johnston,1995)
Thus service quality is now a vital component for the success and profitability of
any organization operating in the banking sector. Provision of superior quality
services results in the achievement of main objectives and goals of the organization
relating to retaining customers, creating customer loyalty , increasing employee
productivity as well as enhancing profitability of organizations. (Cui et al., 2003)
5
Palmer (2004), “Principles of Marketing” ,Fourth Edition Mc Graw Hill (pg:338)
16
SERVQUAL model is widely used as an instrument to measure perceptions of
consumer related to quality of services.
2.4 Criticism of SERVQUAL model:
Although the SERVQUAL model is widely used has also faced a lot of criticism
regarding issues like the logic behind the measurement of expectations (Cronin &
Taylor, 1992). Many researchers argue that perception scores alone are enough to
explain the variation in the quality of services rather than measures proposed by the
gap model of service quality. The reliability and accuracy of the difference score
formulation of SERVQUAL also posed issue (Boller & Babakus, 1992; Brown,
1993) along with problems related to variance restrictions. Brown and Churchill
(1993) conducted a study which proved these psychometric issues arise and
suggested the use of entirely different score measures.
Parsuraman, Berry and Zeithmal argued that the psychometric deficiencies of the
SERVQUAL model were too exaggerated by critics and were less severe. It is
claimed that the model can be applied to any service sector.(1988)
However Buttle (1996) challenged the number of dimensions proposed in the model
in his research, and was unable to replicate the 5 dimensional factor model. While
the SERVQUAL scale is ideal for service industries providing high involvement
inseparable services like retail banking for instance. But it would be less appropriate
to services like investment banking where the consumer is more concerned about
performance rather than quality of service. Other debate that arose regarding the
SERVQUAL model application across different cultures, ethinicities and
countries.(Furer, Ching-Liu & Sudharshan, 2002) These studies showed that
customer values, beliefs greatly affect the way consumers perceive services and
many researchers agree that the applicability of the five dimensions varies from one
service industry to another. (Carman, 1990; Prybutok et.al 1997)
According to Hofstede (2001) Asian cultures particularly developing countries like

India and Pakistan are collectivist. Collective cultures tend to discriminate ingroups
and therefore word for mouth advertising is extremely important for banks of those
17
two regions. People who perceive greater service quality will tell others about their
experience which increases credibility of banks.
Even Parsuraman et al (1994) shifted from the five dimensions of service quality to
only three dimensions combining responsiveness, assurance and empathy as one
single dimension. It is for these reasons the study of the country UAE has been
undertaken to identify difference in the perceptions of consumers and satisfaction
levels across culture backgrounds and the applicability of the SERVQUAL model in
light of differences of culture and ethnicities.
2.5 Service quality in Banks using SERVQUAL model:
Despite all the criticism SERVQUAL model has faced, it continues to be the most
widely used model to measure quality of services delivered in the banking industry
as a whole. (Lewis, 1991).
Researchers Morales, Ladhari et al. (2002) accepted that the SERVQUAL scale is
the most reliable and complete attempt to measure quality of services and providing
a concept to the term “service quality”.
SERVQUAL is not discarded as completely useless by critics because of the reason

that the reliability and accuracy of the model depends on the way researchers use
the tool. For instance Ladhari and Pons(2002) had reviewed nearly 30 articles
concerning the utilization of SERVQUAL tool and found few of the researchers
using the tool were concerned with its validity.
The key existing problem for banking industry is the existence of a clear, precise
definition of quality which hinders banks from taking quality improvement
initiatives. Many empirical studies have been undertaken for analyzing the important
relationship between satisfaction of customers and quality of services using the
popular SERVQUAL scale. (eg: .Angur et al, 1999; Jabnoun & Al- Tamimi, 2002;
Hwan & Lee, 2005; Kangis ,1997).
Jabnoun and Al Tamimi (2002) had developed and tested a modified version of the
SERVQUAL model for measuring quality of services delivered by the commercial
banks of UAE. Unlike the original instrument it comprised of three dimensions
18
namely human skills (combining reliability and assurance), tangible and empathy (
19
combining empathy and responsiveness) Their research explained the 67.5%
variation in overall service quality and the human skill dimension was found to be
most important in UAE.
Karatepe et.al (2005) proposed a 20 item survey to measure customer perceptions
and service quality of banks in Northern Cyprus. It consisted of four dimensions i.e
service environment, interaction quality, empathy and reliability. Interaction quality
dimension was found to be most important.
Kangis and Voukelatos (1997) conducted a research comparing the private &
public sector banks in Greece and found that the perception and expectations of
consumers where significantly higher for private rather than public sector banks for
most of the dimensions which were measured.
Tamimi & Al-Amiri (2003) used the SERVQUAL model to measure service
quality of Islamic banks in UAE and concluded the relationship of overall service
quality of UAE Islamic banks and the service dimensions was positive and
significant. Empathy and tangibility were the most important dimensions in the
minds of the consumer. But also there was no attempt to single out any service
dimension particular to UAE culture.
Zaim et al (2010) conducted their own research to conclude tangibility, reliability
and empathy were extremely crucial to customer satisfaction whereas Mengi (2009)
confirmed responsiveness and assurance are important factors.
Levesque and Mc Dougall (1996) adapted the SERVQUAL model and obtained
three service quality dimensions which supported the claim that two of the
dimensions might be overriding.
The three dimensions were the outcome of services, customer- employee
relationship and employee behavior.
Blanched & Galloway (1994) used the SERVQUAL model to examine the service
of retail banking and provided valuable insight on how banking services could be
improved. Though they had created an alternative model but used most of the items
in the original survey created by Parsuraman,Berry and Zeithmal.
Walfried et al (2000) applied two techniques in their study first was the
SERVQUAL model and other was a technical/functional measure of service quality.
Their study proved in favour of the initial approach i.e SERVQUAL and concluded
that the other measure was better suited for varying situations and cultural context.
20
Zhu et.al (2002) explored the impact of IT services on a large consumer bank to find
that these innovative services had a direct impact on the service dimensions and
indirect impact on the consumer’s perception and expectations of the services. It is
was concluded that it was the preferences of the customers towards traditional
services which had impacted the customer based evaluation.
In Pakistan, Naeem, Malik and Arif (2011) conducted a study on the quality of
services delivered by the banks in Lahore, Pakistan using the SERVQUAL model
and concluded that not all service quality dimensions were responsible for increasing
satisfaction level of banking clients. It was also found that assurance was the most
important dimension in satisfying customers rather reliability.
Siddiqui (2010) also used the SERVQUAL scale to measure the perceived quality of
services in banks of Bangladesh and found that all five service quality dimensions
were applicable to Bangladeshi banking sector with customer satisfaction being
positively correlated to service quality.
Natarjan et al. (1999) examined the improvement of services in banks while
assessing the actual service experience through customer survey. The research
discussed the operations of bank in Bangalore. Mishra et.al (2010) conducted a
study comparing the private and public sectors of India using the SERVQUAL
model to isolate certain determinants of service quality that were considered as most
important for customers. They found that there was small perpetual difference
between customers on the overall service quality of banks. The respondents mostly
emphasized on improving the human resources dealing with service delivery
whereas the banks were more focused on tangible aspects like advanced
technologies, ATM etc.
Angur et al (1999) had conducted research that examined the application of an
alternative measure for service quality in the retail banking industry of India.
SERVQUAL model was used to measure overall service quality of two major banks
in India. They found that all service dimensions were not crucial towards explaining
variance in service quality and that responsiveness and reliability were held as most
important by consumers. Thus they concluded SREVQUAL was the best measure of
service quality especially for developing countries.
In the light of all the mentioned literature , this study is also examining the
differential effect of the SERVQUAL dimensions on service quality and test its
sustainability across different regions.
21
2.6 Customer Satisfaction:
Customer satisfaction is one of the important outcomes of marketing activity.

(Oliver, 1980;Surprenant & Churchill, 1982;Fournier & Mick, 1999) In the banking
industry strafed with intense competition, satisfaction of customers signifies success
and profitability. In fact satisfaction of customers is one of the essential final
outcomes in literature related to marketing. It serves to link purchase with post
attitudes like repeat purchase, brand switching and brand loyalty (Surprenant and
Churchill, 1982). This definition was furthered confirmed by Jamal and Naser
(2003).
According to Oliver (1980) , the customer satisfaction model shows that any
differences in the perception of products and services with customer expectations
result in satisfaction or dissatisfaction. Any discrepancies give rise to
disconfirmation. This disconfirmation was identified by Oliver (1980) of three types
• Positive occurs when the performance of the service exceeds the
expecatations of the customers resulting in the customers being satisfied.
• Negative occurs when the performance of service is less than the
expectations of the customer resulting in dissatisfaction of customers.
• Zero occurs when the performance of service neither exceeds or falls below
the expectation of the customers.
Giese & Cote (2000) had suggested the following postulates of satisfaction based on
Oliver’s research
1. Customer Satisfaction was a unique response of the consumer (coginitive or
emotional)
2. The customer response is focused on a particular experience or consumption.
3. Customer response occurs in a timely manner at a particular time.
Customers always want the best value for their money and therefore make
considerable efforts in selected the best goods and services. (Strategic
Direction,2007)
22
Benefits which are derived from customer satisfaction include customer retention &
loyalty, increased profits and repurchase as well as positive word of mouth about the
goods and services purchased (He and Song, 2009; Sit et al.,2009)
High customer retention is an indicator of customer satisfaction. (Kotler,2003)
The banking industry like all other industry has increased its efforts to generate
customer satisfaction by providing quality services. This is because of the fact that
competition has increased and its more of a buyer’s market than a seller’s market,
with each bank struggling to retain current customers while attracting potential
customer.
The interactions between customer and service organizations always includes the
perception of customer quality. (Zeithmal et al. 1988). Supporting this, Owusu-
Frimpong (2009) stated that the attitude of employees was one of the factors that
gave customers a good perception about the quality of the service. The physical
environment, in terms of layout and equipment and general atmosphere was also
considered by customers while assessing quality. Likewise a shorter duration for
services may give good impression about the quality of bank services.
Kotler (1991) states that satisfaction is a post purchase result or evaluation of goods
and services taking into account the customer expectations.
However Abdullah and Rozario (2009) argue that level of customer satisfaction is
influenced by many external and internal factors by which its difficult to assess
customer satisfaction.
Jamal and Nazer (2002) were of the opinion that customer satisfaction is not only
related to the reliability of the service but also based on the experience of the service
delivery process.
Oliver cited in Ting et al. (2004) have listed many differences between quality of
services and satisfaction level of customers. They proposed that the dimensions of
the quality of services are directly connected to the service delivery while customer
satisfaction is dependent on many factors which maybe directly or indirectly related
to the service delivery services. Perception of service quality is based on experiences
23
and encounter with the service provider and service environment whereas past
experiences of the customer may form the basis of customer satisfaction.
Many researchers are divided over the relationship direction between satisfaction of
customers & quality of services. Scholars like Parsuraman et al (1988) and Bitner
(1990) are of the opinion that service quality leads to customer satisfaction whereas
other researchers like Cronin & Taylor (1992) and Anderson Sullivan (1993) have a
view which is contrary to the latter’s beliefs. Many empirical studies were conducted
to test this relationship. Studies like those of Tam (2000), Patrick and
Backman(2002) and Cronin & Taylor (1992) suggest that satisfaction leads to
superior service quality. Newman (2001) also stated that correlation exists between
quality of services & satisfaction of customers. And that superior service quality not
only leads to customer satisfaction but customer loyalty, retention and greater
profits.
Thus both the concepts of customer satisfaction and service quality are used
interchangeably. Researchers like DeRuyter et al.(1997), Zahorik & Rust (1993)&
Boulding et al. (1993) are of consensus that quality of services rendered and
satisfaction of customers are synonomous &interchangeable. Both refer to meeting
the expectations of customers and fulfilling their needs and thus its difficult to
clearly differentiate the two.
But regardless of the direction of the relationship, the relationship between the two
variables is still strong when examining from both directions. Satisfaction of
customers had a major impact on the assessment of service quality and vice versa
(McAlexander et al.,1994)
3.0 RESEARCH METHODLOGY:
3.1 Purpose of study
The aim of this research to study customer satisfaction levels for banking services
in United Arab Emirates using the SERVQUAL model which states that quality of
service is an precursor satisfaction among customers.
24
Each country differs when it comes to economy and culture and therefore the
perception of service quality would differ. The universe of this study is the country
under study namely UAE. The objective of the study is not only analyze customer
satisfaction but to give a glimpse into the banking cultures of the two countries &
identify the benefits of the relationship between quality of service& satisfaction of
customers.
This study is defined as a panel study which is a longitudinal study which

emphasizes on collecting data from similar sample of individuals or households
across different geographic regions over time. Panel studies are advantageous when
studying the dynamic relationship between quality of service and satisfaction of
customers.
3.2 Instrumentation:
Internet survey is the main form of data collection, in which a self administered
questionnaire was posted on Screator.com. Respondents could provide the answers
to questions displayed on screen and key in the answers. The survey instrument
developed consisted of three main sections. First section was primarily about
demographic profile of the respondent including age, gender, marital status, country
of residence and the name of the bank visited frequently. The second section
consisted of constructs and questions derived from the five dimensions of the
SERVQUAL model as proposed by Parsuraman et al. (1988). Whereas the third
section comprised of questions relating to customer satisfaction.
The instrument utilized the five point Likert scale with number 5 assigned to
“Strongly Agree” and number 1 assigned to “Strongly Disagree”. An initial draft of
the questionnaire was prepared and reviewed to test the clarity & wording before
being published on the Website.
3.3 Variables and Measurements:
Service quality is the independent variable as stated by Parsuraman et al. (1988 ) in

the SERVQUAL model he devised, which involves five dimensions being tested
namely reliability, assurance, empathy, tangibility & Responsiveness. The
dimensions tested in the survey comprise of 24 items, response is given on Likert
scale ranging from five to one.
22
Customer satisfaction is the dependent variable measured from a four item adapted
from Walfried et al. (2000) . Example of a sample item “You recommend the bank
to other people”, the responses to the items are again measured on LIKERT scale
ranging from five for strongly agree to one for strongly disagree. Higher scale
represents higher satisfaction with bank services.
3.4 Population and Sampling:
People of the age of 18 and above, who are bank customers and residing in the
countries under study are the target population of this research. Non probability
convenience sampling 6 was applied to people residing in UAE.
To collect enough data for factor analysis, an Internet survey was conducted to
collect data from the target audience. Invitations to participate in the survey was
distributed randomly to 200 bank customers from each country. Subjects were asked
to assess their perception about the various dimensions of the services they received
from banks and state how much were they satisfied with the bank they visited the
most.
The data collection resulted in 170 questionnaires being completed representing

52.35% response rate. Because the sampling method chosen was convenient to
reach respondents in other geographic regions however lack of cooperation and
willingness of some respondents in addition to contributed towards a low response
rate than anticipated.
3.5 Research tool used:
Microsoft Excel was used to enter responses of the sample population and SPSS
software, a statistical software was used to carry out procedures for factor analysis.
3.6 Limitations of the Research:
The research conducted has numerous limitation in itself. Some limitations of the
research methodology could be :
6
In non probability sampling, the sampling units are not attached to any predetermined estimate of being
chosen as a respondent. Therefore the findings and results of this study cannot be used to generalize the
entire population of each country. As the name suggests people who are conveniently available are invited to
participate in the research
23
 Insufficient sample size. Considering the type of research which is
undertaken , a large sample size is needed to ensure the accuracy
and reliability of statistical tests and testing significant relationships
from the data. However due to the very short span of time allotted
for the research , it is not possible to gather an adequate sample size
of 300 respondents from each country.
 The format of questionnaires makes it rather difficult to examine

respondents on complex issues and opinions. Response is just
limited to the choice criterion presented to the respondents.
Sampling heavily relied on the Internet survey created.
 Regarding responses from UAE which is a country known for its

diversity of cultures. Most responses have been obtained from
respondents of South East Asian Origin rather the locals residing in
the country which could generate bias and misleading results about
customer services in the UAE.
 The research may be subjected to bias from respondents

themselves, as it relies on the cognitive and emotional processes
of the respondents.
4.0 FINDINGS & DATA ANALYSIS:
4.1 Sample size & Circulation:
The purpose of this study had been to compare the service quality & ultimately
customer satisfaction in banking services for United Arab Emirates, which are
characterized by different cultures and values.
The sample size for this study is 89 respondents. Initially a sample size was planned
to be 300, but due to time constraints and unwillingness of the customers to disclose
data and participate in the study the sample size was greatly affected. The
24
demographic background of the respondents had been represented in six parameters
namely gender, educational background, age , country of residence, nationality and
name of the bank they frequented the most.
The data for this study was collected through a Web based questionnaire which was
circulated through email and social networking sites. The questionnaire comprised
of 25 items measuring the parameters as enlisted by the SERVQUAL scale proposed
by Parsuraman et al. (1988). Data regarding customer satisfaction was measured
through a 4 item scale similar to that of Walfried (2002). Likert scale was employed
for both parts of the questionnaire with 5 standing for “Strongly Agree” and 1
standing for “Strongly Disagree” accordingly.
4.2.2 Reliability Analysis:
A statistical software package i.e IBM Statistics Package Version 20 was used to
conduct exploratory factor analysis on the data to assess the reliability and validity
of the data.
First step towards data analysis was Reliability analysis was conducted on both
samples separately which is used to assess the internal consistency of the scale
used.
4.2 DATASET - United Arab Emirates
4.2.1 Sample profile:

Table a,b and c(refer to appendix B) represent the descriptive statistics for the
sample obtained from UAE. Table a shows that out of 89 respondents 64% of the
respondents were males and 36% were females. Similarly Table b shows the age
distribution of the respondents. Nearly 44% of the respondents were belonging to the
age group of 18-35 and another 40% of the respondents belonged to the age group of
26-35. Senior citizens were minority.
25
Table 14 shows the educational qualifications of the respondents. Almost 44% of the
respondents were graduates and 40% postgraduates which reflects that literacy rate
in UAE is high as compared to Pakistan and therefore they avail services of banks
more than those of Pakistan. Another important point to be noted is that high
percentage of the respondents are of Pakistani origin. Very few respondents are of
other nationalities which includes Indians and Canadians.
4.2.2 Reliability analysis:
Table 1.1
Reliability Statistics
Cronbach's Alpha Cronbach's Alpha N of Items
Based on
Standardized
Items
.929 .931 25
Similarly table 1.1 shows that the data collected from United Arab Emirates has
Cronbach’s Alpha value of 0.931 which is acceptable indicating the dataset is
reliable for factor analysis.
4.2.3 Results from factor analysis (Refer to appendix B):

Table 1.2
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .858
Approx. Chi-Square 822.870
Bartlett's Test of Sphericity df 190
Sig. .000
Firstly it was assessed whether the dataset is appropriate for data analysis to be
conducted. As stated earlier Kaiser (1970) suggests a minimum value for Kaiser-
Mayer- Olkin test as 0.5. Values of 0.5-0.7 are considered as mediocre (Hutcherson
& Sofroniou, 1999) . Table 15 shows that the value for the dataset was found to be
26
0.858 which is satisfactory. Barlett’s test of sphericity similarly assures that the data
is significant. i.e (p<0.001)
Table 2.1 shows the correlation matrix generated for the dataset which shows the
Pearson’s correlation coefficient between the variables. In order to perform factor
analysis successfully, it’s essential the variables correlate but do not correlate
perfectly. The correlation co efficient values are all below 0.9 and the significance
values are all below 0.05 for the variables. The determinant value is computed to be
3.65E-10 which is ensures that the dataset is free from multicollinearity.
Table 2.2 shows the anti image matrix which contain measure of sampling
adequacy for each of the variable along the diagonal. It’s important that these values
remain well above the minimum value of 0.5. As highlighted some of the values are
below 0.5 moreover the off diagonal elements are also small, therefore proving that
the dataset is reliable and adequate enough for factor analysis to be performed.
27
Table 1.3
Total Variance Explained
Compone Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared
nt Loadings
Total % of Variance Cumulativ Total % of Variance Cumulative Total % of Cumulati
e% % Variance ve %
1 7.814 39.069 39.069 7.814 39.069 39.069 4.155 20.776 20.776
2 1.641 8.204 47.273 1.641 8.204 47.273 3.395 16.976 37.752
3 1.419 7.094 54.366 1.419 7.094 54.366 2.121 10.605 48.357
4 1.167 5.836 60.203 1.167 5.836 60.203 1.874 9.370 57.727
5 1.004 5.019 65.222 1.004 5.019 65.222 1.499 7.495 65.222
6 .996 4.982 70.204
7 .731 3.655 73.859
8 .678 3.391 77.250
9 .632 3.160 80.410
10 .590 2.952 83.362
11 .496 2.479 85.841
12 .449 2.243 88.085
13 .427 2.133 90.218
14 .403 2.016 92.234
15 .368 1.838 94.072
16 .328 1.639 95.712
17 .259 1.294 97.006
18 .233 1.163 98.169
19 .197 .987 99.156
20 .169 .844 100.000
Extraction Method: Principal Component Analysis.
The first step towards successful factor analysis is to separate out those components
or factors which have high eigenvalues. Kaiser’ criterion of extracting factors with
eigenvalues greater than 1 is used for the extraction of factors. Table 1.3 shows the
eigenvalues of the factors before extraction, after extraction and before rotation. The
first five factors have been extracted as they have eigenvalues greater than 1.
Factor 1 represents nearly 39% of the total variance and after rotation represents
20% of the total variance. Similarly, factor 2 represents 8.2% of the total variance
but represents 16.9% after rotation.
28
Table 1.4
Communalities
Initial Extraction
Q1 1.000 .686
Q2 1.000 .647
Q3 1.000 .662
Q5 1.000 .700
Q6 1.000 .452
Q7 1.000 .758
Q8 1.000 .754
Q9 1.000 .620
Q11 1.000 .656
Q12 1.000 .671
Q13 1.000 .676
Q14 1.000 .640
Q15 1.000 .571
Q16 1.000 .634
Q17 1.000 .730
Q18 1.000 .699
Q19 1.000 .587
Q20 1.000 .616
Q21 1.000 .689
Q23 1.000 .597
Extraction Method: Principal

Component Analysis.
Table 1.4 shows the communalities for the variables before and after extraction.
Principal component initially always assumes the communality to be 1.During the
first run of factor analysis several variables were discarded off whose values were
lower than 0.55 i.e Q4,Q10, Q24,Q22 and Q25. Factor analysis was again run
using the retained variables and the communality values were all found to be
above 0.55. Researchers Mac Callum, Hong & Zhang (1999) have found that the
minimum sample to size ratio depends on various aspects of the research
methodology. Therefore for samples below 100, communality above .6 is
adequate. The average communality was found to be 0.7266 which makes
29
Kaiser’s criterion for factor extraction reliable.
Figure 1
Figure 1 shows the scree plot obtained for the factor analysis of dataset 2
which shows the point of inflexion starting from factor 9. According to
Cattell (1966) factors beyond the point of inflexion are not retained.
Table 2.3 shows the reproduced correlation matrix, where the lower half
depicts the difference between the observed and reproduced correlation which
should be ideally minimal. From the data it can be observed that there are 78
(41%) non redundant residuals with values above 0.05 which is good value.
30
Table 1.5
Rotated Component Matrixa
Component
1 2 3 4 5
Q18 .755
Q23 .719
Q13 .709
Q11 .694
Q12 .628
Q20 .595 .451
Q14 .594 .530

Q6 .460
Q3 .747
Q5 .719
Q17 .679
Q15 .659
Q16 .604
Q1 .582
Q19 .490
Q8 .807
Q7 .766
Q21 .751
Q9 .661
Q2 .762
a. Rotation converged in 7 iterations.
Table 1.6
Component Transformation Matrix
Component 1 2 3 4 5
1 .663 .540 .361 .313 .204
2 -.492 .722 .124 -.444 .152

3 .068 -.429 .582 -.426 .539
4 .179 .040 -.696 -.092 .688
5 -.531 -.038 .176 .717 .414
31
Table 1.5 and 1.6 shows the results of the factor rotation which is performed
to optimize the results obtained from factor extraction. As according to
Steven (2003) factor loading less than 0.513 have not been considered for
interpretation for samples below 100. Observing the table it can been seen
that most of the questions for empathy, responsiveness and assurance have
loaded on component 1 however the highest loading is for empathy of about
0.737 followed by responsiveness of 0.527. This component is named as
“Human Skill”.
Q3, Q5,Q17, and Q16 have loaded on component 2 which are questions
related to tangibility hence the second component is named as “tangibility”.
Component 3 has questions related to reliability factor loaded the most hence
is named as “Reliability”. Component 4 has the highest loading for question
related to assurance and hence is named assurance. Component 5 has the one
question loaded for empathy which is negligible.
Taking an average of all the factor loadings, it was found that the most
important factor for citizens of UAE was assurance followed by human skill
(empathy and responsiveness) , reliability and finally tangibility.
Therefore at the conclusion of factor analysis 5 factors have been successfully
extracted which effect service quality namely assurance, responsiveness, reliability,
empathy and tangibility for dataset 2 obtained from U.A.E.
5.0 CONCLUSION:
5.1 Significance of major findings
Providing optimal customer satisfaction is the core of any marketing activity. The
main objective of the study was to compare the service quality dimensions which
customer satisfaction in banking services in United Arab Emirates with a myriad of
cultures cohabiting together. Numerous studies prove SERVQUAL to be a reliable
32
instrument to measure quality of services. The increasing competitive market and
globalization, requires banking services to be of highest quality possible. This study
contributes to the ever expanding literature on service marketing based in Asia.
Cultural bias does play an important role in the final outcome of the research as
customers from different cultures tend to have different expectations.
5.2 Discussion of major findings
In United Arab Emirates it’s been seen that customers value assurance,
responsiveness and empathy most. Jabnoun and Al Tamimi (2002) had combined
empathy and responsiveness together as one dimension called “the human skill”.
According to Hofstede (2001) Asian cultures particularly developing countries like

India and Pakistan are collectivist. Collective cultures tend to discriminate ingroups
and therefore word for mouth advertising is extremely important for banks of those
two regions. People who perceive greater service quality will tell others about their
experience which increases credibility of banks. In UAE which is a developed
country, a more relaxed culture is prevalent. Most of the bank services are easily
procured from one click of a mouse and customers don’t have to visit banks
physically for various transactions. It’s for this reason that people in UAE value
assurance and reliability the most, it’s important for them that services are carried
out swiftly and accurately.
Tangibility is the least important factor for UAE which attributed to its well
established banking infrastructure.
5.3 Limitations of study
However this study acknowledges several limitations, firstly the bias caused by just
obtaining sample from one particular nationality. Though statistical results showed
that data collected was both reliable and valid. However a larger sample size i.e. of
300 respondents would have been much appropriate for better factor analysis.
Caution is necessary therefore to generalize the outcome to an entire population.
Nevertheless the assessment of this study can help in managerial decision making,
33
helping managers to figure out which dimensions of service quality they should
concentrate on to improve service quality and according improve customer
satisfaction among consumers. The study further suggest that firms who are able to
discern which aspects of service quality to deliver the most on the basis of their
importance can generate greater customer satisfaction and ultimately customer
loyalty.
34
APPENDICES
35
APPENDIX A
Comparative study of customer satisfaction from banking services in UAE & Pakistan
This is Sarah Khurshid, an undergraduate student of Shaheed Zulfikar Ali Bhutto Institute of Science
and Technology (SZABIST), Dubai. I am pleased to inform you that you have been selected to be a
respondent to my thesis work titled as "Comparative study of customer satisfaction from
banking services in UAE & Pakistan ". I would appreciate taking your time in answering the
following questions. Your responses are voluntary and confidential. If you have any queries please
contact me on skhurshid110@gmail.com.
SECTION A
1. Gender
• Male
• Female
2. Your Age
• 18-25 years old
• 26-35 years old
• 36-45 years old
• Over 45 years old
3. Marital Status
• Married
• Unmarried
• Divorced
• Other
4. Highest educational Qualification

• Secondary
• Graduate
• Postgraduate
• Doctoral
5. Your nationality :
6. Country of Residence:
7. Name of the bank you do banking with:
If more than one then specify the one you visit frequently
SECTION B- Please select only one response using the scale below to each statement. Select
which ever you deem is the best answer.
8. You feel safe and secure in your transcations with the bank.
• Strongly Disagree
• Disagree
• Neutral
• Agree
• Strongly Agree
9. Bank implements policies which are in the consumer’s best interest.

• Disagree
36
• Neutral
• Agree
• Strongly Agree
10. Employees at the bank are neat and presentable in appearance

• Disagree
• Neutral
• Agree
• Strongly Agree
11. On the event of fraud, the bank immediately takes steps to rectify the situation.
• Disagree
• Neutral
• Agree
• Strongly Agree
12. The bank is clean and tidy with adequate lighting.

• Disagree
• Neutral
• Agree
• Strongly Agree
13. All telephonic and emailed inquiries & complaints are addressed promptly.
• Disagree
• Neutral
• Agree
• Strongly Agree
14. Employees at the bank tell you exactly when the service will be delivered.
• Disagree
• Neutral
• Agree
• Strongly Agree
15. Bank delivers its promise and provides service at the specified time.
• Disagree
• Neutral
• Agree
• Strongly Agree
16. Operating hours are convenient to all customers.
• Disagree
• Neutral
• Agree
• Strongly Agree
17. Bank safeguards customer information & privacy
37
• Disagree
• Neutral
• Agree
• Strongly Agree
18. Banks are ever ready to help and advise you when necessary.
• Disagree
• Neutral
• Agree
• Strongly Agree
19. Bank personnel engages in face to face conversations with you and gives individual
attention.
• Disagree
• Neutral
• Agree
• Strongly Agree
20. When faced with problems employees would be reassuring and sympathetic.
• Disagree
• Neutral
• Agree
• Strongly Agree
21. Employees at the bank are never too busy to respond to customer requests.
• Disagree
• Neutral
• Agree
• Strongly Agree
22. Bank usually informs its customer of any change in guidelines and regulations.
• Disagree
• Neutral
• Agree
• Strongly Agree
23. Brochures, credit cards and pamphlets presented are well designed and visually appealing.
• Disagree
• Neutral
• Agree
• Strongly Agree
24. Bank is using modern equipment and technology.

• Disagree
• Neutral
• Agree
• Strongly Agree
25. Employees understand the specific need of their customers.
38
 Strongly Disagree
 Disagree
 Neutral
 Agree
 Strongly Agree
26. Employees are warm and welcoming.

• Disagree
• Neutral
• Agree
• Strongly Agree
27. The ambiance and atmosphere of the bank is comfortable and relaxing.
• Disagree
• Neutral
• Agree
• Strongly Agree
28. You feel the bank is genuinely interested in your well- being and success.
• Disagree
• Neutral
• Agree
• Strongly Agree
29. Bank does not make you wait long to procure its services.
• Disagree
• Neutral
• Agree
• Strongly Agree
30. Bank makes an effort to help customers understand more about their finances and actively
engages them.
• Disagree
• Neutral
• Agree
• Strongly Agree
31. Bank informs you of any impending changes or deductions made to your bank account.
• Disagree
• Neutral
• Agree
• Strongly Agree
32. Bank performs its services with minimum errors as possible.
• Disagree
• Neutral
• Agree
• Strongly Agree
SECTION C- Use the scale to respond the following statements on satisfaction. Select only
one answer.
39
33. Overall the bank provides good quality services.
• Disagree
• Neutral
• Agree
• Strongly Agree
34. You forsee continued association with the bank.

• Disagree
• Neutral
• Agree
• Strongly Agree
35. You are satisfied with the level of services the bank provides.
• Disagree
• Neutral
• Agree
• Strongly Agree
36. You will recommend the bank to other people.

• Disagree
• Neutral
• Agree
• Strongly Agree
40
APPENDIX B
Table A
Gender
Frequency Percent Valid Percent Cumulative

Percent
Male 57 64.0 64.0 64.0
Valid Female 32 36.0 36.0 100.0
Total 89 100.0 100.0
Table B
Age

Percent
18-25 36 40.4 40.4 40.4
26-35 40 44.9 44.9 85.4
Valid 36-45 9 10.1 10.1 95.5
Over 45 4 4.5 4.5 100.0
Total 89 100.0 100.0
Table C
Education
Percent
Secondary 6 6.7 6.7 6.7
Graduate 39 43.8 43.8 50.6
Valid Postgraduate 40 44.9 44.9 95.5
Doctoral 4 4.5 4.5 100.0
Total 89 100.0 100.0
41
Table 2.1
42
Table 2.2
43
Table 2.3
44
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COMPARATIVE STUDY OF CUSTOMER

SATISFACTION FROM BANKING SERVCES IN

Dr. Suchi Dubey

understanding throughout the duration of my pursuit of this MBA program. Their

2.1 MEANING OF SERVICE…………………………………………………………..

2.2 DEFINITION OF SERVICE QUALITY…………………………………………

2.3 THE SERVQUAL MODEL…………………………………………………………

2.4 CRITICISM OF THE SERVQUAL

2.5 SERVICE QUALITY IN BANKS USING SERVQUAL MODEL……………….

2.6 CUSTOMER SATISFACTION……………………………………………………

CHAPTER 3: RESEARCH METHODLOGY……………………………………….

3.0 PURPOSE OF STUDY…………………………………………………………….

3.2 VARIABLES AND MEASUREMENT…………………………………………...

3.4 RESEARCH TOOL USED………………………………………………………

3.5 LIMITATIONS OF THE RESEARCH……………………………………………

CHAPTER 4: FINDINGS & DATA ANALYSIS…………………………..……….

4.1 DATASET (U.A.E)……………………………………………………………….

4.2 SAMPLE PROFILE……………………………………………………………..

4.3 RELIABILITY ANALYSIS…………………………………………………......

4.4 RESULTS FROM FACTOR ANALYSIS ……………………………………

CHAPTER 5: CONCULSION AND SUMMARY……………………………………

5.0 DISCUSSION OF MAJOR FINDINGS…………………………………………

5.1 SIGNIFICANCE AND FUTURE IMPLICATION OF THE

5.2 LIMITATIONS OF THE STUDY ……………………………….……………….

APPENDIX B- RESULT TABLES FOR SAMPLE…………………………………..

Table 1.2 KMO Bartlett’s Test

Table 1.3 Total variance explained

Figure 1 Scree Plot (SAMPLE SIZE 1)

COMPARATIVE STUDY OF CUSTOMER SATISFACTION FROM BANKING

Supervisor: Dr. Suchi Dubey

Faculty: Faculty of Management Sciences

1.1 Introduction and background:

“Quality in a service or product is not what you put into it.

In today’s world with increasing technological advancements and increased

Banks are financial institutions as well as financial intermediaries who connect

A number of notable technological advancements were introduced in retail banking.

1.2 Banking sector in United Arab Emirates

In the presence of such a highly competitive market , it is important for banks to

1.4 Significance and objectives of the study:

Considering the implications of quality of services and satisfaction of customers this

1.5 Hypothesis/ Research Question

H1: Tangibility is related to service quality of banking services in UAE

2.0: LITERATURE REVIEW:

2.1 Meaning of Service

Whereas Zeithmal & Bitner defined service as a performance & process.Modern

“anything that cannot be dropped on your foot”

Adrian Palmer(2004) in his book states that services is the production of an

Another eminent researcher further defined service as a process comprising of

Services occur because of contact between providers of services and the

2.1 Definition of Service Quality:

As stated by Reeves & Bednar (1994) , there is no uniform or universal definition to

Service quality has been defined by Robinson (1999) as

“an attitude or global judgment about the superiority of a service”.

According to Gronoos (1990) it’s the result of differences between expectations of

Service quality in banks implies consistent anticipation of customer expectations

It was believed that maintaining outstanding quality in services rendered is crucial

Standord (1994) observed quality of services to be as a vital issue in the banking

2.2 The SERVQUAL Model:

According to Gronoos (1984) quality of services comprised of two distinct aspects,

Thus taking into consideration the definition of service quality given by

i. Disparity between expectation of customers and perception of the

From the 10 dimensions, Parsuraman (1988), Zeithmal (1990) created a 22 item

1. Tangibles – Describes the physical appearance of facilities and equipment,