Aidin Jodat dissertation: Examining Service Quality Dimensions Amongst Malaysian Banking Consumers: An Empirical Case Study on CIMB Bank

1. Examining Service Quality Dimensions
Amongst Malaysian Banking Consumers: An
Empirical Case Study on CIMB Bank.

2. By
Aidin Jodat Jo
Associated Professor
Dr. Abdul Rahman
Center for Postgraduate Studies and Professional Development
Limkokwing University of Creative Technology
October 2013

3. Importance of this study
• The present research intends to test whether the bank
customers are happy with the services provided to them, which
will eventually lead to customer satisfaction. Malaysian CIMB
Bank has been chosen for this research due to its services for
customers.
• The importance of Quality in service is particularly for the
development and growing of service sector business enterprise
(Powell, 1995). It functions as an originator of customer's
satisfaction (Ruyter and Bloemer, 1995).
• Nowadays, with growing significance of service sector in the
business, the measurement of service quality became valuable.
• By providing high quality services banking businesses can
differentiate themselves from their competitors. In fact, better
structural performances have caused to implement a better
variety of events, and let the banking business to become more
competitive (Angur et al., 1999).

4. Previous studies
• Based on observations on other studies, the correlation of
service quality in banking system and customer satisfaction are
limited, but also some other studies on bank branches
productivity do not explain on the changing role of bank
branches (Portela & Thanassolis, 2006).
• Service quality and customer satisfaction are of greatest
consequence in observing the functioning of bank
branches, since their existence rely on their service quality
levels they provide (Portela & Thanassolis, 2006).
• Customer satisfaction is the main achievement Good
service, which is also the main goal of
business, (Ehigie, 2006).
• quality services can provide clear marketing advantage for
banks since value-added levels of service quality are
associated to higher revenue, higher customer holding, higher
selling ratios, and increased market share (Bennett &
Higgins, 1993) (Bowen & Hedges, 1993).

5. Purpose of this study
• The present paper, which is a case study, is about
theoretical framework purposes to examine the
significance of service quality into the customer
satisfaction.
• 5 factors will be examined in this research of service
quality, which are:
• Tangibles
• Reliability
• Responsiveness
• Assurance
• Empathy

6. Problem statement (What is the problem?)
• The previous studies are analyzing the perception on service quality
dimensions in other banks or other countries. There is no exclusive study
on the impact of perception on customer's satisfaction under different
demographic profile. Hence, a research models have been generated to
fill up the research gap.
• Examining service quality dimensions amongst Malaysian banks and
specially CIMB bank of Malaysia is new area on which has been limited
studies before, and should be added to previous researches about the
service quality and customer satisfaction in order to complete the results
of previous studies.
• CIMB bank of Malaysia has been selected for this study to investigate its
service qualities and its impact on customer satisfaction due to previous
advises of other related researches and studies.
• Lack of superior customer service strategy forced businesses to review
their strategies, because of increased quality standards of living, enlarged
competitions in businesses and highly educated consumers.
• CIMB bank in Malaysia is competing with local banks and also with
foreign banks to enlarge their market share in banking in Malaysia.
• Maintaining customer satisfaction is costly and market competition is
strong.

7. Tangible
Responsiveness
Reliability
Empathy
Assurance
Customer Satisfaction
H1
H3
H2
H4
H5
This study followed the theoretical model that has been modified with
Agus et al. (2007) and Caruana (2002) leading the examination of
customer satisfaction on CIMB bank in Malaysia, five dimensions of
service quality will be examined in this research which are:
tangibles, reliability, responsiveness, assurance and empathy
Conceptual framework

8. Hypotheses
• H1.Tangibles has a positive and significant effect on
customer satisfaction.
• H2.Reliability has a positive and significant effect on
customer satisfaction.
• H3. Responsiveness has a positive and significant effect
on customer satisfaction.
• H4. Empathy has a positive and significant effect on
customer satisfaction.
• H5. Assurance has a positive and significant effect on
customer satisfaction.

9. Objectives of this study
• Is to find out the relationships between service quality
dimensions
(tangibles, reliability, assurance, responsiveness, empathy
) and customer satisfaction in the CIMB bank of
Malaysia.
• To identify service quality dimensions and to find the
strengths and weaknesses of CIMB Bank and its services
in Malaysia.
• To study the most important dimensions of Quality
services offered by CIMB Bank systems that affect the
satisfaction level of customers in Malaysia.
• To provide recommendation to Bank Managers to
improve CIMB bank.

10. How this study can help Industry, managers and customers
• As a manager of banking industry, it is relevant that all the
components in a service quality be strictly respected and
employed efficiently. Managers should not only focus on the
bank’s objective of profits and gains, but must also look into
the customer’s expectations. Furthermore, the Manager should
recommend widespread customer relations preparation
programs for all the frontlines and bankers.
• Managers from CIMB banks should continuously measure and
improve the level of customer satisfaction in order to maintain
competitive in the market place.
• Managers and decision makers of CIMB bank, need to pursue
and increase the essentials of service quality that make the
most significant assistances on customer satisfaction.
• Managers should examine customer’s reactions to the five
dimensions of service quality used in this study.

11. Literature review
Service quality
• Service quality defined as the degree of discrepancy between
customers’ normative expectation for service and their
sensitivities of service performance (Parasuraman et al., 1985).
The definition of service quality was further developed as “the
overall evaluation of a specific service firm that results from
comparing that firm’s performance with the customer’ s
general expectations of how firms in that industry should
perform (Parasuraman et al, 1988).
• The result of the comparison maintains that customers’
expectations about a service and their perception of the way
the service has been performed are connected (Lehtinen &
Lehtinen, 1982; Lewis & Booms, 1983, Gronroos, 1984;
Parasuraman et al., 1985; 1988; Caruana, 2002).

12. Literature review
Customer satisfaction
• Customer satisfaction was the customers' evaluation of
services after purchase as opposed to their expectation
(Oliver, 1997; Zeithaml and Bitner, 2000).
• Satisfaction became a popular topic in marketing during the
1980s and was debated topic during both business expansions
and recessions. Most discussions on customer satisfaction
involved customer expectation (Shemwell,1998).
• Oliver (1997) defined satisfaction as “the consumer’s
fulfillment response”, a post consumption judgment by the
consumer that a service provided a pleasing level of
consumption-related fulfillment, including under or over-
fulfillment.

13. Literature review
Customer satisfaction and service quality in banking industry
• Perceived service quality and satisfaction model developed by
Spreng and Mackoy (1996). This model is suitable to find the
construct of service quality and customer satisfaction. Perceived
service quality and satisfaction model is the modification model of
service quality and service satisfaction model (Oliver, 1993).
• Sweeney et al. (1997) established retail service quality and perceived
value model for measuring service quality and related factors in retail
business. They proposed two models related with value perception of
the customers.
• Zhu et al. (2002) proposed service quality model for IT related
business. They Claimed that IT-based services have a direct impact
on the reliability, responsiveness and assurance dimensions and an
indirect impact on customer satisfaction and perceived service quality
IT can help service providers achieve higher level of customer
satisfaction. One important model to measure service quality of
electronic business called Model of e-service quality (Santos, 2003).

14. • Philip and Hazlett (1997) developed PCP attribute model.
There are three important attribute of this model named:
(1) the service environment peripheral attributes
(2) core attribute
(3) pivotal attributes.
• An important characteristic of this model is it’s suitability
to measure in any field of service. Another necessary
characteristic of PCP attribute model is it identifies the
weak area of the service and where the service providers
need to improve.

15. • The study on “Consumer Satisfaction: A Study of bank
Customer retention in New Zealand.” By Cohen et al
(2006), showing positive grades by the respondents as
reasons that would influence their decision to stay with or
leave their current banks. The most important hypothesis
was customer satisfaction, followed by business image
and switching obstacles. Results of this analysis shown
that as the age of customers increases, so too does the
propensity to stay with their current banks.
Moreover, respondents with higher education are most
probable to switch banks possibly because highly
educated consumers tend to have greater opportunities of
services. Gender and income appear not to have
significant association with the respondent’s intention to
stay with or leave their service providers.

16. Methodology
• In this section, sample and data collection will be
discussing, procedures and operational measures of
variables used in the study as well as the statistical tests
will be using to evaluate the hypothesis.
• An empirical research method has been decided for the
study. The service quality model has grown much
significance over the last three decades to measure
general service standard of the companies. Several
scholars have accompanied research related to
SERVQUAL model.

17. Research Design
The methodology trying to obtain information about
customer satisfaction in banking via a survey conducted at a
sample of the general consumer population. The survey
questionnaire is distributed to target respondent randomly.
Targeted respondents are the general public who are at the
legal age to hold a Savings and/or Current Account in any
of the CIMB banks in Malaysia.

18. Data Collection
In order to produce a realistic outcome for the research, the
collation of data has to be distributed over a large
population. Therefore, the survey questionnaires are
designed to apply to a varied population, where targeted
respondents come from the general open public (from
difference genders, races, age, marital
status, education, monthly salary and type of organization
they are working). Due to the fact that different levels of the
people have different expectations and
requirements, thus, the idea of selecting respondents from
different levels will most positively generate a more reliable
outcome concerning Service Quality by CIMB bank.

19. Questionnaire Design
The questions are designed with multiple-choice selections
for convenience. Respondents required the to rate the
satisfaction level of the CIMB bank involved with into a
five pre-defined level scale – 1-“Strongly Disagree”, 2-
“Disagree”, 3-“Neutral”, 4-“Agree” and 5-“Strongly
Agree”. The purpose is to collect the feelings of the
respondents in respond to the importance of SERVQUAL in
chosen a CIMB bank.
All data collected are fed into the Statistical Package for the
Social Sciences (SPSS) for analysis. It is imperative that all
information collated is strictly for the Term Paper research
purpose only.

20. Population and Sampling
To collect enough data to test hypotheses, a survey will be
conducted to collect data from sample. Around 200
questionnaires will be distributed randomly to customers of
CIMB bank branches. Equal numbers of customers will be
asked to fill the questionnaire for each chosen branch.
Subjects were asked to assess their perceptions of various
items representing service quality and customer satisfaction.

21. Data Analysis and Results
Reliability Analysis
• The Cronbach α values for the five dimensions ranged
from 0.788 to 0.850.
• These results are based on 168 respondents from 200
forms.

22. Correlation Analysis
• Correlation analysis was conducted to measure the
strength of the linear relationship between the
independent variables and the dependent variables.

23. Correlation Analysis Results of the Tangibles Dimension
• The analysis of the bivariate correlation between the
tangibles dimension and the customer satisfaction
variables reveal all positive figures.
• The reveal that Tangible is positively correlated to
customer satisfaction (r = 0.767). These correlation
coefficients suggest a moderate and positive linear
relationship which is highly significant at p < 0.0001.

24. Correlation Analysis Results of the Reliability
Dimension
• The analysis of the bivariate correlation between the
reliability dimension and the customer satisfaction
variables reveal all positive figures. The results reveal
that efficiency is positively correlated to customer
satisfaction (r = 0. 640). This correlation coefficient
suggests a moderate and positive linear relationship
which is highly significant at p < 0.0001.

25. Correlation Analysis Results of the Responsiveness
Dimension
• The analysis of the bivariate correlation between the
responsiveness dimension and the customer satisfaction
variables reveal all positive figures. The results reveal
that efficiency is positively correlated to customer
satisfaction (r = 0. 764). This correlation coefficient
suggests a moderate and positive linear relationship
which is highly significant at p < 0.0001.

26. Correlation analysis Results of the Assurance Dimension
• The analysis of the bivariate correlation between the
assurance dimension and the customer satisfaction
variables reveal all positive figures. The reveal that
efficiency is positively correlated to customer satisfaction
(r = 0. 716). This correlation coefficient suggests a strong
and positive linear relationship which is highly significant
at p < 0.0001.

27. Correlation analysis Results of the Empathy Dimension
• The analysis of the bivariate correlation between the
empathy dimension and the customer satisfaction
variables reveal all positive figures. The results reveal
that efficiency is positively correlated to customer
satisfaction (r = 0. 764). This correlation coefficient
suggests a moderate and positive linear relationship
which is highly significant at p < 0.0001.

28. Linear Regression Analysis
The Relationship between Tangibles and Customer
Satisfaction
• The regression model shows that the R-square is 0.585
with an F value of 236.783 and a significance level of p <
0.0001. It can be summarized that 58.5 percent of the
variance in the customer satisfaction has been
significantly explained by the fulfillment dimension.
There is less than 0.0001 percent chance of this not
holding true. In summary, the regression analysis
concludes that the tangibles measure predicts customer
satisfaction.

29. The Relationship between Reliability and Customer
Satisfaction
• The regression model shows that the R-square is 0.406
with an F value of 115.119 and a significance level of p <
0.0001. It can be summarized that 40.6 percent of the
variance in the customer satisfaction has been
significantly explained by the fulfillment dimension.
There is less than 0.0001 percent chance of this not
holding true. In summary, the regression analysis
concludes that the reliability measure predicts customer
satisfaction.

30. The Relationship between Responsiveness and
Customer Satisfaction
• The regression model shows that the R-square is 0.582
with an F value of 233.089 and a significance level of p <
0.0001. It can be summarized that 58.2 percent of the
variance in the customer satisfaction has been
significantly explained by the fulfillment dimension.
There is less than 0.0001 percent chance of this not
holding true. In summary, the regression analysis
concludes that the responsiveness measure predicts
customer satisfaction.

31. The Relationship between Assurance and Customer
Satisfaction
• The regression model shows that the R-square is 0.512
with an F value of 174.170 and a significance level of p <
0.0001. It can be summarized that 51.2 percent of the
variance in the customer satisfaction has been
significantly explained by the fulfillment dimension.
There is less than 0.0001 percent chance of this not
holding true. In summary, the regression analysis
concludes that the tangibles measure predicts customer
satisfaction.

32. The Relationship between Empathy and Customer
Satisfaction
• The regression model shows that the R-square is 0.570
with an F value of 222.762 and a significance level of p <
0.0001. It can be summarized that 57.0 percent of the
variance in the customer satisfaction has been
significantly explained by the fulfillment dimension.
There is less than 0.0001 percent chance of this not
holding true. In summary, the regression analysis
concludes that the empathy measure predicts customer
satisfaction.

33. Demographic characteristics of the Respondents
• Table above shows the sex distribution of the respondents the
researcher’s questionnaires, which indicate that male
respondents were 104 (61.9%), while female respondent were
64 (38.1%). This implies that there are more male respondents
than female respondents.

34. Character Respondents Based on Age
• Results the characteristics of respondent age 18 to 29 years old are as many as 24
(14.3%) people. Respondents with 30 to 39 years old are as many as 54 (32.1%)
people.
• Respondents with age of 40 to 49 years old are as many as 51 (30.4%) people.
• Respondents with age of 50 to 59 years old are as many as 30 (17.9%) people.
• And age of respondents 60 years old are and over as many as 9 (5.4 %) people.
• So it can be concluded that the characteristics of respondents by age dominated
by respondents aged 30 to 39 years and 40 to 49 years old following it very
closely.

35. Character Respondents Based on Education Level
There are 2 (1.2 %) of respondents have certificate.
Respondents with secondary diploma are 14 (8.3 %) customers. Respondents with
higher secondary education are 38 (22.6%).
Bachelor Degree holders are the largest group of respondents comprising 71 (42.3%)
of the respondents.
Holders of master respondents are 34 (20.2 %). There are 9 (5.4 %) of respondents
has chosen PhD or Others education level.

36. Character Respondents Based on Income
The number of monthly income RM 1000 and below is 19 (11.3%)
respondents.
The number of monthly income from RM 1001 to 2000 is 58 (34.5%)
respondents.
The number of monthly income from RM 2001 to 3000 is 58 (34.5), and
RM3001 to 4000 is 23 (13.7%) respondents.
There are only 10 (6 %) respondents who have an income more than RM
4000 in one month.
From the table we can find that the respondents who have a monthly
income of RM1001 to 2000 and RM 2001 to 3000 are the largest group.

37. Character Respondents Based on Occupation
In the research, 31 (18.5%) of respondents worked as self-
employer. There are 63 (37.5%) customers who are private
sector. About 43 (25.6%) of respondents work on public
sector. And also have 31 (18.5%) respondents who are
chose others answer. This table implied that the largest
groups are private sector in this research.

38. Results Analysis
Hypothesis 1
Results show evidence those customers satisfaction are
positive and significantly affected by tangibles. Tangibles
appear contributing variable towards satisfaction level (r =
0.767, R2 = 0.585, F = 236.783). This hypotheses is
supported and accepted as it has confirms that there is
positive correlation between tangibles and customer
satisfaction. Agus (2007) found that tangibles are important
factor related to customer satisfaction.

39. Results Analysis
Hypothesis 2
Examines the impact of reliability towards customer
satisfaction. Result infers that reliability has positive and
significantly impact on customer satisfaction (r = 0.640, R2
= 0.406, F = 115.119). This hypothesis is supported and
accepted, as there is a positive association between
reliability and customer satisfaction. Gelade (2005) and
Jamal (2003) also found that reliability was positively
related to the use of banking.

40. Results Analysis
Hypothesis 3
Customer satisfaction is positive and significant influenced
by the assurance (r = 0.716, R2 = 0.509, F = 174.170).
Thus, the hypothesis is supported and accepted. This
finding implied that, assurance has the positive and
significant relationship with customer satisfaction. Chang
(2007) found that there is a positive and significant
relationship between assurance and customer satisfaction.

41. Results Analysis
Hypothesis 4
Results shows that customer satisfactions were found have
positive and significant impact on the responsiveness
perception (r = 0.674, R2 = 0.582, F = 233.089). This
hypothesis is supported and accepted. Festus (2006) found
that responsiveness was positively related to customer
satisfaction on customers using banks.

42. Results Analysis
Hypothesis 5
Customer satisfaction is positively and significantly
influenced by empathy. Empathy is the predictor of
customer satisfaction (r = 0.757, R2 = 0.570, F = 222.762).
As a result, hypothesis 5 is thus supported and accepted.
The study of Ladhari (2009) also found that empathy is
positively related to customer satisfaction. Kumar et al.
(2010) supported this relationship as well.

43. Summaries of Hypotheses Testing

44. Conclusion
• The highest correlation is between Tangible and customer
satisfaction (r= 0.585; p<0.01),
• Followed by between Assurance and customer
satisfaction (r= 0.582; p<0.01),
• After that between empathy and customer satisfaction (r=
0.570; p<0.01),
• And between responsiveness and customer satisfaction
(r= 0.509; p<0.01),
• The weakest association is between Reliability and
customer satisfaction (r= 0.406; p<0.01).

45. 1. Tangible:
Tangible was found to have a significant relationship with
customer satisfaction. Referring to the definition of
Tangible by Parasuraman et al. 1988; “physical facilities,
equipment and staff appearance”. The appearance of the
Bank depends on the bank display, which was the
“arranging” in this respect. An attractive presentation that
makes the bank suitable for customers to move around and
get the things they need, can make them happy;
furthermore, the highest percentage given as reason for
satisfaction came from “Tangibility”.

46. 2. Assurance:
The findings show a significant relationship between
assurance and customer satisfaction and in-line with
previous research including Ndubisi (2006), et al.
maintaining the interaction is clearly a strong indicator of
overall satisfaction and important source of customer
satisfaction in the Malaysia CIMB bank.
If the staffs are not well informed and considered, or they
suffer from lack of knowledge, they would not be able to
transfer information to the bank customers.

47. 3. Empathy:
Empathy has significant positive relationship with customer
satisfaction. This indication is supported by the conclusions by
Ndubisi (2006), Butcher (2001) and Ehigie (2006).
As recommended by Butcher (2001), friendship between
customers and particular service employees has a major influence
on the development of customer satisfaction.
This is aligned with the findings of this research that empathy has
positive impact on customer satisfaction.
Welcoming staff is very necessary and important because if the
customers are not well treated, or if customers have any
damaging feelings about the staff, there is a possibility that they
will not come back next time and they will swap the Bank.

48. 4. Responsiveness:
Results from hypotheses testing also demonstrate that
responsiveness found to have positive relationship with
customer satisfaction. This is in connection with Glaveli et
al. (2006) who underlined the promptness of service
delivery enhanced perception of service quality while
Joseph et al. (2005) indicated that “no waiting time”
increased customers’ satisfaction level.

49. 5. Reliability:
Moreover, There is a significant and positive relationship
between reliability and customer satisfaction.
Reliability had a significant relationship with service quality and
customer satisfaction at CIMB bank.
Referring to the Parasuraman et al., 1988, definition of reliability
“the ability to perform the promised service dependably and
accurately”, then to the characteristics that were relieved for
reliability in the several service sectors; “time conscious staff and
accurate service and less queue ” for CIMB Bank.
This could explain why reliability according to this research has
significantly related to customer satisfaction for CIMB Bank.
This finding proves that customers see reliability as a obligatory
characteristic to choosing their Banking.

50. MANAGERIAL IMPLICATIONS AND
RECOMMENDATIONS OF SERVICEQUALITY
This study can help bank managers in managing customer
satisfaction. It is obvious that assurance and empathy
primarily motivates customer satisfaction and bank staffs
(especially frontline staffs) have a serious impact on the
most interesting service dimension when targeting
customers.

51. The importance of this research for managerial
decision-making processes
• Banks managers are looking to improve their customers’
satisfaction levels in their strength to increase
profitability, maintain rates and magnetize new customers
• They may be able to make advantage by the information
about the effect of individual dimensions of service
quality on customer satisfaction,
• Bank managers should focus on high quality services, and
improve service quality efficiently.

52. The main expectations refer to the following study:
1) The willingness of the staff to help customers
(responsiveness).
2) The genuine interest in providing solution when customers
have a problem (reliability).
3) The ability of the Bank to deliver what it promises (reliability).
4) The ability of the Bank to provide its services at the time it
promised to do so (reliability).
5) The behavior of the employees, which convey confidence to
customers (assurance).
6) The feeling of safety during the visit of customers in the Bank
(assurance).
7) The ability of employees to provide prompt service
(responsiveness).

53. Other expectations :
1) The well-ordered appearance of the staff (tangibles).
2) The feeling of safety during the visit of customers in the
Bank (assurance).
3) The willingness of the staffs to help customers
(responsiveness).
4) The honest interest of the staff to provide clarifications
when customers have a problem (reliability).
5) The ability of the Bank to perform service right at the
first time (reliability).
6) The dependable kind behavior of the staff towards
customers (assurance).
7) The visual appeal of the Bank’s physical facilities
(tangibles).

54. The research findings suggest that service quality, referring
to a customer’s judgment about a bank’s superiority, should
be regarded as a source of competitive advantage in the
CIMB bank, as it establishes the main driver of customer
satisfaction.
Service quality can be perceived as a competitive
advantage, because in difference to service range that can
easily be simulated, the service quality dimensions are more
difficult to imitate and may represent a maintainable
advantage.
While improving service quality is undoubtedly a
challenging task for bank managers to take on, it is well
worth the trouble, since it can bring great benefits to the
banks in the short and long run.

55. LIMITATIONS OF THE STUDY
• The lack of attentiveness of respondents may affect the results.
• This study did not take into account the possible differences in
customers’ culture.
• The sample in this study will be distributed in small numbers
and it will be limited to customers living in Kuala Lumpur
city, but not the whole Malaysia.
• Respondents will answer to the questionnaire, according to
customers of CIMB bank of Malaysia, and the expectations
may vary from other CIMB Banks of other countries.
• The study did not include all potential dimensions of service
quality that affect customer satisfaction towards CIMB Bank.

56. Future Research
It is recommended for further researches to :
• Extend the study
• Develop the scope of this research
• The model should be improved by searching for
additional dimensions
• Adding CIMB banks of other countries to the research
• Study other Malaysian banks and compare the results
with current or previous results
in order to get more accurate results from service quality
and customer satisfaction and to improved and following
that, managers would be able to have stronger and clearer
perspective of service quality and customer satisfaction
about CIMB Bank.

57. Thank you for your attention