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Customer Satisfaction on Core Banking and Service Quality in CBE (A case study of
Leghar Branch)
Student's Name
Institutional Affiliation
Professor
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Abstract
Since technological advancements have increased the importance of the banking
sector in the economy, we can no longer consider a banking system's success without
considering its reliance on information and communication technology (ICT) since It's now
easier than ever to conduct financial transactions and make payments swiftly. Competitive
financial markets favour banks with the most up-to-date technology and processes, allowing
them to produce more and more revenue, resulting in increased profitability. CBE (Ledger
branch) are still lagging because they offer poor customer service on the core banking system
and service quality. Additionally, this study will focus on the problem statement and propose
ways to improve the problem in my case study. To get enough data on both quantity and
quality, I employed sampling techniques and a plan that included stratified sampling,
interviews and questionnaires. Random sampling was used to choose clients from each bank's
many customer groups (strata) based on their account types, such as current account holder,
savings account holder, and one-time customer. To that end, I want to create a series of
surveys in which I solicit input from bank personnel in questions and possible solutions.
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Introduction
The business environment has grown more competitive and tough than ever. Most
businesses re-engineer their products and processes to satisfy globalization's demands and
improve service quality while remaining competitive. Customer service is important in all
industries and has a major impact on an organization's long-term success (Dawit & Adem,
2018). Corporations are rethinking their collaboration strategies in light of internet-related
technology breakthroughs. Due to the intangible nature of services, it has been difficult to
demonstrate a correlation between customer contentment and various service characteristics
across diverse industries. Due to the intangibility of services, CBE (Ledger branch) has been
struggling to ascertain how customers perceive and evaluate the desired outcome of service
excellence. CBE (the Ledher branch) has consistently trailed behind other banks regarding
customer satisfaction and service quality, leaving many people dissatisfied. As a result, this
study evaluates the relationship between the quality of CBE's service and client satisfaction
(Ledher branch) and attempt to ascertain the root cause of the problem that hangs over
excellent service and propose realistic remedies to the discovered issues.
Statement of the problem
The CBE (Ledher branch) is experiencing significant difficulties due to growing
competition. As a result, several strategies have been developed to retain clients, and
improving service quality has been identified as a major success factor. In banking, service
quality is vital because it ensures a high level of client satisfaction, a critical competitive
advantage in the market (Abebe, 2014). Service quality is currently attracting much attention
due to its direct correlation to expenses, financial performance, customer satisfaction, and
customer loyalty. Numerous industry leaders are regarded as having extremely exceptional
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customer service, as customer happiness is also contingent on the quality of the service
provided. Apart from higher income, they've retained a sizable portion of their customer base.
Network outages and system interruptions have harmed most banks in Ethiopia,
particularly the ledger branch, forcing consumers to wait for extended periods on the bank's
premises. Only a few studies on customer satisfaction and service quality have been
conducted in the banking industry, although several studies on service quality and customer
satisfaction have been conducted. Taye (2016) discovered that CBE has various challenges,
particularly in service quality, and he recommended in his article that additional research be
conducted in this area to extend the scope of the issues confronting CBE. As a result, the
investigator sought to ascertain whether or not CBE clients were satisfied with the service
they received (ledher branch).
Literature review
Customer service and service quality
According to Tesfaye (2015), customer satisfaction is the customer’s assessment of
the outcome of an evaluation process in which the service or commodity is delivered
compared to the customer’s expectations. Service quality is established as a result of a longterm analysis of performance and a customer’s overall opinion of the service. Customer
satisfaction and service excellence are inextricably linked. While some believe customer,
pleasure is intrinsically tied to perceived service quality, others believe service quality is
intrinsically linked to customer contentment (Shewabe, 2018). When it comes to establishing
quality in a customer-centred strategy, client preferences are important. Service quality can
be defined as the amount to which a business meets or exceeds its customers’ expectations
and can be viewed as a comprehensive customer review of a specific service and the extent to
which it does so. Consumer dissatisfaction is created by a perceived discrepancy between
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expectations and actual performance; customer contentment, on the other hand, is caused by
an actual discrepancy (Embiale, 2016). According to Abebe (2014), management must
compare their company’s performance to that of its consumers and other companies in the
same industry to conduct a thorough appraisal
Service quality
Service quality is necessary for success in today's highly competitive corporate
environment. Service quality is critical to a business's capacity to compete. Since there is no
guarantee that a bank's excellent service will continue to be appropriate in the future, banks
should constantly try to improve their service. As a result, banks must devise novel tactics to
retain their clients' loyalty and maintain a competitive edge (Dawit & Adem, 2018). The
quality of its customer service primarily determines a company's capacity to differentiate
itself from its competitors. Service quality is critical for businesses because it gives
enterprises that strive to improve their service quality and boost customer happiness a
competitive edge. There are no commonly accepted criteria for measuring and evaluating
customer service quality. According to Embiale (2016), individual's definition is unique,
moulded by their own life experiences. Academics, practitioners, and the services marketing
literature have placed a premium on customers' overall perceptions of a service's quality.
According to Shewabe (2018), businesses would give better service by establishing service
quality. Therefore, it is important to realize the service's intangibility, heterogeneity, and
inseparability to comprehend its quality since this would simplify the process of determining
the quality of service offered.
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Methodology
Sources of Data and Type
The study's objective was qualitative, and thus the research was conducted
qualitatively. I decided to use a qualitative methodology to get first-hand information from
the bank's employees—some of the methods that I used during the research include;
questionnaires and interviews.
Primary Data Source
Questionnaire
Structured questionnaires were prepared in English and translated into Amharic to
collect primary data. The questionnaires are divided into the following sections: The survey's
initial component elicited information about respondents' personal lives. The survey's second
component assesses consumer satisfaction with the bank's service performance. The third and
final sections of the questioner's query focused on the quality of service and customer
satisfaction.
Key informant interview
The study used key informant interviews. I identified several bank employees who
had first-hand knowledge about the bank, its relation with customers, and the quality of
services they offer. This helped me get first-hand information from the bank, and I was able
to lay down strategies that might help the bank foster a positive relationship with customers.
Method of data collection
The questionnaire was used as the major data-gathering strategy to accomplish the
study's aims. Customers of branch banks who responded to the study were contacted and
handed the questionnaire while obtaining service at a particular branch. The questionnaires
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featured closed-ended questions to make them more understandable to respondents. This
variable was quantified using a Likert scale with five response alternatives. It's self-evident
that I am on the wrong side of this debate.
Procedure of Data Collection
This investigation incorporated both primary and secondary data. Secondary data
analysis involved a comprehensive review of pertinent literature and the administration of a
survey questionnaire, which served as the major data collection method for this study.
Following that, a survey questionnaire was created and distributed to randomly selected CBE
(Ledger branch) consumers. After the data has been acquired, it must be examined using
statistical procedures. The survey findings were analyzed and visualized using SPSS.
Ethical considerations
Permission was obtained from clients because the data was gathered via a
questionnaire and then used by the researchers. Respondents were instructed not to include
their names on the questionnaire and were assured that their responses would be kept
confidential and used purely for academic purposes. The introduction questionnaire parts
were designed to persuade people to engage and provide important information about their
firm of interest, allowing the researchers to make educated study decisions. Finally,
participants were included in the study only if they volunteered. Other writers' writings cited
in this study included a reference page outlining the sources from which they drew their
information.
Findings
Regarding service quality measurements, certain items such as carefulness and
politeness have a high frequency and mean value. As indicated by these statistics, most bank
clients were dissatisfied with these characteristics. Customer satisfaction with the aesthetic
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appeal, greeting, and appearance of facilities and staff was lower in this dimension (Hailu &
Belachew, 2016). Among the reliability dimension items, maintaining accurate customer
records has the highest frequency and mean score, followed by the lowest scorers' items such
as delivering service on time and advising the branch of any problems in advance. The
majority of customers expressed dissatisfaction with their purchases in this area. Most
responsiveness elements have high mean and frequency values, indicating that a portion of
the client base is satisfied with the service (Shewabe, 2018). Employees are prompt,
courteous, and capable of maintaining a safe atmosphere for consumers, all of which
contribute to a pleasant customer experience. While customers may be satisfied with certain
aspects of responsiveness, this does not mean they are satisfied with all of them.
Discussion
Factors affecting service quality and satisfaction in the bank
According to Taye (2016), the product, presentation, atmosphere, and time period all
have an effect. Additionally, departments responsible for manufacturing the product, such as
those responsible for raw materials, can achieve a certain level of quality by adhering to a set
of service quality measures and a monitoring system. According to Shewabe (2018), the
bank's internal and external environments can also affect it. When analyzing Leghar’s branch
appearance, variables such as equipment (heating, air conditioning), cleanliness, employee
apparel, customer service, and timeliness of service were not in the premises hence that gave
employees of the bank a hard time in managing the banks operations. Once interviewee
emphasized the point that clients dislike waiting for extended periods of time. He continued
by stating that there are two types of customers: those with high expectations and those who
do not. If the bank is located in a business neighbourhood, customers will be more
demanding. Customers' expectations will be lower if the bank is isolated without access to
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other financial institutions (Taye, 2016). Regardless of the physical environment (cleanliness,
air conditioning, and seating arrangement), the time of the transaction or the employee dress
code, the customer's relationship with the CSR is critical.
Another interviewee outlined that both categories (quality and happiness) are influenced by
external factors such as brand or company image and customer experience. “Customers may
be satisfied or dissatisfied with us, but we can easily gauge the loyalty effect if we constantly
give a great experience (Hailu & Belachew, 2016: p.45).” Additionally, these categories are
influenced by customer service, service performance, speed, and cleanliness, as well as the
physical environment and surroundings, according to the fourth respondent (such as
temperature, drinks, sweets, etc.). All of these variables are significantly influenced by
service provider conduct in particular. According to Tesfaye (2015), price, availability, client
comprehension, and the environment in which services are provided are significant.
Managing the workforce
According to the first respondent, service quality will suffer if underperforming and
not managed effectively. The second interviewee emphasized the necessity of finding a
career that fulfills them. Unsatisfied employees are incapable of operating at their full
potential or demonstrating any commitment to the assignment. Job satisfaction cannot be
achieved until policies are in place to ensure that the work is performed to a high standard
(Shewabe, 2018). Job rotation plans were offered as a way to avoid these types of events by
rotating or relocating staff. He continued by stating that motivating aspects can be used to
manage personnel efficiently. Managers must constantly cultivate and enhance their
employees' interests in order to keep them engaged. According to the third interviewee,
establishing service standards is insufficient to improve quality standards through staff
oversight. "I assume that personnel should arrive on time; I assume they dress appropriately
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and act appropriately," he remarked. There is no need to inform them of this." All that
matters are coaching and comments.
The fourth interviewee stressed the need of dealing with and managed one's people
efficiently. Without its people, the company would be nothing. The best aspect is that if they
have a favourable view of the firm, they will deliver excellent service. "As a manager," she
continued, "I make it a point to listen carefully to my employees' issues and challenges." I'll
always be available to assist them if they require assistance." She underlined the critical
nature of listening to employees to ascertain the true nature of the issue. How you handle
them has a lot riding on it. Successful personnel management is crucial for a business to
maintain high-quality standards, but it also comes at a cost (Abebe, 2014). According to her,
the value of labour management extends beyond simply increasing service quality. According
to this expert, quality is not the most critical component in employee performance. She asked
businesses to consider other priorities before investing in this.
Problem improvement strategy
Promote Financial Literacy Through Customer Education
Consumers may contact in-branch financial advisors who can guide them through
various scenarios, including purchasing a first home or planning for retirement, and online
instructional tools via their mobile banking app (Abebe, 2014). Financial literacy courses can
be produced with the assistance of community organizations and credit unions by
collaborating on educational seminars with schools and universities. This third item benefits
both younger generations and banks by enabling them to make more informed financial
decisions and engage with potential clients in the future. Customers continue to appreciate
face-to-face interaction, and firms must seize every opportunity to connect with them in this
manner (Embiale, 2016). The bank’s customer service can be enhanced by implementing a
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financial literacy program that acts as an excellent introduction for people who are unfamiliar
with the concept.
Make Contextual Data a Core Component of Your Customer Service Strategy
Contextual data, which comprises more information, provides context for a person or
event. CBE (Ledher branch) may leverage contextual data to identify trends and correlations
in consumer behaviour, which they can subsequently leverage to enhance the customer
experience. As illustrated by the banking industry, a bank's customer service can be enhanced
by leveraging contextual data to provide goods and services tailored to the unique demands of
each individual customer (Tesfaye, 2015).
Provide Customers with Self-Service Opportunities
According to Taye (2016), 74% of customers have already used a self-service help
site, and an additional 81% have attempted to resolve issues without contacting a live service
professional. Despite their obvious benefits, the financial services industry has lagged behind
other industries in adopting self-service capabilities and best practices. As a result, banks
miss out on significant opportunities to minimize call centre congestion, provide 24-hour
service, and enhance the banking client experience (Hailu & Belachew, 2016) Banks and
credit unions are not ignoring the benefits of mobile banking in an age when consumers are
almost fully reliant on their mobile phones.
Conclusion
In today's world, providing superior customer service is a winning strategy. By
delivering superior customer service, a business can obtain a competitive edge in the
industry. Businesses adopt a range of strategies to suit their customers' expectations, and they
are constantly striving to enhance their quality standards to ensure smooth service delivery.
Customers' worth and pleasure can be effectively judged only when organizations understand
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how quality influences customer happiness, its role, and the associated expenses. This
findings indicate that consumer expectations and perceptions of service quality are influenced
by consumer demands and word of mouth, resulting in overall satisfaction or dissatisfaction
with the service. While word of mouth might influence a customer's perception and
expectations of service, a customer's need drives the purchase. Businesses are attempting to
close gaps between management, employees, and customers to better align their performance
systems. By efficiently coordinating activities, conducting research, and arranging the
workforce, it is possible to close the gap in service quality management. Additionally,
database analysis, general customer mapping, and capacity planning are required to stay
current with market movements.
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References
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Satisfaction in Commercial Bank of Ethiopia (A case of Bishofftu Branch). ABC
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Dawit, J. B., & Adem, U. (2018). The Effect of Perceived Service Quality on Customer
Satisfaction in Private Commercial Banks of Ethiopia: The Case of Selected Private
Commercial Banks at Dire Dawa Administration. Business and Economics
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Embiale, Y. (2016). The effect of automatic teller machine service quality on customer
satisfaction: the case of commercial bank of Ethiopia in hawassa city. Journal of
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Hailu, S., & Belachew, M. (2016). Core Banking System Implementation Framework: the
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Shewabe, Y. (2018). Assessing the effect of core banking on service quality and customer
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district (Doctoral dissertation, St. Mary's University).
Taye, E. (2016). Core Banking System Effectiveness in Ehiopia: The Case of Buna
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Tesfaye, B. (2015). The Impact of Service Quality on Customer Satisfaction the Case of
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