Relationship between service quality and customer satisfaction in retail banking in Kenya

Abstract

This study had the overall objective of establishing the relationship between service quality and customer satisfaction in retail banking from banking institutions perspective in Kenya. The study was carried out through a census of the entire banking industry among the commercial banks so as to get their views on perceptions on what they consider quality service and whether there was any relationship between quality of service offered by banks and customer satisfaction. Primary data was collected from the respondents through questionnaires and key informants interviews. A total of 43 questionnaires were sent and administered out of which 30 responded and 13 did not respond giving a response rate of 69.76% and a non-response rate of 30.24%.This was a credible response and adequate to get views on the banking industry to address the study objectives. Secondary data from observation, management reports and a few customers were used to verify and validate the primary data. The data collected was analyzed using content analysis to present information pertaining to the study objective. Research findings revealed that there was clear indication that happy clients will tell other potential clients about the services they get from the bank hence help recruit more members. These results were consistent with literature as pointed out by Kotler and Keller (2006) that customer satisfaction determines the success or failure of a business and customers are very sensitive to the quality of service that they receive from the service providers .The results show that they is a positive and significant relationship between quality of service and customer satisfaction similar to those observations made by Lee et al (2000), Gilbert and Veloutsou (2006), Sulieman,(2011) and Buttle (1996) who suggested that service quality leads to satisfaction. The study recommends that banks incorporate the views of the clients into the quality of service in accordance to the wants of customers and this would go a long way in satisfying them. It further recommends that the banks have to offer quality service to their customers. In doing so more customers would join and banks will realize improved business performance. Banks in Kenya have no option but to be of world class standard, committed to excellence in customers’ satisfaction and to play a major role in growing and diversifying financial sector as observed by Balachandran, (2005).The research findings therefore addressed the questions under investigation and would be practical to the banking sector as they strive to serve customers and grow their business.