EISSN 2277-4955

MARKET RESEARCH ON FACTORS AFFECTING CUSTOMER

SATISFACTION IN RETAIL BANKING IN VADODARA, GUJARAT,
WESTERN INDIA
Ankit Shah
ATL, India, [email protected]
ABSTRACT
In recent years, the banking industry around the world has been undergoing a rapid transformation. Today, banking
is regarded as a consumer-oriented services industry and banks have started realizing that their business
increasingly depends on the quality of the consumer service provided and overall satisfaction of the customer.
Relationship marketing has become the most critical aspect to corporate banking success. In addition, the deepening
of information technology has facilitated better tracking and fulfillment of commitments, multiple delivery channels
for bank customers, and faster resolution of issues. In India too, the wave of deregulation in the early 1990s has
created heightened competition and greater risks for banks and financial intermediaries. Today, customers expect
higher quality services from banks which, if fulfilled, could result in significantly improved customer satisfaction,
and potentially retention levels.
This empirical research study focuses on exploring the major factors that lead to customer satisfaction in retail
banking in India. It also leads to developing a conceptual framework of relationship marketing practices in Indian
banks by capturing the perspectives of consumers with respect to their satisfaction with various services. Data from
300 survey respondents was collected from the selected prominent retail banks in the city of Vadodara (Baroda),
Gujarat (Western India). The findings revealed that customer satisfaction, a transaction-specific attribute, is
dependent on nine different factors. It is hoped that this research paper would help the bank management not only in
improving the overall level of customer satisfaction but also strengthening the bond between the banks and their
customers, thereby helping the banks to retain and/or expand their overall customer base.

Keywords: Customer satisfaction; retail banking;

INTRODUCTION
The banking industry, as is the case with other
financial services industries, is facing a rapidly
changing market, new technologies, economic

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uncertainties, fierce competition, and more

demanding customers; and the changing environment
has presented an unprecedented set of challenges. In
India too, the cross border flows and entry of new

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players and products have forced banks to adjust the

profitability of retail banking in India. It calls for the

product-mix and undertake rapid changes in their

retention of customers for the long term, which is

processes and operations to remain competitive. Over

more economical than attracting new customers

the years, Indian banks have expanded to cover large

Reichheld and Kenny (1990). According to Oliver

geographic

the

(1997), customer satisfaction is an evaluation by the

developmental needs of their customers. They have

customer, after buying goods and services. The most

been managing a world of information about

time-honoured view of customer satisfaction in the

customers their profiles, location, etc. They have a

academic world is that customer satisfaction is the

close relationship with their customers and a good

judgement assumed out of the comparison of pre-

knowledge of their needs, requirements and cash

purchase expectations with post-purchase evaluation

positions. Though this offers them a unique

of the product or service. Achieving customer focus

advantage, they also face a fundamental problem.

requires leveraging existing customer information to

During the period of planned economic development,

gain deeper insight into the relationship a customer

it was the consumers that reached out to the banks for

has with the institution, and improving customer

their needs, i.e. the bank products were bought and

service-related processes so that the services are

not sold. What our banks, especially those in the

quick, error free and convenient for the customers.

public sector, lack is the marketing attitude. What is

Furthermore, a basic percept of marketing is that

needed is the effort on their part to improve their

customer satisfaction with a product will possibly

service image and exploit their large customer

lead to repeat purchases, acceptance of product line

information base effectively to communicate product

extensions,

and/or service availability.

advertising Cardozo (1965). In fact, customer

and

functional

area

to

meet

and

favourable

word-of-mouth

satisfaction is widely recognised as a key pressure in

Unlike in the past, the banks today are market driven

the

and market responsive. The top concern in the mind

intentions Taylor and Baker (1994). In todays highly

of every banks CEO is increasing or at least

competitive,

maintaining the market share in every line of

offering personalized and differentiating services can

business

be critical to a banks success.

against

the

backdrop

of

heightened

formation

of

consumers

increasingly

future

consolidated

purchase
world,

competition. With the entry of new players and

multiple channels, customers (both corporate and

In the current circumstances of retail banking in

India, particularly with banks becoming larger, the

retail) have become more discerning and less loyal

closure of branches and the widespread use of

to banks. This makes it imperative that banks provide

Internet banking, the question becomes whether the

best possible products and services to ensure

customers are satisfied or not and what are the

customer satisfaction.

rudiments of retail banking which lead to the

satisfaction or dissatisfaction of its customers. The

Therefore, customer satisfaction has become one of

knowledge of current levels of satisfaction and, in

the

particular the primary factors of satisfaction, is

most

significant

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factors

for

the

overall

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beneficial to those in the industry, thereby allowing

targeting their strategies and policies towards

them to focus and further strengthen the crucial areas

improving the overall satisfaction levels of their

that lead to highly satisfied customers. Previous

customers and building upon their loyalty through

results have emphasized that in-branch factors, in

improved service quality.

particular, staff cooperation and attitude, branch

location and convenience are the most noteworthy

Therefore, more and more Indian banks are now

factors that have some bearing on overall customer

trying to differentiate themselves in a fiercely

satisfaction in retail banking.

competitive industry. Not only this helps them align

their offerings to the constantly evolving customer

RATIONALE OF THE STUDY

needs and developments in technology, it also serves

The Indian banking industry has undergone a

to replace some of traditional bank functions, thereby

tremendous transformation in its operations since

reducing significant overheads associated with bank

post- independence. Liberalization, unwrapping up of

branches.

the economy in the 1990s and the governments

pronouncement to privatize banks by reduction in

The main concern of the study is to provide

state ownership have culminated in the banking

information that would help the management of the

reforms, based on the recommendations of the

banks to evaluate and re-design its current marketing

Narasimham Committee. After the entry barriers

strategies in order to improve the overall customer

were lowered and the product lines blurred between

satisfaction levels, which, in turn, can help them

banks and non-banks, banks are carrying out their

retain their existing customers and also attract new

operations under competitive pressures originating

ones in todays competitive environment. This study

from within the banking system, from non-banking

is also based on the assumption that patronage of a

financial institutions, and also from the domestic and

bank depends on the degree of customer satisfaction.

international capital markets. This has led the Indian

banking industry to sail through difficult times. The

OBJECTIVES

challenge for banks is to lower costs, increase

The primary objectives of the study can be described

efficiency, while improving the quality of their

as follows :

service, and increase customer satisfaction. Attention

has now turned to improving the quality of service

encounter, when customers enter the bank and come

into face-to-face contact with bank staff Chakravarty
(1996). With the recessionary trends being felt at
present, and in such trying times of mature and

To measure the overall levels of satisfaction

of retail banking customers.

To identify the major factors of customer

satisfaction in retail banks.

intense competitive pressures, it is very important

that banks retain a loyal base of customers. In order
to achieve this and better their market and profit
positions,

many retail

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banks

are

SCOPE OF THE STUDY

The scope of the study is as follows :

increasingly

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The study is specific only to retail banking

in India (city of Vadodara, Gujarat (Western

Thus it can be said that customer satisfaction is a

India)).

judgement by the customer after the purchase has

The

study

revolves

around

customer

satisfaction and its related factors.

taken

place.

Satisfaction

is

the

consumers

contentment response. It is a considered opinion that

either a product or service feature, or the product or
service itself, endows with a pleasurable level of

The factors studied are :

consumption-related fulfilment.

Services provided by the banks

However,

Risk and Privacy implemented by the banks

The image or personality of the banks

Banking convenience felt by the customers

Pricing policies of the banks

Charges levied by the banks

Maintenance

have

different

levels

of

satisfaction as they have different attitudes and

experiences

as

perceived

from

the

company.

Customers satisfaction is affected by the importance

placed by the customers on each of the attitudes of
the

of

customers

product/

service

in

question.

Customer

satisfaction measurement allows an organization to

understand the key drivers that create satisfaction or
dissatisfaction; and what is really driving their

relationship

with

the

satisfaction during a service experience.

customers
It is a well-researched fact that investments in
customer satisfaction, customer relationships and

LITERATURE REVIEW
Pairot (2008) defined Customers satisfaction as the
company's ability to fulfill the business, emotional,
and psychological needs of its customers. In the
words of Oliver (1981, p.27), customer satisfaction is
the summary psychological state resulting when the
emotion surrounding disconfirmed expectations is
coupled with the consumers prior feelings about the
consumption experience. Customer satisfaction has
also been defined by Hunt (1977, p.459) as an
evaluation

rendered

that

the

(consumption)

experience was at least as good as it was supposed to

be. Furthermore, Engel and Blackwell (1982, p.501)
have opined it to be an evaluation that the chosen
alternative is consistent with prior beliefs with
respect to that alternative.
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service quality leads to profitability and market share

Rust and Zahorik (1993). Put differently, customer
satisfaction leads to customer loyalty and this also
leads to profitability Hallowell (1996). If customers
are satisfied with a particular high quality service
offering after its use, then they can be expected to
engage in repeat purchase and even try line
extensions and thus market share can be improved.
Levesque and McDougall (1996) have empirically
confirmed and reinforced the notion that consistent
poor customer experience leads to a decrease in the
levels of customer satisfaction and the chances of
further willingness to recommend the service (i.e.,
word-of-mouth advertising or referrals) is lessened.
Besides, costs of customer acquisition are much

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higher than costs of retention Reichheld and Sasser

factors (Zeithaml and Bitner, (2000)). For example,

(1990).

customer satisfaction with retail banking will be a

broader concept and will certainly be influenced by

A review of the existing literature indicates that there

perceptions of service quality but will also include

can be, in all probability, a large number of

perceptions of product quality (such as variety of

antecedents of customer satisfaction as the facets

deposit options available to customers), price of the

underlying satisfaction judgements are global rather

products(i.e., charges charged by the bank or rates

than specific (Rust and Oliver (1994); and Taylor and

offered by the banks on various deposits), personal

Baker (1994)). Nevertheless, some researchers make

factors such as the consumers emotional state, and

out a case that customers tend to develop norms for

even uncontrollable situational factors such as

product performance on the basis of general product

weather conditions and experiences in conveying to

experiences and these, rather than expectations from

and from the bank.

brands

performance,

influence

the

confirmation/disconfirmation process (Cadotte et al.,

CUSTOMER SATISFACTION AND RETAIL

(1987)). There are also arguments that, over and

BANKING

above the cognitive factors, satisfaction judgements

Retail banking is a service industry focused towards

are also reliant upon affective components, given the

the customers money and its management. An

fact that both exist together and make independent

element that strongly drove the satisfaction of

contributions to the satisfaction judgements.

customers in the banking sector was the conviviality

factor related to the features of a bank and the

Previous researches have shown strong linkages

attributes of its personnel. Rust and Zahorik (1993),

between service quality dimensions and overall

Krishnan et al (1999) conducted various studies and

customer

Sullivan

put forward that satisfaction with perceived product

(1993)). Service quality is accepted as one of the

quality was the prime driver of overall customer

basic factors of customer satisfaction (Parasuraman et

satisfaction. Furthermore, their studies also found and

al., (1994)). However, there is much debate whether

recommended that the impact of service delivery

customer satisfaction is a precursor of service quality

factors varies considerably on customer satisfaction.

judgements (Parasuraman et al., (1985) and Bitner et

To further exemplify, they became aware of the fact

al., (1990)) or the other way round (Anderson and

that for customers who traded heavily and had high

Sullivan, (1993)). Definitive analysis has showed that

investable assets, the effect of an automated

service quality cannot be divorced from the concept

telephone service was elevated than that of the other

of customer satisfaction.

drivers of satisfaction.

Recent studies have shown that satisfaction is

In another research, Hallowell (1996) looked into the

influenced by not only perceptions of service quality

relationship between customer satisfaction and

but also by perceptions of product quality, and

loyalty and his conclusions were quite analogous to

pricing factors as well as situational and personal

Parasuraman et al., (1994). The study concluded that

satisfaction

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(Anderson

and

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satisfaction with the service, and satisfactions with

competitiveness of the banks interest rates, the

price were key elements in the overall satisfaction

customers judgements about the bank employees

measurement. The measurements used in the above

skills and whether the customer was a borrower, were

mentioned study were reasonably all-inclusive, and

among a few other factors that drove customer

concluded that all the elements measured had a

satisfaction.

bearing on overall satisfaction. The findings of the

study emphasized that the service features of branch,

Reichheld and Sasser (1990) have recognised the

staff and information were dominant factors.

benefits that customer satisfaction provides by the

retention of bank customers. They advocated that the

Johnston (1997) promoted the notion that banks, in

longer a customer stays with a bank, the more utility

general, were to all intents and purposes, barking up

the customer generates. This is based on a number of

the wrong tree by enhancing service quality and

factors that relate to the amount of time a customer

these efforts in turn had little or no effect on

spends with a bank. These included a high

improving

study

preliminary cost of introducing and attracting a new

(Johnston, (1997)) suggested that satisfaction or

customer, increase in both the value and amount of

dissatisfaction with retail banking did not arise from

purchases, the customers better understanding of the

the same factors. To be more precise, some elements

bank, and positive word-of-mouth promotion. A

of service quality, if improved, enhance the

study conducted by Bolemer and Kasper (1995)

satisfaction levels of the customers, while on the

researched how satisfaction, image and perceived

other hand, other elements may not improve

service quality determined customer loyalty in a retail

satisfaction

bank.

customer

but

satisfaction.

simply

function

The

to

keep

dissatisfaction at bay or at best, reduce dissatisfaction

alone. This line of accepted wisdom stems from the

METHODOLOGY

hygiene factors of Herzbergs motivation theory.

Measures Used
The major aspiration of the study was to identify the

Levesque

and

McDougall

(1996)

exhaustively

factors that affect the levels of customer satisfaction

explored the consequences of service quality service

in retail banking. The measures used in the study

features and customer complaint handling on

were adopted from previous literature dealing with

customer satisfaction in the Canadian retail banking

service quality and customer satisfaction (Blanchard

sector. Based on their empirical analysis, they have

and Galloway (1994) and Shil and Das (2008)).

suggested that the determinants of satisfaction in

retail banking are driven by a number of factors and

SAMPLE AND SAMPLE SIZE

also included service quality dimensions. The service

The selected respondents represented a balanced mix

providers offering can also be expected to affect

of various demographic factors (age, gender, marital

customer satisfaction (overall) and have a strong

status, education levels, employment status and

bearing

study

income groups). Also, it has been suggested that a

concluded that the banks feature (e.g. location), the

study designed to reveal factor structure should have

upon

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on-going

patronage.

The

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more observations than variables and the minimum

consultation with experts and pilot tests was also

absolute sample size should be 50 observations. For

performed.

this study, a total of 300 respondents were randomly

provided the questionnaire from among those visiting

A 5-point interval Likert scale to examine how

the bank branches. The questionnaire was self-

strongly respondents agree (5) (Very Satisfied) or

administered by the researcher.

disagree (1) (Very dissatisfied) with statements that

measure variables in the hypotheses of this research

DATA COLLECTION

was used. Existing established measures were

For the current study, the responses were gathered

modified and adopted for this study (Churchill,

from the customers of prominent retail banks of

1979). Finally, validity and reliability tests of the

India. The banks were randomly selected for the

measures from the survey questionnaire were

study. The study was conducted in Vadodara

conducted to obtain reliable data that can be analysed

(Baroda), a metropolis and well-known as the second

properly to reveal meaningful findings.

capital of Gujarat, and is stipulated in the western

region of India with a large number of diverse

DISCUSSION DEMOGRAPHIC PROFILE

population.

The questionnaire included a segment on customers

profile, as an assortment of demographic and other

A one-off cross-sectional quantitative research

factors were likely to influence the degree of

methodology has been adopted for this study. A

customer satisfaction with respect to the products and

survey questionnaire to measure the relationships

services offered by the bank. The demographic

between the variables of this study and demographic

profile of the customers can be seen in Table 1.

characteristics of the respondents was designed. In

order to gain objective views and guard against faulty
assumptions and defect flaws in the questionnaire,

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TABLE 1 : DEMOGRAPHIC PROFILE OF CUSTOMERS
S. No.
1.
2.

4.

Demographics

Frequency

Percentage

153

51

Female

147

49

Age (years): <20

45

15

21 -30

135

45

31-40

75

25

41 - 50

36

12

Above 50

Marital Status : Married

138

46

Unmarried

153

51

Others

Education Levels :

99

33

Graduation

171

57

Post-graduation

30

10

Self-Employment

12

Wage-Employment

87

29

Professionals

114

38

Students

63

21

24

Monthly Income in

60

20

Indian Rs.<10,000

99

33

114

38

27

300

100

Gender: Male

Others
5.

Employment Status :

Others
6.

10,001 15,000
15,001 20,000
Above 20,000
Total

As can be seen from Table 1, the respondents had a

respondents were unmarried (51%), while 46% were

relatively equal balance of males (51%) and females

married.

(49%). The sample customers were mostly in the age

postgraduates (57%) and Graduates (33%). This

group of 21-30 years (45%). It is also evident from

implies that the respondents had high literacy levels.

the table that 15% of the respondents were

As far as occupation is concerned, the respondents

youngsters (below 20 years). More than half of the

were a mix of students (21%), self-employed (4%),

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The

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were

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wage employed (29%), professionals (38%) and

20% of the respondents had income of less than

others (8%). The table further indicated that the

Indian Rs. 10,000 while 9% of the respondents

majority of the respondents were earning between

earned more than Indian Rs. 20,000.

Indian Rs.10,000 to 20,000 (71%) per month. Around

OVER ALL SATISFACTION OF THE RESPONDENTS
TABLE 2: OVERALL SATISFACTION LEVELS
Satisfaction Levels

Frequency

Percentage

Very Dissatisfied

19

6.33

Fairly Dissatisfied

41

13.66

Neither Satisfied Nor Dissatisfied

27

9.00

Fairly Satisfied

131

43.66

Very Satisfied

82

27.33

Total

300

100

Majority of the respondents have indicated that they

respondents reported low levels of satisfaction. When

were satisfied (70%) with the services of their bank,

this

as shown in table 2. From the total responses for this

generalized with the total number of customers of the

section, 82 or 27.33 % of the respondents revealed

banks, this will be quite a sizeable number and a

that they were very satisfied with the bank. Around

cause of concern for the banks. To sum up, the data

131 or 43.66% of the respondents showed that they

suggests that most respondents have a positive

were fairly satisfied with the bank. Conversely, it can

attitude and are satisfied with the services of the

also be seen that about approximately 20% of the

banks.

FACTOR ANALYSIS RESULTS

analysis. The 32 variables were reduced to nine

The raw data was factor analysed using SPSS 17.0

principal components through varimax rotation

(Green et al., 2000) to summarize the 32 variables

(Table 2).

percentage

of

dissatisfied

customers

is

into smaller sets of linear composites that preserved

most of the information in the original data set. The

According to the analysis, nine factors with

data was subjected to principal component analysis, a

eigenvalues greater than 1.0 were obtained and these

method categorized under the broad area of factor

accounted for 69.778% of the total variance.

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TABLE 3 : RESULTS OF FACTOR ANALYSIS ON THE 32 ITEMS AND ITS NINE DIMENSIONS
Sr. No.

Factor and Items

Eigenv

Factor

Variance

Cumulat

alue

Loadings

(%)

ive
Varianc
e (%)

1.

TraditionalBankingServices (Cronbach Alpha =

3.781

11.815

11.815

11.331

23.146

10.346

33.492

9.350

42.842

6.825

49.667

0.797)
You are satisfied with the skill and competency of the

0.793

employees
The behaviour of the employees instils confidence in

0.703

you

2.

Each branch has sufficient number of employees

0.668

The bank has convenient timings

0.665

InternetBankingServices (Cronbach Alpha = 0.779)

3.626

Internet Banking(IB) is compatible with my banking

0.718

needs

3.

IB is easy to use

0.706

IB is compatible with my lifestyle

0.700

Using IB is a sign of modernity

0.692

My friends are using IB

0.691

BankImagePositioning (Cronbach Alpha = 0.686)

3.311

The bank has clear objectives to satisfy customers

0.617

The brand (image of the bank) is appealing to you

0.601

Mission and vision statement of the bank rightly

0.502

defines its commitment towards customers

4.

CustomerConvenience (Cronbach Alpha = 0.747)

2.992

The location of the ATMs is convenient to you

0.780

The number of branches of the bank is enough

0.749

The location of the branch of the bank is convenient

0.656

The bank provides ATMs at several prominent

0.653

locations
The general ambience and comfort level at the bank

0.576

is satisfactory
5.

RiskPrivacyInInternetBanking (Cronbach Alpha =

2.184

0.720)

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I am concerned about the security of Internet

0.621

Banking(IB) services

6.

I dont trust IB services

0.601

I am concerned about the privacy of IB services

0.565

I prefer personal and face to face banking

0.563

BankCharges (Cronbach Alpha = 0.553)

1.694

The charges that the bank collects from you are

5.293

54.960

5.109

60.069

4.878

64.947

4.831

69.778

0.485

perfectly justified and in line with RBI Guidelines

The charges that the bank collects from you are

0.649

reasonable when compared with other banks

7.

BankPricePolicy (Cronbach Alpha =0.669)

1.635

The bank has a number of categories to charge its

0.694

customers or to impose penalties

The interest rate offered by the bank on various

0.573

deposits is competitive enough

The rate of interest charged on the loans is

0.516

satisfactory
8.

BankCRM (Cronbach Alpha = 0.598)

1.561

It takes a long time to resolve your problems

0.821

You usually have to stand in a long queue in the bank

0.692

for any transaction

The products and services offered by the bank are

0.661

satisfactory
You wish to continue with the bank, as you are

0.512

satisfied with it
As a customer, when you have a problem, you get

0.510

proper response from the concerned employee

9.

BankParkingFacility (Cronbach Alpha = 1.000)

1.546

Parking space available is sufficient

0.727

The factors derived represent the different elements

employees, their confidence instilling behaviour,

of retail banking, which form the underlying factors

number of employees in each branch, convenient

from the original 32 scale response items given.

timings of the bank.

Referring to Table 3, factor 1 represents the elements

of the services provided by the bank and is therefore

The second factor affecting Internet banking adoption

labelled

These

refers to the Internet Banking Services and is labelled

elements are the skill and competency of the

as Internet Banking Services. The most prominent

as

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TraditionalBankingServices.

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and vital characteristic for any adoption of new

Featherman and Pavlou (2002), perceived risk in the

service or product, is generating awareness among

field of e-banking can be defined as: "the potential

the customers about that specific service or product.

for loss in the pursuit of a desired outcome of using

Hence, if the consumers of Vadodara are not

e-banking services". As Kamel and Hassan (2003)

adopting Internet banking, it may be because they are

put it, Perception of high risk associated with

not aware about such a service being available and

performing financial transactions over the Internet

the added value that it offers.

may actually hinder Internet banking adoption.

Factor 3 has all the statements related to the overall

Factor 6 relates to the reasonability of the charges

image of the bank as perceived by the customers and

collected by the bank when compared to other banks

therefore

Image

and also levied as per RBI (Reserve Bank of India)

Positioning. The elements were the vision and

Guidelines. Its also important to consider the

mission statement of the bank, its clear cut objectives

number of categories to charge the customers or

to satisfy its customers, and the brand (image) of the

impose penalties. Hence, this factor was labelled as

bank.

Bank Charges.

Factor 4 revolves around the convenience and

Factor 7, consisted of the pricing policies of the bank

comforts that a customer should get from a retail

and has been labelled as Bank Price Policy. The

bank

has

been

termed

as

Bank

as

Customer

elements factored were : the interest rates charged on

were

convenient

loans, the interest rates offered by the bank on

locations of the ATMs, provision of the ATMs at

various deposits, and the number of categories to

several prominent locations, the number of branches

charge the customers or impose penalties.

and

thus

Convenience.

The

was

termed

elements

provided, convenient location of the branches being

used, and the general ambience and comfort level at

Factor 8 was a summation of the elements that give

the bank.

rise to a healthy relationship with the customers and

was termed BankCRM. The elements involved

Risk and Privacy Concerns is another important

were : average time taken to resolve a problem,

factor and is labelled as Risk Privacy in Internet

queuing in branch, the products and services offered

Banking (factor 5). The element of trust in this

by the bank, and the customers decision to continue

context would relate to the overall security of online

with the concerned bank if satisfied.

transactions and determine the acceptability rate of

this alternative delivery channel in the long run.

Finally, factor 9 consisted of the availability of

According to Report and Jaworski (2004), Security

sufficient parking space and was aptly termed Bank

is the ability of a system to prevent illegal or

ParkingFacility.

inappropriate use of its data and to deter cybercriminals and hackers. Using the Internet as medium
for transaction always entails some risks. As per

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TABLE 4: KMO AND BARTLETTS TEST
KMO Measure of Sampling Adequacy

0.764

Bartletts Test of Sphericity

Approx. Chi-Square

749.112

Degree of freedom

231.00

Significance

0.000

In this study, the researcher had also applied pre-

null hypothesis (H0) as the population correlation

analysis testing for suitability of the entire sample for

matrix of the measures is an identity matrix). Hence,

factor analysis. As shown in Table - 4, The Kaiser-

the null hypothesis was rejected as the variables were

Meyer-Olkin (KMO) measure of sampling adequacy

correlated with each other.

was 0.764 and the Bartletts test of sphericity

749.112, significant at p<0.001. Thus, it indicated

As from Table 3 above, nine factors with eigen-

that the sample was suitable for factor analytic

values greater than 1.0 were obtained and these

procedures (Hair et al., 2006). Moreover, as the chi-

accounted for 69.778 % of the total variance. In order

square ( ) test statistic is 749.112 (p-value = 0.000),

to establish the internal consistency, Cronbachs

the study identified that there was extremely low

alpha was calculated for all the nine factors : 0.797,

probability of obtaining this result (a value greater

0.779, 0.686, 0.747, 0.720, 0.553, 0.669, 0.598, 1.000

than or equal to the obtained value) if the null

respectively (Cronbach (1951)) (Table 5).

hypothesis (H0) was true. (The study assumed the

TABLE 5 : INTERNAL CONSISTENCY OF THE CONSTRUCTS / FACTORS
Constructs

Cronbach

TraditionalBankingServices

0.797

InternetBankingServices

0.779

BankImagePositioning

0.686

CustomerConvenience

0.747

RiskPrivacyInInternetBanking

0.720

BankCharges

0.553

BankPricePolicy

0.669

BankCRM

0.598

BankParkingFacility

1.000

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banks to identify the factors of customer satisfaction

CONCLUSION
A major contribution of this study is the provision of
an approach for managers to identify the factors of
customer satisfaction in retail banking sector in India.
Although the satisfaction levels are on the higher
side, there still remains a lot to be done by the
management of the retail banks in order to maximize
their customers satisfaction and improve the overall
retention rates. As discussed in the previous sections
of this study, the satisfaction of the customers with
services of the Indian retail banks is linked with the
overall performance of the banks (Jham (2005)).

and future intentions towards them. The approach has

integrated constructs or items beyond the service
quality to capture the sphere of influence of major
factors that drive customer satisfaction. Also, the
study has endowed insights and implications for bank
management,

thus

enabling

them

to

develop

strategies to improve customer satisfaction and

consequently, retention rates.

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