Critical evaluation of banking sector: Research study on UK industry services
Introduction
The year 1970s witnessed an intensification of competition in both corporate sector lending and international banking, thereby intensifying the need to build relationships with existing customers in order to maintain profitability. There was greater diversification within the banking sector as product portfolios have widened to include insurance and investment banking. The UK financial services sector has experienced an increase in the number of technologically advanced consumers who have become increasingly flexible in terms of choosing between competitive financial services’ providers. Customer expectations for increased levels of satisfactory service delivery options have risen to the extent that the financial services industry in the UK has been forced to respond with a broader and deeper set of services than at any time in its past. The exploratory study in an attempt to discover underlying areas of dissatisfaction associated with banking experience in the UK, as it relates to the implementation of new service delivery technology in the banking industry. There will be utilization of banking customers residing in the southern part of the UK. Customer groups divided by age and their opinions regarding the level of service provided by their banking institution were evaluated using survey instrument developed specifically for the present study. It is hoped that by using sample populations from various global regions, future discussions on service delivery technology may take into account the regional differences among target populations and their perspective on what constitutes good service. Literature review of recent developments in services research is provided as background information guiding the current research efforts. The methodology section provides both the sampling frame and method used to analyze the findings, as well as a discussion of the statistical analysis and findings.
Literature Review
The financial services industry is global in scale and quite diverse, encompassing the banking industry, building and loan societies, insurance and investment companies, and increasingly, firms from other fields that have set up their own financial services operations like, retail financial institutions. In addition to the diversity of institutions engaged in some aspect of commercial finance, the development of new distribution channels, particularly those that relate to e-commerce, have changed the very nature of the competitive environment among the various players within the financial services industry (Hughes, 2001). UK financial services industry has been subject to a significant degree of structural change since the early 1980s. This structural change has been associated with a number of issues that include: increasing competition, deregulation, increased diversification and merger activity, and most recently, the demutualization of segments of life assurance and building society industries (Drake, 2001). Birch and Young (1997) indicate that the financial services industry will continue to be strongly impacted by e-commerce strategies, primarily because such implementation tends to change the basic cost dimensions and the distribution structure. Nonetheless, recent empirical studies indicate that internet banking is not having an independent effect on banking profitability, although these findings may change as the use of the Internet becomes more widespread (Carlson et al., 2000). Hence service satisfaction will not merely be based on isolated service encounters and experiences but rather on the overall feelings of satisfaction. If customers are thus using channels in a complementary manner how are the banks taking account of the service experience in each channel to ensure overall satisfaction. One element of dissatisfaction could potentially harm current and potential usage of other delivery channels in the banking sector.
Gilmore (2003) acknowledge an assortment of methods used to measure and assess service quality including scales for measuring customer satisfaction and loyalty, critical incident technique, focus group discussion and in-depth interviews. Moreover, for this study it is important to note that other variables, including customer behavior, customer satisfaction and psychological factors will influence the whole banking experience.
Methodology
The data for this study will be collected in stages. Focus groups will be conducted using bank customers from the southern part of USA to generate items important to users of financial services in the USA. The items are to be considered by the number of bank customers in the UK, insure equivalence of constructs and measurements. The first group can be bank customers (ages 18-24; 35-54, over the age of 55). There identification of significant themes involved in customer evaluations of service in electronic banking as reliability, accuracy, approachability and personalization. Other variables included evaluations of ATM, telephone, and internet banking services provided. A survey will be developed for the study based on the factors within focus group interviews. Another would be the distribution of surveys to a sample of about 100 respondents, electronic banking customers from sampling area of interest in UK. Although e-banking is non-personal in nature, face-to-face administration will be used to maximize response rates and meant the researchers on hand to answer queries.
Section one: Customers’ perceptions of an ideal electronic banking service
Section two: Ranking of important attributes of an electronic banking service
Section three: Consumers’ perceptions of electronic banking performance
Section four: Customers experience in choice of using or not using electronic banking
Section five: Demographic information on respondents
References
Birch, D., Young, M.A. (1997), "Financial services and the internet – what does cyberspace mean for the financial services industry?", Internet Research: Electronic Networking Applications and Policy, Vol. 7 No.2, pp.120-8
Carlson, J., Furst, K., Lang, W., Nolle, D. (2000), “Internet banking: market development and regulatory issues”, paper presented at the Society of Government Economists Conference, Washington DC, 17 November
Drake, L. (2001), "Efficiency and productivity change in UK banking", Applied Financial Economics, Vol. 11 No.5, pp.557-71
Gilmore, A. (2003), Services Marketing and Management, Sage, London
Hughes, T. (2001), "Market orientation and the response of UK financial services companies to changes in Market conditions as a result e-commerce", International Journal of Bank Marketing, Vol. 19 No.6, pp.222-31
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