Int. J. Services and Operations Management, Vol. 10, No.

2, 2011 199

Customers’ perception and attitude towards service

quality in multinational banks in India

Arpita Khare
Department of Management,
LDC Institute of Technical Studies,
9, J.L. Nehru Road, George Town, Allahabad, India
E-mail: [email protected]

Abstract: The research attempts to understand the Indian customers’

perceptions towards the service quality of multinational banks. There have been
several studies to understand the service quality in the banking sector. With
liberalisation policies initiated by the Indian Government, the multinational
banks have been making investments in the country. To be successful in the
country, they would have to understand the expectations of the Indian
customers. The study tries to extend the existing SERVQUAL dimensions used
by previous researches and adopts it in Indian context. The SERVQUAL model
was adopted and modified for the research. Through a survey administered on
Indian customers (n = 198), and their perceptions about service quality was
identified. ANOVA, post-hoc analysis and, multiple regression tests were used
to analyse the data. The results show that Indian customers’ quality perceptions
differ between the two genders and across age categories. The multinational
banks can use the results for planning their expansion and marketing strategies
in Indian subcontinent.

Keywords: service quality; multinational banks; service expectation; personal

interaction; Indian customers; India.

Reference to this paper should be made as follows: Khare, A. (2011)

‘Customers’ perception and attitude towards service quality in multinational
banks in India’, Int. J. Services and Operations Management, Vol. 10, No. 2,
pp.199–215.

Biographical notes: Arpita Khare is currently an Associate Professor in LDC

Institute of Technical Studies, Allahabad, India. She received her MBA in
Marketing and DPhil in International Management from University of
Allahabad. Her research interests span over consumer behaviour, retailing,
services marketing and supply chain management. She has authored quite a few
research papers in international and national journals.

1 Introduction

Liberalisation trends in the emerging economies have led the banking sector devise
marketing strategies to accommodate the changing needs of their customers’ (Krishnan
et al., 1999). The Indian industry has witnessed sweeping reforms in the banking and
financial sector in the last decade. The first banks in India were established by the British
East India Company in the first half of the 19th century – the Bank of Bengal in 1809, the

Copyright © 2011 Inderscience Enterprises Ltd.

200 A. Khare

Bank of Bombay in 1840 and the Bank of Madras in 1843. Later, these banks were
amalgamated to a new bank called Imperial Bank which was renamed as the State Bank
of India in 1955. In 1969, 14 major banks were nationalised and in 1980, six major
private sector banks were taken over by the government (Indiaonline, 2009). In recent
years, the Central Bank of India (RBI) initiated a number of liberalisation measures to
encourage commercial banks to move towards market driven system (Kumbhakar and
Sarkar, 2003). The banking sector reforms have focused on customer-satisfaction,
asset-liability management, investments, training of human resource and use of
technology to make banking convenient (Bedi, 2010). These reforms had a positive
impact on the banking sector. The highly regulated market pre-deregulation had stifled
the growth of the public sector banks, and they had become inefficient and were losing
productivity (Kumar and Gulati, 2009). The earlier banking system crippled the
operations of banking sector and made it incompetent (Mohan, 2007). Kumar and Gulati
(2009) state: “In order to impart more vitality and autonomy to banks in their operations,
the policy makers successfully adopted the route of partial privatisation of public sector
banks, interest rate deregulation, relaxing entry norms for domestic private and foreign
banks, and removal of ‘financial repression’ through reduction in statutory
pre-emptions”. There have been consistent efforts by the government to improve the
banking structure and allow more autonomy to the public sector banks (Roland, 2008).
Liberalisation policies pursued by the government have made it easy for multinational
banks to make investments into Indian banking industry. The multinational banks with
their advanced technologies and superior service portfolios have revolutionarised the
banking services. The Indian banks with their inefficient services are faced with the
challenge to improve their facilities. Indian Banking Sector Forecast (2009) posits that
the Indian banking industry is well poised as compared to their banking industries in the
western countries which have been affected by the financial crisis. The strong economic
growth, low defaulter ratio, absence of complex financial products, regular intervention
by central bank and, proactive adjustment of monetary policy provided the right mix for
investments in Indian banking sector. The multinational banks are eyeing the Indian
banking sector as it promises steady growth and opportunity to serve Indian customers
with better product/service portfolios. The predominant factors which have been
responsible for steady growth are strong economic cycle. The foreign and private banks
have grown at 50%, while public sector banks have improved their growth rate to 15%.
The share of the private sector banks has increased by 35% and that of foreign banks
increased to 20% of total sector assets (McKinsey, 2010).
Increasing competition and variety in banking services have acted as a catalyst for the
growing inclination of Indian customers towards multinational banks (Moody’s Banking
Sector Report, 2008; Business Wire, 2009). The key focus of banking sector reforms was
on technology upgradation and improvement of human resource (Bhaumik and
Mukherjee, 2001). The competition presented by private and multinational banks forced
the public sector banks to adopt aggressive strategies, increase their presence in rural
India and expand their customer base (Sureshchandar et al., 2003; Reddy, 2007; Bedi,
2010). They are focusing on innovative marketing strategies like cross selling, packaged
selling of retail products, and technology based banking (Business Wire, 2009;
McKinsey, 2010).
Banks that provide good quality service to their customers definitely would be able to
increase their profits and revenues by being paid in terms of customer retention (Bennett
and Higgins, 1988) and loyalty. The difference in the perception of the customer related
 Customers’ perception and attitude towards service quality 201

to the quality of the services provided by different banks is dependent upon customers’
perceptual construct and their earlier experiences with the banks. To be able to serve
customers, it becomes imperative for banks to combine promptness with convenience,
and mixing technology with human element. The research adapted the SERVQUAL scale
to understand the customers’ perceptions and attitude regarding service quality of
multinational banks in India. The results would enable multinational banks to define their
strategies for capturing Indian market according to customers’ perspective.

2 Literature review

Research states quality is defined from the users’ perspective wherein goods and services
exceed the customers’ expectations (Parasuraman et al., 1985; Gronroos, 1990; Zeithaml
et al., 1990). Parasuraman et al. (1985) posit that customers’ perception regarding service
quality depends upon the gap that exists between what the customers expect and what
they receive in the service. It becomes imperative for companies to understand the
expectation levels of the customers, and design service delivery according to their
expectations. Delivering a service according to customer expectations and superior
quality of service enhances the competitive advantage of a business (Ranganathan and
Ganapathy, 2002) and helps in retaining customers (Zhu and Lin, 2010).
Quality is a cognitive evaluation of the service (Cronin and Taylor, 1992) and is
supposed to measure the ‘gap’ in the service delivery (Asubonteg et al., 1996). The
intangible nature of services adds to the complexity in understanding services (Cowell,
1984; Wolak, et al., 1998). The pursuance of service quality improves customers’ trust in
the service provider and influences their intentions to use the service (Shamdasani et al.,
2008).
Service quality comprises of functional and technical components (Gronroos, 1990).
The functional component combines the behaviour of the service personnel, the speed at
which the service is delivered, and the competency of the staff. The technical aspects
relate to the outcome of the service. The SERVQUAL model encompasses five perceived
service quality attributes: tangibles, reliability, responsiveness, assurance and empathy
(Parasuraman et al., 1988). It focuses on the delivery process but does not take into
account the behavioural aspects (Baker and Lamb, 1993; Richard and Allaway, 1993).
Research suggests multiple dimensions for understanding service quality. It
encompasses physical, interactive and corporate quality (Lehtinen and Lehtinen, 1982),
service delivery processes (Berry et al., 1985), customer-employee interactions (Rust and
Oliver, 1994) and ‘how’ the service was performed (Swartz and Brown, 1989).
Customers’ evaluate service as poor if it does not meet their expectations (Oliver, 1980).
As service quality increases, the customer satisfaction also increases (Asubonteg et al.,
1996; Gilmore, 1997; Kandampully, 1997; Colgate and Stewart, 1998; Durvasula et al.,
1999) and this would affect their attitude about the service.
Dabholkar et al. (1996) in their research on retail service quality proposed that
perceptions of service quality are multilayered and comprise of overall customers’
perception of quality (physical attributes, reliability, personal interaction, problem
solving, and policy), and subdimension (appearance, convenience). The presence of these
elements improves the assessment towards the service. Research suggests that
SERVQUAL model cannot be applied for all service research studies and modifications
202 A. Khare

have been proposed according to the differences in the nature of services (Parasuraman et
al., 1988; Carman, 1990; Gronroos, 1990; Babakus and Mangold, 1992; Stafford, 1996;
Bahia and Nantel, 2000; Aldlaigan and Buttle, 2002). The SERVQUAL model is said to
measure the service delivery and not the outcomes (Buttle, 1996; Genestre and Herbig,
1996) and does not include all the marketing mix elements and only focuses on the
product/service dimensions (Gilmore and Carson, 1992). In spite of limitations cited
about SERVQUAL model, it have been extensively used to measure service quality of
financial services (Bahia and Nantel, 2000; Lassar et al., 2000; Cui et al., 2003; Duff,
2004; Guo et al., 2008).
Schmenner (1986) postulate retail banking as a mass service, which requires low
service interaction and customisation. The intangible nature of services entails making
the service ‘responsive to customers’ needs’ and ‘being friendly and warm’. The
intangible and tangible aspects are integral aspect of bank service quality (Schmenner,
1986). The service classification in the mass service includes: tangibility (physical
facilities, equipment, and appearance of the service staff), responsiveness, knowledge
(possessing necessary skills and competence of employees), accessibility (readily
available, operating hours, customisation) and, reliability (Schmenner, 1986, 2004). The
technical and functional service quality involves the way the service is delivered (Richard
and Allaway, 1993; Powpaka, 1996; Arora and Stoner, 1996; Brady and Cronin, 2001;
Kang, 2006) and is an essential part of service ingredient. Thus, service quality has both
marketing and operations orientations (Olorunniwo and Hsu, 2006). The behaviour of the
employees and their ability to target the customers’ specific needs are critical elements of
the service quality operations and marketing attributes (Schmenner, 2004; Olorunniwo
and Hsu, 2006). Ba and Johansson (2008) suggest the use of technology to improve
service delivery and consequently customer satisfaction. The increased use of technology
in services has affected the quality of operations and productivity of the companies
(Heim and Field 2007; Cho and Menor, 2010).
In their research on bank service quality, Bahia and Nantel (2000) proposed the
banking service quality scale. In banking perceived service quality results due to the gap
between the expectation and the actual service delivered. The original SERVQUAL scale
consisted of most of the marketing mix elements; however, ‘promotion’ and ‘price’
elements were absent (Bahia and Nantel, 2000). The BSQ scale developed by them
comprises of 31 items: effectiveness and assurance, access, price, tangibles, service
portfolio, and reliability. They suggest that service quality in banking implies consistently
anticipating and satisfying the needs and expectations of customers. Thus, service quality
is determined by the customers’ perceptions and should encompass fulfilling these
expectations (Lewis, 1989; Howcroft, 1991; Kathawala and Elmuti, 1991; Blanched and
Galloway, 1994; Chen, 2009).
Lassar et al. (2000) considered two aspects important for understanding bank service
quality. Though SERVQUAL was important for evaluating quality, however, they
included functional/technical aspects of bank services. In the similar vein, Aldlaigan and
Buttle (2002) posit that bank service quality attributes comprise of system quality,
behavioural quality, transactional accuracy, and machine efficiency and service quality.
There have been several studies to study bank service quality (Cronin and Taylor, 1992;
Kwan and Lee, 1994; Blanched and Galloway, 1994; Johnston, 1997; Jun et al., 1999;
Natarajan et al., 1999; Lassar et al., 2000; Bahia and Nantel, 2002; Herington and
Weaven, 2007; Kumar et al., 2009; Chen, 2009) which have employed and modified the
SERVQUAL scale. Guo et al. (2008) in their research on Chinese banking industry,
 Customers’ perception and attitude towards service quality 203

found that service quality was measured by two higher-order constructs, which were
related to functional quality and technical quality; and four lower-order dimensions
which were reliability, human capital, technology and communication.
Sureshchandar et al. (2001) identified five service quality elements like core
service/product, human element, non-human element, servicescape, and social
responsibility. In their research on service quality in private, public and foreign banks in
India, Sureshchandar et al. (2003) found that customers’ perceptions are affected by the
technological aspects of service delivery. The technological attributes were considered as
the core attribute of banking service and human elements were given less importance in
evaluating the service. They suggest that systematisation and technological factors
affected customers’ choice for banks. In a recent study on public and private banks in
India, Bedi (2010) found that service quality was an important contributor of customer
satisfaction towards public and private banks. She also found that customers’ satisfaction
with the bank service was strongly related with their recommending its services to others.
There are multiple factors affecting customers’ attitudes and perceptions regarding
service quality in banks. Cronin and Taylor (1992) contend that performance based
approach (SERVPERF) is more appropriate for assessing service quality in banks,
however, Angur et al. (1999) after using their model in Indian banking sector found it
inappropriate. Their findings suggest SERVQUAL as more appropriate for measuring
banking service quality. Cui et al. (2003) in their research on Korean banking sector posit
that SERVQUAL and SERVPERF are multidimensional and cannot be considered as
absolute measures of quality. The purpose of the research was to understand customers’
attitude towards multinational bank services in India.
The research objective was to examine the following hypotheses:
H1 Service quality attributes would show a positive relationship amongst themselves.
H2 There will be difference between the two genders regarding the attitude towards
service quality attributes of multinational banks in India.
H3 There will be difference between the different age groups of customers regarding
their attitude towards service quality attributes of multinational banks in India.
H4 The attitude towards the quality of multinational banks would be determined by the
demographic factors like age, education and gender of the customers.
Since multinational banks are in the process of opening branches in different parts of
India, the study attempts to understand the principle factors governing customers’
attitudes and perceptions towards banking services offered by these banks.

3 Research methodology

3.1 Instrument design

The research was directed towards understanding customers’ perceptions towards
multinational banks operating in India. The SERVQUAL model was adapted with some
modification for the study. The instrument was designed keeping into consideration the
Indian banking sector. Earlier research on banking industry was consulted for instrument
design. Attributes like convenience (Berry et al., 2002), personal interaction (Dabholkar
204 A. Khare

et al., 1996), assurance and access (Bahia and Nantel, 2002) and, competence (Kumar et
al., 2009) were considered important in defining bank service quality. The total items for
the scale were segregated under five service quality attributes: four items for tangibles,
five items for reliability, eight items for competence, six items for personal interaction,
and two items for convenience. The SERVQUAL scale developed by Parasuraman et al.,
(1985), and Kumar et al. (2009) were adapted and the personal interaction and
competence attributes (Dabholkar et al., 1996; Bahia and Nantel, 2002) were modified
according to Indian banking scenario.

3.2 Sample
Random sampling technique was used for data collection. Customers visiting the five
major banks in two cities in Northern India (Allahabad and Ghaziabad) were contacted
on Monday and Tuesday during bank working hours in the months of October 2009 to
February 2010. The Banks selected were ICICI, HDFC (Private Banks), State Bank of
India, Union Bank, and Punjab National Bank (Public sector banks). The sample size for
each city was kept as 150 each. Since the purpose was to understand customers’
perception towards service quality of multinational banks, the sample was not kept of
people having accounts with these banks. Thus, only customers visiting public and
private banks in India were contacted. The questionnaires were administered in English
and the responses of the customers was taken on a five-point Likert scale with responses
varying on the scale of 1 for strongly agree and 5 for strongly disagree. The total data
collected was 198 (103 and 95 from Allahabad and Ghaziabad respectively). The
demographic composition of the sample is shown in the Table 1.
Table 1 Demographics of the respondents

Variable Frequency Percentage

Age
20–30 years 12 6.1
30–40 years 40 20.2
40–50 years 24 12.1
50–above years 122 61.6
Gender
Males 111 56.1
Females 87 43.9
Education
Senior secondary 16 8.1
Graduation 73 36.9
Post graduation 109 55.1
Total 198 100
 Customers’ perception and attitude towards service quality 205

Table 2 The reliability coefficients of the five service quality attribute

Quality attributes Chronbach alpha (α)

Tangible .881
The bank has modern looking equipment
It has appealing physical facilities
The appearance of bank staff is neat
Materials associated with the service are visually appealing
Reliability .862
The bank staff keeps the promises
The bank shows a sincere interest in solving customers’ problems
The staff performs service right the first time
Provide services at the time they promise to do so.
The bank insists on error free records
Competence .897
Staff has the right information about exactly when services will be
performed
The service of the bank is on time and very prompt
The bank staff shows willingness to cooperate and help customers
To any queries the staff provides correct information.
Customers feel safe in their transactions with the bank
The staff is experienced and knowledgeable
The bank offers flexible and easy banking
The time taken to complete the transaction is very little as
compared to Indian banks
Personal interaction .896
The staff is ready to help and instil confidence in customers
The staff is friendly and courteous
Individual attention is given by staff
The staff makes efforts to understand the needs of the customers
and establish relationship with them
The staff gives personal attention to customers
The bank understands the specific needs of customers and provides
suggestions accordingly
Convenience .604
ATM of multinational banks are conveniently located
There are clear guidance and information signs provided about how
to use the banks’ services and facilities
206 A. Khare

4 Findings and discussion

The reliability testing of the items was done. Chronbach’s (1951) coefficient alpha
measures the extent to which the scale items cohere with each other. The Chronbach
alpha (α) for the five service attributes ranged between .604–.897 (Table 2), showing that
the scale was reliable. These subscales provide a short-form measurement for each
service quality attribute. The reliabilities are satisfactory in all cases with the exception of
the convenience attribute, which has marginal reliability.
To find the relationship between the various service quality attributes, correlation test
was run. The results suggest that there exists a high positive correlation between all the
five service quality attributes (Table 3).
Table 3 Correlation analysis between the service qualities attributes of multinational banks

Service quality Personal

Tangible Reliability Competence Convenience
attributes interaction
Tangible Pearson 1 .772** .833** .749** .448**
correlation
Reliability Pearson .772** 1 .851** .836** .492**
correlation
Competence Pearson .833** .851** 1 .861** .518**
correlation
Personal Pearson .749** .836** .861** 1 .482**
interaction correlation
Convenience Pearson .448** .492** .518** .482** 1
correlation
Note: **significant at 01 level (two-tailed)
The Pearson correlation between Tangible and reliability is .772; with competence is
.833, with personal interaction is .749 and with convenience is .448. The reliability with
competence is .851, with personal interaction is .836, and with convenience is .492.
Competence has a high positive correlation with personal interaction at .861 and with
convenience at .518. Personal interaction attribute shows high correlation with
convenience at .482. The results suggest that the each attribute plays a significant role in
determining the customers’ perception towards service quality in multinational banks in
India. The results are significant at .001 levels. The results support earlier research
findings that state that bank service quality encompasses the different quality attributes
(Howcroft, 1991; Blanched and Galloway, 1994; Lassar et al., 2000; Bahia and Nantel,
2002; Kumar et al., 2009; Chen, 2009). The Indian customers’ perception towards service
quality of multinational banks would be affected by the interplay of the quality attributes.
The intangibility of services makes service delivery complex and multifaceted. The
customers’ perceptions are guided and determined by their past experiences about
banking services. Their disappointment with service quality would influence their
expectations about what they seek in a service. The multinational banks with their
superior brand image are likely to influence customers’ perceptions and attitudes. The
customers’ perception governed by all the service quality attributes and presence and
performance of one attribute supports the performance of the other four attributes. Thus,
the H1 gets accepted.
 Customers’ perception and attitude towards service quality 207

To understand if the two genders differed in their attitude towards service quality of
multinational banks, ANOVA was computed. The results are shown in Table 4.
Table 4 ANOVA affect of gender on service quality attributes of multinational banks

Service quality Sum of Mean

df F Sig.
attributes squares square
Tangible Between groups 118.900 1 118.900 7.200 .008**
Within groups 3,236.777 196 16.514
Total 3,355.677 197
Reliability Between groups 215.986 1 215.986 10.022 .002**
Within groups 4,223.832 196 21.550
Total 4,439.818 197
Competence Between groups 494.828 1 494.828 9.617 .002**
Within groups 10,033.223 195 51.452
Total 10,528.051 196
Personal Between groups 220.151 1 220.151 6.537 .011**
interaction Within groups 6,600.662 196 33.677
Total 6,820.813 197
Convenience Between groups 9.747 1 9.747 2.465 .118
Within groups 775.127 196 3.955
Total 784.874 197
Note: **significant at 01 level (two-tailed)
The results show that there exists a significant difference between male and female
customers regarding service quality attributes of tangible (F = 7.200; p = .008), reliability
(F = 10.022; p = .002), competence (F = 9.617; p = .002) and, personal interaction
(F = 6.537; p = .001). The males and female customers’ have different attitudes towards
service quality of multinational banks. This may be dependent upon the brand image of
the multinational banks where the customers’ feel that these banks are more reliable and
efficient in service delivery. Since in India, men are mostly operating the bank accounts
and handling the transactions, their exposure with the banking services is more as
compared to women. The women do not go to the banks for any kind of financial
transactions; these issues are handled by men. Even in case of the working women, their
bank transactions may be handled by men folk. The lack of exposure affects the attitude
towards service quality aspects of banks. The gender differences suggest that men have
more exposure to the various services offered by the banks. The multinational banks are
perceived to be organised, and better managed. The general perception is that the service
quality in these banks would be prompt, efficient, error-free and responsive. The quality
of services would be supported with efficient technology.
The ANOVA test was run to understand the differences if any between the various
age categories of customers (Table 5).
The attitudes of customers’ differ across the age categories for all the five service
quality attributes. To understand which age categories of customers’ differed in their
attitude towards the service quality aspects Tukeys’ post-hoc test was computed
(Table 6).
208 A. Khare

Table 5 ANOVA affect of age on service quality attributes of multinational banks

Service quality Sum of

df Mean square F Sig.
attributes squares
Tangible Between groups 1,319.101 4 329.775 31.252 .000**
Within groups 2,036.576 193 10.552
Total 3,355.677 197
Reliability Between groups 1,754.403 4 438.601 31.522 .000**
Within groups 2,685.416 193 13.914
Total 4,439.818 197
Competence Between groups 3,847.713 4 961.928 27.647 .000**
Within groups 6,680.338 192 34.793
Total 10,528.051 196
Personal Between groups 2,817.006 4 704.252 33.948 .000**
Interaction
Within groups 4,003.807 193 20.745
Total 6,820.813 197
Convenience Between groups 211.731 4 52.933 17.825 .000**
Within groups 573.142 193 2.970
Total 784.874 197
Note: **significant at 01 level (two-tailed)

The results suggest that there is a difference in the attitude of young and old customers’
regarding assessment and perception of service offered by multinational banks. The
results suggest that young customers are open to the multinational banks and may prefer
their flexible and modern facilities. The varied services with latest technologies may
appear to be convenient and reliable to the younger generation. The older generation
accustomed to the traditional mode of transactions would still prefer the long waiting
time and inefficient services offered by the Indian banks. The customers are wary of the
latest technologies and feel uncomfortable using them. The difference between
20–30 years and 30–40 years customers with 50 years and above demonstrates that
young customer groups are aware about the multinational banks and their varied
services. Lack of information and awareness about the facilities can also be attributed as
the reason for differences. The H3 gets accepted as customers attitude vary across age
categories.
The younger generation is more conscious about the multinational bank’s image and
its effect on service delivery. Multinational banks with their global operations are
considered to be more efficient and responsive.
The multiple regression tests were run to understand the determinants to customers’
attitude towards service quality of multinational banks in India. The results are shown in
Table 7. The five service quality attributes were summed under one variable: service
quality. The demographic factors like age, gender and education level of the customers
were taken as independent factors.
 Customers’ perception and attitude towards service quality 209

Table 6 Post-hoc analysis for multinational banks’ service quality attributes

95% confidence
Mean interval
Dependent (I) age of (J) age of
difference Std. error Sig.
variable respondents respondents Lower Upper
(I–J)
bound bound
Tangible 20–30 30–40 –1.28333 1.26628 .742 –4.5648 1.9981
40–50 –3.00000 1.36020 .125 –6.5249 .5249
50–above –4.55464* 1.16394 .001 –7.5709 –1.5384
30–40 20–30 1.28333 1.26628 .742 –1.9981 4.5648
40–50 –1.71667 .99335 .312 –4.2909 .8575
50–above –3.27131* .70096 .000 –5.0878 –1.4548
Reliability 20–30 30–40 –.88333 1.44535 .928 –4.6289 2.8622
40–50 –3.62500 1.55255 .094 –7.6483 .3983
50–above –5.03415* 1.32854 .001 –8.4770 –1.5913
30–40 20–30 .88333 1.44535 .928 –2.8622 4.6289
40–50 –2.74167 1.13383 .077 –5.6799 .1966
50–above –4.15082* .80009 .000 –6.2242 –2.0774
Competence 20–30 30–40 –.57500 2.27889 .994 –6.4809 5.3309
40–50 –3.62500 2.44792 .451 –9.9689 2.7189
50–above –6.31612* 2.09548 .015 –11.7467 –.8856
30–40 20–30 .57500 2.27889 .994 –5.3309 6.4809
40–50 –3.05000 1.78771 .323 –7.6829 1.5829
50–above –5.74112* 1.26279 .000 –9.0137 –2.4685
Personal 20–30 30–40 .05000 1.79134 1.000 –4.5922 4.6922
interaction 40–50 –3.12500 1.92421 .368 –8.1115 1.8615
50–above –5.36885* 1.64657 .007 –9.6358 –1.1019
30–40 20–30 –.05000 1.79134 1.000 –4.6922 4.5922
40–50 –3.17500 1.40525 .111 –6.8166 .4666
50–above –5.41885* .99162 .000 –7.9886 –2.8491
Convenience 20–30 30–40 –1.10833 .62229 .286 –2.7210 .5043
40–50 –1.66667 .66845 .064 –3.3989 .0656
50–above –2.32514* .57200 .000 –3.8074 –.8428
30–40 20–30 1.10833 .62229 .286 –.5043 2.7210
40–50 –.55833 .48816 .663 –1.8234 .7067
50–above –1.21680* .34448 .003 –2.1095 –.3241
Note: *The mean difference is significant at the 0.05 level.
The results show that age and gender of the customers play a significant role in
determining the customers’ attitude towards service quality (p = .000). The customers’
education does not affect their quality perceptions; the customers’ attitude is governed by
their perceptions regarding foreign banks. Being accustomed to inefficient service,
untrained unprofessional staff, inability of the staff to provide correct information, long
210 A. Khare

waiting time, errors in transactions, and poor interpersonal interaction between staff and
customers; the Indian customers’ perceive multinational banks as being professional and
efficient in providing facilities. The positive impression of customers towards
Multinational banks can help them immensely in planning their operations in the country.
The younger generation should be targeted by offering them convenient and hassle free
banking, while the older customer groups can be contacted to explain the unique
attributes of easy banking. Since most of the older generation values personal interaction,
and knowing the bank staff instils confidence in them, the same approach may be taken
up by the multinational banks. This would help them in building relationship with the
older customers.
Table 7 Multiple regression analysis – predictors to Indian customers’ attitude towards service
quality of multinational banks

Standardised coefficients
Demographic variables
β t Sig.
(Constant) 7.033 .000
Age of respondents .391 6.051 .000**
Gender .177 2.746 .007**
Education –.054 –.835 .405
Notes: Dependent variable: service quality; **significant at 01 level (two-tailed).

5 Managerial implications

The Indian customers’ attitude towards multinational banks is determined by their service
experiences in Indian banks. The gap existing in the service quality in terms of service
delivery and outcome are major factors in influencing their perceptions that foreign banks
offer better services. They believe that multinational banks operate in different countries
and have efficient processes for accommodating customers’ needs. Even though most of
the customers who participated in the survey have not visited foreign banks, they were
confident about its quality attributes. The Indian banks have made several attempts to
improve their services in the past years, yet the customers’ believe that the service quality
of foreign banks is much superior. Their expectation is heightened by the well-planned
layouts, interiors and well-dressed bank staff of foreign banks. This difference stands out
as the staff in Indian banks do not exhibit professionalism and provide correct
information. The courteousness, friendly and pleasing appearance of staff of foreign
banks instils confidence that they have knowledge and would provide accurate
information. The positive image can help multinational banks in building their marketing
strategy. The foreign banks must focus on the service quality by improving their tangibles
as it would help in differentiating them from Indian banks. The ambience, layout with
well-furnished décor can generate the feeling of ‘customer delight’. This can be further
reinforced by presentable, attentive, friendly staff and the banks’ attempt to establish
relationship with the customers. Personal interaction can enable in banks in establishing
rapport with the customers. The ambience of Indian banks does not give customers’ the
impression of good service. The staff is not cooperative and does not give priority to
 Customers’ perception and attitude towards service quality 211

customer needs. These areas can be identified for devising positioning strategies by
multinational banks.
The Indian customers can be encouraged to use the banking services of foreign banks
by specifically targeting different customer age groups. The older people can be promised
hassle-free, reliable and, convenient banking service where they would not have to wait
for the services. Some banks provide facilities like calling on the customers’ in their
homes and clearing their checks. This can be extended to senior customer groups and
other customised services can be added as per customer requirements.
The female customers can be targeted by promising them easy banking. They can be
provided facilities like phone-banking as most females dread the long queues in the bank
counters. The transactions and instructions should be made easy so that they do not feel
afraid of filling forms for availing facilities like applying for credit cards, loans,
transferring money and making payments through credit and debit cards. The assurance
attribute can go a long way in building confidence amongst Indian females who are
apprehensive about the technical aspects of bank transactions. In India, most bank
transactions are handled by the male members of the family and females rarely operate
their accounts. The working women also show reluctance towards visiting the banks. The
foreign banks can project easy banking image to help customers change their perceptions
about poor service quality of the banks.

6 Conclusions and future research directions

The research attempts to identify the customers’ perceptions about multinational banks. It
can help these banks in planning their marketing strategies and expanding in the smaller
cities of the country. The results show that Indian customers are positive towards the
multinational banks and consider them efficient and competent. For a country where
banking sector liberalisation is in full swing, the findings can help banks in understanding
the expectations of the customers.
The research was conducted in two cities in Northern India. The research can be
extended to more cities and a larger sample would provide different results. The
profession and income levels of the customers/respondents may be also considered as
important factors influencing their attitude towards multinational banks. A comparison
between customers of foreign banks and Indian banks can be done in future to understand
the important service quality issues given priority by the customers. This would also
provide interesting insights regarding customers’ service quality perception for Indian
and foreign banks. The service quality can be extended to understanding the implication
of different services offered by the banks.

Acknowledgements

The author wants to extend her gratitude towards the editor and the anonymous reviewers
for their indispensable and valuable suggestions and comments that improved the quality
of the paper significantly.
212 A. Khare

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