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1. Introduction
The economic and societal developments of countries all over the world largely depend on the contribution of their service sector (Yalley and Agyapong, 2017). At present, the service sector is considered as the most important growth engine as it creates and enlarges the wealth of a nation. As a service sector, banks play a vital and active role in this context. The economic growth of a country is positively influenced by its effective banking system (Ayadi et al., 2015). However, the practitioners of this industry face a number of complex challenges when they operate their businesses in a dynamic, competitive situation. Therefore, it is important for the banks to better understand these challenges and meet the changing needs of the customers in order to compete more effectively with other service providers. Considering this, banks need to offer a diverse portfolio of competitive services and progressively redesign their services to meet the changing needs of their customers.
All types of customers – whether retail or corporate, are important to banks. Therefore, customer satisfaction is an important ingredient for this industry which is closely related with service quality (Spreng and MacKoy, 1996; Silvestri et al., 2017). Improved service quality leads to increased probability of customer satisfaction. On the other hand, better customer satisfaction results in a number of behavioural outcomes such as commitment, customer retention, building bonds, increasing customer tolerance for service failures and positive word of mouth (Berry et al., 1989; Gounaris et al., 2003; Oh and Kim, 2017). Özkan et al. (2019) conclude that the most crucial determinant for success in banking industry is service quality.
The service quality is treated as the most important precursor for surviving in the competitive environment. Sustainable competitive advantage can be achieved by providing best possible services. High service quality differentiates service providers from their competitors by increasing profitability, attracting new customers, reducing cost, enhancing stakeholders' satisfaction, improving customer retention and thus enhancing the corporate image (Gounaris et al., 2003). Furthermore, new customers are attracted through positive word of mouth (Caruana 2002). In essence, the level of customer satisfaction closely relates to service quality offered by the service providing firms. Thus, enhancement of customer satisfaction, in turn, leads to stronger customer loyalty...