Outline for Proposal

Outline for Proposal

Executive Summary

Banking and financial services are a demand driven industry, which constitute an important part of the services industry. Many regulatory, structural and technological changes have taken place within the world banking industry, in line with the trend towards a more integrated global banking environment. Banks are expanding across borders, offering a diverse portfolio of competitive services and restructuring their services in order to make use of rapid technology and to meet the changing needs of customers. The EU has played an important role in facilitating global banking. Financial services within the EU have been regulated and restructured in an effort to integrate the sector by eliminating impediments to cross border branching practices. Because of these measures, the nature of banking services and customer relations are undergoing change. Banks in the United States (US) are facing increased competition from international banks as geographic boundaries are eliminated in terms of banking markets. In addition to this, the banking sector in many developing countries is undergoing change in order to keep up with world trends. The rapidly changing and highly competitive environment which banks are forced to operate within are pushing them to rethink their attitude towards customer satisfaction and optimization of service quality. Banking is a high involvement industry. Customers, whether at the retail or corporate level have always been important for banks. However, as electronic banking becomes more prevalent, customers still tend to measure a bank's service quality in terms of the personal support they receive, rather than the technical support.

I. Introduction

Services were defined as: “Those economic activities that typically produce an intangible product such as education, entertainment, food and lodging, transportation, insurance, trade, government, financial, real estate, medical repair and maintenance like occupations”.

Today, the service sector occupies a great majority of the markets in many countries. For example, in his book Marketing Management stated that 79 percent of all employees are employed in service sector where services account for 76 percent of GDP in US economy. In addition, OECD (Organization for Economic Co-operation and Development) states that more than 70 percent of people are employed in the service sector. The complex natures of services results from their common characteristics, which are intangibility, perish ability, high customer involvement, simultaneous production and consumption and homogeneity. These characteristics coupled with the growing prominence of the services sector, have also increased the need for better service quality as companies look for ways to improve financial performance and attract customers in a very competitive environment. Over the last ten years, a lot of research has focused on the topic of service quality, which is increasingly being recognized as one of the key strategic values of organizations in the services sector. Service quality brings many advantages to the company. It allows the company to differentiate itself from its competitors by increasing sales and market shares, providing opportunities for cross-selling, improving customer relations and thus, enhancing the corporate image. It results in the satisfaction and retention of customers and employees, thus ...