Developing and validating a hierarchical model of service quality of retail banks

Abstract

Like other service institutes, developing and managing quality service is a challenging issue in retail banks. Recent studies established that retail banks' customer satisfaction can be managed with a total quality management approach. It is accepted by prior literature that service quality (SQ) is a multilevel and multidimensional construct; however, the SQ dimensions of retail banking are still considered one-dimensional. The purpose of this study is to develop theoretical conceptualisations and validate an SQ model for retail banks. A positivist epistemology using a mixed method research approach has been adopted for this study. A research model has been developed from the literature which was contextualised by a cross-country qualitative field study. The model is validated with partial least square-based structural equation modelling. The results of this study summarise that retail banks' SQ is a third-order reflective model where SQ can be explained by station, interaction, and outcome quality. Furthermore, these three dimensions reflect nine sub-dimensions in total. This paper focused on managing total quality issues of a retail bank through service quality tools. With the objective of acquiring total quality, bank managers and other management personnel may develop strategies and policies using the findings of this study.

Keywords:

• service quality
• total quality management
• hierarchical model
• PLS