Abstract
The growth of the service industry focuses attention on issues related to service process, like service failures and recovery strategies. Our article aims to use an exclusive scale to measure the magnitude of failure in the banking industry to formulate an appropriate recovery strategy. An exhaustive list of service failures in the banking industry was developed through reviewing the extant literature. Consumer insights on failure magnitude were obtained through 10 focus group interviews conducted in 4 Indian metro areas. The service failure scale was adopted from our previous studies. The study reveals that failures can be dissected into human losses. The root problems in the banking industry are studied to find a correlation with a predefined service failure magnitude scale. The concept of the service recovery paradox grid, which categorizes the possibility of a service recovery paradox in the dynamic exchange of consumers’ generous behavior and service failure magnitude, is introduced. The strategic use of the service failure magnitude scale in the identification of the frequency of failure class and the severity of failure type by keeping the consumer in focus and understanding the possibility of service recovery paradox can improve mitigation quality, consumer satisfaction, and retention levels.