Customer satisfaction and retail banking:

an assessment of some of the key antecedents of

customer satisfaction in retail banking

Ahmad Jamal
Cardiff Business School, Cardiff, UK
Kamal Naser
Cardiff Business School, Cardiff, UK

Keywords in doing so focuses on two of its overriding

Customer satisfaction, Banking,
Retailing, Service quality
Abstract
Understanding the antecedents to marketers and consumer researchers
and outcomes of customer
satisfaction is a critical issue for
both academics and bank
marketers. Previous research has satisfaction can be considered the essence of
identified service quality,
expectations, disconfirmation,
performance, desires, affect and
equity as important antecedents
of customer satisfaction. The
current paper reports findings from oriented’’ and ``customer focused’’ firm
a survey which looked into the
impact of service quality
dimensions and customer
expertise on satisfaction. A
sample of 167 respondents took
part in this study. Findings
indicate that both core and
relational dimensions of service
quality appear to be linked to
customer satisfaction. Findings
also indicate that expertise is
negatively related to satisfaction.
The paper discusses implications
for bank managers.
International Journal of Bank
Marketing
20/4 [2002] 146±160
# MCB UP Limited
[ISSN 0265-2323]
[DOI 10.1108/02652320210432936]
Introduction
Customer satisfaction is an important
theoretical as well as practical issue for most
(Dabholkar et al., 1996; Fournier and Mick,
1999; Meuter et al., 2000). Customer
success in today’s highly competitive world
of business. Thus, the significance of
customer satisfaction and customer retention
in strategy development for a ``market
cannot be underestimated (Kohli and
Jaworski, 1990). Consequently, customer
satisfaction is increasingly becoming a
corporate goal as more and more companies
strive for quality in their products and
services (Bitner and Hubbert, 1994).
A review of the literature suggests that our
understanding of the relationship between
customer satisfaction judgements and
service quality perceptions remains a
problematic issue (Taylor and Baker, 1994). A
stream of research has argued that customer
satisfaction judgements are causal
antecedents of the service quality judgements
(Bitner, 1990; Parasuraman et al., 1988).
However, others have reported that it is the
service quality that appears to be the causal
antecedent of customer satisfaction
(Anderson and Sullivan, 1993; Cronin and
Taylor, 1992; Oliver, 1993; Taylor and Baker,
1994; Woodside et al., 1989). This conflicting
empirical evidence highlights the need for
the research reported here as the direction of
the causal link between satisfaction and
service quality is likely to lead to different
customer behaviour outcomes, which in turn
could have important managerial relevance
(Dabholkar, 1995). Previous services
literature also highlights the
multidimensionality of service quality, and
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dimensions (Levesque and McDougall, 1996;
Gronroos, 1984; McDougall and Levesque,
1994; Parasuraman et al., 1991). The first
dimension includes the core or outcome
aspects (contractual) of the service (e.g.
reliability) and the second one includes the
relational or process aspects (customer-
employee relationship) of the service (e.g.
tangibles, responsiveness, assurance and
empathy (see for instance, Parasuraman
et al., 1991a). However, only a limited set of
empirical research has reported the
relationship between the two dimensions of
service quality and customer satisfaction.
The current paper attempts to fill this gap in
the literature.
A review of the literature also suggests that
expectations for service quality are likely to
be based on perceptions of excellence,
whereas satisfaction judgements are likely to
be based on a broad range of non-quality
issues (Taylor and Baker, 1994; Patterson and
Johnson, 1993; Rust and Oliver, 1994). More
specifically, there can be potentially many
antecedents of customer satisfaction,
including service quality, which is probably
due to the fact that the dimensions
underlying satisfaction judgements are
global rather than specific (Rust and Oliver,
1994). Some widely reported determinants of
customer satisfaction include service
quality, expectations, disconfirmation,
performance, desires, affect and equity
(Churchill and Suprenant, 1982; Glenn et al.,
1998; Levesque and McDougall, 1996; Oliver,
1993; Patterson et al., 1997; Spreng et al., 1996;
Szymanski and Henard, 2001). However, a
review of the literature indicates that
formation of performance expectations
during product or service evaluation can be
moderated by customers’ expertise (Bettman,
1970; Fishbein, 1963; Fishbein and Ajzen,
1975; Rosenberg, 1950). Previous research
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[ 146 ]
Ahmad Jamal and Kamal Naser
Customer satisfaction and
retail banking: an assessment
of some of the key
antecedents of customer
satisfaction in retail banking
International Journal of Bank
Marketing
20/4 [2002] 146±160
suggests that expert customers are likely to
have a superior knowledge of existing
alternatives. They are also likely to have
superior ability to encode new information
and to discriminate between relevant and
irrelevant information (Alba and
Hutchinson, 1987; Johnson and Russo, 1984).
In the context of complex services (such as
banking, insurance, pension, mortgages etc.),
anecdotal evidence identifies a general trend
in the marketplace whereby an increasing
number of customers are making their
financial decisions on their own. However, in
spite of this, no prior research has attempted
to explore the role of customers’ expertise in
the formation process leading to overall
customer satisfaction. The current research
attempts to fill this gap in the literature by
exploring the role of expertise in the
formation process leading to overall
customer satisfaction. In so doing, the
research also explores the impact of
demographics and other related variables on
customers’ evaluation of service quality and
satisfaction judgements.
Conceptual background
Customer satisfaction
Customer satisfaction is generally described
as the full meeting of one’s expectations
(Oliver, 1980). Customer satisfaction is the
feeling or attitude of a customer towards a
product or service after it has been used.
Customer satisfaction is a major outcome of
marketing activity whereby it serves as a
link between the various stages of consumer
buying behaviour. For instance, if customers
are satisfied with a particular service
offering after its use, then they are likely to
engage in repeat purchase and try line
extensions (East, 1997). Customer satisfaction
is widely recognised as a key influence in the
formation of customers’ future purchase
intentions (Taylor and Baker, 1994). Satisfied
customers are also likely to tell others about
their favourable experiences and thus engage
in positive word of mouth advertising
(Richens, 1983; File and Prince, 1992). This
positive word of mouth advertising is
particularly useful in collectivist Middle
Eastern cultures like that of Abu Dhabi
where social life is structured in a way to
improve social relationships with others in
the society (see Hofstede, 1980; Hall and Hall,
1987). Dissatisfied customers, on the other
hand, are likely to switch brands and engage
in negative word of mouth advertising.
Furthermore, behaviours such as repeat
purchase and word-of-mouth directly affect
the viability and profitability of a firm
(Dabholkar et al., 1996). A recent study
conducted by Levesque and McDougall (1996)
confirmed and reinforced the idea that
unsatisfactory customer service leads to a
drop in customer satisfaction and
willingness to recommend the service to a
friend. This would in turn lead to an increase
in the rate of switching by customers.
Some key antecedents to the formation of
overall customer satisfaction
There can be potentially many antecedents of
customer satisfaction as the dimensions
underlying satisfaction judgements are
global rather than specific (Taylor and
Baker, 1994; Patterson and Johnson, 1993;
Rust and Oliver, 1994). For instance, research
on customer satisfaction has largely relied on
the disconfirmation paradigm, which views
satisfaction with products and brands as a
result of two cognitive variables: pre-
purchase expectations and disconfirmation
(Churchill and Surprenant, 1982; Oliver, 1989;
Yi, 1990; Peter and Olson, 1996). According to
Peter and Olson (1996, p. 509):
Pre-purchase expectations are beliefs about
anticipated performance of the product;
disconfirmation refers to the differences
between pre-purchase expectations and post-
purchase perceptions.
Hence, if the perceived performance exceeds
a customer’s expectations (a positive
disconfirmation), then the customer feels
satisfied. On the other hand, if the perceived
performance falls short of a customer’s
expectations (a negative disconfirmation),
then the customer feels dissatisfied. There is
a considerable amount of empirical evidence
that confirms the disconfirmation paradigm
(see for instance Szymanski and Henard,
2001; Yi, 1990). For instance, in an earlier
study, Churchill and Surprenant (1982)
reported that disconfirmation positively
affected satisfaction. That is, when customers
perceived the product performing better than
expected, they became more satisfied
(Churchill and Surprenant, 1982). Further
empirical research supports the notion that
satisfaction is caused by expectations and
requires considerable cognitive effort on the
part of customers (Bearden and Teel, 1983;
Cadotte et al., 1987). However, others argued
that customers develop norms for product
performance based on general product
experiences, and these, rather than
expectations for a focal brand’s performance,
determine the confirmation/disconfirmation
process (Cadotte et al., 1987; Woodruff et al.,
1983). Previous research also demonstrated a
direct link between actual performance and
satisfaction levels (Bolton and Drew, 1991;
Churchill and Surprenant, 1982; Tse and
[ 147 ]
Ahmad Jamal and Kamal Naser
Customer satisfaction and
retail banking: an assessment
of some of the key
antecedents of customer
satisfaction in retail banking
International Journal of Bank
Marketing
20/4 [2002] 146±160
[ 148 ]
Wilton, 1988). More recent work argued that
in addition to the cognitive components,
satisfaction judgements are also dependent
upon affective components as both coexist
and make independent contributions to the
satisfaction judgements (Mano and Oliver,
1993; Westbrook and Oliver, 1991). Also, some
have recently demonstrated a positive
relationship between equity and satisfaction
whereby equity is viewed as a:
Fairness, rightness or deservingness
judgement that consumers make in reference
to what others receive (Oliver, 1997, p. 1944;
see also Oliver 1993; Oliver and Swan, 1989).
Service quality
Research on customer satisfaction is often
closely associated with the measurement of
service quality (Anderson and Sullivan, 1993;
Cronin and Taylor, 1992; Bitner and Hubbert,
1994; Taylor and Baker, 1994; Rust and Oliver,
1994; Levesque and McDougall, 1996). While
satisfaction is a feeling or an attitude of a
customer towards a service after it has been
used, service quality is simply:
Customers’ overall impression of the relative
inferiority/superiority of the organization
and its services (Bitner and Hubbert,
1994, p. 77).
In this context, some argue that both service
quality and satisfaction are:
Best conceptualised as unique constructs that
should not be treated as equivalents in models
of consumer decision-making (Taylor and
Baker, 1994, p. 165).
Hence, many have attempted to establish the
nature of the relationship between service
quality and customer satisfaction. Among the
many attempts, some have proposed a causal
link between customer satisfaction and
service quality, due to the fact that
satisfaction is viewed as experiential or
occurring at the transactional level, whereas
service quality is viewed to be an attitude at a
global level (Bitner, 1990; Oliver, 1981;
Parasuraman et al., 1988). For instance,
Bitner (1990) explored the service quality and
satisfaction judgements of 145 travellers at an
international airport. Her findings suggest
that satisfaction judgements are antecedents
of service quality. However, the current
paper follows a substantial amount of
research which has proposed a causal link
between service quality and customer
satisfaction. This is due to the fact that
customers can and do evaluate service
quality at the transactional level and
customer satisfaction may be quite
meaningful at the global level (see for
instance Anderson and Sullivan, 1993; Bolton
and Drew, 1991; Cronin and Taylor, 1992;
Woodside et al., 1989).
Dimensions of service quality
A review of the literature, however, suggests
that service quality is not a uni-dimensional
construct. Rather, service quality
incorporates a number of dimensions such as
reliability, tangibles, responsiveness,
assurance and empathy (Carman, 1990;
Gronroos, 1984; Lewis, 1993; Bitran and Lojo,
1993; McDougall and Levesque, 1994;
Parasuraman et al., 1985; 1988). Although the
number and composition of service quality
dimensions are likely to be dependent on
service settings (see for instance Brown et al.,
1993; Carman, 1990), one can argue that there
are two overriding dimensions of service
quality (Levesque and McDougall, 1996;
GroÈnroos, 1984; McDougall and Levesque,
1994; Parasuraman et al., 1991a). The first one
refers to the core aspects of the service (e.g.
reliability) and the second one refers to the
relational or process aspects of the service
(e.g. tangibles, responsiveness, assurance
and empathy (Parasuraman et al., 1991a)).
This is due to the fact that reliability is
mainly concerned with the outcome of
service, whereas tangibles, responsiveness,
assurance and empathy are concerned with
the service delivery process (Parasuraman
et al., 1991a). In this context, we propose that
both the core and relational dimensions of
service quality are likely to be antecedents of
customer satisfaction.
Tangible dimension of service quality
Due to the intangible nature of services, it is
often difficult for customers to understand
services (Legg and Baker, 1996). Customers
thus make inferences about the service
quality on the basis of tangibles (the
buildings, the physical layout etc.) that
surround the service environment (Bitner,
1990). Support for this argument comes from
empirical evidence suggesting that the
tangible and physical surroundings of the
service environment can have a significant
impact on customers’ affective responses and
their behavioural intentions (Wakefield and
Blodgett, 1999). Dabholkar et al. (1996)
reported similar findings that the tangible
aspects of department stores do influence
customers’ perceptions of service quality.
Furthermore, the exploration of the use of
evaluative criteria in forming performance
expectations has had a major impact on the
study of consumer behaviour (Bettman, 1970;
Fishbein, 1963; Fishbein and Ajzen, 1975;
Rosenberg, 1950). The evaluative criteria can
include attributes like price, brand
perceptions, quality, comfort and design
(Grapentine, 1995; Lee and Lou, 1996; Monroe
and Dodds, 1988; Myers and Shocker, 1981;
Ahmad Jamal and Kamal Naser
Customer satisfaction and
retail banking: an assessment
of some of the key
antecedents of customer
satisfaction in retail banking
International Journal of Bank
Marketing
20/4 [2002] 146±160
Rao and Monroe, 1989; Richardson et al.,
1994).
In the context of services, a substantial
amount of research has looked into the
criteria adopted by customers in forming
performance expectations (see for example,
Anderson et al., 1976; Tan and Chua, 1986;
Laroche and Taylor, 1988; Erol and El-Bdour,
1989; Erol et al., 1990; Denton and Chan, 1991;
Kaynak et al., 1991; Khazeh and Decker, 1992;
Levesque and McDougall, 1996; Mittal, 1999).
Findings suggest that convenient location is
a critical factor influencing the formation of
performance expectations by customers. A
convenient bank location means customers
can easily do business with their banks on a
regular basis (Levesque and McDougall,
1996). Accessibility is also a related factor,
which, while acting together with
convenience, enables customers to deal with
their banks more easily (Levesque and
McDougall, 1996). For the purpose of current
study, convenience and accessibility are
treated as part of the tangible dimension of
service quality. In this context, we propose
that the tangible dimension of service quality
is also likely to be an important antecedent of
customer satisfaction.
Customers’ expertise
Some earlier studies have suggested that the
effect of evaluative criteria in forming
performance expectations can be moderated
by factors like consumer individual
differences (such as age, gender, education,
occupation) and by customers’ expertise
(Bettman and Park, 1980; Oliver, 1980). In a
landmark article on customer expertise, Alba
and Hutchinson (1987) identified two major
and distinctive components of customer
expertise: expertise and familiarity. They
defined expertise as ``the ability to perform
product related tasks successfully’’, whereas
familiarity was defined as:
The number of product related experiences
that have been accumulated by the consumer
(Alba and Hutchinson, 1980, p. 411).
More specifically, expertise or product class
knowledge represents:
The understanding of the attributes in a
product or service class, and knowledge about
how various alternatives stack up on these
alternatives (Sheth et al., 1999, p. 533).
Thus, some customers may be more expert
than others and may be more likely to
evaluate service quality and satisfaction
judgements rationally at the cognitive level.
For instance, in an earlier work, GroÈnroos
(1982) argued that while evaluating the
quality of a service, customers compare the
service they expect with perceptions of the
services they actually receive. Hence it is
significant for service providers to
consistently meet or exceed customer
expectations (Bojanic, 1991). Gaps can exist,
however, between the service provider’s
perception of quality and customers’
perception of service quality (Parasuraman
et al., 1985; Bojanic, 1991; Patterson and
Johnson, 1993). Obviously, the focus of
service providers’ strategy is to narrow or
close the gaps by developing proper
communication programmes to facilitate
customers’ understanding of and perceptions
about service quality. Research in consumer
behaviour has, however, established that
customers’ expertise facilitates their
learning of new and more complex types of
information (Alba and Hutchinson, 1987;
Cowley, 1994; Mishra et al., 1993). For
instance, a number of researchers have
compared the information processing
activities of more knowledgeable (expert)
customers with those of less knowledgeable
customers (novice). Findings indicate that
experts have superior ability about learning
new information about an offering, as
compared to novice customers (Johnson and
Russo, 1984; Brucks, 1985; Alba and
Hutchinson, 1987). Also, expert customers are
likely to have developed skills in
distinguishing between important and
unimportant information, as well as between
relevant and irrelevant information (Alba
and Hutchinson, 1987). Generally, expert
customers are likely to have a superior
knowledge of existing alternatives; they are
also likely to have a superior ability to
encode new information and to discriminate
between relevant and irrelevant information
(Johnson and Russo, 1984; Alba and
Hutchinson, 1987). Due to their knowledge
and abilities, one could argue that expert
customers in comparison with novice
customers are very likely to have high
expectations from service providers. Hence,
as per the disconfirmation paradigm, the
differences between pre-purchase
expectations and post-purchase perceptions
are likely to be at a highest level for expert
customers. However, despite this, no study to
the best of our knowledge has looked into the
role played by customers’ expertise in the
formation process leading to overall
customer satisfaction.
On the basis of the review of the literature,
a number of research questions can be
raised. For instance, within the retail
banking sector:
What is the role of the core, relational and
tangible dimension of service quality in
the formation process leading to overall
customer satisfaction?
[ 149 ]
Ahmad Jamal and Kamal Naser
Customer satisfaction and
retail banking: an assessment
of some of the key
antecedents of customer
satisfaction in retail banking
International Journal of Bank
Marketing
20/4 [2002] 146±160
What is the role of customer expertise in
moderating the effects of various
dimensions of service quality in the
formation process leading to overall
customer satisfaction?
What is the role of consumer individual
differences such as demographics and
factors such as ethnic background or
length of stay in moderating the effect of
service quality in the formation process
leading to overall customer satisfaction?
multiple interactions between the bank and
the customer (Levesque and McDougall,
1996). In this context, customer satisfaction
could be identified as a composite of overall
attitudes that customers have towards the
bank. Following Levesque and McDougall
(1996), three frequently used measures of
customer satisfaction (i.e. overall service
quality, meeting of expectations and
satisfaction with the service) were used in
this study.

Answers to these questions should be of help Data collection, estimating procedures

to the bank marketers and consumer
researchers in any marketplace.
Study methodology
Context
The Abu Dhabi Commercial Bank (ADCB)
was chosen for the current study for two
important reasons. First, the bank ranks
among the largest and strongly profitable
banks in the UAE (Bank Report, 2000). It was
the third largest bank in the UAE with total
assets of AED 23 billion (US$6.3 billion) at the
end of 1999. Second, the bank has a
significant retail presence with a focus on the
retail market, small businesses, agriculture,
construction, real estate and domestic
private companies; this is despite the fact
that the public sector and the government
remain important customers for the bank.
The bank was established in 1985 and offers a
wide range of products and services. The
bank competes with a number of local as well
as foreign banks in the country. Altogether, a
total of 27 local and seven foreign banks serve
the UAE population of 2.7 million people. In
addition to this, 34 foreign banks maintain
and model development
Data collection
A questionnaire in English was designed
which incorporated the measures mentioned
above. A total of 200 questionnaires were
randomly distributed to those visiting a
specific branch of Abu Dhabi Commercial
Bank (ADCB) in Abu Dhabi during the last
two weeks of June 2000. Following the data
collection procedures outlined by Gerrard
and Cunningham (1997), the questionnaire
was only distributed on every second day of
each week. Furthermore, half of the
questionnaires were distributed during the
first half of the day and the remaining on the
second half of the day. The procedure
resulted in a sample of 167 completed
questionnaires (83.5 per cent useable
response rate).
Estimating procedures and model
development
An index was constructed to measure
customer satisfaction. The index can be
presented mathematically as follows:
Xx
SI ˆ Tx
tˆ1

their representative offices in the UAE.

However, despite this competition, the ADCB
enjoys a competitive advantage due to its
large size, strong retail presence and
competitive pricing. The bank also has an
Internet presence with the aim of offering a
comprehensive range of information and
Internet banking.
Measures
Table I reports measures used in this study.
Measures for the core, relational and tangible
dimensions of service quality were adopted
from previous literature dealing with service
quality and customer satisfaction (Levesque
and McDougall, 1996; Naser et al., 1999).
Measures for product class expertise or
expertise were adopted from the literature
dealing with customer expertise (see for
instance Alba and Hutchinson, 1987; Cowley,
1994; Mishra et al., 1993). Customer
satisfaction in retail banking is based on the
[ 150 ]
where:
SI = customer satisfaction measured by
overall service quality, meeting of
expectations and satisfaction with the
service; and
Tx = level of satisfaction scored by
customer x.
The strength of association between
customer satisfaction and the explanatory
variables was measured by using a linear
regression. It was recognised that the use of
all explanatory variables to predict
customers’ satisfaction might give rise to
some redundant variables and collinearity
problems. A stepwise regression was
therefore employed to remove a previously
entered variable that became redundant.
Thus, the following regression model was
used to assess the effect of each of the
explanatory variables on the level of
customers’ satisfaction:
Ahmad Jamal and Kamal Naser
Customer satisfaction and
retail banking: an assessment
of some of the key
antecedents of customer
satisfaction in retail banking
International Journal of Bank
Marketing
‡ 9 GENDER ‡
20/4 [2002] 146±160
where:
CORE =
SIv ˆ Ix ˆ 0 ‡ 1 CORE ‡ 2 RELATION A multicollinearity problem is likely to occur
when explanatory variables correlate with
each other. Consequently, the effect of each
‡ 3 TANGIBLE ‡ 4 EXPERTISE ‡ 5 AGE
variable of the dependent variable becomes
difficult to identify. Hence, variance inflation
‡ 6 BUSTYPE ‡ 7 EDUCA ‡ 8 ETHNIC
factors (VIF) for each explanatory variable
‡ were used to measure multicollinearity.
10 INCOME 11 ITPURCAS
Normally, a set of explanatory variables is
highly correlated when VIF exceeds ten, thus
‡ 12 OCCUPA ‡ 13 YEARS ‡"
presenting a multicollinearity problem. To
analyse the impact of the demographic
core dimension of service factors on the dependant variable, the
multivariate analysis of variance
quality.
(MANOVA) analysis was undertaken. The
RELATION = relational dimension of
basic principle of this test is similar to other
service quality.
parametric tests such as the t-test, one-way
TANGIBLE = tangible dimension of service
analysis of variance and simple regression.
quality. In this test, the effect of the independent
EXPERISE = expertise. variables is identified taking into account the
AGE = age of the respondents. interaction among the demographic factors.
BUSTYPE = type of business if the
respondents had a business
account. Data analysis
EDUCA = education of the respondents.
ETHNIC = ethnic back ground of the Respondents profile
The questionnaire included a section on
respondents.
GENDER = gender of the respondents. customer’s profile, as various demographic
and other factors like the expertise were
INCOME = income of the respondents.
ITPURCAS = purchases made by the likely to influence the degree of customer
satisfaction of products and services offered
respondents through the
by the bank. Information on demographic
Internet during the last five features is also useful in formulating the
years. bank’s marketing strategy. A profile of
OCCUPA = occupation of the respondents is presented in Table II.
respondents. According to Table II, a significant majority
YEARS = number of years respondents of the respondents (90 per cent) were males,
had been resident in the UAE. while females accounted for about 10 per cent.

Table I
The measures used in the study
S ervice q uality Service qu ality C ustom er satis fac tion
C ore d im ensio n (five-point LT ) Tan gible dim ens ion (five-poin t LT ) (Five-p oint LT)
W hen m y A DC B prom ises to d o so m ething by a c ertain The p hysica l fac ilities of m y AD C B are visua lly Afte r co nsid ering
tim e, it do es so app ealing everything , I am ex tre m ely
M y AD C B perform s the service right th e first tim e P arkin g facilitie s provide d to cu stom ers are adeq uate satisfied w ith m y AD C B
M y AD C B provides its se rvices at the tim e it pro m ises to M y AD C B p ersonnel a re neat in app earan ce M y AD CB alw ays m ee ts m y
d o so M y AD C B h as co nve nient bra nch lo cations expec tatio ns
M y AD C B perform s the service accura tely M y AD C B o ffers a co m ple te ra nge of services The overall qu ality of the
M y AD C B tells you e xactly w hen services w ill be perform e d M y AD C B p rovide s ea sily und erstood sta te m ents services provided by m y
It is very ea sy to get in to a nd out of m y AD C B AD C B is ex celle nt
R elatio nal dim ension (five-p oint LT) quickly
E m p loyee s in m y A DC B are alw ays w illing to h elp M y AD C B p ersonnel h ave the req uired skills a nd
E m p loyee s in m y A DC B are con sistently courteo us know led ge
M y AD C B gives m e ind ivid ual atten tion
E m p loyee s in m y A DC B und erstand m y spe cific nee ds

C ustom er expe rtise (se ven -point bi-polar sc ales)

I know very little a bout ban king 1 ... ... 2 ... ... 3 ... ... 4 ... ... 5 ... ... 6 ... ... 7 I know a lo t a bout ban king
I am in experienc ed 1 ... ... 2 ... ... 3 ... ... 4 ... ... 5 ... ... 6 ... ... 7 I am exp erienc ed
I am un inform ed 1 ... ... 2 ... ... 3 ... ... 4 ... ... 5 ... ... 6 ... ... 7 I am w ell inform ed
I am a novic e buye r 1 ... ... 2 ... ... 3 ... ... 4 ... ... 5 ... ... 6 ... ... 7 I am a n expert buyer

[ 151 ]
Ahmad Jamal and Kamal Naser Table II
Customer satisfaction and Personal background of the respondents
retail banking: an assessment
of some of the key Freque ncy P erce ntage
antecedents of customer
satisfaction in retail banking G en der n = 1 6 4 )
International Journal of Bank M ale 148 90.2
Marketing
20/4 [2002] 146±160 F em ale 16 9.8
A ge n = 1 64)
2 0 or less 1 0.6
2 1-3 0 22 13.4
3 1-4 0 67 40.9
4 1-5 0 61 37.2
5 1-6 0 12 7.3
6 1 and over 1 0.6
O c c upation n= 1 6 5 )
B usinessm a n 85 51.5
B an ker 3 1.8
Inve stor 6 3.6
U niversity lecturer 7 4.2
S choo l teacher 7 4.2
A ccou ntant 9 5.5
M an ager 29 17.6
A uditor 1 0.6
O the r 53 32.1
E duc ation n = 1 6 4 )
Less than O -leve l 28 17.1
O -Leve l 14 8.5
A -Leve l 8 4.9
G radu ate 59 36.0
M aste rs or equivalent 52 31.7
P hD 3 1.8
M on thly in c om e n = 1 6 2 )
Less than D h1 0,0 00 19 11.7
D h1 0,0 00-20,00 0 33 20.4
D h2 0,0 01-25,00 0 36 22.2
D h2 5,0 01-30,00 0 26 16.0
D h3 0,0 01-35,00 0 15 9.3
D h3 5,0 01-40,00 0 17 10.5
M ore tha n D h40,000 16 9.9
E thnic orig in n = 1 6 6 )
U AE natio nal 70 42.2
E gyptian 10 6.0
S yrian 5 3.0
Leb ane se 12 7.2
S udan ese 3 1.8
Indian 20 12.0
P akistani 18 10.8
B an glade sh i 4 2.4
E urope an 14 8.4
A m eric a 6 3.6
O the rs 4 2.4
N um ber of ye ars live d in th e U A E n = 1 0 5 )
1 -3 3 2.9
M ore tha n 3 b ut less th an 5 14 13.3
M ore tha n 5 b ut less th an 10 34 32.4
M ore tha n 10 but less than 15 33 31.4
1 5 and over 21 20.0

[ 152 ]
Ahmad Jamal and Kamal Naser
Customer satisfaction and
retail banking: an assessment
of some of the key
antecedents of customer
satisfaction in retail banking
International Journal of Bank
Marketing
20/4 [2002] 146±160
This is not surprising given the fact that in a
Muslim country like the UAE, it is the men
who perform banking who are expected to
carry out dealings with the banks (Naser et
al., 1999). It is also clear from Table II that
almost 92 per cent of the respondents were
between 21 and 50 age range. In terms of the
occupational background, Table II indicates
that a large number of the respondents (52 per
cent) were businessmen; this was followed by
managers, who constituted almost 18 per cent
of the total sample. This is due to the location
of the particular branch of the bank where the
questionnaire was administered; there was a
large number of a variety of business outlets
in the area. A significant majority (70 per
cent) of the respondents were highly educated
(graduates 36 per cent; postgraduates 32 per
cent; doctorate 2 per cent). The remaining 30
per cent of the respondents were also educated
up to the A-level. Table II also indicates that
the respondents came from different income
backgrounds; however, a majority of them (70
per cent) earned up to Dh 30,000 per month[1].
The questionnaire also included measures to
capture the ethnic background of the
respondents. According to Table II, the
respondents came from diverse ethnic
backgrounds; UAE nationals accounted for 42
per cent of the total sample. This is not
surprising given the nature and structure of
UAE society, which is mainly multicultural.
On the other hand, the respondents who
took part in the survey can be categorised
into three main ethnic categories, namely
Arabs (60 per cent), South Asians (25 per
cent) and American/Europeans (15 per cent).
The Arab category consists of UAE nationals,
Syrians, Lebanese and Sudanese, whereas
the South Asian category included Indian,
Pakistanis, and Bangladeshis. The
American/European category includes
Europeans, Americans and the rest.
In order to determine the impact of one’s
length of stay in a particular market
environment on his/her level of satisfaction,
the questionnaire included a question that
addresses length of the respondent’s stay in
the UAE[2]. In this respect, the results
appearing in Table II showed that a large
majority of the respondents (64 per cent) had
been in the UAE for more than five but less
than 15 years. However, 20 per cent of the
respondents had been in the UAE for more
than 15 years; the rest were in the UAE for
less than five years.
Type and duration of banking
In order to investigate customer satisfaction
with the commercial bank, it was important
to explore where the respondents held their
accounts. For instance, holding accounts in
more than one bank enables customers to
make useful comparisons while evaluating
bank service quality. It was also important to
explore the different types of accounts held
by the respondents with bank(s) and for how
long. Details of the respondents’ accounts are
reported in Table III.
According to Table III, a large number of
the respondents (almost 66.5 per cent) held
accounts in the Abu Dhabi Commercial Bank
only. The remaining 33.5 per cent, however,
indicated that they not only held accounts
with the Abu Dhabi Commercial Bank but
also with some other banks. On the other
hand, the questionnaire included a section
that dealt with types of accounts held by the
respondents and the length of time that they
had held their accounts. The findings are
summarised in Table IV.
It can be observed from Table IV that a
large proportion of the respondents (59.9 per
cent) held personal current accounts with the
Abu Dhabi Commercial Bank. However, a
reasonable proportion of the respondents
(39.5 per cent) did hold both a business and a
personal account with the Abu Dhabi
Commercial Bank. This was followed by
22.8 per cent who only had a business account
with the Abu Dhabi Commercial Bank. It is
also obvious from Table IV that a large
number of the respondents (62 per cent) had a
business account with the bank (business
account only, plus the business and personal
account holders). Respondents were also
asked to indicate the type of their businesses
if they had a business account with Abu
Dhabi Commercial Bank. Table V reports the
findings in relation to this question.
According to Table V, the respondents who
had a business account with the Abu Dhabi
Commercial Bank came from a diverse
business background.
Table VI reports the findings in connection
with the length of time that the respondents
had held their accounts with the Abu Dhabi
Commercial Bank. It is evident from Table VI
that a high proportion of the respondents
(55 per cent) had held accounts with the Abu
Dhabi Commercial Bank for more than three
years, whereas almost 45 per cent had been
with the bank for less than three years. This
might imply a reasonable degree of customer
loyalty and satisfaction. The bank can make
use of this result by adopting a strategy that
contains products and services of long-term
nature (pension and saving schemes, long
term financing and mortgages). This would
help in diversifying products and facilities
offered by the bank in the UAE.
[ 153 ]
Ahmad Jamal and Kamal Naser Table III
Customer satisfaction and
retail banking: an assessment Type of bank(s) in which respondents hold their accounts
of some of the key V alu e label (n = 1 55) Frequen cy P er cent
antecedents of customer
satisfaction in retail banking T he Abu-D ha bi C om m ercial B an k only 10 3 66 .5
International Journal of Bank T he Abu-D ha bi C om m ercial B an k and so m e other banks 52 33 .5
Marketing
20/4 [2002] 146±160 T otal 15 5 100 .0

Table IV
Types of accounts held by the respondents (n = 167)
B usine ss o nly P ersona l only B usine ss an d persona l
V alu e label F P er cent F P e r ce nt F Pe r ce nt
C urren t/dep osit/inve stm ent accou nt 38 2 2.8 100 59.9 66 39.5

Some important antecedents of customer analysis that links customer satisfaction to

satisfaction
The questionnaire included five items to
measure the core dimension, four items to
measure the relational dimension and eight
items to measure the tangible dimension of
service quality (Table I). In order to facilitate
comparability with earlier studies, it was
decided not to use factor analysis as this can
sometimes superficially cluster some
original items into a less meaningful factor.
In doing so, we have effectively imposed a
factor structure rather than testing it for its
existence. All of the three dimensions were,
however, tested for reliability using
Cronbach alpha scores. The core dimension
with an alpha score of 0.87, the relational
dimension with an alpha score of 0.84 and the
tangible dimension with a score of 0.72 easily
passed the minimum level recommended by
Nunnally (1978) of 0.70.
Stepwise regression
It was felt that customer satisfaction could be
modelled using a multivariate regression
Table V
Type of businesses if the respondents had a
business account
V alu e label (n = 8 9) F re que ncy P er cent
M an ufacturing 3 3.4
A gricultu re/farm in g 25
R eta il outle t 13
R en ting/leasin g 11
W hole sale trading 7 7.9
Im po rting/ex porting 15
B uilding/contracting 10
O the r 5 5.6
core, relational and tangible dimensions of
service quality and a range of other variables
such as expertise, age, business type,
education, ethnic background, gender,
income, Internet purchase, occupation, and
number of years in the UAE. Hence a
stepwise regression was performed. A
stepwise regression is a useful tool when
dealing with many explanatory variables. It
is an attempt to find the best regression
model without testing all possible
regressions. In such a regression, variables
are either added to or deleted from the
regression model at each step in the model
development process. The regression ends
with the selection of the best fitting model
where no variable can be added or deleted
from the last fitted model. The stepwise
regression results are shown in Table VII.
It is evident from Table VII that model 6 is
highly significant and explains 85 per cent of
variations in customers’ satisfaction.
Table VII indicates that a positive and
significant association exists between the
degree of customers’ satisfaction and CORE,
RELATION and YEARS. On this basis of this
we can conclude that there appears to be a
strong relationship between the core and
relational dimensions of service quality and
satisfaction. In other words, customers who
positively perceive the core and relational
28.1 dimension of the service quality provided by
14.6 a specific service provider are likely to feel
12.4 satisfied with the service provider. These
findings are in line with those reported by
16.9
Levesque and McDougall (1996). On the basis
11.2
of their research, Levesque and McDougall
(1996) reported that customer satisfaction

Table VI
Period of time the account(s) has/have been held (n = 167)
Less than 1 yea r 1-3 years 3-6 years M ore th an 6 years
Va lue la bel F P er cent F P er cent F P er cent F P e r cen t
C urrent/depo sit/in vestm e nt a ccoun t 8 5.6 56 39.2 45 31.5 34 23.8

[ 154 ]
Ahmad Jamal and Kamal Naser
Customer satisfaction and
retail banking: an assessment
of some of the key
antecedents of customer
satisfaction in retail banking
International Journal of Bank
Marketing
20/4 [2002] 146±160
was driven by a number of factors, including,
but not limited to, service quality
dimensions. Our findings also point to the
fact that the respondents who have been in
the UAE for a longer period of time are likely
to feel satisfied with the service provider.
According to Table VII, however, a negative
and significant association exists between
the degree of customers’ satisfaction and
EXPERTIS, BUSTYPE, and AGE. It implies
that as expertise level increases, the
satisfaction levels are likely to decrease.
Similarly, as the age levels go up, satisfaction
levels are likely to go down.
In order to see whether the average
perceptions (of the issues or variables under
investigation) were identical for all groups
involved in this survey, the Kruskal-Wallis
test was performed. The test was used to
measure any significant difference in
responses, since there were different groups
involved in this survey. This nonparametric
test is appropriate when measurement of the
variables under investigation is in an ordinal
scale (Grimm and Wozniak, 1990). The results
are shown in Table VIII.
It can be seen from Table VIII that the
respondents, regardless of their age, business
type, ethnic background, gender, Internet
purchases, occupation and number of years
in the UAE expressed a degree of satisfaction
towards most dimensions of the bank. The
results, however, pointed to some differences
between the educational background of the
respondents and satisfaction. Similarly,
differences existed between income levels
and satisfaction. These differences can be
clearly observed from the reported 2 . Also,
the reported 2 indicated some differences
between expertise and satisfaction.
Similarly, the reported 2 indicated strong
differences between business type and
expertise, between education and expertise;
between Internet purchases and expertise
and between occupation and expertise. Some
differences in the respondents’ satisfaction
were also reported between satisfaction and

Table VII
Stepwise regression
M odel Variable P aram ete r e stim ate t-statistic P rob > T V IF R2 F-sta tistic P rob > F Stan dard error
0.66 77 .51 0.000 0.41
1 C onstant ±4.00 ±0.0 9 0.93
CORE 1.03 8.8 0 0.00 1.0 0
0.72 50 .75 0.000 0.38
2 C onstant 0.17 0.4 1 0.668
CORE 1.09 1 0.0 0 0.000 1.0 3
B U STY PE ±8.60 ±2.9 7 0.005 1.0 3
0.76 40 .89 0.000 0.35
3 C onstant 1.00 1.9 6 0.058
CORE 1.06 1 0.3 4 0.000 1.0 5
B U STY PE ±9.90 ±3.5 7 0.001 1.0 7
AG E ±0.19 ±2.5 7 0.014 1.0 5
0.80 38 .03 0.000 0.32
4 C onstant 0.63 1.2 9 0.204
CORE 0.84 6.9 0 0.000 1.7 5
B U STY PE ±8.20 ±3.1 5 0.003 1.1 2
AG E ±0.21 ±3.0 6 0.004 1.0 6
R ELAT ION 0.29 2.7 8 0.008 1.6 9
0.83 35 .20 0.000 0.31
5 C onstant 1.57 2.5 6 0.015
CORE 0.87 7.5 2 0.000 1.7 8
B U STY PE ±8.30 ±3.3 8 0.002 1.1 2
AG E ±0.20 ±3.1 3 0.003 1.0 7
R ELAT ION 0.25 2.4 5 0.019 1.7 5
E XP ER TIS ±0.17 ±2.3 4 0.025 1.0 4
0.85 33 .11 0.000 0.29
6 C onstant 1.26 2.1 1 0.042
CORE 0.88 6.7 1 0.000 2.0 0
B U STY PE ±6.70 ±2.6 9 0.011 1.2 5
AG E ±0.21 ±3.4 7 0.001 1.0 7
R ELAT ION 0.30 3.0 1 0.005 1.8 6
E XP ER TIS ±0.17 ±2.4 8 0.018 1.0 4
YE AR S 0.11 2.1 6 0.037 1.2 0

[ 155 ]
Ahmad Jamal and Kamal Naser expertise, age and expertise, and the income overriding dimensions increases our ability
Customer satisfaction and variable and expertise. to explain the relationship in a better way.
retail banking: an assessment This proposition is tested in the current
of some of the key
antecedents of customer MANOVA analysis research utilising data from the retail-
satisfaction in retail banking To shed more light on the effect of banking sector in the UAE. The results
International Journal of Bank demographic factors on the dependent indicate that both core and relational
Marketing variable, a general factorial ANOVA analysis dimensions of service quality appear to be
20/4 [2002] 146±160
was carried out and reported in Table IX. It linked to customer satisfaction. We suggest
can be observed from Table IX that EDU, that these results indicate that customer
OCCUPA and INCOME are significantly satisfaction is based not only on the
associated with SATISFACT, while the table judgement of customers towards the
revealed that the association between reliability of the delivered service, but also
SATISFACT and ETHNIC was marginally on customers’ experiences with the service
significant, whereas, the association between delivery process. In other words, customers
SATISFACT and each of YEAR and EXPEIS who appreciate the core and relational
was insignificant. dimensions of service quality provided by a
service provider are likely to be satisfied
with the services offered by that service
Discussion provider. These findings are in line with
those reported earlier (see Levesque and
There has been a great deal of discussion in
McDougall, 1996; Naser et al., 1999). A great
the previous literature regarding the
deal of discussion has also occurred in the
relationship between service quality and
service literature regarding the significance
customer satisfaction. The current research
of the tangible aspect of service environment
contributes to this discussion by
on customers’ affective responses and
demonstrating that conceptualising different
behaviour intentions. The research reported
dimensions of service quality into two
here, however, could not establish a
relationship between the tangible dimension
Table VIII of service quality and customer satisfaction.
Kruskal-Wallis one-way ANOVA test This might be due to the fact that tangibility
SA TIS FAC EXP E R TIS is already part and parcel of the relational
2 2
Significanc e S ignifica nce dimension of service quality.
A growing body of services literature has
SA TISF AC 8.123 0.087
C O R EA SP 75.562 0.000 6.048 0.109 acknowledged the fact that there can be
R E LATION 62.683 0.000 1.278 0.734 potentially many antecedents of customer
TA NG IB LE 18.368 0.000 1.020 0.600 satisfaction. The current research
AG E 5.582 0.349 10.814 0.055 contributes to this literature by attempting to
B U STY P E 8.843 0.264 26.123 0.000 explore the relationship between customers’
E D U CA 10.033 0.074 27.128 0.000 expertise and customer satisfaction. Our
E TH N IC 1.890 0.596 8.857 0.031 findings suggest that expertise is negatively
G E N DE R 0.372 0.542 0.394 0.530 related to satisfaction. In other words, as
IN CO M E 10.810 0.094 11.298 0.080 expertise levels of customers go up, they are
ITP U R C AS 0.174 0.677 12.919 0.000 less likely to feel satisfied with service
OCCUPA 4.784 0.780 35.604 0.000 providers. This might be due to the fact that
YE AR S 3.108 0.540 4.196 0.380 expert customers might have raised
expectations about service quality. Our
findings also indicate that there is a strong
relationship between one’s length of stay (i.e.
Table IX
number of years) and satisfaction.
General factorial ANOVA test
Furthermore, our findings indicate that
F Sig. F there existed some demographic differences
Interce pt 18 2 0.000 in the way respondents expressed their
AG E 1.453 0.220 satisfaction with the bank. These findings
EDU 1.979 0.086 are in line with those reported earlier (Goode
E TH N IC 1.807 0.149 and Moutinho, 1996; Moutinho and Goode,
G E N D ER 1.058 0.306 1995; Naser et al., 1999). In their study, Naser
IN C O M E 2.381 0.033 et al. (1999) reported demographic differences
OCCUPA 2.056 0.075 in the degree of customer satisfaction
YE AR 0.905 0.463 towards an Islamic bank in Jordan. In our
E XP E IS 0.115 0.989 study, respondents belonging to different
education and income groups expressed their
N ote: D epe ndent variable: SAT IS FAC T differences towards satisfaction with the
[ 156 ]
Ahmad Jamal and Kamal Naser
Customer satisfaction and
retail banking: an assessment
of some of the key
antecedents of customer
satisfaction in retail banking
International Journal of Bank
Marketing
20/4 [2002] 146±160
bank. On the basis of this, we suggest that
education levels and income levels are
important factors in determining customer
satisfaction.
Managerial implications
Many service firms, including retail banks,
have been measuring customer satisfaction
and service quality to determine how well
they are meeting customer needs and
requirements (Dabholkar, 1995).
Understanding the causal relationship
between service quality and customer
satisfaction is of significant value to service
and bank managers, as both satisfaction and
service quality are predictors of customer
behaviours, such as purchase intentions and
word of mouth advertising (Dabholkar, 1995;
Reichheld and Sasser, 1990). The current
research contributes towards an
understanding of the direction of the causal
relationship between service quality and
satisfaction. Our findings imply that the core
and relational dimensions of service quality
are causal antecedents of customer
satisfaction. This is in line with empirical
findings reported earlier (Woodside et al.,
1989; Cronin and Taylor, 1992; Anderson and
Sullivan, 1993). The significance of the core
dimension of service quality means that the
bank management has to make sure that
things are done right the first time and they
have to ensure that the promises are kept in
terms of service delivery. As far as the
relational dimension is concerned, the bank
management has to make sure that the
employees are properly trained so that the
employees are not only courteous, pay
attention and are willing to help customers,
but also are experts in their field so that they
understand specific customer needs.
Although our findings are in line with those
reported by Parasuraman et al. (1991b),
marketing managers must not ignore the
tangible dimension of service quality as
customers are likely to make inferences
about the overall service quality on the basis
of tangible cues that surround the service
delivery environment (Dabholkar et al., 1996;
Wakefield and Blodgett, 1999).
Our findings imply that expert customers
are different from novice customers in that
they may have higher expectations in
comparison with the novice customers. This
means more hard work for the bank
managers, as they have consistently to
outperform demands and expectations of
customers who are increasingly making
their own financial decisions. Also, bank
managers cannot ignore customers’
expertise, as strong differences were found
concerning the expertise of the respondents
and different business types, education,
Internet purchases and occupational groups.
It might be that different people have
different expertise levels due to the nature
and type of business types they are engaged
in, their different educational and
occupational levels and the fact that they
have made purchases through the Internet.
Thus the bank can embark upon a strategy of
targeting specific business type customers
with specific education and occupational
levels to improve the quality of its services in
the eyes of its customers. Also, the bank has
to look into the needs of the different
education and income groups in order to
meet their expectations and ultimately
satisfy them. Our findings suggest that one’s
degree of satisfaction increases as per
increase in one’s length of stay in a
particular marketplace. This means that
bank managers in the UAE can segment their
market according to the number of years
their clients have lived in the country.
Notes
1 £1 sterling  Dh 6.5.
2 The assumption here is that the degree of
customer’s satisfaction varies with the length
of stay.
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