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Service Quality Of Banks In The Uk.

The banking sector in the United Kingdom is today experiencing consumer unrest due to dissatisfaction in the service offered by banks. Banks in the UK, compared to other parts of the world, are perceived to offer their clients sub-standard service in their product portfolio. This product portfolio that includes services such as corporate banking and retail banking as the main products which constitute savings accounts, current accounts, student accounts, cheque processing and issuance, e-banking and money transfer as some of the sub-products currently offered by banks, are all overshadowed by the wanting service delivery by these banks.

Consumer dissatisfaction in UK banks has been demonstrated by the increase in consumer complaints as recorded by the financial ombudsman from 10 per week to 500 within a period of a year from March 2006 to March 2007. Actions by the banking regulators in the UK have also demonstrated possible dissatisfaction among the banking clientele. Some of these actions include the creation of the Treating Customers Fairly initiative by the Financial Services Association (FSA), and the launch of an investigation by the Office of Fair Trading into retail bank current accounts in early 2008 due suspicion of malpractices by banks.

These are just some of the signs that insinuate a negative perception towards banks by the consumers and the regulators of the services offered by banks in the UK. Causes of Dissatisfaction The dissatisfaction in the services offered by banks among the consumers has been caused by several factors that include unfavorable services as viewed by the consumers. This is the main cause of consumer dissatisfaction. Other minor causes of dissatisfaction include an increase in the size of clientele, the emergence of more informed consumers and a perceived lack of action to improve the situation among consumers.

Banks in the UK – compared to those in other parts of the first world, particularly those in the United States of America- offer unfavorable services to their clients. Banks in the UK offer higher interest rates on borrowing and lower interest rates on savings compared to banks in USA. UK banks also have shorter banking hours and are therefore time restrictive on customers. Inefficiency in the banking operations that lead to long queues also aggravates clients to a great extent. Account creation requirements such as relatively high minimum balances are a major cause of dissatisfaction among clients.

The size of clientele has been a major cause of dissatisfaction amongst the clients because the banks are not expanding as fast as the client base is. This has rendered banks helpless as their existing infrastructure is stretched beyond containable limits. As a result, banks have compromised their level and quality of service, an action that has received negative remarks from the clientele. The banking consumer today is more informed compared to banking consumers of yester years. This higher information level has been facilitated by the information age which has availed information on banking to the greater clientele.

As a result, consumers of banking services can compare banking services by different banks and in different countries. Through this comparison, UK bankers have been exposed to better banking services offered by banks especially in the USA. The increase of knowledge has led to more comparison and dissatisfaction of the services offered to the inhabitants of the UK. Clients of UK banks are dissatisfied with the fact that banks in the UK are doing very little to improve on the quality of service delivery.

With very little progress made in the past and the often referral to quantification of customer satisfaction, clients want more done than said. Various researches have been conducted to try and quantify or gauge the customer satisfaction in the recent past. Some of the researches carried out include those of the United Kingdom Consumer Satisfaction Index (UNCSI), J. D. Powers, Unisys and that of Dunhumby. The researches carried out by these organizations are based on different indices and scales but they all come to the conclusion that the consumer satisfaction situation in the UK and especially in the banking industry should be improved.

Effects of Dissatisfaction Due to the apparent dissatisfaction of banking clients in the UK, investigations have been initiated by the Office of Fair Trading into retail bank current accounts in early 2008 due to suspicion of malpractices by banks, researches have been conducted extensively by various research firms, banks have witnessed low rate of client retention and there has been an emergence of a proposed single index by Fred Reichheld known as the Net Promoters Score (NPS). The dissatisfaction and the perpetual complaints by bankers in the UK have led to the emergence of investigations into the practices and operations of banks.

It is suspected that banks may be unfairly charging their clients with the intention of making more profits at the expense of the client. In the present time of transparent regulation and operation of organizations, financial and other operational records are required to be at the disposal of share holders and other external users. This increased vigilance on the operations of institutions especially financial institutions, has necessitated investigations into banks and their affairs to ensure that the interests of the consumers are protected.

The recent investigation by the Office of Fair Trading into retail bank current accounts in early 2008 therefore came as no surprise to the banking fraternity. The unending complaints from clients have also led to the research into the grievances of banking clients and subsequent recommendations. Today, many research firms including J. D. Powers, Unisys and Dunhumby have concentrated on banking operations and consumer satisfaction since that has apparently become the main area of concern among consumers.

However, the analysis of the findings and execution of the recommendations in this research reports is not as forthcoming as would be hoped. This delayed response on the complaints of banking consumers has been a thorn in the flesh for the consumers since the banking does not seem to care about addressing their problems. The dissatisfaction amongst the clients has also led to the loss of many clients by banks especially the small account holders who are greatly affected by banking conditions. As a result, banks are experiencing a high rate of client turn-over.

This occurrence has forced the banks to conduct research exercises themselves, to help formulate measures that will bring about client retention. Client dissatisfaction in the banking industry has also led to the development of a single quantifier of customer satisfaction known as the Net Promoters Score concept. This concept was developed by Fred Reichheld and it seeks to provide a referral analysis amongst consumers on whether people are likely to refer others to a particular bank based on the quality of service received.

The concept has been supported by many researchers and research firms because of its simplicity and ease of execution. The concept has proved to be cost effective to the firms that use it and it is easy to communicate. This concept has however received criticism from various quarters with the common argument being that more variables are needed to offer a conclusive index on such an important matter. Critics of the concept state that one cannot conclusively analyze the level and degree of customer satisfaction based on a single digit. Course of action to deal with the dissatisfaction

The course of action to adequately deal with the problem of dissatisfaction among banking clients entails reviewing the service marketing theory and practice. This will enable banks to assess their deviation from the theory and the extent of their success or failure in relation to the deviation. The second course of action entails using the service quality 5 GAPS to design and deliver services that would satisfy expectations of clients. 1) Service Marketing Theory and Practice Service marketing theory states that consumers use information sources in a distinctive way to reduce the uncertainty associated with services.

This theory brings certain aspects in perspective with regards to consumer behavior and consumer perception of services: a) Consumers choose to use services based on the amount and credibility of information at their disposal concerning the service. b) Consumers view services as having many uncertainties and therefore they cannot adequately quantify the satisfaction from these services. c) The value of the information used by consumers in deciding whether to use a service or not is determined by the credibility of the source.

Therefore the source of the information will determine the success of the service in the market. Services have from ancient times been a mystery to consumers. This is because it is hard to quantify the satisfaction received from a service. Banking is a service that suffers this perception in the market. It is said that banking clients use banks because they have to…it is a necessity and not a choice! This mystery behind services has led to lack of a yardstick on which to gauge the quality of service.

Therefore, with no reference point, it has been a hard task for clients and bankers to give a comprehensive analysis on the quality of service. This is the origin of the problem of banks in the UK; bankers have been unable to qualify the service they give and consumers have resorted to giving bad reviews of the banking services. Banks should therefore review their marketing strategies in order to give out information that can be considered reliable for use by consumers. This will give consumers, who heavily rely on this information, a reference point to base their assessment of the services offered.

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