Service Quality and Customer Satisfaction among Bank Clients in Rwanda

Despite banking services in Rwanda have low levels of penetration, it is important for banks to focus on providing quality service to their customers. This is due to the effect it has on customer s ...


INTRODUCTION
With globalization and increasing competition, many organisations are putting effort into sustaining and retaining a reliable customer base by delivering service quality and customer satisfaction since these two concepts are central for service organisations. Financial institutions are also attempting to increase their customer satisfaction and loyalty through improved service quality [1][2][3][4][5][6][7]. Besides, they suggest that increasing customer retention can have a substantial impact on profits [8][9][10]. Consequently, they are changing the way they conduct business and adopt new strategies with regard to customers' needs and wants by introducing new financial services.
The introduction of banking services in Rwanda has impacted the banking system and plays a major role in economic growth and development [11]. Research conducted by [12] showed that in general, only 14 percent of the active population use banks, 7% use Microfinance Finance Institutions, 26% are informally served and 52% are financially excluded. This low level of penetration of financial services represents potential growth for the banking sector.
Service quality, customer satisfaction and loyalty in general as well as in the banking sector has received a great deal of attention. Initial studies into service quality and service quality dimensions [13][14][15][16]9] have developed into investigation of methods of measurement [14,17,18] as well as the associated behavioural outcomes [19]. Studies have also been conducted into the measurement of these constructs in the banking sector [1,6,7,20,21,22,23,24]. The introduction of internet (and electronic banking) has required the adaptation and development of measurement tools in this context [25].
Studies have been undertaken in Pakistan [26]; India [27,28,29,30]; Ghana [31]; Ethiopia [32] and Bangladesh [33]. It is to the studies in developing economics that this paper seeks to contribute. The contribution of this research is the investigation that has been undertaken in the Rwandan banking industry. Measurement has been done of perceived service quality in order to examine possible behavioural effects that delivering a quality service can give to banks.
The article commences with the theoretical foundation for the study by examining the relationship between service quality and customer satisfaction. The study is then presented, where after the findings are reported. The paper concludes with a discussion of the implications of the research for the specific bank that is the focus of the study together with implications for the broader banking sector.

THE RESEARCH PROBLEM AND RESEARCH OBJECTIVES
Rwanda has seen an increase in the number of adults having access to financial services from 21% in 2008 to 42% in 2012 [34], yet large numbers of individuals can be described as unbanked. Customers coming into the banking system for the first time translates into consumers with varying expectations and perceptions of services. This impacts their satisfaction with the financial services received.
Research conducted by [35,36,37] revealed that customers complain of inadequacy of services in the use of the banking system such as breakdowns of ATMs, long queues at ATM service points, retention of customers' cards by ATM machine, limited knowledge on the use of ATM cards, fraudulent transactions and ATM operation in just a few languages, lack of connection. According to [38], banks' customers in Rwanda are facing a number of other barriers to financial services access, including: a low level of financial literacy, out-dated payment systems, inadequate financial products and service as well as a lack of appropriate delivery methods (particularly in rural areas).
With the description of current services offered, it is necessary to investigate the level of customer satisfaction among customers of commercial banks in Rwanda. To date, little research has been done in Rwanda on the perception and satisfaction of customers with regard to financial services offered by commercial banks [34]. The problem is that with more customers, BK needs to make sure customers are satisfied. But what is their perception of the service quality, and are they satisfied?
With the importance of service quality and customer satisfaction in the performance of the organisation [20,28,30], it is necessary for banks to provide excellent service. Consequently, the purpose of this research is to investigate the satisfaction of banking customers in Rwanda with regard to financial services received.

Brief History of the Banking Sector in Rwanda
The Rwandan financial sector started with the creation of the Central Bank, National Bank of Rwanda in April 1964. According to [39], before the genocide of 1994, the development of the financial sector in Rwanda was weak: only three commercial banks and two specialized banks operated with a total of less than twenty branches in the country, and one microfinance (UBPR) with around one hundred forty six branches. The genocide negatively affected the development of the banking sector and almost both physical and human capital of all banks was destroyed during the genocide [40].
After the genocide the number of banks has increased, where in 2002 there were six commercial banks with twenty eight branches, two specialized banks and one union of financial institutions (UBPR) with one hundred forty eight branches [41]. In 2007, commercial banks operated 38 branches, making only 7% of all branches of financial institutions. By the end of 2008, 8 commercial banks, 2 specialized banks and 1 Microfinance bank were operating. At the end of 2012, the Rwanda's banking sector was composed of nine commercial licensed banks, three micro-finance banks, one development bank, and one co-operative bank [34].
During this time, the Rwandan financial services industry experienced important development, as economic strength and growth increased employment rates and the purchasing power of the Rwandan population, and this lead to more penetration of financial products and services. Although the number of adults benefiting from banking services was still relatively low (58%) in 2008, this figure increased to 72% four years later [34].

Brief Description of the Bank that is the Focus of the Study
Founded in 1966 as a joint venture between Belgolaise S.A. and the Government of Rwanda, Bank of Kigali (BK) is now a dominant player in the Rwandan banking sector and is widely regarded as a reliable financial institution with a highly recognised brand and strong reputation for customer focus, outstanding service and robust balance sheet.
The bank has expanded its service delivery channels and developed an array of products that ensure that customers have access to its services twenty four hours a day, seven days a week. Diverse technological driven alternative delivery channels by introducing mobile vans dubbed mobibank to serve five provinces of Rwanda and all the bank's ATMs and Point of Sales accept international cards [42].
By the end of May 2013, BK had 57 branches operating within Kigali city and across the country and 47 ATMs [43]. Bank of Kigali is the leading bank in Rwanda in terms of assets, deposits, loans and shareholders' equity and is also the most profitable bank in Rwanda, accounting for above 50% of the total banking sector profits in each of the last three financial years. The bank is represented in all provinces and all major economic districts in Rwanda. As of 31 December 2010, the Bank had, after BPR, the second largest branch network in the country with 33 branches [34].

CUSTOMER SATISFACTION AND SERVICE QUALITY
Organisations have focused a great deal of attention on the issues of customer satisfaction and service quality, with efforts going into determining ways in which these aspects can be measured for an organisation while also suggesting ways in which organisations can improve their operations (and these scores).

The Nature of Customer Satisfaction
In general, satisfaction is a person's feelings of pleasure or disappointment that result from comparing a product's or service's perceived performance or outcome to the expectation [9,44]. If the performance falls short of expectations, the customer is dissatisfied. If the performance matches the expectations the customer is satisfied. If the performance exceeds expectations, the customer is highly satisfied and delighted [45].
The concept of customer satisfaction occupies a central position in business relationships. Many have defined with reference to the customer's prior expectations. For instance, [46] defines it as the state of mind that customers have about a company when their expectations have been met or exceeded over the lifetime of the product or service. One can be satisfied by a product and service received, or by the company that offered it, when that product and service, or the provider, has met one's prior expectations. Therefore, a high level of service quality is considered as one of the most important determinant in explaining customer satisfaction, which in turn, influences on customer loyalty towards the organisation [6, 26,28,47]. That is why, in today's high competitive business environment, achieving success will greatly depend on customer satisfaction.

Factors Influencing Customer Satisfaction
According to [48], customer satisfaction is determined by various factors, including perceptions of service and product quality, and price. Other factors like personal and situational factors may influence also customer satisfaction.
Although it is stated that other factors such as price and product quality can affect customer satisfaction, perceived service quality is an important component of customer satisfaction [49]. In addition to service quality, other researchers [50] have identified that customer satisfaction is also determined by other factors such as customer specific and situational factors.

Service Quality
Service quality is regarded as the result of the comparison made by customers about what they feel service organisations should offer, and perceptions of the performance of organisations providing the services [9,22]. A customer's expectation serves as a foundation for evaluating service quality because, quality is high when performance exceeds expectation and quality is low when performance does not meet their expectation [51,52]. Empirical studies show that the quality of service offered is related to overall satisfaction of the customer.
Service quality is considered an important tool for an organisation's struggle to differentiate itself from its competitors [53]. It is also an important tool to measure customer satisfaction [54]. According to several researchers such as [21], and others, service quality is a function of the customer's expectations (what they expect the organisation should offer them) and what they really get and how they feel about it. In order to measure the customer's perceptions of the service received [13] developed the SERVQUAL instrument which compares the customer's initial expectations and his/her perceptions of the service received.
Service quality can be analysed into five dimensions namely reliability, responsiveness, assurance, empathy, and [13]. Service quality is a focused evaluation that reflects the customer's perception of reliability, assurance, responsiveness, empathy and tangibility, while satisfaction is more inclusive and it is influenced by perceptions of service quality, product price and quality as well as situational factors and personal factors [49].These five dimensions of perceived quality are also the basis upon which expected quality is built. Reliability is the ability of the service provider to perform the promised service dependably and accurately [49,55]. Responsiveness reflects of the willingness to help customers and provide prompt service [18,49] and is seen in the timely reaction towards the customers' needs or willingness to provide timely services to customers. In context of the Bank, this refers to the changes that have been observed in financial service like introduction of electronic banking, mobile banking, and ATM services in order to respond to the needs of customers. Assurance quality is a knowledge and courtesy of employees and their ability to inspire trust and convey confidence among customers. Empathy is a quality which is the last dimension on SERVQUAL model. It is the ability to be approachable, and giving individual attention to the customers [22,49]. Tangibility is a concept that measures how dependable a customer views a service provider to be based upon the quality of its most visible attributes [49].
In the banking sector, service quality has become more and more significant aspect for achievement and endurance [6, 19,56]. The stipulation of high quality service helps in achieving numerous requirements like customer satisfaction and its outcome loyalty, profitability, market share and financial performance.
Once the customer has chosen a commercial bank, they have developed expectations of what constitutes service, an ideal service level [49]. This is then used in the evaluation of the actual service, resulting in a confirmation/ disconfirmation of the service.

Measuring Customer Satisfaction and
Service Quality

Measuring of customer satisfaction
Customer satisfaction has been described by organisations as a critical factor in this success. Measuring satisfaction is generally linked to the so-called confirmation/disconfirmation process that comes about when customers believe that their expectations have been met [50]. Associated with this are the expectations and perceptions of customers and the actual experiences of the customer, which in turn produces a level of perceived quality that is influenced by expectations [44].
Satisfaction can be determined by subjective (e.g. customer needs, emotions) and objective factors (e.g. product and service features). Service quality and customer satisfaction are distinct concepts, although they are closely related. Various researches have been done to measure customer satisfaction in service industry.
The search done by [57] found that "cleanliness, security, value for money and courtesy of staff determine customer satisfaction". [58] revealed that cleanliness and comfort, convenience of location, prompt service, safety and security, and friendliness of employees are key determinants of customer satisfaction. A study conducted by [15] claimed that the vital factors are the behaviour of employees, cleanliness and timeliness. On the other hand the study by [59] concluded that staff quality, property qualities, and value are the top three factors that determine customers' satisfaction.

Measuring service quality
It exist many service quality models but scientists do not have similar view about these models and their measurements. Service quality has diverse dimensions in varying service sectors [60]. However, service quality measurement enables managers to recognize quality problems and enhance the efficiency and quality of services to exceed expectations and reach customer satisfaction [61].
The most widely used scales in measuring service quality in the banking sector are the SERVQUAL and SERVPERF models [17,32,56]. [14] developed an instrument SERVQUAL that has the greatest in the measurement of service quality. According to the SERVQUAL model, service quality can be measured by identifying the gaps between customers' expectations of the service to be given and their perceptions of the actual performance of the service. SERVQUAL instrument involves the measurement of the five dimensions. The respondent is capable to specify both perceptions and expectations that statements have of the specific dimension [14] made use of 7 point scale to determine both perceptions and expectations. The foundation of SERVQUAL is the conceptualization of service quality as the difference between customers' expectations and perceived performances.
The SERVPERF instrument was introduced by [17]. SERVPERF measures service quality by measuring the perceptions of customers. Cronin and Taylor argued that measuring perceptions are sufficient for measuring service quality and therefore expectations should not be included as suggested by SERVQUAL [23]. The SERVPERF instrument is a derivative of the original SERVQUAL instrument, only measuring performance of service quality. The improvement offered by SERVPERF includes the absence of gap measurement issues, greater variance explained, and a smaller number of items used [17,21].
The evaluation of service quality is conceptualized as a gap between what the customer expects from banks with regards to financial services and their assessments of the performance with the Bank. The SERVPERF in this study was adapted to Rwanda banking industry to measure service quality as perceived by the customers.

RESEARCH METHODOLOGY
This part provides a detailed analysis of the methodology which has been used by the researcher to collect data, analyse them and the presentation of the findings. Quantitative research was used. The quantitative research is the technique that involves a large number of respondents providing descriptive evidence that cannot be simply projected on whole population [62]. This research undertakes a survey involving customers of one of leading banks in Rwanda. The questionnaire was a self-completion questionnaire: The respondent completed it without any assistance.

Population and Sampling
The population to be used in this study covers the customers of the bank. Non-probability sampling was used. Non-probability sampling represents a group of sampling techniques that help researchers to select units from a population that they are interested in studying [63]. Respondents were selected using convenience sampling method due to a potentially infinite population. This means that customers were selected due to the ease with which they could be contacted. The researcher requested permission from the bank to engage customers in the study through giving them questionnaires to fill them as they come to the bank before they went out.

Sources of Data and Data Collection Instruments
The research used both primary and secondary data. Primary data were selected for respondents using questionnaires. Secondary data were obtained by reviewing existing published literature.
The instrument of this study was constructed on the basis of research objectives and research questions where a bibliographical section was to obtain information about the respondents. Information gathered through questions related to the customers' gender, age, occupation and the time which they have been customer of the Bank. The instrument was adapted to the Rwandan commercial bank situation and was translated into Kinyarwanda. Use was made of a 7 point Likert scale.

Data Processing and Analysis
The researcher closely examined the relationship between the questions and their respective responses in order to ensure consistency, accuracy and uniformity. Quantitative techniques were used to process and analyse the collected data. Using these techniques, the presentation and organization of findings made it very easy to comprehend and draw conclusions based on the findings.
Data collected have been categorized in different categories by which answers to each question in a completed data collection instrument, is categorized and codified. These were presented or summarized or condensed into tables and graphs for analysis purposes. The data was then analysed using statistical methods in order to interpret them. Tests used included descriptive statistics, tests for reliability, ANOVAs and ttests.

FINDINGS
Responses were received from 156 customers of the bank of Kigali.

Demographic Findings
The respondents included more males (67.9%) than females (32.1%). Nearly one third of the respondents (32.1%) is aged between 35 and 54.
There were more married (54.5%) respondents, and the majority of the respondents had completed university (53.8%). The greatest number of respondents have been BK's customer for 1 to 3 years (42.3%). Regarding the frequency of use BK's facilities, one third were using ATM and Mobile banking (39.1% and 32.1%) respectively. Table 1 provides further detail on the respondents.

Customer Perceptions of Service Quality in BK
The scores on the individual items and on the dimensions are presented in Table 2

Reliability of Overall Model and Quality Dimensions
To test reliability between variables, Cronbach's Alpha has been used (it varies between 0 and 1).
Cronbach's Alpha has been used to measure internal consistency, which means that all items within the model should measure the same construct. The closer the value is to 1.0, the greater the internal consistency of items in the model being assessed [64].   The reliability of this study is to measure customer satisfaction with regards to service quality offered by the bank. The Alpha coefficient shows that the reliability of empathy and responsiveness as quality dimensions are 0.544 and 0.508 respectively. As has been calculated in the above

DISCUSSION
The findings show that customers perceive the service received from the bank positively, as they are reflected in the dimensions of service quality. Service quality and customer satisfaction occupies a central position in business activities, which emphasises the purpose of this research in investigating these aspects. The findings are consistent with previous studies that service quality is an important part of having satisfied customers in the banking context [1,6].
Measuring the service quality dimensions (using SERVPERF) has indicated the perceptions of customers with respect to services offered by Bank of Kigali in Rwanda. Based on the study, it was revealed that, BK employees had skills and knowledge in the performance of the services to customers. Customers feel respected and have generated feelings of security with bank, highlighting the importance of human contact [27,28]. Considering the quality dimensions, the largest perceptions of Bank of Kigali were in terms of the tangibility dimension. This differs from other studies but this can be ascribed to the location in which the research was undertaken [28].
All banks strive to deliver service quality at it can provide competitive advantage [1,6,26,28]. But to provide this requires action on the part of management. Having a good recovery process for a dissatisfied customer or service failure is a very important and necessary process for any service organization like Bank of Kigali, and continual development and improvement of this process is necessary. Customer satisfaction as it reflects in specific behaviours are also positive towards the bank, and as word-of-mouth is critical in services, this aspect cannot be ignored by the bank. Financial services that are provided are positively perceived specific strategies needs to be developed in order to retain customers, one of the strategies is to increase number of bank's outlets during taxes payment periods. While employees are perceived to be skilled, the bank needs to ensure that they continue training to ensure that employee skills are at an optimal level.
There are a number of limitations associated with the study. It was conducted in one commercial bank in Rwanda, which cannot be regarded as representative of other commercial banks in Rwanda. This means that the results of this study cannot be generalized. Low levels of reliability in the survey also impacted the results.
For further research, little research has been published regarding service quality and customer satisfaction in commercial bank sector in Rwanda. Research needs to be done in customer satisfaction with other factors including personal factors, price, product quality, situational factors and in other financial service industry of Rwanda. Further research also needs to be done into use of the applicability of other service quality and customer satisfaction instruments in the Rwandan context.

CONCLUSION
Service quality and customer satisfaction are important constructs in service industries, and this is also the case in banking. The purpose of this research was to investigate the satisfaction of banking customers in Rwanda with regard to financial services received, and the investigation of these perceptions of Rwandan banking customers regarding service quality and satisfaction has indicated positive perceptions. While service quality perceptions of customers are largely positive, maintaining these positive perceptions is important for the continued satisfaction of both existing customers while also providing satisfaction to new customers. This would be done through the continued attention to interaction-related aspects (such as employees).