Consumer satisfaction and loyalty derived from the perceived quality of individual banking services: A eld study in Eskisehir

from Turkey
Received: 25th May, 2006

Nuri alk*
is an associate professor in marketing in the Department of Management of Anadolu University, Turkey. He has been a member of the Faculty of Economics and Administrative Sciences and has given courses on Marketing and Operations Research since 1986. He also has business experience as a planning expert for 12 years before 1984 in private sector. His main interests are in Quantitative Analysis, Consumer Behavior, Research Methods and Forecasting.

N. Figen Balta
is an assistant professor in marketing in the Department of Management of Anadolu University, Turkey. She has been a member of the Faculty of Economics and Administrative Sciences and has given courses on Marketing Management, Industrial Marketing and Macro Marketing since 1999. She also has a short business experience, before 1995. Her books on Marketing Management and Macro Marketing are textbooks for business students.

Abstract The research project intends to nd out the differences in the quality of the services rendered by the national banks of Turkey as perceived by the bank customers. This paper is an academically held eld research conducted in May 2000 in the city of Eskisehir Turkey, covering 1340 respondents who are regular bank customers, that is, who carry out banking transactions more than once in a month. These banks are all well-known, nationwide nancial institutions publicly or privately owned and are classied under three main groups depending on their ownership style and their size. Respondents are selected systematically from different age groups, income groups, and occupations reecting both sexes. A questionnaire form included ten close-end multiple-choice questions (excluding demographic questions) is designed for the research purpose Journal of Financial Services Marketing (2006) 10, 135149. doi:10.1057/palgrave.fsm.4760020 Keywords Loyalty, satisfaction, service quality

INTRODUCTION The concept of new economy predicts and even dictates the changes in customers behaviour. Today, the acceleration of information and communication trade-offs between all levels of the communities have created hypercompetitive markets. Therefore,
*Correspondence: Dr. Nuri alik, Anadolu University, Faculty of Economics and Administrative Sciences, Yunus Emic Campus, 26040 Eskisehir, Turkey Tel: 0090 535 3221845; Fax: 0090 222 3+8 3221845; E-mail: ncalik@anadolu.edu.tr

the main problem confronted at this time in the realm of banking becomes satisfaction and customer loyalty. In Banking, customers in the whole sector are more aware of competitive offers, become more price consciou, and more demanding than in the past. Power has migrated from the sellers or producers or retailers to customers who can dene what they want in the way of customised goods and services, prices, distribution channels, and even promotions.1 The importance of customer loyalty lies in the fact that it has a signicant implication

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alk and Balta for the banking service market strategy. For example, a bank might decide whether to emphasise the moves intended to capitalise on loyalty. Such efforts include promotions to attract the younger prospective customers and offering special conditions and crossselling to build up business with current customers. Loyalty can be thought of as the continuing patronage of a particular bank by a particular customer over time. Every customer has a certain degree of loyalty to a bank. According to Meidan,2 degree of loyalty can be gauged by tracking customers from their accounts over dened period of time or by tracking them doing business over a dened time and noting the degree of prolonged patronage. As Meidan2 said, there are several additional reasons why customer loyalty is important. They are as follows: the opening and closing of accounts is expensive for banks in terms of staff time and processing costs high customer turnover reduces protability retaining existing customers leads to further cross-selling to those customers retaining satised customers leads to word of mouth recommendations to new clients. For customers or clients, these delivery systems provide convenience and save time. The old adage Time is money is meant to remind us that time is a scarce resource. As society becomes more afuent, customers are able to buy more material objects, but even the wealthy are limited to 24 hours per day.3 Direct delivery of retail banking services through Automatic Teller Machine (ATM), mail, phone and computer banking enables customers to conduct banking business at home during their off hours. However, some researchers have found that both banks and customers have indicated the importance of human interactions. Although consumers use of electronic banking technology continues to grow, the speed of growth has not met many industry enthusiasts expectations.4 PREVIOUS RESEARCH AND RESEARCH OBJECTIVES The relationship between customer loyalty and service quality are investigated in the realm of banking sector. Meidans researches and explanations, framework of Lievens and the others, longitudional study of Fry and the others and Lewis denitions are used. In addition, this work is based on Kotler et al.1 and Bruhn.5 Fry et al.6 use a simple probability test in their longitudinal study on customer loyalty. The benchmark for loyalty they developed is the following: They assume measures that are available for a population of customers indicating whether they have a specic account at a specic bank, B, in two periods t and t 1. P(Bt) is the unconditional probability of an individual, randomly drawn from the population, having an account at bank B in the time period t and P(Bt/Bt 1) is the conditional probability of an individual having an account at bank B at the time period t, given that someone had an account at bank B in time period t 1. Loyalty exists if P(Bt/ Bt 1)>P(Bt) and the degree of loyalty is the extent to which P(Bt/Bt 1) exceeds P(Bt). The main conclusions of this study on these factors affecting degree of loyalty to a bank are: Bank coverage and mobility: If the respondent does not move from a city to another but remains in one place, or is not mobile, the branch coverage of banks has no effect on loyalty. In other words, mobility affects loyalty and protability of a customer remaining with a bank Loans: If the respondent has an outstanding loan during one period, called period 3, then it is more likely will remain with the same bank the next period (period 4) Gender: It was found that males have higher probability of remaining loyal to a bank than females. This is because some women transfer to husbands bank after marrying

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Prior patronage: If a respondent had an account in a bank during period say 3, then the probability of the respondent remaining with same bank is higher, that is, P(B4/B3)>P(B4). In addition, the inuence of parents on bank patronage is more signicant. The analysis represents that the conditional probability of students patronising the same bank as their parents is much more than the unconditional probability. Service quality initiatives are being developed in the banking service sector. Lewis7 has summarised some denitions and measures of quality of banking service in different studies. At the same time, quality controls based on statistical quality control techniques as in the manufacturing sector have been suggested in the banking services.8 Recently, customer loyalty and service quality have been measured in the retail banking in order to help diagnose problems in delivery of services.9 Other studies10 have suggested that there are seven elements of customer service that should be investigated in the nancial services: Consumption time, professionalism, waiting time, courtesy, attentiveness, accuracy and ability. Apparently, consumption time is the most important element for satisfaction. Other studies have conrmed that individuals generally nd the waiting time in queues unacceptable and reection of poor service quality. Quality in the retail banking is a multidimensional factor that comprises elements of the product (or services) and its delivery together with the other services (sometimes called after sales service), the reputation of the bank and the branding of the retail banking services. As an attribute, other researchers have shown it to be highly correlated with success.2 Thus, the various quality programmes to enhance service levels may indeed provide a key to a sustainable competitive advantage. Specially, service delivery process plays a key role in the overall service quality of banks.11 According to Roth Aleda and

Jackson William (1995),12 process capability and execution are major drivers of performance due to their impact on customer satisfaction and service quality. In the analysis of customer services delivery process, the focus should not be solely on traditional measures of productivity or nancial performance. Rather, comparisons based on intermediary measures that evaluate the drivers of performance from perspective of all participants in the service delivery process must be considered. There is an empirical example of this in the Frei and Harkers article11 To improve the effectiveness and efciency of its retail and business services, the banking sector has developed many new services and information technology-based systems.13 In recent years, advances in the information technology have revolutionised the delivery of retail banking services and the other nancial services. Banks have traditionally delivered services through face-to-face interactions with customers at branch ofces. However, the human interaction feature of services marketing has been challenged by the other channels of delivery, called self-service technology supported by electronic technology. According to Lee,4 these are called non-human delivery. However, setting up these delivery systems incurs large xed costs. However, for many banks, these delivery systems cut operating costs, since the largest expenses for the banks are labour costs and real estate. Instead of cost savings, Hitt and Frei14 discussed that the value of electronic direct marketing channels is to retain customers who are interested in utilising these innovative channels of retail banking service delivery. Furthermore, electronic delivery of retail banking services enables the banks to compete in national and global markets, rather than local market. The most consistent prior research with the research conducted by the authors of this paper was conducted by Boatler and Stanley in the year 198915 on the perceived quality of banking services. However, the major

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alk and Balta difference stems from the point that Boatler and Stanley deal mostly with international banking services, whereas this paper concentrates on national banking services. Their study was based on a mail survey in which 121 respondents from Texas area participated. A four-point Likert scale was utilised for rating the quality of the services from excellent to poor. A univariate analysis of percentage rating revealed that only one-third of the respondents rated banking services as good or excellent. The rest one-third rated them as average and the remaining one-third as poor. However, it should be noted that this research was conducted in 1989 and was an extension of a prior research in 1979 where 60 per cent of the respondents rated the quality of the international services as good or excellent. The conspicuous difference between the two surveys stems from the fact that 1085 United States banks failed in 1980 where 36 per cent of them were located in Texas area. Another important study was conducted by Veloutsou et al.16 in 2004 on bank loyalty in Athens, Greece. A sample of 216 bank customers, banking with ve different banks, was selected. The authors found a close link between brand image, perceived quality, satisfaction, and loyalty where brand image triggers both perceived quality and satisfaction that in turn leads to loyalty. The authors also stressed the causal relationship between perceived quality and satisfaction. A seven-point Likert-type scale (1 = strongly agree, 7 = strongly disagree) was utilised. Perceived quality was split between three factors as quality tangibles, quality personal interaction and employees and quality offer. Respondents were required to make a comparison between the ve commercial banks. Signicantly different conclusions were drawn as far as perceived quality and loyalty are concerned. The overall conclusion was that the brand image has a positive impact on perceived quality and satisfaction. On the other hand, the quality of the tangibles and the offers (comfortable environment, interior design, technology, etc) do not strongly affect the behaviour of the bank customers. The most eminent factor that builds up loyalty is the personalisation of the service provided. The main objective of this research is to determine the underlying factors of perceived quality that buildup customer loyalty. It is not at all an easy process since the effect of most of the determinants of customer loyalty and perceived quality changed considerably after the economic crisis in Turkey between 2001 and 2003 as in the USA (Texas) case. In addition to the past research, the authors of this paper intend to nd out how the difference in consumer demographics, transaction types and volumes, customer contact points, and problem types affect the perception of quality differently and build up different degree of loyalty. RESEARCH MODEL AND HYPOTHESES This research paper assumes that the subjects taken into account are bank customers, that is, depositors of saving deposits, time deposits, foreign exchange deposits, commercial deposits; credit users; utility payers; stocks and bonds traders; remitters; credit card holders; taxpayers, social security premium and insurance policy payers; and nally pensioners who deal with banking transactions at least a couple of times per month via ATMs, contact face to face and telephone and computers (interactively). It is also assumed that constraints faced by the customers are time, knowledge, aptitude to deal with the technical complexity of the non-human factors such as ATM and computer using wrong passwords, etc. The impact of all these constrains appeared during the analysis phase of the research project. Hypotheses Several research hypothesis sets are formulated, which are derived from the previous literature and relationships between

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the variables included in this research project. These hypotheses are grouped into two main parts: Hypotheses based on customer satisfaction H1: Customers who use indirect contact points (ie ATMs or computers) are less satised than those who use face-to-face contacts because of the quality traits associated with personalisation of the service provided. H2: Customer who uses to deal with medium and small-sized privately owned banks are more satised than those who get service from state-owned or large-sized privately owned banks. H3: Customers who get banking services more frequently are more satised and perceive higher quality of services than those who are less involved with banking transactions. H4: There is a positive relation between monthly transaction volume of the bank customers and the degree of satisfaction. This hypothesis is supported by a subHypothesis (H3a) as Customers who get banking services more frequently realise higher volume of transaction. This means that if H3 and H3a are supported H4 will also be supported.

attitude toward the brand. Hypotheses involving consumer loyalty are as follows: H5: There is a positive relationship between customer loyalty and customer satisfaction. In other words, persons who get more satisfaction from banking services deal with a single bank. Loyalty in medium- and small-sized bank customers is more evident than large-sized private or state-owned banks since they get more satisfaction from their services. Frequent users of bank services are more loyal to their banks than the infrequent users since loyalty requires repeat purchase by denition. There is a positive relation between monthly transaction volume of the bank customers and the loyalty. In other words, higher volume builds up more loyalty.

H6:

H7:

H8:

SAMPLE AND DATA COLLECTION As the subjects of research 1340 persons were selected and they expected to be able to give proper answers to the questions in the questionnaire. As pollsters 100 senior students were assigned to obtain data from different occupation, income, educational level, age and gender groups. Prior to the main survey, a pre-test was carried out using a convenience sample on 50 persons. Results of the pre-test were used to revise the questionnaire. The consistency of the collected data was checked by calling a randomly selected sample of 50 respondents and seeking their conrmation. SPSS 11 statistical package program was utilised to analyse the collected data. Ten basic closed-end, multiple-choice questions (excluding ve questions on the demographic characteristics of the respondents) are asked to the subjects. Each of the 15 questions

Hypotheses related to customer loyalty In this work, loyalty is determined with respect to the number of banks that a specic customer deals with. In other words, brand loyalty here is taken as true, not as split loyalty, that is, repeat purchase behaviour based on a salient decision-to-buy process on the part of the consumers who direct their preferences on a single brand. As put forth by Solomon17 For brand loyalty to exist, a pattern of repeat purchase must be accompanied by an underlying positive

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alk and Balta turns into a variable on a nominal, ordinal, interval or ratio scale. The rst ten basic questions are held as variables of dependent. Independent and interdependent in nature and changed their positions (dependent turns into independent or vice versa) in conformity with the hypotheses formulated. All possible relationships between the variables were cross-tabulated and combination of the groups at each cell is interpreted regarding whether a signicant similarity or difference exists or not. Variables are grouped to reect the factual or judgmental data. As the rst step, bivariate analysis is conducted in the form of non-parametric tests. Here MannWhitney U-test reveals meaningful results for the fact that each grouped variable has two main levels (groups) that explain best the signicant difference between the grouping variable and the other independent variables related to it. Dominant groups in each variable are selected from the cross-tabs formed. Signicance level is held at p < 0.01 level in all tests. After securing bivariate relationships, a third variable is sought to play role in grouping the variables. Two complementary non-parametric statistical techniques are employed in this research to facilitate cross-checks to obtain better results. One of them is 2 test and the other MannWhitney two independent samples test. Signicance level of p < 0.01 is selected to arrive conclusions. Study variables and descriptive statistics The variables of this study are as follows: BANKTYPE. The type of the bank that customer utilises for all or most transactions. The banks covered in this research are divided into three main groups as: State banks (owned by public). These are large-sized banks and founded long ago (the youngest is 100 years old). More then one-third (35.3 per cent) of the subjects covered in this study are the customers of these banks. Large-sized private banks. These are the most popular banks in Turkey. They are owned by private persons or holdings with annual revenues less than those of state banks. They establish branches in almost every part of the country. With this type of banks 56.9 per cent of the customers deal. The oldest one is 75 years old. Medium- and small-sized banks. These banks are the youngest and the boldest banks with different behaviour and banking strategies than those mentioned above. They offer higher interest rates on the deposits of the customers and have young managers and employees. Only 7.7 per cent of the subjects under study favoured these banks. TRANSACTION FREQUENCY is the number of transactions that the subjects make in a given period. The number of transactions was grouped into four categories: More than once a day (10.1 per cent) Five or more times per week (12.4 per cent) Once or twice per week (39.3 per cent) A couple of times per month (38.1 per cent). The mod value appears to be once or twice per week or less, that is, bank customers are not very much involved in banking transactions even though a majority of them do not have go to a bank and realise face-toface contact. CONTACT POINT is the customer contact points, that is, the place or the medium that the subject transacts. ATM (48.1 per cent) Face-to face (transactions realised at the bank) (47.3 per cent)

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Interactive (by telephone or by computer) (4.6 per cent). ATM machines were not so widespread at the time of this research. It is however astounding to nd out that domestic bank customer is willing to utilise novelty items as much as possible. TRANSACTION VOLUME is the total amount of transactions per month per customer (in USD terms) 025 USD (6.1 per cent) 26100 USD (34.1 per cent) 101500 USD (36.5 per cent) 5013000 USD) (13.7 per cent) + 3000 USD (8.8 per cent).

(Note: slices less than 5 per cent are grouped under other for technical reasons) PROBLEMS are the most irritating issues encountered by the customers during transactions. Waiting for a long time (long queues) (41.1 per cent) High interest rates applied by the bank, high commissions, taxes and other charges (11.8 per cent) Negative behaviour, omission and lack of interest of the bank employees. (5.7 per cent) Connection disorders of the data lines. (2.0 per cent) Tiresome formalities and red tape (7.6 per cent) Unavailable cash in ATMs. (15.3) Long queues in front of ATMs (16.0). Long queues are eternal headaches of domestic banks. This is because queue arrival rate exceeds service rate, especially in salary and credit payment dates and yet no satisfactory solution is found to this problem up today. CAUSES are related to specied problems. Lack of education and on-the-jobtraining of the bank employees (9.0 per cent) Technical reasons (inefciency of computers and data lines) (35.1) Managerial and organisational causes (insufcient supervision of the subordinates by the bank managers) (15.7) Lack of competitive environment amongst the banks (11.2) Improper intervention and meddling of the bank customers (4.8 per cent) Inadequate number of employees and desks at the branches (!6.4 per cent) Unnecessary prolonging of transactions. (7.7 per cent).

It is noted that the amount of transactions in USD with respect to total income is quite high. Approximately 50 per cent of income is acquired or spent throughout banking activities. TNSACTION TYPE is the type of transaction that a subject carries out most. Savings deposits (52.3) Foreign-exchange deposits (2.5 per cent) Individual and housing credit (2.6) Commercial credit (7.3 per cent) Automatic utility payments (3.3) Negotiable instruments (mostly transactions on promissory notes) (8.6 per cent) Capital stocks and bonds (4.1 per cent) Remittances (5.0 per cent) Student credits (4.3 per cent) Personal insurance (8.9 per cent) Miscellaneous (credit card, tax and real estate, social securities, pension, etc) (10.0 per cent).

Saving deposits surpasses the rest ten transaction types and suggests that persons are either lured by high interest rates (though these rates are still below high ination rate) or they accept them as a lifesaver in hard times such as unemployment, ill health, etc.

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alk and Balta Inadequacy of infrastructure and human factor are deemed as the main causes of the problems by the bank customers. QUALITY OF SERVICE is the appraisal of the quality of the service rendered by the bank where the subject is the customer of that bank. Fully satised (6.0 per cent) Mostly satised (56.0 per cent) Undecided (15.1 per cent) Mostly unsatised (20.4 per cent) Fully unsatised (2.5 per cent). INCOME is the monthly income of the customer 0200 USD (7.1 per cent) 201600 USD (39.3 per cent) 6012000 USD (40.1 per cent) + 2000 USD (13.6 per cent).

GENDER is the sex of the respondent Females (31.4 per cent) Males (68.6 per cent). EDUCATION LEVEL is the last graduated school. Elementary education (13.3 per cent) High school (36.5 per cent) College and university (50.2 per cent). OCCUPATION is the occupation of the subject. Wage and salary earners (30.5 per cent) Businessmen and entrepreneurs (merchants and tradesmen) (19.3 per cent) Managers and administrators (bureaucrats) (9.9 per cent) Self-employed (professionals) (19.3 per cent) Housewives (4.9 per cent) Students (16.0 per cent). The rst ten variables, which can be called as the basic variables, either take a dependent or an independent form with respect to way they are interrelated with another basic variable. This will be more clear in the Hypotheses to be tested part of this study. The basic mission of the demographic variables appear in this research as intervening variables to ease the segregation of the data into two signicantly different groups in the Cluster analysis. The variables also take part as control variables to enhance or to alter the degree of relationships between other basic variables.

Customers are satised from banking services to a large extent but one should note that this is not an overall score. The following variable hints that only 20.1 per cent of the persons deal with one bank and they are required to rate only one bank that they trade most. Therefore, second and/or third bank in concern may not give full satisfaction to the respondents. NUMBER OF BANKS specify the number of banks that each subject does business. Only one (20.1 per cent) Two (46.4 per cent) Three or four (28.1 per cent) More than four (5.4 per cent).

The majority of persons deal with two or more banks. This research does not prove evidence whether a split loyalty exists or not, but we can intuitively assert that there is no split loyalty but obtaining different services from different banks leads the customers to a second or third bank. AGE is the age of the respondent 1525 (33.7 per cent) 2635 (31.7 per cent) 3650 (24.7 per cent) 5165 (9.0 per cent) + 65 (0.9 per cent).

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So to provide an overall view or the prole of an average bank customer, mod values of all those variables are listed in (Table 1). The customer prole derived from the table indicates that the average bank customer under this survey is the person who: trades with large -size private banks; pays a visit once or twice per week; uses automatic teller machineATMs; has a monthly transaction volume of 101500 USD; deals mostly with saving deposits; brings complaint about long queues; thinks that this problem stems from technical reasons; is mostly satised from the quality of banking services; is a customer of two banks , young with moderate income, highly educated, male; and nally a wage or salary earner.

RESULTS H1 is supported at p < 0.01 since 62 per cent of the customers are fully or mostly satised from banking services in the overall sense and those who are satised have less problems tied to personnel causes and are more free to choose their banks because of favourable personnel treatments. ATM and computer users are less satised because they lack mostly the afnity of personnel arising from face-to-face contacts. Of those who get personnel-aided services 65.5 per cent are mostly satised, whereas only 58.3 per cent of remotely provided service takers fall in this category (Table 2). H2 is supported at p < 0.01 level where satisfaction of the customers who deal with medium- and small-sized banks rise up to 72.2 per cent, whereas this satisfaction level is

Table 1 Variable

The prole of an average bank customer Scale type Nominal Ordinal Nominal Ratio Nominal Nominal Nominal Ordinal Interval Ratio Ratio Nominal Ordinal Nominal Mod Large-sized private banks Once or twice per week ATM 101500 USD Savings deposits Long queues Technical reasons Mostly satised Two 1525 6012,000 Males College and university Wage and salary earners Percent (%) 56.9 39.3 48.1 36.5 52.3 41.1 35.1 56.0 46.4 33.7 40.1 68.6 50.2 30.5

BANKTYPE TRANSACTION Frequency CONTACT PDINT TRANSACTION Volume TRANSACTION Type PROBLEMS CAUSES QUALITY OF SERVICE NUMBER OF BANKS AGE INCOME GENDER EDUCATION LEVEL OCCUPATION

Table 2 Signicant determinants of satisfaction Pearson Determinant Customer contact point Bank type Transaction frequency Transaction volume Loyalty Value 11,124 33,033 51,234 41,225 23,341
2

Df 4 8 12 16 12

Asymp. sig. (two-sided) 0.025 0.000 0.000 0.001 0.025

MannWhitney Wilcoxon W U-test 205,057,500 20,216,500 23,954,000 3,351,500 8,823,500 44,6917,500 25,676,500 33,270,000 10,372,500 12,144,500

Z 2,991 3,112 6,133 4,233 2,934

Asymp. sig. (two-tailed) 0.003 0.002 0.000 0.000 0.003

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Table 3 Signicant determinants of loyalty Pearson Determinant Bank type Transaction Frequency Transaction Volume Occupation Satisfaction Value 21,212 121,704 4 164,304 4 38,643 23,341
2

Df 6 9 12 20 12

Asymp. sig. (two-sided) 0.002 0.000 0.000 0.007 0.025

MannWhitney U-test 46,827,000 35,540,500 33,330,500 3,573,500 8,823,500

Wilcoxon W 83,142,000 106,793,500 69,645,500 12,484,500 12,144,500

Z 1,889 6,892 7,797 2,364 2,934

Asymp. sig. (two-tailed) 0.059 0.000 0.000 0.018 0.003

only at 55.6 per cent on the part of stateowned banks. H3 js proved at p < 0.01 level and this time the chasm between more frequent and less frequent is widened. As the following table (Table 3) indicates, people who do banking transactions more than once per day are much more satised (82.3 per cent) than those deal with banks a couple of times per month (56.0 per cent). On the other hand, dissatisfaction rate between these two groups is more than twofold (10.322.9 per cent). H4 hypothesis is also sustained thanks to the acceptance of H3, it is difcult to put forth a plausible explanation of this building up a theoretical background. Therefore, it could be asserted freely that this hypothesis is a simple derivation from H3. Eighty-three per cent of the persons whose total transactions exceed 3,000 USD are mostly satised, whereas this percentage is reduced to 61.1 per cent for those with a transaction volume of 025 USD/month. H5 hypothesis is sustained at p < 0.01 signicance level, where 66.5 per cent of the persons who deal with only one bank(brand loyalists) are fully or mostly satised, whereas only 59.6 per cent of the satised customers trade with three or four banks. Similarly, dissatisfaction rate between these groups are 19.726.4 per cent. H6 hypothesis is accepted at p < 0.01 level by 2 analysis where 7.9 per cent of the small- and medium-sized bank customers are loyal. On the other hand, only 17.6 per cent of the large-sized private bank customers exhibit loyalty. However, MannWhitney

U-test does not reveal the same relationship at this signicance level and the authors are irresolute to accept fully this hypothesis. H7 hypothesis would have been accepted at p < 0.01 level if the hypothesis were to be formulated as there is a signicant difference between the customer loyalty and the frequency of service utilisation. It is however perplexing to nd out that less frequent users of the services are more loyalist. (Those who use banking services a couple of times per month are 28 per cent loyal, whereas the loyalty rate goes down to 11.8 per cent amongst those who use these services more than once per day. H8: The same adverse conclusion is obtained from this relationship as in the case of H7. It is rather hard to explain this nding since there is not much theoretical background supporting it. Customer demographics, satisfaction and loyalty The authors of this paper did not nd much empirical evidence or enough theoretical background to formulate and test hypothesis, but they believe and hope that the ndings in this part will contribute to the theory and will give an idea to the future researches. Demographics related to customer satisfaction The only conclusion derived here is related to occupation, that is, some occupations are signicantly more satised than the others in getting satisfaction from banking services.

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Table 4

Consumer demographics and loyalty Pearson

2

Determinant Age Income Gender Occupation Education level

Value 26,830 152,058 22,357 38,643 51,321

Df 12 9 3 20 6

Asymp. sig. (two-sided) 0.008 0.000 0.000 0.007 0.000

MannWhitneyWilcoxon W U-test 21,747,000 4,035,500 164,651,000 3,573,500 43,290,500 29,128,000 8,595,500 253,482,000 12,484,500 59,221,500

Z 2,764 7,645 4,697 2,364 6,097

Asymp. sig. (two-tailed) 0.006 0.000 0.000 0.018 0.000

Besides occupation, the rest of the demographics yield statistically indifferent results. From occupations point of view housewives get considerably less amount of satisfaction than the rest of the others. It is not easy to give a plausible answer to explain this phenomenon, yet an extensive future research on consumer satisfaction with respect to gender differences might be helpful. In this research, satisfaction level of housewives is 48.5 per cent, whereas managers and administrators get a higher level of satisfaction as 70.0 per cent. Demographics related to customer loyalty Contrary to the relationship between customer demographics and satisfaction where only one determinant can be found, all consumer demographics under analysis yield satisfactory results (ie signicant relationships) as far as customer loyalty is concerned. In summary, customer loyalty in banking services is more nested in senior people (5165 year of age), low-income earners (0200 USD/ month), females (25.2 per cent), less educated (35.4 per cent elementary school) and housewives (42.4 per cent) Housewives give out a perplexing result here since they are the only ones who get less satisfaction from the other occupations but are more loyal. The authors cannot nd a plausible explanation to this dilemma, but will investigate in their future researches. Compliance with loyalty and consumer demographics are given below in Table 4.

DISCUSSION The results obtained from this eld research did not produce too much surprise or disillusionment to the authors of this paper since the time lag between the collection and analysis of the data coincided with an economic crisis that ruled Turkey for more than two years. During this crisis period, almost all of the small-sized banks (13 out of 14) were either liquidated or turned into a fund (Savings Deposits Insurance Fund) governed by the Banking Regulation and Supervision Agency. Therefore, all these kind of banks have one to one correspondence with those grouped under BANKTYPE variable so no further analysis is required for them. The main reason for the liquidation of these banks is that despite the fact that they assumed to render a more qualied service to their customers, at least their loyal customers think in the same manner they were owned by large holdings that provided their nancial resources from the banks they own. Because of the deciencies and gaps in Turkeys current laws, these credits given to the holdings did not return to the banks, which formed the main cause of this disaster. The guaranty of the state on the saving deposits of the individuals caused a nancial burden on (about 50 billion USD) the nation that will have negative impacts on the economy even in the coming decades. The meaningful (statistically signicant) conclusions obtained from this eld research are so diversied that it may easily exceed

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alk and Balta the page limitation of this study if discussed fully. Therefore, it would be wiser to list the ndings and leave the interpretation to the reader who will review the hypotheses section of this study: 1. People who prefer to carry out transactions face-to face at the bank (versus ATM and interactive users) are as follows: those who arrive at a high volume (in monetary terms) so as to avoid mistakes on data lines and therefore make sure a secure transaction those who differ signicantly from interactive customers in dealing with deposit accounts since drawing money is not possible from nor from computers those who do not give the rst priority to technical problems within the problems category, so it could be asserted that they prefer face-to-face contact to reduce such problems those who get most satisfaction from banking services (the primary cause which motivate them towards face-to face contact) mostly self-employed and businessman who seek for person-to-person contact with bank managers to obtain advantage (loan, credit, etc), which otherwise is not possibly obtained by indirect means. less educated: for example, university graduates prefer ATM and interactive use relatively older people: younger generation prefers ATM and computer utilisation. 2. The type and the size of the banks affects the purchase behaviour of and the evaluation of the banking services by the consumers in the manner that:

the amount of interactive banking transactions differ signicantly in large-scale private banks with respect to state banks and small-scale banks.

Its probably due to the fact that these banks place more importance and ease on interactive banking large deposits nd place in private banks than in state banks. Higher interest rates and the guarantee of the state on all deposits yield this result high interest rates and high commissions on loans are perceived as important problem area on mediumand small-sized banks. These banks also impose more red tape on their customers. However, a more affable atmosphere prevails in this type of banks the perception of the major cause of problems encountered by the consumers while carrying out banking transactions differ with respect to the type and size of the banks. Customers of the medium- and small-scale banks impute this problem on the deciency of education and on-thejob training, whereas the customers of the state banks and large-scale private banks see technical difculties as the major problem source the total satisfaction obtained from transactions overwhelms in small-scale banks with respect to the state banks. This might be due to small and not so crowded branches and the friendly atmosphere in such branches high-income groups prefer private banks (especially small-sized ones) mainly because of higher interest rates and offshore banking self-employed people and businessmen prefer private banks (especially small scale ones) despite the fact that they pay higher interest for their loans, but the main clue might be that they obtain easier credits from such banks. 3. Different type of transactions produce different perceived service qualities, which might be linked to the demographic factors of the customers

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and also to the types and sizes of the banks:

the frequency of deposits differ according to whether they are savings deposits or commercial deposits. Extension of due dates by time deposits might be a possible cause for it. The high frequency of promissory notes enhances the fact that business people use banks more frequently than other individuals there is also a reverse relationship between savings and commercial deposits as far as total monthly amount of transactions are concerned the distribution of the problem areas as perceived by the bank customer more or less less exhibit an even distribution over the type of transactions, except for the fact that business people consider the deciency of competition among the banks more crucial than the other problem areas satisfaction from banking transactions might differ according to the types of transactions. Commercial account owners could be more satised because of their good relationships with the bank managers the demographic factor age has its greatest impact on savings deposits since younger people deal more with these transactions more than the other age groups savings deposits and bank remittances show signicant difference than the other accounts since these constitute a lower volume per customer. Whereas commercial deposits differ from other account just on the opposite side (high volume/consumer) of the scale, gender plays an important role in differentiating the type of transactions. Males and females act differently private retirement funds are mostly accepted by less educated people for

the fact that they get lower salaries than more educated from social insurance institutes. Gender and occupation may stand as intervening variables saving deposits are less appropriated by professionals and self-employed people, whereas wage and salary earners and housewives concentrate upon such accounts trading stocks and bonds is more favoured by professionals more than the other occupation groups. 4. Problems encountered during transactions differ signicantly as to the explanatory factors (variables) attached to them.

small- and medium-scale banks cause problems quite different from that of state banks frequent users of the bank services complain from long waiting, long queues and red-tape (formalities) more than the infrequent users ATM users denote cash-absence and queues in front of the machines as their main problem areas high interest rates and commissions harass those mostly who realise high volume transactions negative conduct of the bank personnel, long waiting time and the cumbersome formalities stem mainly from insufcient training high interest and commission charges indicate the lack of adequate competition between banks red tape and formalities are results of management and organisation disorders cash absence in ATMs is regarded as a technical problem rather than a human (organisation) problem people dealing more than two banks complain from high interest rates and long formalities. (This may be a reason why they do not stick up for one bank)

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alk and Balta age difference indicates different problem areas such that long waiting time is seen as a menace by the older people, whereas problems tied to ATM use upsets younger generation. high interest rates and long formalities seem to be severe problem areas by high-income groups since they have more chance to obtain credits less educated people have also less tolerance to wait for a long time at the bank. 5. Causes attributed to banking service problems seem to be different depending on several factors, such as:

customers of the medium- and smallsized private banks regard the causes of the problems, linked to banking service quite different from the customers of the state banks customers with frequent transactions name causes for those problems that are not considered as signicant by infrequent customers long duration of transactions affect interactive customers more than the others. Problems attached to human factor affects face-to-face contacts (as expected) customers with small-volume transactions nd training deciency and technical failures and the main causes of the problems, whereas those who possess large-volume transactions regard lack of competitive power, insufcient number of employees at the bank and long and tiresome transactions as the prime reasons of such problems people who carry out transactions at more than four banks assert signicantly different causes to the problems encountered younger and older people have different thoughts while stating the reasons that cause main issues for them in banking transactions

different income groups have different interpretations of the reasons attached to the problems male customers see human factors as the main indicators of the problems, whereas females point out technical causes less educated customers concentrate on the decient number of employees at the bank as the main cause of problems, whereas more educated customers relate it to technical reasons from occupations point of view: college students have the idea that technical reasons constitute major problems; housewives think that insufcient number of bank employees is more to blame. 6. Evaluation of the quality of banking services by the consumers shows considerable variation among the customers, which can be called as the perceived quality of the banking services

people doing business with small- and medium-sized banks get more satisfaction than those who deal with state and large-scale private banks. high frequency of banking transactions means more satisfaction obtained by the consumer. (Here cause and effect can be reversed.) interactive users are more satised users than ATM users and face-to-face contacts people with high volume transactions are also highly satised customers the most satised age group comprises older people ( + 66) high-income groups are more contented from the banks which they do business managers and ofcials (bureaucrats) tend to be the most pleased occupation group.

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