Evaluation of customer satisfaction for service quality at Saigon Commercial Joint Stock Bank after consolidation

CHAPTER 1: THEORETICAL BASIS ON SERVICE QUALITY AND CUSTOMER SATISFACTION AT COMMERCIAL BANK

1.6. Theoretical foundations of banking services

1.6.1. The concept and characteristics of the service

1.6.1.1. Service concept

Service is a common concept. There are many service concepts as follows:

“Services are activities, endeavors or completions performed by one party for the provision of another party. The effort or completion is often invisible. The “inputs” and “outputs” of the service themselves are not touchable or visible, so the service provision does not lead to any appropriation. Or “Services are economic activities. It creates value and provides benefits to customers at a specific time and place” (Truong Quang Thong, 2012, p. 14).

A service is a detailed description of what is being done to the customer (what the customer needs and wants to be met) and how this can be achieved (Edvardsson and Olsson, 1996).

Services are economic activities that often produce intangible products such as education, entertainment, food and accommodation, transportation, insurance, commerce, government, finance, real estate, medicine, and so on. economics and maintenance (Heizer and Render, 1999).

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Lovelock et al. (1999) separated the “service marketing concepts” as benefits to the customer and the “service operation concept” as the way in which the service is provided to the customer.

A service is a detailed description of a customer’s need to be satisfied, how it will be satisfied, what will be done for the customer, and how this will be achieved (Edvardsson et al., 2000). ).

Clark et al. (2000); Johnston and Clark (2001) define a service concept consisting of four components: service activities, service experiences, service results, and service values. Service operations are the manner in which services are provided; service experience is the customer’s direct experience of services; service outcomes are the benefits and outcomes of services available to customers; The value of a service is the perceived benefit to the customer relative to the cost of the service.

Thus, although there are many different definitions of a service, the definition of Kotler et al. (2005) is relatively consistent with the above approaches and is general in nature: A service is any good measure. any benefit that one party can provide to the other that is essentially intangible and does not result in ownership. Service performance may and may not be tied to a physical product.

1.6.1.2. Features of the service

According to Kotler and Keller (2007), services have four characteristics: Intangibility; Inseparability; Volatility, instability; Perishability, no storage. These four characteristics help distinguish a service from a specific physical product.

– First, intangibility: this is the basic feature of services, products and services • services differ from specific physical products in that the service cannot be held, held, heard, or seen before purchasing. Customers only receive the product or service as soon as it is provided. This increases uncertainty. To minimize uncertainty, customers look for service quality signals. Customers draw service conclusions from the marketing mix. Therefore, making service tangible is very important for service providers to order service marketers to make customers see intangible service quality (Kotler et al., 2005). Santos (2002) argues that although intangibility is an important feature of services, tangibility plays a more important role in the service sector. Invisibility can be reduced by using strong messages in advertising and dissemination.

According to Langford (2009), many service providers consider physical evidence and presentation to demonstrate service quality, thus reducing intangibility. Any service provider can organize the physical setup so that customers get their service fast and efficient. Customers rate good service when the staff is smiling, the uniform is suitable and beautiful. Customers value fast and efficient service through equipment such as computers, other machines and communication. Pricing should also be simple and clear. If we take the case of McDonald’s, we will see that they have a clean environment, good layout, proper lighting, nice menu and appropriate staff uniforms.

– Second, inseparability: services are produced and consumed at the same time and services are inseparable from the supplier whether the supplier is a person or a machine (Kotler et al., 2005). Inseparability is one of the distinguishing features of services from physical products due to simultaneous production and consumption.

According to Davies (1998), the service worker is part of the service and also the customer. Both customers and employees affect the service being provided. This means that customers are also partially responsible for the service they are provided with. Inseparability becomes complicated if the customer is uncertain about what they need. Therefore, the service sector trains employees to help customers know their needs well to choose the right service.

Although different service providers have different inseparability, customers and service providers depend on each other for the success of the service provided (Lawler, 2001).

– Third, volatility, instability: According to Kotler et al. (2005), services are always volatile and difficult to control. This is because the service depends a lot on the service provider as well as when, where and how the service is provided.

Therefore, quality control is important and to achieve this the service sector must employ the right people, standardize services and monitor customer satisfaction. The service sector must be very careful in recruiting service staff. Service companies should invest and train employees so that they can provide good service to customers. Training helps employees develop the skills they need to do their jobs well. Especially employees who have direct contact with customers (Langford, 2009).

– Fourth, perishability, no storage: one of the important characteristics of a service is that the service cannot be stored for later use or cannot be stored for sale. When demand is stable, perishability, no storage is not a problem but the service sector will face big trouble when demand fluctuates (Kotler et al., 2005). In some cases, the service value only exists for a certain time and then disappears. Unused services cannot be kept (Langford, 2009).

Non-retention can cause customers to wait a long time or cause customers to not be served. Because of the perishability of services, the service provider company that delivers the service on time will be more successful. Providing services at the right time will help service providers achieve their profit targets. This simplifies the process and focuses on the quality of service to be delivered (Canel et al., 2000).

1.6.2. Banking services

1.6.2.1. Banking service concept

According to Trinh Quoc Trung (2011, page 247), “Banking products and services are a form of activity, a process, an experience provided by a bank to meet a need and desire of a customer. target. Thus, banking products exist in the form of services of a financial nature. Banks design a product based on the concept that it is a set of benefits that will satisfy the target customer. Banking services provided to customers include: deposit services; lending services; payment services; consulting services; services related to securities trading activities; safes rental services; payment services; card services; information services;…”.

In short, banking services are a collection of features, features and uses created by banks to satisfy certain needs and desires of customers in the financial market (Nguyen Thi Minh Hien, 2003). .

1.6.2.2. Basic features of banking services

Banking services have two basic attributes that determine the entire process of forming, supplying, managing and exploiting products of banks as follows:

• Service attributes: when comparing banking products with industrial products, banking products are service products with intangible properties, heterogeneity, package, and inseparability between production-consumption and non-storability. Depending on the type of product or service, the combination of the above factors is commensurate.

• Financial attributes: is the privacy, confidentiality and sensitivity of information related to the finances of an individual or any organization. Financial attributes are considered as one of the biggest obstacles or barriers for banking service providers in the process of forming, supplying, exploiting and managing products.

1.6.2.3. Classification of banking services

Currently, at commercial banks in the world, the number of banking services is very rich with thousands of products, the classification criteria are also very diverse. In this section, banking services are divided into two main groups: traditional banking services and modern banking services.

Traditional banking services: include the following services:

– Capital mobilization: is a traditional service, although it does not bring direct profits to the bank, it has an important meaning for commercial banks.

In this activity, commercial banks are allowed to use tools and measures permitted by law to mobilize idle capital in the society as a source of credit capital to meet the needs of the economy. Activities of capital mobilization of commercial banks include:

+ Receiving deposits: Receiving deposits is the main form of capital mobilization of commercial banks, including payment deposits, term deposits, demand deposits, and term savings.

+ Issuing certificates of deposit, promissory notes, bonds and other valuable papers

For corporate customers, the main source of mobilized capital comes from temporarily unused payment deposits and deposits to ensure payment of businesses at banks. This source of capital often fluctuates, but the cost is cheap due to the application of the interest rate on demand.

For a group of individual customers, with high costs due to the spread of deposit locations, individual customers often choose the type of term deposit product for the purpose of accumulation. Based on the regulations of the State Bank, socio-economic conditions and the needs of the bank, each bank will have appropriate deposit interest rate proposals. Therefore, the cost of mobilized capital is high and heterogeneous across locations.

It can be said that the capital mobilization service contributes to solving the bank’s input. In which, capital mobilization from individual customers, especially term deposit products, accounts for a large proportion in the bank’s capital mobilization activities.

– Credit activities: are activities that constitute assets and are important to the viability and development of each bank.

Commercial banks are allowed to provide credit to businesses, individuals and households with short, medium and long-term loans in the form of production and business loans, savings loans, consumer loans, loans, etc. real estate loans, study abroad loans, discounts, rediscounts, guarantee services, financial leasing and other forms as prescribed by law.

Credit loans of large corporate customers are usually relatively large loans but the total number of loans is not much.

In contrast, credit loans of individuals and small and medium enterprises are usually relatively small loans but with a large number of loans. Therefore, the bank’s administrative costs for these loans will often be higher than other types of loans. However, this is a large and potential market.

The Bank performs payment transactions of customers by deducting money from the account of the transferee to the account of the beneficiary through banking accounting. Common means of payment include: payment by collection order, payment order, by check, by card…

The fact that commercial banks provide payment services brings benefits to entities in the economy through the support of non-cash payments, payments beyond the territory of a country, significantly improving efficiency of the payment process, making business transactions of customers easy, convenient, fast and safe for both depositors and recipients. At the same time, this service facilitates commercial banks to mobilize capital from customers and enjoy a certain fee, contributing to an increase in the bank’s service fee collection.

– Other activities: In addition to the main activities mentioned above, commercial banks are also entitled to perform other activities in accordance with their professional functions in accordance with the law, such as treasury services, business services. foreign exchange, gold trading, financial and monetary consulting services, asset management and investment trust, guarantee services, valuable papers preservation services, safes rental…

Modern banking services: besides traditional banking services, modern banking services are new services provided by commercial banks on the basis of applying new techniques and technologies, bringing conveniences to customers. new for customers. Includes the following services: