Comparative evaluation of critical factors in delivering service quality of banks An application of dominance analysis in modified SERVQUAL model

Purpose - This study aims to find the differences in the service quality (if any) between two types of banks, namely conventional and Islamic, in terms of common critical factors after re-examining the SERVQUAL model, originally pioneered by Parasuraman. Further, the technique of dominance analysis is used to examine the relative importance of the critical factors in closing up the overall service quality gap in these two types of banks. Design/methodology/approach - The sample is made up of 308 bank customers, consisting of the customers from both Islamic and conventional banks from different parts of Malaysia. The data have been collected by using the structured questionnaire, which consists of three parts. Part 1 deals with consumers' usage of banking channels and their banking behaviour. Part 2 contains 26 statements related to service quality dimensions based on past literature. Finally, Part 3 contains the questions related to the socio-demographic profiles of respondents. Findings - The modified SERVQUALmodel consists of four critical factors (dimensions) as detected by factor analysis: tangibility, reliability, competence, and convenience. The results reveal that the expectations on competence and convenience are significantly different between conventional banks and Islamic banks, whereas the perceptions on tangibility and convenience are found to be significantly different between these two types of banks. The application of dominance analysis in the SERVQUAL model indicates that the difference between the two types of banks is in terms of degree and not pattern. Competence and convenience are found to be the relatively more dominating factors in both the types of banks. These two dimensions together can help to reduce the overall service quality gap to an extent of 72 per cent in the case of conventional banks and 85 per cent in the case of Islamic banks. Originality/value - The application of dominance analysis in the SERVQUAL model could be more meaningful in determining the relative importance of the factors when dimensions are interdependent. It permits direct comparison of measures and allows one to predict the level of influence of one factor in comparison with other factors. The study could be quite useful from the policy perspective in providing the guidelines to develop proper strategies and acknowledge the changes in customers' banking behaviour more quickly.