assessing service quality delivery and its impact on

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By

ADO NINGI IBRAHIM 2-3114-002

MASTER DEGREE In

BUSINESS ADMINISTRATION

FACULTY OF BUSINESS ADMINISTRATION & HUMANITIES

SWISS GERMAN UNIVERSITY EduTown BSD City

Tangerang 15339 Indonesia

Revision after Thesis Defence on 4^th March, 2016

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Ado Ningi Ibrahim STATEMENT BY THE AUTHOR

I hereby declare that this submission is my own work and to the best of my knowledge, it contains no material previously published or written by another person, nor material which to a substantial extent has been accepted for the award of any other degree or diploma at any educational institution, except where due acknowledgement is made in the thesis.

Ado Ningi Ibrahim

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Student Approved by:

Date

Parhimpunan Simatupang, SE, MBA

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Thesis Advisor

Date

Prof. Eric Jos Nasution, MBA, MA, Ph.D Dean

Date

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Ado Ningi Ibrahim ABSTRACT

ASSESSING SERVICE QUALITY DELIVERY AND ITS IMPACT ON CUSTOMER SATISFACTION IN THE BANKING SECTOR: A CASE STUDY OF

XYZ BANK

By:

Ado Ningi Ibrahim

Parhimpunan Simatupang, SE, MBA, Advisor

SWISS GERMAN UNIVERSITY

The purpose of this study is to assess service quality and its impact on customer satisfaction in the banking sector. In XYZ Bank, the objectives of the study are to establish the various dimensions of service quality, to examine the level of customer satisfaction and to determine the relationship between service quality and customer satisfaction. The researcher used closed-ended and self-administered questionnaires as a method of collecting data based on a SERVQUAL model. The study was carried out on one hundred respondents from XYZ Bank in Jakarta and they were selected using the accidental non-probability sampling method because it was difficult to find all respondents at once.

The findings of the study revealed that XYZ Bank applies most of the dimensions of service quality whereas all of these dimensions have a gap between expectations and perceptions, which means that the customers are not fully satisfied about the service quality at XYZ Bank. Long Turn-around-time for cash withdrawal referrals ranks as the highest customers dissatisfied factor of the services of XYZ Bank.

The results show that service quality has a significant positive impact towards customer satisfaction (0.861). This relationship is mainly drawn from the fact that whatever is done in service quality, it is aimed at improving customer satisfaction.

Keywords: Service Quality, SERVQUAL, Customer Satisfaction, Banking Sector, sampling method.

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Ado Ningi Ibrahim

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Ado Ningi Ibrahim DEDICATION

I dedicate this thesis to my dear family, classmates and all well-wishers who are too numerous to mention individually.

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Ado Ningi Ibrahim ACKNOWLEDGEMENTS

I would like to express my sincere gratitude and appreciation to all faculty members of Swiss German University, especially my advisor Mr. Parhimpunan Simatupang, SE, MBA for their collective and singular contributions, and uncommon display of untiring efforts in seeing to the fruition as well as ultimate completion of my thesis.

Mention must also be made of the significant contributions of my colleagues, students whose critiques of some aspects of my work put me on edge to give the thesis my best shot.

Significantly too, was the contribution of my family, particularly my wife, Fati, whose words of encouragement spurred me into action when the enormity of the ever- demanding course contents begun to hit me hard. Of course, I must not forget to mention the support and understanding of my Head of Mission, Ambassador M.L.

Sulaiman who accommodated some of my excuses while attending to my course work. I wish to, also express my sincere appreciation to my office colleagues, Messrs.

Ibrahim Babani and Ali Umar who attended the MBA program with me. In particular, their invaluable advice in urging me to remain focus when the going became too tough especially; the rigors of combining office work with the MBA course were herculean tasks which will remain indelible in my memories. I am grateful to all and sundry who rendered any form of assistance to me in the pursuit of my academic goal.

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Ado Ningi Ibrahim TABLE OF CONTENTS

Page

STATEMENT BY THE AUTHOR ... 2

ABSTRACT ... 3

DEDICATION ... 5

ACKNOWLEDGEMENTS ... 6

TABLE OF CONTENTS... 7

LIST OF FIGURES ... 11

LIST OF TABLES ... 12

CHAPTER 1 – INTRODUCTION ... 13

1.1 Background ... 13

1.1.1 Banking Sector ... 14

1.1.2 Banking System in Indonesia ... 17

1.2 Research Problem ... 22

1.3 Research Question ... 22

1.4 Objectives of the Study ... 23

1.5 Significance of the Study ... 23

1.6 Limitation of the Study ... 23

1.7 Chapter Summary ... 24

CHAPTER 2 - LITERATURE REVIEW ... 25

2.1 The Concept of Quality ... 25

2.2 The Concept of Service ... 25

2.3 Concept of Service Quality ... 28 2.3.1 Customers’ Expectation Compared to Perceptions of Service Quality . 28

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2.4 Service Quality Models ... 29

2.5 Measuring Service Quality using SERVQUAL Model ... 31

2.6 Customer Satisfaction ... 33

2.7 Impact of Service Quality on Customer Satisfaction ... 34

2.8 Past Research ... 36

2.9 Conceptual Framework ... 38

CHAPTER 3 – METHODOLOGY... 40

3.1 Research Framework ... 40

3.2 Research Design ... 40

3.3 Type and Source of Data ... 42

3.4 Sampling Design ... 43

3.4.1 Target Population ... 43

3.4.2 Sampling Technique ... 43

3.5 Questionnaire Design and Scale ... 44

3.5.1 Questionnaire Design ... 44

3.5.2 Scale... 45

3.5.3 Operationalization Variables... 46

3.6 Research Hypotheses ... 48

3.7 Research Paradigm ... 48

3.8 Data Analysis ... 49

3.8.1 Descriptive Analysis ... 49

3.8.2 Validity and Reliability Test ... 50

3.8.3 Multiple Regression... 51

3.8.4 Hypothesis Testing ... 52

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CHAPTER 4 – ANALYSIS AND DISCUSSION... 55

4.1 Introduction ... 55

4.2 Validity and Reliability Test ... 55

4.2.1 Validity Test (Pre-Test) ... 56

4.2.2 Reliability Test (Pre-Test) ... 59

4.2.3 Pre-Test Reliability and Validity Summary ... 61

4.3 Respondent’s Demographic Profile ... 61

4.3.1 Gender... 61

4.3.2 Age (Year) ... 62

4.3.3 Education Background ... 62

4.3.4 Occupation ... 63

4.3.5 Year as Customer of Bank XYZ ... 64

4.3.6 Income ... 65

4.4 GAP Analysis: Customer Expectation and Perception ... 66

4.4.1 Tangibles ... 67

4.4.2 Reliability ... 69

4.4.3 Responsiveness ... 71

4.4.4 Assurance ... 73

4.4.5 Empathy ... 75

4.5 Multiple Regression Analysis ... 77

4.5.1 Multiple Regression Equation ... 77

4.5.2 Classic Assumption Test ... 78

4.5.3 Multiple Linear Regression Result ... 82

4.6 Hypotheses Testing ... 84

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4.6.1 Hypothesis #1 ... 85

4.6.2 Hypothesis #2 ... 86

4.6.3 Hypothesis #3 ... 90

4.6.4 Hypothesis #4 ... 91

CHAPTER 5 – CONCLUSION AND RECOMMENDATION ... 93

5.1 Conclusion ... 93

5.2 Recommendation ... 94

GLOSSARY ... 96

REFERENCES ... 98

APPENDICES ... 107

Appendix 1 - Pearson Table ... 107

Appendix 2– Questionnaire ... 108

Appendix 3 - Questionnaire Results ... 113

Appendix 4 – Post-Test Results ... 117

CURRICULUM VITAE ... 121