Customer Satisfaction in the Banking Sector
Customer satisfaction is a major issue in almost all sectors. This can basically determine the success and profitability of a company as a satisfied customer would most likely to ‘spread the good word’ or would have be happy to do business again with the firm. It is an important theoretical and practical issue for market researchers and consumer researchers (Meuter et al, 2000). With positive results in most research, the significance of customer satisfaction and customer retention in strategy development for a “market oriented’’ and “customer focused’’ firm cannot be underestimated (Kohli and Jaworski, 1990).
Specifically, Levesque and McDougall (1996) stated that customer satisfaction and retention are critical for retail banks, because of their impact on the company’s profit. With this, there is the challenge for banks to deliver a satisfactory quality service. After all, customer satisfaction is inarguably one of the two core concepts that are at the root of the marketing theory and practice (Spreng and Mackoy, 1996). The other one is service quality but it can be said it is not purely intertwined with customer satisfaction as a customer can be satisfied even though the service is not of high quality.
But then, customer satisfaction is considered a must for customer retention and loyalty, and undoubtedly helps in realizing economic goals like profitability, market share, return on investment and other corporate target (Reichheld, 1996; Hackl and Westlund, 2000). This paper presents the proposal to investigate customer satisfaction in the banking industry and link it with the profit of the company. As mentioned, this theory is also plays an important role to banks. The study will focus specifically on the Barclays Bank of Kenya. Barclays is a UK based brand that has made a huge impact on Kenya.
The study will look at how Barclays retain and satisfies its customers and what type of measurement they used and how it can be further improved. In this proposal, a background of Barclays Kenya will be presented along with some insights on the personal experience of the author on their service. Furthermore, a literature review will also be presented. This will include contents of literatures about customer satisfaction, examples of how satisfaction is measures, results of other studies, etc. Other important divisions such as the objectives of the study, the problem, limitation and the methodology will be presented. Background of the Study
Barclays is the UK’s third biggest banking company. It is engaged mainly in retail banking, investment banking and investment management. In 2002, it generated revenues of £11. 32 billion (Datamonitor, 2004). Through its subsidiary Barclays Bank, the company operates about 2,000 offices in the UK, particularly in both England and Wales. Its overseas business is managed by Barclay Bank International, which operates over 500 branches in around 60 countries. Other subsidiaries include the Woolwich, Barclaycard, Barclays Capital, and Barclays Global Investors. The company is headquartered in London, UK (Datamonitor, 2004).
One of its overseas business locations is in Kenya, where the company is considered as one of the key players in the country’s banking industry. Started in the 17th century in London, the company directly invested in Kenya in 1916 and has operated continuously until the present day (Barclays, 2005). Barclays in Kenya is considered the leading contributor of profit and size of operations in Africa (Barclays, 2005). As stated in the Website of the Barclays Kenya, “The bank is the market leader in the retail segment and is aggressively growing its corporate business with numerous world class financial services products.
The bank pioneered the concept of unsecured retail lending in Kenya where it currently holds a market share of 30%” (Barclays, 2005). With a world renowned brand, Barclays is one of the most successful investors in Kenya, with 69 computer-linked outlets across the country and 82 ATMs. Based on personal experience, the Barclays Bank of Kenya offers quality professional service to its customers. The employees are moderately friendly and they welcome customers thoroughly.
However, the employees themselves are not quite persuasive as they should be, but nonetheless, services are satisfactory in terms of speed of service delivery and customer orientation. But perhaps, a more persuasive and friendly approach can be possible. Sometimes, employees are inconsistent with the service quality. Cross-selling is also poor which can be considered as one of the weak points of the bank. SWOT Analysis of Barclays Generally, Barclays have many strengths that they can boast as well as opportunities that they can grab. However, with strengths there also weaknesses that are needed to be fixed.
Furthermore, there are also threats should also be addressed with strategy and care. Strengths and Opportunities Barclays is already an established brand in financial services. Thus, no matter where they are located overseas, they are known as one of the largest financial service groups in the UK. Their corporate identity and features is basically one of their strengths that they can show. They are also the leading provider of coordinated global services to multinational corporations and financial institutions worldwide, and have been involved in banking for over 300 years and with over 73,600 employees (Datamonitor, 2004).
Another strong point of the company is its global reputation and being globally diverse. Operating business in 60 countries, its diverse geographical spread allows the company to spread its risk of the adverse effects of operating in a single country such as economic downturn etc. (Datamonitor, 2004). For instance, despite the economic slump in Kenya, Barclays can still survive as it can ask support from its International office. In Kenya, poverty is widespread with 55 percent of the population below the poverty line.
Specific weak points of Kenya’s economy include: lack of budget discipline, government corruption, slow progress on privatization of parastatal companies, a weak banking sector, poor infrastructure, an inconsistent judicial system (CountryWatch, 2005). But despite these weaknesses of Kenya, especially in the banking sector, Barclays has the strength to stand up in the competition with a strong international aid and support from subsidiaries (Datamonitor, 2004). In addition, one of its strategies for penetrating in foreign markets is its good acquisition.
The company has been able to achieve solid growth, fend off external pressures and global expand through successful acquisitions. In terms of opportunities, Barclays in Kenya can profit from the unique all in one bank account approach. Furthermore, Barclays is offering legal and general life, pensions and investment products to Barclays’ customers. This offers an opportunity to breathe life into the group’s bancassurance operations (Datamonitor, 2004). There is also the growth of customers in Kenya.
The BBK Annual Report (2004) stated that the continued growth in customer deposits is attributed to the attractiveness of Barclay Kenya’s deposit products and the level of confidence their customers have in the Bank. The managing director stated that they continue to focus their efforts in lending to the personal and business sector in Kenya and are considering new products to facilitate this process (BBK Annual Report, 2004). Furthermore, the continuous investment in state-of-the-art technology and the effort to improve staff performance might give the company the edge in providing customer satisfaction in financial services.
Weaknesses and Threats The biggest weakness of Barclays is its bad publicity. Comments of the CEO made to MPs described how he didn’t use credit cards as they were “too expensive” and that he’d advised his children to not get into too much credit card debt causing an embarrassing situation (Datamonitor, 2004). Furthermore, the OFT pulled the plug on a marketing campaign as it described as “misleading” and possibly illegal offering “0% interest forever” (Datamonitor, 2004).
In 2002, its reductions in local and village branches had been criticized and accused of arrogance for its “Big Bank” advertising campaign (Datamonitor, 2004). As mentioned, majority of Kenya’s population is poor, and the grand image might not satisfy customers greatly. In addition, the company has also been criticized for its half-hearted efforts at cross-selling products to existing customers, and the lack of brand clarity has led to the loss of customers who failed to realize that ifferentiated services were available to those with the requisite cash (Datamonitor, 2004).
The main threat of the company, on the other hand, is the poor economic condition of Kenya itself. Furthermore, Kenya’s economy is hindered by the onslaught of AIDS in the region (CountryWatch, 2004). In addition, the continuous conflict in Central Africa might result in a slack of customers. Thus, this gives them the challenge to provide satisfactory service to retain as much customers as possible.