Return to Home Page 1997 Cross-cultural Service Quality and Bank Marketing by Paul Herbig and Alain Genestre Abstract: This paper explains the different aspects of international banking customer service. The different tactics that international banks are developing to maintain their customer base as well as attract new customers to their business are discussed. Examples of different attitudes and different customer demands from various countries will indicate the differences of morals, values and beliefs that people employ in their cultures and relate these cultural elements to the level and type of customer service quality seen. INTRODUCTION: As the marketplace becomes increasingly global, the only way to gain differential market advantage is through providing the customer with unique and reliable service. To survive in the future, every business will have to be customer-focused, global in scope, and flexible in its ability to provide superior values to customers whose choices and expectations are dramatically changed because of continuous exposure to new products and services. It is important to service those needs to satisfied customers in order to create loyal and knowledgeable customers who will appreciate the companies caring and understanding service they provide. Companies who demonstrate their appreciation to customers will enhance more information about what the companies objectives are to satisfying customers needs. International marketers have found that the best way to keep customers and to attract new ones is to stay in touch with customers needs. Global competition is now a fact of economical life for the industrialized nations as well as for most of the developing economies. The global market place is as real for the small manufacturers and local retailers or banks as it is for the multinational corporations. All customers have purchasing options that span the globe, and this demands all market places to provide the best quality service to those prospective customers. The global customer will quickly learn about the large variety of products and services from producers located through out the world. The customer is much more likely to judge products and services in terms of their fundamental value, such as the cost and benefit that the product will provide. It is important that businesses recognize their customers characteristics, needs and preferences to create a successful business for the future. Recognizing the customer is only one of several objectives necessary for survival,however, this will not differentiate a company from its competitors. High quality service would result in higher customer satisfaction with the product or service. These satisfied customers are likely through word- of- mouth communication to promote the company products/services to others. The benefit of this form of promotion is the high degree of credibility of the information transmitted. Further, the satisfied customer is likely to become a loyal customer for many years to come. To maintain customer satisfaction, the company must fulfill its commitment to customers, and try to develop a plan to keep those customers coming back. Not all customers are valuable, and sometimes losing a customer could be the best thing to happen to a business if that customer cannot be satisfied at a reasonable cost. However, customers who value what the firm does well must be attracted and retained. Heskett, Sasser, and Hart (1990) observed that across a wide range of businesses, the pattern is the same: the longer a company keeps a customer, the more money it stands to make. The key to surviving for most firms will be retaining their best customers, rather than attracting a multitude of new customers. One of the most competitive global industries which emphasize the importance of customer service is the banking industry. Promoting a bank as a caring customer service provider should be a top priority in any banking industry. The most difficult challenge facing banks today is providing a balanced array of quality service. A bank can reduce rates or fees, but if it does not offer personalized service, a customer will go elsewhere. No matter what type of customer service is made available, it must be provided at a fair and reasonable cost. Unfortunately, many banks cannot afford to engage in a price war, so service must be the banking institution's competitive edge. Banks must assure fast, accurate, and quality service in order to quantify their customer base. As financial institutions continue to provide the latest high-tech convenience, they will need to ensure that personalized service is still available when needed. The paper points out the importance of customer service in a domestic and global environment. It identifies the importance of maintaining good customer service and explains the different aspects of creating new ways of attracting new customers. It describes how different countries treat their customers when it comes to the banking industry and how culture is related to service quality seen. CUSTOMER SERVICE: The quality of customer service perceived by consumers is considered to be an overall evaluation of the desired level of service a customer wants. Customers demand understanding and satisfaction of their needs. Knowing these customer wants provides a competitive edge. Customers who are satisfied promote the companies products and services to others through word-of-mouth communications and will in turn entice other prospective customers to consider doing business with the company who gives superior quality service. Furthermore, a satisfied customer is likely to be a loyal customer who will provide repeat business if the company continues giving them outstanding service. Another driving force to place more attention on service quality is the emergence of a new breed of consumers. Nowadays, customers are better educated and extensively read and experienced which in turn influences them to have a buying behavior of being more sophisticated, more discerning and have higher expectations. As with any service, prospective customers will evaluate the attention they receive from service personnel, the waiting time involved, as well as the promptness, courtesy and accuracy of any service that is being provided to them. The only way that businesses will learn the secret to treat the customer with quality service is to picture the way you as a person would want to be treated if you were that perspective customer. Employees must not take customers for granted. Employees must realize that the customer is one of the most important promotional tool that will keep the company alive. Therefore, learning the behaviors of customers will become very beneficial in the future. If the customer does not agree with the level of satisfaction that the company is providing them, the company must learn to meet the service that the customer expects. Not meeting the customer’s needs will lead to a loss of a customer. Managers play an important role in determining that desired level of performance that the customer expects. The manager is responsible in developing that desired and ideal service that will enhance the customer base and must instill this way of thinking to all employees to make that ideal service work. The employees must know the importance of providing good quality customer service. This not only increases the level of satisfaction, but increases the customer base as well. Customers expectations will always be a demanding factor in any business, and in order to succeed in this area, everyone in the organization should try their best to grant the wishes that the customers anticipates. THE KEY FOR A SUCCESSFUL CUSTOMER SERVICE : The element of having a successful customer service is how a business implements an effective way of a consistent performance in quality service for customers. To succeed in customer service, the company must be better than the competition. The company must make sure that they please their customers in those areas that the customers demand it. Customers are always looking for a good quality product at a reasonable price, and this is where the company can gain that competitive advantage if the service that is expected from them is performed right. Companies who continue to develop products or services that are not only meeting the customers needs but are attracting the customers to continue buying or receiving a high quality service or product, will enhance the trust and satisfaction many companies can not implement within their own organizations. It is imperative that companies continue to bring in new and productive ideas that will entice customers to consider them as an ideal way of giving the customer what he or she most desires for. Once the company is known for the uniqueness of quality service, the company is capable to beat their competition in any aspect concerning quality customer service. Another important aspect in maintaining a successful quality service is by implementing fast and reliable service to all customers. If the company excels in this area, customers will feel more confident that they are receiving a royal treatment which no other company could grant them. Having a reliable service will create a trusting atmosphere for the customer. Reliability will only enhance the customers faith and confidence for the company, but will create a loyal customer who would continue to bring their business as well as other friends or relatives business to the company. The sense of caring for one's needs will always be an important and sometimes difficult aspect for a company to undertake. Many customers want to feel important and most of all cared for and it is up to the company to bestowe a sensitive and caring company towards their customers. Companies must always show their appreciation to their customers because without them, the company has no chance of surviving. Customer satisfaction is a combination of many factors. In order to maintain a good performance measurement overall, the company must provide the customer with improved service quality that will eventually keep coming back . Management must respond quickly to customers needs in order to avoid having dissatisfied customers who could easily change from greater customer satisfaction to a dissatisfaction. INTERNATIONAL CUSTOMERS AND QUALITY SERVICE: International customers come from different walks of life, and it is important for any company to learn the cultures, values, and customs of these different customers in order to provide them with the service that they are anticipating for. Competitive companies examine the different styles of behaviors and buying patterns that different international customers represent. These different aspects create a customer who can be hard to please, so it is up to the company to attract these customers with good quality service. One way of recognizing the differences of these customers are to become aware of who ones customers are and what they want in order to satisfy their needs. Silver, who is research director of Global Scan, studies the different styles and attitudes of 15,000 customers in 14 countries, and classified these global customers in five categories: Strivers, Achievers, Pressured, Traditional, and Adapters. Although all five consumer classes were found to exist in almost all of the countries mentioned in the study, many of the consumer groups were found to be in Japan and U.S. companies. The first global customer were the Strivers who are defined to be young people on the run. They range from the age of 31, and usually their average day is non-stop. They push hard to achieve their goals and insist on instant gratification who in turn look for pleasure by being materialistic. Many of the Strivers feel that people are getting more out of life, and are very envious of others. The second global customers are called Achievers. These customers fall into a slightly older and way ahead of the Strivers. The Achievers are leaders who like to give their opinion on everything. They are hooked on status and high on quality. They create a youth oriented value that drive the values of society today. Both Strivers and Achievers are aggressive and have a list of goals that must be achieved. They are both the least embarrassed to admit that they want the good things in life. The third global customers are called Traditional. Traditional embody the oldest values of their countries and cultures. Traditional prefer the old way of thinking , eating, and living. The fourth global customers are called Adapters. Adapters are older but they're hardly shocked by the new. They respect new ides without rejecting their own standards. The fifth global customers are called the Pressured, which are those customers who are hard to sell products to because of the feeling of being pressured into buying a certain product. The relatively older and more prosperous German population has smaller Striver and Achiever segments. Instead, 54% of the population are Traditional and Adapters (Mackiewicz, 238). The Spanish are passionate about achievement. Six out of every ten citizens are Achievers or Strivers. Strivers in Spain are innately optimistic and willing to work hard because they believe they are going to succeed. Hong Kong's Achievers are the most materialistic in the Global Scan study, and they are the most pressured. While Canadians rank as feeling the most content, here Achievers are sophisticated in the extreme and are willing to work hard to get the finer things in life (Silver, 238) . All of these different global customer categories indicate that consumers think differently and seek different products or services that meet their needs and expectations. People are different all over the world and whatever works in one country will not always work in another. Companies need to be prepared when entering a new market. They should be knowledgeable about the overall environment and culture of the country, its political and economical risks, and the competitors that the company will face. If the company does not plan ahead it is possible that they will fail in the prospective country that they wish to explore. Despite the challenges posed, a framework of the determinants of service quality has been introduced and are widely accepted. "This framework consists of ten determinants or dimensions of service quality: reliability, access, understanding the customer, responsiveness, competence, courtesy, communication, credibility, security, and tangible considerations" (Agarwal). The other service quality determinants are associated with socio-cultural factors and economic factors. "The service quality dimensions of reliability, and the access of understanding the customer are linked to conventional economic development aspects such as levels of affluence, technology, education, competition, and communications infrastructure" (Agarwal and Baalbaki). The service quality dimensions work differently in developed and developing countries. Service reliability is consistently performing the service dependably and accurately. Reliability and consistency of the service can take two routes. "First, it emphasizes the technology, superiority, and dependability of the process by which the service is produced a high-tech approach" (Agarwal). Compared with developed countries, developing countries are generally of lower financial and technological affluence. These factors might inhibit the adoption of higher technology to meet the needs of the customer better. Second, "concerns on the consistency and dependability of the performance of the service personnel are a high touch approach" (Agarwal). "In general, reliability of services can be better established with a relative emphasis on technology in developed countries and a relative emphasis on personnel in developing countries" (Agarwal and Baalbaki). Continuous improvements is the key to providing reliable service. Berry and Parasuraman explain that "firms in developed countries are constantly faced with intense competition and customers with higher expectations and lower tolerance, and therefore there is a relentless pursuit of continuous improvement in service quality". "The highly advanced and reliable communication infrastructure in developed countries presents various alternatives through which customer and supplier connection becomes possible" (Agarwal). Access, which is the second service quality dimension discussed, indicates the importance of communicating with a customer in a developed country. The technique that is recommended is non-personal contact which is relatively more important in developed countries, whereas personal contact is relatively more important in establishing accessibility in developing countries. Understanding and knowing the customer is the third dimension discussed. "Knowing the customer serves as the underlying basis behind a consistently growing area of interest in marketing: relationship marketing" (Berry and Parasuraman, 1991). In relationship marketing all conceivably viable ideas are implemented to make " the customer the king. There are different levels of relationship marketing. " First, it is based on incentives, such as discounts, given to the customers. Second, the firm combines business and social gatherings which means to stay in touch with the customer. Third, is learning about the wants and needs of the customer and developing a structural relationship" (Berry and Parasuraman, 1991). Competence is the next dimensional factor that indicates the quality of service that a developing country needs. The company must be competent to deliver that service that the customer is expecting from the company. Courtesy is also a dimensional factor that indicates the satisfaction that the customer received with a service that was provided. The service personnel should respect and reflect the customers cherished values and norms. Courtesy is an important factor that will demonstrate to the customer that the company is capable of meeting the customers needs. Communicating is also an important attribute in satisfying the customers needs. It imperative that customers feel that they are being listened to and be cared for as well. Companies should encourage word -of- mouth communication because many customers seek the opinion of others when selecting a product or service. Credibility is also another dimension of an intangible service that will integrate the trustworthiness, believability and credibility of the service supplier. If the company is not meeting the demands of the customer , the customer will not recommend or speak kindly about the companies service. It is important that companies keep a close eye at the quality of service that they provide their customers. International companies should also find innovative ways to develop better service and products in order to maintain or increase the customers awareness on being provided with good quality service. Making the customer feel secure about considering the companies business is also another dimension that should be considered. Security on a financial or a physical aspect is an important factor to keep the international customer aware of. Once the customer feels this security with the company, the customer will always trust the companies innovative products or services that the companies will provide them with. Lastly, tangibility is another dimensional aspect that companies must maintain. Companies that give good product or service at a fair price will never go wrong with maintaining that customers loyalty . As long as the company keeps developing products that will not only interest the customers needs , but also give the customer a good buy for their product or services. Many analyses have been done concerning five major debates taking place in the service quality area. One debate concerns the similarities and differences between the constructs of service quality and satisfaction. "There seems to be a consensus emerging that satisfaction refers to the outcome of individual service transactions and the overall service encounter, whereas service quality is the customer's overall impression of the relative inferiority/superiority of the organization and its services" (Bitner and Hubbert, 1994). A second debate is about the expectation and perception gap view of service quality. The third debate deals with the development of models that help our understanding of how the perception gap arises and how managers can minimize or manage its effect. The forth debate concern the definition and the use of the zone of tolerance. Berry and Parasuraman (1991) suggested that the "zone of tolerance is a range of service performance that a customer considers satisfactory". The fifth debate concerns the identification of the determinants of service quality. These debates should be a center of concern for service managers because it is necessary to measure service quality adequately in order to be able to control and improve those areas that the service providers are lacking and to avoid making satisfied customers dissatisfied customers. Managers should take these debates on service quality in consideration in order to develop a more committed and reliable company that the customer expects to receive. Walker (1990) suggests that the key determinants are product reliability, a quality environment ,and good personal service. The staff must have a positive attitude along with good knowledge and skills that concerns every aspect of the business. CUSTOMER SERVICE QUALITY IN THE BANKING INDUSTRY: Customer service quality in banking implies consistently anticipating and satisfying the needs and expectations of customers. Banks should seek to provide a high quality service in the way the customer prioritize them. The definition produced by Howcraft (1991) indicates that service quality in banking implies consistently anticipating and satisfying the needs and expectations of customers. In particular, "it is customer centered, but in requiring the definition of needs it does not presume upon the customers prior knowledge or technical competence while in allowing for expectations it implies that the service should take account of this prior knowledge and experience”. It also implies an awareness of the dynamic nature of customer expectations in requiring that these are anticipated. Customers view banks as providers of a unique service for their personal and commercial finances. These same services are offered by many other financial services such as insurance companies, mutual funds, brokage firms and a host of other financial services competitors who emphasize innovative products to match customer needs. A typical banking service does more than just manage a customers money. Customers evaluate the attention they receive from service personnel, the waiting time involved, as well as the promptness, courtesy and accuracy of the transaction. Robert Janson highlighted five major trends in consumers service expectations: * "The widespread perception that service quality is deteriorating. * Increased demand for add -on- value. * A growing desire for high-tech to be balanced with high- touch. * Greater expectations of customized service dealing. * A stronger need for one-stop service" (Janson). It is because of these factors that banks must consider to reformulate their approach to providing customer service. Customer service is the main determinant of having a more successful banking business. Banks must be innovative in the type of services that they are willing to provide to the customer. Bankers must remember that not only are they handling the customers money, but that must handle it wisely and determine what is the best alternative that will benefit the customers financial needs in the long-run. Customers want more than products they want to know that they are dealing with a bank that will advise them to make better decisions at a reasonable price. The goal for customer service in the banking industry should be to provide the best quality service that the customer deserves and expects. Consumers desire more than just traditional banking services, they are expecting their banks to develop a place where they can provide networking with their officers , a social hub to see people and enjoy the atmosphere, as well as learn about financial investments. The banks must cater and tailor their products and provide service that is needed by all types of customers in the banking industry. CUSTOMER SERVICE QUALITY IN INTERNATIONAL BANKING: International banking service intensifies seeking a global competitive advantage for customers. Customer service provides a high service quality which increases organizational efficiency and effectiveness, in lowering costs, provide a quicker response to customers, and enhancing a trustworthy reputation. These distinctive quality characteristics make the market for international banking achieve excellent in customer service. Some drawbacks about banking internationally do exist, however,, each country has their own set of characteristics and qualities when it concerns customer service. Different cultures see their banking needs differently as compared to other cultures. In the Mexican culture, the banking service is not as tailored towards the customer as it is in the American culture. Mexican banks do not provide the quality service that is expected because "the people don't think much about the other person's needs in a business sense" (Rojas,pg.48). People go for service, but the bank does not care if it is good or bad, they only give it. Another culture that have a different type of customer service are the Asians. "Private clients in Asia differ so much,” according to Amy Yip of the Citibank private bank of Hong Kong. "Korean clients, for example, are very concerned about the privacy and they tend to put their assets into discretionary off-shore portfolios". Investors from Hong Kong, Taiwan and Singapore are relatively more adventurous, although the crude image of the Asian investor is known to be a gambler, clients like these are more risk takers and enjoy the complexities of the financial markets. The Chinese customers are more technologically advanced in their banking industry. They believe in more riskier markets than other Asians do. Chinese banks are more concerned in providing a competitive rate for all of their customers and giving them a greater advantage to increase their financial needs. In Hong Kong, the customer demands are greater and their technology is going to have to be more sophisticated than other countries in order to provide good customer service. On the other hand, Russian banks, which are still heavenly controlled by the government, are small and young and do not give the customers good service because Russian financial services can only service joint ventures and cannot service any purely Russian business or individual. Doing business in Russia is very challenging for all businesses who pursue a joint venture because the government possesses considerable authority with business ventures. In the Arab culture, they provide a more global base capability. They are more innovative and are totally dedicated to quality service and client relationships. This culture makes their customer feel at home. They go out of their way to provide the best service as well as good benefits from whatever product a customer wishes to purchase. The Arabic customers require a more contemporary cultural atmosphere. The customers desired a level of unity with the bankers and bank employees. They desired more benefits such as discounts, insurance, or added value accounts. All in all, the banking atmosphere for Arabs is a social and cultural service that is worth the while to experience. Canadian banks provide their customers a more refined degree of neighborhood convenience banking as well as a nationwide banking service. For customers, the branch is the bank, it takes place where they deposit, arrange loans for business and personal objectives, cash checks, make payments, and a host of other specialized products. With the entire banking system behind them, branch staff are able to provide their customers with the full resources of the system. French customers want their banking needs to be a more formal atmosphere. The French believe that image is everything and desire a more professional and etiquette banking service. Germans feel that quality service is a very important aspect for customer service in a bank. Germans expect for their banking needs to be catered to every minute of the day. Everything must be done professionally, accurately, and quickly. They also prefer having a more formal relationship with their bankers or bank employees rather than a personal friendly relationship. Swiss banks have a more sophisticated customer base culture. Customers appear to be less comfortable with the idea of investing in a single country. They demand more advanced money management techniques. Japanese banking focuses on customers needs and are concerned with their customers profitability. Although Japanese are very advanced in technology, the Japanese financial way of thinking is more aggressive because they seek for the pursuit of market share and undeniably more market oriented than their U.S. or British counterparts. Japanese financial services have led to a conclusion that there is a need for customer focus in order to design a better product or service to all customers. CONCLUSION: Providing reliable information in a timely and cost effective manner is critical in the competitive international banking business. Bank marketers must remember that customers are bargain hunters as well as high customer quality service seekers. They want better value for their money and want innovative products that are designed to fit very specific needs. Customers, in general, want convenience, efficiency, quick answers and total confidence in the banking system. In the future, the banking industry will continue to evolve towards becoming a high quality information industry which will provide profitability on services and products that customers purchase. More access for customers to banking information will be available in the future and will include a more interactive telecommunications and a bigger demand for personal computers. Banks will become more entrepreneurial and dynamic. They will have to decide what level of customer service they are going to aim for in order to manage their resources accordingly. The luxury of high cost bases of banking will be a memory of the past. Specialization, niche markets and differentiation will be the name of the game. The changes from improved quality customer service: 1. Increased repeat business from current customers. 2. Increased positive customer referral. 3. Increased profits. 4. Improved internal employee morale. Quality service boosts the morale of employees by providing less complaints and more compliments. 5. Develop a culture of service in a company. Different departments must understand that their focus should be on helping the customer and that quality service is everybody's job. 6. Improved productivity and communication. (Johnston,65). The key for success in banking is being able to define and emphasize the service as the primary function of daily operations in the banking industry. Banks must be able to communicate the goal of complete customer satisfaction to all employees. Training programs can also be an effective way of emphasizing and rewarding talented people who are turned into customer needs and satisfaction. Lastly, banks that successfully make these changes should have a secure future in the financial industry. No matter what type of business you are in, quality service to customers will always be an important asset to your company. In order to maintain the competitiveness in the banking industry, most banks must work towards providing better quality service and looking at automating other services that could lead to an easier and faster way of doing a customers banking needs. References 1. Agarwal 2. Babakus, E. and Boller, G.W. (1992), An empirical assesment of the SERVQUAL scale", Journal of Business Research, Vol.26 No. 6,pp. 253-68. 3. Berry, L.L. and Parasuraman,A. (1991), Marketing Services: Competiting through Quality, Free Press, New York, NY. 4. Bitter, M.J., "Evaluating Serice Encounters: The Effects of Physical Surroundidngs and Employee Responses", Journal of Marketing, Vol. 54, April 1990, pp. 69-82. 5. Heskett, Sasser, and Hart (1990), "Measuring Service Quality in Singapore Retail Banking: A Gap Analysis & Segmentation Approach", Singapore Management Review. 6. Janson, Robert 7. Johnston,R. (1995), "The zone of tolerance: exploring the relationship between service transactions and satisfaction with the overall service", International Journal of Service Industry Management, Vol. 6 No 2, pp.46-61. 8. Mackeiwicz,238 9. Parasuraman,A., Zeithaml, V.A. and Berry,L.L. (1985), "a Conceptual Model of Service Quality and Its implications for Future Research", Journal of Marketing, Vol. 49, Autumn, pp. 41-50. 10. Rojas, 48