International Journal of Commerce and Management Research

International Journal of Commerce and Management Research

ISSN: 2455-1627
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Volume 4; Issue 1; January 2018; Page No. 06-11

Service quality gap analysis in HDFC bank: A case study on housing finance customers perspective
1
Y Saritha, 2 Dr. PV Narsaiah
1
Department of Commerce, Sri Venkateshwara University, Tirupathi, Andhra Pradesh, India
2
Prof., Department of Commerce, Sri Venkateshwara University, Tirupathi, Andhra Pradesh, India

Abstract
The present study evaluates the customer perceptions of service quality in selected HDFC Bank housing finance division. Data was
collected from 120 customers of HDFC housing finance division using structured questionnaire. Gap analysis and Paired sample t-
test were used for analysis of data. The result shows that the dimension of service quality such as Empathy and Assurance has
more gap, as the customer expectations are high to their perceived service. The result also indicates that Tangibility-Reliability-
Responsiveness positively influences the service quality and Empathy-Assurance negatively influences the service quality of
HDFC housing finance in Nellore branch. The study implies that bank should reduce the service gap to deliver superior quality of
Housing sector to retain existing customers as well as to attract new customers.

Keywords: service quality, tangibility, reliability, responsiveness, assurance, empathy

Introduction and sustaining satisfying relationships with customers

Banking services worldwide can broadly classified into (Zenithal et al. 2000).
investment banking and commercial banking is primarily Service quality can be defined as the difference between
concerned with helping corporate bodies raise funds at the customer’s expectations for service performance prior to the
best possible rates from various markets. Commercial banking service encounter and their perceptions of the service
is concerned with channeling savings to productive uses. received. (Asubonteng et al., 1996) [2, 12]. Service quality can
Banking in an intermediary function but one that is very thus be defined as the difference between customer
essential for sustained economic growth. In India, since the expectations of service and perceived service. If expectations
nationalization of banks in 1969, banking has been primarily are greater than performance, then perceived quality is less
in the Central Government’s domain. As part of the than satisfactory and hence customer dissatisfaction occurs
Government’s liberalization policy which began in 1991, New (Parasuraman et al., 1985; Lewis and Mitchell, 1990) [4, 3].
Private Sector Banks (NPSBs) were allowed to be set up.
Today, India has nine NPSBs that provide commercial Review of literature
banking services. In relatively short period, the NPSBs have Jain, V, Gupta, S and Jain, S (2012) [8] in their study
managed to achieve about 2% of the market share in terms of “Customer Perception on Service Quality in Banking Sector:
business, a disproportionate of 2% share of the total income With Special Reference to Indian Private Banks in Moradabad
and almost 17% of the total net profit earned by the banking Region” try to learn and understand the customer perception
system as a whole (Nair M.V. 2010) [7]. This success can be regarding service quality and to learn and understand the
attributed in large measure to the superior Quality of Services different dimension of service quality in banks. The Sample
that these banks have been able to provide. size used is 100 and the sample universe is Moradabad. The
Berry et al. investigated that service quality is measured with service quality model developed by Zeithamal, Parsuraman
comparing customers’ perceptions and expectations of the and Berry (1988) [5] has been used in the present study. The
services extended by the business; moreover perceptions are analysis reveals that among the private sector banks all the
articulated as consumer’s experience about the service dimensions of service quality are equally important.
received and expectation as customer demand. Thus, the Singh, SP and Khurana, S (2011) [9] in their research
knowledge about customers’ perceptions and expectations is “Analysis of Service Quality Gap and Customers Satisfaction
significant to service marketers to achieve sustainable viable in Private Banks” tried to examine Gender wise customers‟
advantage by maintaining quality service. expectations and perceptions of service quality provided by
Service quality is a concept that has aroused considerable the Private Banks in Hissar District. Secondly, to identify
interest and debate in the research literature because of the whether there is difference in expectation & perception of
difficulties in both defining it and measuring it with no overall service quality of male & female customers. Lastly, to identify
consensus emerging on either (Wisniewski, 2001). Nowadays, the main attributes of service quality in which male & female
with the increased competition, service quality has become a (separately) are more satisfied or dissatisfied. The Sample
popular area of academic investigation and has been Size is 300 with Sample Universe including Private Banks in
recognized as a key factor in keeping competitive advantage Hissar. The Sampling Technique used was Quota Sampling. A

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questionnaire consisting of 22 items based on SERVQUAL perception and expectation of housing finance in Nellore
model was administered on the sample. The results indicated branch.
that the quality of services private banks provide was below
customers„ expectations. Respondents and Sample Size
Sandip Gosh Hasra and BL Srivastava (2009) [10] in their study According to Keller (2009) “a population is the group of all
indicated that the bank should pay attention to these items of interest to a statistics practitioner”. According to Mc
dimension of service quality and pay more attention to Daniel (2001) target population is a total group of people from
dimension of assurance-empathy to increase loyalty to a whom the researcher may obtain information to meet the
company, willingness to pay, customer commitment and research objectives. The research aims to evaluating the
customer trust. service quality of housing finance division towards the HDFC
Sudesh (2007) [11] revealed that poor service quality in public bank. So, the target population is the housing finance
sector banks is mainly because of deficiency in tangibility, customers taking the loan of HDFC.
lack of responsiveness and empathy. Private sector banks, on The data was collected for the study 120 from customers of
the other hand, were found to be more reformed in this selected HDFC housing finance division in Nellore division
regards. Above all, the foreign banks were relatively close to Andhra Pradesh, based on convenience sampling and
the expectations of their customers with regard to various administered a modified SERVQUAL questionnaire
dimensions of service quality. Further, the study revealed that containing customers’ expectations and customers’ perception
there existed service quality variation across demographic each consisting of 22statements of 5 dimensions. The study
variables and suggested that management of banks should pay follows the SERVQUAL as a framework. The respondents
attention to potential failure points and should be responsive were asked to rate their expectations and perceptions of
to customer problems. service offered by the respective department (housing
finance).
Research Design
This research is diagnostic in nature and uses a case study Service Quality
method for fulfilling research objectives. The Literature Service quality can be defined as the difference between
review clearly indicates that different variables would be customer’s expectations for service performance prior to the
important for different services for customer satisfaction. It is service encounter and their perceptions of the service
further seen that a study on the service quality of HDFC received. (Asubonteng et al., 1996) [2, 12]. Quality service has a
housing finance and level of customer satisfaction from this positive effect on the bottom-line performance of a firm and
service has been neglected by researchers in the housing thereby on the competitive advantages that could be gained
finance context. Hence, an attempt is made to study customer from an improvement in the quality of service offering, so that
perception of quality of service in the context of housing the perceived service exceed the service level desired by
finance. A case study method is adopted and supplemented customers (Caruana, 2002; Chumpitaz. 2004). Gefan (2002)
with findings of a small survey to identify the determinants of defined service quality as the subjective comparison that
customer satisfaction with this very important construction of customers make between the quality of the service that they
house in the special context of housing finance. want to receive and what they actually get. Nowadays, with
Objectives the increased competition, service quality has become a
 To Evaluate the Quality of Service in HDFC Bank in popular area of academic investigation and has been
Housing finance division in Nellore branch recognized as a key factor in keeping competitive advantage
 To identify the gap between customer expectation and and sustaining satisfying relationships with customers
perception (Zeithmal et al...2000).
 To identify the areas that needs to improve by housing Dimensions of service quality
finance to deliver superior quality of service finally. The SERVQUAL scale is the principal instrument widely
Hypothesis utilized to assess service quality for a variety of services.
The following hypothesis were prepared for the purpose of the Parasuraman et al., (1988) [5] have conceptualized a five
research. dimensional model of service quality such as: reliability,
 There is no gap exist between service quality-tangibility responsiveness, empathy, assurance and tangibility. Their
of perception and expectation of housing finance in measurement instrument is known as SERVQUAL, which has
Nellore branch. become almost the standard way of measuring service quality.
 There is no gap exist between service quality-reliability of Further, each item of SERVQUAL has been used twice: to
perception and expectation of housing finance in Nellore measure expectations and perceptions of service quality. The
branch. central idea in this model is that service quality is a function
 There is no gap exist between service quality- of difference scores or gap between expectations and
responsiveness of perception and expectation of housing perceptions. The five dimensions of SERVQUAL Includes:
finance in Nellore branch. Tangibles: Physical facilities, equipment and appearance of
 There is no gap exist between service quality-assurance of personnel.
perception and expectation of housing finance in Nellore
branch. Reliability: Ability to perform the promised service
 There is no gap exist between service quality-empathy of dependably and accurately.

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Responsiveness: Willingness to help customers and provide ability to inspire trust and confidence.
prompt service.
Empathy: Caring and individualized attention that the firm
Assurance: Knowledge and courtesy of employees and their provides to its customers.

Fig 1: Conceptual frame work

Descriptive statistics of the variables in the model of the study reliability and empathy contains 5 items, totaling 22 items.
For the dependent variable: customer satisfaction contains of
five items, while for the independent variable service quality, Conceptual frame work
each of the dimension starting with tangibility contains 4 The Parsuraman, Zethaml, and berry theory of the
items, assurance 4 items, responsiveness 4 items while determinants of perceived quality (Figure 1).
Table 1: Customer Mean score of Perception and expectations HDFC housing finance items of tangible.
S. No. Tangibility Perception of the customer Expectations of the customers Gap (P –E)
1 Modern looking equipment 3.800 3.413 0.387
2 Physical facility 3.734 3.483 0.251
3 Employee are well dressed 3.279 3.450 -0.171
4 Materials are visually appealing 3.612 3.017 0.595
Total SERVQUAL TANGIBLE GAP 14.425 13.417 1.062

Inference mean scores which show that a gap exists in the respect of
The study showed there is (1.062) gaps exist between service service quality TANGIBILITY. If we rank the service quality
quality tangibility of perception and expectations of housing in the respect of tangibility factor the highest expectation of
finance in Nellore district. The perceptions of housing finance the loan holders from the experience banks are connected to
customer mean scores of all items of service quality- the item Materials are visually appealing where gap between
tangibility are greater than the expectations of housing finance perception and expectation of housing finance is (0.595).
Table 2
Paired Samples Statistics
Mean N Std. Deviation Std. Error Mean
Perceptions of Customer 14.4250 120 2.57546 .23511
Pair1
Expectations of Customer 13.3625 120 2.80078 .25568

To analyse the difference in a mean value of service quality of the mean values of perception of customer is 14.425 and for
tangibility as a dimension of housing finance experiences on expectation of customer are 13.363 on the dimension of service
the basis of opinion of the respondents. it is was observed that quality of tangibility of housing finance in Nellore branch.

Paired Sample statistics

Table 3
Paired Differences
95% Confidence Interval of the Difference t df Sig. (2-tailed)
Mean Std. Deviation Std. Error Mean
Lower Upper
P1 - E1 1.06250 3.28708 .30007 .46834 1.65666 3.541** 119 .001
**Significant at 0.01 level.

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Inference between service quality tangibility of perception and

The table shows that the significance values is (0.001) which expectation of HDFC housing finance division in Nellore
is less than 0.01 at 99% level of significance. So that null branch.
hypothesis is rejected. We can conclude that there is gap exist

Table 4: Customer Mean score of Perception and expectations HDFC housing finance items of Reliability.
S. No Reliability Perception of the customer Expectation of the customers Gap (P –E)
5 Delivers service at promised time 3.733 3.175 0.558
6 Interest in solving problem 3.283 3.425 -0.142
7 Perform service right first time 3.542 3.417 0.125
8 Follows the promised time 3.642 3.008 0.533
9 Maintain error free records 3.583 3.292 0.292
Total SERVQUAL Reliability Gap 17.783 16.317 1.467

The study showed (Table) there is (1.467) gap exists between respect of service quality reliability; If we rank the service
service quality reliability of perception and expectation in quality in the respect of reliability factor the highest
housing finance division. The Perception Mean scores of all perceptions Of the account holders from the expectation
items of service quality-Reliability are greater than the housing finance are connected to the item where gap between
expectation Mean scores which show that a gap exists in the perception and expectation of housing finance is (0.558).

Table 5
Paired Samples Statistics
Mean N Std. Deviation Std. Error Mean
Perceptions of customer 17.7833 120 3.01588 .27531
Pair 1
Expectations of customer 16.3167 120 3.34559 .30541

To analyze the difference in a mean value of reliability as a customer are 17.783 and for expectation are 16.32 on the
dimension service quality of HDFC housing finance on the dimension of reliability. This indicates that the perception
basis of opinion of respondents, paired sample t-test was have high satisfaction level on the dimension of reliability of
applied. it was noted that the mean value for perception of service quality HDFC housing finance.

Table 6
Paired Differences
95% Confidence Interval of the Difference t df Sig. (2-tailed)
Mean Std. Deviation Std. Error Mean
Lower Upper
P2 - E2 1.46667 3.28719 .30008 .87248 2.06085 4.888** 119 .000
**significant at 0.01 level.

The table shows that the significance value is (.000) which is between service quality Reliability of perception and
less than .01 at 99% level of significance so that null expectation of housing finance in Nellore district.
hypothesis is rejected. We can conclude that there is gap exist

Table 7
S. No Responsiveness Perception of customer Expectations of the customers Gap (P –E)
1. Tell you about performance of service 3.975 3.250 0.675
2. Gives prompt service 3.417 3.458 -0.041
3. Willingness to help 3.317 3.267 0.05
4. Not busy to respond queries 3.433 2.925 0.583
Total SERVQUAL RESPONSIVENESS GAP 14.092 12.825 1.267

The study showed (Table) overall there is (1.267) huge gap Table 8
exist between service quality Responsiveness of perception Paired Samples Statistics
and expectation of housing finance in Nellore branch. The Mean N Std. Deviation Std. Error Mean
perception mean scores of all items of service quality- P3 14.0917 120 2.77442 .25327
Responsiveness are greater than the expectation mean scores Pair 1
E3 12.8250 120 3.08333 .28147
which show that a gap exists in the respect of service quality
Responsiveness. If we rank the service quality in the respect The mean value of responsiveness as a dimension of service
of Responsiveness factor the highest expectation of the account quality on the basis of perception and expectation, paired
holders from the perception are connected to the item (11). sample t-test was applied. It was noted that the mean value for

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International Journal of Commerce and Management Research

perception is 14.09 and for expectation is 12.83 on the perception of customer have high satisfaction level on the
dimension of responsiveness. This indicated that the dimension of service quality of responsiveness

Table 9
Paired Samples Test
Paired Differences
Sig.
95% Confidence Interval of the Difference t df
Mean Std. Deviation Std. Error Mean (2-tailed)
Lower Upper
Pair 1 P3 - E3 1.26667 2.24445 .20489 .86097 1.67237 6.182** 119 .000
**significant at 0.01 level.

The table shows that the significance value is (0.000) which is between service quality Responsiveness of perception and
less than 0.01 at 99% level of significance so that null expectation of housing division in Nellore branch.
hypothesis is rejected. We can conclude that there is gap exist

Table 10: Customer Mean score of Perception and expectations HDFC housing finance items of Assurance
S. No Assurance Perception of customer Expectations of the customers Gap (P –E)
14 Instils confidence 3.558 3.400 0.158
15 Safe transactions 3.358 3.741 -0.383
16 Employees are consistently courteous 3.217 3.342 -0.125
17 Employee have enough knowledge 3.367 3.775 -0.408
Total SERVQUAL ASSURANCE GAP 13.500 14.258 -0.758

The study showed (Table 1) overall there is (-0.758) huge gap which show that a gap exists in the respect of service quality
exist between service quality assurance of Perception and assurance. If we rank the service quality in the respect of
expectation of housing finance in HDFC Nellore branch. The assurance factor the highest expectation of the account holders
expectation mean scores of all items of service quality- from the perception of respondents are connected to the item
assurance are greater than the perception of mean scores (14).

Table 11
Paired Samples Statistics
Mean N Std. Deviation Std. Error Mean
P4 13.5000 120 3.22021 .29396
Pair 1
E4 14.2583 120 2.47167 .22563

To analyze the differences in a mean value of assurance on the dimension of assurance. This indicated that the expectation
basis of perception and expectation of customers, paired have high but finance housing division not fulfilled on the
sample t-test was applied. it was noted that the mean value for dimension of assurance.
expectation 14.26 and for perception is 13.50 on the

Table 12
Paired Samples Test
Paired Differences
Sig.
95% Confidence Interval of the Difference t df
Mean Std. Deviation Std. Error Mean (2-tailed)
Lower Upper
Pair 1 P4 - E4 -0.75833 3.12215 .28501 -1.32269 .19398 -2.661 119 .009

The table shows that the significance value is (.009) which is is rejected. We can conclude that there is negative gap exist
less than 0.01 at 99% level of significance ‘t’ value is showing between service quality assurance of perception and
negative magnitude between perception and expectation of the expectation of housing finance in Nellore district.
respondents in HDFC housing finance. So that null hypothesis

Table 13: Customer Mean score of Perception and expectations HDFC housing finance items of Empathy
Empathy Perception of customer Expectations of the customers Gap (P –E)
18 Gives individual attention 3.592 2.975 0.617
19 Convenient operating hours 3.275 3.850 -0.575
20 Gives personal attention 3.308 3.442 -0.084
21 Best interest in heart 3.375 3.533 -0.158
22 Understand customer’s specific needs 3.525 3.717 -0.192
Total SERVQUAL Empathy Gap 17.0250 17.4167 -0.392

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International Journal of Commerce and Management Research

The study showed (Table 12) there is (-0.392) gaps exist which show that a gap exists in the respect of service quality
between service quality EMPATHY of expectation and EMPATHY. If we rank the service quality in the respect of
perceptions of housing finance in HDFC Nellore division. The EMPATHY factor the highest expectation of the account
expectations mean scores of all items of service quality- holders from the perception are connected to the item (18)
EMPATHY are greater than the perception of mean scores where gap between expectation and perception bank is (0.617).

Table 14
Paired Samples Statistics
Mean N Std. Deviation Std. Error Mean
Perception of customers 17.0250 120 3.02778 .27640
Pair 1
Expectation of customers 17.4167 120 3.29396 .30070

To analyze the differences in a mean values of empathy as a expectations 17.42 on the dimension of empathy. This
dimension of service quality on the basis of customer opinion, indicates that the expectation have high on the dimension of
paired sample test was applied. It was also noted that the mean empathy of service quality than its perceptions.
value for perception of customers are 17.025 and for

Table 15
Paired Samples Test
Paired Differences
Sig.
95% Confidence Interval of the Difference t df
Mean Std. Deviation Std. Error Mean (2-tailed)
Lower Upper
Pair 1 P5 - E5 -.39167 3.59574 .32824 -1.04162 .25829 -1.193 119 .235

The table shows that the no significance value is (.235) which Services Marketing. 1996; 10(6):62-81.
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