Service quality in the banking sector: the impact of
technology on service delivery
Mathew Joseph
Associate Professor of Marketing, School of Business, Georgia College & State
University, Georgia, USA
Cindy McClure
Graduate in Marketing, School of Business, Swinburne University, Melbourne,
Victoria, Australia
Beatriz Joseph
Lecturer in Marketing, School of Business, Georgia College & State University,
Georgia, USA
Introduction
Over the past 15 years technology has in-
creasingly been employed in the delivery of
services. The adoption of technology into
service industries is becoming a strong trend
as service providers are now being urged by
industry bodies to invest in technology
(Australian Coalition of Services Industries
Annual Review, 1997a; 1997b) as a way of
securing their future in the electronic age.
The role of technology in service organi-
sations as discussed by Kelley (1989) has been
predominantly employed to reduce costs and
eliminate uncertainties. In the service sector,
technology has been used to standardise
services by reducing the employee/customer
interface (Quinn, 1996). The majority of
consumers are now more than ever prefer-
ring to opt for a technology-based service
delivery over that of the employee (Voice +
The European Magazine for Applications of
Computer Telephony, 1997). This emerging
trend raises some important issues about the
impact that technology will have on service
quality and customer satisfaction levels. To
what extent can the employee/customer
interface be removed from the front line and
still maintain or improve the levels of
customer satisfaction? Dabholkar (1996) sug-
gests that little is known about consumer
preference for self-service options, particu-
larly those that are technological based.
Furthermore Cowels and Crosby (1990) have
researched tolerance levels of consumers'
preferences for using technology instead of
the human touch.
The growth of technology in the delivery of
services has had a dramatic effect on the
nature of the core offering. Gilbert (1997) uses
an analogy to make it simpler to understand
the ``revolution'' that has taken place in
technological development in the past two
decades. If technology (in terms of develop-
ment, pricing and accessibility improve-
ments) had occurred in the transport
industry over the same period of time (1975-
1997) as the computer, an aircraft that cost
AU$10 million in 1975 would now cost
AU$450.
The nature of service organisations has
changed over the past two decades. This
change has been influenced by the develop-
ment of storage and speed of data transfer,
particularly in electronic funds transfer
known as EFTPOS. Whole new industries
have emerged (Bradley, 1993), including news
retrieval services and video conferencing.
Dabholkar (1994) discusses how technol-
ogy-based services have made new service
delivery options available to organisations,
making customer participation more widely
possible. Customers use touch screen
``kiosks'' to order take-away food, whilst
banks have widely distributed automatic
teller machines to withdraw, transfer funds
or make deposits into accounts.
Accessibility has been extended through
technological developments as well as the
introduction of new service delivery methods
that allow consumers to do business with
service firms from the home and office.
Impact of technology on the
banking sector
In the categorisation of services in technol-
ogy-based service delivery options Dabholkar
(1994) suggests there are a number of relevant
classifications that will apply to industries
employing technology based service delivery.
The classification analyses ``who'' delivers
the service. That is, person to person, where
the employee uses the technology or consu-
mer to technology, such as the use of an
ATM. The next categorisation looks at where
the service is delivered. Either on the service
firm's sites themself, at the customer's home
or office or at a ``neutral'' site such as an ATM
located at an airport. The final categorisation
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[ 182 ]
International Journal of Bank
Marketing
17/4 [
1999
] 182±191
# MCB University Press
[
ISSN 0265-2323
]
Keywords
Banking, New technology,
Service quality,
Customer satisfaction, Australia
Abstract
The use of technology in the
delivery of banking services is
becoming increasingly prevalent
as it is being employed to reduce
costs and eliminate uncertainties.
This research investigates the role
that technology plays in Australian
banking and its impact on the
delivery of perceived service qual-
ity. A sample of 440 electronic
banking customers was taken and
300 useable questionnaires were
analysed. Using the Hemmasi et
al. importance-performance grid,
results indicated that consumers
have perceptual problems with
some aspects of electronic bank-
ing. Some strategic implications
are discussed.