Improving customer service quality management at tien phong commercial joint stock bank TPBank

MASTER IN FINANCIAL MANAGEMENT

IMPROVING CUSTOMER SERVICE
QUALITY MANAGEMENT AT TIEN
PHONG COMMERCIAL JOINT STOCK
BANK - TPBANK

Graduate student: NGUYEN THI HONG
Supervisor: DR. NGUYEN THI HONG HANH

HANOI, 2021


ABSTRACT
Thesis Title:Improving customer service quality management at Tien Phong
Commercial Joint Stock Bank - TPBankPages: 81
University：International school - Vietnam national university, Hanoi
Graduate School：Master in financial management
Degree：Master
Graduate Student:Nguyen Thi Hong
Your advisor‟s name: Dr.Nguyen Thi Hong Hanh
The study is developed with the main objective of enhancing the customer service at
TPBank‟s Live Bank. The customer service quality is measured through five factors,
namely tangibles, reliability, responsiveness, staff quality, and easy to use. The author
collects the data from 140 Live Bank customers and they provided the assessment
related to each aspect of customer service quality as well as their satisfaction and
loyalty.
The author proposed 11 hypotheses and they validate the effects of these five factors
on customer satisfaction and customer loyalty as well as the effect of customer
satisfaction on customer loyalty.
The author performs multiple linear regression and it is identified that these five

factors significantly explain for 45.6% of variance of customer satisfaction and 55.1%
of variance of customer loyalty. However, the effect of each factor is different. In the
causal relationship between customer satisfaction and 5 factors, it is identified that all
factors have positive and significant impacts on customer satisfaction. However,
reliability and easy to use do not have significant impact on customer loyalty.
2


ACKNOWLEDGEMENT
I would like to thank the Board of Directors, the training department of the
International Faculty, Hanoi National University for creating all conditions for me in
the process of studying and completing this thesis.
I would like to express my gratitude to the teachers and ladies who have dedicatedly
taught MFM2 master class
I would like to express my deep gratitude to my teacher, D.r Nguyen Thi Hong Hanh
who wholeheartedly helped and guided me during the process of writing this thesis.
I would like to thank all my friends, colleagues and family who have always
supported, encouraged and created the best conditions for me to complete this thesis.
Thank you!
Author

3


TABLE OF CONTENTS
ABSTRACT

2

ACKNOWLEDGEMENT

3

TABLE OF CONTENTS

4

LIST OF TABLES

6

1. CHAPTER 1: Introduction
1.1 Background of the study

7

1.2 Rationales

7

1.3. Research objectives and research questions

9

1.4. Scope of the study

9

1.5. Significance of the study

10

1.6. Structure of the study

11

2. CHAPTER 2: Literature Review
2.1 Customer service

13

2.2. Service quality

14

2.3. Factors of customer servicequality affecting customer satisfaction and
customer loyalty in banking services

15

2.3.1. Tangibles

16

2.3.2. Reliability

17

2.3.3. Responsiveness

18

2.3.4. Staff quality

20

2.3.5. Easy to use

21

2.4. Customer satisfaction and customer loyalty

22

2.5. Research model and research hypotheses

23

3. CHAPTER 3: Methodology

4


3.1. Research approach

25

3.2. Research method

26

3.3. Data collection

27

3.3.1. Primary data

27

3.3.2. Secondary data

30

3.4. Sampling procedure

31

3.5. Data analysis techniques

31

4. CHAPTER 4: Research Results
4.1. Overview of TPBank

34

4.2. Descritive analysis

38

4.2.1. Tangibles of Live Bank of TPBank

38

4.2.2 Reliability factor of Live Bank of TPBank

39

4.2.3. Responsiveness of Live Bank of TPBank

41

4.2.4. Staff quality of Live Bank of TPBank

42

4.2.5. Easy to use of Live Bank of TPBank

44

4.3. The evaluation of customer satisfaction and customer loyalty of Live
Bank of TPBank

46

4.4. The reliability test analysis

49

4.5. The validity test analysis

52

4.6. Correlation analysis

54

4.7. Multiple linear regression analysis

55

5. CHAPTER 5: Conclusion and Recommendation
5.1. Conclusion

61

5.2. Recommendation

64

5.3. Limitations of the study

66

REFERENCES

67

APPENDIX 1: Survey of Questionnaire

79
5


LIST OF TABLES
Table 3.1: Items used in the questionnaire

28

Table 4.2: TPBank‟s Business Performance

34

Table 4.3: Evaluation of tangibles of Live Bank of TPBank

38

Table 4.4: Evaluation of reliability of Live Bank of TPBank

39

Table 4.5: Evaluation of responsiveness of Live Bank of TPBank

41

Table 4.6: Evaluation of staff quality of Live Bank of TPBank

42

Table 4.7: Evaluation of easy to use of Live Bank of TPBank

44

Table 4.8: Evaluation of customer satisfaction of Live Bank of TPBank

46

Table 4.9: Evaluation of customer loyalty of Live Bank of TPBank

47

Table 4.10: Reliability test of tangibles factor
49
Table 4.11: Reliability test of reliability factor

49

Table 4.12: Reliability test of responsiveness factor

50

Table 4.13: Reliability test of staff quality factor

50

Table 4.14: Reliability test of easy-to-use factor

51

Table 4.15: Reliability test of customer satisfaction factor

51

Table 4.16: Reliability test of customer loyalty factor

51

Table 4.17: EFA result for customer satisfaction

52

Table 4.18: EFA result for customer loyalty

52

Table 4.19: EFA result for tangibles, reliability, responsiveness, empathy, easy to use 53
Table 4.20: Pearson‟s correlation analysis

54

Table 4.21: Multiple linear regression analysis (Model 1)

55

Table 4.22: Multiple linear regression analysis (model 1, model 2, model3)

58

Table 4.23: Multiple linear regression analysis (Model 3)

60

Table 5.1: Result of Hypothesis Test

61
6


Chapter 1 Introduction
1.1. Background of the study
Customers are considered as the key successful factor in every business,
including banks and it is even more critical in case of the banks face poor
customer database management, lack of sufficient infrastructure and
technologies to improve customer experience (Amoako, 2012). By providing
high-performance in customer service, the banks are able to achieve and to
enhance customer satisfaction since the customer expectation is well-fulfilled
(Sakwa & Oloko, 2014). Customer service is important context in banking and
finance industry. Modern and large banks today have millions of customers and
they have to interact with different customers‟ requests and queries every day.
Understanding the importance of customer service, many banks in Vietnam
have initiated their customer service process such as the establishment of call
center with hotline services so that the customers are able to call and to meet the
banks‟ staffs for a particular problem. Behind of that, the banks in Vietnam also
creates communication portals such as through email, social networking
services (e.g. Facebook) in order to create a quick connection with their
customers. Few banks such as Viet A Bank has adopted new technology to
create a chatbot based on artificial intelligence and machine learning to provide
the interest rate, exchange rate, product features, and banking service fees to the
customers.
1.2. Rationales

Customer service quality is important context in service area. Given to the fact
that, the commercial banks are providing services to the clients such as deposit
services, lending services, payment services, customer service quality must be
taken into account. The study is about customer service quality at TPBank Live
Bank. Live Bank is a service initiated by TPBank since 2016 and now the bank
successfully opens 150 transaction points nation-wide, with 2 million
7


customers. Live Bank services which are offered by TPBank are innovative
banking services in Vietnam. It is described like a small bank‟s branch but
without the employees. Instead of that, the bank relies on the new technologies
to further improve customer experience and customer self-services. Moreover,
the customers who transact through TPBank‟s Live Bank are not able to
complete banking transaction in 24 hours and it is not limited by normal
working times. A competitive advantage of TPBank‟s Live Bank is that it
allows the customers to open new ATM card, current accounts immediately
through the computer screen. The customers are able to receive new physical
ATM card after inputting all required information.
Currently, TPBank‟s Live Bank has 2 million customers and it is continuously
increasing in coming years. Beside of that, the customers need to conduct the
services by themselves. In this context, customer service is important. The bank
needs to provide adequate customer service performance to assist the customers
and therefore leveraging positive customer experience. After more than 3 years
of doing business, TPBank does not develop any assessment of customer
service performance and quality for Live Bank. Behind of that, Vietnamese
banking system consists of 31 commercial banks and the competition is
happened not only in the area of competitive interest rate but also those who are
able to deliver excellent customer service quality to the customers. The banks
with low customer service quality receives adverse impacts such as lowered

customer satisfaction and loosing current customer base.
Customer service is considered as important component in any business model
and it gains increasing attention from the banks. TPBank has been positioning
its business and services based on the understanding of the customers‟ needs as
well as building a strong portfolio that meets various demands from the
customers. In this context, the bank understands the importance of collecting
information related to the customer satisfaction on the bank‟s services in
8


general and in Live Bank services as particular, contributing to the enhancement
of the banks‟ overall service performance and service quality to the customers.
It is denoted that the nature of the customer service is about the customers‟
feeling and perception of the service performance. Different customers may
have different feeling and perception and therefore they have different
assessment of customer service. Customer service is the way that the
organizations to meet the customers‟ needs and demands and the higher the
customer satisfaction, the better the customer service. In this context, the
customer assessment of customer service is subjective matter and different
services may have different customers‟ expectation of the service performance.
1.3. Research objectives and research questions
Main objective of the study is to enhance customer service at TPBank‟s Live
Bank. This research objective is fulfilled by following research questions:
 What are the factors of customer service quality affecting the customer
satisfaction and customer loyalty with TPBank‟s Live Bank services?
 Which factor of customer service quality has highest effect on customer
satisfaction and customer loyalty with TPBank‟s Live Bank services?
To answer the main objective and the research questions, the study follows the
R.A.T.E.R model with five components, namely reliable, assurance, tangible,
enthusiastic, and responsive.

1.4. Scope of the study
The study is developed within predefined timeframe. It requires 2 months to
fulfill the main part of the study, including the literature review, data collection,
and data analysis. This time also covers the process of receiving comments from
the tutor and correcting the written statements. The location of the study is in
TPBank Live Bank located in Hanoi City.

9


1.5. Significance of the study
By conducting this study, the responsible persons in TPBank understand current
performance of customer service designed for Live Bank services. Behind of
that, they get update with the performance of factors represented for total
service quality, including tangibles, reliability, responsiveness, assurance, and
empathy. The combination of these factors results the overall performance of
customer service quality. Other researchers can utilise the research results to
make relevant discussions of their owned findings.
Along with the development of the society, there are more and more enterprises
to be established. To survive and to develop, the enterprises today need to
identify the proper way to retain their customers. It is denoted that the
customers select and purchase a product and service from a company based on
their own rationales and their choice is influenced by other competitors who
have similar products and services. Under this circumstance, the enterprises are
hard to control the customers mindset but they attempt to retain their customers
throughout better customer service quality or how the customers‟ requests are
handled. Thus, the enterprises must ensure that their customers must be treated
superiorly and their services must be a touchpoint to generate the customers‟
satisfaction and happiness. In fact, the marketing theory points out the
importance of four traditional marking mix factors, including product, price,

place, promotion. However, the information transparency and the development
of the Internet makes the enterprises to access required information, leading to
the fact that the marketing programmes are very similar. Therefore, the
enterprises who want to compete better with other competitors need to leverage
the strength from their human resources that address the importance of people.
With high customer service brought by the enterprises‟ employees, it can bring
uniqueness to them and create a competitive advantage against other
competitors in the market. In the case study of TPBank, this context is so-called
10


customer service. In summary, customer service is very important to TPBank
and it contributes directly to the bank development throughout better customer
retention. By keeping the customer service at high level in combination with
attractive physical asset, the bank can keep the customers in using Live Bank
services.
1.6. Structure of the study
There are five chapters that are developed in this study.
Chapter 1 Introduction
The first chapter provides a background information and rationales of
developing this topic. Research objective and questions are given along with
scope and significance of the study.
Chapter 2 Literature Review
The second chapter explores the concept related customer service and customer
service quality. Five factors of customer service quality (tangibles, reliability,
responsiveness, assurance, and empathy) are put into the literature reviews. A
research model is developed to highlight the direct linkage between these
factors and customer service quality.
Chapter 3 Methodology
The third chapter focuses on the research approach and the research method

which are adopted in the study. Data collection plan is proposed and a
questionnaire is developed. Sampling technique and sample size are presented
in the chapter.
Chapter 4 Research Results
The fourth chapter provides the outcomes of data analysis. The respondents‟
evaluations related customer service quality and five factors are provided. The
effects of these five factors on customer service quality are measured and
discussed.

11


Chapter 5 Conclusions and Recommendations
The last chapter summarizes the findings from previous chapters. Some
recommendations are proposed to help TPBank further improves their customer
service quality in Live Bank services.

12


Chapter 2 Literature Review
2.1. Customer service
Customer service is defined as organizational process which is initiated and
implemented with the objective of achieving customer satisfaction and
operational efficiency (Álvarez-García et al., 2019). By conducing customer
service activities, the service providers expect that they will attract more
entrepreneurial

opportunities,

increase

profit,

achieve

timely

market

accessibility, and obtain more customer satisfaction and customer loyalty
(Jahanshahi et al., 2011). When conducting customer service, the firms must
ensure that their customers can understand how the efficiency of their products
and services that is a source of increasing customer trust (Khadka & Maharjan,
2017). Herein, customer service aims to bring better customer experience with
service encounters (Becker & Jaakkola, 2020).
In banking and finance industry, customer service is important activity.
According to Kanwal & Yousaf (2019), customer service should be established
in the way of integration between service innovation and customer value
creation in order to maximize customer satisfaction with banking services. The
banks are required to provide simplified, standardized, and technology-led
customer service process for the higher provision of customer convenience,
attracting new customers, retaining current customers and unlocking future
banking profits (Amoako, 2012).In addition, the banks need to reduce waiting
times for the customers through the avoidance of lengthy customer service
process in order to achieve higher customer satisfaction (Sakwa & Oloko,
2014). Behind of that, the banks need to leverage effective marketing
communication strategies to further improve customer service performance
(Zephaniah et al., 2020). Recently, a new wave of adopting new technologies
into banking operations such as digital banking services and it dramatically

changes the way of the banks contact with their customers (Mbama,
13


2018).Technology innovation such as artificial intelligence, machine learning,
cloud computing allows the banks to timely address and predict the customers‟
needs and problems and enhance the way of interaction with the customers
(Okoye et al., 2019).
2.2. Service quality
Service quality was conceptualized since 1980s and with the definition to be
given by Parasuraman et al. (1985, 1988). At this time, service quality refers to
the customer perceived service quality given to their prior experience.In other
words, service quality is equal to the discrepancy between customer expectation
of service performance and their perceived service performance (Puri & Singh,
2019). This terminology is used to describe how a service performance can
meet the expectations set by the customers (Wang et al., 2020). Behind of that,
the customers evaluate service quality through how the services are performed
with unique advantages over other alternative services (Setiawan et al., 2020).
Herein, a service and its quality are only evaluated directly via customer selfassessment (Albari, 2020). Generally, service quality is associated with
customer satisfaction in case of superior service quality (Prakash & Mohanty,
2012).
By achieving outstanding service quality, the service providers achieve a lot of
benefits. Service quality is an explanatory variable of business performance or
the higher service quality, the higher performance obtained by the firms G r,
2019). Akroush & Khatib (2009) submitted a research paper in which service
quality dimensions had significant effect on financial performance, customer
indicators, and overall banking performance. To further explain the role of
service quality on business performance, previous researcher supplemented its
influence on customer satisfaction and customer loyalty. For instance,
Afthanorhan et al. (2019) obtained the result of one unit increased in service

quality led to 0.619 unit increased in customer satisfaction. The positive effect
14


of service quality on customer satisfaction has been found in many industries,
including banking and finance. Khatab et al. (2019) also found the positive and
significant influence of service quality on the customer satisfaction with
services provided by both private and public banks in Iraq. Pakurár et al. (2019)
collected the data from 825 banking customers in Jordan and they confirmed the
positive influence of service quality on banking customer satisfaction.
Similarly, Raza et al. (2020) also identified a positive and significant impact of
service quality on customer satisfaction with Islamic banking services.
Moreover, superior service quality results customer loyalty with the service
providers. Indeed, Boonlertvanich (2019) examined the data contained 400
valid samples of the customers of a large commercial bank in Thailand and
found that service quality significantly and positively associated with
behavioural and attitudinal loyalty of the customers. Before that, Omoregie et
al. (2018) found an evidence that supported the significant and positive impact
of service quality on customer loyalty among 565 customers of top performing
banks in Ghana.
2.3. Factors of customer servicequality affecting customer satisfaction and
customer loyalty in banking services
Parasuraman et al. (1985, 1988) developed a model to measure customer service
quality through five factors, namely tangibles, reliability, responsiveness,
assurance, and empathy. In this study, this model is proposed to use. In
following sub-sections, the definition and the effect of each of service quality
dimensions are put into the discussion and from that, relevant hypotheses are
developed. It is denoted that the hypotheses are derived from previous empirical
evidences which were designed to identify the relationship between service
quality dimensions and customer satisfaction and loyalty in banking services.

15


2.3.1. Tangibles
Tangibles refer to the physical assets such as machinery, tools, equipment and it
is part of the firm‟s resources Kamasak, 2017). Tangibles are important
element in service sector since it is considered as the input of service production
and service delivery (Schönsleben, 2019). Compared to intangibles, tangibles
allow people to have direct sensory (e.g. taste and smell) and perceived
functional values (e.g. utility, economic value) (Quest, 2019). Parasuraman et
al. (1985) considered tangibles as one of service quality dimensions and it was
defined as the physical evidence of a service that consisted of physical facilities,
tools and equipment used in service delivery, and the appearance of service
personnel.
The effects of tangibles on customer loyalty in banking and finance industry
have been explored by different researchers over the time. Liu & Wang (2017)
collected the data from 250 valid questionnaires filled by the banks‟ customers
in Taiwan and confirmed that tangibles had positive and significant effect on
customer loyalty. Leninkumar (2016) obtained an empirical evidence of
tangibles affected positively and significantly the loyalty of 300 customers who
were using the services provided by four leading commercial banks in Sri
Lanka. Siddiqui (2011) also found a strong interrelation between tangibles and
customer loyalty after examining the data inclusion of 100 retail banking
customers in Bangladesh. In addition, previous researchers also explored the
effect of tangibles on customer satisfaction. Rahman et al. (2017) found that
tangibles had positive and significant impact on customer satisfaction with
mobile banking services provided by commercial banks. Alafeshat & Alola
(2018) dictated that tangibles affected significantly and positively customer
satisfaction. Moreover, they confirmed that customer satisfaction significantly

mediated the effect of tangibles on customer loyalty in banking industry.
Customer satisfaction received significant and positive impact from tangibles
16


factor when Khan & Fasih (2014) explored a dataset of 270 banking
customers.When TPBank delivered Live Bank, the bank decided to build a
physical banking kiosk with the machines to support the customers‟ interaction.
Herein, the physical evidence of Live Bank services is visible and it may affect
customer satisfaction and customer loyalty.In this context, two first hypotheses
are proposed:
H1-1: Tangibles affect significantly customer satisfaction with Live Bank
services provided by TPBank.
H1-2: Tangibles affect significantly customer loyalty with Live Bank services
provided by TPBank.
2.3.2. Reliability
Reliability of a service is defined as the abilities of the firms to provide the
services as promises or how the firms honor their promises related to the
services offered to the customers (Parasuraman et al., 1985). This factor is also
perceived as the firms‟ ability to perform their services accurately and
dependably (Kheng et al., 2010). A reliable service is obtained in case of the
service provider is able to fulfill promised services and adopts reliable
operationalization to perform this service (Dawi, 2016). This factor is important
in servicing area since the customers expect that the services are performed
accurately as promised (Agbor, 2011). In more detail, the services provided by
the firms must be delivered in the way of without making mistakes, within
agreed

time,

and

effective

resolution

for the

customers‟ problems

(Kobbekaduwa et al., 2019).
The effects of reliability on customer loyalty in banking and finance industry
have been explored by different researchers over the time. Collecting the data
from 70 large corporate banking customers, da Silva Fragata & Muñoz-Gallego
(2010) found that customer loyalty was enhanced in case of the banks delivered
the services at minimum level of errors. Sagib & Zapan (2014) identified that
17


reliability was among significant predictor of customer satisfaction with mobile
banking service, confirmed from the data of 216 customers. Malik et al. (2011)
implicated that reliability of banking service and customer loyalty was intercorrelated with each other and the relation was statistically significant. In
addition, previous researchers also explored the effect of reliability on customer
satisfaction. Salihu & Metin (2017) collected the data from 46 electronic
banking customers and they found that reliability had positive and significant
effect on customer satisfaction. Gobena (2019) surveyed 385 banking customers
in a region of Ethiopia and this researcher achieved the result that supported the
positive and significant impact of reliability on customer satisfaction. Before
that, Al-Azzam (2015) selected 400 banking customers in Arab bank and
confirmed the positive and significant effect of reliability of internet banking,

phone banking, ATM services, and other banking services on customer
satisfaction. Live Bank services of TPBank are introduced to the customers few
years ago and the bank had certain commitments of the service performance
such as less time consuming to the customers and the customer self-services in
term of opening account and receiving ATM cards instantly. All of these
commitments and how these commitments to be fulfilled represent for
reliability aspect of Live Bank services and it affects customer satisfaction and
customer loyalty. Thus, another two hypotheses are proposed:
H2-1: Reliability affects significantly customer satisfaction with Live Bank
services provided by TPBank.
H2-2: Reliability affects significantly customer loyalty with Live Bank services
provided by TPBank.
2.3.3. Responsiveness
Responsiveness is the willingness of the firms to help their customers during the
service delivery (Nambiar et al., 2019). Responsiveness is also reflected through
the ability to deliver a prompt services to the customers (Pathirana, 2019).
18


Herein, the main characteristic of responsiveness is timeliness of a service and it
is measured by several items such as arranging customer appointment quickly,
sending mail or call to the customers as quick as possible (Parasuraman et al.,
1985). To keep responsiveness in the service delivery, the firms must take into
account the employees‟ capabilities in which the employees need to be trained
well in order to effectively deliver the services to the customers (Mosimanegape
et al., 2020).
The effects of responsiveness on customer loyalty in banking and finance
industry have been explored by different researchers over the time. Suharto &
Ligery (2018) quantified the effect of responsiveness on the loyalty of the
customers who were using electronic banking services and they confirmed

significant and positive effect of this factor. Before that Md Ariff et al. (2013)
identified that the responsiveness in customer contract significantly explained
for customer satisfaction with Internet banking services in Malaysia. Suleiman
et al. (2012) measured the customer loyalty in banking and they indicated that
responsiveness had positive and significant influence on customer loyalty. In
addition, previous researchers also explored the effect of responsiveness on
customer satisfaction. For example,Iberahim et al. (2016) found that customer
satisfaction with ATM services of the banks was significantly influenced by the
dependability and it is one of the characteristics of responsiveness. Maleeha
2015) informed that when the banks‟ staffs to be responsive to the customers‟
needs, customer satisfaction was greatly improved. Lau et al. (2013) also
confirmed that responsiveness was a significant predictor of customer
satisfaction with banking services after collecting the evaluation from 119 retail
banking customers in Hong Kong. In case study of TPBank‟s Live Bank
services, it is denoted that the customers are able to perform certain banking
services without the direct support from the employees. However, the bank
understands that Live Bank services are still very new in Vietnam so that a
19


customer support is established through the online video to be broadcasted
between the customers and the bank‟s customer support personnel. Herein,
responsiveness is still required in the service delivery process and how the
employees‟ attitude to resolve the customers‟ problems or inquiries as quick as
possible becomes importance. In addition, the responsiveness of performing
certain actions in the machines also decides the customer satisfaction and
loyalty with the services. Given to above discussion, the effect of
responsiveness on customer loyalty and satisfaction is stated through two
hypotheses below:
H3-1: Responsiveness affects significantly customer satisfaction with Live

Bank services provided by TPBank.
H3-2: Responsiveness affect significantly customer loyalty with Live Bank
services provided by TPBank.
2.3.4. Staff quality
Staff quality is acknowledged as the firms‟ employees to provide adequate
caring and individual attention to the customers (Parasuraman et al., 1988).
According to Bove (2019), staff quality is a notion of effective human
interactions and it represents for the ability to understand other people and to
capture their viewpoints and to predict their future needs or actions. This term is
also described as an emotional response developed upon on the communication
and interaction between people and also illustrated for the capabilities of
communication and influences (Cuff et al., 2014).
The effects of staff quality on customer loyalty in banking and finance industry
have been explored by different researchers over the time.Islam (2015)
measured the effect of staff quality on customer loyalty with commercial banks
in Bangladesh and the effect of this factor was positive and significant. Wang &
Chaipoopirutana (2014) confirmed that staff quality was significant influencer
of customer loyalty in Agricultural Bank of China. This factor also had
20


significant correlation with customer loyalty in the research paper published by
Sadiq et al. (2013) after they examined the dataset of 137 banking customers in
Maybank Berhad. In addition, previous researchers also explored the effect of
empathy on customer satisfaction. Collecting the data from 645 general and VIP
customers of Internet banking services, Lee & Lee (2020) found that empathy
had positive and significant effect on customer satisfaction. Khan & Fasih
(2014) also collected the data from 270 customers in different banks and they
confirmed the significant effect of staff quality on banking customer
satisfaction. Yadav & Rai (2015) concluded that assurance was important

dimension of banking service quality and it resulted customer satisfaction with
banking services. In case of TPBank‟s Live Bank, the bank‟s staffs often make
a contact with the customers after the transaction is finished. Depending on the
result of transaction either successful or unsuccessful), the bank‟s staffs check
with the customers in term of what they think and how they evaluate the overall
experience with Live Bank. In this context, two other hypotheses are developed:
H4-1: Staff quality affect significantly customer satisfaction with Live Bank
services provided by TPBank.
H4-2: Staff quality affect significantly customer loyalty with Live Bank services
provided by TPBank.
2.3.5. Easy to use
Easy to use of banking services is counted into the study as one of the factors
affecting customer satisfaction. Previous researchers have explored the impact
of easy to use on customer satisfaction with the banks‟ services. For example,
Kumbhar (2011) collected the data from e-banking customers of Indian banks
and confirmed the positive and significant effect of easy to use on customer
satisfaction. Dondolo & Madinga (2016) surveyed 224 banking customers and
they obtained an empirical evidence of easy to use affected positively and
significantly customer satisfaction. In addition, Sathiyavany & Shivany (2018)
21


asserted that when the customers perceived that banking services are easy to
use, they felt the convenience of using and it resulted customer satisfaction.
Banu et al. (2019) found an empirical evidence of easy to use affecting
customer satisfaction through perceived usefulness from the customers.
In this context, two other hypotheses are developed:
H5-1: Easy to use affects significantly customer satisfaction with Live Bank
services provided by TPBank.
H5-2: Easy to use affect significantly customer loyalty with Live Bank services

provided by TPBank.
2.4. Customer satisfaction and customer loyalty
Customer satisfaction is defined as “a feeling that appears on the results of a
purchase evaluation which is a comparison between actual perception and
expectation” Zaid & Patwayati, 2021, pp.985). Other researchers like Devi &
Yasa (2021) considered the customer satisfaction as the satisfaction level of the
customers towards the products and the services that are offered to them. Razak
et al. (2016) viewed the customer satisfaction as their feedback or their
evaluation of purchased goods and services in the comparison with the
customers‟ needs and demands.
Customer loyalty refers to “the tendency of customers to become repeat
customers based on their past experiences and future expectations” Arslan,
2020, pp.12). Customer loyalty is also viewed as a business concept or business
philosophy whereby the companies try to develop intensive relationship with
the customers in order to increase the customer trust and positive customer
behaviour (Yajid et al., 2020). In fact, customer loyalty has multiple attributes
whether it is categorized into affective and cognitive loyalty, in which affective
loyalty refers to the pleasure fulfillment towards a product or service while
cognitive loyalty refers to the customer preference towards a product or service
upon on available information and options in the market (Dickinson, 2015).
22


The relationship between the customer satisfaction and the customer loyalty has
been highlighted by many researchers in the past. According to Supriyanto et al.
(2021), customer loyalty is a result of customer satisfaction whether satisfied
customers are also loyal to the companies. Darmawan et al. (2017) provided an
empirical evidence of which customer satisfaction had positive and significant
effect on customer loyalty. Moreover, when the customer satisfaction level was
increased by 1 unit, the customer loyalty level will be increased by 0.19 unit.

2.5. Research model and research hypotheses
The eleven hypotheses are extracted from proposed research models:
Tangibles

Reliability
Customer
satisfaction

Responsiveness

Customer loyalty

Staff quality

Easy to use

Figure 2.1: Conceptual Research Model
H1-1: Tangibles affect significantly customer satisfaction with Live Bank
services provided by TPBank.
H1-2: Tangibles affect significantly customer loyalty with Live Bank services
provided by TPBank.
H2-1: Reliability affects significantly customer satisfaction with Live Bank
services provided by TPBank.
H2-2: Reliability affects significantly customer loyalty with Live Bank services
provided by TPBank.

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H3-1: Responsiveness affects significantly customer satisfaction with Live

Bank services provided by TPBank.
H3-2: Responsiveness affect significantly customer loyalty with Live Bank
services provided by TPBank.
H4-1: Staff quality affects significantly customer satisfaction with Live Bank
services provided by TPBank.
H4-2: Staff quality affect significantly customer loyalty with Live Bank services
provided by TPBank.
H5-1: Easy to use affects significantly customer satisfaction with Live Bank
services provided by TPBank.
H5-2: Easy to use affect significantly customer loyalty with Live Bank services
provided by TPBank.
H6: Customer satisfaction with Live Bank services provided by TPBank affects
significantly customer loyalty.

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Chapter 3 Methodology
3.1. Research approach
Research approach addresses the researcher‟s attempt to achieve the research
objectives throughout a clear process (Sileyew, 2019). This process is either
deductive or inductive (Azungah, 2018). In which, deductive approach refers to
a process of finding and adopting suitable theories in a real studying context and
from that several hypotheses are developed and the researchers need to validate
these hypotheses and come up with a conclusion of acceptance of rejection
(Woiceshyn & Daellenbach, 2018). Inductive approach, however, has different
process whether it is matter in case of the researchers do not have any relevant
theories to rely on and they must develop a new one based on their actual
observation of real case studies (Pearse, 2019). The difference between
deductive and inductive is recognized from the purpose of the researchers to

apply or to create new theories (Tie et al., 2019). In addition, when selecting the
most suitable approach, the researchers need to take into account the data
availability and the secondary data sources for referencing (Collins & Stockton,
2018).
Given to these differences, the study is designed with deductive approach. It is
employed because of the theoretical model which is proposed in the second
chapter is not actually new. In fact, it is generated from the perceived service
quality theory provided by Parasuraman et al. (1985, 1988). From that, five
factors are put into the evaluation process, including tangibles, reliability,
responsiveness, assurance, and empathy. These factors are put into the direct
relation with customer satisfaction with TPBank‟s Live Bank services and
indirect relation with customer loyalty with this service. A lot of empirical
evidences in the past confirmed the effects of these five factors on customer
satisfaction and customer loyalty. These empirical evidences are highlighted in
the second chapter and it helps to formulate the hypotheses. Herein, the process
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