Determinants of customer satisfaction on mortgate service a case study of anz bank Vietnam limited Luận văn thạc sĩ

MINISTRY OF EDUCATION AND TRAINING
UNIVERSITY OF ECONOMICS- HOCHIMINH CITY









PHUNG NGUYEN THUC KHUE




DETERMINANTS OF CUSTOMER SATISFACTION
ON MORTGAGE SERVICE:
A CASE STUDY OF ANZ BANK VIETNAM LIMITED







MASTER THESIS

Ho Chi Minh City- 2010
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MINISTRY OF EDUCATION AND TRAINING
UNIVERSITY OF ECONOMICS- HOCHIMINH CITY








Phung Nguyen Thuc Khue



DETERMINANTS OF CUSTOMER SATISFACTION
ON MORTGAGE SERVICE:

A CASE STUDY OF ANZ BANK VIETNAM LIMITED



MASTER THESIS

In
Finance- Banking
Ology Code: 60.31.12

Supervisor
Assoc. Prof. Dr. Nguyn Minh Kiu





Ho Chi Minh City- 2010
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ACKNOWLEDGEMENT


First of all, I would like to express my deepest gratitude and sincerest thanks to Dr. Nguyen Minh Kieu,

my thesis tutor, for his valuable and patient guidance, advice and support during my research.

Second, I would like to thanks all professors, tutors and my classmates who gave me the academic
knowledge, support, encouragement and sharing experience to help me complete this research
successfully.

I also express my sincere thanks to my old colleagues at ANZ Bank Vietnam Limited and all the
respondents who helped me to build the qualitative research and complete the survey.

Personally, I am deeply indebted my parents who always expect and encourage me much during the last
three years. I could not make it without them.




Ho Chi Minh City, December 2010





Phung Nguyen Thuc Khue

ABSTRACT


Recently banking industry has become severely competitive environment than ever before. When the
banking products are easy to imitate, then the service quality becomes important and significant for
banks to increase their competitive capacity. This research, therefore, focused on measuring customer
satisfaction on mortgage lending service which occupies a large portion in retail lending market. ANZ

Bank Vietnam Limit was chosen for a case study in consideration of their strong foothold in retail
lending market after seventeen years of officially operating in Vietnam. This research attempted to
figure out the most important factor influenced mortgage customer satisfaction. Based on that, the
research findings provided meaningful recommendations and managerial implications for ANZ Bank
Vietnam Limited’s management board.

Sample of 150 respondents was selected, it was executed mostly in email and telephone interview.
Collected data was analyzed by using SPSS 16.0. Main analyses were exploratory factor analysis,
correlation, reliability with Cronbach’s Alpha, multiple linear regression.

The result addressed that the key satisfactions of mortgage customers at ANZ Bank Vietnam Limited
were Core Dimension, Relational Dimension, Price, Tangible Dimension and Customer Expertise
respectively.

Managerial implications for management board of ANZ Bank Vietnam Limited were provided.
Subsequently, limitations of the research were discussed for future studies in related field.


TABLE OF CONTENTS

ACKNOWLEDGEMENTS
ABSTRACT
TABLE OF CONTENTS
LIST OF FIGURES
LIST OF TABLES
LIST OF ABBREVIATIONS
CHAPTER 1: INTRODUCTION 1
1.1 BACKGROUND 1
1.2 PROBLEM STATEMENT 2
1.3 RESEARCH QUESTIONS AND OBJECTIVES 4

1.4 RESEARCH METHODOLOGY 4
1.5 SCOPE AND LIMITATION 5
1.6 THE STRUCTURE OF THE STUDY 5
CHAPTER 2: LITERATURE REVIEW 7
2.1 OVERALL ON CUSTOMER SATISFACTION 7
2.2 OVERALL ON CUSTOMER SATISFACTION IN
MORTGAGE LENDING 8
2.3 DETERMINANTS OF CUSTOMER SATISFACTION IN
MORTGAGE LENDING 9
2.3.1 Service quality 10
2.3.2 Service price 12
2.3.3 Customer expertise 12
2.4 RESEARCH MODELS AND RESEARCH HYPOTHESES
OF CUSTOMER SATISFACTION IN MORTGAGE LENDING 13
2.5 CHAPTER SUMMARY 15
CHAPTER 3: RESEARCH METHODOLOGY 16
3.1 QUALITATIVE RESEARCH STAGE 18

3.1.1 General result of the survey 19
3.1.2 Result on Core Dimension determinant 19
3.1.3 Result on Relational Dimension determinant 20
3.1.4 Result on Tangible determinant 21
3.1.5 Result on Competitive price determinant 21
3.1.6 Result on Customer Expertise determinant 22
3.2 QUANTITATIVE RESEARCH STAGE 22
3.2.1 Target population and sampling method 22
3.2.2 Data collection 23
3.2.3 The questionnaire design 23
3.2.4 Data analysis method 24
3.2.4.1 Descriptive statistic 24

3.2.4.2 Reliability testing 24
3.2.4.3 Assessment of Unidimensionality, Convergent
validity and Discriminant validity 25
3.2.4.4 Multiple regression analysis 25
3.3 CHAPTER SUMMARY 25
CHAPTER 4: DATA ANALYSIS AND FINDINGS 26
4.1 SAMPLE CHARACTERISTICS 26
4.2 DATA ANALYSIS 28
4.2.1 Descriptive statistics 28
4.2.2 Reliability assessment 30
4.2.3 Evaluation the measurement scale by using exploratory
factor analysis 32
4.2.4 Assessment of convergent validity and of discriminate
validity 33
4.2.5 Factor analysis of dependant factor 34
4.2.6 The adjusted research model 35
4.3 TESTING OF HYPOTHESES 35

4.4 MULTIPLE REGRESSIONS 37
4.4.1 Multiple regression formula 38
4.4.2 Multiple regression result 38
4.5 DISCUSSION 40
4.5.1 Application of theoretical conceptual framework 40
4.5.1.1 The relationship between service quality and
customer satisfaction 40
4.5.1.2 The relationship between price and customer satisfaction .
40
4.5.1.3 The relationship between customer expertise
and customer satisfaction 40
4.5.2 The result of measuring ANZ mortgage customer satisfaction 41

4.5.2.1 Service quality 41
4.5.2.2 Price 41
4.5.2.3 Customer satisfaction 42
4.5.3 Outcomes of hypothesis test 42
4.6 CHAPTER SUMMARY 42
CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS 43
5.1 CONCLUSIONS 44
5.2 RECOMMENDATIONS 44
5.3 LIMITATION AND DIRECTION FOR FURTHER STUDIES 46
REFERENCE
APPENDICES



LIST OF FIGURES


Figure 1.1: Research procedure 5
Figure 2.1: Conceptual framework proposed by Mc Dougall and Levesque 14
Figure 2.2: The conceptual framework proposed by Naser and Jamal 15
Figure 2.3 The conceptual framework proposed by Nguyen Dinh Tung 16
Figure 3.1: The proposed research model 17
Figure 4.1: The adjusted research model 35

LIST OF TABLES

Table 3.1:
General result of agreement on selected factors 19
Table 3.2:
General result of agreement on Core dimension factor 20

Table 3.3: General result of agreement on Relational dimension factor 20
Table 3.4:
General result of agreement on Tangible dimension factor 21
Table 3.5: General result of agreement on Price factor 21
Table 3.6:
General result of agreement on Customer expertise factor 22
Table 4.1:
Age of customer 26
Table 4.2:
Monthly income of customers
27
Table 4.3:
Customer’s employment 27
Table 4.4:
Descriptive statistic 29
Table 4.5:
Final result of Reliability testing of the whole mod 30

Table 4.6:
Final result of Reliability testing of each factor 31
Table 4.7: The final result of Unidimensionality testing 32
Table 4.8: The analysis result of Convergent validity 33
Table 4.9:
The result of factor analysis for Customer satisfaction 34
Table 4.10: Correlation matrix 36
Table 4.11: Model summary 38
Table 4.12: ANOVA 38
Table 4.13: COEFFICIENTS 39
Table 4.14: ANZ mortgage customer perception 41

LIST OF ABBREVIATIONS


ANZ: ANZ Bank Vietnam Ltd.
CLM: Customer Lending Manager
COR: Core dimension
EFA: Exploratory Factor Analysis
EXP: Customer expertise
H: Hypothesis
HSBC: Hongkong and Shanghai Bank of China
INT: Price
KMO: Kaiser – Meyer – Olkin
No.: Number
REL: Relational dimension
SAF: Customer satisfaction
SPSS: Statistical package of social science
Std. Deviation: Standard Deviation
TAN: Tangible dimension
VIF: Variance Inflation Factor


CHAPTER 1: INTRODUCTION


1.1 BACKGROUND
With the characteristic of young population and high urbanization, Vietnam has high demand in

accommodation, especially in big cities such as Ho Chi Minh City and Ha Noi City. Each year,
thousands of immigrants from other provinces come to Ho Chi Minh City and Ha Noi City for
working and studying while just a small part of them come back to the hometown. Some recent
studies have predicted that in 2020, urban population will come up to 70 million. Besides that,
the young occupies bigger portion in the existing population of Ho Chi Minh City and Ha Noi
City which also push the occupation demand higher. Yearly increasing construction projects in
Ho Chi Minh City and Ha Noi City is an obvious evidence for the occupation demand of urban
people. As statistics, in 2009, the average urban living area in Vietnam is 12.5 m2 per head, Ha
Noi City is 8 m2 and Ho Chi Minh City is 13.6 m2. This is a very low rate in comparison with
the world’s average rate, in which Ha Noi City has the smallest living area per head in the
country. The Construction Ministry has planned to increase the average living area in Ha Noi
City up to 12 m2 per head and 14 m2 for Ho Chi Minh City and therefore, 30-32 million m2
living area need to be constructed each year. With the above reasons, mortgage loan in Vietnam
in general and big cities such as Ha Noi City and Ho Chi Minh City in particular is very
potential. In truth, not many people can purchase a home whether it is a house, flat, apartment or
penthouse without taking a mortgage loan.
A mortgage loan is a loan secured by real property through the use of a document which
evidences the existence of the loan and the encumbrance of that realty through the granting of a
mortgage which secures the loan. However, the word mortgage alone, in everyday usage, is
most often used to mean mortgage loan (source: Wikipedia). Mortgage is one of long standing
products in Vietnam banking, however, for above reasons, it has never been unessential.
Mortgage has grown rapidly for recent years in Ho Chi Minh City and Ha Noi City. As per Dr.
Le Xuan Nghia, Vice President of National Finance Supervisor Committee, in 2009, banking
capital invested in real estate market is around VND 200,000 billion, equivalent to USD 10.1

billion which occupies 14.5% total outstanding loan of banking and 11.76% which of the
economy, in which, Ho Chi Minh City holds 51% and Ha Noi City holds 14.5%. For recent
years, competition in mortgage lending among banking become more fiercely than ever before.
Banks traditionally have relied on differentiation in product category and service to attract and
retain customers. However, it’s not easy as it’s quickly replicated by competitors and often fails

to directly address customer needs. The most critical solution for banks in the violent
competitive and rapidly changing environment of mortgage lending is the deep understanding of
customer and gaining their trust. Customer satisfaction now becomes the determining factor in
mortgage competition among banks in Vietnam and Ho Chi Minh City in particular.

1.2 PROBLEM STATEMENT
The fast growing-up progress of banking industry in Vietnam has accompanied with the
economic development since renovation and reform for 20 years ago. The most prominent
aspect during this progress is the loosening of market entry restrictions. After two decades since
“Banks and banking, cooperative – Law and legislation – Vietnam” (1991), now Vietnam
banking sector comprises five state-owned commercial banks, thirty-nine joint stock commercial
banks, forty foreign bank braches, five 100% foreign owned banks, five joint venture banks and
two development and policy banks established. The establishment and operation of many
foreign banks has also brought a new face to Vietnam banking industry, especially when foreign
banks not only concentrate in wholesales banking, but introduce many retail products such as
HSBC, ANZ, Standard Chartered Bank, Commonwealth Bank of Australia… In which
mortgage is one of their most important target products to occupy retail market which is
considered very potential in Vietnam.

ANZ was one of the first foreign banks setting up business in Vietnam with the first branch in
Ha Noi City in 1993. At that time, it was “the first English-speaking bank in Vietnam”. In 1996,
the second branch in Ho Chi Minh City went into operations and in 2004 business was expanded
to Can Tho Province with a representative office due to the limitation on permitted branches
number. After 15 years in Vietnam, in October 09
th
, 2008, ANZ was granted the license of the

bank with 100% foreign capital which brings much advantage to its long-term development in
Vietnam. Beginning with 28 staff only, now it has more than
400 employees and five branches

and transaction offices in Ho Chi Minh City, six
branches and transaction offices in Ha Noi
City. Targeted to be the best foreign bank in Vietnam, ANZ is trying its best to build up the
bank’s image as well as a sufficient product portfolio. Instead of focusing in wholesale banking
products and corporate customers as in the past, now ANZ has built up a new strategy for
occupying retail lending market. Their retail lending product portfolio is diversified with many
products such as auto finance, mortgage, credit card… In which, mortgage is considered the
most important product in the portfolio. It was firstly introduced in the end of 2007 with four
sub-products: Home loan, Investment loan, Equity loan and Line of Credit. Since then, mortgage
has grown fast and reached more than 2,300 customers in 20 December 2010.

Although being granted many awards such as “The Best Retail Bank in Vietnam”, “The Most
Favorite Bank” or “The Best Customer Oriented Bank” by popular magazines like Vietnam
Economics Times, The Asian Banker and Finance Asia, ANZ has no official research on
customer’s satisfaction on its services, what is the key factor mostly effect customer’s
satisfaction and what to improve to increase the mortgage service quality. Meanwhile, as above
mention, increasing competition in mortgage lending has made the bank’s knowledge on
customer’s need and demand the most importance and challenge. Managing customer
satisfaction is therefore indispensable for management of the banks, to see if they are doing the
right things and if they are doing things right.
For the above reasons, the study on “Determinants of customer satisfaction on mortgage credit
service: A case study of ANZ” has conducted to understands the factors and the key factor
having effects to customer’s satisfaction and recommend for the better customer’s satisfaction
management to the bank as well.
1.3 RESEARCH QUESTIONS AND OBJECTIVES
Research questions
- How satisfied are customers who are using mortgage lending service of ANZ?
- What determinants effecting customer’s satisfaction on ANZ’s mortgage lending service?
- How can these determinants be evaluated and influenced to customer’s satisfaction?

- What solution and recommendation to ANZ to improve customer’s satisfaction on
mortgage loan?

Research objectives
- To study about the importance of customer satisfaction on mortgage product.
- To analyze satisfaction level of customer on mortgage product of ANZ
- To study the effect of main determinants on customer’s satisfaction on mortgage lending
service at ANZ
- To give out appropriate comments and recommendation to improve customer satisfaction
on mortgage product of ANZ

1.4 RESEARCH METHODOLOGY
Necessary data and information for this study could be collected from two main sources:
- Primary data:
o In-dept interviews and discussion with Head of Mortgage, Regional Manager of
Mortgage, Customer Lending Managers and other relevant departments of ANZ
o Feedback from customers who are having mortgage transactions with ANZ. This
will be processed with survey questionnaire. It could be obtained through many
different channels such as telephone, e-mails, fax, posted mail or face-to-face
interviews. The main method will be face to face survey to explore as many
feedbacks from customers as possible.
- Secondary data:
o Statistic reports on the social, economic data and figures from the General Bureau
of Statistic.
o Annual reports of The State Bank of Vietnam and ANZ
o Statistic report of ANZ on mortgage lending status
o Relevant articles, newspapers, books and websites

1.5 SCOPE AND LIMITATION

As limited on time and resource, the study focuses in individual customers having mortgage
transactions with ANZ in Ho Chi Minh City and Ha Noi City.

1.6 THE STRUCTURE OF THE STUDY
Figure 1.1: Research procedure









Chapter 1: Introduction
This chapter includes the research rationale, the problem statement, research questions, research
objectives and research methodology.
Chapter 2: Literature review
This chapter gives an overview on relevant theories. Based on that, the final research model and
hypotheses was developed.
Chapter 3: Research methodology
This chapter describes the operational process of this research in order to approach target
respondents and find out the required data.
Chapter 4: Data analysis and findings
The chapter presents outcomes throughout data processing and analysis. Finally, model and
hypotheses tests were conducted to confirm whether they can be applied to predict the behavior
intention as this research expected.
Chapter 5: Conclusion and recommendations
Chapter 1
Introduction

Chapter 2
Literature review
Chapter 3
Research
methodology
Chapter 4
Data analysis &
findings
Chapter 5
Conclusions &
recommendations

This chapter summarized not only the main findings and implications but also the possible
limitations and further research suggestions.

CHAPTER 2: LITERATURE REVIEW


2.1 OVERVIEW OF CUSTOMER SATISFACTION
What constitute satisfaction? The word "satisfied" itself had a number of different meanings for
respondents, which can be split into the broad themes of contentment/happiness, relief,
achieving aims, achieving aims and happy with outcome and the fact that they did not encounter
any hassle.
There are also many approaches to the customer satisfaction explanation. It is generally
described as the overall attitude of customer towards a service provider (McDougall and
Levesque, 1996, p.14) or an emotional reaction to the difference between what customers
anticipate and what they receive (Zineldin, 2000) regarding the fulfillment of some need, goal or
desire (Oliver, 1999). A similar definition is provided by Gerpott (2001) who proposed that
satisfaction is based on customer’s estimated experience of the extent to which a provider’s
services fulfill his or her expectations. Specifically, customer satisfaction is the feeling or

attitude of a customer towards a product or service after it has been used (Oliver, 1980).
Customers purchase goods and services with pre-purchase expectations about anticipated
performance. Once the purchased goods and services have been used, the outcomes are
compared with the expectations. Customers are satisfied when the perceived service meets or
exceeds their expectations. They are dissatisfied when they feel the service falls below their
expectations (Levy and Weitz, 2005).
Customer satisfaction is an important theoretical as well as practical issue for most marketers
and consumer researchers (Churchill and Suprenant, 1982; Moutinho and Goode, 1995; Naser et
al., 1999; Piercy, 1994). It is a major outcome of marketing activity whereby it serves as a link
with various stages of consumer buying behavior. Customer satisfaction is widely recognized as
a key influence in the formation of consumers’ future purchase intensions (Taylor and Baker,
1994). For instance, if customers are satisfied with a particular service offering after its use, then
they are likely to engage in repeat purchase and try line extensions (East, 1997). Satisfied
customers are also likely to tell others of their favorable experiences and thus engage in positive

word of mouth advertising (File and Prince, 1992; Richens, 1983). This positive word of mouth
advertising is particularly useful in collectivist Asian cultures where social life is structured in a
way to improve social relationships with others in the society (Hofstede, 1980; Hall and Hall,
1987). Dissatisfied customers, on the other hand, are likely to switch brands and engage in
negative word of mouth advertising.
Customer satisfaction can be considered as the key point of success in the highly competitive
business world today. Customer satisfaction is increasingly becoming a corporate goal as more
and more companies strive for quality in their products and services (Bitner and Hubbert, 1994).
Ensuring customers experience satisfaction during their interactions with our business is an
essential part of building a sustainable business of many firms. They continually try to
investigate how to serve the customers better, to implement initiatives to improve the customer’s
experience and to increase customer satisfaction more and more.

2.2. OVERVIEW OF CUSTOMER SATISFACTION IN MORTGAGE LENDING
Banking is a service industry where customer satisfaction has been the research focus (Holliday,

1996). This is mainly because of the fact that the banking industry is increasingly experiencing a
high level of competition, not only competing among each other, but also with non-banks and
other financial institutions (Kaynak and Kucukemiroglu, 1992; Hull, 2002). Banks used to rely
on the product category to increase the competition. However, as Ioanna (2002) has further
proposed, product differentiation is impossible in a competitive environment like the banking
industry. Most bank product developments are so easy to duplicate that now banks everywhere
are delivering the same products. For example, there is usually only minimal variation in interest
rates charged or the range of products available to customers. When banks provide nearly
identical services for nearly the same price, they can only distinguish themselves on the basic of
price and quality. Therefore, banks today have moved away from a transactional-based
marketing approach to a relationship based approach that has at its core the recognition of the
lifetime value of the customer. Bank management tends to differentiate their business with
others through service quality. Customer satisfaction becomes an effective tool that banks can
use to gain a strategic advantage and survive in today’s ever-increasing banking competitive

environment. The trend is clearly observed in retail banking service, especially in lending
section which is usually thought to be so intimidated to customer. The research is conducted in
mortgage lending which is a big section of retail banking in Vietnam.

2.3 DETERMINANTS OF CUSTOMER SATISFACTION IN MORTGAGE LENDING
The working of the customer's mind is a mystery which is difficult to solve and understanding
the nuances of what customer satisfaction is therefore, a challenging task. There have been many
researches on determinants of customer satisfaction. Work done by Berry, Brodeur between
1990 and 1998 defined ten “Quality values” which influence satisfaction behavior, further
expanded by Berry in 2002 and known as the ten domains of satisfaction include: Quality,
Value, Timeliness, Efficiency, Ease of Access, Environment, Inter-departmental Teamwork,
Front line Service Behaviors, Commitment to the Customers and Innovation. These factors are
emphasized for continuous improvement and organizational change measurement and are most
often utilized to develop the architecture for satisfaction measurement as an integrated model.
In 1996, Mc Dougall and Levesque conducted a research about customer satisfaction in retail

banking and found out that there are some determinants driving customer satisfaction in retail
banking, including service quality (core, tangible and relational) and service price. These
factors, in turns, are affected by customer’s expertise in banking and socio-demographic factors
like age, gender, education, occupation. The affection of socio-demographic and expertise
factors to satisfaction are also suggested in a research by Bettman and Park in 1980.
This study, with the research scale of investigate customer satisfaction in mortgage lending
which is an important part of retail banking, will conduct with conceptual framework basing on
the suggested models of customer satisfaction in retail banking.
2.3.1 Service quality
There is a great deal of discussion and disagreement in the literature about the distinction
between service quality and satisfaction. The service quality school view satisfaction as an
antecedent of service quality, which means satisfaction with a number of individual transactions
"decay" into an overall attitude towards service quality. The satisfaction school holds the
opposite view that assessments of service quality lead to an overall attitude towards the service

that they call satisfaction. Obviously, there is a strong link between customer satisfaction and
service quality. For this reason, research on customer satisfaction is often closely associated
with the measurement of quality (East, 1997).
A study conducted by Leeds in 1992 showed that increased service quality or sales and
professional behaviors (such as formal greetings) improved customer satisfaction and reduce
customer attrition. Service quality is an imperative element impacting customers’ satisfaction
level in the banking industry. In banking, quality is a multi-variable concept, which includes
differing types of convenience, reliability, service portfolio, and critically the staff delivering the
service.
Core of the service and the relational of process aspects are two dimensions of service quality
which are suggested by most of empirical evidence and theoretical arguments (Grönroos, 1985;
Mc Dougall and Levesque, 1996; Morgan and Piercy, 1992; Parasuraman et al. (1991b). While
the number of underlying dimensions has been shown to vary with the service setting, it appears
reasonable to suggest that the service core and relational dimensions will emerge in nearly all
cases as they form the basis of the service (Mc Dougall and Levesque, 1996). The first one

refers to the core aspects of the service (e.g. reliability) and the second one refers to the
relational or process aspects of the service (e.g. tangibles, responsiveness, assurance and
empathy (Parasuraman et al., 1991a)). This is due to the fact that reliability is mainly concerned
with the outcome of service, whereas tangibles, responsiveness, assurance and empathy are
concerned with the service delivery process (Parasuraman et al., 1991a).
Due to the intangible nature of services, it is often difficult for customers to understand services
(Leggand Baker, 1996). Customers thus make inferences about the service quality on the basis
of tangibles (the buildings, the physical layout etc.) that surround the service environment
(Bitner, 1990). Brand reputation is important as a potential competitive advantage. Many
financial services are looking at branding techniques to differentiate themselves. Harwood
(2002) argued that branding, as a tool to build image, is critical in the banking industry where all
firms offer about the same kinds of products. Hence, it is critical that banks have a
comprehensive knowledge of customer’s values, attitudes, needs and perceptions of various
services the bank offers and the image which customers have of the bank itself (Kaynak, 1986a,

1986b). Accordingly, banks must be able to build and manage their bank’s image in order to
clearly define the differences between their bank and its competitors. As today customers have
more choices for their financial needs than ever before, technology, globalization, increased
competition and increased consumer mobility have dramatically changed the way people bank
(Harwood, 2002).
Alvarez (2001) proposed that logic is no longer enough to sell the benefits of an intangible
products or service, especially with commodity products and skeptical consumers. This situation
calls for emotion or image to change the perception of the audience in any real or profound way
(Alvarez, 2001). Furthermore, both Marthur (1988) and Gronroos (1984) proposed image as an
alternative to differentiate products. Findings suggest that convenient location is a critical factor
influencing the formation of performance expectations by customers. A convenient bank
location means customers can easily do business with their banks on a regular basis (Levesque
and McDougall, 1996). Accessibility is also a related factor, which, while acting together with
convenience, enables customers to deal with their banks more easily (Levesque and McDougall,
1996). For the purpose of current study, convenience and accessibility are treated as part of the

tangible dimension of service quality.
2.3.2 Service price
As per Abratt and Russell, 1999, the key factors influencing customer’s selection of a bank
include the range of services, rates, fees and prices charged. It’s apparent that only superior
service is not sufficient to satisfy customers. Prices are essential, if not more important than
service quality (David, Christopher, Hua Hwa and Esther, 2006).
Today’s bank customers are more informed on market products due to the loan of circulating
information, making them capable of directly comparing the various competitive products.
Customers communicate with other customers, study brochures and receive information from
television and the internet. Therefore, customers are more influenced than in the past by bank
pricing policies and seek low borrowing interest rates and low costs for the provision of
services. Today’s customers turn easily towards the service of another bank than in the past,
especially when they only find little and insignificant differences among the various products
and services.

In mortgage lending, service price are lending interest rate and other relevant fees. Although the
bank price are now highly affected by market, a little difference in price between bank and its
competitors will be recognized and appreciated by customers and it’s likely to bring them more
satisfaction.
2.3.3 Customer expertise
A review of the literature indicated that formation of performance expectation during product or
service evaluation can be moderated by customer’s expertise (Bettman, 1970; Fishbein, 1963;
Fishbein and Ajzen, 1975; Rosenberg, 1950). In a landmark article on customer expertise, Alba
and Hutchinson (1987) identified two major and distinctive components of customer expertise:
expertise and familiarity. They defined expertise as “the ability to perform product related task
successfully”, whereas familiarity was defined as “the number of product related experiences
that have been accumulated by the consumer” (Alba and Hutchinson, 1987, p.411). Expertise is
more clearly stated that: “The understanding of the attributes in a product or service class, and
knowledge about how various alternatives stack up on these alternatives” (Sheth et al, 1999).
They are also likely to have superior ability to encode new information and to discriminate

between relevant and irrelevant information (Alba and Hutchinson, 1987; Johnson and Russo,
1984). In short, some customers may be more expert than others and their satisfaction is judged
at a cognitive level. In the context of complex services such as banking, insurance, pension,
mortgage etc, anecdotal evidence identifies a general trend in the marketplace whereby an
increasing number of customers are making their financial positions on their own. A number of
researchers have indicated that experts have superior ability about learning new information
about an offering, as compared to novice customers (Johnson and Russo, 1984; Brucks, 1985;
Alba and Hutchinson, 1987). Also, expert customers are likely to have developed skills
indistinguishing between important and unimportant information, as well as between relevant
and irrelevant information (Alba and Hutchinson, 1987). Generally, expert customers are likely
to have a superior knowledge of existing alternatives; they are also likely to have a superior
ability to encode new information and to discriminate between relevant and irrelevant
information (Johnson and Russo, 1984; Alba and Hutchinson, 1987). Due to their knowledge
and abilities, one could argue that expert customers in comparison with novice customers are

very likely to have high expectations from service providers. Hence, as per the disconfirmation
paradigm, the differences between pre-purchase expectations and post-purchase perceptions are
likely to be at a highest level for expert customers.

2.4 RESEARCH MODELS AND RESEARCH HYPOTHESES OF CUSTOMER
SATISFACTION IN MORTGAGE LENDING
Customer satisfaction is a quite complex issue and there is a lot of debate and confusion about
what exactly is required and how to go about it. This exercise in the context of the mortgage
lending industry will give an insight into the parameters of customer satisfaction and their
measurement. In many researches about customer satisfaction on retail banking service, the
SERVQUAL model and the simple RATER model (developed by Zeithaml, Parasuraman &
Berry Parasuraman, 1985, 1988, 1991) are simple and useful models for qualitatively exploring
and assessing customer satisfaction and have been used widely by service delivery
organizations.
To build up an efficient model in identifying determinants of customer satisfaction in retail

banking, in 1996, Mc Dougall and Levesque used some factors like service price and service
quality including core, tangible and relational which had been identified in prior SERVQUAL
research. The model is described briefly in the below charter

Figure 2.1 Conceptual framework proposed by Mc Dougall and Levesque (1996)









Service quality
Core
Relational
Tangible
Price
Customer satisfaction


Source: Mc Dougall and Levesque (1996)

Another study of Jamal and Naser in 2002 has also confirmed that core, relational and tangible
are dimensions of service quality and are likely to be antecedents of customer satisfaction.
Moreover, they also pointed out that customer’s expertise is an important antecedent which has
negative relation to customer satisfaction. It had also been mentioned before in the research of
Bettman and Park (1980) and Oliver (1980), the effect of evaluated criteria in forming
performance expectations can be moderated by consumer individual differences.

Figure 2.2 The conceptual framework proposed by Naser and Jamal (2002)










Source: Jamal and Naser (2002)
In Vietnam, there is a recent study about the same dependent variable of customer satisfaction. It
was executed by Nguyen Dinh Tung in 2009 with the topic of “Determinants of individual
customer satisfaction at Maritime Bank”. His research area was individual customers who had
current and saving accounts at Maritime Bank. After investigating, the research model was
given out with four independent variables having effect on individual customer satisfaction:
Core Dimension, Relational Dimension, Tangible Dimension and Competitive Price. Besides
that, he also explored the influence of socio-demographic and customer expertise on these
determinants. His research model is described as follows.
Service quality
Core
Relational
Tangible
Customer expertise
Customer satisfaction