THE EFFECT OF SERVICE QUALITY ON CUSTOMER SATISFACTION (THE CASE OF E-PAYMENT SYSTEM IN SELECTED COMMERCIAL BANKS)

Abstract

Under the current growing and competitive environment of the banking industry, Customer satisfaction plays a vital role in maintaining firm’s profitability. Thus, the purpose of this study was to explain the effect of service quality on customer satisfaction in the context of selected commercial banks operating in Addis Ababa City west district; namely Commercial Bank of Ethiopia, Dashen Bank and Awash Bank. The study was designed and carried out using descriptive research method using qualitative and quantitative data. In order to answer the basic research questions and attains objectives of the study. Primary data was collected through questioner and interview. From the target population of 2025 customers 323 of them was identified as a sample size and selected to respond a questionnaire using convenience sampling technique. Among the samples, 91.02% of them have appropriately filled. Thus, the analysis and interpretation of the data was based on appropriately filled and returned questionnaires. Furthermore, the results of interview conducted with three district e-payment managers of the banks were also used in the analysis and interpretation of the data. The collected data were analyzed through descriptive and inferential statistics by processing the data using SPSS V20. Moreover, the information obtained from interview and open- ended item of the questionnaire was analyzed using narrative form. A descriptive ANOVA and correlation analysis was carried out and revealed that service quality dimensions are significant predictors of customer satisfaction. Accordingly, the results of data analysis showed that, among the five service quality dimensions; responsiveness, reliability, empathy and tangibility are statically significant to influence the status of service quality on customer satisfaction in the e-payment system. But assurance is not statically significant. In addition, the top four challenges: network interruption, power disruption, limited amount for daily transaction, and difficulty for adjusting errors had a strong negative correlation with customer satisfaction. Finally, based on the findings of the study and conclusions made, possible recommendations were forward to help decision makers to improve e-payment service and customer customers satisfaction in commercial banks found in Addis Ababa city west district.