Operational Uncertainties and Service Quality in Commercial Banks in Kenya
Abstract
This was a survey of the operational uncertainties and service quality in commercial
banks in Kenya which are characterized by a high degree of uncertainty in their
contemporary service processes due to the diversity of customer demand and
tendency of customers to participate in the performance of the service. The aim of the
study was to establish the operational uncertainties and their effect on service quality
in Kenyan Commercial Banks. The specific objectives were; to establish the extent to
which the forms of operational uncertainty affect service quality in commercial banks
in Kenya; to establish the effect of endogenous operational uncertainty on service
quality in commercial banks in Kenya; and to establish the effect of exogenous
operational uncertainty on service quality in commercial banks in Kenya. The study
used a descriptive research design. The population of interest comprised of all
commercial banks in Kenya and Data was collected using a questionnaire and
analysed using descriptive statistics. The factor analysis methodology was further
used to explain the interrelationships between the observed variables. The extracted
factors were thus taken as salient uncertainty factors that are associated with possible
poor service quality outcomes among commercial banks in Kenya. The findings
revealed that Kenyan Commercial Banks have a clear structure of risk and uncertainty
accountability in handling customer information as such this was the only factor
which had no effect on customer service quality. The rest of the hypothesized factors
mostly show that both exogenous and endogenous have direct positive effects on
service quality, with a few exceptions on internal uncertainty factors such as
technology, process and skills. Evidence from statistics further suggests that banks
pursue an active risk and uncertainty strategies to manage the endogenous
uncertainties thereby ensuring high quality customer service. The study however,
recommended that banks should put in place strategies to deal with the impact that
shifts in exogenous uncertainties causes as this was noted to be exerting pressure on
the banks quest to offer quality service. This for instance includes various legislations
as implemented by the government from time to time, which if not managed well plus
other Bills as may be passed by the government will eventually lead to increased
dissatisfaction for account holders as the increased costs is going to be passed
directly to them thus affecting the quality intended. The government should manage
the economic uncertainties through reducing the high inflation rates and enhancing
the business environment. Bank management should also be able to predict the
economic trends and develop counter actions to protect their customers and offer them
quality services. The benefits will certainly be conducive toward improving customer
service performance in support for more efficient operational uncertainty management
leading to the success of businesses as a whole.
Key Words: Operational Uncertainty, Service Quality and Commercial banks
Citation
Master of Business AdministrationPublisher
University of Nairobi