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RESEARCH PROJECT
(BMBR5103)
DETERMINANTS OF CUSTOMER
SATISFACTION ON SERVICE QUALITY
IN PRIVATE COMMERCIAL BANKS IN
HO CHI MINH CITY
STUDENT’S FULL NAME : PHAM NGOC DUNG
STUDENT ID : CGSVN00014973
INTAKE : March, 2013
ADVISOR’S NAME & TITLE : PHAN DINH NGUYEN June, 2014 Page 2

Advisor’s assessment

I would like to express my deeply sincere gratitude to my teacher, Dr. Phan Dinh
Nguyen, for his valuable guidance and advice on effective method. His
professional research understanding helps me and my friends recognize the
research method thoroughly and we had experienced actual process. His comments
and meaningful suggestions were contributed great help for my completion of this
research.
In addition, I would like to special express my thanks to all of my classmates, my
colleagues, my friends who are working in some banks in Ho Chi Minh City: Ms
Ngo Tran Doan Trinh (VietBank), Mr. Ky Minh Thien (Vietcombank), Mr Hoang
Minh Hung (GPbank), Mrs Nguyen Thi Chau (Eximbank)….for their support and
encouragement during the time I was doing my research. And thank you to all
customers who had spent precious time to answer the questionnaire for my topic.

Ho Chi Minh City, Vietnam
September 6th 2014 Pham Ngoc Dung
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Table of Contents

3.4 Research Hypotheses 24
CHAPTER 4: BUSINESS SITUATION AND PERFORMANCE OF
PRIVATE COMMERCIAL BANKS IN HCMC 25
4.1. General overview of the activities of private commercial banks that have
headquater in HCMC 25
4.2. The basic existence and limitations 27
4.3. A number of reasons 29
CHAPTER 5 : EMPIRICAL RESULTS AND DISCUSSION 32
5.1 Results of interviews about the customer personal information 32
5.2. Checking the relevence of the scale 33
5.3. Exploratory factor analysis 34
5.4 Regression Results 41
CHAPTER 6 : SOME POSSIBLE SOLUTIONS ARE GIVEN TO
IMPROVE CUSTOMER SATISFACTION ON SERVICE QUALITY OF
THE PRIVATE BANKS IN HCMC 47
6.1 Conclusion 47
6.2 Policy Recommendation 48
REFERENCES 53
APPENDIX 56
Appendix A – Questionnaire Survey 56
Questionnaire Survey (English) 56
Questionnaire Survey (Vietnamese) 61
Appendix B 66-73

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List of Tables and figures

Table 1.1: Result of collected samples 11
Figure 1 : Research Framework 24


List of Abbreviations
HCMC Ho Chi Minh City
ACB Asean Commercial Bank
OCB Ocean Commercial Bank
HDBank House Development Bank
SCB SaiGon Commercial Bank
ABBank An Binh Bank
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ABSTRACT
The banking industry is rapidly changing. This is the sector mainly depends on
the trust and loyalty of the customer. Therefore, in order to succeed and survive
in the current market, banking managers need to design strategies to enhance
service quality to satisfy customers better than competitors.

This study was conducted to identify the relationship between customer
satisfaction, service quality of private commercial banks in Ho Chi Minh City
(HCMC). It attempts to discover the impact of service quality on customer
satisfaction in private commercial banks in HCMC. Five dimensions in service
quality (SERVPERF) such as tangibles, reliability, responsiveness, assurance and
empathy (Cronin and Taylor, 1992) were used to evaluate satisfaction with the
quality of banking services. A Three-part questionnaire was developed as the
instrument to collect data, using the five-point Likert scale, ranging from strongly
disagree (1) to strongly agree (5). The structured questionnaire consists five (05)
questions for Reliability, five (05) questions for Responsiveness, five (05)
questions for Assurance, five (05) questions for Empathy and four (04) questions
for Tangibility and five (05) for Customer satisfaction with relevant personal
information. There were 269 usable responses of 390 customers who received the
questionnaire. These customers were from five (05) private commercial banks in


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CHAPTER 1: INTRODUCTION
1.1 Problem statement
The social is increasingly developing, life quality of people is increasingly high,
so the consumer demand for the products that they choose is also higher.
Improving product and services quality is competitive trends that private
commercial banks in Vietnam must pay attention in order to increase market
share and face many challenges in term of competition, especially when large
foreign financial groups and banks entered Vietnam.
Being aware of the importance of customer satisfaction, Vietnam banking system
in general and the private commercial banks in Ho Chi Minh City in particular
need to improve their operations as well as strengthen their images in customers’
eyes in order to be able to capture market shares, develop faster and have position
in the market. The problem that banks try their best to fulfill is how to give
customers the best satisfaction in order to meet their needs when using bank’s
products and services. The study “Determinants of customer saisfaction on
service quality in private commercial banks in HCMC” is not out of this purpose
which aims to enhance customer satisfactions for improving the service quality of
the private commercial banks in HCMC in the context of financial liberalization
and globalization.
At the end of May, 2014 there are 13 private commercial banks that have
headquarters in HCMC, such as : Eximbank, ACB, Sacombank, SaigonBank,

57,14%
ABBank
80
67
83,75%
HDbank
90
58
64,44%
Southernbank
60
39
65,00%
Total
390
269
68,97%
1.2 Research Objectives
The main objectives of this research are to identify factors affecting the level of
customer satisfaction on service quality in order to better serve customers, also
enhance the competitiveness and business efficiency of private commercial banks
in HCMC.
Specific objectives are as follows :
1. To consider the level of customer satisfaction on service quality of
commercial banks in HCMC;
2. To identify the impact of service quality on customer satisfaction of the
private commercial banks in HCMC;
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3. To give some possible solutions to improve customer satisfaction on service

commercial banks in HCMC.
 Chapter 5: The impact of service quality on customer satisfaction of the
private commercial banks in HCMC.
 Chapter 6: Some possible solutions are given to improve customer
satisfaction on service quality of the private commercial banks in HCMC
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CHAPTER 2: LITERATURE REVIEW
In this chapter, section 2.1 reviews key theories that are relevant of service
quality and following this, section 2.2 introduces the service quality models
which is used to measure service quality to fit private commercial banks in HCM
city.

(Meuter et al., 2000)
- Service quality is defined as “the consumer's overall impression of the relative
inferiority/superiority of the organization and its services” (Bitner & Hubber,
1994, p. 77).
- Service quality is an important tool to measure customer satisfaction (Hazlina et
al., 2011). The studies of Lee et al. (2000); Gilbert and Veloutsou (2006);
Sulieman (2011) and Buttle (1996) suggest service quality leads to customer
satisfaction.
- In the changing banking scenario of 21st century, the banks had to have a vital
identity to provide excellent services. Banks nowadays have to be of world-class
standard, committed to excellence in customer’s satisfaction and to play a major
role in the growing and diversifying financial sector (Guo et al., 2008). There has
been a remarkable change in the way of banking in the last few years. Customers
have also accurately demanded globally quality services from banks. With
various choices available, customers are not willing to put up with anything less
than the best. Banks have recognized the need to meet customer’s aspirations.
Consequently service quality is a critical motivating force to drive the bank up in
the high technology ladder. Banking industry is a demand driven industry, which
constitute an important part of the service industry (Newman & Cowling, 1996).
Banks have to redefine their corporate image to that emphasizes service quality
since it provides many advantages to a company such as allowing the company to
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differentiate itself from its competitors by increasing sales and market shares,
providing opportunities for cross selling, improving customer relations thus
enhancing the corporate image, reliability, responsiveness, credibility and
communication results in the satisfaction and retention of customers and
employee, thus reducing turnover rate (Newman, 2001).
2.1.4 Customer Satisfaction:
- Customer satisfaction is one of the most important concepts for most marketers

demand or expectation. Customers compare their expectations about a specific
product or services and its actual benefits. As stated by Kotler & Armstrong,
(2010), satisfaction as a person’s feelings of pleasure or disappointment resulting
from the comparison of product’s perceived performance in reference to
expectations. Customer’s feelings and beliefs also affect their satisfaction level.
Along with Zeithaml (2009), satisfaction or dissatisfaction is a measure or
evaluation of a product or service’s ability to meet a customer’s need or
expectations. Razak et al. (2007) also reported that overall satisfaction is the
outcome of customer’s evaluation of a set of experiences that are linked with the
specific service provider. It is observed that organization’s concentration on
customer expectations resulted into greater satisfaction. If the customers of an
organization are satisfied by their services the result is that, they will be loyal to
them and consequently be retained by the organization, which is positive for the
organization because it could also mean higher profits, higher market share, and
increasing customer base (Karatepe et al., 2005). Customer satisfaction has
become important due to increased competition as it is considered very important
factor in the determination of bank’s competitiveness (Berry et al., 2002).
Continuous measurement of satisfaction level is necessary in a systematic manner
(Chakravarty et al., 1996). Because satisfied customer is the real asset for an
organization that ensures long-term profitability even in the era of great
competition. Cronin et al., (2000) mentioned in their study that satisfied customer
repeat his/her experience to buy the products and also create new customers by
communication of positive message about it to others. On the other hand,
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dissatisfied customer may switch to alternative products/services and
communicate negative message to others. Customer satisfaction is a set of feeling
or outcome attached with customer’s experience towards any product/ service
(Solomon, 1998). Hence, organizations must ensure the customer satisfaction
regarding their goods/services.

 In 1985, Parasuraman, Zeithaml, and Berry introduced a new model of
service quality measurement by using the gap be between expected level of
service and dilivered level of sevice called “SERVQUAL”. Initially, it has ten
dimensions and later it got condensed to five dimensions like Tangibility,
Reliability, Assurance, Responsiveness and Empathy.
+ Tangibility: physical facilities, equipment, and appearance of personnel.
+ Reliability: ability to perform the promised service dependably and
accurately.
+ Responsiveness: willingness to help customers and provide prompt
service.
+ Assurance: knowledge and courtesy of employees and their ability to
inspire trust and Confidence.
+ Empathy: caring individualized attention the firm provides to its
customers.
Service quality is defined the model SERVQUAL as follows :
Service Quality = Customer Perceptions – Customer Expectations
Although SERVQUAL has been applied in many studies to assess service
quality, the reliability and validity of this instrument have been debated by
several authors, particularly the expectation dimensions. Carman (1990), for
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instance, argued that SERVQUAL is not applicable for the measurement of
service quality in every service industry since its five dimensions cannot be
generalized to all service industries. Teas (1993) also claimed that
SERVQUAL lacks the discriminatory validity that stems from the
expectation dimension scores because the respondents misunderstand the And
a new research instrument, SERVPERF is came up by Cronin and Taylor
(1992). This SERVPERF did not include the expectation dimension for the
measurement of service quality. Compared to SERVQUAL, SERVPERF is
considered a simpler instrument for measuring service quality since the

structured questionnaire from selected customers consists five (05) questions for
Reliability, five (05) questions for Responsiveness, five (05) questions for
Assurance, five (05) questions for Empathy and four (04) questions for
Tangibility and five (05) for Customer satisfaction with relevant personal
information.
3.2 Methods of data analysis
3.2.1 For objective No.1 :
Topic was used secondary data from the business situation of 14 commercial
banks that have headquarter in HCMC through internet, some statistical reports of
Mr Nguyen Duc Lenh - Integrated Research Manager of the State Bank of
Vietnam – HCMC branch .
3.2.2 For objective No.2 :
a. Scale
Topic used SERVPERF scale to determine the factors that affect customer
satisfaction on service quality of private commercial banks in HCMC. All scales
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of concept were studied in scale model are multivariate and were measured with
5-point Likert-type scale ranging from 1- Strongly Disagree to 5- Strongly Agree.
b. Analysis steps to achieve objective 2 : Cronbach’s Alpha; Exploratory factor
analysis (EFA) and binary logistic model were used to analyse objective 2
b1) A Tool for Assessing the Reliability of Scales is Cronbach’s Alha
(Cronbach, 1951). Cronbach's alpha determines the internal consistency or
average correlation of items in a survey instrument to gauge its reliability. It
emphasized that reliability tests are especially important when derivative
variables are intended to be used for subsequent predictive analyses. If the scale
shows poor reliability, then individual items within the scale must be re-examined
and modified or completely changed as needed. One good method of screening
for efficient items is to run an exploratory factor analysis on all the items
contained in the survey to weed out those variables that failed to show high

when customers use services of the private commercial banks.
3.3 Research Framework
The main objective of the study is to identify the impact of the five dimensions of
service quality on customer satisfaction thus the framework of this study is given
bellow: Figure 1 : Research Framework Responsiveness
Empathy
Reliability
Tangibility
Assurance
Satisfaction
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3.4 Research Hypotheses
From the above mentioned model the following main hypothesis are developed
such as:
H1: More responsiveness, more satisfaction
H2: More empathy, more satisfaction
H3 : More reliability, more satisfaction
H4: More tangibility, more satisfaction
H5: More assurance , more satisfaction


3 lần
Charter Capital
79.678
3,5 lần
Deposits
682.433
3,1 lần
Credit
500.016
2,85 lần
Bad debt
<5%
-
Business results
-
-

Table 4.1: The overview about business activities of private banks
In the past 5 years, although operating during the global economic crisis and the
difficulties of the country's the macro economic, the commercial banks operating
in HCMC, in terms of quantity, there is a high level of growth in scale of
operations and operating network. This reflects on following 03 key dimensions:
4.1.1 Scale of operations grow and expand. In that, total assets at the end of
October,31, 2012 reached : 1,089,041 billion VND, increased by 3 times and
chartered capital: 79 678 billion VND, an increase of 3.5 times compared to
2007. Associated with that process, network of operations expands. Most large
commercial banks have branches operating throughout the provinces of the