Examining Service Quality Dimensions and Customer Satisfaction Interplay in the Retail Banking Sector: An Emerging Economy Perspective

Abstract

This study assesses the relationship between service quality dimensions and customer satisfaction. Specifically, the study aimed to determine the influence of reliability, tangibility, responsiveness, service assurance, and empathy on customer satisfaction with retail banking services. A cross-sectional research design was adopted. Questionnaires were used to collect data from 289 respondents, and the data were analysed using ordinal logistic regression.  Findings indicate that customers are satisfied with the overall quality of services rendered by the retail banking sector. Findings further reveal that reliability, tangibility, assurance, responsiveness and empathy positively influence customer satisfaction.  The findings highlight the importance of service quality dimensions in shaping customer perceptions and satisfaction in the banking sector, and identify areas for development to improve overall service delivery and the customer experience. The study's findings are particularly relevant in emerging economies, where competition is intensifying, and customer expectations are evolving. Findings suggest that Banks that prioritise these dimensions can foster stronger customer loyalty, quality service delivery, greater financial performance and sustainable growth. This study contributes to the body of knowledge by addressing a critical research gap in the Tanzanian retail banking sector, particularly regarding the relationship between service quality dimensions and customer satisfaction. Unlike previous studies that examined conventional banking services, this study emphasises the unique dynamics of retail banking, catering to a large unbanked population in the country. By providing insights into specific service quality factors, the study equips Tanzanian banks with actionable strategies to enhance customer experiences and drive financial inclusion in an evolving economic landscape.