Non-Financial Balanced Scorecard Perspectives And Service Quality In Commercial Banks In Thika Town, Kenya

ABSTRACT

Quality in servicing customers is an important marketing construct for banks. In today's turbulent economic environment service quality is an invaluable asset that banks should manage in order to survive and gain a competitive advantage. Despite the realization of the importance of service quality in the banking sector, there is still evidence of challenges on quality of the service which leads to customer satisfaction. Implementation of balanced score card perspectives can help bank in achieving better service quality. The purpose of this study was to determine the effect of implementation of non-financial balanced scorecard perspectives on service quality in commercial banks in Thika town, Kenya. It specifically focused on establishing the effects of customer perspective, internal business process perspective and learning and growth perspective. The study was anchored on the SERVQUAL Model, resource based view of the firm and organizational learning theory. This study used a descriptive survey research design. The study targeted branch managers, operations managers, credit managers and customer service managers working in the commercial banks within Thika Town. The researcher applied the census approach to include the 48 respondents. The study used a self-administered questionnaires as the main instrument of data collection. Descriptive methods such as frequency distribution, percentages mean, and standard deviation were used to analyze data. Regression analysis was employed to find out the relationship between variables. Presentation of the findings was done through tables and graphs. Descriptive analysis showed that the three perspectives were adopted by participating banks to a large extent. Regression analysis showed that learning and growth perspective (F=13.750, P=0.001) as well as business process perspective (F=36.552, P=0.000) were significant. The beta coefficients showed that internal business process perspective (β=0.739) had the highest effect of the three perspective followed by learning and growth (β=0.314) and customer perspective (β=0.107) in that order. There was a strong positive correlation (R=0.844) between non-financial balanced scorecard perspectives and service quality in commercial banks. The findings further indicate that 71.2% of service quality in commercial banks can be attributed to non-financial balanced scorecard perspectives. The findings show that the F value is significant (F(3,28) = 23.088, P=0.00) indicating that implementation of non-financial balanced scorecard perspectives was significant. The study concluded that implementation of non-financial balanced scorecard perspectives has a strong positive effect on service quality in commercial banks in Thika town. The study recommended that banks provide more incentives to their customers to chance customer retention and therefore customer satisfaction.