In the age of globalization, accomplishingthe higher level of customer satisfaction is the challenging task especially inthe service sector. In order to face this challenging task, many organizationshave started to improve their service quality (Devkota& Dahal , 2016). Service quality is one of the serious components inany service sector because service quality helps to maintain competitiveadvantages in the market place. Therefore, service quality is the strategictool to reinforce competitive advantages and increase profitability in business(Tam, 2004). Service quality is anassessment of how well a delivered service meets the customers’ expectations.It is one of the main components to gain competitive advantages and earn profitin any service sector. It is the tool to attract customers, increase customerbase, retain them and build customer loyalty.
So, it plays a vital role incustomer satisfaction and profitability. Thus, the relationship between servicequality and customer satisfaction is crucial in-service sector such as banking.Bank is basically a customercentric service industry. In banking sector, the customers are attracted by thequality of services offered. For example, the advancement of technology hashelped the banks to introduce services such as internet banking, mobilebanking, ATM (automated teller machine), etc. which have made the lives of thecustomers easier (Otoo, 2016).
The people want to become clients of the banks which helpthem ease their daily activities. With the presence of cut-throat competitionin the banking industry, the banks have to stay ahead of their rivals in orderto earn profits. It can do so by differentiating itself from the competitors byproviding high quality customer service.
For this, the banks should know aboutthe expectations and perception of the customer. Measuring customers’expectation is the key to be able to serve the customers satisfactorily. On theother hand, with the better understanding of customers’ perceptions, banks candetermine the actions required to meet the customers’ needs. This helps tosatisfy the customers’ needs which directly impact the overall performance ofthe bank (Karim & Chowdhury,2014).So, customer satisfaction has a significant role in continuity of the financialinstitutions and achieving their goals and objectives. The way to keepcustomers satisfied in banking industry is by providing high level of service.Therefore, all banking institutions should be focused on maintaining andenhancing their service quality in order to satisfy their customers’ needs andexpectations.In Nepal, the banking sectorhas flourished and has led to establishment of many banks.
This has createdmore options for customer to enjoy banking facilities. As a result, this sectorhas become very competitive and profitable. The banks require to stand out fromthe rest to be able to compete properly. Nepalese market scenario is alsochanging with time so the customers are ready to pay premium price forquality. Thus, in order to attain the competitiveedge and to attract and retain more customers, the banks are focused onproviding better services to the customers which in return will lead tocustomer satisfaction.