Executive Summary

The report investigates the gap between customer expectations and perceptions of banking services in
Bangladesh. To bridge the gap, it emphasizes the significance of knowing customer expectations and
harmonizing service delivery. According to the findings, previous experiences, cultural norms, and
perceived value all influence customer expectations. Positive perceptions contribute to enhanced client
loyalty, whereas negative perceptions can lead to unhappiness and customer loss. In Bangladesh, private
banks have made great efforts to improve customer satisfaction through new services and technology,
whereas government banks encounter difficulty in achieving customer expectations. The findings have
ramifications for customers, marketers, and the government, and they have the potential to improve
service delivery, customer satisfaction, loyalty, and profitability in the banking business. While the study
provides valuable insights, further research is needed to explore additional factors and expand the sample
size for more generalizable results. Closing the expectation-perception gap is crucial for the banking
industry in Bangladesh to meet customer needs effectively.

Introduction

The banking sector in Bangladesh has undergone a substantial expansion and transformation in recent
years. Banks have been working to fulfill the changing demands and expectations of their customers
through the development of financial services and the use of cutting-edge technologies. Nevertheless,
despite these initiatives, there is frequently a gap between what clients anticipate from financial services
and how they actually perceive those services.

For Bangladeshi banks to increase customer happiness, brand loyalty, and eventually market
competitiveness, it is critical to comprehend and close this gap. Banks can discover opportunities for
improvement and develop strategies to better match their services to consumer needs by looking at the
issues behind the gap between client expectations and perceptions.

Customers in the banking industry have certain expectations regarding the services they receive. These
expectations are impacted by a variety of factors, including previous experiences, cultural norms, societal
influences, and the perceived value of competing banks' services. Customers may expect timely service,
effective complaint handling, customized attention, easy access to banking channels, accurate
information, and competitive interest rates, among other things.

People's understanding and evaluation of the services they receive from banks is known as their customer
perception. It is arbitrary and varies depending on the individual. Customers' opinions are influenced by
their encounters with the bank, their relationships with employees, how simple it is to utilize banking
facilities, how quickly questions are answered, how transparent the processes are, and how satisfied they
are with the service in general. While unfavorable impressions can lead to discontent, decreased usage,
and even the loss of customers to rival banks, positive perceptions improve customer loyalty.

When customers' actual experiences do not meet their initial expectations, a gap between customer
expectation and perception develops. Several factors might contribute to this disparity, including
inconsistent service quality, poor communication, service delivery delays, a lack of transparency, and an
inability to address specific customer needs. Identifying the root reasons of this disparity is critical for
banks to resolve flaws, align their services with consumer expectations, and improve overall customer
happiness.

This study of the difference between customer expectations and perceptions of banking services in
Bangladesh is critical for the banking industry. Banks can build targeted measures to bridge the gap by
collecting insights into client expectations and identifying areas where perceptions fall short. Such efforts
can result in increased customer satisfaction, increased loyalty, increased market share, and an industry
competitive advantage.

Finally, identifying and narrowing the gap between consumer expectation and perception is critical for
Bangladesh's banking industry. Banks can identify specific areas for improvement and adopt successful
measures to improve their services by conducting a thorough examination. Finally, connecting customer
expectations with real service experience will help banks develop and succeed in Bangladesh's dynamic
and competitive banking business.

Objectives of the Study

 Determine the elements that contribute to the gap between customer expectations and perceptions
of banking services in Bangladesh.
 Examine the influence of this gap on customer satisfaction, loyalty, and retention in Bangladesh's
banking business.
 Understand the zone of tolerance & how it changes depending on the situations.
 Contribute to current knowledge about customer expectations and views in Bangladesh's banking
business.
 Map out the total number of moments of truth a customer has to go through in order to get a
service from a bank.
 Industry overview

In the economic development of Bangladesh, “The Banking Industry” plays a vital role. Year by
year, this industry is getting more growth. Introducing many newly developed technologies is helping this
industry transform and serve more adequately. Following independence, the banking industry in
Bangladesh began with six nationalized commercial banks, three state-owned specialty banks, and nine
foreign banks (Bangladesh Bank). Private banks started their operations in the 1980s in Bangladesh.
Because of this, the expansion of the banking industry has become more significant. The central bank of
Bangladesh is called “Bangladesh Bank.” The central bank sets all the rules and regulations and
supervises other banks. Currently, 61 scheduled banks are available, governed, and regulated by
Bangladesh Bank (Bangladesh Bank). Some banks don’t have all functions of a scheduled bank, and they
are called non-scheduled banks. There are now five non-scheduled banks in Bangladesh (Bangladesh
Bank). The central bank of Bangladesh implements monetary policy. Several types of banks are available,
such as Commercial Banks, Specialized Banks (Rajshahi Krishi Unnayan Bank), Islamic Banks, etc.

Service offered by banks:

 Deposit
 Loan
 Credit cards
 Remittance service etc.

Customers: Government, individuals, big organizations or companies, and small and medium-sized
enterprises (SMEs) are served by Banks.

We are living in a digital era. Technological improvement is making the banking sector easier. Fund
transfers have become electronic; Mobile banking, internet banking, and agent banking are very attractive
to customers. These innovations are now making tasks more accessible and efficient for this industry.

No industry can run as smoothly as butter. There must be some challenges. There are so many cases
of bankruptcy. Ensuring cyber security, maintaining stability, providing good service, understanding
customers' needs, and providing customer support are significant challenges for Banking Industry.

Background of United Commercial Bank (UCB):

Bangladesh had no domestic private commercial banks until 1982, when the Arab-Bangladesh Bank
Ltd. began private commercial banking in the country. In 1983, five new commercial banks, including
United Commercial Bank Limited, were established, kicking off a period of steady expansion in banking
financial institutions (UCB Profile). In terms of assets, deposits, profitability, network, customer base, and
personnel, United Commercial Bank Ltd. (UCB) is one of Bangladesh's largest commercial banks. By
providing and introducing individualized service, effective management, innovative approach and
practices United Commercial Bank showing its commitment for the development of the country. By
providing fast, friendly and personalized service they make themselves better and take them as a unique
position from their competitors. The bank also offers incoming and outgoing remittance services to its
customers. As a result, expatriates discover an easy way to share money through the proper channels. The
Bank extended its offering by Corporate Banking, Retail Banking, Remittance etc. The success of UCB
cards is very impressive after its launching till now. To gain a competitive edge and play a leadership
position in the country's economic activities, the Bank is firmly involved in the growth of trade,
commerce, and industry by investing in network expansion and new technology adoption.
Background of Eastern Bank Limited (EBL):

EBL has established itself as the country's one of the premier private commercial banks, with unrivaled
leadership in Corporate Banking and strong Consumer and SME development engines. EBL's aim is to be
the leading financial services provider, providing long-term value for its clients, shareholders, employees,
and, most importantly, the community in which it operates. The bank provides a comprehensive variety of
commercial banking products and services to the corporate, mid-market, and retail markets. Corporate
deposit accounts, syndicated financing, trustee and agency services, term loan, project finance, export-
import financing, working capital and other finance, bonds and guarantees, investment and business
counseling, infrastructure finance, cash management services, and so on are all available through the
bank's corporate banking segments (Eastern Bank Ltd.: About Ebl). With an emphasis on urban banking,
the bank provides a variety of alternate delivery channels such as ATMs, Bill Pay Machines, Kiosks, and
Internet Banking. The Bank has established a brand image due in part to its policy of continuing customer
service excellence, new products and services at affordable pricing, and maximum utilization of
technology. Unlike traditional branch banking, credit proposals and business operations are handled
centrally at EBL (Eastern Bank Ltd.: About Ebl). EBL is the first Bangladeshi bank to offer unique and
tailored banking services to high-net-worth clients, elevating service excellence to new heights.
Understanding not only the financial but also the lifestyle needs of consumers has improved the customer-
bank relationship and helped to develop the relationship on an emotional level.

Background of Standard Bank Limited:

Standard Bank Limited began commercial banking operations in 1994, and it has since helped to establish
a positive service-oriented banking sector in Bangladesh. The bank makes a commitment to serve
customers in a timely manner and to meet various customer needs with various banking technologies
given by a professional workforce, and as a result, it has established itself as a dynamic and professional
financial institution in this country. The main goal is to demonstrate how the financial system operates in
the account opening part, mail dispatch section, bill and clearing payment section, cash section, and
remittance section, through which the general activities of a regular bank can be witnessed. Standard
Bank's objective is to be at the top of the EVA (Economic Value Addition) each year, to be the top
commercial bank among all other private banks, and to create the greatest financial institution in the
market to serve the general consumer. Standard Bank has added a new dimension to the world of banking
and commerce by processing monetary transactions rapidly and returning them to the government, from
which people can receive their salaries, loans, deposits, and so on (SBL profile).

Mission: To be the best public commercial bank in Bangladesh in terms of efficiency, capital adequacy,
asset quality, sound management and profitability having a strong liquidity.

Vision: To be a modern Bank having the objective of building a sound national economy and to contribute
significantly to the public exchequer.

Methodology

Approach: The majority of the information used to construct this report came from primary sources, with
a small portion coming from secondary sources. The major sources supply the report with trustworthy
data and information on customers and the bank's operations. Secondary sources, on the other hand, have
been an invaluable source of knowledge regarding the bank's historical background, functions, and
descriptions of its numerous departments.

Primary Sources: To collect data we took interview of three service providers and six customers. We
asked them various questions like how the banking industry is going on, what are the services, what are
the expectation of customers, what level of service they are getting happily, also their zone of tolerance
etc. By asking this different type of questions we tried to find out many issues which can help us to write
this report in a good and presentable way.

Secondary Sources: Information is obtained from sources such as Bangladesh bank website, UCBL
website, SBL and EBL websites. Also, different journal which are available in internet helps to find more
relevant information.

Findings

Expectations of customers in banking industry are many. Some of the major expectations are they
expect more branches and outlets of banks near their residence. They also expect more CRM machines so
that they don’t need to go to bank always to deposit their money. Now in this digital era one of the main
expectations is digitalization of banking system. Adequate level of service expectation are customers want
to be informed about offers, services.

Patterns of customers' zone of tolerance differ person to person. Some people are very aggressive
and some people want to give time to service providers to perform their activities. It basically depends on
the personality of the customers.

Right in banking industry many banks are introducing more features, designing their branches
with stylish tangible furniture’s. Because of advance technology banks are now providing different
services through using mobile. Different banks are providing lounge service. EBL has sky lounge.
Addition of these special features are helping customer to create expectations.

By interviewing the service providers and customers we have gained knowledge that what banks
are offering is good for them. But many banks don’t have dual currency card system. Customer said that
they will be pleased if they get this offer from the banks.

The gap between the expectation and perception of services is not that much big. Commercial
banks are good enough to provide service and make happy their customers. Even they are working very
carefully to find out customers need. Government banks are not as much good as private banks. Customer
are not that much happy with government banks service. Their expectation is also low for government
banks. Government bank corruption is one of the main issues, also the service providers or employees are
not that much good to interact with customers. Private banks are good enough to satisfy their customer.
Banks like EBL have special feature called priority banking for their customer who holds high profile.
These are the thing we have found.

Discussion

Major findings of our research are customer are pretty happy with banking industry specially with the
service of private banks. Private bank is giving so much priority to their customers. They are introducing
many services which can satisfy the need of customers. Also, they are making themselves digitalized to
compete in this competitive area and serve more adequately. Private banks like EBL are increasing their
branches, ATM, CRM machines. They are recruiting good customer service officials to deal with
customer. They are arranging training to employees to serve more efficiently. Premium service like
priority banking, sky lounge is example of their service quality. Private bank like EBL is focusing on
development of mobile application and website so that their customer can easily get their services without
facing so much hassle. These services will help them to retain their customers. On the other hand,
Government or public banks are not enough capable to meet the expectations of customers. Right now,
the customer number of private banks are higher than the public bank what we have observed.

Contribution of Research Findings to the Stakeholders

Consumers: The findings of the study are important for consumers since they provide insight into the
expectation-perception gap in banking services. Customers can have a more realistic understanding of
what to expect from their banks if they understand the reasons that contribute to this disparity in
treatment. They can also make informed selections when choosing a bank and successfully convey their
expectations. Furthermore, the findings may enable users to demand better services, resulting in higher
customer satisfaction and better banking experiences.

Marketers: The outcomes of the study are useful for marketers in the banking business. Marketers can
acquire a more in-depth insight of customer expectations and perceptions, allowing them to better match
marketing tactics with customer demands. This knowledge can be used to improve product and service
development, communication tactics, and customer experience. By resolving the expectation-perception
gap, marketers can strengthen customer relationships, boost customer loyalty, and gain a market
competitive edge.

Government: The conclusions of the study are important for government stakeholders such as regulatory
bodies and policymakers. These stakeholders can use the information to analyze the efficacy of existing
legislation and policies in guaranteeing quality banking services. If the research reveals major
discrepancies between customer expectations and perceptions, the government may consider enacting or
amending rules to protect consumer rights and improve banking service standards. The findings may help
to promote a fair and transparent financial environment for clients.

Banking Industry: The research findings are critical for the banking industry as a whole. Banks may use
the data to improve service delivery, identify areas for improvement, and close the expectation-perception
gap. Banks can improve customer happiness, loyalty, and retention by addressing the identified gaps,
resulting in long-term profitability and sustainability. The insights can also help banks establish customer-
centric strategies, allocate resources more effectively, and remain competitive in a changing financial
sector.

Academia and Researchers: The research findings benefit the academic and research communities by
broadening the information base on consumer expectations and views in Bangladesh's banking business.
These findings can be used to launch other research and scholarly inquiries. Academics and researchers
can use these data to investigate relevant subjects, create theoretical frameworks, and propose novel
approaches to closing the expectation-perception gap in banking services.

Research Limitations and Future Research Direction

Sample Size and Selection: The sample size and selection process could be a drawback of this study. In
total we have taken interviews with three service providers from three different banks and two individual
customers from respective banks. The study's sample size was small, limiting the findings'
generalizability to the larger population of banking clients in Bangladesh. Furthermore, the sample
selection method may not include a varied spectrum of clients, thus resulting in biases in the results.

Data Collection Method: The data collection method could also be termed as a limitation due to the fact
that there were difficulties with response bias or recollection bias. Other difficult-to-measure external
influences may also have an impact on customers' subjective judgments and impressions.

Time Restrictions: Time restrictions could limit the scope and depth of the investigation. Extensive data
collection, analysis, and interpretation are required in order to conduct a thorough assessment of the
discrepancy between consumer expectation and perception in the banking industry. There can be gaps in
the study's information if there isn't enough time to explore all relevant issues.

External Factors: The study might not have taken into account all of the outside forces that could affect
consumer expectations and views. Customer behavior and expectations can be strongly impacted by
variables like macroeconomic conditions, regulatory changes, or technological improvements. Ignoring
these outside factors could prevent a thorough grasp of the difference between customer expectations and
perceptions.

Future Research Directions

Service Quality Dimensions: We can investigate specific dimensions of service quality that contribute
significantly to the expectation-perception gap. Focusing on understanding how factors such as
responsiveness, reliability, empathy, tangibles, and assurance impact customer expectations and
perceptions we can analyze the relative importance of these dimensions in shaping customer satisfaction
and loyalty in the context of the banking industry in Bangladesh.

Service Recovery and Complaint Handling: Investigating the impact of effective service recovery and
complaint handling processes on the expectation-perception gap can be another research direction.
Analyzing how prompt and satisfactory resolution of customer complaints can influence their perceptions,
satisfaction levels, and likelihood of recommending the bank to others, we can have a clear thought on the
importance of service recovery.

Comparative Studies: Comparing the customer expectation-perception gaps among Bangladesh's various
banks or banking segments might reveal best practices and places for development. Although we did with
three banks but the number was very insignificant to have a sound conclusion. Comparing services of all
the prevailing banks can highlight particular tactics or aspects of a service that help to better align
customer expectations and perceptions, allowing the industry to take inspiration from successful cases.

Technology Adoption and Customer Expectations: Examining how customer expectations are affected by
technology adoption in the banking sector is another intriguing topic of research. For banks looking to
keep ahead of client requests, understanding how emerging technologies, such as mobile banking, digital
payments, or artificial intelligence, affect customer expectations and influence their views may be
incredibly insightful.

Customer Segmentation: We can do customer segmentation based on demographics, socioeconomic

factors, or banking behavior to understand how the expectation-perception gap varies across different
customer groups. We can explore whether specific customer segments have distinct expectations or
exhibit varying levels of satisfaction, and devise strategies to cater to their specific needs more
effectively.
Conclusion

Finally, the study on the gap between consumer expectations and perceptions of banking services in
Bangladesh has provided useful insights into the banking industry's dynamics and their impact on
customer satisfaction, loyalty, and retention. The findings emphasize the significance of understanding
customer expectations and synchronizing service delivery in order to bridge the gap between what
customers expect and their actual perceptions.

Bangladesh's banking sector has seen substantial expansion and transformation, with banks attempting to
satisfy their clients' evolving wants and expectations. Customer expectations are shaped by factors such as
previous experiences, cultural norms, societal influences, and the perceived value of competing banks'
services. Customers expect timely service, effective complaint handling, personalized attention, easy
access to banking channels, accurate information, and competitive interest rates, among other things.

Customer impressions of banking services are subjective and vary from person to person. Positive
perceptions contribute to enhanced client loyalty, whereas negative perceptions can lead to unhappiness
and customer loss. It is critical for banks to identify the variables that contribute to the gap between
customer expectations and perceptions in order to rectify defects, improve service quality, and increase
overall customer happiness.

The research further illuminates the concept of the "zone of tolerance" and its application in the banking
business. Customers' levels of tolerance for service quality may differ depending on their personality
attributes. Some clients may have higher expectations, whereas others may offer service providers greater
latitude. Understanding this tolerance zone can assist banks in setting suitable benchmarks and striving to
surpass client expectations.

By providing innovative services, investing in technology, and improving client experiences, private
banks in Bangladesh have showed a strong commitment to customer happiness. To provide easy and
efficient banking services, they have expanded their branch networks, improved the availability of self-
service devices, and focused on digitalization. These efforts have resulted in increased consumer
satisfaction and loyalty.

The findings of the study have important consequences for numerous stakeholders in the banking
industry. Consumers may make more informed decisions and demand better services if they grasp the
expectation-perception gap. Marketers can improve customer connections and gain a competitive
advantage by aligning their tactics with customer expectations. The findings can be used by the
government to evaluate existing legislation and policies and to ensure a fair and transparent financial
environment. The findings can help the banking industry as a whole improve service delivery, client
happiness, loyalty, and long-term profitability.

While this study has produced useful information, there are several limitations that must be
acknowledged. Because the sample size was limited, the findings may not be entirely generalizable to the
overall population of Bangladeshi banking clients. Larger sample numbers could be used in future study
to investigate other elements that contribute to the expectation-perception gap, such as the role of cultural
influences and the impact of technology on customer expectations. Comparative studies across different
banks and regions could also provide a more comprehensive picture of client expectations and
impressions.

In conclusion, narrowing the gap between client expectations and perceptions is critical for Bangladesh's
banking business. Banks may improve customer satisfaction, loyalty, and market competitiveness by
understanding consumer expectations, identifying areas for improvement, and aligning service delivery
accordingly. The findings of this study add to our understanding of customer expectations in the banking
sector and can help banks establish effective strategies to meet customer wants in Bangladesh's dynamic
and competitive banking industry.
 Reference

Bangladesh Bank. (n.d.). https://www.bb.org.bd/en/index.php/financialactivity/bankfi

UCB Profile. Know UCB - United Commercial Bank (UCB). (n.d.).
https://www.ucb.com.bd/know-ucb/#:~:text=See%20details%20%3E-,CORPORATE
%20INFORMATION,Limited%20on%2015th%20November%201995.
#. (n.d.). Eastern Bank Ltd.: About Ebl. Eastern Bank Ltd. | About EBL. https://www.ebl.com.bd/profile
SBL profile. Standard Bank Ltd. (n.d.). https://www.standardbankbd.com/SblProfile.php