Skip to main content
SpringerLink
Log in

The impact of the magnitude of service failure and complaint handling on satisfaction and brand credibility in the banking industry

  • Original Article
  • Published:
Journal of Financial Services Marketing Aims and scope Submit manuscript

Abstract

The present research aims to investigate the effects of service failure and complaint handling on customer satisfaction with complaint handling which consequently impacts overall satisfaction and brand credibility. To examine the objectives of the present research, the authors deployed a sample of 384 respondents in Persian banks within Iran. Structural equation modeling has been used to analyze the data. The findings suggest that the magnitude of service failure negatively effects customer satisfaction with complaint handling. Complaint handling positively affects customer satisfaction with complaint handling. In addition, the results suggest that customer satisfaction with complaint handling positively influences brand credibility and overall satisfaction. Finally, overall satisfaction positively impacts brand credibility. The results revealed that if the complaint handling occurs instantly at the right time, it would have been a positive influence on customer satisfaction and ultimately develop brand credibility. Therefore, banks can adopt customer relationship management systems and processes which enable quick responses to customer complaints. Bank managers could find the results of the present study useful and beneficial in developing complaint handling efforts and expanding appropriate service recovery and brand credibility strategies.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2

Similar content being viewed by others

References

  • Agolla, J.E., T. Makara, and G. Monametsi. 2018. Impact of banking innovations on customer attraction, satisfaction and retention: The case of commercial banks in Botswana. International Journal of Electronic Banking 1(2): 150–170.

    Article  Google Scholar 

  • Ahmed, I., and M. Amir. 2011. Service quality; service features and customer complaint handling as the major drivers of customer satisfaction in banking sector of Pakistan. International Review of Business Research Papers 7(1): 313–318.

    Google Scholar 

  • Akdeniz, B., R.J. Calantone, and C.M. Voorhees. 2013. Effectiveness of marketing cues on consumer perceptions of quality: The moderating roles of brand reputation and third party information. Psychology and Marketing 30(1): 76–89.

    Article  Google Scholar 

  • Azemi, Y., W. Ozuem, K.E. Howell, and G. Lancaster. 2019. An exploration into the practice of online service failure and recovery strategies in the Balkans. Journal of Business Research 94: 420–431.

    Article  Google Scholar 

  • Bagozzi, R.P., and Y. Yi. 1988. On the evaluation of structural equation models. Journal of the Academy of Marketing Science 16(1): 74–94.

    Article  Google Scholar 

  • Bougoure, U.S., R. Russell-Bennett, S. Fazal-E-Hasan, and G. Mortimer. 2016. The impact of service failure on brand credibility. Journal of Retailing and Consumer Services 31: 62–71.

    Article  Google Scholar 

  • Brock, Ch., M. Blut, H. Evanschitzky, and P. Kenning. 2013. Satisfaction with complaint handling: A replication study on its determinants in a business-to-business context. International Journal of Research in Marketing 30(3): 19–322.

    Article  Google Scholar 

  • Broderick, A.J., and S. Vachirapornpuk. 2002. Service quality in internet banking: the importance of customer role. Marketing Intelligence & Planning 20(6): 327–335.

    Article  Google Scholar 

  • Carmona, P., F. Climent, and A. Momparler. 2018. Predicting failure in the US banking sector: An extreme gradient boosting approach. International Review of Economics and Finance 61: 304–323.

    Article  Google Scholar 

  • Casidy, R., and W. Wymer. 2016. A risk worth taking: Perceived risk as moderator of satisfaction, loyalty, and willingness-to-pay premium price. Journal of Retailing and Consumer Services 32: 189–197.

    Article  Google Scholar 

  • Casielles, R.-V., L.S. Álvarez, and A.M. Díaz Martín. 2010. Perceived justice of service recovery strategies: Impact on customer satisfaction and quality relationship. Psychology and Marketing 27(5): 487–509.

    Article  Google Scholar 

  • Chen, H.-T. 2013. Assessing the performance of service failure categories from employee perspective. The Journal of Global Business Management 9(3): 5–15.

    Google Scholar 

  • Chen, T., K. Ma, X. Bian, C. Zheng, and J. Devlin. 2018. Is high recovery more effective than expected recovery in addressing service failure? A moral judgment perspective. Journal of Business Research 82: 1–9.

    Article  Google Scholar 

  • Davidow, M. 2003. Organizational responses to customer complaints: What works and what doesn’t. Journal of Service Research 5(3): 225–250.

    Article  Google Scholar 

  • Erdem, T., and J. Swait. 2004. Brand credibility, brand consideration and choice. Journal of Consumer Research 31(1): 191–199.

    Article  Google Scholar 

  • Garima, M. 2012. Service failure and complaining behavior in Indian banking industry: A factor analytic study. Quest-Journal of Management and Research 3(10): 45–52.

    Google Scholar 

  • Gustafsson, A. 2009. Customer satisfaction with service recovery. Journal of Business Research 62(11): 1220–1222.

    Article  Google Scholar 

  • Hair, J.F., R.E. Anderson, R.L. Tatham, and W.C. Black. 2010. Multivariate data analysis. Upper Saddle River: Prentice hall.

    Google Scholar 

  • Hess Jr., R.L., S. Ganesan, and N.M. Klein. 2003. Service failure and recovery: the impact of relationship factors on customer satisfaction. Journal of the Academy of Marketing Science 31(2): 127–145.

    Article  Google Scholar 

  • Hollebeek, L.D., and R.A. Rather. 2019. Service innovativeness and tourism customer outcomes. International Journal of Contemporary Hospitality Management 31(11): 4227–4246.

    Article  Google Scholar 

  • Holloway, B.B., and S.E. Beatty. 2003. Service failure in online retailing: A recovery opportunity. Journal of Service Research 6(1): 92–105.

    Article  Google Scholar 

  • Homburg, C., and A. Fürst. 2005. How organizational complaint handling drives customer loyalty: An analysis of the mechanistic and the organic approach. Journal of Marketing 69(3): 95–114.

    Article  Google Scholar 

  • Hübner, D., S.M. Wagner, and S. Kurpjuweit. 2018. The service recovery paradox in B2B relationships. Journal of Business & Industrial Marketing 33(3): 291–302.

    Google Scholar 

  • Istanbulluoglu, D. 2017. Complaint handling on social media: The impact of multiple response times on consumer satisfaction. Computers in Human Behavior 74: 72–82.

    Article  Google Scholar 

  • Keiningham, T.L., F.V. Morgeson, L. Aksoy, and L. Williams. 2014. Service failure severity, customer satisfaction, and market share: an examination of the airline industry. Journal of Service Research 17(4): 415–431.

    Article  Google Scholar 

  • Krishna, A., G.S. Dangayach, and R. Jain. 2011. A conceptual framework for the service recovery paradox. The Marketing Review 11(1): 41–56.

    Article  Google Scholar 

  • Laczniak, R.N., T.E. DeCarlo, and S.N. Ramaswami. 2008. Consumers’ responses to negative word-of-mouth communication: An attribution theory perspective. Journal of Consumer Psychology 11(1): 57–73.

    Article  Google Scholar 

  • Lala, V., and R. Priluck. 2011. When students complain an antecedent model of students’ intention to complain. Journal of Marketing Education 33(3): 236–252.

    Article  Google Scholar 

  • Levesque, T.G., and G.H.G. McDougall. 2000. Service problems and recovery strategies: An experiment. Canadian Journal of Administrative Sciences 17(1): 20–37.

    Article  Google Scholar 

  • Lewis, B.R., and P. McCann. 2004. Service failure and recovery: Evidence from the hotel industry. International Journal of Contemporary Hospitality Management 16(1): 6–17.

    Article  Google Scholar 

  • Maxham III, J.G., and R.G. Netemeyer. 2002. Modelling customers perceptions of complaint handling over time: the effects of perceived justice on satisfaction and intent. Journal of Retailing 78(4): 239–252.

    Article  Google Scholar 

  • Montoya-Weiss, M., G.B. Voss, and D. Grewal. 2003. Determinants of online channel use and overall satisfaction with a relational, multichannel service provider. Journal of the Academy of Marketing Science 31(4): 448–458.

    Article  Google Scholar 

  • Nam, J., Y. Ekinci, and G. Whyatt. 2011. Brand equity, brand loyalty and consumer satisfaction. Annals of Tourism Research 38(3): 1009–1030.

    Article  Google Scholar 

  • Nunnally, J.C., and I.H. Bernstein. 1994. Psychometric theory. 3rd ed. New York: McGraw-Hill.

    Google Scholar 

  • Olsen, L.L., and M.D. Johnson. 2003. Service equity, satisfaction and loyalty: From transaction-specific to cumulative evaluations. Journal of Service Research 5(3): 184–197.

    Article  Google Scholar 

  • Orsingher, C., S. Valentini, and M. Angelis. 2010. A meta-analysis of satisfaction with complaint handling in services. Journal of the Academy of Marketing Science 38(2): 169–186.

    Article  Google Scholar 

  • Ozuem, W., A. Patel, K.E. Howell, and G. Lancaster. 2017. An exploration of consumers’ response to online service recovery initiatives. International Journal of Market Research 59(1): 97–115.

    Google Scholar 

  • Ozkan-Tektas, O., and P. Basgoze. 2017. Pre-recovery emotions and satisfaction: A moderated mediation model of service recovery and reputation in the banking sector. European Management Journal 35(3): 388–395.

    Article  Google Scholar 

  • Parrey, S.H., I.A. Hakim, and R.A. Rather. 2019. Mediating role of government initiatives and media influence between perceived risks and destination image: A study of conflict zone. International. Journal of Tourism Cities 5(1): 90–106.

    Article  Google Scholar 

  • Rather, R.A. 2017. Investigating the impact of customer brand identification on hospitality brand loyalty: A social identity perspective. Journal of Hospitality Marketing & Management 27(5): 487–513.

    Article  Google Scholar 

  • Rather, R.A. 2020. Customer experience and engagement in tourism destinations: the experiential marketing perspective. Journal of Travel & Tourism Marketing 37(1): 15–32.

    Article  Google Scholar 

  • Rather, R.A., and M.A. Camilleri. 2019. The effects of service quality and consumer-brand value congruity on hospitality brand loyalty. Anatolia 30(4): 1–13.

    Article  Google Scholar 

  • Rather, R.A., and L.D. Hollebeek. 2019. Exploring and validating social identification and social exchange-based drivers of hospitality customer loyalty. International Journal of Contemporary Hospitality Management 31(3): 1432–1451.

    Article  Google Scholar 

  • Rather, R.A., L.D. Hollebeek, and J.U. Islam. 2019. Tourism-based customer engagement: The construct, antecedents, and consequences. The Service Industries Journal 1–22: 35–45.

    Google Scholar 

  • Rather, R.A., S. Tehseen, and S.H. Parrey. 2018. Promoting customer brand engagement and brand loyalty through customer brand identification and value congruity. Spanish Journal of Marketing 22(3): 319–337.

    Article  Google Scholar 

  • Roschk, H., and S. Kaiser. 2013. The nature of an apology: an experimental study on how to apologize after a service failure. Marketing Letters 24(3): 293–309.

    Article  Google Scholar 

  • Singhal, S., A. Krishna, and D. Lazarus. 2013. Service failure magnitude and paradox: A banking perspective. Journal of Relationship Marketing 12(3): 191–203.

    Article  Google Scholar 

  • Smith, A.K., R.N. Bolton, and J. Wagner. 1999. A model of customer satisfaction with service encounters inving failure and recovery. Journal of Marketing Research 36(3): 356–372.

    Article  Google Scholar 

  • Spry, A., R. Pappu, and T.B. Cornwell. 2011. Celebrity endorsement, brand credibility and brand equity. Euroupean Journal of Marketing 45(6): 882–909.

    Article  Google Scholar 

  • Stevens, J.L., B.I. Spaid, M. Breazeale, and C.L.E. Jones. 2018. Timeliness, transparency, and trust: A framework for managing online customer complaints. Business Horizons 61(3): 375–384.

    Article  Google Scholar 

  • Sweeney, J., and J. Swait. 2008. The effects of brand credibility on customer loyalty. Journal of Retailing and Consumer Services 15(3): 179–193.

    Article  Google Scholar 

  • Tabrani, M., M. Amin, and A. Nizam. 2018. Trust, commitment, customer intimacy and customer loyalty in Islamic banking relationships. International Journal of Bank Marketing 36(5): 823–848.

    Article  Google Scholar 

  • Temerak, M.S., H. Winklhofer, and S.A. Hibbert. 2018. Facilitating customer adherence to complex services through multi-interface interactions: The case of a weight loss service. Journal of Business Research 88: 265–276.

    Article  Google Scholar 

  • Valenzuela, F., R. Cooksey, L. Chandralal, and R. Hassan. 2013. Service recovery in the Australian banking industry. Contemporary Management Research 9(4): 463–482.

    Article  Google Scholar 

  • Varela- Neira, C., R. Vázquez- Casielles, and V. Iglesias. 2010. Lack of preferential treatment: Effects on dissatisfaction after a service failure. Journal of Service Management 21(1): 45–68.

    Article  Google Scholar 

  • Zhou, T. 2018. Examining users’ switch from online banking to mobile banking. International Journal of Networking and Virtual Organisations 18(1): 51–66.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Islamic Azad University Dehaghan Branch, Isfahan, Iran

    Ghazal Shams

  2. University of Bolton, Bolton, UK

    Mohsin Abdur Rehman

  3. CBA Research Centre, Department of Business Administration, College of Business and Administration, Princess Nourah Bint Abdulrahman University, Riyadh, Saudi Arabia

    Sarminah Samad

  4. Department of Tourism Studies, Central University of Kashmir, Jammu and Kashmir, India

    Raouf Ahmad Rather

Authors
  1. Ghazal Shams
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Mohsin Abdur Rehman
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Sarminah Samad
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Raouf Ahmad Rather
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Mohsin Abdur Rehman.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Shams, G., Rehman, M.A., Samad, S. et al. The impact of the magnitude of service failure and complaint handling on satisfaction and brand credibility in the banking industry. J Financ Serv Mark 25, 25–34 (2020). https://doi.org/10.1057/s41264-020-00070-0

Download citation

  • Revised:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/s41264-020-00070-0

Keywords

Search

Navigation