Small finance banks (SFBs) are one of the major initiatives by the Reserve Bank of India to solve bank service challenges to underserved customers in India. This research seeks to establish the pattern of bank service adoption and usage by customers in SFBs in Kerala. The main focus of this research is the assessment of the quality of service and customer satisfaction in SFBs and the analysis of their impact on the sustained patronage of these banks by customers.
Design/Methodology/Approach:
This study used a quantitative research approach and a descriptive research design. Four hundred fifty responses were collected through a purposive sampling method. In order to carry out data collection, the entire state of Kerala was divided into three regions: North, Central and South. On the basis of branch location and branch size of SFBs, the following regions were selected for data collection: Kozhikode, representing the north region; Ernakulam, representing the central region; and Thiruvananthapuram, representing the south region.
Findings and Managerial Implications:
The service quality of SFBs was assessed by using the measurement model ‘SERVPERF’. The findings of the current study indicate that the mean percentage score of the service quality of SFBs in Kerala is 82.96%, which indicates that the service quality of SFBs in Kerala is excellent. Overall, the customers’ adoption and usage of SFB deposit services are good, but the loans availed by the customers are average, while investment and insurance products availed are low. The regression analysis indicated that the SFB’ service quality substantially determines the level of satisfaction among the customers. It further indicated that customer satisfaction strongly determines their intentions in patronizing SFBs.
Originality/Value:
This study aims to present a general overview of the effect of SFBs’ service quality on customer satisfaction and patronage intentions. The research can add substantially to the body of knowledge by evaluating the effect of service quality on customer satisfaction in Kerala’s SFBs. It will benefit academic researchers and offer practitioner-directed findings for bank administrators, policymakers and other financial stakeholders.
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