Perceived Operational Risk Management and Customer Complaints in Malaysian Conventional Banking Industry

Abstract

The management of operational risk is not a new practice; it has always been important for banks to try to prevent fraud, and reduce errors in transaction processing in order to preserve the best quality services for their customers, and also to reduce huge losses. Ignoring the errors and operational risk will lead to customer complaints, losing potential and remaining customers and will jeopardize the bank sustainability in the long run. Thus the objective of this study is to investigate the relationship between perceived operational risk management and customer complaints. Resource Base theory is use in examining the relationships between perceived operational risk management and customer complaints. The survey questionnaires were emailed to branch managers and assistant managers of 650 local commercial bank branches across Malaysia and 132 fully completed survey questionnaires were received. Data was analyzed using multiple regressions. The study found that the banks have perceived operational risk management with a mean of 4.56, and can be concluded as very important in bank branches across Malaysia. As for the relationship of perceived operational risk management to customer complaints, it was found that the practice of hazard identification and formulation of implementation of risk control has a significant negative relationship to customer complaints as hypothesized. From the present study, management can formulate policies or strategies that can be used to mitigate risk in the bank and to enhance customer satisfaction in terms of services rendered by the tellers.