Rebuilding Small Business Confidence by Identifying and Closing Service Gaps in the Bank/SME Client Relationship

Abstract

DR. IAN CHASTON IS WITH THE Management Research Centre, Plymouth University, England. A critical factor in the success of the SME sector is the relationship which exists between ownermanagers and their banks. One unfortunate outcome of the recession in the United Kingdom in the late 1980s was a significant decline in the SME sector's trust and confidence in the UK banking community. To reverse this situation requires actions to alter owner-manager perceptions about service quality. To determine the nature of service quality in the banker-SME client relationship, a survey was undertaken using a modified version of the Parasuraman SERVQUAL model. The results indicated the existence of major Type 1, 4 and 5 Gaps and narrower Type 2 and 3 Gaps in the customer service process. Major causes of these service gaps include bank determined service delivery goals which fail to mirror the customer service need priorities and inappropriate internal/ external communication activities. The study confirms, however, that UK banks are seeking to rebuild customer confidence in the SME sector and are already changing internal cultures (e.g. emphasis on service; rewarding staff for service achievements) and implementing actions (e.g. allocation of resources; creation of appropriate operating systems; using automation to improve service consistency) to achieve this aim. Bankers responding to the survey consider the SME sector represents a vital source of both wealth and job creation. Unless, however, senior managers in UK banks can be persuaded to accelerate actions to close identified service gaps, then ownermanager lack of confidence in the financial community will continue to be a barrier to economic recovery. A process model is presented describing how a bank can identify and then implement actions to rebuild small business customer confidence through closure of quality gaps during the provision of services.