Customer service quality in the Greek Cypriot banking industry

Purpose To measure the service quality perceptions of Greek Cypriot bank customers and to examine the relationship between service quality, customer satisfaction and positive word of mouth, in the light of changing bank market dynamics due to EU accession. Design/methodology/approach A total of 260 retail bank customers responded to a Greek translated version of SERVQUAL. After descriptive and factor analysis, multivariate regression analysis was used to estimate the impact of service quality dimensions on overall customer satisfaction and the impact of satisfaction on positive word of mouth. Findings The SERVQUAL scale proved to be of a three‐dimensional structure in this study. Results revealed that the expectations of bank customers were not met where the largest gap was obtained in the responsiveness‐empathy dimension. Reliability items had the highest effect on customer satisfaction, which in turn had a statistically significant impact on the positive word of mouth. Research limitations/implications There were some difficulties in conducting interviews, which may have restricted the potential sample size. Future research could be directed at how the service is delivered by front‐line employees. Practical implications Findings of this study will help Greek Cypriot banks to redefine their corporate image to one that is customer‐focused and emphasizes service quality. The findings will also be important for other countries that need to restructure their banking system as a prerequisite to EU membership. Originality/value This study assesses the five‐factor fit of the much debated SERVQUAL instrument to a new country setting, that of Cyprus, whose already developed banking system has undergone significant restructuring prior to EU accession.