The emergence of new forms of banking channels such as Internet banking, Automated Teller Machines (ATM),phone banking and also maturing financial market and global competition have forced bankers to explore theimportance of customer loyalty. Therefore, studies need to focus on the changing role of the banking system andits dynamic financial market. The underlying model of SERVQUAL (Parasuraman et al., 1988) with fivedimensions was used by this research to evaluate the impact of service quality on customer loyalty among bankcustomers in Penang, Malaysia with customer satisfaction mediating these variables. The findings show thatimprovement in service quality can enhance customer loyalty. The service quality dimensions that play asignificant role in this equation are reliability, empathy, and assurance. The findings indicate that the overallrespondents evaluate the bank positively, but still there are rooms for improvements.
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Kheng et al. (2010) studied this question.
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