Service Failures and Recovery in Retail Banking: The Customers' Perspective

Focuses on an empirical investigation of service failures and service recovery in retail banking. Different types of failures, and the recovery strategies used by Greek banks to respond to them, were identified using the critical incident technique. A survey questionnaire was then developed to measure customers’ perceptions of the magnitude of service failures and the effectiveness of service recovery strategies. A number of research hypotheses were tested relating to customers’ evaluations of particular banking failures and recovery strategies, their previous experience of failures, demographic variables, and relationships with their banks. Service failures were found to be of varying importance and different service recovery strategies more effective for particular failures; further, customers with long relationships or high deposits with their banks were more demanding with respect to service recovery.