This paper analyzes the outcomes of service quality in private banking. Hypotheses are derived from the service quality literature and adapted to the private banking context so that a chain of effects can be uncovered which leads from service quality to financial results of private banking providers. The analysis is based on a unique dataset consisting of customer relationship managers in 124 private banking services providing companies in Germany, Switzerland, Austria, Luxembourg, and Liechtenstein. Based on the sample, differences between private banking services providers inside and outside Germany are detected as well as differences between higher and lower minimum deposit requirements. As a result, it can be shown that an increase in service quality contributes to both, the amount of assets under management and to an improvement of the profit for private banking services providers.

This paper examines the concept of service quality in private banking theoretically and empirically and identifies factors which contribute to service quality. A multidimensional and hierarchical model is developed based on the work of Rust and Oliver (in Service Quality, pp. 1-20, 1994) and Brady and Cronin (in J. Mark. 65 (3): [34][35][36][37][38][39][40][41][42][43][44][45][46][47][48][49] 2001). The model is then empirically tested among private banking providers with the partial least squares method. Furthermore, the developed model is compared to other approaches, including Grönroos (in Eur. J. Mark. 18(4): [36][37][38][39][40][41][42][43][44] 1984). Another model for comparison excludes the indirect effects of Grönroos (in Eur. J. Mark. 18(4): [36][37][38][39][40][41][42][43][44] 1984) and focuses on the direct effects on service quality. We can conclude that the model based on Rust and Oliver (in Service Quality, pp. 1-20, 1994) and Brady and Cronin (in J. Mark. 65(3):34-49, 2001) produces the best results and can best explain service quality in private banking. Finally, an analysis of various provider groups is conducted in order to identify differences between private banking providers in Germany, Switzerland, Austria and Liechtenstein and between providers with various minimum investment requirements.