The purpose of this paper is to identify the relationship between service quality and customer loyalty in a financial holding company (FHC). Since many commercial banks were launched in 1990 under the removal of limitation in new commercial bank establishment, the financial market appears to be highly competitive due to finite market demand. In order to survive severe competition, finance companies applied low price strategies at the risk of profit erosion. In consequence, Acquisition & Merger has been carried out to obtain competitive advantages. ?FHC Act (2001)? was enacted to comply with ever-changing market. Under this act, a FHC is able to trade in securities, insurances, banking?etc. The characteristic of FHC will provide favorable environment for financial innovation. Improving service quality and satisfying customer needs are necessary for FHC while facing keen competition on providing homogeneous services. Consequently, profit and core competence are generated from loyal customers. Based on SERVQUAL, an instrument designed by the marketing research team of Parasuraman, Zeithaml and Berry, this research developed it a more suitable tool for FHC through personal interview. The SERQUAL instrument helps FHCs understand the gap between customers' expectation for excellence and their perception of actual service delivered. 840 questionnaires are gathered from top 7 profit-making FHCs among 14 licensed FHCs. Significant difference between customers' expectation for excellence and their perception of actual service delivered was calculated from analyzing questionnaires. Based on research findings, conclusions and suggestions are proposed for FHC?s reference in improving service quality, strengthening customer?s loyalty and educating human resources. This paper probes into the gap between service quality offered and customer cognition of the services through expert interviews and SERVQUAL examination. From 120 questionnaires retrieved, it was found that indeed there is a significant gap between service expectation and service experience. The result of this paper will offer the FHCs references for service quality improving, and provide education institute with guiding principles of business education.
