Transformation from Cooperative to a Bank: An Analysis of Koperasi Tentera in Malaysia

Abstract

To transform into a cooperative bank, any cooperative must meet certain criteria as outlined by both Malaysian Cooperative Commission (Suruhanjaya Koperasi Malaysia - SKM) and the Central Bank in terms of legislation, governance and financial performance. For the purpose of transformation, cooperatives also need to consider the willingness of its members towards this agenda. Taking into account the willingness of their members is vital as it reflects their commitment in future business related to cooperative. Thus, this study propose to evaluate the readiness of cooperative’s member regarding the transformation of the cooperative to bank sector based on surveys using five dimensions of service quality, SERVQUAL. A total of 299 members of Koperasi Angkatan Tentera Malaysia Berhad (KATMB), known as Koperasi Tentera (KT) were interviewed. The finding shows that members are satisfied with the quality of KT’s current service at 9.05 min score out of 10. However they are highly skeptical towards the quality of services provided by cooperative bank after transformation, as the expectations value decline to 6.00 min score only. Statistically, there is a significant difference between their perceptions towards service quality of cooperative and the expectations for cooperative bank which is at 0.05 significant levels. Hence, cooperative should take an action to provide a clear explanation and acceptable assurance that this transformation will improve their quality of service and able to give better benefits to their members.