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Customer Satisfaction, Gender Differences,. Online Services Quality, and Risk Assessment. Factors Affecting Internet Banking. Adoption Among Young Adults:.
International Journal of Advanced Biotechnology and Research (IJBR) ISSN 0976-2612, Online ISSN 2278–599X, Vol-8, Special Issue-2, 2017, pp96-104 http://www.bipublication.com Research Article

Factors Affecting Customers’ Satisfaction in Online Banking: Empirical Evidence from Developing Countries

Arshad Mahmood Sadozai1*, Ahmer Saleem2, Shuai Chuanmin1, Muhammad Rashid Ali1 and Muhammad Yousuf Khan Marri3 1

School of Economics and Management, China University of Geosciences, Wuhan 430074, PR China 2 Department of Management Sciences, Allama Iqbal Open University, Pakistan 3 Schoool of Business Management, University Utara Malaysia * Corresponding Author: Email: Sadozai [email protected], [email protected]

ABSTRACT In today’s dynamic environment, internet plays a critical role in all activities either business oriented or not. Especially in the business sector it plays a very influential and powerful role for day to day activities. Banks face lot of challenges while providing services to their customers. Banks’ external environment, including globalization and deregulations; has made the banks highly competitive. The given study purposely stature the impact of e-banking on customer’s satisfaction. After careful review of literature, we found some important factor affecting customer’s satisfaction in online banking in developing countries. We collected the data from 250 customers of different banks from Pakistan for analyzing how the customers react in terms of quality of service, reliability, credibility of a system, transaction efficiency, ease of use and how much awareness is there among the customers towards the facility of electronic banking and how much the customers are satisfied with the usage of electronic banking. The results revealed that these variables have a significant effect on customers’ satisfaction. The results also indicate that People are still not in a position to believe that the online system is more reliable and efficient. The infrastructure of the banking sector in terms of successful implementation of electronic banking needs more improvement. Finally, we proposed some guidelines to overcome these problems accordingly. Key Words: Customers satisfaction, Reliability, Support, Ease of use, Quality, Efficiency, Awareness.

1. INTRODUCTION This is the era of technology and internet is one of the most important invention made by human being which makes the world as global village. The usage of internet is increasing day by day because it is the most convenient way to get the desired information. People are usually very busy and they do not have enough time to go to the bank for depositing or withdrawal cash or any other activities related to banking. Internet

banking facilities solve these problems. According to Ongkasuwan, and Tantichattanon, (2002) and Arunachalam and Sivasubramanian (2007), internet banking means that customers can access their account information through internet websites. Almost all of the banks of globe provide internet facilities to their respective customers. Although people now prefer online banking system but this trend is mostly in developed

Factors Affecting Customers’ Satisfaction in Online Banking: Empirical Evidence from Developing Countries

countries. In under develop or developing countries, banks still face a lot of problems regarding online internet banking. The purpose of this study is to examine the factors that will effect customer’s satisfaction of electronic banking in developing countries. The impact may be analyzed from the satisfaction/dissatisfaction of customers from electronically offered services and whether the customers are satisfied with the quality of services being offered especially in Pakistan. The study will also help to unleash the actual awareness of the customers towards the usage of banking performed electronically which may lead to the tendency of using the internet and other electronic medium. This study will also cover the discussion that whether the system is dependable enough to meet the user requirement and is useful in maintaining the credibility of a system in terms of security and privacy of its users.

2. LITERATURE REVIEW Customers satisfaction is basically the ultimate goal of every organization. It is considered to be a competitive factor in modern world. If customers

are satisfied with the product of the firm, it means the firm will achieve its objectives and more profitable. According to Oliver (1997), customer satisfaction is the benefit which customers may get from the usage of products and services, the benefits may fulfill customer’s needs or not. It means if the customer is satisfied with the product he or she will use it again. Most importantly it will create a better relationship between customers and organization, and organization works more for getting customer retention for satisfying them (Muffatto and Panizzolo, 1995). As a result, customer will use organizational product more frequently. The banking sector is also facing the same situation how to satisfy their customers. Banks provide services and it got deposit from the public; Online banking system helps both customers and bank at same time. Bank cost is reduced and customers saved their time. After the careful review from literature of different studies held in different developing countries, we found several factors which may affect successful implantation of online banking system (shown in Table 1).

Table 1: Paper/Article Receptiveness of Mobile Banking by Malaysian Local Customers in Sabah: An Empirical Investigation An Empirical Study on Service Quality Perceptions and Continuance Intention in Mobile Banking Context in India E-Banking Security Issues: Is there a Solution in Biometrics? Services Quality Model for Online Banking Services by Behavioral Adoption Theories

Author & Year

Factors of online banking

Hanudin, and Rostinah (2012)

Usefulness, Ease of Use, Credibility, Enjoyment, Self-Efficacy

Kumar, and Ravindran (2012)

Continuance Intention, Customer Satisfaction, Service Quality, and Perceived Credibility

Fatima (2011)

Biometrics, E-Security, and Security Transactions & Threats

Sadeghi and Farokhain, (2011)

Online Service Quality

E-banking Patronage in Nigeria: An Exploratory Study of Gender Difference

Olalekan, (2011)

Customer Satisfaction, Gender Differences, Online Services Quality, and Risk Assessment

Factors Affecting Internet Banking Adoption Among Young Adults: Evidence from Malaysia

Cyril, et al., (2011)

Internet Banking in Pakistan: Finding Complexities

Arshad Mahmood Sadozai, et al.

Akhlaq, and Shah (2011)

Internet Adoption factors, ease of use, usefulness, Perceived credibility, self-efficacy Familiarity with Technology, Unfriendly Website Design, Download Speed Concern, Security, Sniffing, Misuse of Information, Fear of Govt. Tracking Down the Transaction

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Factors Affecting Customers’ Satisfaction in Online Banking: Empirical Evidence from Developing Countries

Internet Quality Infrastructure, Govt. Policies, Service Awareness, Benefits, Data Privacy, Technology Awareness, and Trust.

Bank’s Perception of Electronic Banking in Pakistan

Kaleem and Ahmed (2008)

Customer Perception towards Online Banking Services: Empirical Evidence from Pakistan

Omar, et al., (2011)

Reliability, Convenience, Speed, Safety and Security, Quality Service,

Dixit, and Saroj (2010)

Customer Perception, Security and Privacy

Acceptance of E-banking among Adult Customers: An Empirical Investigation in India Present and Future of Internet Banking in China. Computer Crimes and Counter Measures in the Nigerian Banking Sector

Yuan, Lee, and Kim (2010) Olufunke (2010)

E-Banking and Customers’ Satisfaction in Nupur, (2010) Bangladesh: An Analysis Customer Perspectives on E-business Value: Case Study on Internet Banking

Safeena, Abdullah, and Hema, (2010)

An Empirical Investigation of the Level of Users’ Acceptance of E-Banking in Nigeria

Aderonke, and Charles, (2010)

Consumer Acceptance of Online Banking

Nauman, Mujtaba and Riaz (2010)

Factors Affecting Bank Staff Attitude Towards E-Banking Adoption in Libya An examination factors influencing the intention to adopt internet banking among SMES in Yemen: Using an extension of the technology acceptance model (TAM) Internet Banking: An Empirical Study Of Adoption Rates Among Midwest Community Banks Determination of Reasons Affecting the Use of Internet Banking through Logistic Regression Analysis The Impact of Internet Banking Service on Customer Satisfaction in Thailand: A Case Study in Bangkok Perceptions of Electronic Banking Services by Clients in the Limpopo Province of South Africa

Abukhzam, and Lee (2010)

Al-Fahim, et al., (2016)

Hosein (2009)

Ali, (2009)

Perceived Risk, Awareness Control Measures, Computer Crimes Characteristics, Victim Awareness, and Unwillingness to Report. Online Service Quality

Online Service Quality, Customer Awareness, Risk Assessment, Customer Perception and Adoption Customer Perception and Adoption, System Credibility, and Customer Ease. Perceived Usefulness, System Credibility, and Internet Quality Organizational Change, Management Support, IT Knowledge and Awareness, Security and Privacy, Telecommunication Infrastructure, Compatibility, Complexity, and IT Key Resources

Usefulness, Ease of Use

Perceived Usefulness, Ease of Use, Organizational Support, Website Navigation, Awareness, System Credibility, and Trust Customer Income, Online Service Quality, and Internet Availability

Nochai and Nochai (2013)

Reliably, Ease of use, Transaction Efficiency, Customers Support, service quality

Chidindi etal., (2014)

Online Security

The above mentioned table shows different studies relating to online banking system from China, Bangkok, Pakistan, India, Nigeria, Iran, Libya, Ghana, Malaysia, South Africa and Yemen. This table showed the factor effecting customer’s satisfaction of developing countries. Although from the literature it can be concluded that there are many factors that can effect customers, but the most prominent factor of online banking derived from this table is: customer support, reliability of the process, ease of use, transaction efficiency, service security and customer awareness. From the above discussion we may formulate our conceptual model for further analysis.

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Factors Affecting Customers’ Satisfaction in Online Banking: Empirical Evidence from Developing Countries

CONCEPTUAL FRAMEWORK

H6: 3. RESEARCH HYPOTHESIS The main objective of this study is to find out the relationship between the factors affecting the successful implementation of Electronic Banking along with the impact on the Satisfaction of Customers. On the bases of literature review, this study can be hypothesized as: H1: Reliability in online banking will increase Customer Satisfaction. H2: Transaction efficiency in online banking will increase Customer Satisfaction. H3: Customer support in online banking will increase Customer Satisfaction. H4: Ease of use in online banking will increase Customer Satisfaction. H5: Service security in online banking will increase Customer Satisfaction.

Arshad Mahmood Sadozai, et al.

If bank provides awareness for online banking it will increase Customer Satisfaction. 4. Methodology The purpose of this study is to examine the impact of electronic banking on customers’ satisfaction in developing countries. So, we collect the data from Pakistan. As in Pakistan, the banking sector is one of the fastest growing industries of the country. We distributed 400 questionnaires to different banking customers. Out of this 250 respondents provides full information. Before collecting the data, the purpose of this study was briefly explained. We used convenience sampling technique to collect the data because of time and cost.

4.1

Measurement

We used already published scale to measure the different variables of this study. For measuring Customer Support, Ease of Use, Reliability, Transaction Effectiveness, Service Security, the

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Factors Affecting Customers’ Satisfaction in Online Banking: Empirical Evidence from Developing Countries

scale developed by Nochi and Nochi (2013) is used. Variable of this study was measured through five time Likert scale from strongly disagree (1) to strongly agree (5).

4.2

Demographical Analysis

Sample size of this study is 400 but we received 250 suitable complete responses only for further analysis with a response rate of 62.5%. 55.6% of the respondents were male. The majority of the

respondents ages were in between 20 to 30 years. Mostly people were married (75.6%). The majority of the respondents have got bachelor degree (150). Mostly people have monthly income of less than 20,000 Pak Rupee. Mostly respondents have only one electronic transaction in a month (32.85). The detailed demographical analysis is shown in Table 2.

Table2: Demographic Characteristics Response Rate Distributed Received Not Received Age 18-30 31-40 41-50 51 & Above Gender Male Female Marital Status Married Single Education Basic Inter Graduation Masters Monthly Income Less than 20,000 20,000-45,000 45,001-75,000 75001-100,000 More than 100,000 Electronic Transactions (Per Month) once Twice Thrice Four Five or more

4.3

Frequency

Percentage

400 250 150

100 62.5 37.5

177 58 7 8

70.8 23.2 2.8 3.2

139 111

55.6 44.4

189 54

75.6 21.6

14 12 150 74

5.6 4.8 60.0 29.6

89 82 50 16 13

35.6 32.8 20.0 6.4 5.2

82 55 34 20 59

32.8 22.0 13.6 8.0 23.6

Descriptive Analysis

After performing demographical analysis, the next step is to examine the Mean, Standard deviation and reliability statistic. The mean values revealed that mostly respondents were agreeing with the measuring statements of this study, for e.g. 3.03 of customer satisfaction, as shown in descriptive statistical Table (Table 2). The Reliability analysis confirmed that the variables of this study is fulfilling the minimum

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Factors Affecting Customers’ Satisfaction in Online Banking: Empirical Evidence from Developing Countries

criteria of 0.70 as suggested by Nunnally, (1978. The value of the reliability of studied variable is ranging from 0.72 to 0.83. It also confirmed that there is no reliability issue among the studied variables (Table 2). Table 3: Descriptive Statistics and Reliability Variables Customer Support Ease of Use Reliability Transaction Efficiency Service Security Customer Awareness Customer Satisfaction

4.4

N 250 250 250 250 250 250 250

Mean 2.90 2.73 2.95 3.00 2.94 2.97 3.03

S.D. 0.93 1.06 0.91 1.24 1.10 1.02 0.90

Cronbach’s α 0.75 0.72 0.76 0.77 0.83 0.75 0.80

Correlational Analysis

After descriptive analysis the next step is correlational analysis to check whether there is a relationship among studied variables are not. The correlational analysis showed that all the variables are achieving significant level (p