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Customer Perception on Internet Banking and their Impact on Customer Satisfaction & Loyalty: A Study in Indian Context

Customer Perception on Internet Banking and their Impact on Customer Satisfaction & Loyalty: A Study in Indian Context

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Internet banking has become increasingly important because it is one of the most popular delivery channels for banking services accepted by customers in cyber era. This study investigates on how the customers perceive the value of Internet banking over the traditional way of banking. It identifies the perceived service quality dimensions of self-service technology (Internet banking) and the impact of these perceived service quality dimensions towards customer satisfaction level in Internet banking. Primary data was collected from 250 respondents, through a structured questionnaire. Statistical analysis, descriptive statistics and correlation were used to know the perceived service quality of Internet banking (IB) and level of satisfaction between customers in India. The finding depicts many factors such as perceived value, perceived service quality; customer satisfaction and their loyalty have significant impact on a customer acceptance of Internet banking. Link: https://sites.google.com/site/journalofcomputing/volume-2-issue-7-july-2010
Internet banking has become increasingly important because it is one of the most popular delivery channels for banking services accepted by customers in cyber era. This study investigates on how the customers perceive the value of Internet banking over the traditional way of banking. It identifies the perceived service quality dimensions of self-service technology (Internet banking) and the impact of these perceived service quality dimensions towards customer satisfaction level in Internet banking. Primary data was collected from 250 respondents, through a structured questionnaire. Statistical analysis, descriptive statistics and correlation were used to know the perceived service quality of Internet banking (IB) and level of satisfaction between customers in India. The finding depicts many factors such as perceived value, perceived service quality; customer satisfaction and their loyalty have significant impact on a customer acceptance of Internet banking. Link: https://sites.google.com/site/journalofcomputing/volume-2-issue-7-july-2010

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Published by: Journal of Computing on Jul 25, 2010
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JOURNAL OF COMPUTING, VOLUME 2, ISSUE 7, JULY 2010, ISSN 2151-9617HTTPS://SITES.GOOGLE.COM/SITE/JOURNALOFCOMPUTING/ WWW.JOURNALOFCOMPUTING.ORG 131
Customer Perception on Internet Banking andtheir Impact on Customer Satisfaction &Loyalty: A Study in Indian Context
Neha Dixit, Saroj K. Datta
 
Abstract
 —Internet banking has become increasingly important because it is one of the most popular delivery channels forbanking services accepted by customers in cyber era. This study investigates on how the customers perceive the value ofInternet banking over the traditional way of banking. It identifies the perceived service quality dimensions of self-servicetechnology (Internet banking) and the impact of these perceived service quality dimensions towards customer satisfaction levelin Internet banking. Primary data was collected from 250 respondents, through a structured questionnaire. Statistical analysis,descriptive statistics and correlation were used to know the perceived service quality of Internet banking (IB) and level ofsatisfaction between customers in India. The finding depicts many factors such as perceived value, perceived service quality;customer satisfaction and their loyalty have significant impact on a customer acceptance of Internet banking.
Index Terms
 — Perceived value, Service quality, Customer satisfaction, Customer loyalty.
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1 I
NTRODUCTION
ECHNOLOGY innovation has enormous impact ondevelopment of all businesses in India. Now daysbanking sector are doing huge investment in technol-ogy and making their future secure.The impact of Internet technology is especially obviousin the banking industry. Being information intensive innature, virtually every component of the banking busi-ness value chain can benefit from innovative utilization ofInternet technology [1]. Internet banking is a form of selfservices technology. From the bank’s point of view, po-tential benefit promised by Internet banking include low-er operational cost, shorter turnaround time, real timemanagerial information, smooter communications with inthe organization, more convenient interactions with pros-pective as well as existing customers, and the provision ofvalue-added services such as access of professional know-ledge in financial management [2].In addition, other banking technologies such as onlinebanking continue to proliferate. There are a number of-good reasons to introduce technologies such as extendingthe business hours [3], managing capacity [4], customiza-tion [5], and utilizing customer resources to produce theservice [6]. It has also been suggested that the design,functionality, and perceived innovativeness of technolo-gy-based customer interfaces can enhance perceptions ofquality, encourage repeat patronage, and result in in-creased loyalty to the firm [7].The majority of consumers now prefer technologybased service delivery over that of the employee. Thisemerging trend rises some important issues about theimpact of technology will have on service quality andcustomer satisfaction level. To what extend can the com-pany remove employee from its front line and improvecustomer satisfaction? Only a limited number of empiricalresearch studies on self service technologies impact oncustomers perceived value on service delivery and itsimpact on customer satisfaction level [8], [9], [10], [11],[12]. Therefore, future empirical research is required tohave better insights on customer’s perspective on tech-nology based self-service encounter, especially in Indiawhere technology has in a developing stage.In [3] stress that little is known about customer attitudefor self-service options, especially in Internet banking.Furtheremore [13] studied the tolerance level of customerfor using technology instead of human touch. The growthof technology in the delivery of services has had anenormous effect on the nature of the core offering. Withthis background, Researcher identifies the gap and inves-tigates new insights in to customer’s perception on self-service technology and their impact on level of customersatisfaction and loyalty the service among Indian custom-ers.The paper is organized as follows: section 1 introducesthe basic problem of the research. Section 2 highlightssome of the factors that affect internet banking and in-crease the level of satisfaction and loyalty. And section 3describes research method which is performed for result.We then present results and discussion on research resultin section 4, and limitation and address future research insection 5
T
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Neha Dixit is with Faculty of Management Studies, Mody Institute oTechnology & Science, DeemedUniversity, Lakshmangarh, Rajasthan,India..
 
Prof. Saroj K. Datta is with Faculty of Management Studies, Mody Insti-tute of Technology & Science, Deemed University, Lakshmangarh, Rajas-than, India.
 
 
JOURNAL OF COMPUTING, VOLUME 2, ISSUE 7, JULY 2010, ISSN 2151-9617HTTPS://SITES.GOOGLE.COM/SITE/JOURNALOFCOMPUTING/ WWW.JOURNALOFCOMPUTING.ORG 132
 
2 L
ITERATURE
R
EVIEW
 
2.1 Perceived Value
Customer perceived service has been theoreticallyrepresented as consisting of two dimensions. By [13] dis-tinguish a process and an outcome dimension, where as[14] makes a distinction between functional and technicalquality. The process of functional quality refers to “how”the service is delivered, while the outcome or technicalquality refers to “what” customers receive, the benefits ofusing the service. In this automated teller machines howmoney is being transacted is functional benefit, easy touse, less time, effectiveness and efficiency over the tradi-tional systems are the benefits that customers receive aretermed as technical benefit.
2.1 Customer Satisfaction
The customers in two ways can derive the satisfactionwith the services. The two forms are overall customersatisfaction and situation-specific customer satisfaction.Overall satisfaction is defined as an evaluation based onthe consumer’s overall experiences with a service provid-er over the period of time [16]. Many people argued thatoverall customer’s satisfaction is highly influenced by thesituation-specific satisfaction. The situation specific satis-faction is understood as an immediate post purchaseevaluation or judgment of the most recent transactionalexperience with the firm [16]. Moreover, the situation-specific satisfaction may be due to their interaction withtechnology or with the companies’ employees. These dif-ferent forms of satisfaction have several advantages.These differences are due to the different managers with-in the organization may be responsible for managing em-ployees versus implementation and maintaining self-service technologies. This conceptualization also recog-nizes that satisfaction is not simply an overall evaluationof a service experience, but an influence of different com-ponents of the service.
2.3 Customer Loyalty
Loyal customers are important, because they contribute tothe profitability of the service provider [17], [18], [19],[20]. They purchase more than newly acquired customersand can be served with reduced operating costs. Theyprovide free word of mouth and are likely to pay regularprizes. Furthermore, referred customers were found toask for advice and guidance from the loyal customerswho recommended the service to them, thus reducing thecompany’s costs for providing help. Loyalty is predomi-nantly satisfaction driven [21] and therefore customersatisfaction measurements are believed to give a betterindication of future performance of service firms [22]than, for instance financial and accounting based meas-ures [23]. At the same time it must be noted that not allloyal and satisfied customers need to be profitable to afirm [20]. Hence customer loyalty is one of the importantmeasures to find the successful operation of the company.
2.4 Service Quality
Service quality is considered a multi-attribute construct—the product of the comparison between the consumer’sexpectations and their perceptions of the company’s ac-tions [14], [15], [24]. Most of the experts will be in a posi-tion to develop marketing strategies to provide the ser-vice when they know the expectations of service quality.Those expectations, however, can be known before theservice is designed and serve to orient marketing strate-gies, and may be measured when the service is function-ing and compared with the organization’s actions. More-over, when comparing perceptions with expectations, theconsumer takes determined attributes as references. Thisset of items can be grouped into specific dimensions, andtheir detailed study will allow companies to direct theirefforts to improve the quality perceived by consumers.Regarding which dimensions and attributes of the servicethe customer takes as a reference in the evaluation; [24]propose a scale of five dimensions—tangible elements,reliability, response capacity, assurance, and empathy—and 22 explanatory items. Its authors defend its applica-tion to all types of services, and, thus, it represents a basicstructure that can be adapted or complemented to suit theparticular characteristics of each organization [15], [24].However, they advise making slight modifications whennecessary to the composition of the items in order toadapt it to a specific scenario. In this research the fiveconstructs are developed based on the SERVQUAL ele-ments.On the basis of literature review hypotheses can beformulated as follows:
Hypothesis 1:
 
The perceived value of Internet banking has positive impact on customer satisfaction.
Hypothesis 2:
 
The perceived value of Internet banking has a positive impact on the customer loyalty.
Hypothesis 3:
 
Service quality of Internet banking has a posi-tive impact on the customer satisfaction.
 
Hypothesis 4:
 
Service quality of Internet banking has a posi-tive impact on Customer loyalty.
 
Hypothesis 5:
 
Service Quality of Internet banking has a posi-tively related to the perceived value of Internet Banking.
Hypothesis 6:
 
The customer satisfaction with Internet bank-ing has a positive effect on the customer loyalty to InternetBanking the bank.
3 R
ESEARCH
M
ETHODOLOGY
 
Primary data were collected from current and prospectivecustomers of Internet banking services in India. This re-search was conducted through survey of Internet bankingusers of Rajasthan and Uttar Pradesh in India. The res-pondents are users of Internet banking of leading Indianbanks and foreign banks. Predominantly the users areState Bank of India (SBI) and Industrial Credit InvestmentCorporation of India (ICICI) Internet banking users. Thisis largely because of the penetration of Internet bankingof these banks. In order to collect primary research datafrom consumers, a seven-point scale, self-reported ques-tionnaire was developed to measure customer satisfactionand loyalty on Internet banking in India.
 
JOURNAL OF COMPUTING, VOLUME 2, ISSUE 7, JULY 2010, ISSN 2151-9617HTTPS://SITES.GOOGLE.COM/SITE/JOURNALOFCOMPUTING/ WWW.JOURNALOFCOMPUTING.ORG 133
3.1 Sample Characteristics
The survey instrument used in this study was a struc-tured questionnaire for the empirical study. Of the 250people responding survey, 200 respondents were male(80%) and 50 respondents were female (20%). The most ofthe age group was 25 to 40, representing 70.3% of the totalrespondents. Almost 80% of the respondents had a pro-fessional degree. With regards to occupation, the first fourlargest groups were business, information and computer,students and manufacturing. The marital status ratio wasalmost equal those who were married and those unmar-ried.
4 R
ESULTS AND
D
ISCUSSIONS
 
The purpose of this study is to identify the perceived ser-vice quality dimensions of self-service technology (Inter-net banking) and impact of these perceived service quali-ty dimensions towards customer satisfaction level in In-ternet banking in India.
 
The collected data are analyzed with the use of statis-tical measures. The statistical package for SPSS 18.0 wasused for processing data. The descriptive statistics andcorrelation measures were applied to get an understand-ing of how customers perceive Internet banking (IB). Ta-ble 1 gives the descriptive statistics – minimum score andmaximum score opted by the respondents, average ofeach item used for customer perception towards Internetbanking as level of satisfaction, and standard deviation ineach item.It is quite evident from the results that customers in-deed realized that Internet banking is very easy to use,highly useful, and efficient and that they prefer to use andget maximum benefits when compared to the traditionalbanking method. The perceived value is considered veryhigh for the Internet banking service. The purpose of us-ing self-service technologies is to standardize the servicesso as to improve the service quality and satisfaction level.This is also evident from the descriptive statistics of theservice quality components of Internet banking. The satis-faction level with the technology is also high. Moreoverthe results are encouraging for the companies as verymany satisfied people would like to recommend this ser-vice to others. Their tendency to use this self-service tech-nology repeatedly shows high loyalty to these servicesand also to companies offering these services. Customersare satisfied with current services and facilities of Internetbanking.Measurement Items MIN MAX MEAN SD
I find the IB easy to use
 
1 7 5.50 0.78I find it easy to access2 7 6.01 0.92The instruction of IB is clear andunderstandable
 
2 7 6.25 0.84IB does not require a lot of mymental effort
 
3 7 6.67 0.72IB provides me with a betterresult than when I would use atraditional service with personalcontact.
 
1 7 5.09 1.12IB increases the efficiency of theservice delivery system
 
3 7 6.00 0.82IB increases the effectiveness ofthe service.
 
3 7 6.17 0.83IB performs the service right atthe first time always
 
1 7 5.37 1.24IB does not matter surroundingand appearance of bank.3 7 5.64 1.13The navigation of IB is easy ofuse and personalized.1 7 5.10 1.03IB performs the service muchquicker and with no mistakes3 7 5.40 1.25I feel safe and confident to useIB for banking operations.1 7 5.12 1.23I find using IB is useful 3 7 6.10 0.73I will recommend IB in generalto others1 7 6.04 0.96I will recommend this specific(presently using) bank’s IB toothers1 7 5.25 1.42I will recommend this specific(presently using) bank to others2 7 5.24 1.27I have the intention to make useof this IB service in generalagain in future1 7 6.11 1.15I have the intention to make useof this specific (presently using)company’s IB again in the fu-ture1 7 5.41 1.32I have the intention to make useof this specific company (pre-sently using) again in the future.1 7 5.24 1.24IB network distribution 1 7 5.50 1.20Continuous service 1 7 5.31 1.14Variety of transactions 1 7 5.19 1.21General assessment about theservice2 7 5.26 0.90
To find a relationship between the variables involved incustomer evaluations of Internet banking the correlationmeasures are used. Table 2 provides the relationship be-tween the variables. Perceived value has strong and posi-tive relationship with service quality. This supports thatthe perceived value is high and perceived quality willalso be positively associated. The respondents perceived
TABLE
 
1S
UMMARY OF
M
EAN AND
S
TANDARD DEVIATION
 

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