2020 IEEE 7th International Conference on Industrial Engineering and Applications
Assessment of E-Service Quality Dimensions and Its Influence on Customer
Satisfaction: A Study on the Online Banking Services in the Philippines
Mary Christy O. Mendoza, Ronell Ray C. Santos, Jeremiah Eli H. Magdaraog
School of Industrial Engineering and Engineering Management
Mapua University
Manila, Philippines
e-mail: mcomendoza@mapua.edu.ph, ronell.santos30@gmail.com, jemmagdaraog@gmail.com
Abstract—Application of technology in financial services paved
the way for banking institutions to shift from the traditional
way of banking to a more efficient and less costly operation by
means of electronic banking. According to a survey conducted
by the Bangko Sentral ng Pilipinas (2017), though there is a
significant internet usage and awareness of online payment
methods amongst Filipinos, almost half of those with bank
accounts and using the internet remains indecisive about
electronic transactions due to various behavioral factors.
Therefore, this paper was made to study and assess the
significant factors, or dimensions, of service quality which
cause online banking to impact on customer satisfaction –
including efficiency, fulfilment, system availability and privacy.
A conceptual framework was developed to create a structure
for the hypothesis testing. Following the construct of e-service
quality measurement model developed by Parasuraman et.al.
(2005), E-S-QUAL survey for e-services was adapted to assess
the overall online banking experience of respondents (from a
given sample size) via convenience sampling. Analysis was
conducted to validate statistical normality using normal
probability plot, confirm test validity and reliability by means
of measuring Cronbach’s Alpha and establish interrelationship
by means of Pearson correlation and multiple regression
analysis for the core dimensions vs. perceived value and loyalty
intentions. Amongst the quality dimensions examined, it was
found out that efficiency and fulfilment have the greatest
impact on perceived value and loyalty retention of customers.
Keywords-service quality dimension; E-S-Qual scale;
electronic banking; online banking; customer satisfaction
I. INTRODUCTION
Globalization is fast revolutionizing financial industries
thereby strategically lowering operating cost and expanding
customer reach through a wide array of consumer and
corporate banking services. Banks, for which operations is
global in nature, is driven by the need to deploy high
technology innovation to maintain competition, sustain
profitability and achieve customer loyalty. One technological
advancement which was embraced by banks is the concept of
electronic (or sometimes referred to as online/internet/digital)
banking. Consumers can either inquire account balance,
transfer money, pay bills, order checks, load accounts, invest
or maintain their accounts all at the same time using the
same digital interface.
Simpson [1] found evidence that electronic banking is
driven largely by the prospects of operating cost
minimization and operating revenue maximization.
978-1-7281-6785-5/20/$31.00 ©2020 IEEE
Authorized licensed use limited to: Batangas State University. Downloaded on April 14,2021 at 08:02:18 UTC from IEEE Xplore. Restrictions apply.
According to a survey conducted last 2014 by McKinsey &
Company [2], in Asia, electronic banking has been
patronized by customers more often than doing business in
the banks, with an increase in penetration from 58% in 2011
to 92% in 2014 for developed Asia (Australia, Hong Kong,
Japan, Singapore, South Korea and Taiwan) and emerging
Asia (China, India, Indonesia, Malaysia, Philippines,
Thailand and Vietnam) with 10% in 2011 to 28% in 2014.
In the Philippines, banks started to engage in electronic
banking as early as 2000 [3] following the trend of financial
technology “fintech” integration. The government, through
its financial regulating body, Bangko Sentral ng Pilipinas
(BSP), accepted this innovation as part of the financial
inclusion, thereafter drafting guidelines for the provision of
electronic banking services amongst banks (BSP Circular No.
240, 2000). Almost two decades after, electronic banking
continued to be big players in the fintech landscape with
forty-eight (48) domestic financial institutions offering these
services [4]. Though electronic banking is highly expected to
expand customer reach, research shows that consumers are
not really embracing the full advantage of internet banking.
Barquin et.al. [2] states that digital-banking penetration is
only 13% in the Philippines, lower than any of the countries
within the same region of comparison. Moreover, it was
reported that though there is a significant internet usage and
awareness of online payment methods amongst Filipinos, 46%
of those with accounts and using the internet remains
indecisive about electronic transactions due to various
behavioral factors such as cost, convenience, security and
reliability of service provided by the banks [5]. With the low
reception percentage reported, it has now become a focal and
collective concern amongst the banking institutions to entice
discouraged consumers to use internet banking and
strengthen customer-provider relationship. The question now
becomes, “What do Filipino consumers want from an
internet banking service?”
Despite existing literature and reports on this topic, there
was really no effort to look at consumers’ preference in
terms of online banking service adoption. As consumers
demand quality in every aspect – may it be on products and
services provided, system interface presented or customer
service they have experienced, this exigency is clearly
proportional and translatable to their satisfaction. Different
from goods quality which can be measured tangibly, service
quality may only be measured by means of assessing
1076
customer perception of quality or judging a service on its
overall excellence or superiority.
The traditional measurement of service quality as
developed by Parasuraman et.al. [6] using SERVQUAL have
been applied to different e-services including retail and
electronic banking. However, researchers cannot provide
validity of the results as some of the dimensions were no
longer applicable. SERVQUAL was made based on having a
face-to-face interaction between a customer and a service
provider, which cannot be achieved if service is delivered by
means of a digital platform. Since the characteristics differ
between the traditional service and the e-service, the
dimensions for each are also changed. Moreover, according
to Parasuraman et.al. [7], e-service quality must cover all
phases of a customer’s interactions with a web site. Hence,
they developed the scale into two parts, e-core service
quality (E-S-QUAL) scale and a recovery scale E-
RecsQUAL to evaluate customer recovery service with the
following dimensions: Core Scale, E-S-QUAL
• Efficiency. Pertains to the ease and speed of
accessing and using the site
• Fulfillment. Pertains to the extent to which the site’s
promises about order delivery and item availability
are fulfilled
• System Availability. Pertains to the correct technical
functioning of the site
• Privacy. Pertains to the degree to which the site is
safe and protects customer information
Recovery Scale, E-Recs-QUAL
• Responsiveness. Pertains to the effective handling of
problems and returns through the site
• Compensation. Pertains to the degree to which the
site compensates customers for problems
• Contact. Pertains to the availability of assistance
through telephone or online representatives
Consumer preference of online banking services was
studied using the E-S-QUAL Scale [8][9][10][11], to name
some. However, these studies were made in foreign countries
and cannot be used to assess the behavior and preference of
Filipino consumers. Therefore, this paper will examine this
focal aspect and determine the service quality dimensions
which influence and impact customer satisfaction on using
online banking services in the Philippines.
Figure 1. Conceptual model for the independent and dependent variable on
e-service quality of online banking services.
As it was validated from the aforementioned literature
that services are related to quality and customers’ satisfaction,
a conceptual framework following this construct is presented
in Figure 1. The objective of the study would be to determine
1077
Authorized licensed use limited to: Batangas State University. Downloaded on April 14,2021 at 08:02:18 UTC from IEEE Xplore. Restrictions apply.
(1) if e-service quality has a positive and significant
influence on customer satisfaction and (2) which among the
dimensions of e-service quality (efficiency, fulfilment,
system availability and privacy) as measured by the E-S-
QUAL scale (independent variables) greatly impacts the
customer’s perceived value and loyalty retention (dependent
variables).
From the model, the hypotheses shall be:
H1: Efficiency has a positive and significant influence on
customer perceived value and loyalty
H2: System Availability has a positive and significant
influence on customer perceived value and loyalty
H3: Fulfilment has a positive and significant influence on
customer perceived value and loyalty
H4: Privacy has a positive and significant influence on
customer perceived value and loyalty
II. METHODOLOGY
The following methodology were used to proceed with
the analysis:
A. Survey Instrument
The proponents of this study adapted the survey
instrument based on E-S-QUAL or core scale, and E-
RecsQUALor recovery scale [7]. First part consists of
demographic and user interaction questions which produces
descriptive sample profile. Second part is composed of the
22-item core scale from four dimensions: Efficiency (8),
Fulfilment (7), System Availability (4) and Privacy (3).
Third part contains the 11-item recovery scale, however,
dimension used were slightly altered following the validity
of the revised scale from Zarel [9] and Zavareh et.al. [8]. In
replacement of the compensation dimension, site appearance
/ aesthetics was included, same with that from earlier
researches made [8][9][11]. Both core scale and recovery
scale are measured on a 5-point scale (1 = strongly disagree,
5 = strongly agree). The fourth part of the scale measure is
composed of perceived value and loyalty intentions which
were used to measure the scale’s validity. It provides an
overall assessment on the judgement of the consumers on
how they feel the services and offerings from the online
banking facility are delivered to them, or if they feel that
they can use it and/or recommend it based on his/her
contentment.
B. Sampling
Given multivariate data following performance
perception variables (with metric data), the required
minimum sample size is at least five times as many
observations as the number of variables to be analyzed [12].
For this study, given that the total variable is 33, (22-item
ES-QUAL and 11-item E-Resc-QUAL) it was pre-
determined to get at least 165 respondents to have only 5%
margin of error.
C. Test of Normality
As in all statistical analysis, normality of metric variables
was used to ensure validity of the succeeding statistical tests.
D. Measure of Reliability C. Measure of Reliability
Following Hair et.al. [12], the proponents used the first Same with the methodology applied by researchers
measure of reliability (or the degree of consistency between reviewed in the related literature, a reliability test was
multiple measurements of a variable) relates to each separate conducted in order to validate the degree of consistency
item, including the item-to-total correlation (the correlation between each of the independent variables (service quality
of the item to the summated scale score) and the inter-item dimensions). Using the data collected from the survey and
correlation (the correlation among items). Rules of thumb tabulating with total respondent count as N, the coefficient
suggest that the item-to-total correlations exceed 0.50 and alpha, α, was computed as follows:
that the inter-item correlations exceed 0.30. The second
diagnostic measure used for testing reliability and
consistency of the scale is through the Cronbach’s alpha, or
reliability coefficient, with generally agreed upon lower limit
of 0.70.
E. Correlation and Linear Regression
The authors used Pearson Correlation Analysis to
confirm the association between the E-S-QUAL dimensions TABLE I. RELIABILITY TESTING OF INDEPENDENT VARIABLES
to that of perceived value and loyalty of customers.
F. Gap Analysis
Gap analysis was done by examining the individual
construct, and the total summed values of each of the four
dimensions of e-service quality as opposed to the perceived
value and loyalty intention of the aggregate respondents.
With the use of Likert scale, scores obtained may be Amongst the independent variables, the service quality
considered as gauge for getting the satisfactory level of dimension on Efficiency and Fulfillment have a good
online banking users. Therefore, if the score falls below 4 reliability with coefficient alpha equivalent to 0.80 and 0.78
(neutral to strongly disagree), it may potentially be a gap for respectively. However, service quality dimensions on System
the said element in the specific quality dimension. Availability and Privacy did not meet the criteria and with
questionable internal consistency. From these, reevaluation
III. RESULTS AND DISCUSSION of the survey questions and follow-up survey may be done as
suggestive of the gap on that area.
A. Demographic Profiling
From the result of the demographic analysis, 64% of the D. Correlation Analysis
respondents are within the age of 25-40, 62% are female, 64% Different from the reliability test, the succeeding analysis
have attained college degree, 55% have a monthly household was used to measure the correlation of each independent
income greater than Php30,000. Based on these it can be said variable with that of the dependent variables. Using Pearson
that online banking users are generally professionals and can Correlation Analysis, the result is presented in Table II:
freely, easily and directly access the service. It also shows
that 74% of them have been using the online banking service TABLE II. CORRELATION ANALYSIS FOR INDEPENDENT VARIABLES
longer than a year and 65% access it regularly, almost every
day of the week. These implies that the majority of the
correspondents have made online banking a part of their
lifestyle, transforming it as a necessity as part of their
convenience.
B. Normality Testing
Normal probability plot and descriptive analysis
(skewness and kurtosis) were generated for each of the
service quality dimensions and it was found out that As a measure of customer satisfaction, the perception of
sampling distribution for all of the attributes follow the value is highly correlated with Fulfillment service quality
normal distribution with moderate to approximately dimension. This means that if the online banking service can
symmetrical graph. The normal probability plot was created provide its services on time, accurately, truthfully, easily and
to support the findings which shows that the data falls on virtually pleasing, the higher customer satisfaction is gained.
almost straight line. From this finding, the validity of the Likewise, loyalty is retained as evident of high correlation
data is confirmed hence it can be used for further analysis. between Fulfillment and loyalty retention. On the other hand,
service quality dimension System Availability shows low
correlation with value perception and loyalty retention. This
means that customer gives least importance on system

1078

Authorized licensed use limited to: Batangas State University. Downloaded on April 14,2021 at 08:02:18 UTC from IEEE Xplore. Restrictions apply.
availability or had experienced it negatively. This may be the value which means that increasing it will proportionally
focal point for the evaluation of any gap between the user increase the value perception by 65%. This will be beneficial
and the design of the system. for both management and users since customer satisfaction
To further identify the relationship (if there exist any) of will increase if attention is given on how customers are
each single elements within the service quality dimensions fulfilled in using the online banking service. On the other
and customer satisfaction, a correlation analysis was made hand, System Availability dimension impacts least and will
and the result is as follows: not contribute significantly unless re-assessed and
• For the Efficiency dimension, EFF7 (Enables the investigated for potential improvement. Analyzing the next
customer to get into the web easily) and EFF8 equation for loyalty retention, Fulfillment dimension will
(Contents in this site is well organized) is highly significantly impact customer loyalty and by increasing it,
correlated loyalty retention will also increase by 53%. This will
• For the System Availability dimension, SYS2 (The guarantee competitive advantage and increased market share
site launches immediately) and SYS3 (The site does since banks will retain customer loyalty. On the other hand,
not crash) is highly correlated Efficiency dimension does not contribute significantly to
• For the Fulfillment dimension, FUL5 (It is truthful increased loyalty retention so management may need to
about its offerings) is highly correlated to customer strategize and further improve on that aspect.
satisfaction
• For the Privacy dimension, PRI3 (I am confident TABLE III. REGRESSION ANALYSIS WITH ANOVA FOR CUSTOMER
PERCEIVED VALUE (Y)
with the bank’s services) is highly correlated to
customer satisfaction
Extending the correlation analysis to each of the items
listed to assess the value perception and loyalty retention, it
was found out that VAL3 (The extent of which the site gives
you a feeling of being in control) and LOY1 (Say positive
things about this site to other people) best describes the
constructs, respectively. This means that customers feel
valued whenever they feel free to navigate the site and
loyalty is retained (either base customer count is retained or
expanded) since they spread positive words and successful
experience (transaction) to their friends and other bank users.
E. Regression Analysis TABLE IV. REGRESSION ANALYSIS WITH ANOVA FOR LOYALTY
INTENTION (Z)
To determine the impact of the independent variables (E-
S-QUAL dimensions) to that of the dependent variables
(perceived value and loyalty), a multiple regression equation
was designed as follows:

Y = a + b1X1 + b2X2 + b3X3 + b4X4 + E (1)

Z = a + b1X1 + b2X2 + b3X3 + b4X4 + E (2)

where:
Y = Customer Perceived Value
Z = Loyalty Retention
E = Error
X1 = Efficiency
X2 = System Availability
X3 = Fulfilment Considering that Fulfillment was the most significant
X4 = Privacy variable for customer perceived value and loyalty retention,
the highest rating for these service quality dimensions are
The summary output with the Analysis of Variance (1) the internet banking service can be easily accessed
(ANOVA) report presented in the tables below. and
Taking the values from the Coefficient column of both (2) the website design is visually pleasing.
tables, the linear regression equation were built with the
following values: F. Gap Analysis
Y = 0.28x1 – 0.37x2 + 0.65x3 + 0.35x4 + 4.61 Identified Gaps. Gap analysis was done by examining
Z = 0.03x1 + 0.015x2 + 0.53x3 + 0.22x4 + 1.32 the individual construct, and the total summed values of each
Given the regression equation values, it can be seen that of the four dimensions of e-service quality as opposed to the
Fulfillment dimension has the greatest impact on perceived

1079

Authorized licensed use limited to: Batangas State University. Downloaded on April 14,2021 at 08:02:18 UTC from IEEE Xplore. Restrictions apply.
perceived value and loyalty intention of the aggregate
respondents.
From the analysis of Efficiency dimension, the attribute
EFF5 (Fast loading speed of the webpage) had an average
value of 3.87 which is lower that the satisfactory level gauge
hence suggesting a gap that deals with customer-site
interface. For the System Availability dimension, the lowest
value among all of the attributes is SYS4 (Pages at this site
did not freeze after I input needed information) with an
average value of 3.74. This also suggest a gap with the
customer-site interface. For the Fulfillment dimension, the
attributes FUL1 (It promises to do something at a certain
time) and FUL5 (It is truthful about its offerings) have low
average values of 3.94 and 3.97 suggesting a gap from a lack
of communication and misleads the consumers with
promises that exceeds what is feasible.
It is important to note that failure on the e-service quality
dimensions on Efficiency and Fulfilment is suggestive of a
gap on design and information. The Fulfilment gap results
from two events, (1) when marketing promises are inflated
without measuring its real capabilities, or communication
gap, and (2) from customers’ unfulfilled desires or
frustrations with the usage of the site due to the failure of
management to incorporate it in the design of the online
facility.
Supporting this findings, an interview was made amongst
random users of online banking services. Common concerns
raised include:
System Availability
• Users cannot access the account or unable to log-in
• Users cannot use debit cards for online payments
• System is down
• Users are unable to get account details
Fulfillment
• Bank is unable to transfer money on time
• Bank is unable to transfer load on time
• Customer service representatives are unable to
answer queries
• Balance deducted but load not received
Moreover, the complaints were categorized relative to the
types of services and classified it as:
• Account Management
• Payment/Billing
• Transfer Services
• Contact Availability
• System Availability
From the list. Account Management and Payment/Billing
has the highest number of complaints for the customers.
Closing the Gap. The researchers conducted an interview
with Mr. Nonato Bonsato, a Senior Assistant Manager from
one of the leading local commercial banks, pertaining to the
e-channel development and management. The manager
mentioned that their online website hasn’t fully implemented
yet the bank to bank transfer as opposed to competitor banks.
Usual transactions were basically checking account balance
and paying of bills. In terms of getting customer feedback,
they relied heavily through different channels like their email
or even members that file a complaint through the branches.
1080
Authorized licensed use limited to: Batangas State University. Downloaded on April 14,2021 at 08:02:18 UTC from IEEE Xplore. Restrictions apply.
Closing the Design Gap. For the Design Gap that deals
with customer-site interface, he mentioned that routine
maintenance is being done and that if ever it occurred that
the website is updating, they make it a point to be back up
and running in the soonest possible time.
Closing the Efficiency Gap. For this gap which pertains
to the loading of page, he mentioned that this is dependent on
the speed of the internet connection because there could be
some remote areas wherein the signal of the internet is not
strong enough hence causing slow connectivity to the
website.
Closing the Fulfillment Gap. This gap was raised because
of the low acceptance on element “When it promises to do
something on a certain time it does so”. Though he didn’t
provide a specific turn-around time for it to be resolved, he
mentioned that it was dependent on the nature of the concern
and that it is usually resolved within (3 - 5) business days.
However, if the issue is complex, they just update their
members regarding the progress. The gap is closed by
addressing it as soon as possible, and he mentioned that most
of the complaints are resolved so they have no problem with
it at the present time. He also explained that in terms of
privacy, the banks make it a point to be updated with the
laws implemented by governing bodies to ensure a safe and
smooth experience for its members. Moving forward he is
very confident that through the continuous efforts of their
R&D and progress of technology that almost all Filipinos
will be confident in adopting online banking as a means of
transacting with banks.
To close the gap on customer complaints regarding
account management and payment/billing, according to a
local study (Customer Satisfaction and Loyalty among
Internet Banking Users of PNB in Batangas City [13],
periodic maintenance, inspection and updating of system
might help as well as benchmarking study to other banks
whether it is local or foreign. Customer feedback must be
conducted periodically and adopt new technologies and
strategies through their research and development team.
IV. CONCLUSION
The results discussed from the previous chapter answered
the hypothesis testing supporting the objectives of this study.
The survey results were validated to have internal
consistency between the four service quality dimensions,
except for the System Availability. It is therefore concluded
that Efficiency, Fulfillment and Privacy quality dimensions
have a positive and significant influence on customer
perceived value and loyalty intentions. The Fulfillment
dimension, in particular, showed the highest correlation with
customer’s perceived value and loyalty retention and
improving it will provide a significant benefit for both the
management and consumers since it will impact both
customer’s perceived value and loyalty retention by 65% and
53%, respectively. Identified gaps on System Availability
were obtained from survey results and random interview to
bank users were presented to a bank executive, closing each
of the items by answering and sharing their plans in behalf of
the bank institutions. To achieve customer satisfaction from
improved system availability, the proponents of this study
drafted a maintenance schedule on regular periods and
determined to validate its impact and likely improvement
through repeat survey using E-S-QUAL scale measurement.
A proposed project activity timeline and sampling scheme
were provided in this paper and may be considered as a
powerful tool for the banks to maintain and increase the
quality of online banking service that they provide to their
customers.
REFERENCES
[1] J. Simpson, “The impact of the Internet in banking: observations and
evidence from developed and emerging markets”, Telematics and
Informatics, Volume 19 Issue 4 (2002), pp. 315-330. Retrieved from
Science Direct, doi.org/10.1016/S0736-5853(01)00019-3
[2] S. Barquin & H.V. Vinayak, Digital Banking in Asia: What do
consumers really want?, 2015 Retrieved from McKinsey & Company,
https://www.mckinsey.com/featured-insights/asia-pacific/
[3] N. Espenilla Jr., Providing an Enabling Environment at the
Crossroads of Digital Transformation [Transcript], 2018. Retrieved
from Bangko Sentral ng Pilipinas
http://www.bsp.gov.ph/publications/speeches
[4] Bangko Sentral ng Pilipinas. A Report on the Philippine Financial
System: Second Semester of 2018, 2018 Retrieved from
http://www.bsp.gov.ph/publications
[5] Bangko Sentral ng Pilipinas, Financial Inclusion Survey, Moving
Towards Digital Financial Inclusion, 2017, Retrieved from
http://www.bsp.gov.ph/publications/media
[6] A. Parasuraman, V.A. Zeithaml, & L.L. Berry, “SERVQUAL: A
Multiple-Item Scale for Measuring Consumer Perceptions of Service
1081
Authorized licensed use limited to: Batangas State University. Downloaded on April 14,2021 at 08:02:18 UTC from IEEE Xplore. Restrictions apply.
Quality”, Journal of Retailing, Volume 64 Number 1 (1988); pp. 12-
40. doi:10.1177/009207002236911
[7] A. Parasuraman, V.A. Zeithaml & A. Malhotra, “E-S-Qual: A
Multiple-Item Scale for Assessing Electronic Service Quality”,
Journal of Service Research. Volume 7 Issue 3 (2005), pp. 213-233.
doi/10.1177/1094670504271156
[8] F. Zavareh, M. Ariff, A. Jusoh, N. Zakuan, A. Bahari, A. & M.
Ashourian, “E-Service Quality Dimensions and Their Effects on
ECustomer Satisfaction in Internet Banking Services”, Procedia -
Social and Behavioral Sciences, Volume 40 (2012), pp. 441-445.
Retrieved from Science Direct, doi.org/10.1016/j.sbspro.2012.03.213
[9] S. Zarei, “Electronic Service Quality Evaluation Methods for
OnlineBanking System”. International Journal of Computer Science
and Technology, Volume 1, Issue 2 (2010), pp. 6-13. Retrieved from
http://www.ijcst.com/archives/
[10] D. Zhu & Y. Chang, “Investigating consumer attitude and intention
toward free trials of technology-based services”, Computers in
Human Behavior, Volume 30 (2014), pp. 328-334. Retrieved from
Science Direct, doi.org/10.1016/j.chb.2013.09.008
[11] M. Ariff, L. Yun, N. Zakuan & A. Jusoh, “Examining Dimensions of
Electronic Service Quality for Internet Banking Services”, Procedia -
Social and Behavioral Sciences, Volume 65 (2012), pp. 854 – 859.
Retrieved from Science Direct, doi.org/10.1016/j.sbspro.2012.11.210
[12] J.F. Hair Jr., W.C. Black, B.J. Babin & R.E. Anderson, Multivariate
Data Analysis (7th Edition, Pearson New International Edition, 2014,
pp. 31-40, 69-71, 100, 123, 151-160). Essex, England. Pearson
Education Limited.
[13] E. Mojares, Customer Satisfaction and Loyalty among Internet
Banking Users of Philippine National Bank in Batangas City, 2014.
Retreived from http://oaji.net/articles/2014/1543-1418696567.pdf