You are on page 1of 11


Web-based service (online service or e-service) has witnessed explosive growth in the past
several years. In service industries in general and in the banking industry, in particular, the
internet has been exploited as a means to provide e-services. Online banking services are
becoming an attractive alternative to visiting service outlets or phoning call centers Ior
increasing number oI customers (Kenova and Jonasson, 2006). Internet banking helps banks to
build and maintain close relationships with their customers, reduces operating and Iixed costs
and achieves more eIIicient and enhanced Iinancial perIormance (DeYoung et al., 2007 as cited
in Rod et al. 2009). From customer perspective, online services oIIer panoply oI beneIits to the
customers such as enhanced control, ease oI use, and reduced transaction charges (Scullion and
Nicholas, 2001, as cited in Yang and Fang, 2004).
In recent years, many banks try to provide a quality online service to their customers. These
banks are introducing internet banking as an assurance to maintain a competitive quality oI
service in the Iuture, in eIIorts to avoid losing their customers (Rod et al. 2009). OIIering internet
banking is no longer regarded as a competitive advantage but a competitive necessity (Gan et al.,
2006, as cited in Rod et al. 2009).
A lot oI research has been conducted about key service quality dimensions and customer
requirements in the traditional banking environment, where personal interaction between the
customers and the bank employees takes place (Cowling & Newman, 1995; Johnston, 1995;
Bahia & Nantel, 2000; Oppewal & Vriens, 2000). However, the service quality attributes and
customer requirements involved in Internet banking, where the interaction between the
customers and the bank is impersonal, have not been studied enough, which can be implied by
the Iact that there has not been available a precise measurement instrument Ior online services
quality (Cox & Dale, 2001). Thus, it is really important Ior Internet banking providers to learn
more about their customers` perceptions oI the online banking services quality and the attributes,
the customers Iind essential Ior a quality Iinancial service delivery on the Internet. Customers
have some expectations and criteria when they judge whether the provided E-banking service is
satisIactory or not. This is what banks, which provide E-banking services should try to Iind out,
so that they can improve their online services and gain competitive advantage in the banking

Joseph Juran, being one oI the world`s popular quality management analysts had been studying
and had been closely Iollowing the changes and the emergence oI new concepts within quality
management starting Irom as early as 1951 (Cem, 1996). Quality management has evolved over
the past and constitutes various newly added dimensions such as the quality oI soItware used
apart Irom the general reIerence to product quality. In the banking scenario various rapid
changes and adaptations have been taking especially with the advent oI computers and related
technology. Authors, SaIeena, Abdullah and Hema (2009) remarked that the changes in
technology have prompted imminent changes in the banking system and the procedures have
been set as standards Ior ages had to be altered and modiIied. Such user-Iriendly environment
and developmental changes have taken the banks to new horizons oI success and that has been
possible only because banks have been showing incredible willingness to adopt new technologies
so opines Rahmath (2010). These technological advancements such as in the network and
telecommunication sector have also been giving banks a competitive Ioothold in market.
With the above stated introduction, with keen interest, I propose to investigate into the Service
Quality and its related aspects within the new generation banking initiative, i.e. the internet
banking. In the process Iollowing research questions are intended to be resolved:
1. How Iar the customers are aware oI internet banking and what are their perceptions in its
2. What is the Online Banking system at the Barclays and how is it able satisIy online
consumers with its online service quality?
In this research proposal, the background oI the study is presented in order establish the
Ioundation Ior the core aims oI the study and we proceed on to discuss the rationale Ior the same
which will be helpIul in deriving a set oI objectives. Further, literature review is conducted and
the gathered evidences within past literature are brieIly presented in the concerned section oI this
proposal. The case study institution is introduced in the third section and the Iourth section deals
with statements related research aims, objectives and proposed questions. In the Iinal section the
proposed research methodology to be adopted is presented.
1.1 Background
The Banking industry, as also opined by Bauer 09 , (2005), has been very consistent in its
parallel development alongside technology despite rapid changes in the latter. The emergence oI
e-banking is in Iact an example Ior the industry`s coping up with technological advancements.
The last two decades have been witnesses to rapid technological advancements especially in the
IT industry which has also propelled relevant progress within the banking industry and hence the
birth oI electronic banking system. These developments have led to sustainable growth oI banks
in global market and they were able to prove their status as the world`s primary Iinancial
institutions. Those oI the banks that were unable to activate online service portals were at loss
and lagged behind the mainstream progress oI other banks which successIully implemented the
new system. The advent oI electronic banking has made it easy Ior consumers as well as the
Iinancial service providers. However the technological development had also threatened the
stance oI certain traditionally operating banks that could not cope up with change, moreover, it
has also meant certain degree oI risk Ior every bank in general.
With the stated discussion, my interest was aroused to investigate into the altered concepts oI
Customer Perception and Service Quality in the context oI electronic banking. It would be quite
interesting to examine the alterations to both the concepts in this advanced banking system. Also
it would be more interesting to understand on how the customers receive and perceive this
advanced banking portal. I wish to put Iorward this proposal with core aim to examine the status
oI service quality in the context oI electronic banking in a general sense and the service quality
provided by Barclay`s electronic banking portal in speciIic. In the upcoming section oI this
proposal, the rationale Ior conducting research in the chosen research area is discussed.
1.2 Rationale of the Study
Authors, Bauer et al (2005) and Zinkhan and Parasuraman (2002) remarked that the
changes in technology and other such subtle developments oIten prompt organisations to alter or
completely change their ways oI serving their customers and they will have replace their
systems; internet is one oI such technological advancement which has had immense impact on
the management systems oI organisations giving way Ior a completely new kind oI services
oIIered to customers.
Author, Ibrahim et al, (2006), observed that the emergence oI electronic banking has come in as
an advantage Ior customers although it has certain associated risks. The author observed that e-
banking services are selI-administrative and give the customer an independent experience which
is new all together. In Iact, most oI the internet related services are user-Iriendly and tend give an
autonomous experience to users. Since its introduction, the electronic banking technology has
had undergone changes with new versions emerging over time only to enrich the customer
experience and perception. In Iact, setting up electronic business portals will make an
organisation more customer-oriented and most oI the present organisations are rushing to harness
this availability.
In his recommendations Peppard (2002) stated that the emergence oI Customer
Relationship Management has been good news with regards to consumer satisIaction. Further,
Speece, and Rotchanakitumnuai (2004) are oI the opinion that using the latest soItware
technology and internet tools will help organisations provide improved quality oI service to
Given the highly competitive environment within banking sector, as also opined by Bauer 09 ,
(2005), it became imperative Ior banks to provide electronic banking Iacility not only to provide
better service to consumers but also to stay in the competitive market. Majority oI banks these
days commonly provide online services such as money transIers, inIormation requests, and other
such online transactions.
Based on the above discussion I Ieel that E-banking has become the major Iactor that includes
customer retention and satisIaction Iactors in it Ior bank development, Ior which quality service
becomes most important Iactor.
Emphasising on quality oI services in internet banking most oI the studies (Ior example Kelley,
1989; Quinn, 1996; Kellner and Dannenberg, 1998; Gounaris et al, 2005, Bauer et al, 2005; Lin
and Lee, 2005; Ibrahim et al, 2006;) all oI them discussed the importance oI quality service.
Their studies argued that the motive behind organisations inaugurating online service portals was
that they wanted to reduce cost burdens and other related expenditure as well as time. The
organisations also obtained proIessional tag Ior their services on launching online service portals.
However, during the course oI time when the demands and acceptance oI internet banking
started gaining momentum people being educated and developed the awareness oI this Ieature
the next issue was to adhere to the quality oI service they promised.
The studies oI Ibrahim et al, (2006) taking a step ahead stated that majority oI audiences are
using electronic banking portals mainly because it provided an autonomous and timely advantage
to their lives, in spite oI some observable issues oI services and perceived risks.
Rahmath SaIeena, Abdullah and Hema, (2009), cautioned that there are certain associated risks
that come along while using online banking portals both Ior the bankers and their customers.
Some oI the possible risks that come along according to the above authors are technical Iailures
oI online systems, etc which will not allow banks to completely depend on these virtual systems
provided by inIormation technology. There is also a degree oI complexity that is associated with
online systems which has to be resolved to make those systems more user-Iriendly and
convenient as well as easily accessible.
With stated discussion, one must note that though the internet and its related services are
ubiquitous in nature, there are certain issues which have to be taken care with caution and
speculation; the authentication processes, inIormation security and privacy issues are the kind oI
issues leading to speculations among the consumers regarding the services promised by the
With more empirical evidence and statistical evaluation oI results, researchers, Eriksson, Kerem
and Nilson (2008) concluded Irom their studies on the internet banking portals in Estonia, which
is reputed to be the world`s largest user oI internet services which were also best provided in the
nation, that there are many Iactors that are intricately connected and involved in internet banking.
The researcher Iurther observed that the two broad Ieatures that can be outlined in electronic
banking are Complexity` and Relative Advantage`. The researchers stated that the above two
are main Ieatures oI internet banking apart Irom those that impact this new generation baking
Iacility such as those oI compatibility and associated risks. The researchers also remarked that
the scenario and the related Iactors in internet banking cannot be generalised and applied
Based on the stated discussion I personally Ieel that though electronic commerce has come in as
a great boon Ior bankers and had given more convenience and independence to customers, there
are certain associated risks and certain perceived risks leading to speculations among customers,
thereIore, there is a necessity to Iirst oI investigate into the level oI understanding among
consumers about internet banking and on how they receive this new generation banking portal.
The above stated discussion is a clear indication to argue that the stated investigation becomes
more important because as per the preliminary literature review and consistent search that I have
conducted on internet Ior similar researches there seems to be a lack oI any research concerning
Service Quality`.
!roblem Discussion:
When judging the quality oI the provided E-banking services, customers consider a lot oI Iactors
which inIluence their judgment. For some customers the response and eIIiciency oI the service
providers would be oI greatest importance, Ior others the security and privacy issues might be
more important, and still Ior others what matters most may be the website design and ease oI use.
In reality, customers have diIIerent expectations and requirements. They deem diIIerent aspects
oI the service delivery process Ior essential in order Ior them to be satisIied with the service.
Nevertheless, there should be some common requirements among users oI online banking
services, some overall valid expectations, which are oI interest in this study.
As the service delivery process on the Internet diIIers signiIicantly Irom that in the traditional
brick-and-mortar banks` environment mainly because oI the lack oI direct contact between the
employees and the customers, the attributes Ior deIining a high-quality service delivery are
expected to diIIer in the two contexts. According to Li, Tan and Xie (2002), because oI the
existing diIIerence between online and traditional services, there exists real challenges in
measuring the quality oI online services. Although there is a lot oI research, made on evaluation
oI traditional banking services quality (Cowling & Newman, 1995; Johnston, 1995; Bahia &
Nantel, 2000; Oppewal & Vriens, 2000), the research on online services quality, in this respect
also online banking services quality, is in its inIancy (Santos, 2003). As the use oI online
banking steadily increases over the years (Fredriksson, 2003), knowledge about deIining high-
quality service delivery over the Internet becomes crucial Ior banks, which want to stay
competitive on the marketplace. II banks have knowledge about the quality attributes they can
use to measure the quality oI their online services and the overall satisIaction oI their customers
with each oI these attributes, it would be much easier Ior them to take necessary measures and
steps to improve the overall service quality.
For example, iI the eIIiciency oI the service provider is deemed very important Ior the quality oI
the delivered online services and customers turn out to be unsatisIied with this aspect oI the
service delivery, it means that banks and their managers should consider that issue careIully and
try to improve it. Additionally, this knowledge will also help banks allocate their resources in a
way that maximum service quality improvement is achieved. This will eventually lead to gaining
competitive advantage, which will help them retain their customers and increase their
proIitability (Bennett & Higgins, 1988).
looking at the Barclays context in particular, it is measured the quality oI online banking services
and customers` perception oI their quality seems quite appropriate and reliable to be conducted
in London, as London people show high rate oI usage oI this kind oI services and thereIore are
expected to have suIIicient experience in using them. Finally, although older people might be
expected to use online banking services more intensively, it would be interesting to consider the
younger clients oI the banks (those aged below 34) as they are the ones who are going to use the
banks` services Ior longer time in the Iuture and they should be attracted to stay customers oI the
bank they use and not switch to another one.

Research Objective:
The importance oI service quality and the challenges Iacing Internet-based services necessitate
insights on the part oI managers about what attributes customers use in their evaluation oI online
service quality. However, a rigorous measurement instrument oI online service quality has not
been available (Cox and Dale, 2001; O`Neill et al., 2001; Yoo and Donthu, 2001). In order to
improve that condition, this study intends to
identiIy the more salient online service quality dimensions;
conIirm the identiIied major service quality dimensions; and
determine the relative importance oI each identiIied service quality dimension in
producing overall service quality.
Now, having discussed the literary evidences Iound in the context oI internet banking and having
brought out certain key aspects the research intends to Iurther explore, I move on to discuss the
aspect oI the scope oI the study discussing whether my claims and aims already stated can be
attained. ThereIore, I wish to present some more evidences Irom previous academic works which
will useIul in justiIying my claims.

Research Questions
A systematical and extensive study is needed to uncover the underlying key dimensions oI
service quality in the context oI online services. To be able to accomplish the purpose stated
above, the research questions oI this study are deIined as Iollows:
1. What is high quality online service?
2. Which service quality dimensions should banks consider when evaluating the quality oI
their online banking services?
3. How these service quality dimensions oI online banking services can be used to measure
the quality oI online banking services?
4. How do customers perceive the quality oI diIIerent aspects oI the online banking services
they use?
OI course, not all service quality attributes have the same impact on consumer perceptions oI
online services. Some attributes may not be perceived as enhancing overall service quality. The
key, thereIore, is to uncover, among various potentially predictive service quality attributes,
particular dimensions that are most crucial in enhancing the perceived level oI service quality
and to assess the degree to which they are associated. In this manner, management can come to
identiIy what service areas deserve concentration, while avoiding investing resources in
providing service quality attributes that may be oI minor concern to consumers (Oliva et al.,
Scope of the Research
In the most recently concluded studies, author Verena (2011) made several observations and
useIul remarks about the new generation banking portal, i.e. the internet banking. The author
observed that internet banking has many advantages such as one can avail all Iinancial services
operating Irom his/her place oI convenience. However, the author observed that most oI the
internet-banking users are soItware and tech proIessionals and those who have better exposure
into computers and internet technologies. In Iurtherance the author made an observation that
certain demographical characteristics oI individuals tend to impact their exposure to tech
products and internet usage Ior Iiscal services, some oI them are age, marital statuses,
educational background, proIessional experience, etc. Another important observation made by
the author is that Mauritians are unwilling to adopt internet banking and the main reasons being
lack oI technology exposure, lack oI reliable internet connectivity, and individual apprehensions
about internet banking risks (Iigure-1).
igure 1: Technology Acceptance Model (Davis, 1989)

Source: Adapted from the studies of Verena (2011)
The above Iigure clearly indicates that irrespective oI ubiquitous usage oI technological model
pertaining to e-banking within literature, the individual preIerences and understanding levels oI
customers vary.
Thus the research Iurther explores to Iind the perception oI online consumers. Based on Iurther
investigation into literature within the context oI the study I have derived a set oI themes that
were done based on the discussions and assessment oI several evidences Irom literature and the
conceptual and theoretical models. Each oI the themes is supported by literary evidences as
shown below:
Table 1: Derived themes to investigate into the area of research
Derived Theme Literary Evidence
Perceived UseIulness
"The extent to which an individual Ieels that using a
particular system would increase his job perIormance"
(Davis, 1989).
Perceived Ease oI Use
"The extent to which an individual Ieels that using a
particular system would be Iree oI eIIort" (Davis, 1989).
Perceived Risk
"The potential Ior loss in the pursuit oI desired outcome oI
using electronic services" (Featherman and Pavlou2002).
Subjective or Social Norms
"An individual`s perception regarding social pressures put
him/her to perIorm or not perIorm behavior in question
(Ajzen and Fishbein, 1980).
Behavioural Intention
"A person's subjective probability that he will perIorm some
behavior (Fishbein and Ajzen, 1975).
Source: Compiled by the researcher from various sources
The above stated themes will be Iurther investigated in the actual proposed research to Iind the
consumers perception oI internet banking. As the proposed research apart Irom consumers
perception oI internet banking also intends to investigate into the service quality dimensions a
conceptual model related to service quality will also be studied in depth. However to emphasis
its scope some oI the related inIormation on service quality is also presented. In actual terms the
conceptual model was applied in hospitality sector. However considering it also as a service
industry similar to the banking services the variables are discussed in the next chapter.

Limitations of the study
This study is limited to gathering empirical data through a questionnaire Irom a sample oI the
population in IIUM, UUM, and INCEIF universities. The study also concerns to investigate
online service oI Bank Islam Brhd Malaysia (BIBM). The study is not subject to generalization
because it is just to IulIill the English Business course requirements. The sample, thereIore, it is
small, 21 samples. The study has employed a questionnaire including 19 questions developed by
Han and Beak (2004).