The Study of Customer Behaviour and Its Impact on
Customer Satisfaction, Loyalty and Service Quality Perception in E-Banking
Services in Jammu Division
Dr. Roop Lal Sharma
ABSTRACT:
The
banking sector of India is becoming very competitive, it is formulating
customer based strategies to retain old customers than to create new customer
bank. Banks should introduce enhanced service quality, otherwise they may lose
customer base due to increasing banking rivalry. When the customers have the
positive attitude towards the banking service, they will be satisfied and when
they recommend the same banking channel to others, loyalty can be generated.
E-banking domain is getting highly competitive and to survive this, it is
evident that the banks need to provide customers with high quality services.
For this, bankers first need to understand the attributes customers use to
judge them and steps need to be taken to understand the factors which influence
the customer satisfaction, loyalty and their perception of service quality.
KEY WORDS: E-Banking; Customer Satisfaction; Customer Loyalty;
Perception of Service Quality.
INTRODUCTION:
Electronic banking has been
one of the most widely used e-services in the recent times. The traditional
branch model of bank is now giving place to an alternative delivery channels
with various forms of E-banking. Once the branch offices of bank are
interconnected through terrestrial or satellite links, there would be no
physical identity for any branch. It would a borderless entity permitting
anytime, anywhere and anyhow banking. In order to sustain their competition in
the market, a number of traditional brick-and-mortar banks have adopted the
electronic banking medium. Since, the use of internet has substantially reduced
the operating and fixed expenses by replacing employees and physical facilities
with information technology, banks are now able to offers lower or no service
fees and higher interest rates compared to traditional banks (Jun and Cai,
2001). Today, all the private, public sector and foreign banks in India are
offering their services over Internet.
Most of the banks are
moving to the internet domain leading to stiff competition to attract prospects
and customers, especially the young and educated community. Also, with large
population and increasing literacy rate, there is a huge scope for e-banking
services to flourish in India compared to other service sectors. Hence,
customer-based studies will help banks to capture these prospects and keep them
loyal in this competitive environment.
This study has been carried
out to analyze the possible factors which affect customer satisfaction, loyalty
and their perception of service quality in e banking services.
Customer Loyalty:
The concept of loyalty has
evolved over a period of time. In the earlier research at around 1970s, loyalty
was mainly viewed as a behavioural component consisting of repeat purchasing
behaviour. However, this view changed with a number of researchers arguing the
adequacy of purchasing behaviour to measure loyalty (De Ruyter, 1998). In his
research on brand loyalty, Day (1969) stated that loyalty is not just
consistent buying, but there is more to it; for instance: Attitude. Similarly,
Bass (1974) pointed out that deterministic prediction of consumer repurchase
behaviour is difficult as it is stochastic in nature i.e. there is some
unexplained randomness which might be explained through attitude studies.
Eventually, in later studies, the researchers widely defined and assessed
loyalty using attitudinal and behavioural components(Oliver, 1999). Thus, loyalty
is visualized as a favourable correspondence between relative attitude and
repeat patronage (Dick and Basu, 1994), which reflects the degree to which
consumer’s evaluation of services affects their future behaviour.
Service Quality:
With the increasing importance of services and growing
competition both consumers and managers should pay special attentions to the
service quality (Gupta and Bansal, 2012). Grönroos (1983) stated that service
quality contains two components – technical quality (“what” is delivered) and
functional quality (“how” is delivered). Speed of response, offer updates, site
effectiveness and so forth, refers to the technical quality (Rust and Lemon,
2001). Interactive communication, personalization of the communication and of
the service, as well as new forms of customer access refers to the functional
aspect of quality. The package given to the customer must contain both
technical and functional quality to be competitive. Parasuraman et al. (1985)
identified ten determinants of service process quality that were further
distilled them into five dimensions: tangibles, reliability, responsiveness,
assurance, and empathy, and as a result SERVQUAL model came into being
(Parasuraman et al., 1988). It has been tested and validated across various
service industries and countries. Parasuraman et al. (1988) noted that early
researches projected service quality as an attitude shaped on the basis of
disparity between customers' expectations regarding a service to be received
and perceptions of the service being received. This approach to measuring
service quality is popularly referred as “disconfirmation paradigm”.
Customer Satisfaction:
Satisfaction can be
described as an “evaluation of the perceived discrepancy between prior
expectations and the actual performance of the product” (Oliver, 1999). In
other words, satisfaction is a person’s feeling of pleasure or disappointment
resulting from comparing a product’s perceived performance (or outcome) in
relation to his or her expectations (Kotler, 2000). Mano and Oliver(1993)
described satisfaction as a post consumption attitude or evaluative judgement
which varies along with the hedonic continuum focused on the product. Rust and
Oliver (1994) defined customer satisfaction or dissatisfaction as a “cognitive
or affective reaction” that surfaces in the form of a response to a single or
prolonged set of service encounters. With various definitions evolving from
different studies, however one view has in common that customer satisfaction is
one of the primary antecedents of customer loyalty (Cronin and Taylor, 1992;
Cronin et al., 2000; Dabholkar, 2000).
Sampling Procedure:
In the present study, the
methodology is based on applied research and the data collection is a
descriptive type. The statistical population includes the customers of both
public and private sector banks of Jammu Division. Because the statistical
population is unlimited, the sample size is 350 participants. By using
convenient sample method, 425 questionnaires were distributed among the sample,
380 questionnaires were collected among which 355 questionnaires were usable.
Questionnaires were
developed based on the review of literature in e-banking marketing. All items
were evaluated by 5-item likert Scale (completely agree to completely disagree).
For editing and completing questionnaires, advisory opinions were collected and
used. Reliability was confirmed by Cronbach Alpha which is .839, suggesting
that the items have relatively high internal consistency. In this study, an
examination of variation in the respondents' loyalty, satisfaction and service
quality perception based on the types of banks, duration of association,
frequent and recent usage of e-banking has been carried out using descriptive
statistics and ANOVA test. The results have been presented and inferred.
Types of Banks
The customer loyalty,
satisfaction and service quality perception of respondents have been analyzed
based on the types of banks where they are the customers.
Table 1: Respondents’
Loyalty based on Types of Banks
|
Types of Banks
|
Mean
|
Std. Deviation
|
|
Private Sector Banks
|
4.2
|
0.71
|
|
Public Sector Banks
|
3.74
|
1.01
|
|
Total
|
4.07
|
0.83
|
Table 2: Respondents’ Satisfaction based on Types of
Banks
|
Types of Banks
|
Mean
|
Std. Deviation
|
|
Private Sector Banks
|
4
|
0.51
|
|
Public Sector Banks
|
3.65
|
0.66
|
|
Total
|
3.9
|
0.57
|
Table 3: Respondents’
Perception of Service Quality based on Types of Banks
|
Types of Banks
|
Mean
|
Std. Deviation
|
|
Private Sector Banks
|
4.51
|
0.6
|
|
Public Sector Banks
|
3.69
|
0.89
|
|
Total
|
4.28
|
0.78
|
Respondents' loyalty, satisfaction and perception
service quality based on the types of banks has been presented in figure 1.
Figure 1: Respondents'
Loyalty, Satisfaction and Perception of Service Quality based on Types of Banks
Table 4: Significance of Variation based on Types of
Banks
|
Independent Variable
|
Dependent Variables
|
Type III
Sum of Squares
|
Degrees of Freedom
|
F
|
Sig.
|
|
Bank Type
|
Customer Loyalty
|
4.33
|
1
|
6.68
|
0.01
|
|
|
Customer Satisfaction
|
2.62
|
1
|
8.57
|
0
|
|
|
Service Quality
|
14.06
|
1
|
29.56
|
-
|
Effect of Types of Banks- Test of Significance:
The analysis shows that
respondents of private sector banks have provided higher scores for loyalty,
satisfaction and their perception of service quality of e-banking services.
However, to test if private sector banks have significantly higher scores, the
ANOVA test for significance of variation has been carried out.
Based on the ANOVA test
results and the mean scores, it is clearly evident that the overall average
scores for customers' loyalty, satisfaction and perception of service quality
are significantly higher for private sector banks compared to public sector
banks which is indicated by p-value of < 0.05. Thus, it is inferred that
respondents of private sector banks are more satisfied and loyal towards their
e-banking services and perceive better service quality than customers of public
sector banks.
Duration of Customer – Bank Relationship
The customer loyalty,
satisfaction and perception of service quality have been analyzed based on
their duration of association with the bank and the following insights have
been presented.
Table 5: Respondents’
Loyalty based on Duration of Association with Banks
|
Duration of Association
|
Mean
|
Std. Deviation
|
|
1-2
yrs
|
4.13
|
0.69
|
|
3-4
yrs
|
3.88
|
1.01
|
|
5-6
yrs
|
4
|
-
|
|
>6
yrs
|
4.2
|
0.86
|
|
Total
|
4.07
|
0.83
|
Table 6: Respondents’ Satisfaction based on Duration of
Association with Banks
|
Duration of Association
|
Mean
|
Std. Deviation
|
|
1-2
yrs
|
3.85
|
0.52
|
|
3-4
yrs
|
3.96
|
0.65
|
|
5-6
yrs
|
4
|
-
|
|
>6
yrs
|
3.92
|
0.61
|
|
Total
|
3.9
|
0.57
|
Table
7: Respondents’ Perception of Service Quality based on Duration of Association
with Banks
|
Duration of Association
|
Mean
|
Std. Deviation
|
|
1-2
yrs
|
4.1
|
0.73
|
|
3-4
yrs
|
4.2
|
0.93
|
|
5-6
yrs
|
4
|
-
|
|
>6
yrs
|
4.83
|
0.39
|
|
Total
|
4.28
|
0.78
|
Figure 2: Respondents' Loyalty, Satisfaction and
Perception of Service Quality based on Duration of Association with Banks
A comparative analysis of
respondents' loyalty, satisfaction and perception of service quality based on
the duration of association with the banks has been presented in figure 2.
The results shows that
there is not much difference in the average scores given by customer on their
loyalty, satisfaction and perception of service quality based on their duration
of association with the banks. However, only for service quality, respondents
who have more than 6 years relationship have better perceived service quality
with a rating of 4.83 compared to other respondents who have less association
with the banks..
Effect of Duration of Association - Test of
Significance
ANOVA test has been carried
out to test if there is a significant variation in respondents' loyalty,
satisfaction and perception of service quality based on their duration of
association.
The ANOVA results show that duration of association
with the bank significantly affects the perception of the respondents on service
quality since p-value is < 0.05. This indicates that respondents who have
longer association with banks i.e. more than 6 years have given significantly
higher ratings for service quality. However, respondents’ duration of
association has no significant
effect on their loyalty and satisfaction.
Frequency of E-Banking Usage
The respondents' loyalty,
satisfaction and their perception of service quality have been analyzed based
on their duration of association with the banks and insights have been
presented.
Table 9: Respondents’ Loyalty based on their frequency
of E-Banking Usage
|
Frequency of using e-banking
|
Mean
|
Std. Deviation
|
|
Not even once/month
|
4.39
|
0.42
|
|
1-5 times/month
|
4.05
|
0.76
|
|
5-10 times/month
|
4.01
|
1.08
|
|
>10 times/month
|
4.07
|
0.42
|
|
Total
|
4.07
|
0.83
|
Table 10: Respondents’ Satisfaction based on their
frequency of E-Banking Usage
|
Frequency of using e-banking
|
Mean
|
Std. Deviation
|
|
Not even once/month
|
4.17
|
0.16
|
|
1-5 times/month
|
3.79
|
0.49
|
|
5-10 times/month
|
3.91
|
0.78
|
|
>10 times/month
|
4.08
|
0.14
|
|
Total
|
3.9
|
0.57
|
Table 11: Respondents’ Perception of Service Quality
based on their frequency of E-Banking Usage
|
Not even once/month
|
4.56
|
0.53
|
|
1-5 times/month
|
4.22
|
0.73
|
|
5-10 times/month
|
4.22
|
0.96
|
|
>10 times/month
|
4.47
|
0.52
|
|
Total
|
4.28
|
0.78
|
Figure 3 represents the
comparison of customers' loyalty, satisfaction and perception of service
quality based on their frequency of e-banking usage.
The result shows that there
is no much difference in the average scores of all three variables i.e.
respondents' loyalty, satisfaction and perception service quality based on the
frequency of their usage of e-banking services.
Figure 3: Respondents' Loyalty, Satisfaction and
Perception of Service Quality based on their E-Banking Usage frequency
Table 12: Significance of
Variation based on frequency of E-Banking Usage
|
Independent Variable
|
Dependent Variables
|
Type III
Sum of Squares
|
Degrees of
Freedom
|
F
|
Sig.
|
|
Frequency
of E-Banking Usage
|
Customer
Loyalty
|
1.04
|
3
|
0.5
|
0.68
|
|
Customer
Satisfaction
|
1.74
|
3
|
1.81
|
0.15
|
|
Service
Quality
|
1.51
|
3
|
0.83
|
0.48
|
The ANOVA results confirm
that there is no significant difference in the level of loyalty and
satisfaction based on the frequency of respondents’ usage of e-banking services
which is indicated by p-value > 0.05.
Effect of Frequency of E-Banking Usage - Test of
Significance:
The ANOVA test has been carried out to test if there
is a significant variation in respondents' loyalty, satisfaction and their
perception of service quality based on their frequency of usage of e-banking
services,.
CONCLUSION:
This study examines the
variation in customers’ loyalty, satisfaction and service quality based on the
types of banks, relationship duration and their e-banking usage. The major
inference derived is that e-banking customers of private sectors banks are more
loyal, satisfied and perceive better service quality who have given average
scores of 4, 4.2 and 4.51 respectively which are significantly higher than the
average scores of 3.74, 3.65 and 3.69 which have been given by customers of
public sector banks. The relationship duration of the respondents with the
banks significantly affects only the customers' perception service quality and
not their level of loyalty and satisfaction. The rating for customers'
perception service quality who have associated with bank for less than 6 years
is 4.1 and those associated for more than 6 years is 4.8 which is significantly
higher. Based on customers’ frequent and recent usage of e-banking services,
there is no variation in their loyalty, satisfaction or their perception of
service quality. Thus, the frequent or the recent usage of e-banking services
by a customer in a given time frame does not represent his loyalty or level of
satisfaction. As per the study results, the more the customers are associated
with the bank the more they express satisfaction, loyalty and better perception
of service quality. Moreover study results show that e-banking customers of
private sectors banks are more loyal, satisfied and perceive better service
quality than the public sector banks. Hence, possible initiatives should be
undertaken by public sector banks to improve their customer service in terms of
efficiency, convenience, security, and responsiveness so as to retain their
customers.
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