Management & Economics, University Sultan Zainal Abidin, Terengganu, MalaysiaNorjaya Mohd Yasin
Prince Sultan University, Riyadh, Saudi ArabiaFeras Mi Alnaser
University Sultan Zainal Abidin, Terengganu, Malaysia
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The rapid growth in internet technology and electronic business has stimulated the banking sectors to encourage customers towards online banking (internet banking). Only in Pakistan there are 1.8 million internet banking users and millions more are expected to come online. Looking at the growth in banking technology this study explores the effect of e-service quality dimensions include: website design, Assurance, Customer Service on intention to adopt internet banking and customer loyalty. Next to this bank image is also incorporated to explore the customer loyalty. The data for this study is based on 500 internet banking users from commercial banks of Lahore, Pakistan. Researcher used the structural equation modeling to evaluate the hypothesized relationships. The results of this study revealed that the adoption of internet banking in Pakistan may be motivated by a set of specific factors (i.e., Website Design, Assurance, Customer service and Bank image). Further, these results are expected to help policy makers to understand critical factors that influence on internet banking usage. Finally limitation and future directions have been discussed.
Internet Banking Adoption; Website Design; Customer Service; Brand Image; Customer Loyalty
Internet technology is a tool to achieve competitive advantages and has great importance on our daily lives. According to Gupta, Rao, and Upadhyaya  postulated that, customer choose the internet technology because it is convenient and have speedy action. Authors like Liao and Cheung  described the importance of the technology. Technology is the most powerful element for the success of the business. It has changed the ways of the business and has strong influence on people lives. In views of Lichtenstein and Williamson  narrated that internet banking is better than traditional banking and maximum operation should be transformed via internet banking. In this era of technology customer wants ease in their buying and selling process with latest features and companies are focusing to improve their technological systems [4,5]. Information technology is a powerful tool or enabler in the era of customer service and create more opportunities for customer and as well as for investors. Authors like Weick and Quinn  argued that information technology is the most essential service to provide front line function, a place where you may don’t exist but your customer exist and he/she is willing to buy your products. According to Nabi  argued that there are different types of internet banking definition however, we can conclude that it is a network who combine the computers all over the world. In views of Bauer, Hammerschmidt, and Falk  explained, that internet banking involve a process where user use the internet and get directly access from bank account to perform banking transaction. Electronic banking contains different types of services like ATM,s, Mobile Phone Banking, Real Time online banking, Point of sale, Call center banking, Plastic card composition however , the present study will just focus on Internet banking which is most innovative and convenient service of Electronic banking.
Electronic commerce refers to the use of electronic means and technologies to conduct commerce in various settings, such as business-to-business (B2B) and business-to-consumer (B2C) . With addition to that Jayewardene and Foley  described the importance of e-commerce. It provides facilities to customer for the purpose of business and exchanges between two or more customers moreover it bring effectiveness in business process. Shariq  postulated that the use of internet and technology is the most important element to improve efficiency in business. Hence, Tan and Teo  illustrate that internet banking will grow vigorously in coming few years and it will transformed traditional banking into branchless banking. An author like Orr  illustrates banks that are not providing internet banking they will lose their customer. In service quality perspective author like Jayawardhena  explained that website should be user friendly and it must have ample information that how user can perform operation during online transaction. Moreover if the website is not user friendly and it does not have a proper content that’s means you are losing your customer trust and image about your banks. Additionally with complex website customer will never satisfied however well designed website can create curiosity and attraction to perform operation. Hence website that would use for internet banking it must be flexible in operation.
In addition to that Reichheld and Schefter  explain that if your company is providing better service on website, customer loyalty would be higher towards internet banking or for any other organization. According to Norsworthy, Griffith, Scott, Smith, and Oliver  also explain in their research that if you are using internet properly it would be powerful for your business and it will enhance the image and loyalty towards that particular brand hence if you are just service provider especially in case of banking you must be more conscious about the performance of operation.
In one another study author like Tarı́ and Sabater  narrate that companies must know that how to hold the customer for their survival and use of internet is the best way to attract your customer anywhere at any time, hence companies should review their policies of product development they must get feedback about their online usage. If your customers are giving you proper feedback that’s means you are gaining better image via use of internet. Different studies have been conducted with number of determinants that effects on internet banking or overall electronic banking. However these studies have failed to explore the internet banking adoption problem. To the best of author knowledge this study is first in its nature that explore dimension of e-service quality in internet banking adoption context.
These days web-service quality is getting importance not only in evaluating of business success or failure but also determining consumer experiences in an interactive online environment [17,18]. E-service quality and web-service quality both researcher and practitioners have used it interchangeably . With accession to this Zhang and Prybutok  supported to the same concept as web site service quality and e-service quality can be used interchangeably. In views of Ho and Lin  defined, e-service or interactive service quality that is delivered on the internet. Furthermore, Santos  explains that e-service quality a virtual marketplace where customer can evaluate, judge and compare the excellence of e-service delivery. According Zeithaml  posited that e-service quality is the extent in which a web site facilitates to customer to perform shopping, purchasing and receiving of goods and services. In e-service customer rely on information technology. According to Rowley  stated that e-services can be defined as deeds, efforts, or performance of the customers whose delivery is mediated by information technology. According to researcher like  postulated that e-service quality is getting importance day by day. It is because of customer can compare the product prices and technical features at any time with the use of information technology. Following is the key dimensions of e-service quality.
According to Shariq  a website plays delivery channel role and it is very important in usability point of view. Website design plays an important role especially in online business. In case of online business, availability of the information is the most important factor Wolfinbarger and Gilly . Relevant information on the website is also important because it plays a role of salesperson .
Relevant information on website provides an easy way to select a product and save search time . Quality information on websites always motivates users to buy product on internet [25,27-29]. Hence, to provide quality information about products on website is very essential. This study focus is on three main dimensions include contents layout, contents updating, and user friendless adopted by research work of [30-33]. For banks, their internet banking website is important to perform a smooth financial transaction. Thus the following hypothesis generated.
H1: Website design is positively influence on Intention to adopt internet Banking.
In services sector the term assurance means security and credibility that a company provides to its customer . Overall it has been seen that in online environment security and privacy is the main obstacle for the growth of e-commerce. Security concern is much sensitive in online services where customers want privacy . This dimension is incorporated security elements, confirm the purchase process, guaranteeing confidentiality and communicating to customers. It is essential in an online environment and it has been used in different online perspective research studies for instance [27,35-37]. To sum up the overall objective of this dimension is to provide security and confidentiality to customers. Thus the following hypothesis is formulated.
H2: Assurance is positively influence on Intention to adopt internet Banking.
In early days of e-commerce there was a thought that success of the business was dependent only on low prices. However, customer service has proved an essential element in online buying process . Online transaction is very sensitive, what consumer demands quality services like correct and timely transaction, personal attention towards their emails and queries. Hence, website developer must bear in mind that website should fulfill the expectation of the end users.
This dimension is supported and have been explored by several researcher like Liu and Arnett ; Madu and Madu ; Van Riel, Liljander, and Jurriens , Wolfinbarger and Gilly . Customer service is derived from service reliability, personalized service, fast response to complain and customer sensitivity. Hence, the main theory of service quality by Parasuraman, et al.  include following dimensions of service quality: customer knowledge, sensitivity and courtesy. The subsequent SERVQUAL scale by Parasuraman, et al.  include: sensitivity and empathy while, courtesy was moved into trust dimension. For online business customer service is very important. Thus the following hypothesis is formulated.
H3: Customer Service is positively influence on Intention to adopt internet Banking.
H4: Customer Service is positively influence on Customer Loyalty.
What would be a brand in custome ’s point of view what they think about brand is the total accumulation of all his/her experiences and is to build all points of contact with the customer . The brand is the identity of the product and image explains that is brand valuable or not [41,42] explain that brand is as important as product itself it differentiate the product with other products, brand is an emblem or symbol and this symbol motivate the customer to buy their product.
A symbol may be called differently like logo according to the easiness or trademark moreover the key role of a brand is to distinguish a product with other on behalf of quality or service. It creates trust between customer and manufacturer and gives competitive advantages. According to Kapferer  defined that brand is an identity of a product. There are many angles to see a brand for customer it includes overall experience from their buying process to using. Hence brand image comes when customers have overall experience about the brand.
Authors like De Chernatony  narrate that for successful brand image it is important that companies must observe the needs of the customer deeply and it must be relevant what customer actually want and does your product fulfill the need of the customer. According to Aaker, Rahi and Ghani [42,45,46] explained that brand image research emphasize on identity of you product if the product has unique qualities it will attract the customer and will create good brand image. Hence, to maintain the brand identity it is important to maintain consistency about quality and services, research also explain that to attain customer attention via services and quality is the best tool to build strong image in customer minds.
H5: Brand Image is positively influence on Customer Loyalty.
Behavioral Intention towards Internet Banking
Intention is a plan or motivation towards buying a product. According to Zeithaml, Berry, and Parasuraman  postulated that behavioral intention can be captured by such factors for instance purchase intention, word of mouth, loyalty, price sensitivity and complaining behavior.
This study suggest that high level of service quality that perceived by customer always motivate towards favorable behavioral intention while low level of service quality often leads to unfavorable intentions . In views of Rahi and Ghani  stated that behavioral intentions are relevant to custome ’s decision and their desires to stay or switch from company services. With accession to this author like Zhang and Prybutok  emphasized that customer experience is more relevant to behavioral intention. It is said that the more positive custome ’s experience the more likely that your customers will show the intention to buy or use your services. A behavioral intention has been seen as an indicator of system success .
Customer loyalty has been explored in several sectors with different ways. Loyalty is generally defined as a commitment to consistently revisit a site or repurchase an item or service from the same company, despite situational influences and marketing efforts having the potential to cause switching behaviour .
Another, definition of customer loyalty is introduced by Andreassen  postulated that e-loyalty where the custome ’s favourable attitude towards an electronic business, resulting in repeat purchasing. With the emergence of e-commerce researcher has seen e-loyalty more sensitive as compare to loyalty that comes from offline business [45,46].
According to Horppu, et al.  stated that e-loyalty is somewhat different from offline business. Several studies defined e-loyalty as a commitment to consistently revisit a website because of the shopping without switching on others websites [45,46,52-54]. In banking context Rahi and Ghani [45,46] stated that how consistently internet banking users revisit bank website because of financial transaction or to get financial information from bank website (Figure 1).
This study is conducted under positivist paradigm. Becker, et al.  postulated that positivists believe in employing quantitative approaches to data analysis and support objectivity to define their ontological statements. Thus quantitative approach was used to verify the influence of e-service quality and Brand Image on intention of internet banking adoption and Customer Loyalty.
Survey Design and Sampling
A questionnaire was developed for measuring the espondent’s observation. The survey was directed towards customers of commercial Banks in Lahore city of Pakistan. Before conducting the survey, formal letters were written to the respective commercial banks. Where, researcher took the permission to collect the data within bank branches. Convenience sampling method was used in this study. Convenience sampling defined as a process of data collection from population that is close at hand and easily accessible to researcher. Hair  illustrated that convenience sampling allows researcher to complete interviews or get responses in a cost effective way. Comrey and Lee  stated that sample size of 50 is very poor, while 100 is poor, 200 is reasonable, 300 is good, 500 is very good and 1000 is brilliant for structural equation modeling. For this study the required sample size was 500. However, researcher set out to collect data which was slightly larger than the required number. Thus a set of 550 structured questionnaires were distributed out of 500 useable response received from internet banking users.
The survey instrument was consisted on two parts. First part asked about demographic characteristics like region, age, gender, qualification while, second part include six latent construct named website design, assurance, customer service, Brand image, intention to adopt internet banking, and customer loyalty. All the constructs items were adopted from previous research work. Items of Intention adopted from Martins, Oliveira, and Popovič , while Customer Service, Website Design, and Assurance adopted from Cristobal et al. . Lastly Customer Loyalty items adopted from . The items anchored on a 7-point Likert scale (1= strongly disagree to 7 strongly agree)
The demographics of 500 respondents are tabulated in Table 1. Males were (52%) slightly more than females (48%). The age of the respondents 34.4% is for less than 25 years old, 35.6% that counts at age between 26 to 35 years, 18.4% for 36 to 45years and above 46 there are 11.6% respondents. Overall a good mixture of age was directed in this study of internet banking adoption. Data was further analysed with demographic characteristics of education and region.
Table 1: Demographic profile of the respondents.
|Demographic Characteristics||Frequency||Percentage (%)|
|Less than 25 years||172||34.4|
|46 years and above||58||11.6|
|Below high School||16||3.2|
|Attended High School||35||7.0|
Table 1 depicted that 48% respondents that belonged to urban side while, 52 respondents participated from country side. Lastly education of the respondents were measured where only 3.2% respondents were considered below high school education, 7% from those who attended high school, 10.2% respondents who attended college, the maximum share was graduate respondents with 49.8% and finally 29.8% respondents were post graduated and participated in internet banking adoption study.
To analyze the research model Partial Least Square (PLS) analysis technique was employed by using the SmartPLS3.0 software Ringle, et al. . Following two-stage analytical procedure, researcher tested the measurement model (validity and reliability of the measures) and structural model (Hypothesis testing) recommended by Hair Jr, et al. .
Prior to structural modeling study has to assess the measurement model of latent construct for their dimensionality, validity, and reliability by going through the process named as confirmatory factor analysis (CFA). As the study is quantitative in nature, usually C onbach’s (α) is recommended to ensure reliability. Therefore, Composite Reliability (CR) is also preferred Henseler, et al. . Two types of validity approached: Convergent and discriminate validity.
Convergent validity of measurement model is usually ascertained by examining the factor loading, average variance extracted and compost reliability . Figure 2 depicted result where, factor loading values supported by Chin  as recommended threshold level of 0.6. All the values were above than 0.6 that indicates the convergent validity.
The convergent validity was also confirmed through estimation of average variance extracted (AVE) by recommended values of Fornell and Larcker  as it must be greater than 0.5. The average variance extracted that reflects the overall amount of variance in the indicators accounted for latent construct. Further to this measurement model needs to be assess composite reliability. Table 2 depicted composite reliability (CR) degree where the construct indicator represent the latent construct, values exceeded 0.7 recommended by Hair, et al. .
Table 2: Results of measurement model .
|I can log in this portal easily.||0.801|
|This internet banking portal enables me to complete a transaction quickly.||0.875|
|I can complete online transactions easily.||0.768|
|Transactions on this portal site are reliable and credible.||0.868|
|My transaction data are protected by this portal site.||0.863|
|I feel relieved to transact on the internet banking portal.||0.893|
|Internet banking portal performs the service correctly at the first time.||0.867|
|I received prompt responses to my request by e-mail or service line.||0.847|
|When problems occur, the internet banking system guides me to solve them.||0.861|
|Intention to adopt internet Banking||IBA||0.793||0.879||0.707|
|I plan to use the system in the next months.||0.842|
|I intend to consult the balance of my account on the platform of Internet banking.||0.857|
|I intend to perform a transfer on the platform of Internet banking.||0.822|
|I feel that a banks branding services (Internet Banking) possesses its practical function||0.783|
|I feel that a banks branding services (Internet Banking) possesses a positive symbolic meaning.||0.876|
|I feel that a bank branding services (Internet Banking) can relate to the pleasant experience.||0.878|
|I will use Internet Banking product in the future.||0.861|
|I will say positive things about Internet Banking when I talk to my friends or relatives||0.87|
|I will recommend Internet Banking to my friends or relatives when they need the related information||0.867|
The discriminate validity of the measures was examined by following Fornell and Larcker . Discriminate validity is the degree where items differentiate among constructs and measures distinct concepts Fornell and Larcker . It is measured by examining the correlation between the measures of the potential overlapping constructs . According to Compeau, et al.  the average variance shared between each construct and its measure should be greater than the variance shared between the constructs and other constructs. Table 3 showed that the square root of the AVE as showed in bold values on the diagonals were greater than the corresponding row and column values that indicates the measures were discriminate.
Table 3: Discriminate validity of measurement model.
|Brand Image (BI)||0.48||0.847|
|Customer Loyalty (CL)||0.827||0.44||0.866|
|Customer Service (CS)||0.303||0.313||0.304||0.858|
|Website Design (WD)||0.339||0.5||0.299||0.383||0.366||0.816|
Note: Bold values indicate the square root of AVE of each construct
Discriminate validity can be measured by examining the cross loading of the indicators Hair, et al. . It can be done by comparing an indicato ’s outer loadings on the associated constructs and it should be greater than all of its loading on the other constructs . Table 4 depicts that all the items measuring a particular constructs loaded higher on that construct and loaded lower on the other constructs that confirms the discriminate validity of the constructs.
Table 4: Loading and cross loadings.
|Intention to Adopt||0.31||0.278||0.268||0.329||0.842||0.308|
|Intention to Adopt||0.262||0.256||0.237||0.333||0.857||0.291|
|Intention to Adopt||0.243||0.247||0.2||0.328||0.822||0.323|
Structural Model Evaluation
Measurement model was achieved after conducting validity and reliability analysis. Further, the hypothesis developed for this study was tested by running a bootstrapping procedure with a resample of 5000, as suggested by Hair . The results in Table 5 depicts path coefficient of respective constructs with its level of significance. The hypothesis results revealed that all five hypotheses have significance relationship with their respective endogenous variables. The relationship between website design to Intention to adopt internet banking has supported by H1: (β = 0.207, p< 0.01).Next, the relationship between Assurance and intention to adopt internet banking is supported by H2: (β = 0.175, p< 0.01). H3 showed that customer service is positively related with Intention to adopt internet banking by (β = 0.26, p< 0.01). Relationship between customer service to customer loyalty is supported by H4: (β = 0.184, p< 0.01). Finally, the results of H5, where the relationship between brand image to customer loyalty is supported by (β = 0.382, p< 0.01).
Table 5: Results of structural model analysis (Hypothesis Testing).
|H1||WD -> Intention||0.207||0.04||5.171||***||Significant|
|H2||ASS -> Intention||0.175||0.041||4.238||***||Significant|
|H3||CS -> Intention||0.26||0.039||6.595||***||Significant|
|H4||CS -> CL||0.184||0.048||3.847||***||Significant|
|H5||BI -> CL||0.382||0.046||8.279||***||Significant|
Note: Significance level where, * p <0.1, **p < 0.05, ***p < 0.01.
The R2 for intention to adopt internet banking was 0.235 and for customer loyalty 0.224, which was acceptable based on the cut-off suggested by Cohen . Researcher also assessed the effect size of (f2). As suggested by Cohen  P value can show you that effect exist however it does not reveal the size of the effect. In Table 6 effect size of (f2) can be seen where hypothesis H1 to H4 has small effect size while H5 has medium effect size as suggested by Cohen . Further to this researcher also assessed predictive relevance of the model by using the blindfolding procedure. Blindfolding procedure should only be applied to endogenous constructs that have a reflective measurement . If the Q2 values are greater than 0 it showed that model has predictive relevance for a certain endogenous construct [66,68]. Table 6 showed that the values of Q2 are greater than 0 that depicts the proposed model has significant predictive relevance.
|H1||WD -> Intention||0.045||Small|
|H2||ASS -> Intention||0.034||Small|
|H3||CS -> Intention||0.072||Small|
|H4||CS -> CL||0.039||Small|
|H5||BI -> CL||0.17||Medium|
f2 : 0.02, small; 0.15, medium; 0.35, large
Internet banking is becoming prevalent and competing banks have limited ways to feat in establishing a differentiation . Improvements in quality service can only be achieved when it can be measured in its first place. Delivering a superior service quality as compared to competitors offers an opportunity to banks to achieve a competitive differentiation . The fact that effective measurement of service quality can be very useful when the allocation of resources and the segmentation of customer is well documented. All these arguments combined have led to service quality measurement in internet banking becoming an area of growing interest to research. Furst, et al.  stated that the profitability of the banks by using internet banking was higher than nonusers of internet banking. Internet banking is creating new marketing opportunities and improving customer loyalty Rahi 4,5]. In Pakistani banking sector there is a great need to identify the factors that effects adoption of internet banking . By following above arguments this study explore the e-service quality dimensions towards adoption of internet banking in Pakistan. Website design, assurance, and customer service has collective 23% impact on intention of internet banking adoption.
Thus we can infer that a bank should design the website with adequate and precise information content. H2 is supported to behavioral intention to adopt internet banking where we can imply that by giving a guarantee or assurance Pakistani banks can attract more customers towards adoption of internet banking. Customer service has proved an essential element in online buying process Zeithaml . By supporting this argument it can be seen in H3 and H4 where customer service is influencing on intention to adopt of internet banking with this it also has supporting relationship with customer loyalty. To maintain the brand identity it is important to maintain consistency about quality and services. Previous research by Rahi et al.  also explained that to attain customer attention by providing unique services is the best tool to build strong image in customer minds. Hypothesized relationships of both H4 and H5 are supported where banks brand image and customer service collectively influence on customer loyalty with a variance of 22%. The relationship between e-customer services and internet banking adoption reveal that by improving e-customer service banks can get more and more internet banking users. To sum up, we can conclude that website design, assurance customer service, and brand image are the most influential factors that can derive customers towards internet banking adoption and customer loyalty.
Future research can apply this model in other developing countries to contrast and compare the factors that affect the internet banking adoption. Second, the variables selected in this study may not include all the variables that affect internet banking adoption. Using other variables derived from technology acceptance theory or theory of planned behaviors researchers can observe the behavioral intention of internet banking users.
This study is cross-sectional in its nature and measures the internet banking use ’s behavior at one point in time that may be less significant as compare to longitudinal study.