Journal of Internet Banking and Commerce ISSN: 1204-5357
ISSN: 1204-5357
+44-175-271-2024Norizan M. Kassim, University of Qatar, Qatar
Web: http://www.qu.edu.qa
Email: norizanmk@qu.edu.qa
Norizan Kassim is an Assistant Professor of Marketing in the Department of Management and Marketing, College of Business and Economics of Qatar University. Her research interests include services marketing, service innovation and innovativeness of organizations. She has published many research papers, among others, in Journal of Business Research, Asia Pacific Business Research and Singapore Management Review.
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Financial liberalization and technology revolution have allowed the developments of new and more efficient delivery and processing channels as well as more innovative products and services in banking industry. Banking institutions are facing competition not only from each other but also from non-bank financial intermediaries as well as from alternative sources of financing, such as the capital markets. Another strategic challenge facing banking institutions today is the growing and changing needs and expectations of consumers in tandem with increased education levels and growing wealth. Consumers are becoming increasingly discerning and have become more involved in their financial decisions. For this reason, they are demanding a broader range of products and services at more competitive prices through more efficient and convenient channels. This study investigates the discrepancy between customer's expectation and perception towards the e-banking services.
Established in 1993, Qatar Central Bank (QCB) sets monetary policy, issues currency, manages foreign exchange reserves, supervises the banking system, and acts as a banker and a financial adviser to the government. In February 2001, QCB removed its ceiling on interest rates for local current deposits, thereby freeing the banking system from all interest rate policy restrictions.? There are no exchange control regulations in force, but movement of money in and out of local accounts is monitored. There are 15 banks in Qatar, seven of which are Qatari owned institutions, including five commercial banks and two Islamic institutions (see Table 1). Apart from local banking groups, there are seven foreign banks in Qatar. A specialized government owned institution (Qatar Industrial Development Bank) was established in 1997 to provide financing to small and medium scale industries. The majority of the bank institutions in Qatar extend standard individual banking facilities and most offer 24-hour access to account through Automated Teller Machines (ATM) and some via telephone (fixed and mobile), Internet banking or through call centers.
Table 1: List of the financial institutions in Qatar
Against this backdrop, a number of challenges have emerged. Foremost amongst these is the growing and changing needs and expectations of consumers in tandem with increased education levels and growing wealth. For this reason, they are demanding a broader range of products and services at more competitive prices through more efficient and convenient channels. As such, it is equally important for banking institutions to complement the richer and more customized range of product offerings with higher levels of service performance. Thus, the primary objective of this study was to investigate the impact of electronic banking (e-banking) services on customer's perception of the service quality.
In Qatar, e-banking is very much in its infancy. For example, the current level of ATM penetration in Qatar (i.e. 20 ATMs per 100, 000 inhabitants) is still low compared to the UK and USA (61 and 114 ATMs per 100,000 inhabitants respectively)(MEFTEC, 2004). In fact, only 20% of banks in the Middle East region (including the GCC countries) provide full transactional e-capacity. However, this number is expected to rise as more banks are spending between 25%-30% of their IT budgets on Internet and web-related banking technologies.
In the retail banking services area, most models of customer evaluations of services focus on the comparative judgment of expectations versus perceived performance resulting in the two major evaluative judgments of perceived service quality and customer satisfaction (Bloemer et al., 1998; Murphy, 1996; Smith, 1992). For example, customers assess service quality by comparing their expectations prior to their service encounter with a bank (employee), develop perceptions during the service delivery process and then compare their perceptions with the actual service received from the bank employee. Thus, customer expectations are unique, individual constructs which, prior to a service, influence customer's evaluation of service performance and customer satisfaction.
Services, by definition, are intangible and easily duplicated. They can be divided into high-touch or high-tech services. High-touch services are mostly dependent on people in the service process producing the service, whereas high-tech services are predominantly based on the use of automated systems, information technology and other types of physical resources. However, one should always remember that high-touch also includes physical resources and technology-based systems that have to be managed and integrated into the service process in a customer-oriented fashion (Gronroos, 2001). Thus, in this study, e-banking services include both high-tech and high-touch services. For example, high-tech services include Internet/Telephone/Short Messaging Service (SMS), ATM machines whereas high-touch services consist of instructions and personnel assistance in using the services.
Quality is differentiable and stem from the expectations of customers. Hence, it is necessary to identify and prioritize expectations for service and incorporate these expectations into a process for improving service quality (Kassim and Bojei, 2001; Goodman et.al., 1986). Implementing and evaluating service quality is a very complex process. Two aspects need to be taken into consideration when evaluating service quality: content and delivery (Zeithaml and Bitner, 1996). Customers may be in the best position to evaluate the quality of delivery, while the service providers are the best judges of the content of the message. Though there is a number of a different aspect of services involved, this study focuses on only one: the perceptions of e-banking users as to the quality of the services.
Sample and data collection
The sample in this study consisted of respondents who are users of the e-banking services. A data set to test the proposed model came from self-administered survey of a convenience sample of retail banking customers. A questionnaire was distributed to 100 retail-banking customers in Doha. Out of a total of 100 questionnaires, only 62 were useable. A cross-sectional survey design was adopted which questioned respondents on e-banking services. The design of the questionnaire was based on a multiple-item measurement scale (e-banking services). The questionnaire consisted of three parts. The first part consisted of general information pertaining to the respondent's service provider. The second part was based on the respondent's expectations and perceptions of the e-banking services. This part was important because it measured the respondent's attitude, opinion, perception and knowledge about the e-banking services. Items related to the e-banking services were developed through discussions with five officers from the banking industry who were experts in this area and five retail banking customers. Five items were identified and measured on a four-point Likert scale (1 = low/poor to 4 = high/good). The Cronbach alpha for this scale was 0.90. Finally, the third part consisted of the respondent's seven demographic variables.
Respondent profile
The characteristics of the sample shown in Table 2 respondents were almost evenly split by nationality (59.7 per cent Qatari and 40.3 per cent residence permit) and gender (40. 3 per cent female and 59.7 per cent male). The majority of the respondents were between 22 to 30 years of age (50 per cent), followed by the age groups of between 41 to 50 years (17.7 per cent). About 61.3 per cent of the respondents were better educated with a bachelor's degree.
Table 2: Sample characteristics (N=62)
Expectation and perception of the service quality
Investigating the expectation and perception of the quality of service (Table 3), customer gave the highest score of 3.26 for the functionality of the ATM machines. Meanwhile, the lowest score of 2.83 was for the e-banking services. Compared to the perception of the quality of service, the customers collectively gave the highest score of 3.18 for the availability of the ATM machines. The lowest score of 2.70 was given to the role of bank personnel in assisting the customers with the e-banking services.
Table 3: Comparison of mean responses for expectation, perception, and gap scores among users of e-banking services
Gap score among the five items
SERVQUAL method developed by Parasuraman et. al. (1985) was used to calculate the difference in the score between the five items. The negative score indicated the existence of service quality gap, where customers were not having their expectations met by actual service performance (Table 3). The findings from Table 3 showed that there were some differences in magnitude of gap score among the five items of the e-banking services: Internet/Telephone/SMS, personnel assistance, instructions, ATM machines and functionality of the ATM machines. The result also showed that one item of e-banking services had positive gap score, that is, the quality of the Internet/Telephone/SMS banking services (0.05). All the other four items indicated that the quality of service fell short of the customer's expectation; the customers were generally not satisfied with the service providers. Nevertheless, each item of quality of the e-banking services showed differences with respect to the size and gap score. The list of the five items could be ranked from the biggest score to the smallest score. The summary of the ranking of the five items used to measure the ebanking service quality from customer's perspective is presented in Table 3.
Next, a simple t test was conducted in order to gain deeper and more comprehensive insights into the mean differences between perception and expectation levels of the e-banking service quality. The results in Table 4 show customers' perception of the e-banking service quality did not meet their expectations. Moreover, the priority or rank ordering as indicated in Table 3 showed that "instructions" as being the most important item, followed in turn by "personnel assistance", "functionality of ATM machine", "ATM machines" and "Internet/Telephone/SMS".
Table 4: Differences in means between perception and expectation levels of e-banking service quality
The findings of this study provide initial direction in determining the optimum service quality attributes pertaining to e-banking services. The largest discrepancies between what were expected by the customers and what were delivered by the bank were found in the availability of the instructions and personnel assistance on how to use the e-banking services and the functionality of the ATM machines. This is alarming because human interactions occur so seldom and when they occur they do so in critical situations. If these high-touch interactions of the high-tech service process fail, there are fewer opportunities to recover the mistake than in high-touch service processes. Indeed, based on the nature of the relationship with customers, banking services involve a continuous flow of interactions between the customer and the service provider. Thus, bank managers should invest resources to enhance overall service quality. Management and employees should strive to find out what customers expect (in terms procedure handling, efficiency, accessibility and updated information about products and services) when designing strategies to enhance overall service quality. This implies an extensive and continuous training program a bank needs to carry out for its employees.
In conclusion, to compete more efficiently and effectively in the marketplace, a banking institution must be sensitive to meeting customers' expectations to the availability of the instructions and personnel assistance on how to use the e-banking services and to the functionality of the ATM machines. Despite the need for more studies in this area, i.e. the effect of management and customers' expectation level, the results of this study provide critical information which banking institutions can use for promoting their services.
There are two limitations in the study that should be considered when interpreting the results and implications. First of all, an expected language problem might also limit the respondents having full understanding of the questionnaire. Secondly, the sample size was small.
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