ISSN 1822-6760. Management theory and studies for rural business and infrastructure
development. 2011. Nr. 2 (26). Research papers.
INTERNET BANKING QUALITY: MARKETING POSSIBILITIES AND
CUSTOMERS’ LOYALTY
Hermanis Rullis, Biruta Sloka
University of Latvia
Purpose of the research is to identify customers’ satisfaction with internet banking quality
and customers’ loyalty. Internet banking is bank’s innovative product that has positive influence on
environment, i.e., it provides possibility to save paper, energy and other resources and as result to
decrease carbon footprint and to provide other business with possibility for sustainable development. Internet banking quality is important factor that influence adoption of internet banking and
customers’ loyalty. Research results identified that internet banking users are satisfied with internet
banking reliability, internet banking usability, internet banking quality. They have also positive attitude regarding internet banking and they are willing to recommend it. Internet banking quality cannot be considered as factor that hinders adoption of internet banking and use of internet banking as
environment for marketing. Research methods used: literature review, survey methods, descriptive
statistics, factor analysis.
Keywords: internet banking, customer’s loyalty, marketing research, quality.
JEL codes: M300; M310.
Introduction
Sustainable development usually is associated with environmental, social and
economical issues. “Brundtland report”, Our Common Future (Brundtland, 1987)
provided definition of sustainable development as development that “implies meeting
the needs of the present without compromising the ability of future generations to
meet their own needs”.
Since most of banking products are intangible and due to specific of banking
operations there is not obvious influence of banking institutions on sustainable development for average person, but it is not so simple. There are at least two ways of sustainable development integration into the banking institutions: bank's environmental
and social responsibility that manifests as environmental initiatives and socially responsible initiatives; and integration of sustainability into a bank's core businesses (integration of environmental and social considerations in products’ strategy, design,
etc.). Integration of sustainability into a bank's core businesses can facilitate bank’s
support to environmentally and socially responsible, innovative and sustainable companies. Leading banks around the world (such as SEB, UniCredit Bank, Nordea, DnB
Nor, etc.) have adopted “Equator Principles” on project financing that suppose assessing and handling environmental and social impacts when bank engage in project financing transactions (The Equator Principles, 2011). It is obvious evidence of banks’
engagement in issues related to sustainable development.
Internet banking is bank’s innovative product that can provide input in both already mentioned ways: internet banking has positive influence on environment, i.e., it
provides possibility to save paper, energy and other resources and as result to decrea193
se carbon footprint; and “provide the means for sustainable development of other businesses” (Sakalauskas, 2009).
Importance of internet banking for bank’s operations supports also its possibility to provide environment for marketing. Bank can get benefit of internet baking only
if it is adopted by customers. Adoption of internet banking is influenced by internet
banking quality that also facilitates customers’ loyalty. B. Enguist, B. Edvardsson and
S. P. Sebhatu (2007) argued that a service should correspond to customers’ expectations and satisfy their needs and requirements.
Purpose of the research is to identify customers’ satisfaction with internet banking quality and customers’ loyalty. Research results extend knowledge in the field of
science and give practical contribution that can be used by professionals to improve
bank marketing practice.
Research methods used: literature review, survey methods, descriptive statistics (mean, mode, median, indicators of variability) and factor analysis.
Theoretical background
Internet banking could become a widely adopted method for disseminating information and exchanges in the near future (Gan, 2006). Internet bank provides environment for marketing (public relations, advertising, promotion, direct marketing,
etc.). Z. Liaoa and M. T. Cheung (2002) argued that a major force behind these developments is technology. C. B. Ho and W. Lin (2010) argued that information technology is a tool to achieve competitive advantage and has been developing rapidly in
recent years. Marketing possibilities within internet bank have become available due
to rapid development of information and communication technologies and have not
been researched enough.
There is possibility to use internet bank for marketing purposes if customers
have adopted it. In order to facilitate adoption of internet banking there should be
identified and eliminated factors that hinder it.
Internet banking adoption has been topical subject of research at least for last ten
years (Malhotra, 2010; Branca, 2008; Centeno, 2004; Jayawardhena, 2000). Researchers have paid a lot of attention also to issues related to internet banking quality (Bauer,
2005; Broderick, 2002; Jun, 2001). There were identified significant relationships
among online customer service quality, online information system quality, banking
service product quality, overall internet banking service quality and customer satisfaction (Rod, 2009). The service quality is the dominant variables that influence consumers’ choice of electronic banking (Gan, 2006). Customers’ loyalty and willingness to
recommend it depends on customers’ satisfaction with internet banking. Customers’
satisfaction with internet banking is influenced by its quality. M. S. Sohail and N. M.
Shaikh (2008) identified that the users of internet banking services have been satisfied
with such variables as protection of banking information, personal information and
feeling a sense of security. V. S. Chau and L. W. L. C. Ngai (2009) identified that there
is a positive impact of internet banking service quality on satisfaction and loyalty. Y.
K. A. Migdadi (2008) argued that internet banking service quality may differ as a result
194
of different country context. There is not done enough scientific research regarding
internet banking quality and customers’ loyalty in Latvia.
Authors adopted a multiple item scale for measuring internet banking service
quality developed by C. B. Ho and W. Lin (Ho, 2010). There are five dimensions in
the measurement scale for measuring the service quality of internet banking: customer service, web design, assurance, preferential treatment, and information provision.
Questions for internet banking user have been united in following dimensions
that are created by using also already mentioned measuring scale: internet banking reliability, internet banking usability, internet banking service quality, internet banking
quality.
Research authors have identified customers’ satisfaction with internet banking
quality and customers’ loyalty.
Research results
Research authors conducted internet bank users’ survey in Latvia in 2010. Survey was sent to 1,273 private persons and there were received valid 873 responses.
For survey there was chosen only current internet banking users because none users
could not answer to these questions. Following questions were asked:
Please evaluate internet banking reliability
1. Internet banking transactions are precise (Precise transactions)
2. Internet banking is safe (Safe)
3. I am familiar with possibilities provided by internet banking (Familiar)
4. I feel comfortable with internet banking (Convenient)
5. I have positive experience with internet banking (Positive experience).
Please evaluate internet banking usability
6. Internet banking navigation is simple (Navigation is simple)
7. Internet bank has nice appearance (Attractive design)
8. Internet banking design is appropriate for such site (Appropriate design)
9. Internet banking leaves impression of competence (Sense of competence)
10. Internet banking creates sense of individualizations (Customization)
11. Links within internet bank are valid (Links are valid)
12. Internet banking pages open fast (Works fast)
13. Internet banking provides easy access to bank transactions (Easy access).
Please evaluate internet banking service quality
14. Bank responds quickly to questions sent via internet bank (Quick response)
15. Internet bank provides all necessary information to solve problems (Support information available)
16. Internet banking service is faster than at the branch (Fast service).
Please evaluate your satisfaction with internet banking quality
17. I am satisfied with internet banking quality (Satisfied with quality).
Please evaluate your attitude regarding internet banking
18. I have positive attitude regarding internet banking (Positive attitude)
19.I can recommend my internet bank to others (Can recommend).
Respondents were asked to evaluate mentioned above factors in the scale 1 –
10 where 1 is no importance and 10 is very important.
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Survey results regarding internet banking reliability are presented in the Table 1.
Table 1. Internet banking reliability
Precise
Positive
Safe
Familiar
Convenient
transaction
experience
N
Valid
872
871
873
873
872
Missing
1
2
0
0
1
Mean
8.81
8.00
7.64
8.65
8.84
Std. Error of Mean
0.048
0.063
0.061
0.051
0.049
Median
9.00
8.00
8.00
9.00
9.00
Mode
10
9
8
10
10
Std. Deviation
1.418
1.864
1.812
1.506
1.453
Variance
2.011
3.476
3.285
2.268
2.110
Range
9
9
9
9
9
Minimum
1
1
1
1
1
Maximum
10
10
10
10
10
Source: Research authors’ conducted survey among internet banking users in Latvia in 2010
(n=873)
Survey results in the Table 1 indicate that almost all respondents recognize following: internet banking transactions as precise (Mode 10, Median 9.00, Mean 8.81),
internet banking is safe (Mode 9, Median 8.00, Mean 8.00), respondents are familiar
with possibilities provided by internet banking (Mode 8, Median 8.00, Mean 7.64),
respondents feel comfortable with internet banking (Mode 10, Median 9.00, Mean
8.65), respondents have positive experience with internet banking (Mode 10, Median
9.00, Mean 8.84). Survey results regarding internet banking usability are presented in
the Table 2.
Table 2. Internet banking usability
N
Navigation is
simple
873
0
8.04
Attractive
design
871
2
7.99
Appropriate
design
870
3
8.23
Sense of
competence
866
7
8.16
Valid
Missing
Mean
Std. Error of Me0.054
0.055
0.054
0.055
an
Median
8.00
8.00
8.00
8.00
Mode
8
8
8
8
Std. Deviation
1.590
1.620
1.597
1.622
Variance
2.529
2.625
2.550
2.630
Range
9
9
9
9
Minimum
1
1
1
1
Maximum
10
10
10
10
Source: Research authors’ conducted survey among internet banking users in Latvia in 2010
(n=873)
Survey results in the Table 2 indicate that almost all respondents have alike
opinions – they recognize following: internet banking navigation is simple (Mode 8,
Median 8.00, Mean 8.04), internet bank has nice appearance (Mode 8, Median 8.00,
196
Mean 7.99), internet banking design is appropriate for such site (Mode 8, Median
8.00, Mean 8.23), internet banking leaves sense of competence (Mode 8, Median
8.00, Mean 8.16).
Table 2 (Continue). Internet banking usability
Links are
Works fast
Easy access
valid
N
Valid
868
868
862
870
Missing
5
5
11
3
Mean
7.43
8.49
8.23
9.01
Std. Error of Mean
0.074
0.052
0.058
0.044
Median
8.00
9.00
9.00
9.00
Mode
8
10
9
10
Std. Deviation
2.181
1.539
1.716
1.302
Variance
4.755
2.368
2.946
1.696
Range
9
9
9
9
Minimum
1
1
1
1
Maximum
10
10
10
10
Source: Research authors’ conducted survey among internet banking users in Latvia in 2010
(n=873)
Customization
Survey results in the continue of Table 2 indicate that almost all respondents
recognize following: internet banking creates sense of individualizations (Mode 8,
Median 8.00, Mean 7.43), links within internet bank are valid (Mode 10, Median
9.00, Mean 8.49), internet banking pages open fast (Mode 9, Median 9.00, Mean
8.23), internet banking provide easy access to bank transactions (Mode 10, Median
9.00, Mean 9.01).
Survey results regarding internet banking service quality, satisfaction and loyalty are presented in the Table 3.
Table 3: Internet banking service quality, satisfaction and loyalty
855
18
6.13
Support
information available
872
1
6,52
0.114
0.103
0.047
0.049
0.042
0.058
7.00
8
3.331
11.094
10
0
10
7.00
8
3.035
9.209
10
0
10
10.00
10
1.386
1.922
9
1
10
9.00
10
1.441
2.076
9
1
10
10.00
10
1.245
1.550
9
1
10
9.00
10
1.718
2.952
9
1
10
Quick
response
N
Valid
Missing
Mean
Std. Error of Mean
Median
Mode
Std. Deviation
Variance
Range
Minimum
Maximum
Fast service
Satisfied
with quality
Positive
attitude
Can recommend
862
11
9.18
869
4
8.53
872
1
9.24
867
6
8.57
197
Survey results in the Table 3 indicate that almost all respondents recognize following: bank responds quickly to questions sent via internet bank (Mode 8, Median
7.00, Mean 6.13, there is rather big variability of respondent’s views), internet bank
provides all necessary information to solve problems (Mode 8, Median 7.00, Mean
6.52), internet banking service is faster than at branch (Mode 10, Median 10.00, Mean 9.18), respondents are satisfied with internet banking quality (Mode 10, Median
9.00, Mean 8.53), respondents have positive attitude regarding internet banking (Mode 10, Median 10.00, Mean 9.24 variability of respondent’s views is low), respondents can recommend their internet bank to others (Mode 10, Median 9.00, Mean
8.57, variability of responses is low).
Research authors performed factor analysis by using orthogonal rotation. Table
4 shows the rotated factor matrix which is a matrix of the factor loading for each variable onto each complex factor.
Table 4. Rotated Component Matrixa
Component
1
2
3
Internet banking provide easy access to bank transactions
0.248
0.028
0.811
Internet banking service is faster than at the branch
0.094
-0.057
0.781
I feel comfortable with internet banking
0.388
0.066
0.777
I have positive experience with internet banking
0.363
0.038
0.777
I have positive attitude regarding internet banking
0.294
0.004
0.731
Internet banking transactions are precise
0.282
0.033
0.718
Internet banking is safe
0.352
0.032
0.604
I am familiar with possibilities provided by internet banking
0.310
0.139
0.559
I can recommend my internet bank others
0.053
0.553
0.569
Internet bank has nice appearance
0.262
0.035
0.850
Internet banking design is appropriate for such site
0.254
-0.015
0.837
Internet banking leaves sense of competence
0.313
0.021
0.819
Internet banking navigation is simple
0.380
0.052
0.726
Internet banking creates sense of individualizations
0.142
0.098
0.725
Links within internet bank are valid
0.475
0.038
0.652
Internet banking pages open fast
0.375
0.041
0.636
I am satisfied with internet banking quality
0.563
0.046
0.601
Bank respond quickly to questions sent via internet bank
0.046
0.026
0.898
Internet bank provides all necessary information to solve problems
0.028
0.081
0.896
Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 5 iterations.
Source: Research authors’ conducted survey among internet banking users in Latvia in 2010
(n=873)
Research authors identifies following complex factors (components): 1. component – reliability; 2. component – quality; 3. component – support. The discovered
research results could be useful for bank marketing managers.
198
Conclusions
Internet banking is bank’s innovative product that has positive influence on
environment, i.e., it provides possibility to save paper, energy and other resources and
as result to decrease carbon footprint and to provide other business with possibility
for sustainable development.
Importance of internet banking for bank’s operations supports also its possibility to provide environment for marketing. Bank can get benefit of internet baking only
if it is adopted by customers.
Internet banking quality is important factor that influence adoption of internet
banking and customers’ loyalty. Research results identify that:
• internet banking users are satisfied with internet banking reliability, internet
banking usability, internet banking quality;
• they have also positive attitude regarding internet banking and they are willing to recommend it. It proofs customers’ loyalty.
Internet banking quality cannot be considered as factor that hinders adoption of
internet banking and use of internet banking as environment for marketing.
In order to improve service quality in banking sector there should be done additional research that would identify current state of internet banking products adoption. Research results would allow to increase internet banking service quality and as
result facilitate a switch of customers from branches to internet banking.
References
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INTERNETINĖS BANKININKYSTĖS KOKYBĖ:
RINKODAROS GALIMYBĖS IR KLINTŲ LOJALUMAS
Hermanis Rulis, Biruta Sloka
Latvijos universitetas
Tyrimo tikslas – išanalizuoti klientų, naudojančių internetinės bankininkystės paslaugas, pasitenkinimo ir lojalumo laipsnį. Tikslui pasiekti buvo naudoti mokslinės literatūros analizės, internetinės bankininkystės vartotojų apklausos, statistikos ir veiksnių analizės metodai. Tyrimo rezultatai rodo, kad internetinės bankininkystės vartotojai yra patenkinti šios paslaugos patikimumu, patogumu ir kokybe bei pasiruošę šią paslaugą rekomenduoti. Internetinė bankininkystė yra šiuolaikinė
banko teikiama paslauga, kuri yra palanki supančiai aplinkai ir formuoja kitų įmonių darnaus vystymosi prielaidas.
Raktiniai žodžiai: internetinė bankininkystė, klientų lojalumas, rinkodaros tyrimai, kokybė.
JEL kodai: M300, M310.
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