AN ASSESSMENT OF INTERNET BANKING SERVICE QUALITY

by

MASOPHA NEHEMIA MOLAPO

Short dissertation

Submitted in partial fulfilment of the requirements of the degree

MASTER COMMERCII

in

Business Management

at

UNIVERSITY OF JOHANNESBURG

STUDY LEADER: Mr C. SCHEEPERS

October 2008

JOHANNESBURG

i

Abstract

Extensive studies have been done in the past on measuring service quality where the

service is delivered on a face-to-face encounter. This study assesses and measures

online service quality where there is no face-to-face encounter. The service quality

measures are particularly on Internet Banking service. The research problem has

been stated as the lack of insight into customer perceptions on Internet Banking

service quality by management in South African banks. The purpose of this study was

to explore customers’ perceptions on key electronic service dimensions or factors of

Internet Banking service quality. The primary objective of the study was to have an

insight into how Internet Banking customers in South Africa perceive their respective

banks’ performance on pre-defined electronic service quality dimensions. The

secondary objective was to determine if there was any difference in Internet Banking

service quality perception based on age, gender, or primary bank offering the service

(service provider).

Even though online shopping and Internet Banking are online services there are

subtle differences between the two services. With online shopping there is a physical

item that gets traded and in Internet Banking only services are traded. It is for this

reason that the original E-S-Q instrument was slightly adjusted. Some of the

dimensions that were excluded from the original E-S-Q instrument include flexibility,

price knowledge and customization

Given the purpose and objectives of the study a quantitative approach was taken as

the major research approach for the study. The sampling design was a non-

probability sampling one because the convenience method of sampling was used.

The survey population was all online banking users, utilizing services from South

African banks. A slightly revised electronic service quality (E-S-Q), a service quality

measurement instrument, was used in this study. Data was collected via a web based

self administered survey. The original E-S-Q instrument measured customer service

quality from an online shopping experience point of view. This study aimed at

gleaning respondents’ perceptions on key Internet Banking service dimensions.

The study involved collecting primary data through a structured survey questioning

which was followed by statistical analysis of the data. The objective was to generalise

about online banking customers’ perceptions on the quality of Internet Banking

ii

service. To collect primary data the Internet survey method was used. In essence, the

combination of the quantitative approach and the survey method was utilised in this

study.

The findings and conclusion of the study is that the overall respondents’ perception on

Internet Banking service quality was a satisfactory one. The Internet Banking service

quality perceptions are not influenced by who the service provider is, age or gender.

Respondents’ perceptions were neutral or indifferent on the responsiveness service

quality dimension. Lastly there were five dimensions that the respondents evaluated

Internet Banking service quality on, that of efficiency, performance, security,

responsiveness and contact.

iii

Declaration of Original Work

AFFIDAVIT: MASTER’S AND DOCTORAL STUDENTS TO WHOM IT MAY CONCERN

This serves to confirm that I Masopha Nehemia Molapo

ID Number 6112025743086

Student number 200610108 enrolled for the

Qualification: M.Com

Faculty: Business Management

Herewith declare that my academic work is in line with the Plagiarism Policy of the

University of Johannesburg which I am familiar with. I further declare that the work

presented in the minor dissertation is authentic and original unless clearly indicated

otherwise and in such instances full reference to the source is acknowledged and I do

not pretend to receive any credit for such acknowledged quotations, and that there is

no copyright infringement in my work. I declare that no unethical research practices

were used or material gained through dishonesty. I understand that plagiarism is a

serious offence and that should I contravene the Plagiarism Policy notwithstanding

signing this affidavit, I may be found guilty of a serious criminal offence (perjury) that

would amongst other consequences compel the UJ to inform all other tertiary

institutions of the offence and to issue a corresponding certificate of reprehensible

academic conduct to whomever requests such a certificate from the institution.

Signed at Johannesburg on this 17 day of March 2009. Signature__________________________________ Name: Masopha Molapo STAMP COMMISSIONER OF OATHS Affidavit certified by a Commissioner of Oaths This affidavit conforms with the requirements of the JUSTICES OF THE PEACE AND COMMISSIONERS OF OATHS ACT 16 OF 1963 and the applicable Regulations published in the GG GNR 1258 of 21 July 1972; GN 903 of 10 July 1998; GN 109 of 2 February 2001 as amended.

iv

Acknowledgements

First and foremost I would like to thank my saviour, the Almighty God, for His love and

guidance, for granting me the strength to persevere and the ability to succeed.

Secondly I would like to express my sincere gratitude to my wife Thuso, my children

Khanyapa, Thato and Refiloe, for their love, understanding and patience they gave

me when I could not spend quality time with them during my studies. I am also

thankful to my brothers and sisters for the encouragement and support they gave me

during these trying times.

Lastly I would also like to express my gratitude to the following persons:

• Mr. Cor Scheepers for his supervision, advice, guidance and support.

• Professor Adele Thomas for her encouragement and continued drive in

assisting me to complete this dissertation.

• My friends, colleagues, business partners and my family for being available as

a sounding board in the process of writing this dissertation.

• My language editor, Mr Patrick Radebe, for his editorial work on this document.

• All those who participated in the survey, without whom this study would not

have been possible.

• University of Johannesburg statistical services (STATKON) for assisting me in

designing, hosting the online survey and completing the statistical analysis.

v

TABLE OF CONTENTS Page

Abstract.......................................................................................................................i

Declaration of Original Work................................................................................... iii

Acknowledgements.................................................................................................. iv

Chapter ONE..............................................................................................................1

INTRODUCTION.........................................................................................................1

1.1 Background of the study ...............................................................................1

1.1.1 Historical background .............................................................................1

1.1.2 Banking and technology..........................................................................2

1.1.3 Internet service quality ............................................................................3

1.1.4 Internet Banking......................................................................................4

1.2 Problem statement: .......................................................................................5

1.3 Objective / purpose .......................................................................................6

1.4 A brief outline of the research methodology..................................................6

1.4.1 The research methodology .....................................................................6

1.4.2 The research population .........................................................................6

1.4.3 The sampling method .............................................................................6

1.4.4 Data Collection........................................................................................6

1.5 An outline of the remainder of the dissertation..............................................7

1.6 Conclusion ....................................................................................................8

Chapter TWO .............................................................................................................9

LITERATURE REVIEW ..............................................................................................9

2.1 Introduction. ..........................................................................................................9

2.2 Traditional Services ....................................................................................10

2.2.1 Definition and characteristics of services ..............................................10

2.2.2 Traditional service quality......................................................................11

2.2.3 SERVQUAL ..........................................................................................16

2.2.4 Traditional banking service quality ........................................................17

2.3 Electronic Services (e- Services) ................................................................18

2.3.1 Definition and characteristics of e-Services ..........................................18

2.3.2 Electronic Service quality ......................................................................20

2.3.3 Understanding and measuring e-Service quality...................................23

2.4 Online systems quality ................................................................................24

2.4.1 Definition of online systems quality .......................................................24

2.4.2 Characteristics of online systems quality ..............................................25

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2.4.3 Measuring online systems quality .........................................................26

2.5 Internet Banking..........................................................................................30

2.5.1 Definition of Internet Banking................................................................30

2.5.2 Characteristics of Internet Banking .......................................................30

2.5.3 Internet Banking Service quality............................................................33

2.5.4 Measuring Internet Banking service quality...........................................35

2.6 Conclusion ..................................................................................................35

Chapter THREE .......................................................................................................38

RESEARCH METHODOLOGY.................................................................................38

3.1 Introduction .................................................................................................38

3.2 Research design .........................................................................................38

3.3 Research population ...................................................................................39

3.4 Sampling .....................................................................................................41

3.4.1 Sampling methodology..........................................................................41

3.4.2 Sample size ..........................................................................................42

3.5 Research instrument ...................................................................................43

3.6 Data Collection............................................................................................44

3.7 Data Analysis ..............................................................................................45

3.8 Ethical Considerations ................................................................................46

3.9 Conclusion ..................................................................................................47

Chapter FOUR .........................................................................................................48

PRESENTATION OF RESULTS ..............................................................................48

4.1 Introduction. ................................................................................................48

4.2 Missing data................................................................................................48

4.3 Descriptive Statistics ...................................................................................48

4.4 Principal Component Analysis ....................................................................51

4.5 Reliability and Validity Tests .......................................................................56

4.6 Internet Banking service quality measures .................................................58

Chapter FIVE............................................................................................................69

INTERPRETATION OF RESULTS ...........................................................................69

5.1 Introduction. ................................................................................................69

5.2 Findings ......................................................................................................69

5.3 Findings linked to the literature ...................................................................70

5.3.1 Characteristics of service ......................................................................70

5.3.2 Responsiveness in service recovery.....................................................70

vii

5.3.3 GAPS model .........................................................................................71

5.3.4 Modified theoretical model ....................................................................72

5.4 Limitations to the study ...............................................................................73

5.5 Conclusion ..................................................................................................73

Chapter SIX..............................................................................................................74

CONCLUSION AND RECOMMENDATIONS ...........................................................74

6.1 Summary of research objectives and major findings...................................74

6.2 Recommendations ......................................................................................75

6.3 Suggestions for further study ......................................................................76

REFERENCES..........................................................................................................77

APPENDICES...........................................................................................................81

viii

List of Tables Page

Table 2.1: WebQual 4.0 Instrument ......................................................................... 27

Table 2.2: E-S-Q instrument .................................................................................... 28

Table 2.3:E-RecS-Qual............................................................................................ 29

Table 2.4: Retail banking services and distribution channels................................... 32

Table 2.5: Service dimensions and related categories............................................. 35

Table 4.1: KMO and Bartlett’s Tests ........................................................................ 51

Table 4.2:Communalities of the twenty four variables.............................................. 52

Table 4.3: Total Varience explained......................................................................... 53

Table 4.4: Rotated Factor Matrix.............................................................................. 55

Table 4.5: Cronbach’s Alpha scores ........................................................................ 57

Table 4.6: Potential Maximum Validity Coefficient ................................................... 57

Table 4.7: Normality Test......................................................................................... 58

Table 4.8: ANOVA T-Test for Age............................................................................ 66

Table 4.9: ANOVA T-Test for Gender ...................................................................... 67

Table 4.10:ANOVA T-Test for primary bank ............................................................ 68

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List of Figures Page

Figure 2.1: GAPS model of service quality .............................................................. 13

Figure 2.2: Extended GAPS model if service quality................................................ 14

Figure 2.3:Possible levels of customer expectations ............................................... 15

Figure 2.4:Inherent characteristics of systems......................................................... 19

Figure 2.5: Conceptual model for understanding quality.......................................... 20

Figure 2.6: e-Service quality model.......................................................................... 22

Figure 2.7: Conceptual model for e-SQ ................................................................... 24

Figure 2.8: Website Portal Quality ........................................................................... 25

Figure 2.9: Changes in the banking sector .............................................................. 31

Figure 2.10:Internet Banking perceived qulaity model ............................................. 34

Figure 3.1: Consumer households using Internet Banking ...................................... 41

Figure 5.1: Initial and modified theoretical model..................................................... 72

Appendices

Appendix I: Internet Banking Service Quality Frequency Table ................................ 81

Appendix II: Descriptive Statistics ............................................................................. 82

Appendix III:Normality Test results ...........................................................................83

Appendix IV: Reliability Test results.......................................................................... 85

Appendix V:New Service Dimensions Labels ........................................................... 89

Appendix VI:The Kruskal-wallis Test......................................................................... 91

Appendix VII:Survey Covering Letter........................................................................92

Appendix VIII:The Survey Questionnaire..................................................................93

1

Chapter ONE

INTRODUCTION

1.1 Background of the study

The Internet emerged as a key competitive arena for the future of financial services

hence it came as no surprise when banks and brokers flocked to the Web. The use of

the Internet makes it possible for banks to offer a number of home banking services

24 hours a day (Möls, 1998:331). According to Sayar and Wolfe (2007:123) the term

Internet Banking is used to describe the case where banks’ customers conduct

banking transactions on the Internet.

1.1.1 Historical background

According to Singh (2004:187) banking in South Africa has its roots in both the British

and Dutch traditions. The British and the Dutch influence led to the existence of

Standard Bank and Nedbank respectively. The year 1998 saw the consolidation of

United, Volskas and TrustBank into a single brand as Absa adopted a new corporate

identity. As a result, four major banks, Standard Bank, Nedbank, Absa and First

National Bank emerged. These banks dominate the South African retail banking

sector (Singh, 2004:188).

Internet Banking in South Africa started in 1996. The start was fairly slow, but

consumers were attracted to the convenience, safety and low costs of online banking.

Absa was the first to offer online services and was followed by Nedcor with Standard

Bank, First National Bank and Mercantile Bank being the last to follow (Singh,

2004:190). Below are some of the key milestones in the history of Internet Banking:

• May 1995: Wells Fargo (USA), already on the Web, offered online access to

statements

• November1995: NBS became the first South African bank on the Web, offering

only a brochure on its site, with no clickable links.

• October 1996: Absa became the first South African bank to offer personal

banking details online.

• February 1997: Nedbank became the first South African bank to allow online

transactions.

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• December 1997: Wells Fargo became the first online banking service to sign-

up 400 000 customers.

• July 2001: South Africa’s first standalone bank 20Twenty was launched with

the backing of Saambou and 40 000 customers signed up in the first six

months.

• July 2003: UK based Standard Chartered Bank signed an agreement to

acquire 20Twenty as part of its entry into the retail banking space in South

Africa.

• May 2004: Absa reached the 450 000 online banking customer mark

(Goldstuck, 2004:23).

1.1.2 Banking and technology

The Internet emerged as a key competitive arena for the future of financial services

hence it came as no surprise when banks and brokers flocked to the Web. The use of

the Internet makes it possible for banks to offer a number of home banking services

24 hours a day (Möls, 1998:331). The Internet is not merely a medium of information

delivery in a passive sense. Due to the necessary participation of the consumer in

using the Internet, it also serves as a means of service delivery. The Internet, along

with other means of home banking services, has dramatically changed the distribution

channel of the structure of banks. New partnerships and electronic commerce product

announcements have become a daily routine for financial services industry. The

momentum to move to Web-based business models is increasing and the traditional

distinction amongst the service providers is blurring (Sweeny & Lapp, 2004:276).

Singh (2004:187) supports this notion by stating that in South Africa business is being

revolutionised every day as a result of the influence of the Internet. He further

maintains that organisations have become leaner, meaner, more profitable and more

competitive. Some existing organisations have moved from brick-and-mortar format to

clicks-and-mortar format, whilst others have adopted a more conservative approach

and have both physical and virtual presence.

Bradley and Steward (2003:272) are of the opinion that the banking sector, which has

been characterised by its tried and tested processes of service delivery, is greatly

affected by the environmental change. The authors assert that competition is

escalating for both traditional players and new entrants because of deregulation,

changing consumer behaviour and needs, globalisation and Information Technology.

3

The financial sector is one of the business areas that has been most affected by the

spread of new technologies, particularly the Internet. These technologies have not

only had a bearing on the internal organizational processes, but have also had a

sizeable influence on the way in which financial institutions interrelate with their

customers (Flavian, Guinalίu & Torres, 2006:406). The Internet has been accepted as

a new addition to the traditional way of doing business. Banking organisations have

progressed a long way in the use of the Internet, with most banks offering transaction

services over the Internet (Sohail & Shaikh, 2008:58). O’Neill, Palmer and Wright

(2003:281) reckon that the winners in the online search market space will be those

who consistently provide compelling, user friendly and responsive online service

experiences. They further suggest that specific research on the identification of

attributes that work together to create effective online services experience is lacking.

1.1.3 Internet service quality

Sweeney and Lapp (2004:276) argue that following the proliferation of e-commerce

and the Internet there has been an increasing interest in the evaluation of Websites.

Ibrahim, Joseph, and Ibeh (2006:476), add that the challenging business environment

in the financial services market in the UK and beyond has also resulted in more

pressure on the banks to develop and utilise alternative channels with a view of

attracting more customers and improving customer perceptions. According to Ibrahim

et al. (2006:476) “not enough is known regarding how customers perceive and

evaluate electronically delivered services”. Service quality research has

overwhelmingly focused on customer expectations. The importance-performance

analysis (IPA) approach is built around customer perceived importance of quality

attributes and attributes of performance, the interplay of which suggests strategies for

service improvement and satisfaction management (Ibrahim et al., 2005:479).

Rowley (2006:339) is of the view that service experience associated with electronic

environments is very different from a service experience that is mediated through a

human service agent. Zeithaml (2002:135) defines electronic service quality (E-S-Q)

as an extent to which a Website facilitates efficient and effective shopping, purchasing

and delivery. Zeithaml’s (2002:135) research on electronic service quality indicates

that E-S-Q has seven dimensions that form two scales: a core E-S-Q scale and a

recovery scale. Four dimensions - efficiency, reliability, fulfilment and privacy form the

4

core E-S-Q scale that can be used to measure customer perceptions of service

quality. According to Zeithaml (2002:136) the other three dimensions become salient

when online customers run into problems. These three dimensions are

responsiveness, compensation and contact. These three dimensions were

conceptualised by the research as constituting E-S-Q recovery. Jun and Cai

(2001:276) identified seventeen dimensions under three categories of Internet

Banking service quality. These dimensions included:

• Customer service quality: reliability, responsiveness, competence, courtesy,

credibility, access, communication, understanding, collaboration and continuous

improvements

• Online system quality: content, accuracy, ease of use, timeliness, aesthetics, and

security.

• Banking service product quality: one dimension of product variety.

Broderick and Vachirapornpuk (2002:332) in their study on Internet Banking service

quality agreed that the management implication for their study arises in two areas:

firstly within the service interface and secondly, with the management of increased

customer role. From a service setting point of view they argued that at the outset

customers might use service setting cues more in judging service quality, because of

the lack of tangible cues that are available in Internet formats. Broderick and

Vachirapornuk (2003:333) further purport that one feature of customer interaction is

not confined to Internet transactions, but involves a lot of other interfaces. Customer

scripts also operate between the service setting and the service encounter, as when

customers seek to solve problems with service setting by contacting personnel. This

study will focus on assessing Internet Banking service quality dimensions. From the

set of identified dimensions the study will establish how the South African banks are

performing as perceived by their customers.

1.1.4 Internet Banking

Internet Banking, at a basic level, is defined as the setting up of a Web page by a

bank to give information about its products and services. At a more advanced level it

is defined as provisioning of facilities such as accessing accounts, funds transfer and

buying financial products or services online (Sathye, 1999:524). According to Sayar

5

and Wolfe (2007:123) the term Internet Banking is used to describe the case where

banks’ customers conduct banking transactions on the Internet. In the contemporary

context, this mainly implies the usage of computers, and digital TV’s for accessing

internet branches.

Internet Banking refers to a service offered by banks that allows account holders to

access their account data via the Internet. In order to take advantage of the Internet

Banking, an account holder would need to meet several technological requirements,

such as having a personal computer with Internet access and a web browser. If these

conditions are satisfied Internet Banking can be performed from anywhere in the

world. Thus, Internet Banking facilitates direct access to account details; enables

transfer of funds; allows for multiple bills payments, and performs an array of other

transactions (Sayar & Wolfe, 2007:124).

1.2 Problem statement:

The challenging business environment in the financial services market resulted in

more pressure on banks to develop and utilise alternative delivery channels, with a

view to attracting more customers and improving customer perceptions and

encouraging loyalty. Internet Banking is among the channels that were developed and

implemented. Banks have invested heavily in introducing and making Internet

Banking service functionality rich, with an objective of improving customer satisfaction

and loyalty, ultimately contributing positively to income and profits.

The challenge for teams of software designers, marketers and experts in human-

computer interaction, (amongst others), is to create a business model that not only

increases productivity and enhances bottom line performance, but one that also seeks

to add value for customers, employees and suppliers alike (O’Neill et al., 2003:293).

Research Problem:

Management in South African banks, do not have an insight into how their customers

perceive and evaluate Internet Banking service quality.

6

1.3 Objective / purpose

This study aims to explore customers’ perceptions on Internet Banking service quality

dimensions or factors. This will be done with the following objectives in mind:

• Have an insight into how Internet Banking customers in South Africa perceive and

evaluate their respective banks’ performance on pre-defined Internet Banking

service quality dimensions.

• Determine if there are any differences in perceptions of Internet Banking service

quality based on gender, age or primary bank.

1.4 A brief outline of the research methodology

1.4.1 The research methodology

The survey method was used to collect primary data for this study. Electronic

interactive media was employed, as respondents were contacted via e-mail and

directed via a URL to take a self-administered questionnaire online. Zikmund

(2003:198) defines electronic interactive media as “a communication media that

allows an organization and the audience to interact using digital technology”. This

method was chosen as it was inexpensive and could reach a wide sample of the

survey population with ease.

1.4.2 The research population

The survey population was a sample of customers that do banking online with any of

the South African banks.

1.4.3 The sampling method

Convenience sampling was used to sample the population. This was a non-probability

sampling design

1.4.4 Data Collection

Data was collected using an Internet survey. The survey was a self-administered

questionnaire posted on a web-site. This made it possible to reach a large number of

respondents and secure confidential answers quickly and cost-effectively.

7

Respondents were invited by e-mail to participate in the survey. This ensured that the

respondents’ feedback was captured at the time when the responses were submitted.

1.5 An outline of the remainder of the dissertation

Chapter one: Introduction

This chapter provides a background to the study, in which the environment within

which the research is undertaken is described. Concepts such as Internet Banking

and service quality are introduced. The problem statement, which flows from the

background, is also stated in this chapter. The objective(s) of the research in

addressing the research problem are then identified

Chapter 2: Literature review

The chapter reviews related literature on Internet Banking. The literature offers

guidance to the tentative solutions to the problem. It addresses concepts such as

traditional services, electronic services, online system quality, Internet Banking

services and instruments like SERVQUAL and E-S-Q for quality of service

measurements.

Chapter 3: Research Methodology

This chapter will explain the research design chosen and the rationale behind such a

choice. It will focus on the research population, the sampling techniques to be used

and the sample size. It will further elaborate on the research instruments used and

data collection and analysis including validity and reliability of the research instrument.

Chapter 4: Presentation of research results

The chapter will focus on providing the main findings of the study, the insights gained

in relation to the research objectives.

Chapter 5: Interpretation of research results

The chapter will analyse and interpret research results and link them to the reviewed

literature. The chapter will conclude by giving a statement on limitations of the study.

8

Chapter 6: Conclusions and recommendations

The chapter will give a summary of the research objectives and major findings.

Recommendations and suggestions for further research will also be outlined in this

chapter.

1.6 Conclusion

Chapter one served as an introduction to the study, outlining the problem statement,

the research objectives and the research methodology were discussed. In chapter two

a review of the related literature will be done. The review will include an explanation of

what service quality, service and electronic service are. The chapter will undertake to

offer insights into service quality dimensions. The other concepts to be discussed

include SERVQUAL and E-S-Q as instruments used to measure traditional service

quality and electronic service quality respectively.

9

Chapter TWO

LITERATURE REVIEW

2.1 Introduction.

O’Sullivan, Edmond and ter Hofstede (2002:3) define a service in its simplest form, as

an action which involves transferring value, performed by one entity on behalf of the

other. According to Zeithaml, Bitner and Gremler (2006:6) the broad definition of

service implies intangibility as a key determinant of whether an offering is a service or

not. The International Organization for Standardization (ISO) describes a service as

part of the total production concept. A service is generated by a process and the

customer outcome is created in this process. In the case of a service as compared to

a product the customer is present and affects the results in terms of added value and

quality (Edvardsson, 1998:142).

Service quality can be viewed in a structured and integrated way called the GAPS

model of service quality. Zeithaml, Bitner and Gremler (2006:33) depict the GAPS

model as consisting of the customer and provider gaps. The customer gap is the

difference between the customer expectations and perceptions. To close the all

important gaps, the GAPS model suggests that the other four gaps, referred to as

provider gaps, need to be closed. According to Zeithaml et al., (2006:34) the gaps

occurring within the organization providing the service include:

• Gap1 is about not knowing what customers want.

• Gap2 refers to not selecting the right service designs and standards.

• Gap3 refers to not delivering to service designs and standards.

• Gap4 is about not matching performance to promise

The literature review will look into the definition of traditional service, service quality,

banking service quality and service quality measurements. This will then lead to a

discussion on electronic service, service quality and electronic service measurements.

The majority of definitions for electronic service use the Internet and/ or workflows as

a conduit to new revenue or task completion. Web services have also been described

as an aggregation of functionality with a single façade and published for the purpose

of use (O’Sullivan et al. 2002:3). To conclude the literature review an important

10

discussion on online systems will be undertaken. Internet Banking service will be

defined and its characteristics outlined.

2.2 Traditional Services

2.2.1 Definition and characteristics of services

Zeithaml et al. (2006:4) simply describe services as deeds, processes and

performances, whilst Baron and Harris (2003:4) concur that services are processes

that occur over time. There are three fundamental aspects of service: process,

people, and physical evidence. Compatible to the simple definition is that services

include all economic activities whose output is not a physical product and is

consumed at the time it is rendered. In the broad definition of service, intangibility is

the key determinant of whether an offering is, or is not a service (Baron & Harris,

2003:5). According to Zeithaml and Bitner (1996:5) while the statement on

intangibility being the key determinant of service is true, it is also true that few are

purely intangible or totally tangible. Services tend to be more intangible than

manufactured products. The latter products tend to be more tangible than services.

Bateson and Hoffman (1999:9) agree that it is difficult to define a pure good product

or service. A pure service assumes that there is no “goods” element to the service that

the customer receives. In reality most services contain some “goods” element in them

(Bateson & Hoffman, 1999:9). Zeithaml et al. (2006:21) summarises the

characteristics of services that distinguish it from products as intangibility,

heterogeneity, simultaneous production and consumption as well as perishability.

• Intangibility

The distinguishing characteristic of services is intangibility because services are

performances or actions rather than objects, they cannot be seen, felt, tasted or

touched in the same manner one can touch and feel physical goods (Zeithaml et al.

2006:22). Baron et al. (2003:19) indicate that the intangibility of services often

increases the risk for the purchaser. Some services are perceived to be riskier than

others depending on whether they are high in search, experience, and credence

factors. Baron and Harris (2003:19) describe these factors as:

o A service that is high in search factors is the one about which customers

can get some (prior) information as to what they will receive.

o A service that is high in experience factors is one that customers must try

out (experience) before they can decide whether or not it is a great deal.

11

o A service that is high in credence factors is one that is difficult to evaluate

even after experiencing it.

• Heterogeneity

No two services will precisely be alike because they are performances frequently

rendered by humans (Zeithaml et al., 2006:22). Baron and Harris (2003:20) say

organisations providing services know that no two service provisions are exactly the

same, whatever the attempts to standardise them. The quality of any service will vary

when offered by different employees, probably at different times of the day.

• Simultaneous rendering and consumption

To receive the benefit of the service, the consumer must be part of the system. It thus

becomes impossible to store a service (Bateson & Hoffman, 1999:12). This situation

of simultaneous rendering and consumption means that the consumer is present while

the service is being rendered and thus views and may even take part in the rendering

process. In simultaneously rendering and consumption of service, customers will

interact with one another during the service rendering process and thus may affect

one another’s experiences (Zeithaml et al., 2006:23). Baron and Harris (2003:20) refer

to this characteristic of service as inseparability.

• Perishability

According to Zeithaml et al. (2006:23) perishability refers to the fact that services

cannot be saved, stored resold or returned.

2.2.2 Traditional service quality

Imrie, Cadogan and McNaughton (2002:10) describe service quality as an antecedent

of consumer assessment of value. Examples of behaviours motivated by favourable

service quality assessment are re-purchase intentions, loyalty and word of mouth.

Kang and James (2004:267) point out that the construct of service quality as

conceptualised in the services marketing literature centres on perceived quality,

defined as a consumer’s judgement about an entity’s overall excellence. Kang and

James (2004:268) further suggest that the “perceived service quality model” replaces

the product features of a physical product in the consumption of services. The

technical aspect (what service is provided) and the functional aspect (how the service

is provided) are the two dimensions that Kang and James (2004: 268) identified.

12

Santos (2003:234) argue that there are two main conceptualisations of service quality

that exist – one based on disconfirmation approach, and the other based on the

performance-only approach. Oliver (1980:461) points out that expectations are

thought to create a frame of reference about which one makes a comparative

judgement. This means that outcomes poorer than expected (negative

disconfirmation) are rated below this reference point, whereas those better than

expected (a positive disconfirmation) are rated above the base. Service quality was

therefore understood to be a measure of how well the service level delivered matched

customer expectations.

Bateson and Hoffman (1999:340) argue that the two concepts of customer satisfaction

and service quality are intertwined. One plausible explanation is that satisfaction

assists customers in revising service quality perceptions. Bateson and Hoffman

(1999:340) describe the logic for this position as follows:

• Consumer perception of the service quality of a firm with which no prior

experience exists is based on the consumer’s expectations.

• Subsequent encounters with the service firm lead the consumer through the

disconfirmation process and further revise the perceptions of service quality.

• Each additional encounter with the service firm further revises or reinforces

service quality perceptions.

• Revised service quality perceptions modify future consumer purchase

intentions towards the service firm.

Baron and Harris (2003:136) describe perceived service quality as the degree and

direction of the gap between consumer perceptions and expectations of service. In

the GAPS model as described by Zeithaml et al. (2006:46) this refers to the customer

gap 5 - the gap between the expected service and the perceived service. Baron and

Harris (2003:136) further describe consumer satisfaction as a function of the

similarities between the consumers’ expectations and the perceived performance of

the purchaser.

13

Figure 2.1: The GAPS model of Service quality

Source: Adapted from Parasuraman (2004:46)

The conceptual model of service quality as outline in Figure 2.1 was based on the

insights from extensive focus group research with customers and an in-depth

interview with executives in various sectors. The primary thesis of their model is that

the service quality shortfall Gap 5 (the gap between customers’ service expectations

and perceptions) is a result of a series of shortfalls within the service provider’s

organisation (Parasuraman, 2004:45). This then means that improving the quality

experienced by customers requires diagnosing the causes of and correcting the

internal deficiencies (Gaps 1-4).

Zeithaml et al. (2006:33) describe the customer gap (service quality gap) as the

difference between the customer expectations and perceptions. Closing the gap

between what customers expect and what they perceive is critical in delivering quality

service; it also forms the basis for the GAPS model (Zeithaml et al., 2006:34).

The GAPS model in Figure 2.1 suggests that the four provider gaps occur within the

organisation. Zeithaml et al. (2006:35) describe the four gaps as:

• Gap 1 not knowing what customers want

• Gap 2: selecting the right service designs and standards.

• Gap 3 delivering to service designs and standards.

• Gap 4 matching performance to promises.

14

Figure 2.2: Extended GAPS Model

Source: Adapted from Parasuraman (2004:46)

.

The extended Gaps model as shown in Figure 2.2 above enumerates for each

general gap a list of organisational deficiencies that could contribute to the gap. The

model is a useful starting point for diagnosing and closing the gaps (Parasuraman,

2004:47). The GAPS model has emerged as the most popular measurement

approach of service quality and has been extensively applied in different service

sectors. The GAPS model has however been criticised on methodological and

conceptual grounds (Mukherjee & Nath, 2005:175). Mokherjee and Nath (2005:181)

concluded that while the GAPS model provided a good starting point for analysis,

problems with “average” approach to aggregate service quality measures arise when

gaps have different signs and positive and negative deviations cancel each other out.

This is realistic only when dimensions are compensatory. For an example a customer

who is dissatisfied with billing accuracy is unlikely to feel compensated by its speedy

arrival

Zeithaml et al. (2006:84) point out that services are heterogeneous in nature in that

performance may vary across providers, employees from the same provider delivers

the service differently. The extend to which customers recognise and are willing to

accept this variation is called the zone of tolerance as defined by Zeithaml et al.

(2006:85). This is represented by the area between the desired service and the

adequate service. The zone of tolerance differs from customer to customer. Some

15

customers have narrow zones of tolerance, requiring a tighter range of service from

providers and others have a greater range of service (Zeithaml et al., 2006:86).

According to Zeithaml et al. (2006:81) customer expectations are beliefs about service

delivery that serve as standards or reference points against which performance is

judged. The level of expectation can vary widely depending on the reference point the

customer holds. These can start with the highest – desired service to the lowest –

minimum tolerable expectations (Zeithaml et al. 2006:83).

Figure 2.3: Possible levels of customer expectations

Source: Adapted from Zeithaml, Bitner and Gremler (2006:82)

In the levels of customer expectations model in Figure 2.3, the possible levels of

customer expectations can be explained as follows:

• Ideal expectations or desires - This is the highest level of expectation, the

wished for level of performance and a blend of what the customer believes “can

be” and “should be” (Zeithaml et al., 2006:83).

16

• Normative (“Should”) expectation: an example of this expectation would be: as

expensive as this restaurant is, it ought to have excellent food for service.

• Experience-based norms: this refers to an expectation based on past

experience. For example, “In most cases this restaurant is very good, but when

it gets busy the service is slow”.

• Acceptable expectation: an example of an acceptable expectation would be: “I

expect this restaurant to serve me in an adequate manner”.

• Minimum tolerable expectation: This is the extreme side of the desired service

as it relates to the bottom level of performance acceptable to the customer

(Zeithaml et al., 2006:83).

2.2.3 SERVQUAL

SERVQUAL is a multidimensional scale used to capture customer perceptions and

expectations of service quality. The SERVQUAL scale was first published in 1988 and

has undergone numerous improvements and revisions since then. The scale currently

contains twenty one perception items that are distributed across five service quality

dimensions (Zeithaml et al., 2006:154). Parasuraman (2004:46) indicates that building

on key insights from qualitative research, the research team launched a series of

empirical studies to develop, test and refine a scale for measuring service quality as

perceived by customers. These qualitative studies gave birth to SERVQUAL, a five

dimensional, two part instrument. The first and the second parts measure customer

expectations and perceptions respectively along a variety of service attributes

grouped into five dimensions of reliability, responsiveness, assurance, empathy and

tangibles. The SERVQUAL instrument, though very valuable, is believed to be just

one approach for assessing service quality (Parasuraman, 2004:48).

One criticism of SERVQUAL has been the point that the instrument mainly focuses on

the service delivery process (Kang & James, 2004:266). The other criticism by

Oppewal and Vriens (2000:154) is that SERVQUAL does not provide good measures

of the importance of service attributes and dimensions. SERVQUAL grounded in the

GAPS model, measures service quality as the calculated difference between

customer expectations and the performance perceptions of a service encounter.

Cronin and Taylor (1992:56) challenged this approach and developed the SERVPERF

scale which directly captures customers’ performance perceptions in comparison to

17

their expectations of service encounter. A qualitative method of measuring service

quality includes techniques such as interviews, focus groups, customer role-play and

observation. These provide insight into the mindset of customers and are highly

subjective. Quantitative surveys can be administered either face-to-face or customers

may be left to do these on their own. The confirmation-disconfirmation paradigm has

been extensively incorporated into surveys (O’Neill et al., 2003:283). O’Neill et al.

(2003:284) further suggest that as consumers evaluate the levels of the service’s

performance, they typically cannot help but compare that performance to what they

expected. In turn, these expectations provide a baseline for the assessment of a

customer level satisfaction.

2.2.4 Traditional banking service quality

Using the critical incident technique Johnston (1995:65) made the following

conclusions in his study on the determinants of service quality satisfiers and

dissatisfiers amongst bank customers:

• Some determinants of quality predominate over others.

• For the personal customer of the bank, the main sources of satisfaction are

attentiveness, responsiveness, care and friendliness. The main sources of

dissatisfaction are integrity, reliability, responsiveness, availability and

functionality.

• The sources of dissatisfaction are not necessarily the obverse of sources of

satisfaction.

• The intangible aspects of the staff-customer interface have significant effects,

both negative and positive, on service quality.

• Responsiveness is the crucial determinant of quality, as it is the key component

in providing satisfaction and the lack of it is a major source of dissatisfaction.

• Reliability is predominantly a source of dissatisfaction not satisfaction.

Johnston (1995:62) in his study used eighteen service quality attributes:

attentiveness, responsiveness, care, availability, integrity, friendliness, courtesy,

communications, competence, functionality, commitment, access, flexibility,

aesthetics, cleanliness, comfort and security.

18

Bahia and Natel (2000:86) used an alternative measure on service quality by

proposing seven dimensions of which some were covered by the SERVQUAL scale.

These included effectiveness and assurance, access, price, tangibles, place, service

portfolio and reliability. Oppewal and Vriens (2004:158) used twenty eight attributes

including four service quality dimensions to evaluate service quality. The four

dimensions included accessibility, competence, accuracy and tangibles.

2.3 Electronic Services (e- Services)

2.3.1 Definition and characteristics of e-Services

Buckley (2003:455) defines e-Service as the electronic provision of a service to

customers whilst Santos (2003:234) describes e-Service as the provision of

consumers with a superior experience with respect to the interactive flow of

information. Rowley (2006:341) on the other hand brings in a different perspective of

e-Service by defining it as deeds, efforts or performances whose delivery is mediated

by information technology (including the Web, information kiosks and mobile devices)

and such includes the service element of e-tailing, customer support , service and

service delivery. In e-Service the customer’s interaction or contact with the

organisation is through the technology, such as Websites. e-Service encounter is the

initial landing on the home page until the requested service has been completed or

the final product has been delivered and is fit for use (Bucley, 2003:456). During an e-

Service encounter, customers have to rely on only two senses, that of sight and

sound, whereas the traditional service experience can use all senses. e-Service is

described as a relative impoverished experience, due to the absence of face to face

interaction, which is seen as central to relationships development (Rowley 2006:341).

From all the definitions of e-Service discussed the following characteristics standout:

• There is an interactive flow of information between the customer and the

service provider.

• This customer interaction is mediated through some kind of information

technology.

• The service is a virtual one and there is no face-to-face interaction.

• Customers have to rely on only two senses that of sight and sound during the

interaction.

19

Rowley (2006:351) concludes in his research on e-Service literature with a conceptual

perspective or model that summarises the issues that both characterise e-Service,

and are also open to design by the organisation delivering the service. The model as

outlined in Figure 2.4 defines the inherent characteristics of e-Service systems.

According to Rowley (2006:352) the inherent characteristics of e-Service delivery

systems focus on three potential elements

• Website design, including layout, aesthetics and navigation

• Information creation, selection and quality

• Dialogue and learning design

There has been considerable research and practice development in the area of

Website design, whilst research on information quality is relatively limited (Rowley,

2006:352). The model as described by Rowley (2006:352) concludes that customer

perceptions of e-Service are driven by Website features, security, communications,

reliability, customer support, responsiveness, information accessibility, delivery and

personalisation.

Figure 2.4: Inherent characteristics of systems

Source: Adapted from Rowley (2006:352)

20

The first box in Figure 2.4 summarizes the issues that both characterise e-Service and

are also open to design by the organisation delivering the service. The second box

includes differentiating factors. This means that one service system and experience

are different from the next in terms of scope and nature. The third box is concerned

with the customers’ perceptions of the experience of e-Service and derives from work

on e-Service quality dimensions. It summarizes and identifies some of the dimensions

that customers use in their evaluation of e-Service experiences (Rowley, 2006:352).

2.3.2 Electronic Service quality

Figure 2.5: Conceptual model for understanding and improving quality

Source: Adapted from Zeithaml (2002:136)

Zeithaml (2002:137) identifies the four key dimensions of quality as efficiency,

reliability, fulfilment and privacy and then defines electronic service quality (e-SQ) as

the extent to which a Website facilitates effective and efficient shopping, purchasing

and delivery. Zeithaml's research (2002:136) on quality dimensions found out that

customer evaluative criterion for e-SQ existed at various levels of specificity ranging

from concrete cues to perceptual attributes and from broader dimensions to higher-

order abstraction as indicated in the conceptual model for understanding and

improving quality in Figure 2.5. The four key dimensions are:

21

1. Efficiency – refers to the ability of customers to get to the Website, find their

desired product and information associated with it and check-out with minimal

effort.

2. Fulfilment incorporates accuracy of service promises, having products in stock

and delivering the products in the promised time.

3. Reliability is associated with the technical functioning of the site, particularly the

extent to which it is available and functioning properly.

4. The privacy dimension includes assurances that shopping behaviour and

information is secured.

The recovery-SQ scale includes the personal service aspects:

1. Responsiveness measures the ability of a company to provide appropriate

information to customers when a problem occurs, have mechanisms for

handling returns and providing online guarantees.

2. Compensation is the dimension that involves receiving money back.

3. Contact points. So that customers should be able to speak to a live service

agent in times of problems.

According to Santos (2003:238) there are two dimensions that determine e-Service

quality, the incubative and active dimensions as indicated in the model of e-Service in

Figure 2.6. The incubative dimension lists the determinants of a Website daily hit rate

and the time length any visitor stays on the Website as ease of use, appearance,

linkages, content and layout. Santos (2003:239) defines these determinants as

follows:

• Ease of use is defined as how easy the Website is for customers to conduct

external search in cyberspace and internal navigation and search within the

Website.

• Appearance is defined by Santos (2003:239) as the proper use of colour,

graphics, images and animations, together with the appropriate size of the

Web pages. Appearance is usually the first thing observed by Web users.

• Linkages refer to the number and quality of links that a Website offers.

• Structure and layout refers to the organisation and presentation of a Website’s

content and information. This structure is characterised by simplicity clarity,

consistent layout, good use of frame, provision of a site map that allows users

to skip sections that are of no interest, a clear listed menu, and the company

22

logo being present are some of the key factors that impact on structure and

layout.

• Content refers to the presentation and layout of factual information and

function on a Website.

Figure 2.6: A model of e-Service quality

Source: Santos (2003:239)

Santos (2003:241) defines the active dimensions in the model as the good support,

fast speed, and attentive maintenance that a Website can provide to its customers.

The active dimensions consist of reliability, efficiency, support, communications,

security and incentive. Santos (2003:248) upholds that the active dimension must be

achieved consistently throughout the period that a Website is active to increase

customer satisfaction. These dimensions are described as follows:

• Reliability refers to the ability to perform the promised service accurately and

consistently, including frequency of updating the Website, prompt reply to

customer enquiries, and accuracy of online transactions.

• Efficiency refers to the speed of downloading, search, and navigation.

• Support is constituted by the technical help desk, user guide, help pages,

frequently asked questions (FAQ’s) and demos.

23

• Communications is defined as keeping the customers properly informed and

communicating with them in a language they can understand. Communications

in e-Service consists of online communications (e-mails and chat rooms) and

traditional communications methods (telephone, fax and postal mail.

• Security refers to the freedom from danger, risk, or doubt (including financial

insecurity) during the service process.

• Incentive is the encouragement given by Web providers to consumers to

browse and use the Website.

2.3.3 Understanding and measuring e-Service quality

Parasuraman, Zeithaml and Malhorta (2005:230) on their research on electronic

service quality (E-S-Q) a multiple item scale for assessing electronic service quality

came up with the five managerial implications:

• Efficiency and fulfilment were the most critical and important facets of the

Website service quality. Of the four E-S-Q dimensions, customers’

assessments of a Website on these two dimensions had the strongest

influence not only on the overall quality perceptions but also on perceived value

and loyalty intentions.

• The systems availability facet of the Websites was also critical contributor to

customers’ perceptions of overall quality, value and loyalty intentions.

• Privacy was the least critical of the four E-S-Q dimensions

• The three service recovery dimensions (responsiveness, compensation, and

contact) and the perceptual attributes they contain imply service aspects that

mirror aspects of traditional service quality (ready access to company

personnel, solving customers’ problems)

• The E-S-QUAL and electronic recovery of service quality ( E-RecS-Q) are

generic scales, intended for obtaining a global (as opposed to transaction-

specific) assessment of a Website service quality.

The dimensions on which customers assess electronic service quality (e-SQ) are:

access, ease of navigation, efficiency, customization/personalization, security/

privacy, responsiveness, assurance/ trust, price knowledge, aesthetics, reliability,

flexibility and efficiency. Each of the mentioned general dimensions has a number of

specific attributes (Parasuraman, 2004:50). Parasuraman (2004:50) adds that the

24

qualitative research done suggest a conceptual “GAPS” model for electronic service

quality (e-SQ) as shown in Figure 2. 7.

Figure 2.7: Conceptual GAPS model for E-S-Q

Source: Adapted from Parasuraman (2004:51)

2.4 Online systems quality

2.4.1 Definition of online systems quality

According to the technology acceptance model (TAM) users’ decisions to adopt a new

technology are determined by their attitudes towards two factors related to the

technology: ease of use and usefulness (Pikkarainen, Pikkarainen, Karjaluoto &

Pahnila 2005:214). Perceived ease of use refers to the degree to which a person

believes that using a particular system would be free of effort and perceived

usefulness refers to the degree to which a person believes that using a particular

system would enhance his or her job performance (Yang & Fan, 2004:304). By

implication online systems quality refers to satisfaction delivered by the system’s ease

of use and usefulness.

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2.4.2 Characteristics of online systems quality

Figure 2.8: Website portal quality

Source: Adapted from Zeithaml et al. (2006:83)

According to Bauer, Hammerschmidt and Falk (2005:172) e-banking portal quality

cannot be described as a one dimensional customer rating. It represents a multi-

dimensional construct that is composed of partial quality judgements with regard to

the portal’s diverse service categories as shown in Figure 2.8. The criteria portal users

perceive to be essential for an assessment of quality can be reduced to a small

number of fundamental dimensions (Bauer et al., 2005:170). The validated

measurement model of portal quality as concluded by the Bauer et al. (2005:171)

research illustrates how the portal quality dimensions can be managed. The first

dimension the factor “security” is predominantly related to the quality of the online

system whilst “trustworthiness is mainly dependent on the reliability and credibility of

the provider.

The Web is an information providing medium that allows a range of activities that add

to the customer experience (Sweeney & Lapp, 2004:277). Sweeney and Lapp

(2004:285) in their research on service quality encounters identified the following

quality dimensions:

26

1. Ease of use which deal with the following factors:

• Instructions and explanations on the web

• Structural design

• Navigational systems

2. Content

• Depth of content

• Correctness and accuracy of the content

• Presentation appropriateness

3. Process

• Control of the process

• Speed

The empirical results from the Bauer et al. research (2005:172) support the

understanding of portals as integral solutions representing a bundle of various

services and functions. Based on this research, aspects such as depth of service

range and possibility of opening accounts online or call back buttons and prompt

responses to questions, are important drivers leveraging overall service quality in an

effective manner.

2.4.3 Measuring online systems quality

Yang and Fang (2004:305) hold that: “since consumers’ use of Internet-based

services can be viewed as similar to the adoption of new technology, ease of use and

usefulness are important factors in evaluating online service quality.” Dimensions of

online service quality such as information content, customization, reliability, and

response also have significant effects on perceived ease of use and perceived

usefulness, which in turn influences the attitude towards using the portal site,

behavioural intention to reuse portal sites and actual portal site use (Yang & Fang,

2004:305).

27

Table 2.1: The WebQual 4.0 Instrument

Source: Adapted from Barnes and Vidgen (2003:299)

According to Barnes and Vidgen (2003:298) WebQual is based on quality function

deployment (QFD) which is a structured process that provides a means to identify and

carry the voice of the customer through each stage of the product or service

development. The standard WebQual 4.0 instrument in Table 2.1 consists of 23

questions with usability, information quality and service interaction as the main

categories.

The original electronic service quality (E-S-Q) scale was used to measure Website

service quality. The Table 2.2 below represents the original E-S-Q scale dimensions

with related questions (variables).

28

Table 2.2: The E-S-Q questionnaire and respective dimensions

Dimension Questions

Efficiency 1. This Website makes it easy to find what I want.

2. It makes it easy to get anywhere on the site.

3. It enables me to complete a transaction quickly.

4. Information on this Website is well organised

5. It loads its pages fast.

6. The Website is simple to use.

7. The Website enables me to get on to it quickly.

8. The Website is well organised.

System availability 1. This Website is always available for business.

2. The Website launches and runs right away.

3. The Website does not crash.

4. Pages at this Website do not freeze after I enter my

order information.

Fulfilment 1. It delivers orders when promised.

2. This Website makes items available for delivery within

suitable time frame.

3. It quickly delivers what I order.

4. It sends out the orders I ordered.

5. It has in stock the items the company claims to have.

6. It is truthful about its offerings.

7. It makes accurate promises about delivery of products

Privacy 1. It protects information about my Web-shopping

behaviour.

2. It does not share my personal information with other

sites.

3. The Website protects information about my credit card

Source: Parasuraman, Zeithaml and Malhotra (2005:230)

29

Table 2.3 is the original E-S-Q instrument and it is part of the Website service quality

but focuses on the recovery of service (E-RecS- Q)

Table 2.3: E-RecS-Q

Dimension Questions

Responsiveness 1. It provides me with convenient options for returning my

items.

2. This Website handles product return well.

3. This Website offers meaningful guarantee.

4. It tells me what to do if my transaction is not processed.

5. It takes care of problems promptly.

Compensation 1. The Website compensates me for problems it creates.

2. It compensates me when what I ordered doesn’t arrive

on time.

3. It picks up items I want to return from my home or

business.

Contact 1. The Website provides a telephone number to reach the

company.

2. The Website has customer representatives available

online.

3. It offers the ability to speak to a live person if there is a

problem.

Source: Parasuraman, Zeithaml and Malhotra (2005:231)

30

2.5 Internet Banking

2.5.1 Definition of Internet Banking

According to Sayar and Wolfe (2007:123) the term “Internet Banking” from a

customer’s perspective is used to describe the case where banks’ customers conduct

banking transactions on the Internet. In the contemporary context, this mainly implies

the usage of computers, but also allows for other possible devices like mobile phones

and digital TVs (Sayar & Wolfe, 2007:123). Internet Banking presents the industry

with an electronic and remote distribution channel. It represents an electronic

marketplace whereby consumers may conduct their financial transactions on a virtual

level (Bradley & Steward, 2003:272). Internet Banking refers to a service offered by

banks that allows account holders to access their account data via the Internet. In

order to take advantage of Internet Banking, an account holder would need to meet

several technological requirements, such as having a personal computer with Internet

access and web browser. If these conditions are satisfied, Internet Banking can be

performed from anywhere in the world. Thus, Internet Banking facilitates direct access

to account details, enables transfer of funds, allows for multiple bills payments, and

performs an array of other transactions.

2.5.2 Characteristics of Internet Banking

Jayawardhena and Foley (2000:19) in Figure 2.9 explain that the developments in

technology have dominated the revolution in the banking sector. The world-wide

expansion in technologies for connections has supported increased globalisation of

capital flows and financial organisations. The successful implementation and

development of online banking are influenced by the quality and security of Internet

network, the level of Internet knowledge of the population, the government support, as

well as the Internet strategy of the bank and the quality/ reliability of online banking

services (Gurau, 2002:294). Jayawardhena and Foley (2000:20) further state that

traditional banking is characterised by physical decentralisation, with branches

scattered around populated areas providing an ubiquitous presence. The rationale

behind such branch investment is the need to distribute the banking services.

Jayawardhena and Foley (200:21) indicate that the properties of Internet are the key

reasons why it is an ideal medium for delivery of banking products and services.

Gurau (2002:285) concurs that by using the Internet people can access their bank

accounts and conduct transactions twenty four hours a day, seven days a week with

31

reduced costs and increased convenience. As a result of the explosive development

of the digital environment the banks have now an opportunity to expand the market

penetration internationally. According to Jayawardhena and Foley (200:21) the

advantages accruing to the bank can be summarised as:

1. Cost Savings: internet delivery is cheaper than physical delivery.

2. Increased customer base: present Internet demographics suggest that it is the

relatively well off and well educated that use the Internet which suggests that

potential users are high net worth customers.

3. Enable mass customisation: Internet delivery has the capability to customise

information to suit the needs and likes of individual users.

Figure 2.9: Changes in the banking sector

Source: Jayawardhena and Foley (2000:20)

32

Table 2.4 Retail banking services and the distribution channels

Source: Akinci, Aksoy and Atilgan (2004:215)

A review of the literature on Internet Banking by Akinci, Aksoy and Atilgan (2004:212)

brings out four interrelated areas identified as: retail banking services, distribution

channels for the services, consumer attitudes towards the adoption of Internet

Banking and banks’ and bank managers’ perception on an approach to Internet

Banking. Akinci et al. (2004:214) say that the advent of new channels has contributed

not only to the adoption of multi-channel strategies by the existing institutions but also

the emergence of new forms of financial business as “virtual banks”. The model above

in Table 2.4 as depicted by Akinci et al. (2004:215) discusses the interrelation

between retail banking services, the distribution channels and the target markets:

• Banking services

The banking services include services like money withdrawals, payments, money

transfers and account opening (Akinci et al. 2004:215).

• Distribution Channels:

Akinci et al. (2004: 214) point out that the advent of new channels has contributed not

only to the adoption of multi-channel strategies by the existing institutions, but also the

emergence of new forms of financial business as “virtual banks”. The Internet

33

influences the future distribution channel structure in two ways. Firstly, it is in itself a

new distribution channel for financial service. The costs of using it are different from

those of other available distribution channels. Secondly, the Internet influences

consumers many of whom invest time and money in becoming PC literate and getting

to know the Internet (Möls, 1998:332)

• Target Market

The extent to which customers switch to Internet Banking is mainly determined by

each individual’s expectations regarding security, accuracy, transaction speed, user

friendliness, user involvement and convenience, all of which are components of

“perceived usefulness” (Sayar & Wolfe, 2007: 125).

2.5.3 Internet Banking Service quality

Focussing on the quality perception process, the model in Figure 2.10 below as

described by Broderick and Vachirapornuk (2002:328) identifies five key elements as

central influences on perceived quality:

• customer expectations of service

• the image and reputation of the service organization

• aspects of the service setting

• the actual service encounter

• customer participation

The model permits exploration of the perceived difference between expected service

and the experienced service. Corporate image is regarded as an important

determinant of perceived service quality. Customers build trust based on the image

and reputation of service providers (Broderick & Vachirapornuk, 2002:328). Broderick

and Vachirapornuk (2002:329) further state that the model incorporates concepts of

functional and technical quality by focusing on two elements of service experience,

that of service encounter and that of service setting. In Internet service the service

setting is one of the key elements that will affect perceived quality. In the Internet

environment, the virtual service setting facilitates performance and communicates

evidence to customers about service. User satisfaction was found to be dependent

on Website features such as speed to download, content and design, interactivity,

navigation and security. There is good evidence that service encounter evaluation is

34

significantly correlated with perceived service quality. Customers do play a key role in

the service delivery process, resulting in the perceived service quality becoming

complex and a more involved issue for customers (Broderick & Vachirapornuk,

2002:329). From this model of perceived service quality it is not just the degree of

participation which changes, but also the degree of self-determinism permitted to

customers. The roles and service capability of customers become key inputs to

perceived service quality within their service encounter (Broderick & Vachirapornuk

2002:328).

Figure 2.10: Internet Banking perceived quality model

Source: Adapted from Broderick and Vachirapornuk (2002:328).

35

2.5.4 Measuring Internet Banking service quality

A study undertaken by Jun and Cai (2001:276) on the key determinants of Internet

Banking service quality concludes that a total of seventeen dimensions were identified

under three categories of Internet Banking service quality:

• Customer service quality.

• Online systems quality.

• Banking service product quality.

Table 2.5: Service Dimensions and related Categories

Customer Service Quality Online System Quality Banking Service Product

Quality

Reliability Content Product variety

Responsiveness Accuracy

Competence Ease of use

Courtesy Timeliness

Credibility Aesthetics

Access Security

Communications

Understanding the customer

Collaboration

Continuous improvement

Source: Jun and Cai (2001:282).

2.6 Conclusion

The literature reviewed a number of concepts on service quality. It started with the

review of traditional services, traditional service quality, SERVQUAL as an instrument

used to measure traditional service. It also introduced the concept of electronic

service. In measuring electronic service the basis of the SERVQUAL instrument was

used. This was the basis of a new tool called E-S-Q (Carrillant, Jaramilo & Mulki,

2007:473). Internet service quality was also reviewed and a model adapted from Jun

and Cai (2001:238) brought about the fact that dimensions were identified under three

categories, that of customer service quality, online system quality and banking service

product quality.

36

To move ahead to understanding Internet Banking service quality, one needs to

unpack a number of service concepts. This starts by understanding traditional

services and measurements thereof, through to electronic service such as Internet

Banking service. Concepts and theory on measurements of electronic service have

been presented in order to provide a deeper understanding of Internet Banking

service quality. The intention of presenting the theoretical background of both

traditional service and electronic service is to offer an insight into measuring service

quality, how it developed in time and how it changed because of the impact of

technology, especially Internet service delivery.

The basis of the E-S-Q and E-Rec-Q will be used to develop an instrument for

measuring the quality of Internet Banking service quality. A slightly modified version

of this instrument will be used in this study. This instrument will include amongst

others a question on customers’ perception on how the depth of functionality offered

by their banks’ Internet Banking service addresses their needs. Dimensions which

were in the original E-S-Q instrument like flexibility, price knowledge and

customization will be excluded in this study. These dimensions are more related to an

online purchasing service rather than banking, hence they will be excluded from the

instrument.

Based on the numerous discussions in the literature around measurements of

traditional service quality, electronic service quality, online systems quality and

Internet Banking service quality with their respective determinants of service quality

an adapted E-S-Q instrument was used in this survey. Twenty four questions were

used covering eight key determinants of electronic Banking service quality:

1. Efficiency: covers the ability to access the banking site, the ease of use, the

speed of completing banking transactions and the depth of Internet Banking

functionality.

2. Fulfilment: covers accuracy of information, the convenience factor and

promises being kept.

3. System Availability: is about system quality. Internet Banking system being

available at all times when needed.

4. Privacy: no misuse of personal information that gets exchanged on the online

interaction.

37

5. Assurance and trust: refers to confidence in the online service and how

trustworthy the brand is.

6. Responsiveness: refers to online requests done promptly and issues are

resolved on time.

7. Contact: refers to the bank being easily accessible and support staff available

at all times when needed.

8. Website aesthetics: means how attractive the banking site is.

Chapter Three describes in detail the research methodology used to do the study.

This chapter will capture the research design, sample selection and methods used to

collect primary data. The relevant reliability and validity tests to be employed will also

be discussed in this chapter.

38

Chapter THREE

RESEARCH METHODOLOGY

3.1 Introduction

This chapter discusses the methodology that was employed to conduct the study. The

discussion will include the design of the research, population sample, sampling and

data collection methods that were used. The web survey method was used to collect

primary data for this study. Web survey process concerns transforming paper based

instruments into Web forms and incorporate user interface design (Roynolds, Woods

& Baker, 2007:11). Electronic interactive media was used as respondents were

contacted via e-mail and directed via a URL to take a self-administered questionnaire

online. Zikmund (2003:198) defines electronic interactive media as a communication

media that allows an organization and the audience to interact using digital

technology. This method was chosen as the preferred method because of its wide

reach of respondents, convenience, low cost, speed of data collection and the fit that

it has with the study. An Internet survey is a self administered questionnaire posted

on a Website. Respondents provide answers to questions displayed on the screen by

clicking on an icon, keying in an answer or highlighting a phrase (Zikmund, 2003:221).

3.2 Research design

Zikmund (2003:65) defines research design as a master plan specifying the methods,

approaches and procedures for collecting and analysing the needed information. The

objectives of the research, the available data sources, the urgency of the decision,

and the cost of obtaining the data will determine the choice of the appropriate

research design. The quantitative and qualitative research methodologies are the two

main research approaches useful in the classification of studying primary data (Davis,

2000:265). Zikmund (2003:110) asserts that qualitative research usually provides

greater understanding of a concept or crystallizes a problem, rather than providing

precise measurement or quantification. The focus of qualitative research is not on

numbers but rather on words and observations. According to Schmidt and Hollensen

(2006:89) the purpose of qualitative research is to find out what is going on in a

person’s mind. Davis (2000:265) on the other hand says qualitative research consists

of studies that can be quantified. He maintains that these studies are an in-depth

39

analysis of one or a few observations; they involve less structured questioning and

observations of respondents.

Conversely, quantitative research uses large samples and involves structured survey

questioning that is subsequently numerically and statistically analysed (Davis.

2000:265). Martins et al. (1996:125) highlight that quantitative research objective is to

generalise about a specific population, based on the results of a representative

sample of that population. The method generally involves the collection of primary

data from a large number of individuals, with the intention of projecting the results to a

wider population. Quantitative research approach is based on testable hypothesis

and tends to measure “how often” or “how much”. The choice of the approach to be

taken in a research study is primarily based on the research question or problem.

Taking into consideration the description of the two research approaches discussed

above and the study’s research objectives, it was decided to use the quantitative

research approach. This study aims to explore customer’s perceptions on key

electronic service dimensions of Internet Banking service quality. Since this study

explores perceptions it means the study aims to measure “how much” satisfied online

banking customers are with the quality of Internet Banking service. This approach

allowed for statistical analysis of the data on the basis of a service quality

measurement instrument. The study involved collecting primary data in a structured

survey questioning which was followed by statistical analysis of the data. The

objective was to be in a position to generalise about online banking customers’

perceptions on the quality of Internet Banking service. To collect primary data the

Internet survey method was used. The combination of the quantitative approach and

the survey method was appropriate for the research question in this study as a

representative sample of the population was surveyed.

3.3 Research population

Davis (2000:220) defines population as the complete set of units of analysis that are

under investigation. Zikmund (2003:369) brings in an element of commonality by

defining population or universe as a complete group of entities sharing some common

set of characteristics. On the other hand the survey population is an aggregate of

elements from which the sample is drawn (Martins et al., 1996:252). Martins et al.

(1996:252) state that “In practice we seldom find complete lists of all the elements, so

40

that the sample has to be drawn from lists that do not always contain all the elements.

The differences between the survey population and the population or universe should

therefore be always noticed.” The distinction between a population and the universe

is made on the bases of whether the group is finite (population) or infinite (universe)

(Zikmund, 2003:369). Based on the definitions of universe, population and survey

population by different authors above, these concepts can be summarised as follows:

• Universe is an infinite group of entities sharing some common characteristics.

• Population is a finite complete group of entities sharing some common

characteristics.

• Survey population is the aggregate of elements from which a sample is drawn.

This study investigated the perception of online banking customers on the quality of

service delivered by Internet Banking. The universe comprised of all banking

customers world wide, whilst Internet Banking customers in the world will be the

population and the Internet Banking customers using South African banks will form

the survey population.

The contact list of online banking customers in South Africa was not commercially

available and the four major banks would not divulge their customers contact details

as a result of legal compliance restrictions. An alternative to reach as many online

banking customers as possible was an approach of social networking to create the

survey population list. An invitation was sent to colleagues, friends, business

associates, family and social contacts from social media (Face book) to provide

contact e-mail addresses of their contacts that are online banking users. This ensured

that there was no bias in selecting users from any specific bank.

Figure 3.1 shows the trend of Internet Banking users in the United States compared to

the world wide trends. The trend shows a 3 275% increase of world wide online

banking users in 12 years between 1995 and 2007.

41

Figure 3.1: Consumer households using online banking:

Source: Online banking report Number 150 January 28, 2008

3.4 Sampling

Zikmund (2003:369) defines sampling as the process of using a small number of parts

of a larger population to make a conclusion about the whole population. This study

focused on all Internet Banking customers serviced by South African banks regardless

of their geographic location. The common characteristic of the sampled population

was that all respondents were selected from customers who do online banking using

any South African banks.

3.4.1 Sampling methodology

Davis (2000:229) defines sample design as the method used to select the units of

analysis for a study. He says that such methods can be classified in a variety of ways,

of which the most usual breakdown is into probability and non-probability sampling

designs. In probability sampling every element has an equal chance of being

selected. In non-probability sampling the probability of any particular member of the

population being chosen is unknown. The selection of sampling units is arbitrary as

researchers rely on personal judgment (Zikmund, 2003:379). Zikmund (2003:380)

further suggests that it should be noted that there are no appropriate statistical

42

techniques for measuring random sampling error from a non-probability sample. A

non-probability sample is a one in which chance selection procedures are not used

(Davis, 2003:243)

Given the above discussion on probability and non-probability sampling this study

used the non-probability sampling called convenience sampling. This was because

the respondents that were invited to take part in the survey were conveniently

available. To gather names and e-mail addresses of the respondents, an e-mail and a

face book invitation were sent to colleagues, friends, business associates, and family

asking them to extend the invitation to their respective lists. The only criteria stipulated

were that the respondent should be an online banking customer with one of the

banking institutions in South Africa. This then meant that the survey population was

conveniently obtained from friends, business associates, colleagues and family. One

thousand (1 000) contacts e-mail addresses were gathered through this method. The

reason for using the convenience sample was to obtain a large number of completed

questionnaires quickly and economically. The only other way of getting a sample

would have been to get a list of all online banking customers from the banking

institutions in South Africa. Out of the combined list a random sample would have

been selected as the survey population. One of the limitations of the study was the

fact that the sample used was a non-probability one because it was a convenience

sample. Projecting results beyond a specific sample in a non-probability sample

(convenience) might be inappropriate. Zikmund (2003:382) states that convenience

samples are best used for exploratory research when additional research will

subsequently be conducted with a probability sample.

3.4.2 Sample size

Two hundred and six (206) responses were received. Based on the online survey

responses, the average response rate for online surveys is approximately twenty

percent (20%). The survey population was one thousand (1 000). The two hundred

and six represented a 20.6% response rate. One hundred and sixty five (165) usable

responses were received as out of the two hundred and six, the valid responses were

one hundred and sixty five representing a 16.5% of the survey population.

43

3.5 Research instrument

Zikmund (2003:330) points out that a survey is only as good as the questions it asks,

hence the questionnaire design is a critical stage in the survey research process. The

questionnaire must be relevant and accurate in trying to capture the essence of the

research objective. To achieve these ends, a researcher will be required to make

several decisions:

• What should be asked?

• How should each question be phrased?

• In what sequence should the questions be arranged?

• What questionnaire layout will best serve the research objectives?

• How should the questionnaire be pre-tested?

• Does the questionnaire need to be revised.

The questionnaire that was used in this study was based on an E-S-Q instrument that

has been extensively used to measure the quality of service delivered by Websites

and online services. The questionnaire was slightly adjusted to ensure that it captured

the essence of Internet Banking compared to electronic shopping. The instrument has

been used mostly in electronic shopping service quality measurements. This

instrument included amongst others a question on customers’ perception on how the

depth of functionality offered by their banks’ Internet Banking service addressed their

needs. Dimensions which were in the original E-S-Q instrument like flexibility, price

knowledge and customization were excluded in this study. These dimensions refer to

online purchasing service rather than banking, hence they were excluded from the

instrument. Twenty four questions were used covering eight key determinants of

electronic banking service quality. Five more questions on the customer’s personal

information (biographical questions) were covered. The first question in the survey

asked customers if they banked online or not. This was to allow non-Internet Banking

customers not to take the entire questionnaire but rather to fill in only the biographic

information. Customers that responded with a “Yes” answer to this question were

directed to take the entire questionnaire. A summary of the eight key determinants of

electronic banking service are:

• Efficiency: covers the ability to access the banking site, the ease of use, the

speed of completing banking transactions and the depth of Internet Banking

functionality.

44

• Fulfilment: covers accuracy of information, the convenience factor and

promises being kept.

• System Availability: is about system quality. Internet Banking system being

available at all times when needed.

• Privacy: no misuse of personal information that gets exchanged on the online

interaction.

• Assurance and trust: refers to confidence in the online service and how

trustworthy the brand is.

• Responsiveness: refers to online requests done promptly and issues are

resolved on time.

• Contact: refers to the bank being easily accessible and support staff available

at all times when needed.

• Website aesthetics: means how attractive the banking site is.

The scale that was used in the instrument was the summated ratings method called

the Linkert scale. With the Linkert scale, respondents indicate their attitude or

perception by checking how strongly they agree or disagree with carefully constructed

statements that range from very negative to very positive towards the attitudinal object

(Zikmund. 2003:312). Schmidt and Hollensen (2006:120) define the Linkert scale as a

widely used rating scale that requires the respondents to indicate a degree of

agreement or disagreement with each of a series of statements about the stimulus

objects. Since Internet survey or questionnaire was used, respondents were given

radio buttons to make their choices. In the questions where personal information was

required input fields were provided.

3.6 Data Collection

Zikmund (2003:72) argues that because there are many research techniques it stands

to reason that there will also be different ways of collecting data. Respondents may be

given a questionnaire to fill or they may interact with an interviewer. A self-

administered survey questionnaire is defined as a questionnaire that is filled in by

respondents rather than an interviewer. An internet survey is one such questionnaire

where the respondent takes a self-administered questionnaire posted on a Website.

The speed of response, cost of gathering primary data and the reach of the Internet

survey are some of the advantages of this method of collecting data. One other

45

advantage is that the information collection and capturing can be done in real time

(Zikmund, 2003:227).

The Internet self-administered questionnaire method was used in this study. The

major reason for using this method was that the nature of the topic is around online

banking hence the survey sample was easily reachable through this technique and

was also more willing to take the questionnaire online. This guaranteed some form of

a good response rate. Some of the advantages of using online questionnaire for

primary data collection are:

• Speed of data collection is almost instantaneous.

• High geographic flexibility.

• Respondents’ participation would be higher compared to other methods.

• Versatile questioning.

• No interviewer influence on questions.

• Anonymity of respondents can be guaranteed.

• Low cost for primary data collection.

The questionnaire was open for two weeks. A reminder was sent in the second week

to improve on the response rate. The site was taken down after it has been up for two

weeks.

3.7 Data Analysis

The data was collected online in real time. As respondents submitted their

questionnaire the data was automatically exported into a predefined and coded

database. Each question was coded in the interface (Web form) and matched to field

names in the database. This in turn made analysis to be started much quicker.

STATCON (A statistical services bureau at the University of Johannesburg) was

contracted to host the web side and do the analysis. Some of the services that

STATKON completed included:

• Ensuring that respondents only had one opportunity for taking the

questionnaire. This was done by tracking the embedded system controls.

• Statistical analysis of quantitative data including use of multivariate techniques

to meet the objectives of the research project.

• The reliability and validity tests.

• Providing the interpretation of the statistical results

46

• Providing the graphical displays to enhance the interpretation of the results.

3.8 Ethical Considerations

Ethical questions are philosophical questions. There is no general agreement

amongst philosophers about the answers to such questions. However, the rights

and obligations of individuals are generally dictated by the norms of society. Social

norms are codes of behaviour adopted by a group; they suggest what a member of

a group ought to do under given circumstances (Zikmund, 2003:78). Below are

some of the ethical aspects which were considered during the research project:

• Informed consent - the respondents were informed on the invitation letter

about the intent of the study.

• Deception - the intent and mandate to do the research was made clear from

the onset.

• Anonymity - the self administered questionnaires were completed

anonymously to ensure the privacy of the subject.

• Confidentiality - all information received was handled with confidentiality

• Publication of the findings - a written academic report was compiled as

accurately and objectively as possible.

Roynolds et al. (2007:114) point out that the application of ethical principles in

online surveys implies the following:

• Providing complete and unambiguous information regarding the identity of

the researcher, the purpose of research, and the use of the collected data,

including the diffusion of the research results

• Including a clear statement regarding the protection of participants’ privacy

and to give the participants the opportunity to define the level of

confidentiality they require

• To ensure the security of Internet connection and data transfer, informing

participants about the risk of data interception by third parties.

• Openly present all the advantages or disadvantages related to the

participation in the study

• Providing contact information to allow respondents to obtain additional

clarification about the research project.

47

3.9 Conclusion

The aim of the study was to explore online banking customers’ perceptions on Internet

Banking service quality. The quantitative approach allowed for statistical analysis of

the data. The sample was a non-probability sample and the study followed a

quantitative research approach. The combination of the quantitative approach and the

survey method was appropriate for the research question in this study as a sample

population was surveyed and the general conclusion drawn for the entire sample

population. The survey population was all online banking users utilizing services from

South African banks and the sampling design was a non-probability one as a

convenience sampling method was used. A slightly revised E-S-Q service quality

measurement instrument was used in this study and data was collected via a web

based self-administered survey.

Chapter Four will concentrate mainly on the presentation of the results. The focus will

be on providing the analysis of the results in terms of elaborating on the research

objectives.

48

Chapter FOUR

PRESENTATION OF RESULTS

4.1 Introduction.

The presentation and analysis of the results of the conducted imperial survey will be

done in this chapter. The results of the survey include the analysis of missing data,

descriptive statistics, Principal Component Analysis, Reliability and Validity tests and

lastly the Internet Banking Service quality measures.

4.2 Missing data

One thousand respondents were invited to participate in the survey. Two hundred and

six (206) responses were received representing a 20.6% response rate. Sixteen of the

responses were non Internet Banking users hence they did not complete the entire

questionnaire and twenty nine had missing information. It therefore meant that there

were one hundred and sixty one (161) valid responses for the demographics

questions.

4.3 Descriptive Statistics

Graph 4.1 Age demographics

Age

5.0%

51.0%

39.7%

4.3%

18 - 24 25- 35 36 - 49 Older than 50

All the responses with missing data were excluded from the demographic analysis.

Graph 4.1 indicates the following age splits: 18-24 (5%), 25-35 (51%), 36-49 (39.7%)

and older than 50 (4.3%). The majority of the respondents were aged between 25 and

35 years followed by the 36 to 49 years age group. Given the above results it was

49

decided for statistical reasons to split the groups into two. One group would be all

respondents who are 35 years and younger and the second group would be that of

respondents who are 36 years and older. Graph 4.2 below indicates the overall split of

the two age groups.

Graph 4.2 Overall age demographics

Age

56%

44%

35 years and younger 36 years and older

Graph 4.3 indicates the gender demographics. Out of the one hundred and sixty one

(161) valid responses 51.5% were males compared to 48.5 females.

Graph 4.3 Gender demographics

Gender

51.5%

48.5%Male

Female

50

Graph 4.4 indicates the respondent’s primary bank and it can be seen that from the

161 respondents using Internet Banking, 42.1% bank with Absa, followed by 22.1%

that bank with Standard bank, 12.6% banking with FNB and 6.3% with Nedbank. Only

1.6 banks with Investec.

Graph 4.4 Bank demographics

Distribution by bank

42.1%

12.7%

22.1%

6.2% 1.5%

Absa

FNB

SBSA

Nedbank

Other

Graph 4.5 indicates that 92% of the respondents have been using the service for

more than a year. This implies that the responses given in the survey are based on

solid experience.

Graph 4.5 length of Internet Banking use

Internet Banking use

1% 7%

92%

Less than 3 months 3 - 12 months More than 12 months

The details of the demographics data is reflected in Appendix II Descriptive statistics

51

4.4 Principal Component Analysis

A Principal Component Analysis is concerned with explaining the variance-covariance

structure through a number of linear combinations of the original data. Its general

objectives are data reduction and interpretation. An analysis of principal components

reveals relationships that were not previously suspected and therefore allows

interpretations that would not have ordinarily resulted (Johnson & Wichern, 1992:356).

Bartlett’s Test of Sphericity and Kaiser-Meyer-Olkin Measure (KMO) of Sampling

Adequacy were performed on the data to confirm the suitability of the data for Factor

Analysis. In order to analyse the collected data factor analysis was performed on the

items of the instrument (model) with Principal Component Analysis as the extraction

method. The result of the performed Bartlett’s Test of Sphericity and the KMO

Measure of Sampling Adequacy is shown in Table 4.1. The Bartlett’s Test of

Sphericity results indicates a 0.00 score whilst the KMO score is 0.919. According to

Kenova and Jonasson (2006:30) for a factor analysis to be considered appropriate a

score of the Bartlett’s Test of Sphericity should be less than 0.05 and a KMO

minimum score of 0.6 is needed for good factor analysis. The result of the Bartlett’

test is 0.00 which is less than 0.05 indicating that the factor analysis can be

considered appropriate and KMO Measure of Sampling Adequacy is 0.919, which

exceeds the minimum value of 0.6 for good factor analysis.

Table 4.1 KMO and Bartlett’s Test

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling

Adequacy. 0.919

Approx. Chi-Square 2,140.468

df 276

Bartlett's Test of Sphericity

Sig. 0.000

Table 4.2 indicates the communalities of all the twenty four variables (questions)

Communalities consist of Initial and Extracted Values. It represents the result of the

conducted Principal Component Analysis (CPA) on all components with five factors

extracted. Communality can be interpreted as the reliability of the indicator. If the

communality of a given variable is low, then this variable should probably be removed

52

from the instrument (model) because the factor it pertains to cannot explain its

variance. The interpretation of the values of communalities should be done in relation

to the interpretation of the factors. The extracted value represents the percent of

variance in a given variable explained by the extracted factor.

Table 4.2 Communalities of the twenty four variables

Initial Extraction

q1 0.563 0.531

q2 0.463 0.484

q3 0.538 0.518

q4 0.580 0.552

q5 0.509 0.524

q6 0.536 0.498

q7 0.528 0.622

q8 0.414 0.453

q9 0.471 0.463

q10 0.510 0.482

q11 0.707 0.747

q12 0.590 0.606

q13 0.439 0.404

q14 0.506 0.501

q15 0.504 0.532

q16 0.635 0.616

q17 0.544 0.513

q18 0.601 0.632

q19 0.678 0.712

q20 0.535 0.488

q21 0.675 0.741

q22 0.667 0.717

q23 0.598 0.687

q24 0.497 0.587

Extraction Method: Principal Axis

Factoring.

53

Table 4.3 Total Variance Explained

Initial Eigenvalues Extraction Sums of Squared

Loadings Rotation Sums of Squared Loadings

Factor Total % of

Variance Cumulative

% Total % of

Variance Cumulative

% Total % of

Variance Cumulative

%

1 9.993 41.639 41.639 9.567 39.861 39.861 3.757 15.654 15.654

2 1.839 7.664 49.303 1.451 6.048 45.909 3.285 13.689 29.344

3 1.460 6.083 55.386 1.026 4.273 50.182 2.487 10.364 39.707

4 1.333 5.555 60.942 0.956 3.982 54.165 2.161 9.005 48.712

5 1.034 4.307 65.248 0.609 2.538 56.702 1.918 7.990 56.702

6 0.763 3.180 68.428

7 0.741 3.088 71.516

8 0.684 2.849 74.365

9 0.640 2.668 77.033

10 0.576 2.400 79.433

11 0.570 2.377 81.809

12 0.511 2.129 83.938

13 0.500 2.085 86.023

14 0.443 1.845 87.868

15 0.395 1.645 89.513

16 0.376 1.566 91.079

17 0.362 1.508 92.587

18 0.344 1.433 94.020

19 0.318 1.324 95.343

20 0.299 1.246 96.589

21 0.244 1.015 97.604

22 0.203 0.846 98.450

23 0.192 0.800 99.249

24 0.180 0.751 100.000

Extraction Method: Principal Axis Factoring.

Table 4.3 shows the Total Variance Explained eigenvalues. The variance in all the

variables which is accounted for by the given factor is measured by the eigenvalues

for this factor. If the eigenvalue of a specific factor is low it means that this factor

explains less of the variance in the variable and can be dismissed from the

instrument. The data presented in Table 4.3 Total Variance Explained can be used to

determine the number of factors to extract. It therefore means that there are only five

factors to be extracted as there are only five factors with the initial eigenvalue higher

than one.

The Rotated Component Matrix shows the correlation between each question in the

survey and the different factors. Each variable (question) should pertain to the factor

with which it correlates best. Observing Table 4.4 on Rotated Factor Matrix it shows

that the following questions (variables) are best correlated to Factor1 and should as

such be grouped together to represent that factor: Q19 (76.1%), Q18 (66.1%), Q16

54

(61.9%), Q6 (56.7%), Q9 (56.9%) and Q17 (51.3%). Although the communality value

for Q9 is below 50% at (47%) it will be retained in the instrument as a result of the

good correlation at (56%) which is higher than 50%.

Following similar logic the following questions correlates best to Factor2 as observed

from Table 4.4 hence they will be grouped together: Q21 (79%), Q22 (78%), Q11

(73.5%), Q3 (60.2) and Q1 (51.4) All factors will be retained as the communality

scores of all the five questions is above 50. The third factor as observed from Table

4.4 will be grouped as follows: Q12 (65.3%), Q4 (57.2%), Q5 (47.9%), Q10 (44.8)

and Q13 (38.8). Question 10 can be retained as it has a communality value of more

than 50%; however question 13 cannot be retained as it has the less favourable

correlation of 38.8% which is less than the 60% and also the communality value of

less than 50%. Question 13 was about the brand reputation, this question was

included because from the theory it is stated that a well known brand will always

positively influence customer perceptions. This variable will however be excluded

based on the results above. The fourth factor should include the following questions

which best correlates to factor4: Q7 (70.8), Q8 (65.8), Q14 (48.4), Q2 (46.3) and Q20

(41.6). All the other questions can be retained in the exception of question 2 as it has

a communality value of less than 50%. Lastly, the fifth factor as observed from Table

4.4 will be represented by the following questions (variables): Q24 (66.8%), Q23

(65.2%) and Q15 (54%).

55

Table 4.4 Rotated Factor Matrix

Factor 1 2 3 4 5

q19 0.761 0.312 q18 0.661 0.331 q16 0.619 0.341 q6 0.567 q9 0.561 0.322 q17 0.513 0.299 0.298 q21 0.790 0.265 q22 0.780 q11 0.735 0.359 q3 0.281 0.602 q1 0.402 0.514 0.270 q12 0.250 0.288 0.653 q4 0.572 0.314 q5 0.442 0.479 q10 0.446 0.448 q13 0.299 0.306 0.388 q7 0.708 q8 0.658 q14 0.322 0.262 0.484 q2 0.260 0.419 0.463 q20 0.394 0.289 0.416 q24 0.297 0.668 q23 0.486 0.652 q15 0.357 0.540

As a result of the analysis done above of the collected data, the number of

dimensions included into the presented theoretical model, should be decreased from

eight to five. The performed factor analysis with Principal Component Analysis as an

extraction method showed that all the variables pertaining to the initial theoretical

model are not well grouped to represent the eight initial dimensions and thus should

be rearranged to represent five quality dimensions. Appendix V indicates the new

labels for the five extracted dimensions with the associated questions (variables). The

five new service dimensions are summarised as efficiency, fulfilment, security,

responsiveness and contact. The questions are split as follows per dimensions:

• (factor1) Efficiency Q19, Q18, Q 16, Q6, Q9 and Q17;

• (factor2) Fulfilment Q21, Q22, Q11, Q3 and Q1;

• (factor3) Security Q12, Q4, Q5 and Q10;

• (factor 4) Responsiveness Q7, Q8, Q14 and Q20 and lastly

• (factor 5) Contact Q24, Q23 and Q15.

56

Factor one refers to efficiency and includes variables like adequacy of functionality,

the ease of finding information on the banking site, aesthetics of the site and speed of

transacting amongst others. These variables are more inclined towards the service

efficiency as perceived by customers hence it was labelled “Efficiency”. The second

factor relates to the fulfilment. Variables included cover speed at which the Website

pages load at, the availability of the Website and the speed of accessing the Website

hence the dimension was labelled “Fulfilment”. The third factor relates to the security

of the information exchanged, the protection of information, and the assurance with

the transactions and confidence in the service. As a result this dimension was labelled

“Security”. The fourth factor relates to customer feedback and accessibility of the

bank. The variables contained in this factor address issues like how responsive is the

bank and how it communicates on customers’ requests hence it was labelled

“Responsiveness”. Lastly the fifth factor is around contact. The related variables

(questions) relate to the bank offering contact details on the site and having personnel

available online and telephonically. This factor was labelled “Contact”.

4.5 Reliability and Validity Tests

Reliability is broadly defined as the degree to which measures are free from error and

therefore yield consistent results (Zikmund, 2003:300). Kurpius and Stafford

(2006:121) concur by defining reliability as the trustworthiness or accuracy of

measurement. The terms consistency and stability are also used when discussing

reliability. According Kurpius and Stafford (2006:121) reliability coefficient refers to the

scores obtained on a test. A reliability coefficient of zero indicates that the test scores

are unreliable. On the other hand the higher the reliability coefficient, the more reliable

or accurate the test scores. A reliability coefficient is a numerical value that can range

from zero to one. For research purposes, tests with a reliability score of 0.7 and above

are accepted as reliable, whilst for clinical decision making, test scores of between 0.8

and 0.9 are acceptable (Kurpius & Stafford, 2006:121).

The Cronbach’s Alpha Test of reliability was used to test the reliability of the

instrument (model) used for the survey. The reliability test was done on the five

extracted factors or dimensions and the scores are reflected in Table 4.5. Detailed

scores across all dimensions and variables are obtained in Appendix IV. From Table

4.5 it can be seen that the Alpha scores on all dimensions, efficiency, fulfilment,

57

security, responsiveness and contact are all higher than 0.7 indicating that the scores

on these tests were reliable.

Table 4.5 Cronbach’s Alpha Scores on the service quality dimensions

Component Cronbach's Alpha score Number of items

Factor 1 (efficiency) 0.868 6

Factor 2 (fulfilment) 0.881 5

Factor 3 (security) 0.816 5

Factor 4 (responsiveness) 0.791 5

Factor 5 (contact) 0.765 3

Internet Banking Quality 0.935 24

Scores on a test need to be valid and reliable. Evidence of validity is reported as a

validity coefficient, which can range from 0 to +1.00. The validity coefficient score of

zero indicates that the tests scores do not measure the construct under investigation.

The validity scores approaching 1 provide strong evidence that the tests scores are

measuring the construct under investigation (Kurpius & Stafford, 2006:142). Kurpius

and Stafford (2006:154) further point out that the validity coefficient for a test’s score

cannot be greater than the square root of the test’s reliability. Table 4.6 indicates the

potential maximum values of the validity coefficient as per the definition above.

Table 4.6 Potential maximum validity coefficient

Component Cronbach's Alpha score

Potential maximum validity coefficient

Number of items

Factor 1 (efficiency) 0.868 0.931 6

Factor 2 (fulfilment) 0.881 0.938 5

Factor 3 (security) 0.816 0.903 5

Factor 4 (responsiveness) 0.791 0.889 5

Factor 5 (contact) 0.765 0.874 3

Internet Banking Quality 0.935 0.967 24

The instrument used in the survey was a slight variation of the (E-S-Q) instrument

which has been adapted from the SERVQUAL instrument for face-to-face service

delivery. The SERVQUAL instrument has been used extensively in the research

because its validity is not questionable. Secondly, the maximum potential validity

coefficient of all the dimensions as indicated in Table 4.6 is closer to 1 indicating

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strong evidence that the test scores are indeed measuring the construct under

investigation which in this case is Internet Banking service quality.

The “Sig” values in the “Test for Normality” Table 4.7 represent the p-values based on

testing the null hypothesis that the data is normally distributed. Both tests are

designed to determine whether the data observed closely fit the shape of a normal

curve. Both tests for the five factors and the overall Mean-Quality-Internet- Banking is

significant as the scores lie between (p = 0.068 and 0.000) which suggests that the

data is not normal but it is skewed to the right. The details of the distribution of the

different factors and the overall mean are discussed in the next section.

Table 4.7 Normality test

Kolmogorov-Smirnov(a) Shapiro-Wilk

Statistic df Sig. Statistic df Sig.

Mean_Factor1

(efficiency) 0.161 165 0.000 0.921 165 0.000

Mean_Factor2

(fulfilment) 0.108 165 0.000 0.940 165 0.000

Mean_Factor3

(security) 0.115 165 0.000 0.889 165 0.000

Mean_Factor4

(responsiveness) 0.078 165 0.015 0.980 165 0.020

Mean_Factor5

(contact) 0.113 165 0.000 0.892 165 0.000

Mean_Quality_Internet_Ba

nking 0.067 165 0.068 0.956 165 0.000

a. Lilliefors Significance Correction

4.6 Internet Banking service quality measures

Appendix I shows the distribution of the level of satisfaction or dissatisfaction of

customers on all the variables. There were one hundred and sixty five valid

responses for this section. The frequencies in Appendix I indicate that customers are

generally satisfied with all the variables of Internet Banking service quality. The overall

distribution curve for Internet Banking service quality is skewed to the right. The

distribution of the service efficiencies dimension is illustrated in graph 4.5 (a) and

59

graph 4.5 (b) below. The dimension of service efficiency had mean of 4.09 from the

five point Linkert-Scale indicating that the 161 valid responses are satisfied with this

dimension. There were an insignificant number of respondents who were extremely

dissatisfied with this dimension.

Graph 4.5(a): Efficiency

Graph 4.5 (b): Efficiency

60

The variables (questions) which were rated as extremely satisfactory by the

respondents as per the distribution frequency in Appendix I include/were:

• My bank is well known and has a good reputation. (52.1%)

• My Internet Banking transactions with my bank are always accurate. (51.5%)

• I am able to get to my bank's Internet Banking site quickly. (49.7%)

• It is quick to complete a transaction through my bank's Internet Banking site

(44.2%)

The second dimension of service quality, fulfilment as extracted in this study had a

mean of 3.97 and as illustrated by graph 4.6(a) and graph 4.6(b) below. The graphs

show that the respondents were also satisfied with this dimension of service as well.

Graph 4.6(a): Fulfilment

61

Graph 4.6 (b): Fulfilment

The third dimension of security which encompasses assurance, trust and privacy

indicated a mean north of 4 (4.29) as indicated in graph 4.7(a) and graph 4.7(b)

respectively, showing that the respondents were satisfied with this dimension.

Graph 4.7(a): Security

62

Graph 4.7 (b): Security

The contact dimension also had a mean of 4.06 showing satisfaction with this

dimension as indicated in graphs 4.8(a) and 4.8(b).

Graph 4.8(a) : Contact

63

Graph 4.9(b): Contact

The overall Internet Banking service quality indicated a mean of 4.03 as per graphs

4.9(a) and 4.9(b) indicating that the respondents were generally satisfied with Internet

Banking service quality.

Graph 4.9(a): Internet Banking Service Quality

64

Graph 4.9(b): Internet Banking Service Quality

Graph 4.10(a): Responsiveness

65

Graph 4.10(b): Responsiveness

The only dimension that showed a mean south of 4 at (3.74) was that of

responsiveness which encompasses the communications and fulfilment dimensions.

Although a mean of 3.74 does not look bad, but compared to all the other four

dimensions it is the one where respondents showed the most indifference. This

indicates that most of the respondents were neutral and indifferent on this particular

dimension of service quality as indicated in graph 4.10 (a) and graph 4.10(b)

respectively.

The respondents indicated a neutral or indifferent level on the responsiveness

dimensions which pertains to service recovery and fulfilment as indicated by the

frequencies in the variables (questions) listed below.

• (Q7) The bank gives prompt responses to my requests by e-mail or other

means (27.9% were neutral, 36.4% satisfied and 25.4% strongly satisfied).

• (Q8) The bank is easily accessible. (27.9% were neutral, 37% satisfied and

23% strongly satisfied).

• (Q14) The bank quickly resolves problems I encounter with my Internet

Banking transactions. (38.2% were neutral, 39.4% satisfied and 17% strongly

satisfied).

66

• (Q20) The bank’s site makes accurate promises about the services delivered

(24.8% were neutral, 47.3% satisfied and 23.6% strongly satisfied).

• (Q23) My bank’s Internet Banking site does not share my personal information

with other sites. (24.2% were neutral, 36.4% satisfied and 36.4% strongly

satisfied).

Comparing the respondents’ levels of dissatisfaction per variable, the highest scores

were recorded on the following variables:

• My Bank's Internet Banking site pages download quickly all the time. (11.5%).

• It is easy for me to find what I want on my bank's Internet Banking site. (9.7%).

• My bank gives prompt responses to my request by email or any other means

(9.7%).

• When my bank promises to do something at a specific time, it keeps its

promises (9.1).

This is in line with the variables where respondents indicated neutrality and would

thus be the dimension that would need improvement to enhance the Internet Banking

service quality.

Table 4.8: ANOVA T-Test on age

T-Test Age

rq27 N Mean Std.

Deviation Std. Error Mean

35 and younger 90 4.13 0.653 0.069 Mean_Factor1

36 and older 71 4.09 0.656 0.078

35 and younger 90 3.99 0.771 0.081 Mean_Factor2

36 and older 71 4.00 0.716 0.085

35 and younger 90 4.31 0.509 0.054 Mean_Factor3

36 and older 71 4.28 0.650 0.077

35 and younger 90 3.77 0.704 0.074 Mean_Factor4

36 and older 71 3.74 0.640 0.076

35 and younger 90 4.07 0.710 0.075 Mean_Factor5

36 and older 71 4.06 0.825 0.098

35 and younger 90 4.06 0.535 0.056 Mean_Quality_Internet_Banking

36 and older 71 4.03 0.563 0.067

Elliot and Woodward (2007:52) indicate that the analysis of covariance ANOVA is

used to determine whether there are any differences in perception amongst identified

groups. From Table 4.8 on age distribution, the two age groups were consolidated

into two major groups, ages 35 and younger and ages 36 and older. Applying the

ANOVA t-Test on age it can be seen that there is an insignificant difference in the p-

67

values of the two age groups across all dimensions and including the overall Internet

Banking service quality where the p-value for respondents 35 years and younger is

0.535 and that of respondents 36 years and older is 0.563. This then means that age

does not influence the perception of Internet Banking service quality.

Table 4.9 ANOVA T-Test on Gender

T-Test Gender Group Statistics

q26 N Mean Std.

Deviation Std. Error Mean

Male 83 4.12 0.580 0.064 Mean_Factor1

Female 78 4.10 0.726 0.082

Male 83 4.03 0.722 0.079 Mean_Factor2

Female 78 3.95 0.772 0.087

Male 83 4.32 0.524 0.058 Mean_Factor3

Female 78 4.27 0.624 0.071

Male 83 3.75 0.712 0.078 Mean_Factor4

Female 78 3.76 0.638 0.072

Male 83 4.06 0.800 0.088 Mean_Factor5

Female 78 4.08 0.721 0.082

Male 83 4.06 0.501 0.055 Mean_Quality_Internet_Banking

Female 78 4.03 0.593 0.067

From Table 4.9 it is evident that there is an insignificant difference between the p-

value scores on both genders across all dimensions including the overall Internet

Banking service quality. The p-value for male on the mean Internet Banking service

quality is 0.501 and that of females is 0.593 showing an insignificant difference. This

indicates that males and females have similar perceptions when it comes to Internet

Banking service quality.

From the ANOVA T-Test on primary bank in Table 4.10, the p-values scores across

the five dimensions are very close, indicating an insignificant variance in the

perception of Internet Banking service quality from the different banks services. The

scores for an overall Internet Banking service quality are as follows:

• Absa (4.05)

• FNB (4.01)

• Standard bank (4.03).

Nedbank and other (Investec) scores were excluded from this test as a result of the

low number of responses from these banks as indicated in graph 4.3.

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Table 4.10: ANOVA T-Test on primary Bank

Bound Bound

Absa 80 4.08 0.686 0.077 3.92 4.23 2 5

FNB 24 4.07 0.857 0.175 3.71 4.43 1 5

SBSA 42 4.15 0.517 0.080 3.99 4.31 3 5

Total 146 4.10 0.671 0.056 3.99 4.21 1 5

Absa 80 3.95 0.738 0.082 3.79 4.11 1 5

FNB 24 3.95 0.824 0.168 3.60 4.30 1 5

SBSA 42 4.01 0.721 0.111 3.79 4.24 2 5

Total 146 3.97 0.743 0.061 3.85 4.09 1 5

Absa 80 4.34 0.525 0.059 4.22 4.46 3 5

FNB 24 4.28 0.806 0.165 3.94 4.62 1 5

SBSA 42 4.22 0.512 0.079 4.06 4.38 3 5

Total 146 4.30 0.575 0.048 4.20 4.39 1 5

Absa 80 3.77 0.711 0.080 3.61 3.93 2 5

FNB 24 3.86 0.617 0.126 3.60 4.12 3 5

SBSA 42 3.71 0.606 0.094 3.52 3.90 2 5

Total 146 3.77 0.665 0.055 3.66 3.87 2 5

Absa 80 4.16 0.685 0.077 4.01 4.32 3 5

FNB 24 3.78 1.043 0.213 3.34 4.22 1 5

SBSA 42 4.07 0.712 0.110 3.85 4.29 1 5

Total 146 4.07 0.769 0.064 3.95 4.20 1 5

Absa 80 4.05 0.555 0.062 3.93 4.18 3 5

FNB 24 4.01 0.683 0.139 3.72 4.30 1 5

SBSA 42 4.03 0.462 0.071 3.89 4.18 3 5

Total 146 4.04 0.550 0.046 3.95 4.13 1 5

N Mean

Std.

Deviation Std. Error

95% Confidence

Interval for Mean Minimu

m

Maxim

um

Mean_Factor1

Mean_Factor2

Mean_Factor3

Mean_Factor4

Mean_Factor5

Mean_Quality_Internet_

Banking

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Chapter FIVE

INTERPRETATION OF RESULTS

5.1 Introduction.

In this chapter the results presented in Chapter four are interpreted and discussed.

The findings and issues picked up including limitations of the study are also

discussed. The findings are also linked to the literature that was reviewed

5.2 Findings

The findings below were made in respect of the three biographical variables (gender,

age and primary bank) in the survey,

• Gender

It was observed that the p-values between males and females across all five

dimensions were insignificant. This then indicates that there are no differences in

perception or opinion on Internet Banking service quality between males and females.

• Age

The p-values across all variables for the two identified age groups (35 and younger

and older that 36) showed no significant difference. The overall mean on the quality of

Internet Banking was 0.535 for respondents 35 years and younger compared to 0.563

for respondents 36 years and older. This indicates age does not play a major role in

influencing the respondents’ perceptions on Internet banking service quality.

• Primary bank

The Kruskal-Wallis Test in appendix VI indicates that there are no significant

differences in the rankings across all dimensions from the respondents. These

insignificant differences in the rankings imply that the quality of Internet Banking

service delivered by the different banks is perceived in a similar manner by the

respondents.

From the frequency distribution Table in Appendix I, it was observed that the majority

of the respondents gave a perception that they were satisfied with all the five

dimensions of Internet Banking service. The overall p-value for quality of Internet

Banking service was 4.03 as shown in the normality distribution curve in Appendix II,

implying that respondents were satisfied with all the five extracted dimension of

Internet Banking service quality. One particular dimension that showed a neutral

70

perception with a lowest p-value of 3.7 was that of responsiveness. This dimension

comprised of the following variables:

• The bank gives prompt responses to my requests by e-mail or other means

• The bank is easily accessible by phone

• The bank quickly resolves problems I encounter with my Internet Banking

transactions

• The bank’s site makes accurate promises about the services delivered

The neutral or indifferent perception on these variables implies that the banks can

improve overall satisfaction of Internet Banking service quality by:

• Giving prompt response to customers’ requests sent by e-mail or any other

means.

• Ensuring that the banks are easily accessible by phone

• Ensuring that the banks quickly resolves problems customers encounter with

Internet Banking transactions

• Committing to service delivery promises made on their banking sites.

5.3 Findings linked to the literature

5.3.1 Characteristics of service

Zeithaml et al. (2006:21) summarise the characteristics of services that distinguish it

from products as intangibility, heterogeneity, simultaneous production and

consumption and perishability. Heterogeneity as one of the characteristics of service

played a major role in the assessment of the responsiveness dimension of service.

The quality of any service will vary when offered by different employees at different

times. Baron and Harris (2003:20) say organisations providing services know that no

two service provisions are exactly the same, whatever the attempts to standardise

them. It is for this reason that it is not surprising that respondents were indifferent on

the responsiveness dimension of Internet Banking service quality.

5.3.2 Responsiveness in service recovery

Parasuraman et al. (2005:230) on their research on electronic service quality (E-S-

Q), a multiple item scale for assessing electronic service quality, came up with five

managerial implications as described in Chapter Two. From these managerial

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implications one finding that came up as an area of concern from the analysis of the

survey results was that of the responsiveness dimension. This dimension covers

variables such as communications with customers and solving customers’ problems

which are in line with service recovery. This dimension indeed mirrors aspects of

traditional service such as ready access to company personnel and solving

customers’ problems. The respondents were neutral and indifferent on this dimension.

The critical incident technique as defined by Johnston (1995:65) indicates that

responsiveness is the crucial determinant of quality, as it is the key component in

providing satisfaction and the lack of it is a major source of dissatisfaction

5.3.3 GAPS model

The GAPS model as illustrated in Figures 2.2 depicts non-responsiveness as one of

the major gaps that could contribute to the customer dissatisfaction of service quality.

In this study responsiveness was one of the dimensions where respondents were

most indifferent compared to the other four dimensions. According to Zeithaml et al.,

(2006:34) the gaps occurring within the organization providing the service include:

• Gap1 is about not knowing what customers want.

• Gap2 refers to not selecting the right service designs and standards.

• Gap3 refers to not delivering to service designs and standards.

• Gap4 is about not matching performance to promise.

In this study the responsiveness dimension was the one where respondents were

indifferent.

The overall satisfaction of Internet Banking service quality in this study was skewed to

the right implying that respondents were generally satisfied with the level of service

quality. The two most critical and influential dimensions were that of efficiency and

fulfilment. In the literature Parasuraman et al. (2005:230) describe these two

dimensions as follows: efficiency and fulfilment were the most critical and important

facets of the Website service quality. Of the four E-S-Q dimensions, customers’

assessments of a Website on these two dimensions had the strongest influence not

only on the overall quality perceptions but also on perceived value and loyalty

intentions. The systems availability facet of the Websites was also the critical

contributor to customers’ perceptions of overall quality, value and loyalty intentions.

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5.3.4 Modified theoretical model

Figure 5.1: The initial and modified theoretical model

A modified theoretical model was developed based on the conducted Principal

Component Analysis (PCA) and Cronbach’s Alpha Test of reliability. The Principal

Component Analysis has proven the incongruity of the division of the initial eight

theoretical quality dimensions, thus requiring the rearrangement of the dimensions

into five new quality dimensions. Based on the results presented in Table 4.4 (the

rotated factor matrix) it was concluded that from the initial eight dimensions the

following five dimensions can be constructed: efficiency (the service is quick, easy to

use, and it addresses customer needs), fulfilment (speed of loading and availability

refer to the ability of customers to get to the Website and do banking), security

(assurance, trust, and privacy), responsiveness (communications and fulfilment

which incorporates accuracy of service promises) and contact (contact details

available, and availability of customer service support). The initial and modified

theoretical models are graphically illustrated in Figure 5.1 above.

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5.4 Limitations to the study

As with any research, there were limitations to this study. Firstly, the respondents’ lists

that would allow for random sampling were not readily available. The sample used

was a non-probability sample because it is was a convenience one. Projecting results

beyond a specific sample in a non-probability sample (convenience) might be

inappropriate. Zikmund (2003:382) points out that convenience samples are best

used for exploratory research when additional research will subsequently be

conducted with a probability sample.

The instrument used, only measured the level of customer satisfaction with different

dimensions characterising Internet Banking services quality, but does not show the

relative importance of each dimension in comparison to the others.

5.5 Conclusion

The following conclusions can be arrived at based on the research results analysis

and interpretation. The overall respondents’ perception of Internet Banking service

quality was skewed to the right, indicating a satisfactory perception. There was no

difference in perception of Internet Banking service quality based on age, gender or

primary bank of the respondents. This implies that Internet Banking service quality

perceptions are not influenced by respondents’ age, gender or bank. The only service

quality dimension where the respondents exhibited a neutral stance was that of

responsiveness. Lastly, the instrument used in the survey was reliable and the results

obtained can be trusted as they have been proven to be valid.

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Chapter SIX

CONCLUSION AND RECOMMENDATIONS

6.1 Summary of research objectives and major findings

Banks have invested heavily in introducing and making Internet Banking service, with

the objective of improving customer satisfaction and loyalty, ultimately contributing

positively to income and profits. This study’s purpose was to explore customer’s

perceptions on key electronic service dimensions or factors of Internet Banking

service quality. The survey was done with a primary objective of having an insight

into Internet Banking service quality as offered by South African banks. The

secondary objective was to determine if there were any differences in perceptions on

Internet Banking service quality based on gender, age or primary banking institution.

The major findings of the research study were:

• Customers were generally satisfied with Internet Banking service quality.

• Internet Banking customers’ perception on the responsiveness dimension of

service quality was neutral or indifferent. This dimension relates to service

recovery with variables like: the bank giving prompt responses to customer

requests; being easily accessible by phone; speed of resolving problems

encountered with Internet Banking and banks making accurate promises about

the services they deliver on their Websites.

• The variables where the frequency scores were indicating a level of

dissatisfaction were in line with the variables where a level of neutrality was

indicated.

• There were no significant differences in perceptions of Internet Banking service

quality, based on gender, age or primary bank offering Internet Banking

services.

O’Neill, Palmer and Wright (2003:281) concluded that the winners in the online market

space will be those who consistently provide compelling, user-friendly and responsive

online service experiences. Overall Internet Banking customers in South Africa are

satisfied with Internet Banking service quality. However, attention needs to be given to

the service recovery dimension of Internet Banking service which was identified as

responsiveness. These findings mean that Internet Banking service quality is not

75

influenced by gender, age or the bank offering the service. People of different age and

gender have similar Internet Banking service expectations. Lastly the study indicated

that the respondents evaluated Internet Banking service quality on five key

dimensions: efficiency, performance, security, responsiveness and contact

6.2 Recommendations

As outlined in the limitations section of this study it is important to further develop the

instrument in order to better understand Internet Banking service dimensions and their

relative importance as perceived by customers. The analysis of the survey includes

implications to bank mangers as far as satisfaction levels of their customers on

different aspects of Internet Banking are concerned.

The respondents in this study have shown the highest level of indifference or

dissatisfaction with aspects of Internet Banking service quality such as the bank giving

prompt responses to customer requests or complaints, being easily accessible by

phone, speed of resolving problems encountered with Internet Banking and banks

making accurate promises about the services they deliver on their sites. Bank

managers should improve on the following responsiveness or service recovery

aspects of Internet Banking service:

• An improved and closely managed customer complaint management system

and process with tight service levels agreements in place.

• Ensuring that all contact details given on the banks’ information and banking

Websites are manned and relevant responses are given to customers within

reasonable time frames.

• Ensuring that there is proper feedback given to customers on their requests.

Proper feedback might also include an acknowledgement of the request with a

commitment of timelines for resolution.

• Ensuring that the banks meet all obligations and promises that are made on

their Websites.

The results of the analysis indicate that banks perform relatively well on aspects of

Internet Banking such as service efficiency (the service is quick, easy to use, and it

addresses customer needs), fulfilment (speed of loading and availability which refer

to the ability of customers to get to the Website and do banking). It is recommended

that banks keep on innovating in this area as more and many customers are starting

76

to bank online. Banks must always try to exceed the customers’ expectations. This is

one critical area of Internet Banking service that could impact the overall satisfaction

negatively if it were to be allowed to deteriorate or not leave up to customers’

expectations.

Bank managers do not need to segment the market by gender or age to achieve

Internet Banking service quality because the results of this study have revealed that

there is no significant gender-based or age-based difference in so far as Internet

Banking service quality is concerned. .

6.3 Suggestions for further study

The instrument used in this study, only measured the level of customer satisfaction

with different dimensions characterising Internet Banking services quality. The

instrument fell short of showing the relative importance of each dimension in

comparison to the others. It is suggested that a further study on Internet Banking

service quality be undertaken where the relative importance of the dimensions is

tested. The importance-performance analysis (IPA) approach is built around

customer-perceived importance of quality attributes and attributes of performance, the

interplay of which suggests strategies for service improvement and satisfaction

management (Ibrahim et al., 2005:479).

Time permitting and a list of customers using Internet banking available, probability

sampling method could be used to ensure that the survey sample is representative of

the population.

In view of the relative immaturity of online banking, other interesting areas for further

research include:

• A comparison of online banking service quality with traditional service-quality

models.

• An exploration of the difference in customer expectations and perceptions

between online environment and traditional channels.

77

REFERENCES

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81

APPENDICES Appendix I: Internet Banking Service Quality Frequency Table

Quality of Internet Banking Services

Strongly

Disagree Disagree Neutral Agree

Strongly

Agree Total

Count 2 4 8 69 82 165

% 1.2% 2.4% 4.8% 41.8% 49.7% 100.0%

Count 3 15 48 66 33 165

% 1.8% 9.1% 29.1% 40.0% 20.0% 100.0%

Count 2 12 15 87 49 165

% 1.2% 7.3% 9.1% 52.7% 29.7% 100.0%

Count 2 1 27 70 65 165

% 1.2% 0.6% 16.4% 42.4% 39.4% 100.0%

Count 1 3 10 86 65 165

% 0.6% 1.8% 6.1% 52.1% 39.4% 100.0%

Count 3 8 30 82 42 165

% 1.8% 4.8% 18.2% 49.7% 25.5% 100.0%

Count 1 16 46 60 42 165

% 0.6% 9.7% 27.9% 36.4% 25.5% 100.0%

Count 4 16 46 61 38 165

% 2.4% 9.7% 27.9% 37.0% 23.0% 100.0%

Count 4 16 25 81 39 165

% 2.4% 9.7% 15.2% 49.1% 23.6% 100.0%

Count 1 2 8 69 85 165

% 0.6% 1.2% 4.8% 41.8% 51.5% 100.0%

Count 1 10 32 73 49 165

% 0.6% 6.1% 19.4% 44.2% 29.7% 100.0%

Count 1 5 23 78 58 165

% 0.6% 3.0% 13.9% 47.3% 35.2% 100.0%

Count 1 5 4 69 86 165

% 0.6% 3.0% 2.4% 41.8% 52.1% 100.0%

Count 2 6 63 65 29 165

% 1.2% 3.6% 38.2% 39.4% 17.6% 100.0%

Count 4 11 30 69 51 165

% 2.4% 6.7% 18.2% 41.8% 30.9% 100.0%

Count 1 8 14 69 73 165

% 0.6% 4.8% 8.5% 41.8% 44.2% 100.0%

Count 1 3 13 89 59 165

% 0.6% 1.8% 7.9% 53.9% 35.8% 100.0%

Count 2 3 9 83 68 165

% 1.2% 1.8% 5.5% 50.3% 41.2% 100.0%

Count 3 9 20 77 56 165

% 1.8% 5.5% 12.1% 46.7% 33.9% 100.0%

Count 1 6 41 78 39 165

% 0.6% 3.6% 24.8% 47.3% 23.6% 100.0%

Count 2 19 38 71 35 165

% 1.2% 11.5% 23.0% 43.0% 21.2% 100.0%

Count 4 15 33 71 42 165

% 2.4% 9.1% 20.0% 43.0% 25.5% 100.0%

Count 3 2 40 60 60 165

% 1.8% 1.2% 24.2% 36.4% 36.4% 100.0%

Count 2 6 15 73 69 165

% 1.2% 3.6% 9.1% 44.2% 41.8% 100.0%

My Bank's Internet Banking site pages download

quickly all the time.

My Internet Banking pages do not freeze, after I have

entered my login credentials.

My bank's Internet Banking site does not share my

personal information with other sites.

My bank's Internet Banking site does provide

telephonic contact details

The functionality delivered through my bank's Internet

Banking service effectively address most of my

banking needs.Using my bank' Internet Banking service does not

require a lot of effort.

The information on my bank's Internet Banking

service does not require a lot of effort.

My bank's site makes accurate promises about the

services they deliver.

My bank is well known and has a good reputation.

My bank quickly resolves problems I encounter with

my Internet Banking transactions.

My bank's Internet Banking service does have

customer support staff available on email and/or

telephonically.It is quick to complete a transaction through my bank's

Internet Banking site

It is easy for me to find what I want on my bank's

Internet Banking site.

My Internet Banking transactions with my bank are

always accurate.

My bank's Internet Banking site launches and runs

immediately.

I feel safe with all my internet banking transactions.

I have confidence in my bank's Internet Banking

Service.

My bank's Internet Banking website design is

aesthetically attractive.

My bank gives prompt responses to my request by

email or any other means.

My Bank's Internet Banking site pages download

quickly all the time.

I am able to get to my bank's Internet Banking site

quickly.

When my bank promises to do something at a specific

time, it keeps its promises.

My bank's internet Banking site is always available for

business

My bank's Internet Banking site protects information

about my banking behavior.

82

Appendix II: Descriptive Statistics

Q26 What is your gender?

Frequency Percent

Valid

Percent

Cumulative

Percent

Male 83 43.7 51.6 51.6

Female 78 41.1 48.4 100.0

Valid

Total 161 84.7 100.0

Missing System 29 15.3

Yes

Total 190 100.0

Q27 What is your age?

Frequency Percent

Valid

Percent

Cumulative

Percent

18 - 24 8 4.2 5.0 5.0

25- 35 82 43.2 50.9 55.9

36 - 49 64 33.7 39.8 95.7

Older than

50 7 3.7 4.3 100.0

Valid

Total 161 84.7 100.0

Missing System 29 15.3

Yes

Total 190 100.0

Q25 Where you do most of your Internet Banking?

Frequency Percent

Valid

Percent

Cumulative

Percent

Absa 80 42.1 49.7 49.7

FNB 24 12.6 14.9 64.6

Standard Bank 42 22.1 26.1 90.7

Nedbank 12 6.3 7.5 98.1

Other 3 1.6 1.9 100.0

Valid

Total 161 84.7 100.0

Missing System 29 15.3

Total 190 100.0

83

Appendix III: Normality Test Results

TEST FOR NORMALITY

Statistic Std. Error

Mean 4.09 0.052

Lower Bound 3.99 95% Confidence Interval for Mean

Upper Bound 4.19

5% Trimmed Mean 4.13

Median 4.17

Variance 0.443

Std. Deviation 0.666

Minimum 1

Maximum 5

Range 4

Interquartile Range 1

Skewness -1.142 0.189

Mean_Factor1

Kurtosis 2.444 0.376

Mean 3.97 0.058

Lower Bound 3.86 95% Confidence Interval for Mean

Upper Bound 4.09

5% Trimmed Mean 4.02

Median 4.00

Variance 0.562

Std. Deviation 0.750

Minimum 1

Maximum 5

Range 4

Interquartile Range 1

Skewness -0.882 0.189

Mean_Factor2

Kurtosis 1.187 0.376

Mean 4.29 0.045

Lower Bound 4.20 95% Confidence Interval for Mean

Upper Bound 4.38

5% Trimmed Mean 4.32

Median 4.40

Variance 0.330

Std. Deviation 0.574

Minimum 1

Maximum 5

Range 4

Interquartile Range 1

Skewness -1.319 0.189

Mean_Factor3

Kurtosis 5.393 0.376

Mean 3.74 0.053

Lower Bound 3.64 95% Confidence Interval for Mean

Upper Bound 3.85

5% Trimmed Mean 3.75

Median 3.80

Variance 0.464

Std. Deviation 0.682

Mean_Factor4

Minimum 2

84

Maximum 5

Range 3

Interquartile Range 1

Skewness -0.140 0.189

Kurtosis -0.296 0.376

Mean 4.06 0.059

Lower Bound 3.94 95% Confidence Interval for Mean

Upper Bound 4.18

5% Trimmed Mean 4.11

Median 4.00

Variance 0.571

Std. Deviation 0.756

Minimum 1

Maximum 5

Range 4

Interquartile Range 1

Skewness -0.998 0.189

Mean_Factor5

Kurtosis 2.497 0.376

Mean 4.03 0.043

Lower Bound 3.95 95% Confidence Interval for Mean

Upper Bound 4.12

5% Trimmed Mean 4.05

Median 4.04

Variance 0.304

Std. Deviation 0.552

Minimum 1

Maximum 5

Range 4

Interquartile Range 1

Skewness -0.891 0.189

Mean_Quality_Internet_Banking

Kurtosis 2.790 0.376

85

Appendix IV: Reliability Test Results

Fulfilment

N %

Valid 165 86.8

Excluded(a) 25 13.2

Total 190 100.0

Cronbach's Alpha N of Items

0.881 5

Mean Std. Deviation N

q21 3.72 0.968 165

q22 3.80 1.001 165

q11 3.96 0.890 165

q3 4.02 0.890 165

q1 4.36 0.789 165

Scale Mean if Item

Deleted

Scale Variance if

Item Deleted

Corrected Item-Total

Correlation

Cronbach's Alpha if Item

Deleted

q21 16.15 8.861 0.739 0.850

q22 16.07 8.538 0.772 0.842

q11 15.90 9.100 0.776 0.842

q3 15.84 9.597 0.665 0.867

q1 15.50 10.215 0.638 0.874

Case Processing Summary

Cases

a. Listwise deletion based on all variables in the procedure.

Reliability Statistics

Item Statistics

Item-Total Statistics

Efficiency

N %

Valid 165 86.8

Excluded(a) 25 13.2

Total 190 100.0

Cronbach's Alpha N of Items

0.868 6

Mean Std. Deviation N

q19 4.05 0.919 165

q18 4.28 0.756 165

q16 4.24 0.849 165

q6 3.92 0.890 165

q9 3.82 0.983 165

q17 4.22 0.719 165

Scale Mean if Item

Deleted

Scale Variance if

Item Deleted

Corrected Item-Total

Correlation

Cronbach's Alpha if Item

Deleted

q19 20.49 10.556 0.761 0.828

q18 20.26 11.865 0.674 0.845

q16 20.30 11.152 0.718 0.836

q6 20.62 11.297 0.644 0.849

q9 20.73 11.065 0.598 0.861

q17 20.32 12.256 0.630 0.853

Case Processing Summary

Cases

a. Listwise deletion based on all variables in the procedure.

Reliability Statistics

Item Statistics

Item-Total Statistics

86

Security

N %

Valid 165 86.8

Excluded(a) 25 13.2

Total 190 100.0

Cronbach's Alpha N of Items

0.816 5

Mean Std. Deviation N

q12 4.13 0.808 165

q4 4.18 0.814 165

q5 4.28 0.712 165

q10 4.42 0.700 165

q13 4.42 0.741 165

Scale Mean if Item

Deleted

Scale Variance if

Item Deleted

Corrected Item-Total

Correlation

Cronbach's Alpha if Item

Deleted

q12 17.30 5.127 0.674 0.759

q4 17.25 5.301 0.610 0.780

q5 17.16 5.646 0.619 0.777

q10 17.01 5.780 0.588 0.786

q13 17.02 5.750 0.548 0.797

Case Processing Summary

Cases

a. Listwise deletion based on all variables in the procedure.

Reliability Statistics

Item Statistics

Item-Total Statistics

Responsiveness

N %

Valid 165 86.8

Excluded(a) 25 13.2

Total 190 100.0

Cronbach's Alpha N of Items

0.791 5

Mean Std. Deviation N

q7 3.76 0.962 165

q8 3.68 1.011 165

q14 3.68 0.847 165

q2 3.67 0.957 165

q20 3.90 0.824 165

Scale Mean if Item

Deleted

Scale Variance if

Item Deleted

Corrected Item-Total

Correlation

Cronbach's Alpha if Item

Deleted

q7 14.94 7.435 0.620 0.735

q8 15.02 7.725 0.510 0.775

q14 15.02 8.030 0.597 0.745

q2 15.03 7.700 0.564 0.754

q20 14.81 8.206 0.578 0.751

Case Processing Summary

Cases

a. Listwise deletion based on all variables in the procedure.

Reliability Statistics

Item Statistics

Item-Total Statistics

87

Contact

N %

Valid 165 86.8

Excluded(a) 25 13.2

Total 190 100.0

Cronbach's Alpha N of Items

0.765 3

Mean Std. Deviation N

q24 4.22 0.849 165

q23 4.04 0.906 165

q15 3.92 0.988 165

Scale Mean if Item

Deleted

Scale Variance if

Item Deleted

Corrected Item-Total

Correlation

Cronbach's Alpha if Item

Deleted

q24 7.96 2.669 0.630 0.654

q23 8.14 2.682 0.551 0.735

q15 8.26 2.304 0.620 0.661

Case Processing Summary

Cases

a. Listwise deletion based on all variables in the procedure.

Reliability Statistics

Item Statistics

Item-Total Statistics

All Dimensions

N %

Valid 165 86.8

Excluded(a) 25 13.2

Total 190 100.0

Cronbach's Alpha N of Items

0.935 24

Mean Std. Deviation N

q1 4.36 0.789 165

q2 3.67 0.957 165

q3 4.02 0.890 165

q4 4.18 0.814 165

q5 4.28 0.712 165

q6 3.92 0.890 165

q7 3.76 0.962 165

q8 3.68 1.011 165

q9 3.82 0.983 165

q10 4.42 0.700 165

q11 3.96 0.890 165

q12 4.13 0.808 165

q13 4.42 0.741 165

q14 3.68 0.847 165

q15 3.92 0.988 165

q16 4.24 0.849 165

q17 4.22 0.719 165

q18 4.28 0.756 165

q19 4.05 0.919 165

q20 3.90 0.824 165

q21 3.72 0.968 165

q22 3.80 1.001 165

q23 4.04 0.906 165

q24 4.22 0.849 165

Case Processing Summary

Item Statistics

Cases

a. Listwise deletion based on all variables in the procedure.

Reliability Statistics

88

Scale Mean if Item

Deleted

Scale Variance if

Item Deleted

Corrected Item-Total

Correlation

Cronbach's Alpha if Item

Deleted

q1 92.37 162.064 0.631 0.932

q2 93.06 160.362 0.581 0.933

q3 92.71 161.915 0.559 0.933

q4 92.55 161.859 0.621 0.932

q5 92.45 163.079 0.648 0.932

q6 92.81 160.214 0.637 0.932

q7 92.97 161.981 0.509 0.934

q8 93.05 165.498 0.340 0.937

q9 92.92 160.298 0.566 0.933

q10 92.31 163.971 0.609 0.933

q11 92.77 159.312 0.680 0.931

q12 92.60 162.010 0.618 0.932

q13 92.32 163.632 0.590 0.933

q14 93.05 160.839 0.643 0.932

q15 92.81 159.727 0.587 0.933

q16 92.49 159.471 0.707 0.931

q17 92.51 162.751 0.660 0.932

q18 92.45 162.554 0.635 0.932

q19 92.68 159.207 0.660 0.932

q20 92.84 161.260 0.642 0.932

q21 93.02 159.518 0.610 0.932

q22 92.93 158.624 0.624 0.932

q23 92.69 162.947 0.501 0.934

q24 92.52 163.190 0.528 0.933

Item-Total Statistics

89

Appendix V New Service Dimensions Labels

Variables

(Questions)

Content of each question New dimension

label

Q19 The information on my bank’s Internet Banking

site is well organised and is easy to follow.

Q18 Using the bank’s Internet Banking service does

not require a lot of effort

Q16 It is quick to complete a transaction through my

bank’s Internet Banking site.

Q6 The Internet Banking website design is

aesthetically attractive

Q9 It is easy for me to find what I want on my bank’s

Internet Banking site

Q17 The functionality delivered through my bank’s

Internet Banking site effectively addresses my

banking needs.

Efficiency

(The service is

quick, easy to use,

and it addresses

customer needs)

Q21 My bank’s Internet Banking site pages loads fast

all the time.

Q22 The Internet Banking pages do not freeze, after I

have entered my log-in credentials.

Q11 The bank’s Internet Banking site launches and

runs right away

Q3 The Internet Banking site is always available for

business

Q1 I am able to get to my bank’s Internet Banking

site quickly

Fulfilment

(Speed of loading

and availability it

also refers to the

ability of customers

to get to the

Website and do

banking)

Q12 I feel safe with all my Internet Banking

transactions

Q4 The Internet Banking site protects information

about my banking behaviour.

Q5 I have confidence in the bank’s service

Security

(Assurance, Trust,

security and

privacy)

90

Q10 My Internet Banking transactions with the bank

are always accurate

Q7 The bank gives prompt responses to my

requests by e-mail or other means

Q8 The bank is easily accessible by phone

Q14 The bank quickly resolves problems I encounter

with the my Internet Banking transactions

Q20 The bank’s site makes accurate promises about

the services delivered

Responsiveness

(Communications

and fulfilment which

incorporates

accuracy of service

promises )

Q24 My bank’s Internet Banking site does provide

telephonic contact details

Q23 My bank’s Internet Banking site does not share

my personal information with other sites

Q15 The Service does have customer support staff

available online and telephonically.

Contact

(contact details

available, and

availability of

customer service

support)

91

Appendix VI: The Kruskal- Wallis Test

Kruskal-Wallis Test

Who is your primary bank; i.e.

Where you do most of your online

Banking? N Mean Rank

Absa 80 72.96

FNB 24 76.60

SBSA 42 72.75

Total 146

Absa 80 71.95

FNB 24 73.85

SBSA 42 76.25

Total 146

Absa 80 76.03

FNB 24 79.04

SBSA 42 65.51

Total 146

Absa 80 74.95

FNB 24 79.35

SBSA 42 67.39

Total 146

Absa 80 76.90

FNB 24 62.19

SBSA 42 73.49

Total 146

Absa 80 74.62

FNB 24 76.90

SBSA 42 69.43

Total 146

Chi-Square df

Asymp.

Sig.

Mean_Factor1 0.157 2 0.924

Mean_Factor2 0.289 2 0.865

Mean_Factor3 2.240 2 0.326

Mean_Factor4 1.443 2 0.486

Mean_Factor5 2.299 2 0.317

Mean_Quality_Internet_

Banking0.601 2 0.741

Mean_Quality_Internet_

Banking

Test Statistics(a,b)

a. Kruskal Wallis Testb. Grouping Variable: Who is your primary bank; i.e. Where you do most of your

online Banking?

Mean_Factor2

Mean_Factor3

Mean_Factor4

Mean_Factor5

Ranks

Mean_Factor1

92

Appendix VII: SURVEY COVERING LETTER

Dear Prospective Respondent

You are hereby invited to complete a survey on Internet Banking service quality in SA as part

of my dissertation that I will be submitting in fulfilment of the requirements for the degree in

Magister Commercii in the faculty of Management at the University of Johannesburg.

Topic: An assessment of Internet Banking Service Quality.

The objective of the study is to get an insight into the perceptions of online banking customers

in South Africa on Internet Banking service quality. The questionnaire will take approximately

only 8 - 12 minutes to complete, confidentiality is guaranteed and your co-operation in this

regard is highly appreciated.

To access the survey please click on the hyperlink below or copy and paste the link into your

web browser

http://take-survey.com/statkon2/Quality_of_Internet_Banking_Services.htm

Thanking you in advance

Masopha Molapo Study Leader: Cor Scheepers

M.Com Business Management Student Faculty of Business Management

University of Johannesburg University of Johannesburg

Masopha.Molapo@gmail.com http://www.uj.ac.za/

93

Appendix VIII: SURVEY QUESTIONNAIRE

Quality of Internet Banking Services survey

Do you make use of Internet Banking Services?

Yes

No

Continue

Based on your personal experiences as an Internet Banking Service user, please indicate to what extent you agree or disagree with each of the statements below in relation to your primary bank's Internet Banking service. Your primary bank in the questionnaire will always refer to the bank with which you do most of your online banking transactions.

Strongly Disagree Disagree Neutral Agree Strongly

Agree

1 2 3 4 5

1. I am able to get to my bank's Internet Banking site quickly.

2.When my bank promises to do something at a spesific time, it keeps its promise.

3. My bank's Internet Banking site is always available for business.

4. My bank's Internet Banking site protects information about my banking behaviour.

5. I have confidence in my bank's Internet Banking service.

6. My bank's Internet Banking website design is aesthetically attractive.

7. My bank gives prompt responses to my requests by e-mail or any other means.

8. My bank is easily accessible by phone.

9. It is easy for me to find what I want on my bank's Internet Banking site.

10. My Internet banking transactions with the bank are always accurate.

11. My bank's Internet Banking site launches and runs immediately.

12. I feel safe with all my Internet banking transactions

13. My bank is well known and has a good reputation.

14. My bank quickly resolves problems I encounter with my Internet Banking transactions

15. My bank's Internet Banking service does have customer support staff available on e-mail and/or telephonically.

16. It is quick to complete a transaction through my bank's Internet Banking site.

17. The functionality delivered through my bank's Internet Banking service effectively addresses most of my banking needs.

Appendix IV

94

Strongly Disagree Disagree Neutral Agree Strongly

Agree

1 2 3 4 5

1. I am able to get to my bank's Internet Banking site quickly.

2. When my bank promises to do something at a specific time, it keeps its promise.

3. My bank's Internet Banking site is always available for business.

4. My bank's Internet Banking site protects information about my banking behaviour.

5. I have confidence in my bank's Internet Banking service.

6. My bank's Internet Banking website design is aesthetically attractive.

7. My bank gives prompt responses to my requests by e-mail or any other means.

8. My bank is easily accessible by phone.

9. It is easy for me to find what I want on my bank's Internet Banking site.

10. My Internet Banking transactions with the bank are always accurate.

11. My bank's Internet Banking site launches and runs immediately.

12. I feel safe with all my Internet Banking transactions

13. My bank is well known and has a good reputation.

14. My bank quickly resolves problems I encounter with my Internet Banking transactions

15. My bank's Internet Banking service does have customer support staff available on e-mail and/or telephonically.

16. It is quick to complete a transaction through my bank's Internet Banking site.

17. The functionality delivered through my bank's Internet Banking service effectively addresses most of my banking needs.

18. Using my bank's Internet Banking service does not require a lot of effort.

19. The information on my bank's Internet Banking site is well organised and is easy to follow.

20. My bank's site makes accurate promises about the services they deliver.

21. My bank's Internet Banking site pages download quickly all the time.

22. The Internet Banking pages do not freeze, after I have entered my login credentials.

23. My bank's Internet Banking site does not share my personal information with other sites.

24. My bank's Internet Banking site does provide telephonic contact details.

Continue

95

Please provide the following information:

25. Who is your primary bank; i.e. Where you do most of your online Banking? (Please choose one only)

Absa

FNB

SBSA

Nedbank

Other (Please specify)

26. What is your gender?

Male

Female

27. What is your age?

Younger than18

18 - 24

25 - 35

36 - 49

Older than 50

28. How long have you been using Internet Banking?

Less than 3 months

3 - 12 months

More than 12 months

29. How do you access your Internet Banking site? (Most of the time)

Home - Dial-up access

Home - Fixed line or wireless broadband

My employer's network

Other (Please specify)