The Impact Of Technology Based Self Service Banking Service Quality On Customer Satisfaction: A Case Study Of The Nigerian Banking Sector
ABSTRACT
The purpose of the research is to determine the impact of Technology Based Self-Service Banking (TBSSB) on customers’ satisfaction in the Nigerian Banking Sector. Focus is given to five selected banks within Yola metropolis, in Adamawa state. The research determines the degree of impact of speed of delivery, convenience, efficiency, reliability & security as well as their influence on customer satisfaction. In this context, the speed of delivery, convenience, efficiency, reliability & security are considered as service quality factors associated with TBSSB. The methodology approach employed was the survey questionnaire administered to the respective customers of banks via TBSSB channels. Five hypotheses were formulated and tested using the Structural Equation Modeling-Partial Least Square (SEM-PLS). A survey of 248 valid questionnaire instruments, were collected from the customers of TBSSB within Yola metropolis. Data obtained from the customers were analyzed using the SEM-PLS to determine the reliability and validity of the model. Besides, the significance path coefficient as well as the degree of impact of the service quality factors of TBSSB on customer satisfcation were also determined. The findings indicate that speed of delivery and reliability has significant influence on customer satisfaction among other variables. Speed of delivery, convenience and efficiency has small impact on customer satisfaction while reliability seen as having medium degree of impact on customer satisfaction, while security has a large impact on the customer satisfaction. The research findings are of importance to both theory and practice. To theory, the research has developed a model for evaluating service quality factors associated with TBSSB in the Nigerian banking sectors. Practical wise, banks can use the model to understand the factors they should focus on while servicing their customers associated with the extent/degree of impact suggest that speed of delivery, convenience, and efficiency have small value on customer satisfaction. This is followed by reliability, convenience via TBSSB channels.
TABLE OF CONTENTS
itle Page. . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Certification . . . . . . . . . . . . . . . . . . . . . . . . . … . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Acknowledgement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . …5
Abstract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Table of Content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
List of Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
List of Figures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Abbreviation & Nomenclature . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
CHAPTER ONE …………………………………………………………………………………………………………… 11
1.0 Background of the Study ………………………………………………………………………………………….. 11
1.1Problem Statement ……………………………………………………………………………………………………. 13
1.2Research Question ……………………………………………………………………………………………………. 14
1.3Objectives of the Study ……………………………………………………………………………………………… 15
1.4Significance of the Research ………………………………………………………………………………………. 15
1.5Scope and Limitations of the Study …………………………………………………………………………….. 15
1.6Thesis Structure ……………………………………………………………………………………………………….. 16
CHAPTER TWO
2.0 Literature Review……………………………………………………………………………………………….. 17
2.1 Introduction …………………………………………………………………………………………………………… 17
2.2Customer Quality Service and TBSSB ………………………………………………………………………… 17
2.3Customer Satisfaction in TBSSB ………………………………………………………………………………… 19
2.4Brief Historical Evolution and History of Banking in Nigeria ………………………………………… 17
2.5Service Quality…………………………………………………………………………………………………………. 20
2.6Attribute Based Model in Information System (IS) Research …………………………………………. 22
2.7Discrepancy Model in Research of Satisfaction in Information Systems………………………….. 24
2.8 Associated Quality Service Factors In TBSSB …………………………………………………………….. 26
2.9 Efficiency of Technology Self-service ……………………………………………………………………….. 27
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2.9.1 Convenience of Technology Self-Service ………………………………………………………………… 28
2.9.2 Speed of Delivery of Technology Banking ………………………………………………………………. 28
2.9.3 Reliability of Technology Banking ………………………………………………………………………….. 29
2.9.4 Security of Technology Banking …………………………………………………………………………….. 29
2.9.5 Knowledge Gap from Literature ……………………………………………………………………………… 30
CHAPTER THREE …………………………………………………………………………………………………………………… 31
3.0 Methodology . .………………………………………………………………………………………..31
3.1 Introduction …………………………………………………………………………………………………………….. 31
3.2 Research Design………………………………………………………………………………………………………. 31
3.3 Survey Methodology ………………………………………………………………………………………………… 32
3.5 Selecting the Sampling Technique……………………………………………………………………………… 34
CHAPTER FOUR ……………………………………………………………………………………………………………………… 36
4.0Research Data Presentation and Analysis of Result ………………………………………………………. 36
4.1 Analysis Software (SEM-PLS) ………………………………………………………………………………….. 36
4.3Statistical Data Analysis Tools …………………………………………………………………………………… 38
4.4 Measurement Model ………………………………………………………………………………………………… 38
4.5 Quality and Rigor of the Research ……………………………………………………………………………… 41
4.7 Composite Reliability ………………………………………………………………………………………………. 42
4.8 Validity ………………………………………………………………………………………………………………….. 43
4.9 Convergent Validity …………………………………………………………………………………………………. 43
4.9.1 Discriminate Validity ……………………………………………………………………………………… 43
4.9.2 Determination of the Path Coefficient and Structural Relevance Relationship ……… 45
4.9.3Determination of the Result (Regression Analysis of R2) …………………………………….. 46
4.9.4Hypothesis Testing and Result ………………………………………………………………………….. 46
4.9.5 Determining and Assessing the Effect Size F2 ……………………………………………………. 47
CHAPTER FIVE ………………………………………………………………………………………………………………………. 51
5.0Summary Conclusion and Recommendation …………………………………………………………………………….. 51
5.1 Summary …………………………………………………………………………………………………………………………….. 51
5.2 Recommendation and Future Research ………………………………………………………………………. 52
5.3 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
CHAPTER ONE
Introduction
This chapter presents the Master’s Thesis titled “The Impact of Technology Based Self-Service Banking Service Quality on Customer Satisfaction.” The introduction is divided into the sections herein. Section 1.0 provides the background and introduces the phenomenon under investigation. Section 1.1 gives the problem statement of the research. Section 1.2 provided the research questions. Section 1.3 introduces the aim and objectives of the study. Section 1.4 gives the significance of the research. Section 1.5 gives the scope and limitations of the study. Finally, 1.6 gives the thesis structure
1.0 Background of the Study
Today, almost all the Nigerian commercial banks provide automated services better known as Technology Based Self Service Banking (TBSSB). Information Technology is considered as one of the greatest transformations in financial institutions. Consequently technology has led to new innovative services, creating market opportunities and introducing new business information systems (Chang, Cheung, & Cheng, 2002). Technology Based Self-Services Banking includes mobile banking, Internet banking, automated teller machine banking and tele banking, most of which are similar (Akinyele & Olorunleke, 2010). Moreover, Technology Based Self-Service is changing the way the financial markets use innovative resources with enterprise deliverables (Wang & Harris, 2003). The emergence of TBSSB has led to the innovation of new strategies for improving and facilitating customer satisfaction (Adewoye, 2013). The transformation and growth of Information Systems in the banking industry has added to inventions and advances in developing countries, which has introduced a new system of process in ICT in those countries (Avgerou, 2010). The rise of TBSSB in developing countries has played a significant role in determining the successes of online purchase, electronic commerce, as well as delivering services and improving collaborative flow of information (Jayawardhena, 2004; Ombati, et al, 2010).
TBSSB enables customers to complete service for themselves without support from banks staff (Meuter, Bitner, Ostrom, & Brown, 2005). TBSSB includes, all sorts of computing devices used for transaction in the bank such as Automated Teller Machine (ATM), electronic mobile banking and internet banking services among others (Meuter, Ostrom, Roundtree, & Bitner, 2000).
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Technology Based Self-Service is a “relatively new type of information system that uses the World Wide Web (WWW) to enable customers to do their transactions and financial activities in virtual space” (Shih & Fang, 2004, pp. 213-223). It is an interesting self-banking service, where a customer could do different transactions without any support from the bank employee. There are many advantages of using the automated TBSSB service, which include; lower customer influx, low cost of operations, and convenient self-service banking (Meuter et al., 2005). These have eased Nigerian banking culture and have successfully standardized their business operations. The technology transaction has brought about social change such as: user control of operations, less restriction, environmental management and convenience among others (Frank & Zion, 2012). Globalization in the banking sector has improved ways of delivering service to customers (Abd, Aziz, Pacha, & El, 2014). Because of the innovative systems of technology in the information age, customers have to choose from diverse alternatives those services that they want (Cavus, Netsai, Chingoka, & East, 2015). The TBSSB services which the financial institution provides to customers are reliable and dependable 24hours, 7 days a week without interruption.
Different authors have viewed service quality, as the degree to which customer expectations and needs are satisfied (Bebli, 2010). Service quality guarantees organizational success and usefulness (Bavarsad, Azizi, Saghaeian & Hozhabri, 2015; Yen, 2005). The introduction and growth of TBSSB has been acknowledged, as providing service quality, which is a key factor in establishing competitive advantage (Ombati et al., 2010).
Customer satisfaction means the measures of indicator on how product or services which needed by the organization meets users anticipation. Customer satisfaction is significant because it provide the business owners with the metric that can help them manage and improve their business.
From the users perspectives literature has shown that customers benefit from the following Technology Based Self-Service banking factors; speed of delivery, ease of use, reliability, efficiency, which are attribute of service quality, in evaluating business continuity (Lehtinen, 2010). Electronic service quality has a significant direct relationship with the information systems, and Internet service quality as well as overall technological service quality (Rod, Ashill, Shao, & Carruthers, 2009). There is a relationship between the technology banking and
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electronic telecommunications systems. Although, many studies have been done on self-service technology banking, the studies only concentrated on one banking self-service platform (White & Nteli, 2004).
Over the past decades, technology banking services have been in demand beacause there were more provision of services than product in a global economy. The focus is now shifting to providing more e-services than tangible services.Technology has radically changed, to encourage customers to be more proactive in patronizing the efficient and quick services provided by institutions through self service (Rose, 2013). Younger people are technology driven, more educated, affluent and exposed and are willing to adopt to the changing economy. Implementing this new innovative technology is significant for the banking industry. There are different perceptions of concepts from the customers’ perspective. This study seeks to determine the impact of TBSSB on customer satisfaction.
1.1 Problem Statement
Technology transformation in the banking system has conveyed the need for the use of Technology Based Self-Service Banking (Akinyele and Olorunleke, 2010). There is need for an in depth understanding of the technology based service in the financial banking sector’s use of technological platforms (Meuter, Bitner, Ostrom, & Brown, 2005).
Yen, (2005) was able to use the Attribute Based Model (ABM) to explore the interaction between technologies based service opportunities and customer satisfaction. The model was used because it had an instrument of measurement for service quality. He investigated the interaction between the service quality option and technology. In his study the potential of Attribute Based Model was limited in its interface with technological service; which means interaction between the customer and the technology system. The model was not able to address how TBSSB service quality influences and interacts with the customer. The ABM’s major focus is on the customer’s choice process, hence its usefulness in the research of customer satisfaction in using self-service technology; which has not yet been explored (Buell, Campbell, & Frei, 2010). On the other hand, the Discrepancy Theory of Satisfaction in Information System (IS), which according to Jiang and Klein (2000) has been used in studies of job satisfaction, which are based on Maslow’s hierarchy
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of need. This concept is frequently applied in customer satisfaction and information systems research, in the service economy to measure the delivery of products or services.
Although, many studies have been done on technology service banking they are limited to only one banking application service channel (White & Nteli, 2004). The Attribute Based Model and Discrepancy Theory of customer satisfaction were not able to consider other service options such as mobile banking, phone banking, automated teller machines, internet banking and quick service delivery system just to mention a few. Therefore this study has looked into all the technology service options of TBSSB, and how associated service quality impacts customer satisfaction in five selected retails commercial banks within Jimeta metropolis area of Adamawa State.
However, the widespread proliferation of TBSSB across the service industry is apparent. Self-Service Technology Banking is attracting a lot of research attention in banking marketing research and management (Curran, Meuter, & Surprenant, 2003). Research work has been carried out on technology banking TBSSB and the exceptional way of delivering quality service to customers in financial institutions (Muiruri& Ngari, 2014). Research has been done on the impact of technology mobile banking in Nigeria (Oluwatolani, Joshua, & Philip, 2011). Nevertheless, existing studies on TBSSB are limited to one service platform, which is internet banking and information system, showing their relationship with quality service measurement (Rod et al., 2009). TBSSB is a recent service delivery system, and little research has been carried on it (Ombati et al., 2010). The impact of technology banking on customer satisfaction in Nigeria and service quality is not yet clear (Fernandes& Pedroso, 2016). Self-service technology is a new service that has enhanced competitiveness and reliability in the banking industry. The impact of self-service technology on customer satisfaction is not yet known (Parasuraman & Grewal, 2000). The impact of TBSSB service quality on customer satisfaction in Nigeria is not yet represented in the literature.
1.2 Research Questions
This study aimed to answer the following research questions?
1. What factors of TBSSB associated with service quality influence customer satisfaction in the Nigerian retail banking environment?
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2. What impact and relationship do service quality factors of TBSSB have on customer satisfaction in the Nigerian retail banking environment?
1.3 Objectives of the Study
The general purpose of the research is to study the impact of TBSSB service quality on customer satisfaction; the specific objectives of this study are as follows:
1. To determine the influence of the associated factors of TBSSB quality service on consumer satisfaction by using the five dimensions of service quality
2. To establish a relationship among the dimensions and study the impact of TBSSB on customer satisfaction among banks in Nigeria.
1.4 Significance of the Research
Schumann and Wunderlich (2012) have called for further research into the exploration of service quality of self-service technology. This research attempts to fill the knowledge gap on how the self-service technology service quality dimension influences customer satisfaction. This study would contribute to the existing knowledge on the following factors of TBSSB: speed of delivery, ease of use, efficiency, reliability, and security of customer satisfaction
Nonetheless, this research explores another perception of technology based service from the customer satisfaction perspectives towards using the TBSSB dimension. Finally, the research findings from this study will contribute to the understanding of the customers who are users of the technology platform. Besides, this is significant to the financial institution managers who are custodians of technology transformation in the service economy.
1.5 Scope and Limitations of the Study
The study is limited to the users of Technology Based Self-Service Banking in the Nigerian banking sector. The study has also limited scope to the customers of five selected banks within Jimeta metropolis in Adamawa State. Similarly, the study is limited to the lack of data from the customers of TBSSB have also been of limiting effect. However a better result would have been
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obtained with much sufficient data, and more independent variable which will have effect on the R2
1.6 Thesis Structure
The research project consists of five chapters; this segment briefly explains the organization of the thesis. Chapter one presents and gives the background introduction of the study, consisting of the problem statement, research questions, objectives of the study and scope and limitation. Chapter two discusses analytically, the related literature review, the theory that was used. Such as the Attribute Based Model and Discrepancy Theory of Satisfaction in Information System research, the chapter also contains the conceptual model for the study. Chapter three presents the methodology, research methods, the research strategy applied to empirically test the proposed model of TBSSB customer satisfaction. The population size, sample size, the step taken to collect the data, issues scale item taken to collect the data. Chapter four of the thesis presents the data presentation, analysis discussion and research findings. The chapter five summarizes and gives the conclusions and recommendations.
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