Customer Satisfaction with E-banking Services of Private

Commercial Banks in Nepal

Submitted by:
Rajeev Shrestha
Roll No: 12/070
T.U. Reg. No: 7-2-410-73-2009
People’s Campus
Paknajol, Kathmandu

A Thesis Submitted to:

Office of Dean
Faculty of Management
Tribhuvan University
Kathmandu

In partial fulfillment of the requirement for the degree of

Masters of Business Studies (M.B.S.)
Kathmandu, Nepal

February, 2019
 RECOMMENDATION

This is to certify that the thesis

Submitted by:

Rajeev Shrestha

Entitled

CUSTOMER SATISFACTION WITH E-BANKING

SERVICES OF PRIVATE COMMERCIAL BANKS IN NEPAL

has been prepared as approved by this department in the prescribed format of the Faculty of
Management. This is forwarded for examination.

…………………. ……………………………. ……………………………..

Dr. Arhan Sthapit Dr. Gopal Krishna Shrestha Chhatra Mangal Bajracharya

(Thesis Supervisor) (Head/Research Department) (Campus Chief)

Date:…………………

ii
 VIVA-VOICE SHEET

We have concluded the viva-voice of the thesis

Submitted by:

Rajeev Shrestha

Entitled

CUSTOMER SATISFACTION WITH E-BANKING

SERVICES OF PRIVATE COMMERCIAL BANKS IN NEPAL

and found the thesis to be the original work of the student and written according to the
prescribed format. We recommend the thesis to be accepted as partial fulfillment of the
requirement for the degree of Master of Business Studies (MBS).

Viva- voice Committee

Chairperson, Research Committee : …………………………….

Member (Thesis Supervisor) : …………………………….

Member (External Expert) : ……………………………..

iii
 DECLARATION
I hereby declare that the work reported in this thesis entitled CUSTOMER
SATISFACTION WITH E-BANKING SERVICES OF PRIVATE COMMERCIAL
BANKS IN NEPAL submitted to office of Dean, Faculty of Management, Tribhuvan
University is my own work done in the form of partial fulfillment of requirement for
the Master’s Degree in Business Studies (M.B.S.), which is prepared under the
supervision of Dr. Arhan Sthapit, Tribhuvan University.

…………………….
Rajeev Shrestha
People’s Campus
T.U. Reg. No: 7-2-410-73-2009

February, 2019

iv
 ACKNOWLEDGEMENT

This thesis entitled “Customer Satisfaction with E-banking Services of Private

Commercial Banks in Nepal” has been prepared to fulfill the partial requirement for
MBS degree of Tribhuvan University. I wish to acknowledge my deep sense of
gratitude to Office of Dean Faculty of Management, Tribhuvan University and
People’s Campus for giving me such a valuable opportunity to explore my abilities
via this project. I would like to record my sincere appreciation and gratitude towards
my thesis supervisor, Dr. Arhan Sthapit, Tribhuvan University, without whose kind
assistance, this project could not have been completed and his guidance in conducting
an efficient thesis and for offering me the cooperation to get to this point of
completion.

I would like to thank Mr. Rajan Bilas Bajracharya, advisor at Research department,
People’s Campus, for the encouragement and support throughout the process. I would
also like to thank Mr. Gopal Krishna Shrestha, Head of Research Department and Mr.
Chhatra Mangal Bajracharya, Campus Chief for their motivation to complete the
thesis. I would also like to thank Mrs. Sujeeta Shrestha, MBS Administration
Assistant for her support to complete this thesis.

I would also like to express my gratitude towards all the respondents who cooperated
in filling up my questionnaire and responding to my queries without any hesitation. I
am also very thankful and grateful towards my seniors, colleagues and authorities of
People’s Campus for their support, encouragement, and valuable suggestions as well
as for the generosity and co-operation for the completion of this project.

Last but not the least, I would like to express my sincere thanks to all my family,
friends and well-wishers for their immense support and best wishes throughout the
project.

Thank you

Rajeev Shrestha

v
 TABLE OF CONTENTS

RECOMMENDATION ............................................................................................. ii
VIVA-VOICE SHEET ............................................................................................. iii
DECLARATION....................................................................................................... v
ACKNOWLEDGEMENT ......................................................................................... v
TABLE OF CONTENTS.......................................................................................... vi
LIST OF TABLES ................................................................................................. viii
LIST OF FIGURES .................................................................................................. ix
ABBREVIATIONS ................................................................................................... x

CHAPTER 1
INTRODUCTION .................................................................................................. 1-8
1.1 Background of the study............................................................................. 1
1.2 Statement of Problem.................................................................................. 4
1.3 Research Questions..................................................................................... 5
1.4 Objectives of the Study ............................................................................... 5
1.4 Hypotheses ................................................................................................. 6
1.6 Significance of Study .................................................................................. 6
1.7 Organization of the Study ........................................................................... 7

CHAPTER 2
REVIEW OF LITERATURE ............................................................................... 9-36
2.1 Review of Theoretical Framework ............................................................. 9
2.1.1 Conceptual Definitions ........................................................................... 9
2.2 Review of Related Empirical Studies ....................................................... 27
2.3 Concluding Remarks ............................................................................... 34
2.3 Study Framework .................................................................................... 35

CHAPTER 3
RESEARCH METHODOLOGY ........................................................................ 37-43
3.1 Research Design ...................................................................................... 37
3.2 Nature and Sources of Data ..................................................................... 38
3.2.1 Pilot Test .............................................................................................. 38
3.2.2 Reliability and Validity......................................................................... 39

vi
 3.3 Population and Sampling ......................................................................... 40
3.4 Methods of Analysis ................................................................................ 41

CHAPTER 4
PRESENTATION AND ANALYSIS OF DATA ............................................... 44-62
4.1 Respondents’ Profile ............................................................................... 44
4.1.1 Gender of Respondents ......................................................................... 45
4.1.2 Age group of Respondents .................................................................... 46
4.1.3 Educational Qualification of Respondents............................................. 47
4.1.4 Profession of Respondents .................................................................... 48
4.2 Descriptive Analysis ............................................................................... 49
4.2.1 Accessibility of e-banking service......................................................... 49
4.2.2 Reliability of e-banking service ............................................................ 50
4.2.3 Convenience of e-banking service......................................................... 51
4.2.4 Security of e-banking service ................................................................ 52
4.2.5 Customer Satisfaction ........................................................................... 53
4.3 Inferential Analysis ................................................................................. 54
4.3.1 Correlation Analysis ............................................................................. 54
4.3.2 Regression Analysis ............................................................................. 56
4.4 Hypothesis Testing .................................................................................. 58
4.5 Major Findings ........................................................................................ 60

CHAPTER 5
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ......................... 63-67
5.1 Summary................................................................................................ 63
5.2 Conclusions............................................................................................ 64
5.3 Recommendations .................................................................................. 66

REFERENCES ........................................................................................................ 68
ANNEXURE

vii
 LIST OF TABLES

Table No. Title Page No.

Table 3.1 Cronbach’s Alpha Coefficients 40
Table 4.1 Distribution of Respondents based on Gender 45
Table 4.2 Distribution of Respondents based on Age 46
Table 4.3 Distribution of Respondents based on Educational Qualification 47
Table 4.4 Distribution of Respondents based on Profession 48
Table 4.5 Descriptive Statistics of Accessibility of E-banking Service 49
Table 4.6 Descriptive Statistics of Reliability of E-banking Service 50
Table 4.7 Descriptive Statistics of Convenience of E-banking Service 51
Table 4.8 Descriptive Statistics of Security of E-banking Service 52
Table 4.9 Descriptive Statistics of Customer Satisfaction 53
Table 4.10 Correlation Analysis 55
Table 4.11 Multiple Regressions Analysis 57

viii
 LIST OF FIGURES

Figure No. Title Page No.

Figure 2.1 Product Development and Customer Satisfaction 23
Figure 2.2 Study Framework 36
Figure 4.1 Distribution of Respondents based on Gender 45
Figure 4.2 Distribution of Respondents based on Age 46
Figure 4.3 Distribution of Respondents based on Educational Qualification 47
Figure 4.4 Distribution of Respondents based on Profession 48

ix
 ABBREVIATIONS

ANOVA Analysis of Variance

SPSS Statistical Package for Social Scientists
BFIs Bank and Financial Institutions
ICTs Information and Communications Technologies
ATM Automated Teller Machine
SMS Short Message Service
E-Banking Electronic Banking
PDA Personal Digital Assistant
EDI Electronic Data Interchange
NBS Nottingham Building Society
BBC British Broadcasting Corporation
BACS Bankers Automated Clearing Service
EFT Electronic Funds Transfer
POS Point of Sale
IVR Interactive Voice Response
TAM Technology Acceptance Model
SSTs Self Service Technologies
IT Information Technology
SEM Structural Equation Mode
FDIC Federal Deposit Insurance Corporation
IB Internet Banking
PCA Principle Component
Acc Accessibility of E-banking Service
Rel Reliability of E-banking Service
Con Convenience of E-banking Service
Sec Security of E-banking Service
Cs Customer Satisfaction

x
 CHAPTER 1

INTRODUCTION

1.1 Background of the study

The internet communication is one of the most recent developments in
communication to be developed with the first email being sent in 1972 in a split
second. This communication allows the transmission of seemingly limitless amounts
of information across the globe (Poster, 2011).The use of information and
communications technologies (ICTs) have changed the way of conducting business
transactions and meeting the growing demands of customers for most organizations.
The use of ICTs has brought in new products, service market opportunities and
developing more information systems that are business oriented and support
management processes such as planning, controlling and co-ordination. One of the
areas ICTs has gained growing significance is in the banking sector where BFIs seek
to be more competitive, increase customer base, reduce transaction costs, improve the
quality and timeliness of response, enhance opportunities for advertising and
branding, facilitate self-service and service customization, and improve customer
communication and customer relationship management.

In recent years, there has been fast development in information technology and
internet in particular. Generally the rapid development of World Wide Web and
internet has affected many businesses including banking sector. Banks have been
using information technology and internet to enhance operational efficiency, intensify
business and provide better customer service with reduced cost of operation. Apart
from these, banks are using information technology to enhance and strengthen their
electronic service delivery channels. The electronic service delivery channels include
electronic payment, electronic banking and so on. All these services allow customers
to have direct access to their financial information and to undertake financial
transactions with no need to go to the bank. Furthermore, from a banks viewpoint the
new delivery channels lead to cost reductions and increased competitiveness.
Moreover, this service delivery channel seen as powerful because it can retain current
web-based customers who continue using banking services from any location.

1
Moreover, internet banking provides opportunities for the bank to develop its market
by attracting a new customer base from existing internet users.

In a competitive marketplace where businesses compete for customers, customer

satisfaction is seen as a key differentiator and increasingly has become a key element
of business strategy (Gitman & Carl, 2005). To understand the economic problems
and choices facing Banks, it is useful to regard them as firms, and apply the general
principles of microeconomics, which shape the environments of all firms. However,
Banks are firms of a specialized type not simply in terms of the services they provide,
but in terms of how and by whom those services are provided (John, 2003). These
days customers face many problems regarding services and customer satisfaction
provided by Banks. Studies have shown that many international internet users
demonstrate similar behaviors and preferences across nations (Masukujjaman &
Akter, 2010). Other researchers have studied the internet in the context of traditional
cultures, and yet delimited by national borders. Some have investigated customer
preferences of e-banking. Some have examined the issues on the evolution of e-
banking and investigated the success factors in various e-delivery channels in banking
scenario (Sohail & Shanmugham, 2003).

The precursor for the modern home online banking services were the distance banking
services over electronic media from the early 1980s. The term online became popular
in the late '80s and referred to the use of a terminal, keyboard and TV (or monitor) to
access the banking system using a phone line. ‘Home banking’ can also refer to the
use of a numeric keypad to send tones down a phone line with instructions to the
bank. Online services started in New York in 1981 when four of the city’s major
banks (Citibank, Chase Manhattan, Chemical and Manufacturers Hanover) offered
home banking services using the videotext system. Because of the commercial failure
of videotext, these banking services never became popular except in France where the
telecom provider subsidized the use of videotext (Minitel) and the UK, where the
Prestel system was used.

The UK's first home online banking services known as Home link was set up by Bank
of Scotland for customers of the Nottingham Building Society (NBS) in 1983. The
system used was based on the UK's Prestel view link system and used a computer,
such as the BBC Micro, or keyboard (Tandata Td1400) connected to the telephone

2
system and television set. The system allowed on-line viewing of statements, bank
transfers and bill payments. In order to make bank transfers and bill payments, a
written instruction giving details of the intended recipient had to be sent to the NBS
who set the details up on the Home link system. Typical recipients were gas,
electricity and telephone companies and accounts with other banks. The account
holder via Prestel input details of payments to be made into the NBS system. A
cheque was then sent by NBS to the payee and an advice giving details of the
payment was sent to the account holder. Bankers Automated Clearing Service
(BACS) was later used to transfer the payment directly.

Stanford Federal Credit Union was the first financial institution to offer online
internet banking services to all of its members in October 1994.Today, many banks
are internet only banks. Unlike their predecessors, these internet only banks do not
maintain brick and mortar bank branches. Instead, they typically differentiate
themselves by offering better interest rates and more extensive online banking
features.

Banking started in Nepal in 1937 by the establishment of the Nepal Bank Ltd.
Currently; there are 28 commercial banks, 33 developments banks licensed and over
100 other financial institutions that operate in Nepal. The banking sector is the major
financial services industry in Nepal that offers several banking services, such as
acceptance of deposits, granting of credit facilities, and management of loans, among
others. Nepalese financial market is late adopter of information technology including
electronic payment, electronic banking. However, many of Nepalese private banks at
present are providing electronic banking, electronic payment. In response to
competitive pressure in the banking industry, banks continued to make significant
investments in upgrading information technology platforms by automating and
centralizing various back office activities to enhance the quality of service delivery to
their customers.

When we look at the historical development of electronic payment, electronic

banking, we can find that NABIL Bank was pioneer bank to introduce credit cards in
1990. After the introduction of credit cards in Nepalese banking, various banks tried
to come up with new service innovations. Among them, Himalayan Bank was first
bank to introduce ATM cards in 1995 and it also introduced telephone banking,

3
Kumari Bank was first commercial bank to start internet banking in 2001 and Laxmi
Bank was first to started mobile banking in 2004. When we look at present, we can
find that almost every financial institution is providing ATM facility. Similarly, most
of the commercial banks are providing internet banking and SMS banking services.
However, the electronic payment including mobile payment services are still new and
primitive in case of financial institution of Nepal. So, in most of the Nepalese banks,
till today ATM and branch are the primary delivery channels. Further, there are few
users of mobile banking and internet banking as these areas of innovations is new to
Nepalese customers in Kathmandu valley. Nepalese banks are motivated to adopt
these new technologies to remain competitive in the market. Therefore, we can say
that Nepalese financial is slowly moving towards the technology mediated medium
such as electronic payment, electronic banking.

1.2 Statement of Problem

Banking practices have undergone significant changes since the advent of the Internet.
Banks provide many services online, which are extremely convenient for banking
customers. Electronic banking (e-banking) has existed for decades, starting with
automatic teller machine (ATM) in the late 1960s (Broderick & Vachirapornpuk,
2002). Internet Banking makes it possible for banks and their customers to do
business from anywhere in the world. This greatly increases the bank’s potential
client base. Nevertheless, the global approach to banking that e-banking permit makes
it extremely difficult for regulatory authorities to enforce finance laws. Additionally,
regulations differ from nation to nation and banks are not always proficient in the
financial laws for every nation in which they have business (Flavian, Guinaliu, &
Gurrea, 2006).

Overtime, more and more concerns are associated with electronic banking, as the
industry branched out to phone and on line banking. However, regardless of the
benefits obtained from e-banking, e-banking in Nepal is passing into different
challenges. Although, there has been a rapid expansion of internet banking products
and services by banks and financial institution in Nepal e-banking services have not
been widely adopted by bank’s customers. This may be due to lack of trust,
customer’s ignorance towards technologies and perceived risk towards the services.

4
Electronic banking is conducted by the customer instead of a bank teller, so there is
no face to face interaction. The customers do not seek any additional services or help
on by pro-actively contacting the bank. Some customers refuse to use these services
because they feel they are entitled to in-person customer service. On the other hand,
there are Customer’s complains on the issues with security and accuracy. At this
situation, we need to analyze satisfaction and experience of customers toward e-
banking services. Further, the role played by demographic factors such as gender, age,
occupation, income and education in adoption of e-banking are to be analyzed.
Further, we also need to analyze the risks, limitations and problems in using e-
banking.

1.3 Research Questions

Though there is a rapid growth in Nepalese financial sector, e-banking is still in
infancy. Banks are investing lots of amount on technology but they are not been
successful enough in E-banking activities. If the banks do not see the scenario and
challenges of e-banking, they can't be profitable. In this context, this study has
examined into the following problems:

 Are customer satisfied with e-banking services offered by banks and financial
institutions?
 Are customers aware of technical complexity in using e-banking?
 What is the customer’s frequency of using online banking services to access the
banking services?
 What are the factors that determine customer's choice of e-banking service?
 What are the problems and risks to customers faced in using e-banking services?

1.4 Objectives of the Study

 To identify the major e-banking service attributes that satisfy customers in e-
banking;
 To examine the relationship between the various e-banking service attributes and
the customer satisfaction; and
 To study the impact of the e-banking service attributes on the satisfaction of
customers.

5
1.5 Hypotheses
Six hypotheses have been drawn for the purpose of identifying relationship between
dependent and independent variables in this study. These hypotheses were drawn
from the theoretical framework of the study.

 H1: There is no significant relationship between accessibility of e-banking and

customer satisfaction;
 H2: There is no significant relationship between reliability of e-banking and
customer satisfaction;
 H3: There is no significant relationship between convenience of e-banking and
customer satisfaction;
 H4: There is no significant relationship between security of e-banking and
customer satisfaction;
 H5: There is no significant relationship between e-banking service attributes and
customer satisfaction.
 H6: There is no significant impact of e-banking service attributes on the
satisfaction of customers.

1.6 Significance of Study

This research paper is of great importance especially for banking industry in Nepal.
With knowing the awareness and satisfaction of internet enables the bankers to cope
the problems of customers and ultimately helps to customize their e-banking products
and services to cater their needs. Further, this research paper also provides guidelines
to the policy makers to make policies, rules and regulations on e-banking. This study
should be beneficial for the academic institutions and individuals who might be
interested in carrying out related researches in the future.

The study stresses that there are variables associated with e-banking and those
variables have huge impact upon level of customer satisfaction. Customer satisfaction
with regard to any services offered greatly exceeds the expectations of customer, and
then satisfaction will be elevated. So, through this study, various factors that affects
customer satisfaction while using e-banking service has been identified.

6
Thus, this study assists to the banking professional to know the customer's awareness
and satisfaction toward e-banking ultimately helps to increase the accessibility of
financial services of customers creating awareness through workshop and seminar on
the importance and business value of e-banking.

1.7 Organization of the Study

The whole research includes five chapters, which include:

Chapter 1: Introduction
The first chapter deals with the general information of the e-banking as a whole and
pinpoints the objectives and theme of the research. Also included in this chapter is the
statement of problem and importance or significance of this study to the end users.
Furthermore, a brief synopsis of how the chapter flows has shown under the title
organization of the study.

Chapter 2: Review of Literature

The second chapter presents comprehensive surroundings of e-banking. Precisely, this
chapter examines the effectiveness of e-banking also relate it with the practiced
approach. This chapter includes benefits and challenges of e-banking. Further this
chapter provides related words, definitions, and findings on the related topic from
other researchers, journals, papers, and similar works which are very important in
guiding the research. Besides, this chapter includes theoretical framework around
which the whole work have been put together.

Chapter 3: Research Methodology

The research design and methodology includes the planned methods used while
conducting the research, which has helped to guide the research towards its main
findings and conclusion. It includes information on research design, data analysis
methods, questionnaire, population and sample size, sampling techniques, data
collection instrument, methods of data analysis and limitations or barriers
incorporated while preparing the report.

Chapter 4: Presentation and Analysis of Data

The fourth chapter is the major part of the research work, which is related with the
presentation, analysis and interpretation of data with reference to e-banking and
customers’ satisfaction. Hence, this chapter includes presentation of data and analysis

7
of the findings using diagrammatic representations such as pie charts, bar graphs as
well as mathematical and statistical tools like descriptive analysis & inferential
analysis.

Chapter 5: Summary, Conclusions and Recommendations

The fifth chapter is the concluding chapter where summary is discussed, conclusions
are drawn, and recommendation is made. In this chapter, the theme of the research
presented. In other words, this chapter identifies what has been achieved through the
research and to which extent. In addition, this segment of the research provides
recommendation satisfying the research question priory set. Additional pages include
References, Appendices and other supporting documents.

8
 CHAPTER 2

REVIEW OF LITERATURE

2.1 Review of Theoretical Framework

This chapter endeavors to analyze the relevant body of knowledge to understand the
concept of customer satisfaction with internet banking service quality, from an
academic point of view. It commences with the literature that relates the research
objectives and the research questions. Several literatures are reviewed that is related
to given subject or chosen topic area. This chapter comprises of conceptual
definitions, theories, empirical studies and gap of the study.

2.1.1 Conceptual Definitions

Conceptual definitions are related with all the possible concepts related with online
shopping some of which are discussed below:

E-banking
E-banking is defined as the automated delivery of new and traditional banking
products and services directly to customers through electronic, interactive
communication channels. E-banking includes the systems that enable financial
institution customers, individuals or businesses, to access accounts, transact business
or obtain information on financial products and services through a public or private
network, including the internet. Customers access e-banking services using an
intelligent electronic device, such as a personal computer (PC), personal digital
assistant (PDA), automated teller machine (ATM). (Encyclopedia Britannica online)
Use of computers and telecommunications to enable banking transactions rather than
through human interaction is e-banking. Its features include electronic funds transfer
for retail purchases, automatic teller machines (ATMs), and automatic payroll
deposits and bill payments. (Encyclopedia Britannica online).

Daniel (1999) defines electronic banking as the delivery of banks’ information and
services by banks to customers via different delivery platforms that can be used with
different terminal devices such as personal computers and mobile phone with browser
or desktop software, telephone or digital television.

9
Ovia (2001) argues that electronic banking is a product of e-commerce in the field of
banking and financial services. In what can be describe as business to consumer
domain for balance enquiry request for cheque books recording stop payment
instruction balance transfer instruction account opening and other forms of traditional
banking service. Banks are also offering payment services on behalf of their customer
who shop indifferent e-shops.

E-banking is the term that signifies and encompasses the entire sphere of technology
initiatives that have taken place in the banking industry. E-banking is a generic term
making use of electronic channels through telephone, mobile phones, internet etc. for
delivery of banking services and product. The concept and scope of e-banking is still
in transitional stage. E-banking has broken the barriers of branch banking (Nidhi,
2016).

Electronic banking has vastly reduced the physical transfer of paper money and
coinage from one place to another or even from one person to another. Electronic
banking systems can be retail payment systems, such as Automated Teller Machine
(ATMs) networks, point-of-sale systems, and interbank payment systems. E-banking
implies exchange of banking products and services through electronic delivery
channels. Electronic banking has been around for quite some time in the form of
automated teller machines and telephone transactions.

Electronic banking is an umbrella term for the process by which a customer may
perform banking transactions electronically without visiting a brick-and-mortar
institution. The following terms all refer to one form or another of electronic banking:
personal computer (PC) banking, Internet banking, virtual banking, online banking,
home banking, remote electronic banking, and phone bank. PC banking and Internet
or online banking is the most frequently used designations. It should be noted,
however, that the terms used to describe the various types of electronic banking are
often used interchangeably.

There are many electronic banking delivery channels to provide banking service to
customers. Among them ATM, POS, mobile banking and internet banking are the
most widely used and discussed below.

10
ATM: Automated Teller Machine (ATM) is a machine where cash withdrawal can be
made over the machine without going in to the banking hall. It also sells recharge
cards and transfer funds; it can be accessed 24 hours/7 days with account balance
enquiry (Fenuga & Kolade, 2010).

Internet banking: Internet banking allows customers of a financial institution to

conduct financial transactions on a secure website operated by the institution, which
can be a retail or virtual bank, credit union or society. It may include of any
transactions related to online usage. Banks increasingly operate websites through
which customers are able not only to inquire about account balances, interest and
exchange rates but also to conduct a range of transactions. Unfortunately, data on
Internet banking are scarce, and differences in definitions make cross-country
comparisons difficult (Timothy, 2012).

POS: Point of sale (POS) also sometimes referred to as point of purchase (POP) or
checkout is the location where a transaction occurs. A ‘checkout’ refers to a POS
terminal or more generally to the hardware and software used for checkouts, the
equivalent of an electronic cash register. A POS terminal manages the selling process
by a salesperson accessible interface. The same system allows the creation and
printing of the receipt (Worku, Tilahun, & Tafa, 2016).

A point of sale (POS), or point of purchase, is the place where a customer executes
the payment for goods or services, and where it be in a physical store, where POS
terminals and systems are used to process card payments, or a virtual sales point such
as a computer or mobile electronic device. (Investopedia online)

Mobile banking: Mobile banking (also known as M-banking, mbanking) is a term

used for performing balance checks, account transactions, payments, credit
applications and other banking transactions through a mobile device such as a mobile
phone or Personal Digital Assistant (PDA). The earliest mobile banking services were
offered over SMS, a service known as SMS banking. Mobile banking is used in many
parts of the world with little or no infrastructure, especially remote and rural areas.
This aspect of mobile commerce is also popular in countries where most of their
population is un-banked. In most of these places, banks can only be found in big
cities, and customers have to travel hundreds of miles to the nearest bank. The scope

11
of offered services may include facilities to conduct bank and stock market
transactions, to administer accounts and to access customized information (Tiwari &
Buse, 2007).

The ATM was one of the earliest electronic banking products, being introduced in the
mid 1970’s. It provided customers with the ability to withdraw or deposit funds,
check account balances, transfer funds and check statement information. Electronic
Funds Transfer (EFT) is another electronic banking product that facilitates transfer of
funds from any branch of a bank to any other branch of any bank in the shortest time.
Telephone banking is only a new electronic banking product. It is rapidly becoming
one of the most popular products. Customer can perform a number of transactions
from the convenience of their own home or office. In fact, from anywhere they have
access to phone. Customer can check balances and statements information, transfer
funds from one account to another, and pay certain bills.

Attributes of E-Banking
Joseph, McClure, and Joseph (1999) considered banking service quality with respect
to technology use, such as ATMs, telephone, and the internet and identified six
dimensions. They were convenience/accuracy; feedback/complaint management;
efficiency; queue management; accessibility; and customization. Yang and Jun (2002)
redefined the traditional service quality dimensions in the context of online services,
and suggested an instrument consisting of seven online service dimensions
(reliability, access, ease of use, personalization, security, credibility, and
responsiveness). It also indicated that there is a significant positive relationship
between overall service quality and satisfaction. It has been argued that for any
service or technology to success it must be adopted by the users and accepted. The
major four attributes of e-banking have been identified during this study and are
discussed below:

Accessibility: Peterson, Zsidisin, and Daily (1999) revealed ease of use/accessibility

had considerable impacts on both customers perceived overall service quality and
satisfaction. Accessibility is defined as the ability of users to access information and
services from the web, this dependents on many factors. They include the content
format; the user's hardware, software and settings; internet connections; the
environmental conditions and the user's abilities and disabilities (Hackett &

12
Paramanto, 2009). The term "web accessibility" generally relates to the
implementation of website content in such a way as to maximize the ability of users
with disabilities to access it. For example, providing a text equivalent for image
content of a web page, allows users with some visual disabilities access to the
information via a screen reader. The techniques and approaches that create web pages
that are more accessible for people with disabilities also address many other access
issues such as download speed and discoverability (Hackett & Paramanto, 2009).
Therefore, accessibility has positive effect on customer satisfaction.

Reliability: Joseph, McClure, and Joseph (1999) also considered reliability of the
service as an important factor of service quality. Research on the use of computers or
technologies which share similar characteristics also affect performance (or
dependability) as it is an important attribute. Zeithaml and Bitner (2000) advised that
customers should be specifically influenced by the reliability of new technology
because they might be associated with risks such as the technology malfunctioning. It
involves two concepts, dependability and uniformity in performance. Yang and Jun
(2002) posited that reliability is the most crucial characteristics for customers in the
evaluation of service quality. Reliability also means honoring the commitments in
areas such as billing accuracy, proper record maintenance and delivering the service
within acceptable time limit (Saha & Zhao, 2005). It also “refers to the correct
technical functioning of a self-services technology and the accuracy of service
delivery”. Many authors have detected that reliability is significant in the
determination of service quality (Zeithmal, Bitner, & Gremler, 2005). Finally,
Maenpaa, (2008) in his study revealed that reliability and accuracy are appropriate
measure for assessing service that has to do with technology.

Convenience: Ainscough and Luckett (1996) the provision of customer interactivity

is an important criterion that attracts users in the delivery of e-banking. E-banking
provides higher degree of convenience that enables customers to access internet bank
at all times and places. Apart from that, the ease of access of computers is perceived
as a measure of relative advantage (Polatoglu & Ekin, 2001). Gerrard and
Cunningham (2003) identified other factors of paramount importance in ensuring the
success of e-banking, i.e. the ability of an innovation to meet users' needs using
different feature availability on the web site. For instance, the provision of interactive

13
loan calculators, exchange rate converters, and mortgage calculators on the web sites
draw the attention of both users and non-users into the bank's web site.

Privacy or Security: Assurance about security relates to the extent to which the
website guarantees the safety of customers` financial and personal information, an
area which has witnessed a proliferation of research interest (Kimery & Mccord,
2002). All transactions occur on a secure server of a bank via the internet. The bank
has all of the required data and software to execute the transactions. Customers go the
bank's Web site, log in, and then take advantage of the bank's internet services.
Typical bank services are account access and review, transfers of funds between
accounts, bill payment, and then a widening variety of new services and products.
Security plays an important role in internet banking and so there are several protocols
for internet security of encrypted data packets (Kolsaker & Payne, 2002).

Encryption technology is the most common feature at all bank sites to secure
information privacy, supplemented by a combination of different unique identifiers,
for instance, a password and key. Thus, a combination of smart card and biometric
recognition using fingerprints offers a more secure and easier access control for
computers than the password method. Customers have doubts about the trust ability of
the e-bank's privacy policies; trust has striking influence on user's willingness to
engage in online exchanges of money and personal sensitive information. Privacy is
an important dimension that may affect users' intention to adopt e-based transaction
systems (Gerrard & Cunningham, 2003).

Security can be assured by providing a privacy statement and information about the
security of the shopping mechanisms and by displaying the logos of trusted third
parties. For example, displaying trusted third party logo guarantees a certain level of
security protection and has been shown to significantly influence how consumers
regard the trustworthiness of e vendors (Constantine, 2004).

The benefits of electronic banking cannot be over emphasized. This is to say that it
provides a lot of benefits both to the customer and the bank itself. Online banking is a
new phase in retail banking services. With the help of online banking several types of
services through which customers can request information and carry out their banking
transaction such as balance inquiry, inter-account transfers, utility bills payment,

14
request check book etc., Via a telecommunication network or internet without
physically visiting the branches In future, along with physical market competition the
virtual market (market space) also going to take place (Rayport & Sviokla , 1994).
Mols (1998) it was opined that the Internet is a revolution that will do away the old
request holds much influence. The internet revolution in electronic-banking
transaction is much less expensive than branch or even telephone transactions.

According to Rotchanakitumnuai and Speece (2003) E- banking provides various

benefits to both banks and customers. With electronic banking customers can check
accounts, transfer money and can have access to numerous banking products and
services. There is no need for Customers to visit banks to make transactions.
Tremendous progress in the field of information technology has reduced the world to
a global village and it has caused unprecedented change in the banking industry. Huge
developments in the technology of telecommunications and electronic data processing
have further stimulated these changes. Automation has revolutionized financial and
banking sectors globally. Apart from branch banking in the brick and mortar mode,
click and order channels like internet banking, ATMs, Tele-banking and mobile
banking are now in vogue. Customers can view the accounts, get account statements,
transfer funds, purchase drafts by just making a few key punches. Availability of
ATMs and plastic cards to a large extent make it necessary for customers going to
branch premises. Smart Cards with an embedded microprocessor chip have brought
about revolutionary change. Electronic Data interchange (EDI) is another
development that has made its impact felt in the banking arena. Transaction costs
have fallen down, productivity has tremendously improved, new banking products
and services have entered the market.

Mobile banking has a great contribution in online banking revolution, which is given
a competitive edge to the banks against their rivals. Especially “Transaction Alert /
Confirmation” is most demanding service by users. Customers feel that after
monetary transaction, the SMS should be received and they prefer the version of the
IVR (Interactive Voice Response) banking service that provides (out-of-band) SMS
confirmation over those one that does not. Therefore, online banking helps bank to
retain and enhance the loyalty of their existing customers, increase customer
satisfaction, provide opportunity to the bank to increase market share, reduce

15
administrative and operational cost and to improve bank’s competitive position
against their rivals. The other advantages may be measured in terms of money. The
primary objective of every institution is to increase profits with which banks cannot
be excluded. Many contend that E-banking can do away the hitherto laborious and
less viable methods for banking. According to Jen and Michael (2006) electronic-
banking has made common open doors for banks and businesses around the world,
and that is clear in the way they sort out financial transaction.

To begin with a foremost benefit e-banking service is competitive branding and as

well as better appreciation to the market demands. As such banks that provide
services are known to be leaders in technology implementation and advancement.
Thus, the better image brand they enjoy (Kwarteng, 2015).Due to this fact, more and
more banking companies have been thinking about switching their businesses from
the physical to virtual market (online technology). As advancements in technology
and information system are arising rapidly and different kinds of electronic banking
system are introducing by banks, where each system has a unique and systematic way
that facilitate the user to interact with the bank in easiest way. The increase use in
credit card is attributable to electronic banking. Customers are able to shop worldwide
without the need of carrying paper money.

A research by Daft and Richard, (1982) demonstrated that the rise of E-banking may
be a smart thought however with respect to customers they may confront some risk
connected with the specific type of innovation. Daft identified what he described
Strategic Risk. Management of financial institutions should know and understand
risks associated with e- banking and provide remedies for it. Poor E-banking planning
and investment decisions can increase a financial institutions strategic risk. The
evidences of various researches show that there is a high association between
consumer’s usage patterns of ATM’s and their demographic profiles. But nowadays,
the relationship between ATM’s usage patterns and psychographic profiles is also
found significant (Stevens & Ben McFarlance, 1986).

The security problems have a large contribution to reduce customer satisfaction. The
success of any new product and service is highly depending on customer acceptance
and customer satisfaction. In contrast, the customer dissatisfaction and resistance is
one of the major causes of market failure of innovation (Ram & Sheth, 1989).

16
Another security issue associated with E-banking as introduced by the Economist
journal (1999) recounts that E-banking insecurities is classified into three categories,
firstly those associated with fraud and theft secondly those by hackers and lastly flaws
in systems design or set up leading to security breaches (genuine users seeing / being
able to transact on other users accounts). All of these insecurities have financial and
legal reputations. Other challenges associated with electronic banking spans from the
type of technology selected, lack of knowledge and lastly implementation. The costs
of establishing e-banking services are high. Establishing a trusted brand is very costly,
as it requires the purchase of expensive technology. Some of the problems that
customers face in using electronic banking services include risk arising from fraud,
network and system errors and other unanticipated events resulting in the
organization's inability to convey banking products and services. This risk could be
inherent in different products and services (Earl, 2000). Earl further commented that
banking activities can expand their activities of establishment's and the amount of its
transaction or operational risk, particularly if the organization is putting forth
imaginative administrations that have not been institutionalized. Earl (2000)
furthermore identified that while managers understand their business and operational
process, their employees mostly lack the skills and experience to adapt to software
technologies and educate their customers.

In online business trust, security and safety are the most challenging issue for the
banks. Beside them, to build and retain the customer’s trust will also become a future
challenge for banks especially in internet banking (Aladwani, Change Management
Strategies for Successful ERP Implementation, 2001). Majority of the customers
hesitate to use e-banking services because of security and privacy issues (Turban &
Warkentine , 2001). In online banking business the Automated Teller Machine
(ATM) is the first popular system that was introduced to facilitate the users to access
and carry out their banking transactions in minimum time. In other to embrace global
technology, there ought to be a satisfactory level of infrastructure and human capacity
building before developing nations can receive the global technology for their nearby
necessity. The society for worldwide interbank financial telecommunications
(SWIFT) to the internet shows that in many developing countries full migration has
not occurred as a result of inadequate infrastructure, required technical expertise and
working capital.

17
Many corporate and consumers in some developing countries do not have access to
the necessary infrastructure to enable them process electronic payments. There are a
few ramifications of international electronic banking. It is for all intents and purposes
realized that low transactional cost possibly make it much less demanding to conduct
international banking electronically. For some banks, cross-border operations offer a
chance to harvest economies of scale. But it requires a higher level of supervision. In
response, many financial institutions have already modified their regulations to
achieve their main objectives, ensuring the safety and soundness of the domestic
banking system, promoting market discipline, and protecting customer rights and the
public trust in the banking system. Financial institutions should therefore provide
reliable services to help customers gain easy access at all times. Although
opportunities to banks, there are various difficulties such as the innovation of IT
applications, the obscuring business sector limits, rupturing modern boundaries, the
passage of emerging competitors, and the development of new plans of action (Liao &
Cheung, 2002).

When we see, the challenges and opportunities of e-banking in Nepal 47.31 percent of
the population are connected to broadband internet and a large number of people are
served by one bank branch compared to other countries. Un-served market, stable and
secure political environment, rapidly growing mobile infrastructure, availability of
delivery channels (outlets), safe and sound financial sector are the most important
opportunities in Nepal. However, low level of financial literacy of the public, level of
readiness and capacity of financial institutions to provide service, infrastructure,
insufficient cash flow in rural areas limited potential agents, and presence of a few
branches in rural areas are some of the challenges facing the country. Legal and
related issues, the importance of looking in to the role of newly emerging third party
technical providers, reconsidering pre-paid balance requirements and widening the
scope of mobile banking service are also critical.

Customer Satisfaction
Customer satisfaction is an ambiguous and abstract concept and the actual
manifestation of the state of satisfaction will vary from person to person and
product/service to product/service. The state of satisfaction depends on a number of
both psychological and physical variables, which correlate with satisfaction behaviors

18
such as return and recommend rate. The level of satisfaction can also vary depending
on other options the customer may have and other products against which the
customer can compare the organization's products.

Organizations of all types and sizes have come to realize that their main focus must be
to satisfy their customers. Organizations are increasingly interested in retaining
existing customers while targeting noncustomers; measuring customer satisfaction
provides an indication of how successful the organization is at providing products
and/or services to the marketplace. According to the classification by Jones and
Sasser (1995) customers can be grouped into four (4), these are “Apostles”,
“Hostages”, “Mercenaries” and “Terrorists”. An “Apostle” is a high satisfied and high
loyalty customer. Such as customer due to their loyalty and satisfaction are willing to
recommend the product or service to others whilst “Hostages” are lowly satisfied but
high loyal customers because they have fewer choices or alternatives. “Mercenaries”
are those customers who are interested in changing their supplier in order to obtain
lower prices although they are high satisfied. Such customers are said to be highly
satisfied but lowly loyal. “Terrorists” on the other hand are lowly satisfied and lowly
loyal and uses alternative suppliers to express their dissatisfaction with their initial
supplier. In this study the researcher is interested in the two extreme, that is, apostle
and terrorist hence the interest in the term customer satisfaction. The interest in the
two groups is because the researcher is interested in knowing the dimension of the
services that makes such individuals or customers either highly satisfied or not
satisfied at all.

Oliver (1997) defined satisfaction as a judgment following a consumption experience-

it is the consumer’s judgment that a product provided (or is providing) a pleasurable
level of consumption-related fulfillment. Kotler (2000) defined satisfaction as a
person’s feelings of pleasure or disappointment resulting from comparing a product’s
perceived performance (or outcome) in relation to his or her expectations.

According to Hansemark and Albinsson (2004) satisfaction is an overall customer

attitude towards a service provider, or an emotional reaction to the difference between
what customers anticipate and what they receive, regarding the fulfillment of some
need, goal or desire. Any business aims to achieve customer satisfaction among its
customers.

19
This is no different for BFIs. Dissatisfied customers will not make use of the services
of BFIs again and might be discouraged from buying online in the future. Satisfaction
can be associated with feelings of acceptance, happiness, relief, excitement, and
delight. Most research confirms that the confirmation or disconfirmation of pre-
consumption expectations is the essential determinant of satisfaction. This means that
customers have a certain predicted product performance in mind prior to
consumption. During consumption, customers experience the product performance
and compare it to their expected product performance level. Satisfaction judgments
are then formed based on this comparison. The resulting judgment is labeled positive
disconfirmation if the performance is better than expected, negative disconfirmation if
it is worse than expected and simple confirmation if it is as expected. In short,
customers evaluate product performance by comparing what they expected with what
they believe they received. Customer satisfaction is a measure of how products and
services supplied by a company meet or surpass customer expectation. That means, it
is approval when comparing a product's perceived performance with his or her
expectations.

According to Kotler & Keller (2009) a buyer goes through five stages while making a
decision to purchase. These stages are best explainable when a buyer goes for buying
costly items, such as a house, a car, diamond jewellery etc. However, in day- to- day
purchase, consumers may not go through all these stages, since some commodes do
not need information, and based on buyer’s previous experience they will visit a store
for the purchase. These stages are: “problem recognition, information search,
evaluation of alternatives, purchase decision, and purchase behavior” (Kotler &
Keller, 2009).

Models of Customer Satisfaction

Various models of factors influencing customer satisfaction have been developed;
some of them were discussed below:

SERVQUAL Model (Service Quality Gap Model)

SERVQUAL is a multi-item scale developed to assess customer perceptions of
service quality in service and retail businesses (Parasuraman, Zeithaml, & Berry,
1988). The approach starts from the assumption that the level of service quality
experienced by customers is determined by the gap between their expectations of the

20
service and their perceptions of what they actually receive from a specific service
provider. (Parsuraman, Zeithaml, & Berry, 1985) developed the "Gap Model" of
perceived service quality. This model has five gaps: Gap 1. Consumer expectation -
Management perception gap Gap 2. Management perception - Service quality
specification gap Gap 3. Service quality specifications –Service delivery gap Gap 4.
Service delivery - External communication gap Gap 5. Expected service -
Experienced service Gap One--Positioning Between customer's expectation and
management's perceptions of those expectations i.e. not knowing what customers
expect The SERVQUAL model proposes five dimensions upon which customers
evaluate service quality. These are:

Tangibles – the appearance of the physical facilities and materials related to the
service
Reliability – the ability to perform the service accurately and dependably
Responsiveness – the willingness to help customers and provide prompt service
Assurance – the competence of the system and its security, credibility and
courtesy
Empathy – the ease of access, approachability and effort taken to understand
customers’ requirements

The use of perceived as opposed to actual service received makes the SERVQUAL
measure an attitude measure that is related to, but not the same as, satisfaction
(Parasuraman, Zeithaml, & Berry, 1988). It is arguably that if the service offered to
customers constituents and meet the five dimensions of the service quality model, the
customer perception towards the services offered will be positive. SERVQUAL can
measure attitude of the customers towards services. Various studies have developed
alternatives concepts for service quality, some state that services quality should
include three dimensions, like technical quality, functional quality and corporate
quality (Gronroos, 1982). Others propose that services quality may be evaluated on
the functional dimension, described by five components: tangibility, responsibility,
assurance, and empathy. Service quality is determined by the differences between
customer’s expectations of the services and their perceptions of the service
experiences (Parasuraman, Zeithaml, & Berry, 1988).

21
The Kano Model
The Kano model is a theory of product development and customer satisfaction
developed in the 1980s by Professor Noriaki Kano that classifies customer
preferences into five categories: Attractive, One-Dimensional, Must-Be, Indifferent,
Reverse.

 Must-be Quality: Simply stated, these are the requirements that the customers
expect and are taken for granted. When done well, customers are just neutral,
but when done poorly, customers are very dissatisfied. Kano originally called
these “Must-be’s” because they are the requirements must be included and are
the price of entry into a market.

 One-dimensional Quality: These attributes result in satisfaction when

fulfilled and dissatisfaction when not fulfilled. These are attributes that are
spoken and the ones in which companies compete. An example if this would
be a milk package that is said to have ten percent more milk for the same price
will result in customer satisfaction, but if it only contains six percent then the
customer will feel misled and it will lead to dissatisfaction.

 Attractive Quality: These attributes provide satisfaction when achieved fully,

but do not cause dissatisfaction when not fulfilled. These are attributes that are
not normally expected, for example, a thermometer on a package milk
showing the temperature of the milk. Since these types of attributes of quality
unexpectedly delight customers, they are often unspoken.

 Indifferent Quality: These attributes refer to aspects that are neither good nor
bad, and they do not result in either customer satisfaction or customer
dissatisfaction. For, example, thickness of the wax coating on a milk carton.
This might be key to design and manufacturing of the carton, but consumers
are not even aware of the distinction. It is interesting to identify these
attributes in the product in order to suppress them and therefore diminish
production cost.

 Reverse Quality: These attributes refer to a high degree of achievement

resulting in dissatisfaction and to the fact that not all customers are alike. For
example, some customers prefer the basic model of a product and will be
dissatisfied if a product has too many extra features.

22
 Satisfied
Delighters

Customer Satisfaction Performance Needs

Not Implemented
Fully Implemented

Basic Needs

Dissatisfied
Presence of the Characteristics

Figure 2.1: Product Development and Customer Satisfaction

Source: Kano Model (1980)

An attribute will drift over time from exciting to performance and then to essential.
The drift is driven by customer expectations and by the level of performance from
competing products. For example, mobile phone batteries were originally large and
bulky with only few hours of charge. Over time we have come to expect 24 hours of
battery life on slim lightweight phones. The battery attributes have had to change to
keep up with customer expectations.

Quality Function Deployment (QFD) makes use of the Kano model in terms of the
structuring of the Comprehensive QFD matrices. Mixing Kano types in QFD matrices
can lead to distortions in the customer weighting of product characteristics. For
instance, mixing Must-Be product characteristics such as cost, reliability,
workmanship, safety, and technologies used in the product in the initial House of
Quality will usually result in completely filled rows and columns with high
correlation values. Other Comprehensive QFD techniques using additional matrices
are used to avoid such issues. Kano's model provides the insights into the dynamics of
customer preferences to understand these methodology dynamics.

23
The Kano model offers some insight into the product attributes which are perceived to
be important to customers. The purpose of the tool is to support product specification
and discussion through better development team understanding. Kano’s model
focuses on differentiating product features, as opposed to focusing initially on
customer needs.

Theory of Planned Behavior (TPB)

The theory of planned behavior is a theory about the link between attitudes and
behavior. The concept was proposed by Icek Ajzen to improve on the predictive
power of the theory of reasoned action by including perceived behavioral control
(Koger & Winter, 2010). It is one of the most predictive persuasion theories. It has
been applied to studies of the relations among beliefs, attitudes, behavioral intentions
and behaviors in various fields such as advertising, public relations, advertising
campaigns and healthcare. The theory states that attitude toward behavior, subjective
norms, and perceived behavioral control, together shape an individual's behavioral
intentions and behaviors (Sniehotta, 2009).

The Theory of Planned Behavior (TPB) helps to understand how the behavior of
people can change. The TPB is a theory, which predicts deliberate behavior, because
behavior can be deliberative and planned. TPB is the successor of the similar Theory
of Reasoned Action (TRA) of Icek Ajzen and Martin Fishbein. Koger and Winter
(2010) the succession was the result of the discovery that behavior appeared not to be
100 percent voluntary and under control, which resulted in the addition of perceived
behavioral control. With this addition the theory was called the Theory of Planned
Behavior. According to TPB, human action is guided by three kinds of considerations:
toward the behavior, subjective norm, and perception of behavioral control lead to the
formation of a behavioral intention. As a general rule, the more favorable the attitude
and subjective norm and the greater the perceived control, the stronger should be the
person’s intention to perform the behavior in question. Stern (2005) investigated
Residual Effects of Past on Later Behavior. He came to the conclusion that this factor
indeed exists.

(i) Behavioral Beliefs (beliefs about the likely consequences of the behavior)
(ii) Normative Beliefs (beliefs about the normative expectations of others)

24
(iii) Control Beliefs (beliefs about the presence of factors that may facilitate or
impede performance of the behavior).

Ajzen's three considerations are crucial in circumstances / projects / programs when

changing behavior of people. In their respective aggregates, behavioral beliefs
produce a favorable or unfavorable attitude toward the behavior, normative beliefs
result in perceived social pressure or subjective norm, and control beliefs give rise to
perceived behavioral control (Koger & Winter, 2010). In combination, attitude cannot
be described to habituation as many people think. A review of existing evidence
suggests that the residual impact of past behavior is attenuated when measures of
intention and behavior are compatible and vanishes when intentions are strong and
well formed, expectations are realistic, and specific plans for intention
implementation have been developed.

E-Banking and Customer Satisfaction

Davis (1998) proposed that customers’ intentions to use internet banking can be
affected by customers’ attitudes toward using internet banking. When customers have
positive attitudes, they are more likely to adopt internet banking and vice versa.

Aladwani (2001) mentioned that while the industry has moved instantly to deploy and
offer new banking services via e-channels for customers and in consequence the e-
banking services have boomed promptly. Today, several financial institutions are
endeavoring to emphasize customer–oriented services. For this sake, it is crucial to
implement new banking services in order to develop and keep better relationships
with customers. Rationale for ‘banks’ to provide Internet banking services,
Ongkasuwan and Tantichattano (2002) indicate that internet banking helps banks in
cost saving, increase customer base, enable mass customization for e-Business
services, extend marketing and communication channel, search for new innovation
services, and explore and development of non-core business. Customers’ attitudes are
significant factor affecting customer behaviors in accepting or rejecting technology. It
was found that the relationship between attitude towards using and usage was
significant. Customers' attitudes are a significant factor affecting customer behaviors
in accepting or rejecting technology (Broderick & Vachirapornpuk, 2002). Hence
building up competitive predominance almost depends on customers’ satisfaction
with banking service. It is recognized that banks gaining higher customer satisfaction

25
will have a conspicuous marketing ascendancy because the higher customer
satisfaction is associated with greater revenues, increased cross-sell rations, higher
customer retention and bigger market share (Gonzalez, Quesada, Picado, &
Eckelman, 2004).

Gan (2006) identified that user input factors are a function of control, enjoyment and
intention to use. Control could be described as the amount of effort and involvement
required by consumers in electronic banking. Enjoyment is the perceived playfulness
and intrinsic value that consumers experience from the utilization of electronic
banking and this would influence the level of satisfaction; when consumers are aware
of the availability of electronic banking, they will use adopt, though some may not.

Lichtenstein and Williamson (2006) noted that several theories converging reference
domains and theories suggest numerous potential influences on consumer adoption of
internet banking including theories of consumer behavior in mass media choice and
use, gratification theories, innovation diffusion, technology acceptance, online
consumer behavior, online service adoption, service switching costs and the adoption
of internet banking. Boateng and Molla (2006) contend that operational constraints
related to customer location, the need to maintain customer satisfaction and the
capabilities of the Bank's main software are influential factors in motivating the
decision to enter electronic banking services and consequently influencing the usage
experience and thus affecting the level of satisfaction.

Raman, Stephenaus, Alam, and Mudiarasan (2008) said that service as an intangible
good appeal differently to each customer and certain extent of service should be
achieved in order to satisfy the customer and that the resulting commitment, loyalty
and retention are critical indicators of customer satisfaction. Customer commitment;
Power and Associates note that on average, highly committed customers use more
products or services, give more referrals and are much less likely to switch to another
bank, compared with customers who have lower commitment levels. Indeed, this view
is supported by Casalo, Flavian, and Miguel (2008) who contends that higher levels of
website usability might lead to higher levels of consumer's affective commitment to
the website as well a direct, positive and significant relationship between.

26
However, customers’ ability to subscribe to the Internet-based banking services
depend on several factors such as user-friendly interface, level of Internet experience,
types of services provided, (for example e-mail, file transfer, news, online financial
services, shopping and multimedia services), attitude and perception, access and
delivery time and experience with the Internet. The introduction of internet banking
services is facilitated by the bank’s reputation in terms of size, awareness and trust
awareness of Service and its benefits in form of the amount of information a customer
has about Internet banking and its benefit may have a critical impact on the adoption
of Internet banking (Kwarteng, 2015).

2.2 Review of Related Empirical Studies

Nath (2001) tried to study examines banker’s view on providing banking services to
customer using the web. Especially, it addresses issue such as the strategic need for
internet banking, its effect on customer-bank relationships and customer’s experiences
in internet banking. Data collected from 75 banks show that most banks do not yet
offer full-fledged internet banking. However, most banks have plans to do so.
Furthermore, bankers see internet banking as a strategic opportunity that can reduce
transaction costs, enhance customer service, increase the customer base and improve
cross-selling opportunities. In addition, internet banking is perceived more favorably
by banks that offer it compared to those that do not.

Kumbhar (2001) evaluated major factors (i.e. service quality, brand perception and
perceived value) affecting on customer’s satisfaction in e-banking service settings.
This study also evaluates influence of service quality on brand perception, perceived
value and satisfaction in e-banking. Required data was collected through customer’s
survey. For conducting customer’s survey linker scale, based questionnaire was
developed after review of literature and discussions with bank managers as well as
experts in customer service and marketing. Result indicates that, perceived value,
brand perception, cost effectiveness, easy to use, convenience, problem handling,
security assurance and responsiveness are important factors in customers satisfaction
in e-banking. It explains 48.30 percent of variance. Contact facilities, system
availability, fulfillment, efficiency and compensation are comparatively less important
because these dimensions explain 21.70 percent of variance in customer’s satisfaction.

27
Security assurance, responsiveness, easy to use, cost effectiveness and compensation
are predictors of brand perception in e-banking and fulfillment, efficiency, security
assurance, responsiveness, convenience, cost effectiveness, problem handling and
compensation are predictors of perceived value in e-banking.

Speece (2003) conducted a research on barriers of internet banking adoption to the

corporate customer of Thailand. The findings of this research suggest that security of
the internet is a major factor inhibiting wider adoption. Those already using internet
banking seem to have more confidence that the system is reliable, whereas non-users
are much more service conscious, and do not trust financial transactions made via
internet channels. Non-internet banking users tend to have more negative
management attitudes toward adoption and are more likely to claim lack of resources.
Legal support is also a major barrier to internet banking adoption for corporate
customers.

Laforet (2005) conducted a study to investigate the market status for online banking
in China. With the recent and forecast high growth of Chinese electronic banking, it
has the potential to develop into a world-scale internet economy and requires
examination. The results shows Chinese online bank users were predominantly males,
not necessarily young and highly educated, in contrast with the electronic bank users
in the West. The issue of security was found to be the most important factor that
motivated Chinese consumer adoption of online banking. Main, barriers to online
banking were the perception of risks, computer and technological skills and Chinese
traditional cash-carry banking culture. The barriers to mobile banking adoption were
lack of awareness and understanding of the benefits provided by mobile banking.

Eriksson (2005) conducted a study of technology acceptance of internet banking in

Estonia, an emerging East European economy. The findings suggest that internet bank
use increases insofar as customers perceive it as useful. The perceived usefulness is
central because it determines whether the perceived ease of internet bank use will lead
to increased use of the internet bank. Put differently, a well-designed and easy to use
internet bank may not be used if it is not perceived as useful. We thus, conclude that
the perceived usefulness of internet banking is, for banks, a key construct for
promoting customer use. We also suggest that models of technology acceptance

28
should be re-formulated to focus more on the key role of the perceived usefulness of
the service embedded in the technology.

Curran (2005) conducted a research aims to focus on the examination of factors that
influence consumer attitudes toward and adoption of self-service technologies (SSTs).
A comparison of the results of the model tests on the three technologies provides
evidence that different factors influence attitudes toward each of these technologies
and offers an explanation of the varying degrees of acceptance found among
consumers. This research has demonstrated that multiple factors need to be considered
when introducing technologies into the service encounter and that the salient factors
may vary among technologies and their stages in the adoption process.

Ahmed (2006) examined the issues related to the development of the internet and e-
commerce (EC) in the Kingdom of Saudi Arabia. The key challenges identified for
Saudi’s organizations are the continuing relying on face-to-face contact principles,
problems with information overload, charges still expensive, the need for technical
support and expertise, lack of a management commitment and understanding the
potential role of information technology (IT) on the country’s future and middle aged
and older people were more reluctant to use IT.

Jenkins (2007) conducted a study to examine the factors affecting the adoption of
internet banking services by domestic commercial banks in a sparsely populated small
island. Evidence from survey studies and from bank’s websites indicated that banks in
North Cyprus have been consistently moving toward providing internet-banking
services despite a very small potential market to share. In 2004, the majority of
commercial banks claimed that the potential market was too small to adopt internet-
banking services in North Cyprus. In 2006, the same banks were in the process of
introducing internet banking as an assurance to their customers that they would be
able to maintain a competitive quality of service in the future, hence avoid losing their
customers to the branches of foreign banks.

Laukkane (2007) conducted study to explore and compare customer value perceptions
in internet banking. The purpose especially is to compare customer perceived value
and value creation between internet and mobile bill paying service. The results
indicate that customer value perceptions in banking actions differ between internet

29
and mobile channels. The findings suggest that efficiency, convenience and safety are
salient in determining the differences in customer value perceptions between
internets.

Dawson (2007) tried to illustrate how the process of technological change is shaped
by a combination of contextual elements that relate to the political and social history
of Sudan. The development in infrastructure, relationships with economically
powerful industrialized countries and the attitudes and perceptions of key decision
makers are discussed. The findings highlight the needs for bank general managers and
IT managers to collaborate in the establishment of IT strategies and in ensuring that
there are sufficient staff and budgetary resources for successful implementation.
There is also a need to develop comprehensive banking policies in Sudan in order to
support the replacement of traditional manual methods of banking with more
advanced computer-based systems. Managing this process is not simply a technical
issue, but a complex socio-political challenge that requires management sensitivity to
the context within which change is taking place.

Kim (2007) conducted a study on the adoption of business-to-business and business-

to-consumer, e-commerce have not simultaneously considered trust and risk as
important determinants of adoption behavior. Further, trust in information technology
has not been addressed to a great extent in the context of e-commerce. This research
explicitly encompasses the electronic channel and the firm as objects to be trusted in
e-commerce. Our conceptual model leads us to believe that trust in the electronic
channel and perceived risks of e-commerce are the major determinants of the adoption
behavior. Based on the social network theory and the trust theory, determinants of
trust in the electronic channel are included in the research model. This research is
expected to provide both theoretical explanations and empirical validation on the
adoption of e-commerce.

Bastola (2007) financial institutions are slowly moving from Brick and Mortar
(Physical branches) to Click and Order (e-banking). ATM's are the most popular
electronic delivery channel for banking services in Nepal. Only few customers are
using e-banking facilities. Nepalese financial institutions till date have not faced any
kind of electronic fraud or risk. Banks have basic security tools like firewall,
lightening power surge protection. However, it is found that the some banks are in

30
lack of having regular back up of website information and e-banking policy. Nepalese
banks are using e-banking for their own convenience and for the purpose of retaining
exiting customers. The cost analysis of most of the banks in Nepal seems to be either
inadequate or not applied due to their narrow space of business transaction or lack of
sufficient tools. No significant correlation was found between uses of e-banking and
gender, marital status or salary of customer. However, it was found that use of e-
banking was significantly associated with age and education.

Haque (2007) conducted a research to find out significant factors of consumer’s

perception on e-banking transaction by Malaysian Bank Consumers. The study
utilizes a combination of theoretical frameworks and quantitative techniques to testify
the statistical relationships between consumer perceptions on e-banking transaction.
Meanwhile, factor analysis was performed to extraction and make initial decision on
the number of factors underlying asset of measured variables of interest. Thereafter,
structural equation mode (SEM) was estimated to anticipate the effects of the
explanatory variables. This study shows that only protected transaction, have
significant impact on consumer’s perception about e-banking security, followed by
service quality and regulatory framework issues. This study is the first that seeks to
ascertain the insight into e-banking in Malaysia, which has not been previously been
investigated and much statistical significance makes this study a potential cornerstone
for future research. Therefore, this study thus sets an important benchmark for further
research in the area.

Faullant (2008) studied on the acceptance of internet banking to investigate the role of
internet trust as a specific form of technology trust in the context of internet banking.
Furthermore, the integration of propensity to trust within the hierarchical structure of
personality and its applicability to technological systems are investigated. The results
confirm the influence of internet trust on risk perception and consumer attitudes
towards internet banking. Propensity to trust is a determinant not only for
interpersonal relationships but also for trust in technological systems.

Smith (2008) conducted a research on internet retail banking. The purpose of this
research was to examine the online retail banking industry and determine if there is
evidence that online banking will be a dominant player in the financial services retail
marketplace. The researcher has used Porter’s five-force model to conduct the

31
industry analysis. The result suggests that online banking is still in its infancy,
although with great potential. According to FDIC, while approximately 40 percent of
the 10,623 banks and thrifts in the US market have a website, only 376 offer
transactional internet banking at the time of the study. About 30 internet-only banks
or a pure-play format operates in the USA. All of the web-only banks in the USA
combined have about 250,000 depositors, out of the nearly six million customers who
have stated that they do significant banking activities over the internet.

Maenpaa (2008) examined the role of expertise measured in terms of use frequency
and length of use in moderating consumer perceptions of dimensions of internet bank
services. A survey of three hundred respondents investigated differences in
perceptions of the proposed service dimensions. The results reveal that consumer’s
perceptions differed in four of seven dimensions of internet bank services when
examined along the criterion of expertise. The most interesting result is that security is
not a concern for any of the user groups. Also, an interesting finding is that the
dimensions of status, personal finances and investment proved to be U-shaped.
Practical implications the findings of this research provide several ideas for marketing
of internet banking (IB) and for developing IB websites. For example, appeals of
status and ego-gratification in advertising can be used to attract new consumers to IB.
Also, designing auxiliary features or tools for personal finance management into
bank’s websites would prove to be sound investment. This research suggests that
expertise has correlation with demographics as well as in perceptions of service
dimensions. Thus, it may be possible to apply expertise for segmenting markets along
demographic criteria and then to offer appropriate mix of services for each segment.

Wong (2008) tried to re-examine the role of traditional service quality in an e-banking
environment by providing a review of how traditional service quality perceptions
have evolved through the current and continuing stream of change in banking
technology and the corresponding changes in the nature of how banks interact with
their customers. The result of this study suggests that there exist a large discrepancy
between customer expectations and their perceived performance of traditional
banking services.

Pekka (2008) tried to explore understanding of innovation resistance by dividing

internet banking non-adopters into three groups based on their intentions to use the

32
innovation. Thereafter, the aim is to identify how the resistance differs in these
customer groups. Significant differences were identified between the groups explored.
The resistance of the rejecters is much more intense and diverse than that of the
opponents, while postpones show only slight resistance. The results also indicate that
psychological barriers are even higher determinants of resistance than usage and
value, which are constructs related to ease-of-use and usefulness determining
acceptance in the traditional technology acceptance model. Moreover, the findings
highlight the role of self-efficacy in bank customer’s risk perceptions to internet
banking.

Hwang and Thao (2008) tried to investigate how small and medium-sized travel
agencies as business customers perceive the benefits and barriers of internet use that
related to the development of a positive relationships and loyalty with their service
suppliers. The major benefits of internet user were interactional and transactional
benefits. The main barriers of the internet user were organizational weaknesses, poor
IT infrastructure, mistrust of the internet system and legal issues. While the benefits
positively contributed to the service and social bonds, the barriers negatively impacted
the development of these bonds. The interactional benefits play a major role to
increase switching costs. The customer relationships and switching costs concurrently
enhanced the customer loyalty.

Clark (2009) examined the relationships among three dimensions of service quality
that influence overall internet banking service quality and it is subsequently effect on
customer satisfaction in a New Zealand banking context. The results show significant
relationships among online customer service quality, online information system
quality, banking service product quality, overall internet banking service quality and
customer satisfaction.

Manzano (2009) tried to analyze the determinants of internet banking use, paying
special attention to the role of product involvement, perceived risk and trust. Data
analysis shows that technology acceptance model (TAM) beliefs and perceived risks
(security, privacy, performance and social) have a direct influence on e-banking
adoption. Trust appears as a key variable that reduces perceived risk. Involvement
plays an important role in increasing perceived ease of use.

33
Rensleigh (2010) conducted a study on what are internet banking customer’s
perception on information protection when using internet banking services and
products? The research study consisted of a detailed literature review, followed by an
empirical component, which consisted of a quantitative questionnaire. The
questionnaire used in this study consisted of eight sections covering biographical
information, financial institution and internet banking, internet banking service
quality and delivery, internet banking functionality, internet banking costs, internet
banking convenience and relationships, internet banking trust and internet banking
security. The final conclusion was internet-banking products and services will
continue to grow across various divides and platforms as the internet costs decrease in
future, the growth of internet related products and services such as internet banking
will increase.

Kawamala, (2013), tried to study examines customers perception on e-banking

services in Tanzania. Especially, it addresses issue such as the strategic need for
internet banking, its effect on customer-bank relationships and customer’s experiences
in internet banking. The results of this research reveal that internet banking is
perceived more favorably by banks that offer it compared to those that do not. It was
revealed that there were different factors causes Azania bank to adopt e-banking
system such as Government support, availabilities of the equipments, customers
satisfaction on their needs, competition with other bank perceived ease of use and
perceived usefulness, trust and security aspects are deemed crucial factors to
explaining internet banking adoption in Tanzania and level of education and income
level of respondents may be a major determinant in influencing the adoption of
internet banking. The introduction of Mobile banking, the m-banking/mobile phone
banking such as M-Pesa and Tigo Pesa have increased the speed of money deposits
and transfers via the use of electronic banking run by these companies both in urban
and rural areas.

2.3 Concluding Remarks

This chapter explored the concept of electronic banking. It was revealed that the
varied definition was based on the context, situation and the environment under which
the concept existed. However, the common theme that permeates through all the
definitions was underlined by key words such as the exchange of information using

34
ICT tool to foster good customer relation. In other words, electronic banking was
explained as a mechanism by which banks adopt in order to deliver quality services to
their clients.

The review also looked at the various forms of electronic banking. Benefits and
challenges associated with adaptation of electronic banking was also captured under
the chapter. Lastly, empirical studies were also reviewed. Various published and
unpublished papers are followed to make the research fruitful and fill the gaps of
previous studies. This study helps to conceptualize about the theoretical framework
within which this study was conducted.

There is gap between the present research and previous researches in terms of some
objectives, tools used for analysis, period of data collection and so on. The topic is
also considered as the difference between the previous researches and the current
research. The main objective here is to draw a genuine conclusion about the customer
satisfaction towards e banking considering the previous studies. In this context, the
previous studies can't be ignored because they provide the foundation to present
study. Thus, to complete this research work, many books, journals, articles and
various published and unpublished dissertations are followed as guideline to make the
research effective and smooth through these reference materials.

2.4 Study Framework

A study framework is the basis for thinking about what to do and about what it means,
influenced by the ideas and research of others. A framework can help to explain why
a study can be doing a in a particular way. It can also help us to understand and use
the ideas of others who have done similar things. Framework can be used like a travel
map. With reference to the literature review, the following conceptual model was
developed. The model draws much input from the literature mentioned. Specifically,
this study considers various attributes of internet banking such as accessibility,
reliability, convenience, privacy and security as antecedents for adaptation of e-
banking.

In order to fill the research gaps the following study framework model is proposed
with respect to aforementioned literature review. In order to fill the research gaps the

35
following theoretical framework, which is presented in figure 2.2, is proposed with
respect to literature review.

Independent Variables Dependent Variable

Attributes of E-banking

Accessibility

Customer
Reliability
Satisfaction

Convenience

Privacy /
Security Demographic
Factors

Figure 2.2 Study Framework

This study framework shows all the independent variables and dependent variable
associated with this study. This framework explains the relationship that existing
between variables used in the present study. To understand customers’ satisfaction on
E-banking, the following variables reliability, accessibility, ease of use,
privacy/security and demographic variables were considered.

Dependent Variable: The dependent variable represents the output or outcome

whose variation is being studied. In this study customer satisfaction on e-banking is a
dependent variable.

Independent Variable: The independent variable is known as regressors in statistical

context, which represent inputs or causes i.e. potential reason for variation. However,
there are various dimensions of e-banking service but this study considered reliability,
accessibility, convenience, privacy/security as the major attributes of e-banking
service.

36
 CHAPTER 3

RESEARCH METHODOLOGY

This chapter is designed to explain the research methods used to meet the stated
objectives of the study. It explores the research process regarding E-banking and
Customer Satisfaction in the context of Nepalese society. This chapter hence provides
information about research design, sources of data, questionnaire, data collection
procedures, pilot study, population and sampling, instrumentation, administration of
instrument and data analysis plan. The primary objective of this chapter is to highlight
the methods and procedure utilized to get the most accurate result following the set
objective of the research topic. The design and methods have been applied according
to the research type, which is descriptive.

3.1 Research Design

Sekaran (2003) a research design is the determination and statement of the general
research approach or strategy adopted for the particular research work. Sekaran
(2003) indicated that after identifying the variables in developing the conceptual
framework, the subsequent step is to design the research in a way that the data can be
collected and analyzed. Malholtra (2004) research design is a framework or blueprint
for conducting marketing research project. It provides details of the necessary
procedures for obtaining the information needed to structure and to solve marketing
research problems.

A systematic research is carried out for the purpose of making findings. A descriptive
as well as explanatory research was carried out for the purpose of this research. The
research is descriptive in nature as it describes data and characteristics about the
population being studied, solely on the basis of statistics, without any form of
manipulation. The research is also explanatory since it has been conducted to identify
the extent and nature of cause-and-effect relationships among the dependent and
independent variables.

Basically, this study is based on survey research design for understanding consumer
response towards e-banking service of banks. Hence, for this, questionnaire and semi
structured interviews were used. For the collection of primary data, a set of

37
questionnaire has been prepared and distributed within the customers of private banks
inside Kathmandu valley. This study was conducted using both the qualitative and
quantitative research.

3.2 Nature and Sources of Data

The data used in this research is primary in nature. All the data has been collected
from the respondents via the structured questionnaire and field survey. Primary data is
a type of information that is obtained directly from first-hand sources by means of
surveys, observation or experimentation. It is data that has not been previously
published and is derived from a new or original research study and collected at the
source such as in marketing. In this research primary data has been used to meet the
research objectives and draw genuine conclusions in the end. Primary data was
gathered by means of questionnaires and semi structured interview questions.

The findings of this research were based on the primary survey. The data was
collected by formulating a set of questionnaire and then the questionnaire was
distributed to the customers of the bank. So, the findings have been totally based on
the data and facts provided by the sampled respondent. The study used various
instruments of data gathering such as questionnaires and interview questions in order
to collect quality and reliable data. In this way, the research has been designed to
pinpoint the major existing problems and issues and thereby providing the applicable
recommendation and thus, facilitate the end user of this research study.

3.2.1 Pilot Test

The purpose of pilot test is to refine the questionnaire so that the respondents do not
face any problems answering the questions and also to eliminate further problems in
recoding the data collected. Pilot test ensures that the collected data will be helpful in
answering the research questions. For this research, the pilot study was done within
the Bagbazar area randomly by distributing the questionnaires taking 30 respondents
as per convenience. The pilot study showed that the respondents did not find the
questionnaire long and were clear and understandable. Hence, no modifications were
made for the same and were used for further research. Only when the pilot test seems
to be reliable for the study, data were collected in full-fledged. Through the pilot test
it became sure that the designed questionnaire can meet the research objectives
defined at chapter one.

38
The data obtained from the research was analyzed by using statistical tools. Mainly,
descriptive statistical analysis was used for the purpose of generating findings. Apart
from these analyses in some of the variables, inferential analysis was also done to find
relationship between the variables. On top of it the recommendation and conclusion is
totally based upon the findings.

3.2.2 Reliability and Validity

Reliability is synonymous with the consistency of a test, survey, observation, or other
measuring device. Research requires dependable measurement. Measurements are
reliable to the extent that they are repeatable and that any random influence, which
tends to make measurements different from occasion to occasion or circumstance to
circumstance, is a source of measurement error. Reliability is the degree to which a
test consistently measures whatever it measures. The idea behind reliability is that
any significant results must be more than a one-off finding and be inherently
repeatable. Other researchers must be able to perform exactly the same experiment,
under the same conditions and generate the same results. This will reinforce the
findings and ensure that the wider scientific community will accept the hypothesis.
Without this replication of statistically significant results, the experiment and research
have not fulfilled all of the requirements of testability.

Validity refers to the degree in which our test or other measuring device is truly
measuring what we intended it to measure. In other words, validity reflects the
truthfulness of findings. It determines whether the study truly measures what it was
intended to measure or how truthful the study results are. It refers to the accuracy of a
measure and a measurement is valid when it measure and perform the functions that it
support to perform. Validity refers to how well a measurement truly represents
characteristics that exist in the phenomenon being investigated. In order to guarantee
external validity, measures were taken to collect a sample that is as representative as
possible.

The purpose of the validity and reliability analysis is to determine whether data are
trustworthy or not. The designed questionnaire is finalized before requesting the
respondents to participate. For the reliability test, Cronbach’s Alpha was calculated
for this questionnaire. The result of the reliability test is shown in Table 3.1.

39
 Table 3.1: Cronbach’s Alpha Coefficients

S. No. Variables No. of items Cronbach’s Alpha

1 Accessibility 6 .759
2 Reliability 6 .762
3 Convenience 6 .783
4 Security 6 .794
5 Customer Satisfaction 4 .728

Note: Researcher’s Survey, 2019

Table 3.1 shows the Cronbach’s alpha coefficients of independent variables-

Accessibility, Reliability, Convenience, Security and dependent variable-Customer
Satisfaction. Cronbach’s Alpha coefficient less than 0.6 is considered as ‘poor’;
greater than 0.6 but less than 0.8 is considered ‘acceptable’ and greater than 0.8 is
considered ‘good’ (Sekaran U. , 2000). Here, Cronbach’s Alpha of all the variables
are considered as acceptable, since they are greater than 0.7. Therefore, the
instruments used in this research are considered to be reliable.

Data for this survey was collected through questionnaire for measuring impact of e-
banking service of banks on customer satisfaction. Samples of 140 respondents’ i.e.
individuals who use e-banking service of banks were selected. The questionnaires
were distributed among the respondents and the responses were collected thereafter.

The questionnaire developed includes personal information about respondents such as

gender, age, education and profession. There are also six point Likert scale questions
in which respondents were asked to express to what extent they perceive the
determinants of e-banking service (Accessibility, Reliability, Convenience, Security).
Simple descriptive statistics such as simple frequency count, percent, mean, median
and standard deviation, etc. is used particularly to analyze the factors affecting
customer satisfaction and issues related to it.

3.3 Population and Sampling

Population or universe refers to the industries of the same-nature of its service and
product. It is the collection or the aggregate of objects or the set of results of an
operation. On the other hand, sample means the representative parts of population
selected from it with the objectives of investigating its properties. Thus, a sample is

40
just a portion of the population selected with a view to draw conclusions about the
population under study. For the purpose of this study, survey method has been was
adopted. The overall survey and study was guided by the objectives of the study that
is set as mentioned in the first chapter. In conformity with the objective, the study was
designed to understand the relationship between e-banking and customer satisfaction
in the context of Nepalese society.

The target population for this study includes all the customers of private commercial
banks inside Kathmandu valley. Researcher used the convenience sampling by sub
grouping the occupation as government employees, private employees, self-employed
and student and the sample respectively. This study obtained data from 140 people out
of whom some are working in various organizations, some are students, and some are
businessperson. Convenience sampling was used in this study to track the respondents
for the study. With this sampling technique, subjects are selected because of their
convenient accessibility and proximity to the researcher. Convenience sampling was
appropriate for this research because of its advantages like availability and the
quickness with which data can be gathered.

Samples were collected from the different sub-groups and they were the customers of
different 4 commercial banks (NCC, Mega, Janata and Civil). Moreover, sample of
customers were from the different age groups, educational background and gender. In
the survey, all respondents had to respond through filled questionnaire.

3.4 Methods of Analysis

In this research, the major source of data was the data collected from the
questionnaire and the whole research is based on this data. So, all the questionnaires
were distributed and collected by the researcher. Further, the researcher was
personally presented while asking respondents to fill the questionnaire. After
collecting questionnaire, every questionnaire was thoroughly checked. On the basis of
questionnaire some research hypothesis were created which, are described in the first
chapter.

For the distribution of the pre-designed questionnaire all the identified respondents
were given a set of printed copy of questionnaire. They were then asked to fill them
without being biased and confirmed that their response will be kept confidential. After

41
filling out the questionnaire their response were abstracted via the use of various
statistical tools and techniques.

At the initial phase for the purpose of developing theoretical framework the secondary
sources of data collection was used. The secondary source of data was internet, books,
journals, newspaper and articles. Similarly, in the later stage the primary sources of
data collection was used. The primary source of data was structured questionnaires,
which consisted of multiple-choice questions and rating scales so as to meet the
intended objective of the study.

The key instrument used in the study is the structured questionnaire, which was
designed to meet the stated objectives of the research. To maximize content validity, a
comprehensive literature review was done in order to grasp the relationship of e-
banking and customer satisfaction. On the basis of the questionnaire, data were
collected and were analyzed using the analytical tools in an attempt to describe what
has been observed regarding theoretical framework developed by referring the related
literatures in this topic.

The questionnaire mainly included multiple choice questions and Likert scale
questions, which is a widely used rating scale that requires respondent to indicate a
degree of agreement or disagreement with each series of statement. The survey
contains 28 questions using a six-point Likert scale for each question ranging from
‘Strongly Disagree’ to ‘Strongly Agree’, coded by 1 representing ‘Strongly Disagree’
and 6 representing ‘Strongly Agree’.

The first part of the questionnaire deals with demographic information of respondents,
which includes gender, age, education, and profession. The second part deals with
questionnaires concerning various determinants of e-banking that have a relationship
with customer satisfaction, as stated in the theoretical framework for the study. The
different variables included independent variables such as accessibility, reliability,
convenience, privacy of e-banking and a dependent variable- customer satisfaction.
All the independent variables consist of 6 questions each and dependent variable-
customer satisfaction consists of 4 questions.

The study aims to analyze the relationship between e-banking service attributes and
customer satisfaction. The determinants of e-banking service are used as independent

42
variables. Four different determinants are taken as independent variables namely
accessibility, reliability, convenience and security. Customer satisfaction is taken as
dependent variable. Multiple regression models are used in this study to analyze the
relationship between the determinants of e-banking service and their impact on
customer satisfaction. The multiple regression model used in this study is as follow:

Ŷ= α + β1X1+ β2X2+ β3X3 + β4X4 +ei …………….. (i)

Where, Ŷ= Customer Satisfaction X1 = Accessibility, X2 = Reliability, X3 =

Convenience, X4 = Security, α = constant, ei = Error term and β1, β2, β3, β4 are the
beta coefficients of the explanatory variables to be estimated. All the observed
relationship and findings have been interpreted to drive at meaningful conclusions
regarding the relationship between e-banking service and customer satisfaction.

In this way, the research required the collection of both primary and secondary data
for the purpose of making useful finding.

3.6 Limitations of the Study

There are always some limitations present while performing any work. The basic
limitations of this research are as follows:

 The study was restricted to the Kathmandu city, capital of Nepal as the capital city
is far more developed than other cities in terms of information technology and
communication.

 The study made use convenience sampling method and non probability sampling
method.

 The study has used only limited analytical tools due to limited time and resources.

The study as a matter of fact should have captured all the customers of major banks in
Nepal. This is, however, too difficult and impractical due to many factors like limited
time and resources. Respondents individual opinions are collected so whatever they
provided may be different to other context. That is why further evidence is needed for
generalization purpose.

43
 CHAPTER 4

PRESENTATION AND ANALYSIS OF DATA

This chapter describes the analysis results generated from the process of data
collection. It deals with the analysis and interpretation of the primary data collected
through questionnaire from 140 respondents. Data were analyzed with reference to the
objectives of this research as mentioned in the earlier chapter. The primary purpose of
this chapter is to analyze and interpret the collected data and present the results of the
questionnaire survey. The main objective of this research study will be fulfilled with
the outcomes derived from the analysis of the data. The data collected from the
procedure as stated in chapter three were further taken for analysis and presentation.
This analysis part consists of details of the respondents’ profile, descriptive analysis
of respondents’ answers on e-banking service and the respective correlation among
the dependent and independent variable.

The main purpose of this section is to test relationship between the attributes of e-
banking and customer satisfaction along with the presence of dependent variable
which is employee engagement and independent variables such as Accessibility,
Reliability, Convenience and Security. This section is further sub-divided into various
sections. The first part deals with the respondents’ profile and their demographic
characteristics. The second part is descriptive analysis, which analyzes the collected
data through frequency analysis and measures of central tendency. The third part
analyzes the collected data through inferential analysis, which includes hypothesis
testing and correlation analysis. Fourth part is regression analysis. The fifth and the
final part of this chapter deals with discussion and inferences by analyzing and
interpreting the collected data on attributes of e-banking service and customer
satisfaction in Nepalese banking industry.

4.1 Respondents’ Profile

This section deals with the demographic analysis and interpretation of primary data
collected through questionnaires. It gives an insight into the demographic
characteristics of the respondents under study. In this study the respondents has been
sub divided into various categories for the purpose of simplicity and they are:

44
• Gender wise
• Age wise
• Occupation wise
• Education level wise

The main reason behind sub categorization is that it will help the end users to know
‘what specifically is the main key variable in this research influencing the output?’
For example, in this research gender wise categorization helps the end users to know
whether male or female are using more of the internet banking service.

4.1.1 Gender of Respondents

The questionnaire was distributed to both male and female respondents. The objective
was to determine the percentage of distribution of respondents by gender. The
frequency and percentage of the respondents is depicted in Table 4.1 and Figure 4.1
below:

Table 4.1: Distribution of Respondents Based on Gender

Gender Frequency Percentage
Male 84 60
Female 56 40
Total 140 100.0

Note: Researcher’s survey, 2019

Gender

Female 40% Male

Female
Male 60%

Figure 4.1 Distribution of Respondents based on Gender

45
Figure 4.1 and Table 4.1 show gender distribution of the respondents. From the above
figure and table, it is clear that out of total respondents, 84 were male and 56 were
female. Hence, respondents comprised of 60 percent male and 40 percent female.

4.1.2 Age group of Respondents

The questionnaire was distributed to respondents of different age groups. This was to
determine the percentage distribution of the age groups of people who responded to
the given questionnaire, as shown in Table 4.2 and Figure 4.2.

Table 4.2 Distribution of Respondents based on Age

Age Frequency Percentage
Below 20 14 10
20-30 56 40
31-40 36 25.7
41-50 20 14.3
Above 50 14 10
Total 140 100
Note: Researcher’s survey, 2019

Age of Respondents
45
40
40
35
30
25.7
25
20 Percentage
14.3
15
10 10
10
5
0
Below 20 20-30 31-40 41-50 Above 50

Figure 4.2 Distribution of Respondents based on Educational Qualification

Figure 4.2 and Table 4.2 show age distribution of the respondents, where majority of
the respondents fall under the age group of 20-30. From the above figure and table it
is clear that 14 respondents were under the age group of below 20, 56 respondents

46
were of age group 20-30, 36respondents were of age group 31-40, 20 respondents
were of age group 41-50 and 14 respondents were under the age group of above 50.
Out of total respondents, 10 percent were below 20 years of age, 40 percent fall in the
age group of 21-30, 25.7 percent fall in the age group of 31-40, 14.3 percent fall in the
age group of 41-50 and 10 percent respondents were above 50 years of age. Hence,
this result shows that the majority of people using e-banking service fall within the
age group of 21 -30.

4.1.3 Educational Qualification of Respondents

The questionnaire was distributed to respondents having different levels of academic
experience. The educational qualification of respondents is shown in Table 4.3 and
Figure 4.3.

Table 4.3 Distribution of Respondents based on Educational Qualification

Educational Qualification Frequency Percentage
SLC 8 5.7
Intermediate 14 10
Bachelor Degree 60 42.9
Master 58 41.4
Total 140 100

Note: Researcher’s survey, 2019

Educational Qualifaction
50
45 42.9
41.4
40
35
30
25
Percentage
20
15
10
10 5.7
5
0
Up to SLC Intermediate Bachelor Degree Master or above

Figure 4.3 Distribution of Respondents based on Educational Qualification

47
Figure 4.3 and Table 4.3 depict educational qualification of the respondents. It shows
that 5.7 percent of the respondents i.e. only 8 respondents were in SLC level,
10percent of the respondents i.e. 14 respondents were in the intermediate level, 42.9
percent of the respondents i.e. 60 respondents were in Bachelor level and 41.4 percent
of the respondents i.e. 58 respondents were in Masters Level. Therefore, this result
shows that the majority of the e-banking users have a qualification Bachelor degree.

4.1.4 Profession of Respondents

The questionnaire was distributed to respondents working in different fields. The
profession of respondents is shown in Table 4.4 and Figure 4.4.

Table 4.4 Distribution of Respondents based on Profession

Profession Frequency Percentage
Government Employee 34 24.29
Private Employee 54 38.57
Self Employed 21 15
Student 12 8.57
Other 19 13.57
Total 140 100

Note: Researcher’s survey, 2019

Profession of Respondents
45
38.57
40
35
30
24.29
25
20 Percentage
15 13.57
15
8.57
10
5
0
Government Private Self Employed Students Others
Employee Employee

Figure 4.4 Distribution of Respondents based on Profession

48
Table 4.4 and Figure 4.4 depict the distribution of respondents based on profession
such as government employee, private employee, self-employed, students and other. It
shows that majority of the respondents i.e. 38.57 percent belong to private employees
other than which are mentioned.

4.2 Descriptive Analysis

In order to present descriptive scores for each of the variables used in the survey,
descriptive analyses were performed. Descriptive statistics summarizes the sample
and observations that have been made. In this study, descriptive analysis incorporates
the calculation of statistical measures such as mean and standard deviation. A total of
28 items (questions) with particular mean score were obtained as output. A six-point
Likert scale was used for each question ranging from ‘Strongly Disagree’ to ‘Strongly
Agree’; coded by 1 representing ‘Strongly Disagree’, 2 representing ‘Disagree’, 3
representing ‘Neutral’, 4 representing ‘Agree’ and 5 representing ‘Strongly Agree’.
These values are used to analyze the data with respect to frequencies and aggregation
relating to research questions and variables.

4.2.1 Accessibility of e-banking service

Accessibility of e-banking service is one of the independent variables of this research.
Descriptive study of each question drafted and overall descriptive study on this
variable is shown below:

Table 4.5 Descriptive Statistics of Accessibility of e-banking service

Code Statements N Mean Std. Deviation
Acc1 E-banking Service of the bank is easy to use. 140 4.17 1.262
Acc2 Website of the bank is properly designed. 140 4.10 1.250
Acc3 Easy to get access to all the financial
140 4.13 1.290
information in the bank’s e-banking service.
Acc4 Easy to find the policy and notice statements in
140 4.15 1.255
the bank’s website.
Acc5 Speed to login and logout of the bank website
140 4.28 1.132
is fast
Acc6 Website of the bank does not freeze during
140 4.40 1.254
transactions.
Accessibility of e-banking 140 4.21 1.082

Note: Researcher’s survey, 2019

49
The results in Table 4.5 show descriptive statistics of an individual item and as a
whole of accessibility sub-factor. There are six statements used to measure the
accessibility of e-banking service. Each of the 140 respondents submitted their
responses in the six-point Likert scale. The Table show that the items have a mean
value ranging from 4.10 to 4.40 i.e. the response is positive.

The Table shows that “Acc6” has the highest mean and “Acc2” has the lowest. The
highest mean of 4.40 indicates that it is the most agreed statement, stating, “Website
of the bank does not freeze during transactions”. Lowest mean of 4.10 shows that
respondents are less agreed by the statement “Website of the bank is properly
designed”.

Additionally, the Table shows that “Acc6” has the highest standard deviation whereas
“Acc5” has the lowest standard deviation. This means respondents have more
deviation with the statement “You get access to all of your financial information in
the bank’s e-banking service.”

4.2.2 Reliability of e-banking service

Reliability of e-banking service is another independent variable of this research.
Descriptive study of each questions drafted and overall descriptive study on this
variable is shown below:

Table 4.6 Descriptive Statistics of Reliability if e-banking service

Code Statements N Mean Std. Deviation
Rel1 Can rely on the accuracy of the information
140 4.61 0.967
provided in web page of the bank.
Rel2 Contents on bank’s website are up to date. 140 4.56 1.393
Rel3 The bank’s website provides all details of
140 4.78 1.080
products and services.
Rel4 The bank provides customer service over the
140 3.52 0.942
telephone when needed.
Rel5 Can rely on bank for not misusing information. 140 4.26 0.975
Rel6 The bank’s website provides an error free
140 4.12 1.184
transaction.
Reliability of e-banking service 140 4.31 0.997

Note: Researcher’s survey, 2019

50
The results in Table 4.6 show descriptive statistics of an individual item and as a
whole of reliability of e-banking service sub-factor. There are six statements used to
measure the reliability of e-banking service. Each of the 140 respondents submitted
their responses in the six-point Likert scale. The Table show that the items have a
mean value ranging from 3.52 to 4.78 i.e. the response is positive. Among the six
statements, the statement with code "Rel4” has scored the lowest mean of 3.52 with a
standard deviation of 0.942 and statement with code "Rel3” has scored the highest
mean of 4.78 with standard deviation of 1.080.

The highest mean of 4.78 indicates that it is the most agreed statement, stating “The
bank’s website provides all details of products and services” and the lowest mean of
3.52 shows that respondents are less agreed by the statement “The bank provides
customer service over the telephone when needed”. Additionally, the table shows that
“Rel2” has the highest standard deviation of 1.393 whereas “Rel4” has the lowest
standard deviation of 0.942. This means respondents have more deviation with the
statement “Contents on bank’s website are up to date”.

4.2.3 Convenience of e-banking service

Convenience of e-banking service is another independent variable of this research.
Descriptive study of each questions drafted and overall descriptive study on this
variable is shown below:

Table 4.7 Descriptive Statistics of Convenience of e-banking service

Code Statements N Mean Std. Deviation
Con1 Language of bank’s website is easy to understand. 140 4.02 1.104
Con2 E-banking service of the bank is user friendly. 140 3.89 1.220
Con3 The bank’s website is easy to navigate. 140 4.15 1.314
Con4 The e-banking service of bank is available for 24
140 4.32 1.080
hours per day & 7 days a week.
Con5 Instructions on bank’s website are very helpful. 140 3.93 1.261
Con6 The bank handles complains and solves problem
140 3.42 1.187
quickly through live chat service.
Convenience of e-banking service 140 3.95 1.173

Note: Researcher’s survey, 2019

51
The results in Table 4.7 show the descriptive statistics of an individual item and as a
whole of convenience sub-factor. The Table show that the items have a mean value
ranging from 3.42 to 4.32 i.e. the response is positive. Among the six statements, the
statement with code "Con6" has scored the lowest mean of 3.42 with a standard
deviation of 1.187 and statement with code "Con4" has scored the highest mean of
4.32 with the lowest standard deviation of 1.080.The highest mean of 4.32 indicates
that it is the most agreed statement, stating, “The e-banking service of bank is
available for 24 hours per day & 7 days a week”. Lowest mean of 3.42 shows that
respondents are less agreed by the statement “The bank handles complains and solves
problem quickly through live chat service”.

Additionally, the table shows that “Con3” has the highest standard deviation of
1.314whereas “Con4” has the lowest standard deviation of 1.080. This means
respondents have more deviation with the statement “The e-banking service of bank is
available for 24 hours per day & 7 days a week”.

4.2.4 Security of e-banking service

Security of e-banking service is the sixth and the final independent variable of this
research. Descriptive study of each questions drafted and overall descriptive study on
this variable is shown below:

Table 4.8 Descriptive Statistics of Security of e-banking

Code Statements N Mean Std. Deviation
Sec1 The transaction on bank’s website is confidential. 140 3.74 1.243
Sec2 Bank collects personal information very carefully. 140 4.22 1.110
Sec3 The e-banking service of bank suggest for creation
140 4.45 1.075
of strong password.
Sec4 Session timeouts occurred in the bank’s website
140 3.92 1.215
after some times.
Sec5 The bank’s website has dedicated security
140 4.12 1.126
software, which updates on regular basis.
Sec6 The bank sends messages & mails during every
140 4.24 1.344
transaction to alert or notify.
Security of e-banking service 140 4.12 1.102

Note: Researcher’s survey, 2019

52
The results in Table 4.8 show the descriptive statistics of an individual item and as a
whole of security sub-factor. There are six statements used to measure security of e-
banking service. Each of the 140 respondents submitted their responses in the six-
point Likert scale. The Table shows that the items have a mean value ranging from
3.74 to 4.45.

Among the six statements, the statement with code "Sec1" has scored the lowest mean
of 3.74 with standard deviation of 1.243 and statement with code "Sec3" has scored
the highest mean of 4.45 with a standard deviation of 1.075.The highest mean of 4.45
indicates that it is the most agreed statement, stating, “The e-banking service of bank
suggest for creation of strong password”. Lowest mean of 3.74 shows that
respondents are less agreed by the statement “The transaction on bank’s website is
confidential”.

Additionally, the table shows that “Sec6” has the highest standard deviation of 1.344
whereas “Sec3” has the lowest standard deviation of 1.075. This means respondents
have more deviation with the statement “The bank sends messages& mails during
every transaction to alert or notify”.

4.2.5 Customer Satisfaction

Customer satisfaction is the dependent variable of this research. Descriptive study of
each questions drafted and overall descriptive study on this variable is shown below:

Table 4.9 Descriptive Statistics of Customer Satisfaction

Code Statements N Mean Std. Deviation
Cs1 Easy to access the e-banking service of the
140 4.17 0.969
bank satisfies the customer.
Cs2 Reliability on e-banking service of the bank
140 4.41 0.948
encourages using the service.

Cs3 User-friendly characteristic of e-banking

140 4.27 0.921
service of bank satisfies the customer.
Cs4 Dedicated security software in bank’s website
140 3.98 0.993
gives confidence to use the service.
Customer Satisfaction 140 4.20 0.946

Note: Researcher’s survey, 2019

53
The results in Table 4.9 show the descriptive statistics of an individual item and as a
whole of Customer Satisfaction. There are four statements used to measure Customer
Satisfaction on e-banking service. Each of the 140 respondents submitted their
responses in the six-point Likert scale. The Table shows that the items have a mean
value ranging from 3.98 to 4.41.

Among the four statements, the statement with code "Cs4" has scored the lowest
mean of 3.98 with standard deviation of 0.993 and statement with code "Cs2" has
scored the highest mean of 4.41 with a standard deviation of 0.921.The highest mean
of 4.41 indicates that it is the most agreed statement, stating, “Reliability on e-banking
service of the bank encourages using the service”. Lowest mean of 3.98 shows that
respondents are less agreed by the statement “Dedicated security software in bank’s
website gives confidence to use the service”.

Additionally, the table shows that “Cs4” has the highest standard deviation of
0.993whereas “Cs3” has the lowest standard deviation of 0.921. This means
respondents have more deviation with the statement “Dedicated security software in
bank’s website gives confidence to use the service”.

4.3 Inferential Analysis

The purpose of this section is to present the method for analyzing the empirical
results, test the hypothesis set, built in previous chapter. Inferential statistics are
procedures used that allow researchers to infer or generalize observations made with
samples to the larger population from which they were selected. It enables use of one
or more samples of observations to infer values of a population. Inferential analysis
test hypotheses to determine if observed differences between groups or variables are
real or occur simply by chance. It produces new information by making predictions
and generalizations based on samples. This section consists of two analysis tools
which are:

4.3.1 Correlation Analysis

Correlations Analysis between variables was studied to find relations among them.
Pearson’s correlations analysis was carried out for variables having simple multi
option answers. Correlation matrix was computed to assess the extent or degree of
relationship in between the research variables. Correlation between Independent and
Dependent variables is shown in Table 4.10:

54
 Table 4.10 Correlation Analysis
Customer
Accessibility Reliability Convenience Security
Satisfaction
Accessibility 1
Reliability .459** 1
Convenience .531** .648** 1
Security .420** .577** .688** 1
Customer
.554** .644** .533** .479** 1
Satisfaction
** Correlation is significant at the 0.01 level (2-tailed).
Note: Based on researcher’s calculation from the survey data

Relationship between Accessibility and Customer Satisfaction

The Pearson Correlation coefficient between the independent variable accessibility of
e-banking service attributes and dependent variable Customer Satisfaction is 0.554,
which implies that the two variables are positively correlated. The positive coefficient
of correlation is 0.554 at 1 percent significant level.

Relationship between Reliability and Customer Satisfaction

The Pearson Correlation coefficient between the independent variable reliability of e-
banking service and dependent variable Customer Satisfaction is 0.664, which implies
that the two variables are positively correlated. The positive coefficient of correlation
is 0.664 at 1percent significant level.

Relationship between Convenience and Customer Satisfaction

The Pearson Correlation coefficient between the independent variable convenience of
e-banking service and dependent variable Customer Satisfaction is 0.533, which
implies that the two variables are positively correlated. The positive coefficient of
correlation is 0.533 at 1percent significant level.

Relationship between Security and Customer Satisfaction

The Pearson Correlation coefficient between the independent variable security of e-
banking service and dependent variable Customer Satisfaction is 0.479, which implies
that the two variables are positively correlated. The positive coefficient of correlation
is 0.479 at 1percent significant level.

55
4.3.2 Regression Analysis
The general purpose of multiple regressions is to learn more about the relationship
between several independent or predictor variables and a dependent or criterion
variable. In statistical modeling, regression analysis is a statistical process for
estimating the relationships among variables. It includes many techniques for
modeling and analyzing several variables, when the focus is on the relationship
between a dependent variable and one or more independent variables.

A correlation analysis can only tell whether or not a strong relationship exists between
two variables. But even if a correlation coefficient indicates that a strong relationship
exists between two variables, the exact shape of the relationship between the two
variables cannot be determined. In this case, regression analysis provides more
information about the slope of the relationship. It is used to describe the nature of a
relationship and to make predictions.

This section determines which independent variable explains variability in the

outcome, how much variability in dependent variable is explained by independent
variables and dependent variable, and which variables are significant (over other
variables) in explaining the variability of the dependent variable. Multiple regressions
were used to explore the impact of independent variables on dependent variable.

Multiple Regression Model

Ŷ= α + β1X1+ β2X2+ β3X3 + β4X4 +ei.

Where,

Ŷ= Customer Satisfaction (Dependent variable)

X1 = Accessibility of e-banking service

X2 = Reliability of e-banking service

X3 = Convenience of e-banking service

X4 = Security of e-banking service

α = Constant

ei = Error term

β1, β2, β3 & β4 are the beta coefficients of the explanatory variables

56
 Table 4.11 Multiple Regressions Analysis
Dependable variables: Customer Satisfaction
Ŷ = α+β1 X1+β2 X2+β3 X3+β4 X4+et
Coefficients
(Constant) 0.464
(.232)
Factor 1: Accessibility 0.503
(.000)
Factor 2: Reliability 0.488
(.001)
Factor 3: Convenience 0.510
(.000)
Factor 3: Security 0.678
(.000)
33.849
F-value
(.000)
R2 66.40
Adjusted R2 64.40
Note: The numbers in the parentheses are the p-values.
Based on researcher’s calculation from the survey data

Model summary indicates the R- square also known as coefficient of determination

which can help in explaining variance. The value of R-square as evident from Table is
0.644 which means 64.4 percent variation in Customer Satisfaction is explained by
accessibility of e-banking service, reliability of e-banking service, convenience of e-
banking service, security of e-banking service. This shows moderate relationship
between all variables of e-banking service and customer satisfaction. Model summary
also indicates the standard error of the estimate of 0.33849 which shows the
variability of the observed value of customer satisfaction from regression line is
0.33849 units. However, the remaining 35.6 percent (100 percent-64.4 percent) is still
unexplained in this research. In other words, there are other additional variables of e-
banking service that are important in explaining customer satisfaction, that have not
been considered in this research.

Based on ANOVA, the p-value is 0.00 which is lesser than alpha value 0.01.
Therefore, the model is a good predictor of the relationship between the dependent
and independent variables. As a result, the independent variables (Accessibility,
Reliability, Convenience and Security) are significant in explaining the variance in
Customer Satisfaction.

57
Taking four dimensions of e-banking service i.e. accessibility, reliability, convenience
and security as independent variable (X1, X2, X3, X4,) and Customer Satisfaction as
the dependent variable, the model is constructed with equation as below:

Ŷ= α + β1X1+ β2X2+ β3X3 + β4X4 +ei.

Based on the coefficients, the regression equation for customer satisfaction can be
written as:

Ŷ= .464+0.503X1+0.488X2+0.510X3+0.678X4.

Regression coefficient of Accessibility, Reliability, Convenience and Security are

.0.503, 0.488, 0.510 and 0.678 respectively.

4.4 Hypothesis Testing

Hypothesis testing is the use of statistics to determine the probability that a given
hypothesis is true. Hypothesis testing is done using inferential analysis. Inferential
analysis test hypotheses to determine if observed differences between groups or
variables are real or occur simply by chance. The best way to determine whether a
statistical hypothesis is true would be to examine the entire population. Since that is
often impractical, researchers typically examine a random sample from the
population. If sample data are not consistent with the statistical hypothesis, the
hypothesis is rejected.

Six alternative hypotheses were drawn for the purpose of identifying relationship
between dependent and independent variables in this study. Each hypothesis is tested
on the basis of the Pearson’s correlation coefficient. Test on each of these hypotheses
is discussed below:

Hypothesis 1
H1: There is no significant relationship between accessibility of e-banking service and
Customer Satisfaction.

The correlation analysis shows that there is a positive correlation between

accessibility of e-banking service and Customer Satisfaction. The correlation is
significant at 1 percent where p-value is less than alpha i.e. 0.000< 0.01. Hence, the
alternative hypothesis (H1) is not accepted.

58
Hypothesis 2
H2: There is no significant relationship between Reliability of e-banking service and
Customer Satisfaction.

The correlation analysis shows that there is a positive correlation between reliability
of e-banking service and Customer Satisfaction. The correlation is significant at 1
percent where p-value is less than alpha i.e. 0.001< 001. Hence the alternative
hypothesis (H2) is not accepted.

Hypothesis 3
H3: There is no significant relationship between Convenience of e-banking service
and Customer Satisfaction.

The correlation analysis shows that there is a positive correlation between

convenience of e-banking service and Customer Satisfaction. The correlation is
significant at 1 percent where p-value is less than alpha i.e. 0.000< 0.01. Hence the
alternative hypothesis (H3) is not accepted.

Hypothesis 4
H4: There is no significant relationship between Security of e-banking service and
Customer Satisfaction.

The correlation analysis shows that there is a positive correlation between security of
e-banking service and Customer Satisfaction. The correlation is significant at 1percent
where p-value is less than alpha i.e. 0.000< 0.01. Hence, the alternative hypothesis
(H4) is not accepted.

Hypothesis 5
H4: There is no significant relationship between e-banking service attributes and
Customer Satisfaction.
The correlation analysis shows that there is a positive correlation between e-banking
service attributes and customer satisfaction. Hence, the alternative hypothesis (H5) is
not accepted.

Hypothesis 6
H4: There is no significant impact of e-banking service attributes on the satisfaction of
customers.

59
The correlation analysis and regression analysis shows that there is a positive
correlation between security of e-banking service and Customer Satisfaction. The p-
value is less than alpha i.e. 0.000< 0.01. Hence, the alternative hypothesis (H6) is not
accepted.

From the above analyses, it can be concluded that all the independent variables have a
significant positive relationship with Customer Satisfaction. However, among all the
independent variables the independent variable ‘Reliability” has the highest
correlation coefficient. Therefore, it can be concluded that Reliability has a greater
impact on Customer Satisfaction.

4.5 Major Findings

A survey was conducted to find out the influence of different independent variables,
used in research, on customer satisfaction. The research was done with the sample
size of 140 representing the population size.

The descriptive statistics study and the hypothesis test were conducted and the final
result was presented. The results obtained from descriptive statistics for the dependent
variables and independent variables are summarized as below:

 The overall average mean value of Accessibility is 4.21, which show that
respondents agree that Accessibility is an important factor of e-banking
service that affects level of customer satisfaction.
 The overall mean of Reliability is 4.31, which show that the respondents give
importance to Reliability and it influences customer satisfaction.
 The overall mean of Convenience is 3.95, which show that respondents agree
that Convenience is an important factor of online shopping that affects
customer satisfaction levels.
 The aggregate mean of Security is 4.12, which show that accurate product
information is an important aspect of customer satisfaction.
 The aggregate mean of Customer Satisfaction is 4.20, which show that the
level of customer satisfaction with e-banking service attributes is good.
 The correlation coefficient analysis shows that the relationship between
dependent variable and independent variables is positive, which indicates that
e-banking service attributes, influence customer satisfaction.

60
The descriptive findings suggest that among various independent variables, Reliability
has the highest mean of 4.31 with standard deviation of 0.997. This shows that
Reliability has a greater influence on customer satisfaction. Similarly, the dependent
variable, customer satisfaction has a mean of 4.20 and standard deviation of 0.946.
This shows that level of customer satisfaction with e-banking service of Nepalese
bank is good. Standard deviations of some variables are below the level of 1.00 and
some are above 1.00 which depicts that there is variation in responses of the
respondents. Six research hypotheses were formulated and tested to test the impact of
four dimensions of e-banking service (accessibility, reliability, convenience and
security) on customer satisfaction.

The significance of the hypothesis between the variable are also analyzed from the
significant value drawn from the sample. The correlation results were used to answer
the six research hypotheses. The result showed that all the constructs are statistically
significant at the 0.01 level. This is because the p-value 0.001 is less than alpha value
i.e. 0.01. Hence, the results proved that all the independent variables including
accessibility, reliability, convenience and security have a significant positive
relationship with customer satisfaction.

The results of test of hypothesis indicated that the correlation is significant at 1percent
where p-value is less than alpha i.e. 0.001< 0.01. There exists positive correlation
between Accessibility and Customer Satisfaction. Hence, the first alternative
hypothesis “There is significant relationship between Accessibility and Customer
Satisfaction” is not accepted. Similarly, there exists positive correlation between
Reliability and Customer Satisfaction. Hence, the second alternative is also not
accepted. Similarly, there exists a positive correlation between convenience and
Customer Satisfaction. Hence, the third alternative hypothesis is not accepted.
Likewise, there exists positive correlation between Security and Customer
Satisfaction. What this states is e-banking service provider who ensures secure mode
which may generate greater level of satisfaction among the customers. Thus, the
fourth alternative hypothesis is not accepted.

The findings of inferential analysis show that there is positive and influential
relationship between independent variables and dependent variable. The significance
value is less than the alpha value (i.e. 0.000 < 0.01), this indicates that there is a

61
significant relationship between e-banking service attributes and customer
satisfaction. Hence, the fifth hypothesis is not accepted.

The findings from this research document the relationship between customer
satisfaction and e-banking service in the context of Nepalese banking sector, as
documented in the literature. Thus, sixth and final hypothesis cannot be accepted.

This relationship is one that can help e-banking service providers to improve their
service and sustain more number of customers. Understanding how various factors of
e-banking service contribute to customer satisfaction provides the service provider
with insight for developing and sustaining highly motivated customers.

62
 CHAPTER 5

SUMMARY, CONCLUSIONS AND

RECOMMENDATIONS

This chapter summarizes the research process and result of the study. The entire
chapter is summarized in three sections. The first one summarizes the study and
general overview about research, the second section derives the conclusion of the
study and the third section delivers the recommendations.

5.1 Summary

The study is conducted with the general objective to relationship between dimensions
of e-banking service and customer satisfaction and in what way those factors of e-
banking service affects customer satisfaction. Moreover, the specific objectives of the
study were to identify the major service quality dimensions of e-banking service that
affects customer satisfaction in e-banking banking and to study the impact of the e-
banking service quality dimensions on the satisfaction of customers.

Different materials were reviewed to build up the conceptual framework and to find
out the clear destination of the research work. Concept of e-banking, attributes,
advantages and challenges of e-banking in Nepal, models of customer satisfaction
reviewed as conceptual review. Various studies related to e-banking service of various
people have been reviewed and their ideas have been explained. Based on the
literature review four major determinants of e-banking service was derived i.e.
accessibility, reliability, convenience and security. A theoretical model was then
developed taking into account the prescribed variables and perceived relationships
among them. The hypotheses were then developed from the study of the literature.

This study consisted of 140 participants belonging to different background. For the
purpose of conducting the study, a 28 item questionnaire was used. A survey was
carried out using convenience sampling and the sample obtained included the
respondents with different gender, age, and work background of Kathmandu Valley.

In order to determine the survey result, different statistical tests have been performed.
At first, descriptive analysis was done to determine the average value and standard

63
deviation of each variable under each hypothesis. There were at least 4 to 6 questions
or variables to measure each hypothesis. Respondents answered on a six-point Likert
scale ranging from ‘Strongly Disagree’ to ‘Strongly Agree’.

The findings from this research document the relationship between e-banking service
and customer satisfaction, as documented in the literature. The descriptive statistics
study and the hypothesis test were conducted and the final result was presented.

The descriptive findings suggest that among various independent variables, Reliability
has the highest mean of 4.31 with standard deviation of 0.997. This shows that
Reliability has a greater influence on customer satisfaction. Similarly, the dependent
variable, customer satisfaction has a mean of 4.20 and standard deviation of 0.946.
This shows that level of customer satisfaction with e-banking service of Nepalese
bank is good.

Six research hypotheses were formulated and tested to test the impact of four
dimensions of e-banking service (accessibility, reliability, convenience and security)
on customer satisfaction. The significance of the hypothesis between the variable are
also analyzed from the significant value drawn from the sample. The correlation
results were used to answer the six research hypotheses. The result showed that all the
constructs are statistically significant at the 0.01 level. This is because the p-value
0.001 is less than alpha value i.e. 0.01. Hence, the results proved that all the
independent variables including accessibility, reliability, convenience and security
have a significant positive relationship with customer satisfaction.

5.2 Conclusions
The study helps to identify the major attributes of e-banking service which plays
important role in the customer satisfaction. This study also helps to examine the
relationship between those attributes and customer satisfaction. In addition, this study
helps to examine the impact of e-banking service quality dimensions on customer
satisfaction.

Major e-banking service attributes that influence customer satisfaction

This study identified the four major e-banking service attributes; accessibility,
reliability, convenience and security satisfy customer satisfaction. These four service

64
quality dimensions plays vital role in the customer satisfaction. The results are
somewhat similar with Yang and Jun (2002) that studied the similar construct in the
Hong Kong context. Yang and Jun (2002) redefined the traditional service quality
dimensions in the context of online services, and suggested an instrument consisting
of seven online service dimensions (reliability, access, ease of use, personalization,
security, credibility, and responsiveness).

Relationship between e-banking service attributes and customer satisfaction

This study examined that the factors of e-banking service, which have significant
impact upon the level of customer satisfaction in the context of Nepalese banking
sector. Upon examining the factors of e-banking service, it has been found that a
relationship between the factors and customer satisfaction does exist. The results are
consistent with Clark (2009) that studied the similar construct in the New Zealand
context. Clark (2009) examined the relationships among three dimensions of service
quality that influence overall internet banking service quality and it’s subsequently
effect on customer satisfaction in a New Zealand banking context. The results show
significant relationship among online customer service quality, online information
system quality, banking service product quality, overall internet banking service
quality and customer satisfaction.

E-banking service influence customer satisfaction

This study identified that the e-banking attributes, accessibility, reliability,
convenience and security; influence the customer to use the e-banking service through
satisfaction. Hence, the present study has slightly differed from Gerrad and
Cunningham (2003) in the Singapore Context. Gerrard and Cunningham (2003)
revealed that there are some service quality determinants that are predominantly
satisfiers and others that are predominantly dissatisfies with the main sources of
satisfaction being attentiveness, responsiveness, care and friendliness. The main
sources of dissatisfaction are integrity, reliability, responsiveness, availability and
functionality.

The results indicated that e-baking service providers could utilize all the factors
significantly to improve the level of customer satisfaction. In addition, the research
findings help the banks in re-drafting/re-considering their managerial strategies as
how to get better performance to increase the customer satisfaction level and standout

65
in the highly competitive business. Banks should re-evaluate all four variables that
highly affect customer satisfaction and should initiate and re-construct their strategies
accordingly to sustain in the extremely competitive business environment. These
variables are actually acting as customer feedback for e-banking service, what exactly
they feel and what they need. This study acts as an important part for evaluating and
enhancing their performance.

5.3 Recommendations
This research paper is of great importance specially for banking industry in Nepal.
Based on the research findings of this study, the following recommendations are
prescribed to serve as a guideline for future research work of similar nature:

 The data collection for this study was conducted in a single location i.e.
Kathmandu, which is the capital city of the country. This highlights the
necessity to extend this research to a larger and geographically more
diversified sample of consumers.

 With knowing, the factors of e-banking enable the banks to cope the problems
of customers and ultimately helps to customize their e-banking products and
services to cater their needs.

 This study focuses on overall e-banking service and the impact on customer
satisfaction. However, future research can focus upon level of consumer
satisfaction in relation to different groups e-banking users. This will have
better understanding about behavior of consumers, variables associated with e-
banking as well as the impact on satisfaction level of consumers while using e-
banking service.

 For the purpose of this study, a quantitative approach was adopted to identify
level of satisfaction towards e-banking service. Although the use of
quantitative methods is considered valuable in examining relationships
between variables, it is considered to be weak when trying to explore the
reasons for the relationships. As a result, using qualitative along with
quantitative methods is recommended in future studies, to further examine
relationships among the variables.

66
The study contributes to the general body of empirical evidence about e-banking
service and the behavior of the users and tries to explain this phenomenon with
respect to Nepalese society. However, the study does have certain methodological
limitations. First of all, this study uses sample only from Kathmandu, thus results
might not be generalizable. Moreover, for this study, convenience sampling technique
was used which has certain drawbacks. Results generated from such sampling might
not be the true representative of the target population. All this raises a new agenda for
future researches. Any researcher examining a similar topic in future has to
investigate these parameters and should try to conduct a large-scale survey to make
the results more representative and generalizable. The findings of this research study
will help banks to increase their sales through e-banking service. However, the results
of this study might not be exhaustive and further research still needs to be done to
validate the findings

67
REFERENCES

Ahmed, R. (2006). The Indian customer satisfaction index: Nature, purpose, and
findings. Hyatt Dorado Beach Resort and Country Club, Puerto Rico, USA.
doi:10.1117/12.694177

Ainscough, T. L., & Luckett, M. G. (1996). The internet for the rest of us: marketing
on the world wide web. Journal of Consumer Marketing, 13(2), 36-47.
doi:10.1108/07363769610115393

Aladwani, A. M. (2001). Change management strategies for successful ERP

implementation. MCB UP LTD. Retrieve from https//doi.org/10.1108/1463
7150110392764

Aladwani, A. M. (2001). Online banking: a field study of drivers, development

challenges and expectations. International Journal of Information
Management, 21, 213-225. doi:10.1016/S0268-4012(01)00011-1

Banstola, A. (2007). Prospects and challenges of e-banking in Nepal. The Journal of

Nepalese Business Studies, 4, 96-104. doi:10.3126/jnbs.v4i1.1034

Bastola, G. (2007). Principles of e-commerce. Buddha Academy Publication, Nepal.

Bless, C., Higson-Smith, C., & Sithole, S. L. (2013). Fundamentals of social research
methods: An African perspective. Durban: Juta Books.

Boateng, R., & Molla, A. (2006). Developing e-banking capabilities in Ghanaian

bank: preliminary lessons. Journal of Internet Banking and Commerce, 11(2).
Retrived from http://www.arraydev.com/commerce/jibc/2006-08/Boateng.asp

Broderick, A. J., & Vachirapornpuk, S. (2002). Service quality in internet banking:

the importance of customer role. Marketing Intelligence & Planning, 20(6),
327-335. Retrived from https://doi.org/10.1108/02634500210445383

Casalo, L. V., Flavian, C., & Miguel, G. (2008). The role of usability and satisfaction
in the consumer's commitment to financial services website. International
Journal of Electronic Finance, 31-49. doi:10.1504/IJEF.2008.016883

68
Clark, M. (2009). User friendly e-banking: A survey of online e-banking retail
initiatives. In Communications of the ACM , 47(1), 99-102. Retrieved from
https://doi.org/10.1111/j.1744-6155.2009.00187.x

Curran, H. (2005). Statistical for Business and E-Commerce. USA: Thomson Higher
Education. Retrieved from https://doi.org/10.1002/nem.546

Daniel, E. (1999). Provision of electronic banking in the UK and the Republic of

Ireland. International Journal of Bank Marketing, 17(2), 72-83. Retreived
from https://doi.org/10.1108/02652329910258934

Dawson, P. (2007). Measuring the quality of e-banking portals. Internationa Journal

of Bank, 23(1). Retrieved from https://doi.org/10.1108/02652320510584395

Earl, M. (2000). Evolving the e-business. Business Strategy Review, 11(2), 33-38.
Retrieved from https://doi.org/10.1111/1467-8616.00135

Eriksson, K., Kerem, K., & Nilsson, D. (2005). Customer acceptance of internet
banking in Estonia. International Journal of Bank Marketing, 23(2), 200-216.
Retrieved from https: doi.org/10.1108/02652320510584412

Fenuga, O. J., & Kolade, O. R. (2010). The effect of electronic payment on customer
service delivery in Nigerian banks. International journal of Economic
Development Research and Investment, 1, 227-239. Retrieved from
https://pdfs.semanticscholar.org/5e8c/58952c0b6ca02a9099f04e3c0505f6d448
d0.pdf

Flavian, C., Guinaliu, M., & Gurrea, R. (2006). The role played by perceived
usability, satisfaction and consumer trust on website loyalty. Information &
Management, 43, 1-14. doi: 10.1016/j.im.2005.01.002

Gan, C., & Clemes, M. (2006). A logit analysis of electronic banking in New Zealand.
International Journal of Bank Marketing, 4(3), 290-298. Retrieved from
https://doi.org/10.1108/02652320610701717

69
Gerrard, P., & Cunningham, J. B. (2003). The diffusion of internet banking among
Singapore consumers. International Journal of Bank Marketing, 21(1), 16-28.
Retreived from https://doi.org/10.1108/02652320310457776

Gitman, L. J., & Carl, D. M. (2005). The future of business: The essentials, 2nd ed,
Masion, Ohio: South Western.

Gonzalez, M. E., Quesada, G., Picado, F., & Eckelman, C. A. (2004). Customer
satisfaction using QFD: An e-banking case. Managing Service Quality, 14(4),
317-330. Retrieved from https://doi.org/10.1108/09604520410546851

Gronroos, C. (1982). An applied service marketing theory. European Journal of

Marketing, 16(7), 30-41. doi: 10.1108/EUM0000000004859

Gunasekaran, A., & Love, P. E. (1999). Current and future directions of multimedia
technology in business. International Journal of Information Management, 19,
105-120. doi: 10.1016/S0268-4012(99)00003-1

Hackett, S., & Paramanto, B. (2009). Homepage not enough when evaluating web site
accessibility. Internet Research, 19(1), 78-87. doi:10.1108/106622409109278
30

Hansemark, O. C., & Albinsson, M. (2004). Customer satisfaction and retention: The
experiences of individual employees. Managing Service Quality, 14(1), 40-57.
doi: 10.1108/09604520410513668

Haque, J. (2007). E-commerce management: Theory and practice. Hampshire:

Palgrave MacMillan.

Hwang, J. H., & Thao, T.H. (2008). Commercial bank management. Boston: McGraw
Hill Irwin.

John, J. (2003). Fundamentals of customer-focused management. Westport, CT:

Praeger.

Joseph, M., McClure, C., & Joseph, B. (1999). Service quality in the banking sector:
The impact of technology on service delivery. International Journal of Bank
Marketing, 17, 182-193. doi: 10.1108/02652329910278879

70
Kawamala, N. (2013). Investigating e-banking and customer satisfaction in
Tanzanian banks the case of Azania bank ltd. (Unpublished Master's Thesis).
Open university of Tanzania. Retrieved from https://repository.out.ac.tz/id/
eprint/965

Kimery, K. M., & Mccord, M. (2002). Third party assurances: Mapping the road to
trust in e-retailing. Journal of Information Technology Theory and
Application, 4(2), 63-82.

Kolsaker, A., & Payne, C. (2002). Engendering trust in e-commerce: a study of

gender-based concerns. Marketing Intelligance & Planning, 4(3), 333-340.
doi: 10.1108/02634500210431595

Kotler, P. (2000). Marketing Management: Longitudinal Assessment of customer, 6th

ed, New Jersey: Prentice-Hall LaBarbera.

Kwarteng, P. A. (2015). The effect of electronic banking on customer service delivery

in KUMASI Metropolis. (Unpublished Master's Thesis). Faculty of
Management, Kwame Nkrumah University. Retrieved from
https://ir.knust.edu.gh/xmlui/handle/ 123456789/8585

Laukkane, U. (2007). E-commerce management and business policy. New York:

Prentice Hall.

Liao, Z., & Cheung, M. T. (2002). Internet based e-banking and consumer attitudes:
an empirical study. Information and Management, 39(4), 283-295. doi:
10.1016/S0378-7206(01)00097-0

Lichtenstein, S., & Williamson, C. (2006). Understanding consumer adoption of

internet banking: an interpretive study in the Australian banking context.
Journal of Electronic Commerce Research, 7(2), 50-66. Retrieved from
https://www.researchgate.net/publication/228374053

Malhotra, N. K. (2012). Marketing research: An applied orientation, 3rd ed, New

Jersey, USA: Prentice Hall LaBarbera.

71
Masukujjaman, M., & Akter, A. (2010). Quality of categorized service and customer
satisfaction in banking industry : An emperical study on private commercial
banks in Bangladesh. Journal of business and technology (Dhaka), 5(2), 54-
58. Retreived from https://doi.org/10.3329/jbt.v5i2.9933

Mols, N. P. (1998). The Internet and banks strategic distribution channel decision.
International Journal of Bank Marketing, 8(4), 331-337. Retreived from
https://doi.org/10.1108/10662249810231087

Nath, B. (2001). Consumer resistance to internet banking: Postponers, opponents and

rejectors. In The International Journal of Bank Marketing 26(1), 440-455.
Retreived from https://doi.org/10.1108/02652320810902451

Oliver, R. L. (1997). Satisfaction: A behavioral perspective on the consumer. New

York: McGraw Hill.

Parsuraman, A., Zeithaml, V. A., & Berry, L. L. (1985). A conceptual model of

service quality and it's implication. Journal of Marketing, 49, 41-50. doi:
10.2307/1251430

Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1988). SERVQUAL: a multiple-

item scale for measuring consumer perception of the service quality. Journal
of Retailing, 64(1), 12-40. Retrieved from https://psycne.apa.org/record/1989-
10632-001

Pekka, D. (2008). Principles of e-banking. New York: Tata McGraw Hill.

Polatoglu, V. N., & Ekin, S. (2001). An empirical investigation of the Turkish

consumers' acceptance of internet banking services. International Journal of
Bank Marketing, 19(4), 156-165. doi: 10.1108/0265232011039257

Poster, M. (2011). What's the matter with the internet? Minnesota: University of
Minnesota Press.

Ram, & Sheth. (1989). A model of innovation resistance. New Delhi: Tata MacGraw
Hill Publication.

72
Rotchanakitumnuai, S., & Speece, M. (2003). Barriers to internet banking adoptation:
a qualitative study among corporate customers in Thailand. International
Journal of Bank Marketing, 21(6), 321-323. Retrieved from https://doi.org/10.
1108/02652320310498465

Sekaran, U. (2003). Research methods for business: A skill building approach. New
York: John Wiley & Sons, Inc.

Sniehotta, F. F. (2009). An experimental test of the theory of planned behavior.

Health and Well Being, 1(2), 257-270.doi: 10.1111/j.1758-0854.2009.01010.x

Sohail, M. S., & Shanmugham, B. (2003). E-banking and Customer Preferences in

Malaysia: An Empirical Investigation. Information Science Journal, 150, 207-
217. doi: 10.1016/S0020-0255(02)00378-X

Sthapit, A. B., Gautam, H., Joshi, P. R., & Dongol, P. M. (2009). Statistical methods,
5th ed, Kathmandu: Buddha Academic Enterprises Pvt. Ltd.

Turban , E. D., & Warkentine , M. (2001). Electronic commerce: In a managerial

Prespective. New Jersey: Prentice Hall.

Wong, D. H. (2008). Offline and online banking. International Journal of Bank

Marketing, 28(1), 27-46. doi: 10.1108/02652321011013571

Worku, G., Tilahun, A., & Tafa, M. (2016). The impact of electronic banking on
customers’ satisfaction in Ethiopian banking industry. Journal of Business &
Financial Affairs, 5(2), 5-7. doi: 10.4172/2167-0234.1000174

Yang, Z., & Jun, M. (2002). Consumer perception of e-service quality from internet
purchaser and non-purchaser perspective. Journal of Business Stratefies, 19,
19-41. Retrieved from https://www.academia.edu/11282681

Zeithmal, V., Bitner, M., & Gremler, D. (2005). Service marketing strategy. Willey
International Encyclopedia of Marketing. doi: 10.1002/9781444316568

73
 ANNEXURE
Questionnaire

SURVERY QUESTIONNAIRES FOR CUSTOMER SATISFACTION WITH

E-BANKING

(A Research on Customer satisfaction with E-Banking service of Private

Commercial Banks in Nepal)

Instruction: Please tick (√ ) as appropriate.

Section A: Demographic data:

1. Gender: Male Female

2. Age: Below 20 20-30 31-40 41-50 Above 50
3. Education: SLC +2 Bachelors Masters
4. Occupation: Government Service Private Employee Self Employed
Student Other

Section B: Level of satisfaction with e-banking service.

S.N. Accessibility of e-banking service Strongly Disagree Neutral Agree Strongly
Disagree Agree

1 E-banking Service of the bank is easy

to use.
2 Website of the bank is properly
designed.
3 Easy to get access to all the financial
information in the bank’s e-banking
service.
4 Easy to find the policy and notice
statements in the bank’s website.
5 Speed to login and logout of the bank
website is fast
6 Website of the bank does not freeze
during transactions.

S.N. Reliability on e-banking service Strongly Disagree Neutral Agree Strongly

Disagree Agree
1 Can rely on the accuracy of the
information provided in web page
of the bank.
2 Contents on bank’s website are up
to date.
3 The bank’s website provides all
details of products and services.
4 The bank provides customer service
over the telephone when needed.
5 Can rely on bank for not misusing
information.
6 The bank’s website provides an
error free transaction.

S.N. Convenience of e-banking service Strongly Disagree Neutral Agree Strongly

Disagree Agree
1 Language and contents used in
bank’s website is easy to
understand.
2 The e-banking service of the bank is
user friendly.
3 The bank’s website is easy to
navigate.
4 The e-banking service of bank is
available for 24 hours per day & 7
days a week.
5 Instructions on the bank’s website
are very helpful.
6 The bank handles complains and
solves problem quickly through live
chat service.

S.N. Privacy/Security of e-banking Strongly Disagree Neutral Agree Strongly

service Disagree Agree
1 The transaction on bank’s website
is confidential.
2 The bank collects personal
information very carefully through
e-banking.
3 The e-banking service of bank
suggest for creation of strong
password.
4 Session timeouts occurred in the
bank’s website after some times.
5 The bank’s website has dedicated
security software, which updates on
regular basis.
6 The bank sends messages& mails
during every transaction to alert or
notify.
S.N. Satisfaction with e-banking service Strongly Disagree Neutral Agree Strongly
Disagree Agree
1 Easy to access the e-banking service
of the bank satisfies the customer.
2 Reliability on e-banking service of
the bank encourages using the
service.
3 User-friendly characteristic of e-
banking service of bank satisfies the
customer.
4 Dedicated security software in
bank’s website gives confidence to
use the service.
 Proposal on
Customer Satisfaction with E-banking Services of Private
Commercial Banks in Nepal

Submitted by:
Rajeev Shrestha
Roll No: 12/070
T.U. Reg. No: 7-2-410-73-2009
People’s Campus
Paknajol, Kathmandu

A Thesis Submitted to:

Office of Dean
Faculty of Management
Tribhuvan University
Kathmandu

In partial fulfillment of the requirement for the degree of

Masters of Business Studies (M.B.S.)
Kathmandu, Nepal

February, 2019
Chapter 1. Introduction
1.1 Background
In recent years, there has been fast development in information technology and internet in
particular. Generally the rapid development of World Wide Web and internet has affected
many businesses including banking sector. Banks have been using information technology
and internet to enhance operational efficiency, intensify business and provide better customer
service with reduced cost of operation. Apart from these, banks are using information
technology to enhance and strengthen their electronic service delivery channels. Moreover,
this service delivery channel seen as powerful because it can retain current web-based
customers who continue using banking services from any location. Moreover, internet
banking provides opportunities for the bank to develop its market by attracting a new
customer base from existing internet users.

1.2 Statement of Problem

Although, there has been a rapid expansion of internet banking products and services by
banks and financial institution in Nepal e-banking services have not been widely adopted by
bank’s customers. This may be due to lack of trust, customer’s ignorance towards
technologies and perceived risk towards the services.

1.3 Research Questions

 Are customer satisfied with e-banking services offered by banks and financial
institutions?
 Are customers aware of technical complexity in using e-banking?
 What is the customer’s frequency of using online banking services to access the banking
services?
 What are the factors that determine customer's choice of e-banking service?
 What are the problems and risks to customers faced in using e-banking services?

1.4 Objectives of the Study

 To identify the major e-banking service attributes that satisfy customers in e-banking;
 To examine the relationship between the various e-banking service attributes and the
customer satisfaction; and
 To study the impact of the e-banking service attributes on the satisfaction of customers.
1.5 Hypotheses
Hypotheses will be devlope for the purpose of identifying relationship between dependent
and independent variables in this study.

1.6 Significance of Study

This research paper will be of great importance especially for banking industry in Nepal.
With knowing the awareness and satisfaction of internet enables the bankers to cope the
problems of customers and ultimately helps to customize their e-banking products and
services to cater their needs. Further, this research paper also provides guidelines to the
policy makers to make policies, rules and regulations on e-banking. This study will also be
beneficial for the academic institutions and individuals who might be interested in carrying
out related researches in the future.

1.7 Organization of the Study

This section will breifly give details of the chapters of the study. The whole research will
includes five chapters, which include:

Chapter 1: Introduction
The first chapter will deals with the general information of the e-banking as a whole and
pinpoints the objectives and theme of the research. Also in this chapter the statement of
problem and importance or significance of this study will be included. Furthermore, a brief
synopsis of how the chapter flows will shown under the title organization of the study.

Chapter 2: Review of Literature

The second chapter will present comprehensive surroundings of e-banking. Further this
chapter will provide related words, definitions, and findings on the related topic from other
researchers, journals, papers, and similar works which are very important in guiding the
study. Besides, this chapter will include study framework.

Chapter 3: Research Methodology

The research design and methodology chapter will include the planned methods for
conducting the research, which will help to guide the research towards its main findings and
conclusion and limitations or barriers of the study.
Chapter 4: Presentation and Analysis of Data
This chapter will include presentation of data and analysis of the findings using diagrammatic
representations such as pie charts, bar graphs as well as mathematical and statistical tools like
descriptive analysis.

Chapter 5: Summary, Conclusions and Recommendations

The fifth chapter will conclude this study which will include summary, conclusions, and
recommendation.

Chapter 2. Review of Literature

2.1 Review of Theoretical Framework
This chapter will analyze the relevant body of knowledge to understand the concept of
customer satisfaction with internet banking service quality, from an academic point of view.

2.2 Empirical Review

Wong, (2008), tried to re-examine the role of traditional service quality in an e-banking
environment by providing a review of how traditional service quality perceptions have
evolved through the current and continuing stream of change in banking technology and the
corresponding changes in the nature of how banks interact with their customers. The result of
this study suggests that there exist a large discrepancy between customer expectations and
their perceived performance of traditional banking services.

Laukkane (2007) conducted study to explore and compare customer value perceptions in
internet banking. The purpose especially is to compare customer perceived value and value
creation between internet and mobile bill paying service. The results indicate that customer
value perceptions in banking actions differ between internet and mobile channels. The
findings suggest that efficiency, convenience and safety are salient in determining the
differences in customer value perceptions between internets.

Kawamala, (2013), tried to study examines customers perception on e-banking services in

Tanzania. Especially, it addresses issue such as the strategic need for internet banking, its
effect on customer-bank relationships and customer’s experiences in internet banking. The
results of this research reveal that internet banking is perceived more favorably by banks that
offer it compared to those that do not. Hence, it is recommended that education and
marketing of E-banking products should be encouraged in the bank to attract more customers.
2.3 Concluding Remarks
This chapter will conclude the second chapter and help to find the gap of previous researches.

2.4 Proposed Study Framework

The proposed study framework will shows a relationship that exists between variables will be
used in the study.
IndependentVariables
Independent Variables Dependent
Dependent Variables
iable
Accessibility Customer Satisfaction
with the E-banking
Reliability services.

Convenient Demographic Variables

Age, Gender, Occupation,
Privacy/Security Income, Education

Figure: Theoretical Framework for the Study

Chapter 3. Research Methodology

3.1. Research Design
Research plan and design is the process to identify the relationship between the dependent
and independent variables to meet the objectives. In order to attain the objectives mentioned
includes sampling, empirical research with the help of data analysis and questionnaire.

3.2. Nature and Sources of Data

The data used in this research is primary in nature. All the data will be collected from the
respondents via the structured questionnaire and field survey.

3.3. Population and Sample

At the initial phase for the purpose of developing theoretical framework the secondary
sources of data collection was used. The secondary source of data was internet, books,
journals, newspaper and articles. Similarly, in the later stage the primary sources of data
collection will be used. Further, the primary source of data will be gathered from structured
questionnaire.
The researcher will collect altogether 140 samples from the customers of different 4
commercial banks (NCC, Mega, Janta and Civil). Moreover, sample of customers will from
the different age groups, income groups, educational background and gender.
3.4. Method of Analysis
The data obtained from the research will be analyzed by using statistical tools. Mainly,
descriptive statistical analysis will be used for the purpose of generating findings. Apart from
these analyses in some of the variables, inferential analysis will also be used to find
relationship between the variables.

3.5. Limitation of the Study

The basic limitations of this research are as follows:
 The study will restricted to the Kathmandu city, capital of Nepal as the capital city is far
more developed than other cities in terms of information technology and communication.
 The study will use convenience sampling and limited analytical tools.

Chapter 4. Presentation and Analysis of Data

This chapter will include presentation of data and analysis of the findings using diagrammatic
representations such as pie charts, bar graphs as well as mathematical and statistical tools like
descriptive analysis.

Chapter 5: Summary, Conclusions and Recommendations

The fifth chapter will conclude this study which will include summary, conclusions, and
recommendation.
REFERENCES
Ahmed, R. (2006). The Indian customer satisfaction index: Nature, purpose, and findings.
Hyatt Dorado Beach Resort and Country Club, Puerto Rico, USA.
doi:10.1117/12.694177

Banstola, A. (2007). Prospects and challenges of e-banking in Nepal. The Journal of

Nepalese Business Studies, 4, 96-104. doi:10.3126/jnbs.v4i1.1034

Dawson, P. (2007). Measuring the quality of e-banking portals. Internationa Journal of Bank,
23(1). Retrieved from https://doi.org/10.1108/02652320510584395

Kawamala, N. (2013). Investigating e-banking and customer satisfaction in Tanzanian banks

the case of Azania bank ltd. (Unpublished Master's Thesis). Open university of
Tanzania. Retrieved from https://repository.out.ac.tz/id/ eprint/965

Laukkane, U. (2007). E-commerce management and business policy. New York: Prentice
Hall.

Parsuraman, A., Zeithaml, V. A., & Berry, L. L. (1985). A conceptual model of service
quality and it's implication. Journal of Marketing, 49, 41-50. doi: 10.2307/1251430

Ram, & Sheth. (1989). A model of innovation resistance. New Delhi: Tata MacGraw Hill
Publication.

Turban , E. D., & Warkentine , M. (2001). Electronic commerce: In a managerial

Prespective. New Jersey: Prentice Hall.

Wong, D. H. (2008). Offline and online banking. International Journal of Bank Marketing,
28(1), 27-46. doi: 10.1108/02652321011013571