*Assistant Professor in Commerce, Government First Grade College, Hoskote, Bangalore Rural Dist

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1 MODERATING CUSTOMER LOYALTY IN SERVICE QUALITY DIMENSIONS OF INDIAN E-BANKING INDUSTRY Dr.Sathyanarayana* Dr.Muninarayanappa Abstract: The Internet is the ideal medium for carrying out banking activities due to its cost savings potential and speed of information transmission. From a technological and costdriven standpoint it may seem quite logical for banks to shift as many banking activities online as possible. At the same time, the question of how to foster customer loyalty arises when the relationship between the bank and the user becomes a virtual one. This paper investigates the importance of antecedents of online loyalty such as trust, quality of the Web site, quality of the service and overall satisfaction. Rather than investigating which factors drive customers to use online banking instead of offline banking, this paper expresses the problem of how to keep customers online and loyal to a specific supplier. A survey among more than 400 customers of 5 districts in Karnataka on Axis bank was conducted and a structural equation modeling approach was used to gain important insights into how customer retention in the online banking business can be ensured. Satisfaction and trust were identified as important antecedents of loyalty. Additionally, the moderating role of consumer characteristics (gender, age, involvement, perceived risk and technophobia) was supported by the data. Keywords:, E-Banking, Loyalty, customer retention,quality, ICT, *Assistant Professor in Commerce, Government First Grade College, Hoskote, Bangalore Rural Dist sathyanarayana80@gmail.com

2 *Professor in Commerce, Bangalore university, Bangalore The fast advancing global information infrastructure (including information technology and computer networks such as the Internet and telecommunications systems) enable the development of electronic commerce at a global level. The nearly universal connectivity which the Internet offers has made it an invaluable business tool. These developments have created a new type of economy, which many call the digital economy. This fast emerging economy is bringing with it rapidly changing technologies, increasing knowledge intensity in all areas of business, and creating virtual supply chains and new forms of businesses and service delivery channels such as e-banking. As a direct consequence of the emergence of the digital economy, the balance of power seems to be shifting to the customers. Customers are increasingly demanding more value, with goods customized to their exact needs, at less cost, and as quickly as possible. To meet these demands, businesses need to develop innovative ways of creating value which often require different enterprise architectures, different IT infrastructures and different way of thinking about doing business. This transformation of business from an old company to a new agile electronic corporation is not easy and requires a lot of innovative thinking, planning and investment. The Internet is a relatively new channel for delivering banking services. Its early form online banking services, requiring a PC, modem and software provided by the financial services vendors, were first introduced in the early 1980s. However, it failed to get widespread acceptance and most initiatives of this kind were discontinued. With the rapid growth of other types of electronic services since mid 1990s, banks renewed their interest in electronic modes of delivery using the Internet. The bursting of the Internet bubble in early 2001 caused speculation that the opportunities for Internet services firms had vanished. The dot.com companies and Internet players struggled

3 for survival during that time but e-commerce recovered from that shock quickly and most of its branches including e-banking have been steadily, and in some cases dramatically, growing in most parts of the world. One survey conducted by the TechWeb News in 2005 (TechWeb News, 2005) found e-banking to be the fastest growing commercial activity on the Internet. E-banking can mean the provision of information about a bank and its services via a home page on the World Wide Web (WWW). More sophisticated e-banking services provide customer access to accounts, the ability to move their money between different accounts, and making payments or applying for loans via e-channels. The term e-banking will be used in this book to describe the latter type of provision of services by an organization to its customers. Such customers may be either an individual or another business. To understand the electronic distribution of goods and services, the work of Rayport and Sviokla (1994; 1995) is a good starting point. They highlight the differences between the physical market place and the virtual market place, which they describe as an information-defined arena. In the context of e-banking, electronic delivery of services means a customer conducting transactions using online electronic channels such as the Internet? The spread of online banking has coincided with the spread of high-speed broadband connections and the increasing maturation of the Internet user population. Another factor in e-banking growth is that banks have discovered the benefits of e-banking and have become keener to offer it as an option to customers. Objectives of the study: 1. To find out traditional structure of banking industry may be changing as the Internet-only banking model offers a potential alternative 2. As a competitive advantage to as lower operational costs could mean they are able to offer higher value to customers.

4 3. To know fact information and communication technologies (ICT) are enabling bank to make radical changes to the way they operate. 4. The factors which contributed to its current shape, and how it operates and Rapid advances in technology seem to have more impact on changes in the banking industry. Review of literature: E-banking largely came into being as a result of technological developments in the field of computing and communications but there have been a number of other factors or challenges which played an important part in its development. According to Jayawardhena and Foley (2000) the challenges for banks are fourfold. First, they need to satisfy customer requirements that are complex and ever changing. Second, they need to deal with increased competition from old as well as new entrants coming into the market. Third, they need to address the pressures on the supply chain to deliver their services quickly. Finally, they must continually develop new and innovative services to differentiate themselves from the competition, as having a large branch network is no longer seen as a main source of competitive advantage. E-banking is seen by many banks as a key tool to address these challenges. Other reasons for the adoption of e- banking by banks may include achieving competitive advantage (at least in short term), creating new distribution channels, improving image, and reducing costs. E-banking has the potential to be a very rich and pleasant experience, and may provide more opportunities for banks to develop mutually satisfying, tailor made services to enrich relationship with customers. As technology evolves, the opportunities to extend the relationship beyond what is possible in the physical world continue to grow and will only be limited by a bank s ability to innovate or commitment to e-banking. Some companies such as IBM have expressed their vision of the future of financial services, complete with biometrics, state-of-the-art branch offices, enterprise risk-management systems, and advanced customer interaction (Marlin, 2005). The use of financial

5 decision-aid tools in e-banking is also set to grow. To date, the experiences of many e- banking users with these tools have proved unsatisfactory: with many firms do not even offering online advice tools, people often have little idea of the benefits such tools could bring. Banks need to promote the availability and use of these, and educate consumers about their benefits (Clarke, et al. 2006). Smart cards are also beginning to make their mark in the e-banking field and are expected to play greater role in the future. A smart card is a credit card-sized plastic card with an embedded chip that provides power for multiple uses (I.D card, SIM cards for mobile phones, credit/debit cards, benefit claim, health cards, etc.) Smart cards are enhanced by PIN verification and cryptography, and the size and power of the chip determine its storage and processing capacities (M Chirgui & Channel, 2007). It is clear that, some of the hardware and software associated with such a vision are already in use but their feasibility of industry-wide use is still questionable. Internet technology can make a significant contribution to a company s value chain. It can improve a company s relationship with vendors and suppliers, its internal operations and its customer relations, and offers the prospect of reaching an expanding customer base. The Internet also promises to dramatically lower communications costs by eliminating obstacles created by geography, time zones, and locations (Tan & Teo, 2008). However, Owens and Robertson (2010) contend that it takes longer for physical organizations to develop an integrated e-commerce structure than it does for virtual traders to commence trading. This is due to the reduced, simple physical structure of the virtual organizations. They argue that a structure of similar efficiency must be adopted by physical organizations for the provision of Internet services. Riivari s (2013) research on mobile banking found that mobile banking is accelerating around india and beyond. Laforet and Li s(2013) research on mobile and Internet banking claimed that younger consumers were more interested in online and mobile banking than older consumers, and use of mobile banking amongst this segment is growing fast. To cash in on improved prospects, at least in the developed world, some

6 banks such as Axis bank in the India have re-introduced the mobile (or wireless device as they call it) banking. According to O Donnel (2015) the advantages of SOA over other software development technologies is that by externalizing functionality into reusable components and organizing them into a logical framework, it minimizes two of the greatest causes of delay - the need for exhaustive communication between the business and IT, and the need for IT to write code. In addition, unlike other IT paradigms, organizations can also re-use their legacy systems as SOA enables legacy systems to communicate with other systems. In the context of SOA, services are self describing, platform-independent computer programs that enable rapid and often lowcost composition of distributed IT solutions. Services perform functions, which can be anything from simple requests to complicated business processes (Papazoglou, 2016)This new service will allow mobile phone or other wireless devices such as BlackBerry users to enter a six digit pin to access a wide range of financial services. Experiments are also become true, mainly in india, after demonotisation impact from Nov 8 th 2016 to turn these mobile devices into payment tools. Often called Contactless Payments it involves swiping an enabled mobile phone near a point-ofsale terminal to make payments which could be a bill or purchase of goods. These efforts to develop such systems often have support from credit card vendors who are looking for new ways to make payment processes more convenient. Distribution showing Aware of different e-banking services The Table No.1 describes the distribution of the respondents based on the Aware of different e-banking services by the respondents. Table 1. shows that 66.5% of the respondents are not aware of different e- banking services, 31% of the respondents are aware but not use of it and remaining 2.5% of the respondents aware and use of it. Majority of the respondents not aware of different e-banking services.

7 Table No.1 Aware of different e-banking services by the respondents Aware of different e-banking services No Yes, but not use of it Yes, and use of it Total N % N % N % Bangalore Urban Districts Bangalore Rural Chitradurga Davanagere Tumkur Sector Gender Age (yrs) Public sector Private sector Male Female Up to

8 Above Graduation Education level PG Profession Others Service Self employed Occupation Professional Business Student Income Level (per Annam) Up to Rs.75, ,000 to 1,50,000 1, 50,000 to 3, ,00000 and

9 Above Location of bank Urban Semi Urban Rural Total Further with a view to find the degree of association between the Aware of different e-banking services and demographic variables of the respondents, Chi-square test was used and result of the test is shown in the following Table 2. Table 2. Chi square test Aware of different e-banking services with respect to demographic variables Demographic Variables Chi square value df p Remark Districts Highly Significant Account Maintained Sector Not Significant Gender Highly Significant Age < Highly Significant Education level Significant Occupation Not Significant Income Level (per Annam) Highly Significant

10 Location of bank < Highly Significant It is also noted from the table 2. That the p value is less than 0.01 for the demographic variables of Districts, Gender, Age, Income Level (per Annam), Location of bank and hence the result are highly significant. From the analysis it is concluded that there is highly significant association is found between the Districts, Gender, Age, Income Level (per Annam), Location of bank and the Aware of different e-banking services. Similarly the p value is less than 0.05 for the demographic variables of Education level and hence the result is significant. From the analysis it is concluded that there is significant association is found between the Education level and the Aware of different e-banking services. Distribution showing Services use on e-online banking The Table No.3 describes the distribution of the respondents based on the Services use on e-online banking by the respondents. Table No.3 Services use on e-online banking by the respondents Services use on e-online banking ATM Debit/ Credit cards ECS/EFT Total N % N % N % Districts Bangalore Urban Bangalore Rural

11 Chitradurga Davanagere Tumkur Sector Gender Public sector Private sector Male Female Up to Age (yrs) Above Graduation Education level PG Profession Others Occupation Service Self employed

12 Professional Business Student Up to Rs.75, ,000 to 1,50, Income Level (per Annam) 1, 50,000 to 3, ,00000 and Above Location of bank Urban Semi Urban Rural Total Table.3 shows that 60.3 % of the respondents using ATM, 35.8 % of the respondents using Debit / Credit cards and remaining 4% of the respondents using ECS/EFT. Majority of the respondents using ATM. Further with a view to find the degree of association between the Services use on e-online banking and demographic variables of the respondents, Chi-square test was used and result of the test is shown in the following Table 4.4.7a.

13 Table 4. Chi square test Services use on e-online banking with respect to demographic variables Demographic Variables Chi square value df p Remark Districts Not Significant Account Maintained Sector Not Significant Gender < Highly Significant Age Significant Education level Highly Significant Occupation < Highly Significant Income Level (per Annam) Significant Location of bank < Highly Significant It is also noted from the table 4. that the p value is less than 0.01 for the demographic variables of Gender, Education level, Occupation, Location of bank and hence the result are highly significant. From the analysis it is concluded that there is highly significant association is found between the Gender, Education level, Occupation, Location of bank and the Services use on e-online banking and significant association is found between the Age, Income Level (per Annam) and the Services use on e-online banking.

14 Distribution showing Comfortable in using the e-banking services The Table No.5 describes the distribution of the respondents based on the Comfortable in using the e-banking services by the respondents. Table No.5 Comfortable in using the e-banking services Comfortable in using the e-banking services Yes No Total N % N % Bangalore Urban Bangalore Rural Districts Chitradurga Davanagere Tumkur Sector Gender Public sector Private sector Male Female Age (yrs) Up to

15 Above Graduation Education level PG Profession Others Service Self employed Occupation Professional Business Student Up to Rs.75, ,000 to 1,50, Income Level (per Annam) 1, 50,000 to 3, ,00000 and Above

16 Location of bank Urban Semi Urban Rural Total Table 5 shows that 83.8 % of the respondents comfortable in using the e-banking services and 16.3 % of the respondents are not comfortable in using the e banking services. Majority of the respondents comfortable in using the e-banking services. Further with a view to find the degree of association between the Comfortable in using the e-banking services and demographic variables of the respondents, Chi-square test was used and result of the test is shown in the following Table 4.4.8a. Table 6. Chi square test Comfortable in using the e-banking services with respect to demographic variables Demographic Variables Chi square value df p Remark Districts Not Significant Account Maintained Sector Not Significant Gender Significant Age Significant Education level Not Significant

17 Occupation < Highly Significant Income Level (per Annam) Not Significant Location of bank Not Significant It is also noted from the table 6. That the highly significant association is found between the Occupation and significant association is found between Gender, Age and the Comfortable in using the e-banking services. Distribution showing Variety of services offered by banks The Table No.7 describes the distribution of the respondents based on the Variety of services offered by banks by the respondents. Table No.7 Variety of services offered by banks by the respondents Variety of services offered by banks Payment through internet banking Facility of clean loans Safe locker facility with passwords Acceptance of follow up transactions Total Districts Bangalore Urban Bangalore Rural N % N % N % N %

18 Chitradurga Davanagere Tumkur Sector Public sector Private sector Gender Male Female Up to Age (yrs) Above Graduation Education level PG Profession Others Occupation Service

19 Self employed Professional Business Student Income Level (per Annam) Up to Rs.75, ,000 to 1,50,000 1, 50,000 to 3, ,00000 and Above Location of bank Urban Semi Urban Rural Total

20 Table shows that 17.8 % of the respondents by payment through internet banking, 30 % of the respondents by facility of clean loans, 34.8 % of the respondents by safe locker facility with passwares and remaining 17.5% of the respondents by acceptance of follow up transactions. Majority of the respondents by safe locker facility with passwords. Further with a view to find the degree of association between the Variety of services offered by banks and demographic variables of the respondents, Chi-square test was used and result of the test is shown in the following Table 4.4.9a. Table 8. Chi square test Variety of services offered by banks with respect to demographic variables Demographic Variables Chi square value df Table value Remark Districts Not Significant Account Maintained Sector Not Significant Gender < Highly Significant Age Not Significant Education level Significant Occupation Not Significant Income Level (per Annam) Significant Location of bank < Highly Significant

21 It is also noted from the table 4.4.9a that the highly significant association is found between the Gender, Location of bank and significant association is found between the Education level, Income Level (per Annam and the Variety of services offered by banks. Findings relating to the demographic variables of customers According to the age, it shows that majority of respondents were in the age group of yrs, majority level of education among the respondents are professionals with self employed. Further the majority of the respondent s marital status is single and from nuclear family with size of family of 3 4 and number of earning member is one with annual Income (in Rs.) of 3,00,000-5,00,000. Equal percentage of the respondents maintaining accounts in public and private sector banks and Majority of respondents were taken from Bangalore Urban. In this section the usage of E banking relating to Duration using the e-banking services, Reason for not using E banking, Most important reason to choose particular bank for e-banking services, Believe e-banking services will replace traditional banking services, Type of advantages on -line banking can provide, Aware of different e-banking services, Services use on e- online banking, Comfortable in using the e-banking services, Variety of services offered by banks, Technical problems faced, complaint when face any problem with online or e-banking, Type of Fringe benefits needed to e- banking services, Ready to pay bank charges for utilizin g e-banking services & Type of electronic technology used in branch were presented. Findings relating to Duration using the e-banking services The Duration using the e-banking services shows majority of the respondents using the e-banking services Less than four years and there is

22 highly significant association is found between the Education level & Income Level (per Annam) and the Duration using the e-banking services and significant association is found between the Gender & Location of bank and the Duration using the e-banking services The most important reason to choose particular bank for e-banking services by the respondents is for choose the e-banking services traditional account with old bank and highly significant association is found between the Districts, Income Level (per Annam), Location of bank and the most important reason to choose particular bank for e-banking services & significant association is found between the Education level, Occupation and the most important reason to choose particular bank for e-banking services. Majority of the respondents reason for not using the e-banking services due to lack of beliveness and highly significant association is found between the Occupation &Location of bank and the Reason for not using E banking and significant association is found between the Districts, Education level & Income Level (per Annam) and the Reason for not using E banking. Believe e-banking services will replace traditional banking services by majority of the respondents and highly significant association is found between the Districts, Age, Income Level (per Annam), Location of bank and the Believe e-banking services will replace traditional banking services & significant association is found between the Occupation and they Believe e-banking services will replace traditional banking services. Majority of the respondents stated convenient home banking is the advantage of on line banking and highly significant association is found

23 between the Districts, Income Level (per Annam), Location of b ank and the Type of advantages on-line banking can provide. Majority of the respondents not aware of different e-banking services and use only ATM and comfortable in using the e-banking services. Among the Varieties of services offered by banks majority use safe locker facility with passwords. Further highly significant association is found between the Gender, Location of bank and significant association is found between the Education level, Income Level per Annam and the Variety of services offered by banks. Among the Technical problems majority of the respondents faced technical problem of hanging of computers and highly significant association is found between the Districts, Age, Education level, Occupation, Location of bank and the Technical problems faced. Majority of the respondents complaint to related branch if face any problem with online or e-banking and significant association is found between the Education level, Income Level (per Annam and the Complaint when face any problem with online or e-banking. Findings relating to the Type of Fringe benefits needed to e - banking services by the respondents Majority of the respondents needed excellent layout in e-banking services. Majority of the respondent ready to pay bank charges for utilizing-banking service.

24 Conclusion: It is notoriously difficult to predict the future, but some educated guesses can be made using past and current experiences. In our view, the next developments in e- banking will involve new products and services that were not feasible in traditional banking models. This could involve enabling instant payments using mobile devices, or tools to help people manage their multi-bank financial portfolio, simultaneously. Internet only banking may also become more viable as the functionality of e-banking systems grows, and customers adapt to the new ways of conducting their financial activities. International banking might become a reality for ordinary consumers as banking payments systems are increasingly harmonized across borders.

25 Bibiliography 1.Jayawardhena, C., & Foley, P. (2000). Changes in the banking sector: The case of Internet banking in the UK. Internet Research: Electronic Networking Applications and Policy, 10(1), Kalakota, R., & Whinston, A. B. (1997). Electronic Commerce: a Manager s Guide.Reading, 3.M Chirgui, Z., & Channel, O. (2007). The adoption and use of smart card technology in banking: An empirical evidence from the moneo electronic purse in france. 4. V. Ravi (Ed.), Advances in Banking Technology and Management: Impact of ICT and CRM. IGI Global Inc. USA 5.Rayport, J. F., & Sviokla, J. J. (1994, November-December). Managing the marketspac Harvard Business Review, (pp ). 6. M. Anandarajan, & C. Simmers (Eds.), Managing Web Usage in the Workplace:A Social, Ethical and Legal Perspective (pp ). Hershey, PA: Idea Group Publishing JIBC/ htm,

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