Examining the effect of electronic banking service quality on customer satisfaction and loyalty: an implication for technological innovation

Abstract

In this ever-growing competitive banking industry, understanding the effect of electronic banking service quality on customers’ satisfaction and loyalty is the secret to being competitive and successful in the sector. In Ethiopia, measuring service quality in the banking sector is a new paradigm. The primary purpose of this research was to examine the effect of electronic banking (e-Banking) service quality on customer satisfaction in Ethiopia’s emerging banking industry. Data were obtained using a closed-ended structured questionnaire from a total of 385 participants selected using a convenience sampling technique. Frequencies, percentage distributions, group modes, standard deviations, Chi-square correlations, and multinomial logistic regression were employed to analyze the quantitative data. The results confirmed a significant effect of the variables responsiveness, reliability, security and privacy, speed, and convenience on customer satisfaction. Similarly, customer satisfaction with the electronic banking service quality has a significant effect on customer loyalty. System availability, easiness to use, and service charge, on the other hand, have no statistically significant impact on customer satisfaction. Hence, based on the findings of this study, it is recommended that banks should focus on the factors related to responsiveness, reliability, system availability, and speed to maximize customer satisfaction and loyalty. The adoption of electronic banking service that offers a meaningful guarantee takes care of problems promptly, provides services precisely as promised, is always available and quick delivery enables customers to be better satisfied and thus create committed and loyal customers.

Online Banking Service Practices and Its Impact on E-Customer Satisfaction and E-Customer Loyalty in Developing Country of South Asia-Nepal

“…Amin and Isa (2008) discovered that providing greater levels of services will result in more satisfied customers. Ayinaddis et al (2023) found that customer satisfaction and system availability were both favorable and significant. However, Matar and Alkhawaldeh (2022) found no connection between perceived security issues and Wi-Fi service consumption.…”

“…The standardized path was 0.840 for the efficiency of the website, 0.798 for e-customer service, 0.182 for userfriendliness, 0.165 for security & privacy, and 0.162 for site organization, respectively. Ayinaddis et al (2023) reported trustworthiness, security and secrecy, pace, and suitability significantly influence customer satisfaction. Matar and Alkhawaldeh (2022) also found that perceived value, ease of use, and bank credibility have a positive and significant relationship using technology services.…”

“…E-customer satisfaction significantly influences e-customer loyalty, and e-satisfaction significantly mediates the impact of e-service quality on e-loyalty. Ayinaddis et al (2023) reported the quality of electronic banking services significantly impacts customer loyalty. Conversely, they also found no statistically significant relationship between system accessibility, usability, service fee, and customer satisfaction.…”

“…The quality of the E-banking offerings is the key determinant of customer satisfaction that encourages the client to stick with the banks and maintain long-term and fruitful relationships (Khatoon et al, 2020). So, customer satisfaction and loyalty are positively correlated with service quality parameters (Ayinaddis et al, 2023;Yang et al, 2023).…”

“…It can increase electronic customer satisfaction and loyalty to boost business profitability (Kotler, 2011;Kotler & Keller, 2006). E-Banking is changing the financial services sector by promoting innovation, fostering growth, and boosting internal and external competitiveness (Ayinaddis et al, 2023;Yang et al, 2023). However, current banking services, particularly in developing countries, lack the distinguishing characteristics of online banking services (Amin, 2016;Banstola, 2008;Firdous, 2017;Rod et al, 2009).…”