Over the last decades, the banking sector has experienced a paradigm shift resulting from the integration of traditional banking with key technological developments and innovations that have further been blended with information technology. The result is internet banking that offers customers an improved quality of service delivery. Although the adoption of technology has been going on for a while, the emergence of the COVID 19 had a lot of governments enacting health measures to protect their citizens from contracting the virus and minimize the health costs that would be incurred. Some of the measures included social distancing and total lockdowns in some countries (Kasradze, 2020). This necessitated the banking sector to reinforce the contactless methods to facilitate the consumption of financial products and services, accelerating the shift to electronic banking that was transitioning slowly. The following research intends to identify the impact of electronic banking on the customer satisfaction of the people in the UK during the pandemic. The study focuses on the diffusion of innovation theory, theory of reasoned action, and contrast theory. The study will adopt a descriptive survey research design, where questionnaires will be administered using a convenience sampling method to determine the level of satisfaction that UK-based people get from electronic banking. Findings from the study indicate that the convenience of electronic banking, its friendliness, and its usefulness impacts greatly on the level of satisfaction of the customers.
1.2 Introduction and Research context
Electronic banking has been termed as a new revolution of traditional banking services which allows customers to transact via electronic devices such as telephones and computers in the comfort of their homes. Electronic banking can be associated with the technological developments that have created a global world where ideas are exchanged, thus creating a space for competition in the banking industry as well as other industries (Banna and Alam, 2021). Technological solutions to the banking industry had been introduced in search of a remedy to the long queues that customers used to make in the banks to deposit, withdraw, and pay their bills. The efficiency that followed the implementation of technological solutions increased the need for more banking institutions to adopt internet technology to serve customers devoid of their presence at the bank. The banking sector has also been more turbulent and competitive as a result of the increasing trends toward mergers, internationalization, consolidation, and takeovers (Simon et al., 2016). Studies have identified throat-cutting competition, change in consumer needs, and shortage of time as special features that cannot be ignored in the current era. Businesses that manage to adapt to the three features have high chances of surviving and maintaining their profitability, while those that cannot are doomed to extinction.
In the light of the COVID, 19 pandemic that has hit the global economy due to restricted economic activities, the management of financial institutions have been under pressure to ensure that their customers are still satisfied while trying to stay afloat amidst the pandemic by maintaining low costs in their operations (Agur et al., 2020). This is so considering that countries resulted in strict measures to deal with the pandemic such as total lockdowns which meant no movement to the banks, yet consumers had to consume the financial products and services. Consequently, electronic banking was not left as an option, but a necessity in the banking industry. While the change may have been facilitated by the pandemic, the trend is not likely to end after the crisis.
However, the change may not be even across all communities since it means access to connectivity and electronic devices. In communities where consumers have no access to the internet or electronic devices, the use of electronic banking may be difficult, and thus such communities would not be favored when traditional banking is affected.
In the UK, the banking industry has been experiencing unprecedented growth attributed to the continuous developments in the e-services of the banking industry as a way of accommodating the diverse and ever-changing lifestyle and needs of modern clients (Shanmugam, et al., 2015). Additionally, the competition among banks has made e-banking services more common as a way of retaining customers and attracting new ones. This has resulted in huge investments in the implementation of e-banking. However, despite the investments, not all UK residents enjoy the use of e-banking. Studies show that the baby boomers have trust issues when it comes to banking electronically regarding their privacy while transacting online, saying they would rather transact in traditional banking (Statista, 2020). The millennials and the generations after would however prefer to transact online, for it saves them time, suits their lifestyle, and other needs. The following studies seek to understand how electronic banking impacts the satisfaction of those who use electronic banking in the UK, especially in the face of the COVID 19 pandemic.
1.3 Problem statement
The world of business has highly changed, with consumers not only seeking products and services but also the satisfaction that comes from using different tools at hand from those who serve them. In this context, the consumers do not just seek purchasing of financial products and services online, but they require dependable and reliable technologies. In the bid to ensure this happens, the UK banking industry has sought to invest huge amounts of money to ensure that the self and virtual banking services are properly implemented to enhance the quality of services that the customers receive. However, since technology is not static, those service providers that are able to implement new technologies in their systems are more likely to attract more customers and have increased customer satisfaction and loyalties, especially in a highly competitive marketplace. In the UK, the issue of privacy has had many consumers resent using electronic banking, yet in the face of COVID 19, the circumstances forced them to use e-banking (Bank of England, 2021). The privacy issues prevail despite the efforts by the media to assure the citizens that the e-banking is safe and the data of customers is secure. This study would like to understand the level of satisfaction that consumers gain from using e-banking despite the privacy issues being prevalent.
1.4 Study objectives and research questions.
The main aim of the study is to identify the impact that electronic banking has on the customer satisfaction of the people living in the UK during the pandemic period. The study seeks to find this by answering the following research questions.
- To what extent does electronic banking contribute to repeat customers?
- How does customer satisfaction in electronic banking influence the consumption of other bank products?
- To what extent does customer satisfaction in electronic banking contribute to increased referrals and new customers?
1.5 Significance of the study.
The following study intends to be a helpful tool in the future while providing knowledge to related studies on how electronic banking impacts the satisfaction of users. As a result, financial institution managers can use the information from the study while implementing further technology in their systems and predict the form of outcome to expect from the consumers. The bank will hence be able to learn how to select useful technology and leave those that are not, saving on their cost, increasing their consumer loyalty, and consumer satisfaction. The profitability of the banks also increases while the right investments are implemented. Finally, the study will inform the present knowledge regarding electronic banking.
1.6 Structure of the proposal
The following work is presented in three chapters. Chapter one will entail the abstract, introduction and research context, problem statement, the objectives and research questions, and the significance of the research. Chapter two will discuss the reviewed literature. Chapter three will entail the research philosophy, strategy, design, population and sampling, data analysis techniques, and finally a discussion and conclusion.
2.1 Conceptual framework
2.1.1 Electronic banking
Electronic banking refers to using the internet and other telecommunication networks to provide a wide range of products and services that have been added value by the provider. E-banking allows the customers to enjoy the products and services without going physically to the bank, but as long as they have internet connectivity, and the right devices to access the services. Electronic banking can be an integration of the traditional banking system with the technology while still having the physical stores for customers to attend, but others are purely online and have no physical presence. Online banking through traditional banking provides customers with all routine transactions such as bill payments, balance inquiries, account transfers, and online loan applications among other activities. Access to e-banking is not limited to time or place. According to Ismail and Alawamleh (2017), e-banking is the use of the internet to remotely provide services such as funds transfers, deposits, and other banking services. The following study defines e-banking as the use of internet and internet accessing devices such as smartphones to access any services and products from the bank.
2.1.2 Customer satisfaction.
In the current business environment, customer satisfaction is a prerequisite for the success of any business (Simon et al., 2016). Studies have defined customer satisfaction as an evaluation of the experiences that customers receive when they are purchasing products or services over time. Customer satisfaction goes hand in hand with customer expectations, and the ability of the service or product provider to meet the expectations either casually or exceptionally. The ability of the companies to meet the expectations of the customers determines their loyalty to the brand. In the context of electronic banking, some of the customer expectations include privacy, efficiency, responsiveness, system availability, contact, and friendliness of the website. When these features are satisfactorily met, (Kan and Fabrigar, 2017) suggest that there is a high likelihood of the customers coming back to buy again, buying other products from the company, and also using the word-of-mouth advertisement to attract their friends to buy from that brand. As a result, companies should strive to meet the expectations of the existing customers, as it buys their loyalty, and increases the chances of attracting new ones. Ajzen and Schmidt (2020) note that the use of word-of-mouth advertising can be a powerful tool over other advertising methods, since, people tend to believe their friends on their past experiences, rather than strangers.
2.2 Theoretical framework.
2.2.1 Theory of reasoned action.
Coined by Ajzen in 1991, the theory tries to explain the relationship that exists between behaviors, attitudes, and intentions and understand why people behave in a particular manner (Conner, 2020). The theory is used in predicting how and why the behavior of people may change, since it assumes that people’s behavior can be planned and deliberative. According to the theory, the behaviors of people are influenced by their intentions towards a particular behavior. The intention in return affects the behavior based on the social and environmental surroundings. Further, Steinmetz et al., (2016) argue that for a person to predict behavior, they need to have the belief that the behavior will result in the intended outcome. In line with this, the behavior of people to use the internet and its products lies in the attitudes held by people as well as the social and environmental surroundings.
While competition has led to many companies seeking many ways to stand out and gain more market share, providing high-quality products has stood to be a major way that companies use to attract more customers, as well as retain the current ones (Kan and Fabrigar, 2017). High quality has been used by firms as an environmental factor that attracts more customers with the belief that it will lead to the intended outcome, which in this case is to meet the expectations of the customers. Thus, Conner (2020) suggests that product quality and customer satisfaction are interrelated. As a result, when the expectations of the customer are met, the customer retention rate increases, and so does the chance of word-of-mouth advertisement (Ajzen and Schmidt 2020). E-banking is hence said to play a significant role when it comes to filling the gap that exists between the expected and perceived service quality by the bank to the people.
2.2.2 Diffusion of innovation theory.
The theory was coined by Rogers in 1962 and postulates that over a given period, an idea, product, or behavior gains momentum and diffuses across a social system (Dearing and Cox, 2018). The resulting idea is that the people change from their traditional behavior and adopt the new idea, product, or behavior. The main idea behind the people adopting the new concept is that it must be innovative or new to them, making diffusion possible. According to Al-Jabri and Sohail (2012), the key features that trigger quick adoption of the new idea include complexity, relative advantage, trialability, observability, and compatibility.
A majority of the banks have found it effective and advantageous to integrate ICT into their operations as a way of increasing efficiency. The efficiency is attained by creating mobile applications and websites that are friendly and meet customer expectations. Customers are able to access their accounts anywhere anytime, which is a new norm as to queuing in the bank previously. Over time, people have hence adopted the use of electronic banking over going physically to the bank. Although it was not easy at first to sell a new idea to the people, the ability to enhance electronic banking by assuring people of their privacy against cyber threats and fraud has allowed a majority to buy the idea of electronic banking (Liébana‐Cabanillas et al., 2013). The ability of the banks to have user-friendly websites, responsive, and available, has met the expectations of the customers and made them continue using electronic banking.
2.2.3 Assimilation-contrast theory.
The following theory assumes that if performance is found to be within the customer’s range of acceptance, then the discrepancy is disregarded, despite falling short of expectation (Zhang et al., 2017). Assimilation would then operate and the performance of the product or service would be deemed acceptable. On the other hand, when performance falls within the range of rejection, then contrast prevails, making the difference exaggerated and the service or product is deemed unacceptable. The assimilation-contrast theory concurs with the disconfirmation theory which states that the satisfaction of the consumer is relatable to the direction and size of the disconfirmation experience that will occur after comparing the consumer’s expectations against service or products performance (Lankton et al., 2014). The two theories assume that the level of satisfaction a consumer gets is a function of the immensity of the discrepancy between the perceived and expected performance. De Bruyn and Prokopec (2017) concur with the theory, where he argues that the consumer will accept the performance to be within expectation if the discrepancy between the expectation and the performance is relatively small. The assimilation-contrast theory tries to illustrate that both the contrast and assimilation paradigms apply while studying customer satisfaction. Additionally, other variables other than the contrast or assimilation effect include difficulty in judging the product performance, where expectations are bound to dominate making the assimilation effects observed and contrast effects resulting in high involvement circumstances (Kokthi and Kelemen-Erdos, 2017). Further, when the consumer has high expectations, this may affect the assimilation or contrast effects to be observed.
Akin to this, the banking institutions have the responsibility of ensuring that the services they offer via electronic banking are as efficient as possible, and in case of an error, it should be relatively small. Failure to do this would lead to discontented customers, who are associated with low loyalty. Additionally, when customers are dissatisfied, the word-of-mouth they will spread to their relatives and friends would be negative, affecting the general market share of the bank.
2.3 E-banking and customer satisfaction
Several studies have tried to identify the relationship between e-banking and customer satisfaction. Some of these studies include the work by Liébana‐Cabanillas et al., (2013), who found that most customers are affected in their usage of e-banking due to the perceived risk, for this study it means the privacy of account information could lead to cyber-attacks or fraud. However, the perceived benefits of using e-banking, which include saving time, ease of use, availability any time anywhere, and flexibility push the consumers towards e-banking. Additionally, in their study, Chu et al., (2012) argued that the value proposition significantly increases the customer satisfaction of the intangible items. Satisfaction has been found to be related to increased customer retention and helping in the growth of the organizational value.
In other studies, Ismail and Alawamleh (2017) found some of the perceived benefits of electronic banking to the banking sector. The financial institutions stand to gain loyal customers, free advertisements where contented customers tell their friends and relatives about the banking services, cross-buying of financial services, and willingness to pay for more due to the excellent services (Oni and Eweoya, 2016). All aforementioned benefits translate to the growth of financial institutions. In the same vein, the UK customers have been found to have been contented with e-banking, with evidence being on the increasing rate at which the UK people have used electronic banking.
3.1 Research philosophy.
Research philosophy refers to the means of collecting information, analyzing it, and using it during a research project (Leatherdale, 2019). While research philosophy deals with the means, research strategy deals with how the researcher will systematically pursue their project to come to a thorough report and research, by guiding the researcher step by step. While exploring the impact that electronic banking has on the satisfaction of UK consumers during the pandemic, the following research intends to utilize quantitative research methods since a lot of numerals will be used. In line with this, research philosophy is divided into positivism and interpretivism philosophy. Positivism philosophy argues that a piece of particular knowledge or reality regarding a phenomenon can only be understood objectively, without the interference of the researcher (Alharahsheh and Pius, 2020). The researcher, however, uses scientific methods only as means to understand the phenomenon. On the other hand, interpretivism argues that reality is subjective to the views, experiences, and knowledge of the social actors such as the researcher. In the following study, the purpose of the researcher is to identify the relationship between e-banking and consumer satisfaction. As such, the study is objective and does not require the insight of the researcher, but rather will use scientific means to understand the relationship hence making use of the positivism philosophy.
3.2 Research design and strategy.
While studies are characterized as either qualitative, quantitative, or mixed methods, the following study will make use of the quantitative research methods to understand the relationship between e-banking and consumer satisfaction specifically during the pandemic. Quantitative research methods allow for precise measurement of the independent and dependent variables, giving accurate study results (Leatherdale, 2019). Additionally, quantitative methods give the researcher the chance to test the hypotheses. It is worth noting that quantitative methods, however, are not the best when the researcher requires rich data.
Depending on the nature of the research, the researcher is able to determine the research strategy effective for the study, where it can either be a descriptive or explanatory research strategy. A descriptive research strategy describes the features of a population or phenomenon under study while focusing on the ‘what’ question instead of the ‘why’ question (Leatherdale, 2019). The main methods used in a descriptive study include case studies, surveys, and observational methods. As a result of using the method, a lot of information is obtained, which can be useful in developing a hypothesis or for future research. In business, case studies and surveys are more preferred, the following study intends on using surveys by means of distributing online questionnaires for the respondents to give their feedback. It is worth noting that for the right feedback to be provided, the researcher must ask the right questions, failure to which the respondents will not have the right feedback, hence tampering with the accuracy of the study results.
3.3 Population sampling and data collection.
One of the crucial steps in research is determining how the data for the study will be collected even before embarking on the research. This is necessitated by the fact that wrong data can jeopardize the research results. A sample refers to a small set of data chosen by the researcher from a large population by the use of pre-defined selection methods. Some of the key techniques used in deciding the sampling methods include unknown possibilities, probability, and known possibilities. However, for the researcher to effectively decide on the technique to use, he has to consider four main steps which include the right population to sample, the appropriate sample frame, the sample size needed, and finally the sampling technique (Leatherdale, 2019). According to this study, the right population is the UK population that uses online banking services. As a result, the right sampling method to use is the convenience sampling method, where the researcher has the advantage of being able to reach the respondents conveniently. The data collected will be analyzed using IBM’s SPSS.
3.4 Research instruments
These are tools used during the research. They include case studies, questionnaires, interviews and observations. The following study will make use of surveys in form of online questionnaires.
3.5 Research ethics
Ethics in research are the moral standards that a researcher must consider and maintain during a study. Ethics are crucial in every aspect of our lives and businesses, for unethical decisions lead to negative results, which may impact business performance. Some of the ethical considerations in this study include the principle of justice, beneficence, and respect since it is research involving human subjects. In line with this, the researcher requires permission from the school, as a way of ensuring formality and legality are followed. While conducting the research, the researcher is expected to hold high levels of confidentiality regarding any information given to him by the respondents, and also ensure that the obtained data is protected from access by unauthorized individuals. Further, the researcher should avoid any form of violence, and since the following research will be mainly online, there should be no cyberbullying or attacking the respondents emotionally. Finally, respondents should consent before undertaking the study, and in case any of them feel that they do not want to continue with the study, they should be allowed to leave, and their data kept confidently.
The following study intends to identify the impacts of electronic banking on customer satisfaction of the people of the UK during the COVID 19 pandemic. While technology had been an integral part of the banking system, the presence of the COVID 19 necessitated the need for almost every person to use electronic banking since the country was on lockdown. Although a majority of the UK people have been hesitant about using electronic banking citing privacy issues, the pandemic period did not make e-banking an option, but a necessity for bank users. It is crucial to identify the level of satisfaction that the people perceived from using the e-banking then as a means of trying to improve the e-banking systems since the already adopted e-banking culture is not likely to end after the pandemic, but people need to adapt to using it. However, using the aforementioned theories, while the quality of the services or products matches the expectations of the user or even exceeds, then the satisfaction rate of the consumer increases, giving the chance to purchase more products from the financial institutions and also spreading positive word-of-mouth.