E-Banking service Delivery and Customer Satisfaction in Commercial banks in Lagos Metropolis Nigeria

1.1Background to the Study

In the service industry, particularly the banking sector, across the world, the delivery of high quality services to customers is a key factor affecting the performance of firms(Akinci, Atilgan- Inan, & Aksoy 2010; Aliyu &Tasmin, 2012). It is thus realistic to state that the industry is synonymous with competition as a result of continued improvement in the service deliveryAkinci, Atilgan-Inan, and Aksoy(2010). This improvement is a reflection of the high expectation of bank customers. This quest for continued improvement has thus made the banking sector in Nigeria to face enormous challenges of rapid environmental changes which eventually translate to stiff competition among banks (Adewuyi, 2011). This competition equivocally made the banks to jostle for leadership positions in the industry and thus imperative for banks to at least meet the target customers’ satisfaction with quality of services expected by them since customers’ quest for improved services has become non- negotiable. The essence of this competition bothers on which bank could actually offer customers services or offerings that will be more attractive to customers than that of a competing bank.

Ariff, Yun, Zakuan and Jusoh (2012) asserted that delivering effective electronic service quality (e-SQ) is crucial to becoming, and remaining, competitive in internet banking service. From the banks perspective, to remain competitive, banks must ensure that their service delivery is effective, and this can be achieved by measuring and improving every dimension of internet banking service quality. This is because service quality is one of those virile determinants of customer satisfaction (Ziethaml, Parasuraman, Malhotra, 2003).

Customer satisfaction can be interpreted as an overall evaluation of service quality attributes or service attribute performance (Boulding, Kalra, Staelin &Zeithaml, 1993). It is invariably the state felt by a person who has experienced a performance or outcome that has fulfilled his or her expectations. According to Kotler and Keller (2006) customer satisfaction refers to a person’s feelings of pleasure when a firm’s offerings matches or exceeds customer expectations. As a performance indicator within an organisation, customer satisfaction measures products and services, in meeting customer expectations with respect to service quality (Cheolho, 2010). Existing customer satisfaction literatures highlighted the importance of service quality as an antecedent of customer satisfaction just as Parasuraman, Berry and Zeithaml, (1985) asserted that service quality is the customers’ subjective assessment of the expectations with actual service performance.

The evaluations of service delivery are actually dependent on the consistency of the service delivery over time (Parasuraman & Grewal, 2000; Barrera, García, & Moreno, 2014). Going by the above, banks thus have the herculean task of attracting customers but a more difficult mission is how to maintain the existing customer base (Oghojafor, Mesike, Omoera & Bakare, 2012). This is because most consumers are rational and are prepared to spend their money and time judiciously. The implication of the above is that banks will strive hard to ensure that their service delivery is of high standard. For an organization to gain competitive advantage over its competitors, its services delivery must be commendable by their consuming public (Hazlina, 2011). The quest for delivering high and standardized services coupled with zeal to meet international banking practices eventually led Nigerian banks to opt for a more sophisticated electronic banking for doing business. This is because electronic banking is found to be an important driver of performance in the banking industry for bank’s performance in a way that

seeks to enhance effective customer service delivery and efficient financial services (Thulani, Njanike, Manoramo & Chriseri, 2011; Aliyu, Tasmin & Takala, 2012). This implies that its effective delivery will be a critical success factor for banks to build their competitive advantage and increase their competitiveness. The issue of service delivery applies to all service industries including the banking sector where firms jostle for customers in a keenly competitive industry. As a result, the quality of electronic banking services (e-banking), e.g Telephone Banking, Point of Sale (POS), Mobile Banking, Automated Teller Machine(ATM), Internet Banking e.t.c, has become a major area of attention among researchers and bank managers due to its strong impact on business performance, customer satisfaction, customer loyalty and profitability (Hanzaee & Sadeghi, 2010).It is therefore germane to look inwards at bank performance and service delivery before the digital era banking operations.

Traditional banking is a relatively old economic activity in Nigeria, dating back to 1892 when the African Banking Corporation was established. First Bank of Nigeria established in 1894 was formerly Bank of British West Africa (BBWA); and Barclays Bank DCO, now Union Bank of Nigeria Plc established in 1917 (Ehikhamenor, 2003). All these banks had banking activities done traditionally. During this time, bank customers spent more waiting time in the banking halls. However, transformation in the banking sector started in the 1960s when the use of mainframes by banks helped facilitate the replacement of paper by book entries (Emmanuel & Adebayo, 2011). During the 1970s and 1980s, banks created database; with the automation of simple and repetitive clerical tasks there were considerable gains in efficiency. By 1990s, the western world had continued to dominate the world of Information Technology (IT) and set the pace in transformation of the world economy; hence the need for the Nigerian Banking sector to

follow the trend of IT compliance. The revolution in Information and Communication Technology (ICT) informed need for the banking sector to change from the traditional mode of operations to a presumably better way with technological innovation that improves efficiency (Osubuohien, 2008; Singh, 2012).

Information Technology (IT) has brought about extensive changes in the banking industry, forcing them to re-engineer and restructure many of their basic processes and systems (Adeoti, 2005). Few of the technology-driven or delivery channels of electronic banking services being offered are Automated Teller Machines (ATM), Electronic Clearing Service (ECS), Electronic Funds Transfer (EFT), Point of Sale (POS), Tele-banking, Internet banking to mention a few.

These new technological capabilities mentioned above are to be effectively used to create value and to better manage customer relationship. To this end, Sidiqqi, (2010) and (Singh, 2012) appreciate this technology absorption to be electronic banking (e- banking) which according to Rotchababkitumnuai and Speece, (2003) is ‘’an internet portal, through which customers can use different kinds of    banking services ranging from bill payment to making investments’’. With the exception of cash withdrawals, internet banking gives customers access to almost any type of banking transaction at the click of a mouse (De Young, Lang & Nolle, 2007). Fierce competition in the banking sector have made it expedient for banks to turn their attention to internet banking so as to be competitively viable with international practice (Alaba, 2012; Jayawardhena & Foley, 2000). The aforementioned will thus inform for customer satisfaction which, according to Spreng, MacKenzie, and Olshavsky (1996); Mick and Fournier, (1999) and Sidiqqi, (2010) is one of the important outcomes of marketing activity in the competitive banking industry and as such considered as the essence of success (Sidiqqi, 2010). Kotler and Keller, (2006) mentioned that the customer is the king thereby signifying that if banks policies are customer- oriented and

delivery of high quality services guaranteed, then high customer satisfaction will be important in maintaining a loyal customer base (Kumar, kee & Manshor, 2009).

In the light of the above, it is germane for banks to recognise that effective delivery of services need complementary functions from the staff that will ensure its certainty. Effective e- service delivery is all about service quality which according to Kenova and Jonasson (2006);Lee and Lin (2005); and Santos (2003) is the overall customer evaluations and judgments regarding the excellence and quality of e-service delivery in the virtual marketplace. Keeping in view the significance of service quality as a means of competitive advantage and organizational sustainability, banks pursue multidimensional approaches to improvement in service quality to attract and retain customers (Kandampully, 1997). From the aforementioned, it is evident that superior service quality is a weapon of competition and this helps demonstrate that it is a predictor of customer satisfaction.