American Based Research Journal Vol-5-Issue-12 Dec-2016 ISSN (2304-7151)

Relationship between E-Banking Service Quality and Customer Satisfaction in

Commercial Banks in Jordan
Author’s Details: (1) Basel J. A. Ali -Ph.D. Student, School of Business Innovation & Technopreneurship,
and University Malaysia Perlis (2) Dr. Wan Ahmad Wan Omar-School of Business Innovation and
Technopreneurship, University Malaysia Perlis, Malaysia
Abstract
The aim of this study is to examine the relationship between e-banking service qualities on customer
satisfaction in the commercial banking industry in Jordan. Partial least squares structural equation
modelling (PLS-SEM), adopted to analyse the casual relationships between exogenous variables and
endogenous variable. The model was developed and later tested by using the Partial Least Square (smart
PLS) procedure on data collected from a survey that yielded 107 usable questionnaires. The findings
demonstrated that efficiency of online service quality and Responsiveness of online service quality have
significant and positive influence on customer satisfaction in the commercial banking industry in Jordan.
The findings imply that the relationship of the efficiency of online service quality and Responsiveness of
online service quality on customer satisfaction could lead to commercial banks’ profitability.
Keywords: E-service quality, Customer satisfaction, and dimensions of service quality.
1. Introduction
Nowadays, the increasing progress in technology makes the service organizations like banks provide e-
banking services or online banking in order to access the competitive advantage and dedicate much market
share for themselves (Beigi, Jorfi, Tajarrod, & Beigi, 2016).
consequently service quality assessment in organizations which provide electronic and on line services differs with
the quality of traditional services (Ardakani, Ardakani, & Mohammad Fotouhi Ardakani, 2015). In supplying
new services, in addition to the correspondence of recent services to customer needs, the manner by means of which
those services are brought to the customer is also vital. The developing IT and ICT applications have had ways
reaching implications for the mode of operation in all sectors, consisting of the banking industry. The net has greatly
modified the established concepts in marketing and provision of products and services as well as the customer
expectations concerning quality of services and products. the new means in the provision of banking services that is
closely tied to ITC plays an important role in customer satisfaction and retention and in giving the bank a competitive
edge over the competitors (Doost & Ashrafi, 2014). E-banking has accomplished wonders in handing over
banking products & services to the clients. Even though, banks still want to enhance with a purpose to
satisfy the customers. customer satisfaction could be very crucial for business success in today’s market in
order to build long- term and profitable customers which in the long run results in consumer loyalty and
repeat business (Punyani, Dash, & Sharma, 2015). most banks within the developed world and some within
the developing world are now providing internet banking services with diverse levels of sophistication
(Bawumia, 2007). as an example, even as some banks have adopted net banking for communicating to the
consumer on concerning financial institution statements, other banks use net banking services to permit
customers to access their financial institution accounts and carry out different banking transactions
(Bawumia, 2007). Electronic Service Quality (E-SQ) is a newly developing area of research, which has
strategic importance for businesses striving to address customers in the electronic marketplace (Parasuraman
& Zinkhan, 2002).
The paper explores e service quality dimensions based on a review of the development of e-service quality
dimension. It proposes a four-dimension scale for measuring eservice quality: efficiency; reliability;
responsiveness; and privacy.
2. Customer satisfaction (CS)
customer satisfaction considered as one of the most important and vital variables for long-time period
business success (Ardakani et al., 2015). nowadays the need for continuing activities and maintaining the
competitive gain is attention to customers (Mozaheb, Alamolhodaei, & Ardakani, 2015) . Customer
satisfaction means about to what extent customer needs, wishes, and expectations towards the services and
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 American Based Research Journal Vol-5-Issue-12 Dec-2016 ISSN (2304-7151)
products are fulfilled. during the period sale, customer encouraged to repurchase and be customer loyalty
(Kocoglu & Kirmaci, 2012) . According to (Kotler, 2000), a highly satisfied customer can be identified as
follows:

i) The customer continues his shopping for a long time.

ii) They buy more as long as the firm produces new products and the existing products are improve.
iii) They speak about the firm and its products with praise.
iv) They keep does not care about another brand that is in competition with the products of the firm and does
not an emphasis on the price.
v) They will give the firm suggestions and ideas about products and services.
In another word, customers’ satisfaction obtained while banking is based on customers’ expectations(Beigi
et al., 2016) . Several studies have been conducted to determine the major instrument that has a substantial
impact on customer satisfaction. One of the most widely used instrument to determine the customer
satisfaction is SERVQUAL developed by Zeithaml et al. (2002). In this study, the researcher has paid much
attention to determine the relationship between E-Banking Service Quality and customer satisfaction.
3. E-Service Quality
Electronic Service quality refers to the consumer's overall evaluation and judgment of the excellent and
quality of electronic service providing in the virtual marketplace (Santos, 2003). In trendy, E-service do
continue to be defined as like an interactive, content-centred, then net-based customer service to that amount
is driven through customers or clients and integrated along the assist on technologies and systems provided
through service providers, who aim at strengthening the customer-provider relationship (De Ruyter,
Wetzels, & Kleijnen, 2001) . The appearance of net paved the way for the emergence of the concept of E-
service. E-services have two major characteristics: the service is available with electronic networks, and the
service is consumed via someone via the internet (Batagan, Pocovnicu, & Capisizu, 2009). The discussion of
service quality may be extended to the overall assessment of a particular service with ten service quality
dimensions: tangibles, responsiveness, competence, reliability, courtesy, access, communication credibility,
security, and understanding the customer (Parasuraman et al., 1985, 1988).
Five dimensions of SERVQUAL have been developed for the service sectors: Reliability, assurance,
tangibility, responsiveness, and empathy (van Iwaarden, van der Wiele, Ball, & Millen, 2003) . It was
concluded by many researches that that SERVQUAL is the best model to measure service quality in the
banking industry (Angur, Nataraajan, & Jahera Jr, 1999).similarly, other research showed, in brief,
SERVQUAL is a proper and good assessment tool to measure service quality in the retail banking industry
(Lau, Cheung, Lam, & Chu, 2013).
Zeithaml, Parasuraman, and Malhotra (2000, 2002) developed E-SERVQUAL for measuring e-service
quality through a three-stage process using exploratory focus groups and two phases of empirical data
collection and analysis. This process produced seven dimensions reliability, fulfilment, compensation,
efficiency, privacy, responsiveness, and contact that form a core service scale and a recovery service scale.
Four dimensions efficiency, fulfilment, reliability, and privacy—form the core E-SERVQUAL scale that is
used to measure the customers’ perceptions of service quality delivered by online retailers.
Those dimensions consist of the criteria customers use to assess routine on-line service once they revel in no
questions or troubles in the usage of the site. Efficiency refers back to the ability of the customers to get to
the internet website online, discover their desired product and information associated with it, and check out
with minimum effort. Reliability is associated with the technical functioning of the website, specifically, the
extent to which it is available and functioning properly. The privacy dimension consists of assurance that
shopping behaviour data aren't shared, and that credit card information is secure(Zeithaml, Parasuraman, &
Malhotra, 2002).
According to (Khan, Khan, Khan, Naseem Bakht Yar, & Khan, 2014), the dimensions of service quality can
be identified as follows:

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Efficiency is about the proper working of the internet services. Customers can get all the information from
the website easily. It refers to the ability to get the reliable and related information on the website.

Reliability is related to the technical working of the website. It involves the proper functionality of the
website.
Responsiveness is related to the customer representative services. It measures the ability of e-tellers to
provide timely information to the customers, handling the quarries and complains of the clients and provides
online guarantees.

Privacy is the most important and mostly preferred dimension of service quality. Customers are reluctant to
provide personal data and credit card information on the website because of the threat of being theft. So this
dimension provides the assurance of security and privacy of data.
4. Hypothesis and research framework
In this study, we used to Kim and et al. (2008) and SERVQUAL for measurement of eService Quality of
Point of Sale (POS). In finally, authors used four variables as the independent variable and one as the
dependent variable for the survey. This study proposes the following hypothesis.

1) There is a relationship between Efficiency of online service quality and customer satisfaction.
2) There is a relationship between Reliability of online service quality and customer satisfaction.
3) There is a relationship between Responsiveness of online service quality and customer satisfaction.
4) There is a relationship between the privacy of online service quality and customer satisfaction.
E-Banking Service Quality

Efficiency

Reliability Customer satisfaction in

Internet banking
Responsiveness

Privacy

Figure 1. Research Framework

5. Methodology Survey Instrument

26 observed variables form the exogenous independent variable measurement of dimensions of e-banking
service quality of Efficiency 9 items, Reliability 7 items, Responsiveness 6 items and Privacy 4 items. The
customer satisfaction 5 items as an endogenous variable. Survey questionnaire was designed by broadly
reviewing literature in order to identify scales used in the previous studies which are having high reliability
and validity. This study applied the 5-point Likert scale of 1-strongly agree, 2-agree, 3-neutral, 4-disagree
and 5-strongly disagree.
To study the relationships among the main constructs by using the partial least squares (PLS) technique,
Smart PLS was adopted to assess the measurement and structural model(Ringle, Wende, & Will, 2005).
PLS analysis was chosen because it can evaluate all paths at the same time and does not need a large sample
size (Gefen, Straub, & Boudreau, 2000). To assess the associations, all measurement items were

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 American Based Research Journal Vol-5-Issue-12 Dec-2016 ISSN (2304-7151)
standardized, and missing values were substituted by sample means to check validity, reliability, and
statistical power. The bootstrapping technique was used, which approximates the estimator sampling
distribution by resampling with substitution from the original sample (Moore, McCabe, & Evans, 2005) to
acquire more consistent results.
Sample
Total of 150 customers from commercial banking in Jordan had been asked to answer the questionnaire.
After the process of screening, 110 or 73% of the participants involved in this study were eligible and can be
regarded as respondents. However, after screening the data, only 107 survey questionnaires can be utilized
for this study. Therefore, the response rate is adequate for analysis of Smart PLS.
6. Data Analysis
In this part of the study, the fitness of measurement models has been evaluated, and the validity and
reliability of the instruments of the study are investigated and interpreted. In the following, the fitness of
structural model and then, the overall fitness of the model are examined, and the hypotheses are finally
tested.
Measurement models:

Figure 1 PLS Measurement Model

Reliability
In this study, to evaluate the reliability of the questionnaire, three criteria of factor loading coefficients,
Cronbach's alpha and composite reliability have been used that each is addressed in detail in the following
and their results are interpreted and reported.

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Factor loading:
Table 1. Factor loading coefficients of the items
Item No Factor Item No Factor Item No Factor
Loading Loading Loading
CS 2 0.753 Eff 3 0.642 Rel 1 0.826
CS 3 0.844 Eff 5 0.618 Rel 2 0.653
CS 4 0.790 Res 1 0.827 Rel 3 0.808
Eff 1 0.814 Res 1 0.674 Pri 2 0.633
Eff 2 0.789 Res 1 0.726 Pri 3 0.880
Given that the proper value of factor loadings coefficients is equal to or greater than 0.4 (Hulland &
Business, 1999) and according to the results in Table 1 and the obtained values for all questions, it can be
said that the reliability is good.
Cronbach's alpha
In this study, Cronbach's alpha related to each y variables has been separately calculated whose results are
seen in Table 2.
Table 2. Cronbach's alpha coefficients for each variable.
Variable Cronbach's alpha coefficient
CS 0.716
Eff 0.688
Pri 0.318
Rel 0.657
Res 0.614

Given that the proper value of Cronbach's alpha is Alpha values of more than 0.5 are generally considered
acceptable and values of more than 0.6 satisfactory. And as it is seen in Table 2, the value obtained for all
variables is more than 0.6. Therefore, it can be said that the reliability is good.
Composite reliability
Composite reliability for each variable is observed in Table 3.
Table 3. Composite reliability for each variable.
Variable Composite reliability
CS 0.839
Eff 0.810
Pri 0.735
Rel 0.809
Res 0.788

Given that the proper value of composite reliability is 0.7 (Nunnally, 1978) ,and according to the results of
Table 3, the value obtained for all variables is more than 0.7, therefore, it can be said that the reliability is
good.
Convergent validity
Average Variance Extracted (AVE) from the variables is applied to evaluate convergent validity. AVE for
each study variable is given in Table 4.

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Table 4. Average variance extracted from the variables.
Variable Average Variance Extracted (AVE)
CS 0.634
Eff 0.520
Pri 0.587
Rel 0.587
Res 0.555

Given that the proper value of AVE is 0.4 (Magner, Welker, & Campbell, 1996) and according to the results
of Table 4, the value obtained for all variables is more than 0.5, therefore, it can be said that the convergent
validity is good.

Predictive Relevance (Q2)

Models with acceptable fitness for the structural part should have the predictive power of indexes related to
endogenous structures of the model. On the severity of the predictive power of the model in endogenous
structures. The following 0.02, 0.15 and 0.35 indicating the weak, medium and strong predictive power of a
structure, respectively for the indicators of the structure(Henseler, Ringle, & Sinkovics, 2009). Table 5
shows the values of Q2 for each endogenous variable of the model.
Predictive Relevance (Q2) 0.185

According to the values obtained for Q2 for endogenous variables of internet banking service quality and
customer satisfaction equal to 0.185, the medium capabilities of internet banking service quality and
customer satisfaction are confirmed.

Discriminant Validity

Table 6. Discriminate Validity test based on fornell-larcker Criterion

CS Eff Pri Rel Res

CS 0.797

Eff 0.541 0.721

Pri 0.151 0.057 0.766

Rel 0.322 0.417 0.093 0.766

Res 0.294 0.154 0.161 0.048 0.745

Table 6. Showed that the values of the square root of AVE for each construct are higher in that particular
diagonal and it indicates good discriminant validity.

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Structural model

Figure 2 PLS Structural Model

In the structural model of PLS analysis, hypotheses testing can be done. Here the path coefficient, t
statistics, average estimate and error are considered. Table 7 showed the structural model for hypothesis
testing. Figure 2 also shows the PLS structural model output.

Table 7: Structural model output

Hypotheses Path T- P- Level of

Coefficient Value Value Significance
Eff -> CS 0.458 6.526 0.000
H1 ****
Pri -> CS 0.082 0.845 0.400
H2 *
Rel -> CS 0.113 1.620 0.108
H3 **
Res -> CS 0.205 2.378 0.019
H4 ***

Hypothesis Testing and Results

First hypothesis:
There is a relationship between Efficiency of online service quality and customer satisfaction.
The findings of table 4-11 indicate that the coefficient of the efficiency effect is meaningful on customer
satisfaction (0.458) the corresponding t statistics is 6.526 (P<0.000). Therefore the services quality has a
positive and meaningful effect on financial performance, and the first hypothesis is confirmed.
Second hypothesis:
There is a relationship between Reliability of online service quality and customer satisfaction.

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The findings of table 4-11 indicate that the coefficient of Reliability is meaningful on the customer
satisfaction (0.113) the corresponding t statistics is a 1.620at level of p<0.108. The second hypothesis is
rejected.
Third hypothesis:
There is a relationship between Responsiveness of online service quality and customer satisfaction.

The findings of table 4-11 indicate that the coefficient of the responsiveness effect is meaningful on
customer satisfaction (0.205) the corresponding t statistics is 2.378 at the level of p<0.019. Therefore
responsiveness has a positive and meaningful effect on customer satisfaction, and the third hypothesis is
confirmed.
Fourth hypothesis:
There is a relationship between the privacy of online service quality and customer satisfaction.
The findings of table 4-11 indicate that the coefficient of privacy of online service quality effect is
meaningful on customer satisfaction (0.082) the corresponding t statistics is a 0.845at level of p<0.400.
Therefore the fourth hypothesis is rejected.

Conclusion
The purpose of this study was to investigate the relationship between of E- banking service quality on
customer satisfaction in the Jordanian Banking sector. In particular, four hypotheses were postulated. To test
the proposed hypotheses, data were collected from commercial banks in Jordan. The empirical results
supported the two posited research hypotheses in a significant way (H1and H3). While two hypotheses
(H2and H4), although was insignificant.
Important to note about the study findings is the fact that Efficiency of online service quality has the
strongest influence on customer satisfaction and followed by Responsiveness of online service quality on
customer satisfaction. The paradox is on Reliability of online service quality and privacy of online service
quality which was found to be negatively related to customer satisfaction.
6.3 Limitations and Future Research
Although this study makes significant contributions to both academia and practice, it was limited in some
ways, and therefore some future research avenues are suggested. First, the data were gathered from
commercial banks in Jordan, and the sample size of 150 is relatively small. A larger sample size is suggested
to be used in future studies by researchers. Therefore, future studies may be conducted by using data from
Islamic banks sector. Other researchers who are interested in E-banking can improve another model that
consist same variables used in this study but in different sectors such as service sector or industrial and
telecommunication rather than focusing on the financial sector.
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