Customer Satisfaction towards E-Banking in Saudi Arabia - Research Proposal Example

Satisfaction Towards E-banking in Saudi Arabia: Alrajhi Bank as a Case Study. By [Presented to] of ] CHAPTER-1: INTRODUCTION Online banking often termed as e-banking is one of the main functions of the modern banking system all across the globe. E-banking has changed the way of banking transactions by making them simple and easy. E-banking operations have been improving the performance of banks along with reducing transactions cost for customers. It is often believed that web based services have brought novel and unique changes in all sectors of the modern economy and especially in the banking sector. In the context of service industry; it is often believed that the banking industry is more innovative, competitive, and customer oriented than any other industry. Kenova (2006) believed that e-banking is an interesting alternative to traditional banking as it helps in saving time and energy along with making the entire banking experience unique and interesting. Rod (2008) stated that e-banking helps in maintaining close relationship with customers along with reducing operational costs and thus facilitating more efficient and improved financial performance. Yang (2004) further added that e-banking helps customers in reducing transaction costs and having easy and simple access to banking services. Overall, the introduction of e-baking has helped both banks and customers. Thus, the major purpose of conducting the research will be to analyse and investigate customer satisfaction towards e-banking in Saudi Arabia by focusing on the case study of Alrajhi Bank. Saudi Arabia is one of the highly sought after economies in terms of business opportunities and recent advancements in banking structure and processes have opened new doors of opportunities for both the customers and investors. The research will help in evaluating the advantages of e-banking in terms of enhancing customer satisfaction through improved performance and efficient banking services. The next part of the discussion presents an overview of the research aim, objectives, and questions. 1.1: Research Aim The research will aim to investigate customer satisfaction towards e-banking in Saudi Arabia by focusing on the case study of Alrajhi Bank. The research will also aim to ascertain factors responsible for customer satisfaction towards e-banking in a critical manner. 1.2: Research Objectives In order to support the purposed research aim, the researcher has formulated few research objectives that will help in investigating the research topic in a systematic manner. The research objectives are as follow: To analyse customer satisfaction towards e-banking in Saudi Arabia by focusing on the case of Alrajhi Bank To investigate factors responsible for customer satisfaction towards e-banking in Saudi Arabia To underpin the advantages and disadvantages of e-banking towards customer satisfaction in case of Alrajhi Bank 1.3: Research Questions To further support the research aim and objectives, the researcher has designed few research questions. The research questions are as follow: 1. What are the factors responsible for customer satisfaction towards e-banking in the context of Alrajhi Bank? 2. What are the present and future e-banking advantages and services aimed at customer satisfaction in the context of Alrajhi Bank? 3. Why awareness strategies in the context of e-banking are needed to enhance customer satisfaction especially in the case of Alrajhi Bank? 1.4: Background of the Research Topic Almost every Saudi bank in last few years has faced difficulties in meeting customer needs and fulfilling their desired satisfaction level. Customers were required to stand in queues for depositing and withdrawing money. However, the use of e-banking has helped in improving the effectiveness and efficiency of banking operations and transactions. This has undoubtedly enhanced the overall appeal of Saudi Banks. Alrajhi Bank is the leading Islamic bank in Saudi Arabia and with large inflow of capital; the bank witnessed tremendous growth in a short period of time. With aggressive marketing activities; the bank acquired new customers that further helped in excellent growth. However, with an increase in the scale of operations coupled with the complexity of Islamic banking; the bank suffered severe setback in terms of declining customer satisfaction. This led to the introduction of customer oriented approach rather than functional based along with e-banking that helped in adding value to the customer satisfaction to an extent. Thus, the background of the research topic seems to be interesting in terms of further research. 1.5: Rationale for the Research Topic The goal of every organisation is to increase customer satisfaction in a unique manner. Meeting the needs and demands of customers often ensure the survival of organisations along with adding value to the reputation. The rationale for the research is based on the fact that intent technologies have offered great potential to almost every sector to flourish and grow. Furthermore, it has offered an opportunity to enhance customer satisfaction by saving their time, energy, and additional transaction cost. Thus, the research will explore these opportunities in the context of customer satisfaction. Furthermore, there are not many research works on the relationship between customer satisfaction and e-banking and this research work will help in filling this gap and thus adding more value to the existing literature. 1.6: Scope of the Research The scope of the research can be assumed as moderately broad considering the fact that the use of case study will help in garnering multiple data that will offer opportunity to triangulate data and thus strengthening the research. In order to further enhance the scope of the research; the researcher will use relevant secondary data and information that will add more value to the research and thus helping in collecting relevant findings. 1.7: Structure of the Research The structure of the research work needs to be kept simple. In this regard, the researcher will be dividing the research work into six different chapters discussed as follow: Chapter-1: Introduction- The chapter will introduce the research topic along with stating the aim, objectives, and relevant research questions. The chapter will also discuss the rationale and scope of the research along with highlighting the background. Chapter-2: Literature Review- The chapter will underpin the concept of customer satisfaction, emergence of e-banking, advantages and disadvantages of e-banking and future of e-banking towards customer satisfaction in a critical manner. Chapter-3: Research Methodology- The chapter will discuss different elements of the methodology to achieve the proposed aim and objectives of the research. Chapter-4: Findings and Analysis- The chapter will present findings in the form of the analysis of the surveys and interviews in a critical manner. Chapter-5: Discussion- The chapter will present a critical discussion on the association of primary and secondary data. Chapter-6: Conclusion and Recommendations- The chapter will present conclusion and recommendations based on the key outcomes of the primary and secondary research. CHAPTER-2: LITERATURE REVIEW 2.1: Introduction The chapter presents an analysis of e-banking in Saudi Arabia, customer satisfaction in the banking industry towards e-banking, advantages and challenges of e-banking, and present and future prospects of e-banking. The chapter takes a general approach rather than a specific approach on Alrajhi Bank in order to explore existing and relevant literature and later associating it in the context of the proposed bank to identify the association in terms of the relationship. 2.2: E-banking Haider (2011) stated that there are not many studies being conducted in the context of ascertaining customer satisfaction towards e-banking in Saudi Arabia. In last few years, the focus of the researchers has been on the emergence of Islamic banking and traditional banking in terms of ascertaining the profitability and acceptance in different parts of the world. Haider (2011) in her study conducted on Islamic banks operating in Pakistan found that e-banking has a positive impact on enhancing the customer satisfaction. It helps in enhancing the efficiency of banking processes and transactions along with reducing the cost of labor and enhancing the quality of service accuracy. Abdullah (2009) in his study conducted on Saudi Banks found that a number of customers are willing to accept e-banking as a banking tool facilitating their business transactions in a hassle free manner. This study proved that the acceptance rate of e-banking in Saudi Arabia is quite high mainly because of the benefits and advantages associated with it. Another study was conducted by Al-Samadi (2010) on the customers of Jordan and it was found that majority of the people preferred branch banking rather e-banking. However, e-banking generated more revenue compared to traditional banking. This shows that the relevance and acceptance of e-banking has been positive and somehow profitable. 2.3: E-banking in Saudi Arabia E-banking is dependent on the internet connection that has to be fast and reliable. Internet was introduced in Saudi Arabia in 1998 and has been controlled by the Saudi government. Sathye (2009) believed that internet connection plays an important and crucial role in enhancing the acceptance rate for e-banking. Almogbil (2005) further added that there is a significant relationship between the speed of internet and use of online banking services. Sohail and Shaikh (2005) stated that the acceptance rate of internet in Saudi Arabia has been quite positive that has resulted in the acceptance for e-banking. Al-Samadi (2010) added that the use of e-banking is quite a new experience for a number of customers and thus requires adequate amount of awareness. Sathye (2009) found that not many customers across the world are aware of the benefits, advantages, and disadvantages associated with e-banking. In the case of Saudi Arabia, it was found that the acceptance rate for e-banking is quite high and majority of large banks have been offering e-banking services and solutions (Abdullah and Gholami, 2009). E-banking is offered by a number of banks in Saudi Arabia and Alrajhi bank is the largest e-banking service provider in the country. Each bank in the country offers its own proprietary system for corporate banking purposes (Aladwani, 2001). It was found that, majority of the corporate houses use e-banking whilst the acceptance rate among general consumers is quite moderate. Alrajhi bank is the largest e-banking service provider having 1.3 million online banking subscribers. Though, the emergence of e-banking in Saudi Arabia is not new but the awareness among general consumers is quite moderate. Thus, the focus of the paper will be on ascertaining the satisfaction level of those consumers rather than focusing on corporate consumers. In this regard, the next section presents a critical assessment of the customer satisfaction in the banking industry of Saudi Arabia. 2.4: Customer Satisfaction and E-banking Titko and Lace (2010) stated that competitive power and survival of banks is purely dependent on their customer retention and satisfaction rate. Hence, it is important to pay proper attention on enhancing customer satisfaction in a well planned manner. Khattack and Rehman (2010) believed that customer satisfaction needs to be translated into wide arrays of measurable factors that can be understood and influenced by customers. Stafford (2006) further added that all banks sell almost similar products and services and thus, in order to gain competitive excellence; it is important to enhance quality of service Titko and Lace (2010) further claimed that quality of service and satisfaction level are the most important indicators for strengthening the relationship between banks and customers. Abdullah and Gholami (2009) believed that the customer satisfaction rate towards e-banking is still unknown to an extent considering the fact that there are not many studies being conducted. This has created a gap in ascertaining the relationship between e-banking and customer satisfaction (Ajzen, 2002). Yang (2004) believed that Middle East countries have been slow in adopting new internet technologies and this has resulted in slow acceptance of e-banking among consumers. Furthermore, the satisfaction level of consumers is dependent on wide arrays of factors like quality of internet connection, awareness of service, perceived usefulness, perceived ease of use, attitude towards use, behavioral use to use, trust, self-efficacy, social influence, and resistance to change. Furthermore, all these factors are not investigated or explored much leaving a gap in ascertaining the relationship between e-banking and customer satisfaction (Titko and Lace, 2010). Based on this, it can be believed that customer satisfaction towards e-banking still needs extensive research in order to underpin the true relationship and thus analysis of wide arrays of factors in a critical manner (Al-Gahtani, 2007). 2.5: Technology Acceptance Model Davis (2009) believed that in order to ascertain why people accept or reject certain technologies, a number of models have been introduced by a number of researchers. The Technology Acceptance Model (TAM) is one of the highly sought after models used to study factors responsible motivating users to accept or reject technologies. The major purpose of using TAM is based on identifying reasons behind the acceptance or rejection of technologies. The primary reason behind discussing over TAM in this part of the section is based on the fact that acceptance of technologies is based on wide arrays of factors and principles and customer satisfaction rate is dependent on all those factors. Thus, it is important to have an overview of this model that can be further used in the formulation of questionnaires. Al Shibly (2011) believed that use of any information technology is based on behavioural intention to use it in the short as well as in the long run. The behavioural intention is influenced by users’ attitude and perceived usefulness of the system. Attitude and perceived usefulness are also affected and influenced by perceived ease of use. As per the Tam; greater perceived usefulness and perceived ease of use decide the intention to use the system along with the satisfaction level. In order to enhance the perceived usefulness and perceived ease of use; it is important for banks to use appropriate marketing strategies along with creating awareness in a positive manner. The usefulness of applying this model is greatly recognised in analysing the adoption of technologies in different settings like e-commerce (Gefen, et al, 2003), electronic learning (Arbough, 2000), and internet banking (Hasan, 2005). The application of this model helps in ascertaining the behavioural intention of customers that in turn helps in investigating their satisfaction level. The next part of the discussion presents an overview of the advantages and disadvantages of e-banking. 2.6: Advantages and Disadvantages of E-banking The general problem with the Saudi population is their reluctance for information technology. The government has been promoting technologies by incurring wide arrays of expenditure but still the overall acceptance rate of internet technology is not much high. In 2007, only 2.5% of the total population subscribed to broadband services. This indicates that the interest level for intent services has not been high in Saudi Arabia and this can be considered as a disadvantage in the context of e-banking. There is no doubt that e-banking offers a number of advantages in the form of reducing the operational cost for banks, reducing the transaction costs for consumers, easy accessibility, mobility of depositing and withdrawing money, and also collecting wide arrays of relevant data and information. From 2002 to 2007, a number of banks have introduced internet banking but only 12.6% of clients were using internet banking in 2006. This shows that the overall interest level of corporate and individual customers has not been that high in last few years in Saudi Arabia (Al Shibly, 2011). Sohail and Shaikh (2007) added that the major disadvantage of e-banking is based on little awareness level among consumers. The level of awareness is quite high among corporate but in the context of individual consumers; there is a difference in the awareness level. The advantages of e-banking are widely known but not many customers have been successful in availing those benefits. Overall, it can be said that the only disadvantage associated with e-banking is based on little awareness level and questions over the speed and perceived usefulness of internet technology. A number of researchers believed that internet technologies have the potential to shape the banking industry but requires proper awareness and implementation of marketing strategies to strengthen the overall benefits. This will result in higher satisfaction rate among Saudi customers (Al Sukkar and Hasan, 2005). 2.7: Factors Affecting E-banking Acceptance There are a number of factors associated with e-banking acceptance and these factors have significant impact on the customer satisfaction level. Quality of internet connection is the most important factor in facilitating the purpose of e-banking. Without a proper and fast internet connection, the use of e-banking is not possible. Though, the numbers of internet users in Saudi Arabia are not much but the dial up connectivity is quite fast facilitating the purpose of e-banking in last few years. Howcroft, et al (2002) stated that awareness factor also plays an important and crucial role in enhancing the acceptance of e-banking. In the context of Saudi Arabia, the awareness factor is not much among individual users but the same is moderately high among corporate customers. Furthermore, lack of awareness in terms of the benefit is the main reason behind customers’ reluctance to use e-banking services and solutions. Suh and Han (2012) believed that trust factor also plays an important and decisive role in enhancing the acceptance rate of e-banking and directly influencing the customer satisfaction level in the long run. Customers’ trust in online banking is very important as it helps in making the service more reliable and trustworthy. Furthermore, banks need to maintain honest communication with customers in order to win their trust. Social influence is another factor that that affects the online banking behaviour. Customers may have favourable or unfavorable experiences regarding online banking and positive or negative perceptions of others help in shaping the beliefs of customers. Though, computer efficacy is another factor that may decide the acceptance rate for e-banking but it does not decide the customer satisfaction rate in terms of using e-banking. Overall, it can be believed that discussed factors affect the acceptance for e-banking that in turn decides the customer satisfaction rate considering the fact that customer satisfaction is based on high degree of actual benefits compared to perceived benefits. 2.8: Summary The chapter presented an overview of e-banking, e-banking in Saudi Arabia, customer satisfaction and e-banking, technology accepted model, advantages and disadvantages of e-banking, and factors affecting the acceptance of e-banking and its relationship with customer satisfaction. It was found that customer satisfaction is based on wide arrays of factors and all those factors also play an important role in determining the acceptance for e-banking. The next chapter presents an overview of the research methodology. CHAPTER-3: RESEARCH METHODOLOGY 3.1: Introduction The chapter presents an overview of different elements of the methodology that will further help in achieving the proposed aim and objectives of the research. The chapter also presents reasons for selecting the discussed elements of the methodology. 3.2: Research Philosophy Saunders, et al (2007) stated that research philosophy defines the mindset of researchers. Research philosophy has been categorized into the positivism and anti-positivism philosophy. The positivism philosophy believes that realities cannot be changed and remain the same whilst the anti-positivism philosophy is based on challenging the existing realities by analysing the views and opinions of people affecting the realities. For the research work, the researcher will be using the anti-positivism research philosophy as the case study will be based on collecting data through interviews and surveys and in this regard, actual views and opinions of the participants will be required who may challenge the existing reality. 3.3: Research Approach Saunders, et al (2007) categorized research approach into the inductive and deductive approach. The inductive approach is based on analysing the realities and questions through observations and understanding of phenomena while the deductive approach is based on analysing facts and information through the use of statistical tools. The inductive approach moves from specific to general while the deductive approach moves from general to specific. The researcher will be using the inductive approach as it goes well with the chosen anti-positivism philosophy and also will help in analysing the views and opinions of others in a critical manner. 3.4: Case Study Approach Case study approach helps in adding strength to what is already known through past and previous research. Case study approach is based on empirical analysis examining limited number of issues in a critical manner. These studies are based on formulating research questions, selecting relevant cases, data collection tools, analysis of data, and preparation of report. A number of researchers have argued that case studies offer limited reliability or generality of findings while many believed that intense focus on few issues help in collecting relevant findings. The researcher will be using the case study of Alrajhi Bank for this purpose. 3.4: Data Collection Methods Saunders, et al (2007) claimed that data can be collected from two sources; primary and secondary. Primary data can be collected through surveys, interviews, observational studies, and focus group interviews whilst secondary data can be collected through past published academic books, journals, internet articles, and news papers. The researcher will collect primary data through surveys to be conducted on Saudi customers based on TAM parameters and interviews to be conducted on the banking official of Alrajhi Bank in Saudi Arabia. On the other hand, secondary data will be collected by referring to relevant academic and non-academic sources. 3.5: Sampling Saunders, et al (2007) stated that sampling is the process of identifying few participants from the available population and seeking their views and opinions. The researcher will be looking for a sample size of 70-80 respondents for the purpose of surveys while a sample size of 3-5 participants will be considered ideal for the purpose of interviews. Sampling will be done using snow ball sampling method where few known individuals will be requested to refer to few more and thus forming the sample size. 3.6: Research Design Saunders, et al (2007) believed that research design is the illustration of the findings and outcomes of the research work. Research design has been categorized into the qualitative and quantitative design. The qualitative design is based on the theoretical underpinning and presentation of data while the quantitative design is based on the use of statistical tools to ascertain numerical findings. The researcher will be using the qualitative research design to present the findings and outcomes of the research in a critical manner. 3.7: Ethical Considerations Blackburn (2001) stated that ethics play an important and crucial role in being honest and transparent and in this regard, the researcher will be forming an ethical approach. The researcher will not use the confidential data and information of the research participants without their prior consent. Furthermore, data and information will not be manipulated for personal benefit. Thus, all these ethical considerations will help in conducting the future research work in an honest and ethical manner. 3.8: Summary The chapter presented an overview of different elements of the methodology along with justifying the selection. The chapter also discussed the advantages and disadvantages of using the preferred elements of the methodology in the future research. References Aladwani, A.M., 2001. Online banking: a field study of drivers, development challenges, and expectations. International Journal of Information Management 21 (3), 213–225. Ajzen, I. (1991). The theory of planned behavior. Organizational behavior and human decision processes, 50(2), 179-211. Ajzen, I. (2002). 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