SERVICES ON SERVICE QUALITY AMONG UNITED STATES
INTERNATIONAL UNIVERSITY STUDENTS
SERVICES ON SERVICE QUALITY AMONG UNITED STATES
INTERNATIONAL UNIVERSITY STUDENTS
GAKERE MWANGI GAKERE
A Research Project Report Submitted to the Chandaria School of Business
in Partial Fulfilment of the Requirement for the Degree of Masters in
Business Administration (MBA)
STUDENT’S DECLARATION
This is my original work as the undersigned and it has not been submitted to any other
university, institution or other college other than the United States International University.
Signed: ______________________ Date: ____________________
Mwangi Gakere (ID 627944)
The following report has been conferred for examination with my approval as the selected
supervisor.
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All rights reserved. Any unwarranted reproduction, copying or transmitting of this project
report in any form or media such as recording, electronically or mechanically on any
information storage is strictly prohibited by the author and will be considered an a violation
of copyright.
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ABSTRACT
The main objective of this study was to evaluate the extent to which mobile services
provision has on service quality in commercial banks among university students. The
purposes of the research were; to determine the effects of mobile banking services on
empathy in service quality; establish the effects of mobile banking services on reliance in
service quality; deduce the effects of mobile banking services on assurance in service quality
and determine the effects of mobile banking services on responsiveness in service quality.
The researcher applied the descriptive research survey design and similarly, the target
population in the research was students of the United States International University (USIU)
which is located in Nairobi in Kenya. The sampling frame of the study was 5,932 students.
The study adopted stratified sampling procedure where the population was stratified into
undergraduate, masters and doctorate students. The Yamane sampling formula was adopted
to establish a sample size of 375. Data was collected through questionnaires which were
presented through self-administered print questionnaires. For analysis, the data was evaluated
using the Statistical Package for Social Sciences (SPSS) software. The researcher used
descriptive (measures of central tendency) and inferential (Correlation and regression)
statistics. The analysed data was further presented in tables accompanied by researchers’ own
interpretation.
In terms of empathy, respondents indicated that instructions using mobile banking services
are easy to follow. This means that the mobile banking services prompt influence students
decisions to use the services. The study found that there was a positive and significant
relationship between empathy and service quality.
In regards to reliability, the highest ranked statement was I fear that a transaction may not be
complete due to network problems. The findings were attributed to the poor networks which
are experienced among mobile phone users. The findings show a positive and significant
relationship between reliability and service quality.
In regard to assurance, the study found that respondents were worried about security of
mobile banking transactions. This finding suggest that security of mobile banking services
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are a significant factor for its use among students. There was a positive and significant
relationship between assurance and service quality.
In terms of responsiveness, the study revealed that mobile banking services provided
timeliness of services. The results revealed that there was a positive and significant
relationship between empathy and service quality.
The study concluded that empathy has no significant influence on mobile banking service
quality among USIU students; reliability has no statistically significant influence on mobile
banking service quality among USIU students; that assurance is the second most significant
dimension to influence customer service quality in mobile banking services and
responsiveness was the most significant attribute to influence services quality in banking
services.
The study recommended that mobile banking services providers should improve the bill
payments services through mobile phones; that mobile banking service providers should
improve on the service networks; that banks should undertake monitoring and evaluation of
the mobile banking services and that banks providing mobile banking services should
provide a wide range of mobile banking services to serve the diverse customer base.
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ACKNOWLEDGEMENTS
First, I would like to thank God almighty for his consistent care and guidance during this
research and writing of this report.
Also, I would like to acknowledge my supervisor Dr. Peter Kiriri for his consistent support
and dedication which ensured that the project writing was in accordance with all the
necessary requirements. He also shared his vast knowledge of the subject with me making
the compilation of the project a less arduous task.
My sincere love and appreciation is bestowed on my loving parents Mr. and Mrs. Gakere for
their encouragement, always believing in my abilities and providing all the financial and
moral support that ensured my complete dedication to achievement of this research project.
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1.3 General Objective .......................................................................................................... 5
1.4 Specific Objective .......................................................................................................... 6
1.7 Definition of Terms........................................................................................................ 7
2.1 Introduction .................................................................................................................... 9
2.2 Effects of Mobile Banking Services on Empathy in Service Quality ............................ 9
2.3 Effects of Mobile Banking Services on Reliance in Service Quality .......................... 14
2.4 Effects of Mobile Banking Services on Assurance in Service Quality ....................... 19
2.5 Effects of Mobile Banking Services on Responsiveness in Service Quality ............... 24
2.6 Chapter Summary ........................................................................................................ 29
3.4 Data Collection Method ............................................................................................... 32
3.5 Research Procedures .................................................................................................... 33
3.7 Chapter Summary ........................................................................................................ 34
4.1 Introduction .................................................................................................................. 35
4.2 Response Rate .............................................................................................................. 35
4.3 Demographic Information ............................................................................................ 36
4.4 Effects of Mobile Banking Services on Empathy in Service Quality .......................... 40
4.5 Effects of Mobile Banking Services on Reliability in Service Quality ....................... 44
4.6 Effects of Mobile Banking Services on Assurance in Service Quality ....................... 47
4.7 Effects of Mobile Banking Services on Responsiveness in Service Quality ............... 51
4.8 Customer Service Quality ............................................................................................ 54
4.9 Correlations .................................................................................................................. 57
4.10 Regression .................................................................................................................. 57
5.1 Introduction .................................................................................................................. 60
5.2 Summary ...................................................................................................................... 60
5.3 Discussion .................................................................................................................... 61
5.4 Conclusion ................................................................................................................... 67
5.5 Recommendations ........................................................................................................ 68
APPENDIX II: QUESTIONANIRE ..................................................................... 78
Table 3.2: Sample Size Distribution ....................................................................................... 32
Table 4.1: Response Rate ........................................................................................................ 35
Table 4.2: Ease of Using mobile Banking .............................................................................. 41
Table 4.3: Reliability and Adequacy of Balance Inquiry in Mobile Banking ........................ 41
Table 4.4: Learning Mobile Banking Services ....................................................................... 42
Table 4.5: Personalization of Mobile Banking Communication ............................................ 42
Table 4.6: Adequate Feedback During Mobile Banking Transactions ................................... 43
Table 4.7: Ease to Follow Mobile Banking Instructions ........................................................ 43
Table 4.8: Ease and Speed of Bill Payment Services by Mobile Banking ............................. 44
Table 4.9: Reliability of Mobile Money Transfer Functions .................................................. 44
Table 4.10: Dependability of Mobile Banking in Transactions .............................................. 45
Table 4.11: Incomplete Transactions and Network Problems in Mobile Banking ................. 45
Table 4.12: Network Disconnection During Transactions in Mobile Banking ...................... 46
Table 4.13: Speed and Affordability of Mobile Banking Services ......................................... 46
Table 4.14: Transaction Compensation in Mobile Banking ................................................... 47
Table 4.15: Practicality of Mobile Banking ............................................................................ 47
Table 4.16: Competence of Banks in Providing Mobile Banking Services ........................... 48
Table 4.17: Bank Staff Competence in Mobile Banking Services ......................................... 48
Table 4.18: Deception by Mobile Banking Service Providers ............................................... 49
Table 4.19: Consumer’s Interest in Mobile Banking Services ............................................... 49
Table 4.20: Personal Information Safety in Mobile Banking ................................................. 50
Table 4.21: Transaction Security in Mobile Banking ............................................................. 50
Table 4.22: Satisfaction of Mobile Banking Services ............................................................ 51
Table 4.23: Willingness of Employees to Provide Mobile Banking Services ........................ 51
Table 4.24: Prompt Service in Mobile Banking ..................................................................... 52
Table 4.25: Understanding Mobile Banking Service Consumers’ Needs and Wants ............ 52
Table 4.26: Convenient Operating Hours for Mobile Banking Consumers ........................... 53
Table 4.27: Staff Individual Attention by Mobile Banking Service Providers....................... 53
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Table 4.28: Attention to Problems and Customers’ Safety in Mobile Transactions .............. 54
Table 4.29: Consumer’s First Choice of a Bank ..................................................................... 54
Table 4.30: Recommending Banks to Peers ........................................................................... 55
Table 4.31: Consumers’ Patronizing their Banks ................................................................... 55
Table 4.32: Continuity of Using Banking Services ................................................................ 56
Table 4.33 Frequent Satisfaction in Banking Services Experiences ....................................... 56
Table 4.34: Overall Satisfaction with Banking Services ........................................................ 57
Table 4.35: Empathy, Reliability, Responsiveness, Assurance and Service Quality ............. 57
Table 4.36: Model Summary .................................................................................................. 58
Table 4.37: ANOVA ............................................................................................................... 58
Table 4.38: Coefficients .......................................................................................................... 59
Figure 4.1: Age Categories of Students .................................................................................. 36
Figure 4.2: Gender Distribution among Students ................................................................... 37
Figure 4.3: Education Levels among Students ....................................................................... 37
Figure 4.4: Frequency in Use of Mobile Banking Services .................................................... 38
Figure 4.5: Uses of Banking Services ..................................................................................... 39
Figure 4.6: Access of banking Services using mobile phones ................................................ 39
Figure 4.7: Banking Services Accessed by Students .............................................................. 40
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1.1 Background Of The Problem
As reported by the American Marketing Association (AMA), marketing is the technique of
planning and executing the understanding, valuing, sponsoring and sharing of concepts,
goods together with services to create exchange and rewarding individual and organizational
ambitions. One major aspect of the definition as compared to older definitions is that the
execution of marketing plans execution of marketing plans has been upgraded and given the
same priority as planning (Gronroos, 1989). Likewise, marketing can be defines as the
process by which companies establish value for customers and frame firm customer
associations so as to build value from customers as a response. Building profit oriented
commercial relationships with customers is the core of marketing (Kotler & Amstrong,
2010).
It is important to mention that the servqual model was developed by leading authorities in the
field of services marketing including Berry, Parasuraman and Zelithaml after a
comprehensive qualitative research as a scale of measuring service quality as perceived by
customers. This model is a five dimensional and is divided into a two part instrument
whereby the first and second parts measure customers’ expectations and attitude respectively
together with a variety of service aspects grouped as follows empathy, reliability, tangibles,
responsiveness and finally assurance (Parasuraman, 2004).
As electronic commerce (e-commerce) expand rapidly worldwide, consumers and marketing
companies can now interact better online thus establishing a competitive edge. These
companies are using the internet to improve customer interaction in order to sell more
products and services using alternative channels therefore reducing the cost of
communicating with customers. The key determinants of success or failure of any successful
modern business is not just about web presence or low price but rather focusing on delivering
electronic service quality (e-SQ). Companies progressively changed focus from e-commerce
transactions to e-services where all cues and encounters that occur before, during and after
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the transactions are improved in order to promote repeat purchases and build customer
loyalty, (Zeithaml, 2002).
For organizations to stay competitive, web technology is critical as it establishes uniquely
important positions than it did in prior generations of information technology. Gaining such
competitive advantage requires building on the principles of effective strategy. Successful
organizations in the future will use the internet as a substitute to the conventional ways of
competing rather than those that set their internet activities apart from their established
operations. This is favourable especially to established companies which are often in the best
position to merge internet and traditional approaches in ways that support existing
advantages (Porter, 2008).
Berry (1987) on the other hand contributed by stating that the main difference between goods
businesses and services businesses is that goods enterprises sell physical items and service
firms sell performances which are often labour intensive and the service provider is
incorporated in the service. In addition, services marketers deal with some special obstacles
that come from product intangibility and the people factor. These challenges propel the fast
improvement of services marketing as a sub-dominion of marketing. As the services
marketing discipline grows by great strides, it is good to remember some of the principal
ideas that can be used both now and in the future.
Banks collect surplus funds from savers and allocate them to people or companies with a
deficit of funds (borrowers). Therefore, they channel funds from savers to borrowers and
increase economic efficiency by promoting a better allocation of resources (Casu, Girardone,
& Molyneux, 2006). Financial services, money transfer, savings and credit provide the
backbone of a vibrant modern economy. The banking sector has used technology to enhance
its operations since the availability of telecommunications. Automated Teller Machines
(ATMs) have been introduced by banks at the front customer end to provide cash to clients.
Point of sale devices have been integrated with electronic cards to provide merchants with
the possibilities of processing sales directly to their bank accounts. The internet has
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introduced automated purchasing and the financial sector has responded with person to
person transfer and easier automated services (Batchelor, Kashorda & Sylla, 2009).
According to Chen (2013), online banking has over the years become popular as financial
institutions can deliver banking services using electronic channels causing a slackened
importance of conventional branch networks. Likewise, the fast growing penetration rate of
mobile phones has increased the importance of mobile banking. Consequently, banks that do
not offer desired mobile services may lose clients. The success possibility of mobile banking
is high as it has imitated the evolution of online banking. Knowing the factors that will aid
propel the service into advanced levels will need full understanding of consumer needs to
satisfy them competently. The study of service quality aided in making concrete conclusions
and the ways of implementing the service efficiently.
M-banking has been the evolutionary step to follow internet banking. Moreover, mobile
banking services such as SMS banking, thin client applications, or direct access to online
banking provide a full range of banking operations with the value of immediate accessibility
with reduced reliance on internet access (Laukanen, 2010). In addition, the improvement of
mobile telecommunications technology has spread the availability of mobile phones for users
even in the remotest part of the globe. Pre-paid tariffs as well as cheaply manufactured
phones from China has contributed significantly to the spread of mobile technology in
developing countries. Consequently, the number of mobile phone users has immensely
surpassed the number of people with bank account across the world (Tobbin, 2012).
Kenya’s finiancial sector currently comprises of fourty two licensed commercial banks with
several branches operating all over the country and one mortgage finance company. Among
the forty three financial institutions, thirty nine commercial banks and three mortgage finance
institution are privately owned while the remaining three commercial banks are controlled by
the govenrment. In addition, twenty five of the thirty nine privately owned banks and the one
mortgage finance institution are locally owned while fourteen are foreign owned (Central
Bank of Kenya, 2016).
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The sovreignity of the financial sector in the 1990s explained a shift of the banking sector in
Kenya from government control through exchange rate controls, credit controls, interest rate
controls in both small and large commercial banks. The removal of credit ceilings as well as
exchange rate controls created competition by the entry of new private banks and foreign
banks because of flexible licensing requirements by the government. The denationalization of
the banking sector has shown increased performance as dictated by the improved interest rate
margins. The net interest margins (NIM) of Kenya’s banking industry grew by 1.62 percent
from 2005 to 2009 and similarly the average lending and deposit rate during the period
between 2006 and 2010 were 14 and 4 percent respectively. As compared to other countries,
the financial sector assessment program indicated that Kenya recorded a NIM of 9.1 percent
as compared to other countries in sub-Saharan African countries which were at an average of
8.1 percent (Sahile, Tarus and Cheruiyot, 2015).
Kenya’s banking system has been characterized by dependability on information and
communication technology such as internet banking, mobile phone banking and agency
banking to successfully conduct operations. Furthermore, Kenya was the pioneer globally to
use a mobile money transfer service. M-Pesa, a product of a Kenyan telecommunication
company, Safaricom Limited derives its name from combining two words namely mobile
and pesa which means money in Swahili. The service allows mobile users to send and
receive money from each other, purchase goods and services, pay for bills, pay school fees
and more. This idea along with agency banking has enabled the larger majority of the
population who are unbanked population to access financial services on their mobile phones.
This concept has intensified competition in Kenya specifically based on the ability and
willingness to adopt and market the new technology (Sahile et al., 2015).
Furthermore, majority of banking services are delivered through a branch of a bank where
they are guarded against fraud and many other possible eventualities making most branches a
very expensive delivery mechanism. Consequently, this expense is transferred to clients and
the limited number of transactions especially in underdeveloped areas do not cover up for the
expenses in many financial institutions. This discourages many people in areas such as rural
Kenya to open up bank accounts as it is seen to be time consuming, bureaucratic and
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irrelevant. With mobile banking, even poor people with very basic education can be able to
operate a mobile bank account therefore it has become a huge success for telecommunication
companies such as Safaricom Limited (Batchelor et al., 2009).
1.2 Statement of the Problem
The decision by the management of a bank to improve their services using mobile services is
brought about by various challenges such as limited knowledge in the subject of service
quality. This is because mobile banking is a relatively new concept and not much research
has been done on the subject. M-banking is the future of banking and it serves both the lower
and upper pyramid clients therefore it can improve customer reach (Reeves & Sabharwal,
2013). Similarly, according to Kuada (2014), as the magnitude of competition intensifies
within the financial sector, the propensity of customers has shifted form monogamous status
(having a single active bank account) to a polygamous status (having multiple active bank
accounts). Furthermore, m-banking is much more secure, fast and easy to set up as compared
to opening up a physical branch. Knowing the effects of m-banking on service quality will
assist banks to know how best to implement the new technology and improve on their service
provision, customer reach, customer retention and financial performance.
Service quality is a relatively understudied subject and more specifically, few studies have
focused on the significance of new technology such as m-commerce on service quality.
Previous studies have primarily focused on the other forms of electronic bank services such
as internet banking and ATMs. Many of the studies in this subject have theoretical models
and frameworks developed to study consumer behaviour and satisfaction in Western context
and may not be appropriate in studying consumers in emerging markets. Therefore, there is
still a lot to learn about bank service management and consumer behaviour in Africa (Kuada,
2014).
1.3 General Objective
The general objective of the study was to evaluate the extent to which mobile banking
services provision has on service quality in commercial banks among United States
International University students.
1.4 Specific Objective
1.4.1 To determine effect of mobile banking services on empathy of service quality
1.4.2 To ascertain how mobile banking services influence reliability in service quality
1.4.3 To determine influence of mobile banking services on assurance in service quality
1.4.4 To establish how mobile banking services influence responsiveness in service quality
1.5 Significance of the Study
The study hoped to be of significance in mainly four areas which are mobile banking services
providers, employees working in mobile banking services, researchers and academia and
lastly mobile banking services customers.
1.5.1 Mobile Banking Services Companies
Top management in the financial services sector in Kenya by making recommendations to
improve service delivery to mobile banking services users by identifying the factors
influencing use of these services.
1.5.2 Mobile Banking Services Employees
The research wished to be of importance to employees in financial institutions by enhancing
their customer relations and service delivery as espoused by users of mobile banking
services.
1.5.3 Academia and Researchers
The study was significant to researchers and academia as it contributed to the body of
knowledge on mobile banking services and also suggested areas for further studies.
1.5.4 Customers of Mobile Banking Services
From the research, users of mobile banking services had an opportunity to inform financial
service providers on the issues that affect their use of mobile banking services therefore assist
mobile banking service providers to improve and benefit from the services.
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1.6 Scope of the Study
The study addressed mobile banking services and the effects that it has on service quality.
Specifically, it focused on how mobile banking services have impacted service quality in
banks as well as mobile money transfer services as observed by United States International
University (Africa) students. One limitation to the study willingness of some of the students
in the university to participate in the study. However the students were assured that the
information the questionnaire that they were filling was confidential and it will take only a
short period of time to fill. For methodology, the subject of mobile banking and also service
quality had a narrow scope of information however the made the questionnaire as simple as
possible to get information about mobile banking services used regularly.
1.7 Definition of Terms
1.7.1 Assurance
The knowledge, capability to inspire trust with confidence and courtesy of employees in an
organization (Parasuraman, 2004).
1.7.2 Commercial Bank
A bank is defined as a financial intermediary whose core activity is to provide loans to
borrowers and to collect deposits from savers (Casu et al. 2006).
1.7.3 Empathy
1.7.4 Reliability
The extent to which a service is available and functioning properly (Zeithaml, 2002).
1.7.5 Responsiveness
Willingness to help customers and provide prompt service (Lovelock & Writz, 2007).
1.7.6 Mobile Banking
Use of mobile phones or another mobile device to undertake financial transactions linked to a
client’s account (Anderson, 2010).
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1.7.7 Service Quality
The extent to which service expectations are met as compared to the perceived standard of
delivery (Palmer, 2014).
1.8 Chapter Summary
Mobile banking involves the use of mobile phones or another mobile device to undertake
financial transactions linked to a client’s account and it is an evolutionary step from internet
banking. Mobile banking provides an opportunity to banks and other financial institutions to
have a wide customer reach, more reliable service and lower operating costs. The quality
provided by a service provider is determined by the difference between the customer’s
promises or expectation form the provider and the perceived level of actual performance. In
order to measure service quality, a qualitative marketing research procedure known as
servqual assisted the study in understanding the impact of using mobile banking in providing
services. This study consequently expected to help managers in financial institutions to make
better decisions when incorporating mobile banking in their services as well as academicians
in knowing more on service quality.
Consequently, the remainder of the chapters were put together in the following order.
Chapter two introduced the proposed framework and hypotheses. Chapter three further
described the proposed method used to test the framework. In addition, chapter four set out
the results of the study. Lastly, chapter five contrived the summary, conclusion and
recommendations of the study.
2.1 Introduction
The chapter below put out the work of researchers from the past who have carried out the
same research on mobile banking (m-banking). This mainly covered literature in relation to
mobile banking more specifically on its impact on service quality. The areas of interest were
the different aspects of service quality including customer assurance, customer reliability,
customer empathy and finally the responsive change when mobile banking services are used.
Lastly, there was a summary of the literature review in the areas covered.
2.2 Effects of Mobile Banking Services on Empathy in Service Quality
Empathy is explained as the capability to recognize and understand another individual’s
emotions, thoughts and perspectives. It is also known as perspective taking and allows a
person to cognitively assess the situation from another person’s viewpoint and anticipate
their needs and motivations. Likewise, empathic responsibilities from service providers for
instance are linked to considerate actions because of feelings of associating with users who
are in need of help. Therefore, empathy encourages a person’s ability to associate with other
people and take up obligations that are appropriate for the circumstances (Itani & Inyang,
2015).
Likewise, Lancaster and Massingham (2011), specified that service clients have beliefs
regarding the scope that service providers seem to comprehend the service and is more
concerned about their individual needs and wants. Basically, service providers who are more
empathetic to customers benefit more.
2.2.1 Ease of Access
Balachandran (2004), explained that a service has to be accessible whether it is in terms of
location, telephone connections, hours of operation, adequacy of staff and other facilities
make for ease of access. Conversely, waiting is the oppoite of ease of access and it is not
completely available especially if the service is good and the demand for it is high.
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Palmer (2014), pointed out that many organizations industrialized their service processes by
moving from face to face encounters to the internet. Consequently, there were big savings to
the service provider and often benefits to customers as well. Mobile services or location
based services have the potential to improve efficiency and take service delivery more
successfully by allowing customers to access a service wherever they may be. Palmer further
stated that by saying that banking was at the forefront of the service sectors that sought to
migrate customers from face to face transactions to computer mediated transactions. M-
banking allows customers to access their bank accounts through mobile devices, check their
balance or conduct financial transactions. Similarly, the range of services can be undertaken
while mobile has increased with the development of mobile applications (apps) and mobile
phones are likely to evolve as ubiquitous payment devices.
Sangle and Awasthi (2011), contributed by saying that the circumstances of mobile CRM
(customer relationship management) services for banking on a person's lifestyle strongly
influenced his or her decision to adopt the application. For instance it is simpler for a
customer who has experience with Internet banking to learn mobile banking. Similarly,
consumers who have an involving lifestyle especially around gadgets are prompt more for
the use of mobile CRM services. Fundamentally, consumers use mobile channels because of
the opportunity it offers to satisfy the unique services needed.
Much of Africa’s economy remains informal and outside the government. Relying on cash
transactions, SMEs and households do not bank their takings at the end of the day, but rather
the cash moves on to other informal transactions. Even though there is a portion of these
transactions that may want to remain informal, conventional wisdom suggests that a majority
of the transactions would happily be conducted without cash if a viable system were
available. The uptake of M-Pesa seemed to support this. Increased ease of transaction would
enable more transactions and a growth in the economy (Batchelor et al., 2009).
2.2.2 Good Communication
Jenkins (2006) demonstrated that the value of good communication in mobile
communication is high and rising for a number of reasons. Principally, it is a form of close
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communication and being part of people's daily lives cannot be underestimated. Secondly, It
is highly targeted and timely and more so than most other most other methods of marketing
communications. The audience is opted in and it is valuable to know your target wants to
hear from you. Similarly, mobile communication has the benefit of easy interaction as well as
opportunities to personalize the message, both of which increase relevance. With mobile
communication, you can reach individual people on the go, a benefit no other media enjoys.
In terms of brand positioning, an association with a new medium can only be good in the
youth market. Lastly, it is measurable.
Lack of good communication between consumers and service providers may lead to negative
consumer outcomes, a problem that is even more pronounced in bilingual markets. Given the
negative impact of being served in a second language, managers need to understand under
what circumstances bilingual consumers are willing to switch to their second language, or
prefer service in their native language (Holmqvist, Vaerenbergh, & Gronroos, 2014).
2.2.3 Customer Understanding
Thakur (2014) described usability as the effort required to use a computer system specifically
mobile phone interface for banking. It concerned several aspects such as the ease with which
the user is capable of learning to manage the system, the ease of memorizing the basic
functions, the grade of efficiency with which the interface has been designed, the degree of
error avoidance and the general satisfaction of the user in terms of manageability. Therefore,
greater levels of usability was associated to lower levels of difficulty to manage that
functionality and consequently it had always been considered a key factor for predicting
intentions to use a system. Thakur also said it has a positive impact on the effective customer
satisfaction and company preference for future interactions. Usability reflects the perceived
ease of navigation, ease of conducting transaction, response time and interface simplicity.
Complicated systems taken up by mobile banking services providers that are not easy to
understand as well as bank staff who do not interact with clients on how to use these
technologies reduce customer satisfaction level. Consequently, banks need to maintain
advanced technologies but these technologies should not be complex to use. Banks need to
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know the customer characteristics in depth before providing mobile banking services
(Zameer, Tara, Kausar, & Mohsin, 2015).
The technology adaptation model (TAM) according to Sangle and Awasthi (2011) was
developed to explain the acceptance and usage of technology. This model explained that an
individual customer system usage is decided by their personal likelihood which is
consequently determined by the perceived benefits which is how much person believes that
using a system will improve their job performance and secondly the perceived ease of use
which is the magnitude a client thinks that utilising a system will be effortless. The TAM
model is illustrated below in figure 2.1 below.
Figure 2.1 Technology Adaptation Model
Source: Palmer (2014)
Tobbin (2012) further added on the technology adaptation model by stating that the measures
of perceived usefulness include performance increase, productivity increase, effectiveness,
overall usefulness, time saving and increased job performance. Also measures of perceived
ease of use have included, ease of control, ease of use, clarity, and flexibility of use.
Furthermore, a number of recent studies have adopted the TAM model to study the
acceptance of internet and mobile related technologies, such as mobile payments, mobile
banking and mobile commerce.
By contrast, resistance to change is similarly a normal consumer response as illustrated by
Cruz, Neto, Gallego, and Laukkanen (2010) and other marketers have the professional
1. Perceived
Behaviour
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responsibility to understand this process, given its relevance and the scope of the context of
applicability. Many products at the same time have record a high level of innovation and rate
of failure because people progressively resied the use of a new product by creating barriers to
adoption at both functional and psychological levels.
The authors further explained that there are three functional barriers. The first one was the
usage barrier that was related to a person's perception about everything that is in conflict with
their habits, routines and work. According to this perspective, this barrier was the most
common cause of resistance to innovation. Secondly, the value barrier was another functional
barrier, being defined as the consumer perceptions of a product's practical benefits, which
may be economic or simply pleasurable, taking into account the comparative cost between
similar or substitute products.
Cruz et al. (2010) further explained that the third risk is known as the risk barrier and is
related to the uncertainty surrounding the secure use of the innovation. One of the
psychological barriers involves tradition which is a consumer’s fear that innovation lead to
changes in their routine and reduce any control already in place. Essentially, the greater a
person's routine, the higher the barrier of tradition. Finally, the image barrier, which was the
positive or negative perception of the product image, company, brand, country of origin, or
the difficulty in using new technologies, may be an obstacle to the adoption of innovations.
Furthermore, Reeves and Sabharwal (2013) explained that m-banking solutions in
developing markets demonstrate cross side network effects that are strong and positive.
Consumers are most attracted to the platform that has the highest number of other consumers
with whom they can transfer airtime credits or money, and are also attracted to the platform
through which they can reach the highest number of commercial partners on the other side of
the network. At the same time, commercial users are most attracted to the platform with the
highest number of registered consumers. This effect is significant in a market like Kenya
where Safaricom Limited has over 70 per cent consumer market share, thereby creating by
far the most attractive cross-network effect for potential commercial users of the system.
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2.3 Effects of Mobile Banking Services on Reliability in Service Quality
As demonstrated by Palmer (2014), reliability means that the mobile services are dependable
and accurate. In addition, Lancaster and Massingham (2014) defined reliability as the
magnitude a service is delivered to customers to a certain regulation as guaranteed to a
provider. Customer always want to feel that what they are getting is worth what they have
paid for and any failure by the service provider will cause complaints by the clients.
Chen (2013) explained that mobile banking has great chances of success as it follows the
achievement of online banking therefore it is guaranteed as an effective way of receiving
financial business services. In essence, mobile banking combines mobile communication
technology and equipment to access various banking and financial services. Consequently,
mobile banking has become progressively adaptable, as users can access financial services of
banks without time, place, and space constraints.
In addition, Balachandran (2004) explained that services are bought before they are
experienced and a certain level of credibility that the service bought will be of the expected
level. If this does not happen, there will be a serious lack of satisfaction. Furthermore,
reliability deals with the extent of comfort one has that the promise will be redeemed.
2.3.1 Dependability
In m-banking, customer service is mostly delivered through technology-based channels like
call centres. Every service encounter is a moment of truth for the customer which may lead to
satisfaction or otherwise for the customer. As there is no physical interaction between service
provider and the customer, customers call the call centre for any complaint or information. A
critical satisfactory or dissatisfactory service encounter incident was the frontline employees'
response to a complaint of the customer. If there is inadequate information, it affects the
firm's image and customer satisfaction (Thakur, 2014).
On the flip side, Palmer (2014) pointed out that consumers who use computer mediated
service delivery experienced a number of post purchase paradoxes which a service provider
should seek to address. First, there was the issue of freedom verses enslavement of the
service as customers are likely to experience feelings of freedom when their use of new
15
technology gives them new levels of independence but on the other hand are likely to
experience enslavement when they become dependent on the technology. In addition, Palmer
pointed out that a consumer of technology may have mixed feelings of either control or
chaos. A feeling of control arises when consumers can use new technology and use it to
direct their activities but chaos results when the technology inhibits their activities and causes
turmoil.
Users of technological innovations such as m-banking generally decide if the comparative
advantage on the costs of adoption are higher than the advantages likely to be received. In
mobile banking CRM services, costs play a dual role. First, they benefit customers in terms
of cost as they do not need to commute to the bank as in traditional banking and all they need
is an internet connection just as internet banking. Secondly, the time aspect in mobile
banking is way more convenient to traditional banking and internet banking. Costs that are
non-financial such as psychological costs, search costs, and convenience costs benefit clients.
Monetary costs such as acquiring GPRS connection and other service costs on transactions
are likely to be perceived on the loss side (Sangle & Awasthi, 2011).
2.3.2 Expected Standards
An important point to consider is system quality. The quality of the system demonstrates the
access speed, ease-of-use, navigation and appearance of mobile banking. Because of the
constraints of mobile devices for instance small screens together with inconvenient input,
users may find it difficult to search for information with mobile banking. Thus, an interface
with powerful navigation, good design and proper feedback mechanism are essential to
consider in mobile banking. A below par system quality can make service providers to be
perceived as inadequate as they have not given enough time and money in developing the
mobile banking service. Consequently, this affects their integrity and goodwill as service
providers. Poor system quality decreased user expectation of acquiring positive outcomes in
the future because users will always encounter service interruptions and they will not be able
to make purchases or payments (Akturan & Tezcan, 2012).
16
Dosen and Zizak (2015) on the other hand explained that expectations for service quality
were likely to be based on perceptions of excellence. A customer’s identification of quality
attributes and the assessment of their relative importance can take different approaches. Each
customer encounter with a particular service is unique and influences the customer’s
perceptions of the service value and quality. Even though service quality is subjective, it is
integral as it represents the attifude, opinion and relationship of each customer with the
service as a result of a comprehensive long-term evaluation of the service company’s offer
and behavior. As such, service quality is associated with the level of fulfillment of
customers’ requirements, needs and expectations. Perceived quality is the customer’s
judgment of service superiority and excellence. It is actually the customer’s attitude, related
but not equal to satisfaction, which arises from comparison of customer service expectations
and perception of service.
Mobile banking service providers have expected standards which are used to mitigate
maoney laundering risk for mobile bank and securities account (M-BSA) services were
identified in the jurisdictions visited. First, innovative Know Your Customer (KYC)
procedures such as legal expectations to veify the customer’s physical location during
initiation of the transaction, alternative verification methods and restricted functionality.
Secondly, there is limited transaction amounts and imposed reporting threshholds. Third,
there are two to three factor authentification mechanisms which avoid unauthorised use of
existing M-BSA services. Also, there is customer profiling which is used to dininish the
elusiveness risk. The type of channel is also used as a mitigation measure. Lastly, there are
integrated internal controls that effectively manage risks of real time mobile transactions
(Chatain, Coss, & Zerzan, 2008).
2.3.3 Value for Money
The best organizations give customers reasons other than just price to care about their
services. Low prices do not automatically create high value. A customer’s financial burden
may be low, but the non-financial burden may be high. A long wait at checkout or inadequate
parking, for example, may steer customers to a competitor. Delivering strong value involves
increasing the most salient benefits and decreasing the most onerous burdens to target
17
markets. Investing in ongoing strategic innovation to increase benefits and ongoing
operational innovation to decrease burdens creates sustainable differentiation and customer
commitment (Berry, 2016).
Using m-banking reduces costs both for MFIs (micro-finance institutions) and for customers.
Previous studies have shown that mobile banking can lower the cost for banks of delivering
financial services by over fifty per cent by reducing back office operating costs and
upgrading old technology. In turn, mobile banking can help to reduce the high interest rates
that microfinance institutions must charge to cover the cost of administering small loans.
Direct and frequent contact with customers in inaccessible locations is expensive, but mobile
telephony reduces this cost. Mobile banking saves customers the cost of waiting in line at
banks, the opportunity cost of taking time away from work and the cost of transportation
(Murray, Liang & Gerald, 2010).
Sangle and Awasthi (2011) further explain that users without experience find it hard to
estimate actual costs of services such as GPRS. Customers do not get to know how much the
service cost unless they request for the charges as such cost are not well communicated when
the services are advertised. All this contribute to false calculation of costs as users are
unfairly charged for the same services in traditional or internet banking.
On the contrary, Reeves and Sabharwal (2013) differ by saying that mobile banking had
demonstrated a potential to deliver financial services to a wider base at a cheaper cost but
some customers may be difficult to reach. This is because the cost of mobile services remains
one of the biggest barriers for penetration of low-income sectors. Low income individuals
devote a considerable amount of their earnings to telecommunication services. Average
telecommunications customers spend two to three per cent of their income on these services
while low-income individuals in developing countries spend as much as ten to forty per cent
of their income on mobile services. Moreover, the size of the initial investment which is the
mobile handset is a barrier for non-users.
Reeves and Sabharwal (2013) further explain that while low-income clients’ use of mobile
banking has been promising, far more effort has been spent on registering new clients than on
18
teaching them how to use the technology. For example, while ninety per cent of the world's
population had mobile phone coverage in 2010, less than ten per cent of MFSs (mobile
financial services) users are low-income. Many of the ten per cent of MFS users, who are
low-income earners, use mobile finance for one or two months, but then significantly reduce
or stop using the service.
International remittance flows to Africa exceed development assistance and yet in 2005, 12
percent of all transactions were taken as transaction fees. M-commerce holds the potential to
reduce transaction fees to 4 percent, adding 1.6 billion dollars to today’s remittance flows
and to African economies. With lower transaction costs, international remittances are likely
to grow steeply (Batchelor et al., 2009).
On the contrary, the pursuit of service productivity can help companies reduce expenses and
increase profits in the short term. The effects on customer service and customer loyalty in
addition to long-term profits have not received as much attention as the cost savings that can
be achieved by implementing productivity enhancing strategies like lean service management
and automation. Although the goal of lean service management is to eliminate service waste
without sacrificing value for customers, in practice, conflicts between customer service and
cost efficiency are frequently resolved in favour of the latter especially in companies
predisposed to boosting their bottom lines through cost cutting. A sole focus on improving
service productivity can be counterproductive. The presence of an optimal level of service
productivity beyond which further cost reductions through automation can be detrimental to a
firm’s future sales and financial health (Parasuraman, 2010).
2.3.4 Accuracy
In accuracy, Reeves and Sabharwal (2013) demonstrated that low usage of mobile financial
services was due to the client's inexperience with and lack of trust in these technologies.
Low-income consumers fear mistakes could be made while conducting a transaction with a
machine and are confused about where to turn when something goes wrong. Another
constraint is the cost of the service. At first glance, the cost of banking transaction may seem
19
affordable, but when users transfer money to those outside of their mobile network or to an
unregistered user, costs escalate significantly.
2.4 Effects of Mobile Banking Services on Assurance in Service Quality
As described by Lancaster and Massingham (2014) assurance is the extent of trust and
confidence a consumer feels that the service provider is qualified to supply the service
especially in the provider's staff. If a client does not feel contented about the abilities of the
service provider, they will be unhappy. Palmer (2014) contributed by saying that the growth
of m-banking is possible to proceed only if customers see the significant benefits it offers. If
customers do not see the advantages of m-banking, consequently it is not likely that banks
will significantly increase resources used to support it.
2.4.1 Competence
Competence refers to the level of knowledge and skill of the person in contact. If the person
in contact is observed to be inadequately informed on matters relating to the service and the
company policies in that regard or is seen fumbling repeatedly to someone else, or trying to
hide his ignorance, there is dissatisfaction (Czinkota & Ronkainen, 2010).
Technological competence, also called technological readiness, consists of IT infrastructure
and IT professionals, and covers mainly technological aspects. With regards to mobile
commerce activities, firms equipped with IT, endowed with a certain infrastructure and
employing professionals who have knowledge of mobile commerce should be expected to
outperform firms that are not endowed with such resources. In addition, technological
competence has a positive effect on performance. Firms perceive enhanced performance if
they are well equipped in IT, when they have available infrastructure, and when they employ
professionals with the necessary knowledge and skills to conduct the activities required.
(Martin, Catalan & Jeronimo, 2012). Customers may also experience a paradox of
competence or incompetence as competence may arise out of the successful use of new
technology but incompetence when the technology either fails or is not fully understood.
(Palmer, 2014).
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Gurau and Ranchhod (2009) pointed out that the rapid development of wireless
communication came along with several advantages and disadvantages to both service
providers and consumers. For example, as compared to other electronic communication
channels like Internet, mobile devices have specific aspects that aid in highly personalised
marketing communication time wise, location and context. On the flip side, the ability to
locate and communicate with mobile phone users creates highly likely threats for users'
privacy.
Similarly in competence, one of the key challenges for any mobile enabled financial account
is the regulatory requirements regarding anti-money laundering (AML) and KYC. These
internationally set standards require those accepting deposits to ensure that they know who
the customer is both in terms of identity and physical address. There is considerable
discussion going on globally about mitigating the risk of fraud and misuse by limiting the
transactions and accepting initially lower set of criteria for identification with an opportunity
to upgrade accounts as more identification is proven (Batchelor et al., 2009).
Chatain et al (2008) contributed that forged documentation used to evade detection is
perceived as a serious risk in mobile financial services. The requirements to attain a mobile
phone are often very different than those to open a bank account. Some observers point out
terrorist financers and money launderers use aliases or third party names and information
even from the deceased. Alternatively, mobile phones may be passed off to terrorists and
money launderers by those sympathetic to their efforts. In addition, mobile phone theft is a
matter of interest in the case of terrorists or money launderers stealing a third party’s phone
and using it to transfer money in the hopes of it going undetected.
2.4.2 Trust
Yu, Balaji, & Khong (2015), defined trust as the willingness to rely on the other party
because of the belief, expectancy, or feeling that other party would act in the interest of the
trusting party. In the internet banking context, it can be defined as the willingness of the
customer to conduct transactions on the bank’s web site because of the belief or expectation
they have toward the bank and bank’s web site as a trusted party in fulfilling its obligations.
21
Trust demonstrates an ability to be freely accessible judged on the confidence towards
another person’s future behaviour. The three dimensions of trust are ability, integrity along
with benevolence. First, ability simply means that the providers of mobile banking services
have enough knowledge and skills to fulfil their tasks. On the other hand, integrity
demonstrates that mobile service providers deliver their promises. Finally, benevolence refers
to mobile service providers being apprehensive about not just their own concerns but others
as well. Perceived usefulness reflects the utility derived from using mobile banking and
initial trust affects perceived usefulness. Trust provides a guarantee that users will acquire
future positive outcomes and enables users to believe that mobile service providers have
enough ability and benevolence to provide useful services to them. (Zhou, 2011).
It is paramount to provide conditions of trust that can allow potential clients to overcome
such hurdles. For instance in m-shopping, product quality cannot be determined by touchable
aspects therefore transactions can be manipulated because security and privacy concerns and
a lack of trust is are likely to be observed. Trust means a customer has certainty in the service
provider’s abilities and honesty. Establishing these abilities and honesty relies both on the
shopper’s nature as well as the service provider’s attributes (Martin & Catalan, 2013).
Thakur (2014) pointed out that trust is a key construct in commitment trust theory where
scholars such as Morgan and Hunt showed trust is central to successful relationship
marketing. Trust exists when one party has confidence in an exchange partner's reliability
and integrity. Trust is an individual's confidence in the intentions and capabilities of a
relationship partner and the belief that a relationship partner would behave as one hoped.
Furthermore, the lack of trust can influence the way in which consumers see banks and
financial institutions and in particular consumers' attitudes to new forms of service delivery
via mobile.
In addition, Sangle and Awasthi (2011) have explained that aspects of risk and expectations
have blended in mobile commerce adoption. The physical separation of users with service
providers’ high importance to the trust between two parties. Users of mobile banking services
have to disclose confidential information such as telephone numbers and sometimes credit
22
card details to the seller in order to be provided a service. The domain of mobile services
trust can be defined as user's confidence or extent anywhere a particular mobile service is
considered to have no security and privacy threats. Menon and O’Connor who are scholars in
the field showed that trustworthy and efficient self-service technologies may cause customers
to accept confidently and identify with banks.
Murray et al. (2010), contribute by stating that a critical way that technology interface design
influence human decision making is by improving the trust that a user has in the technology.
Cooperative interactions with technology and opportunities for cooperation tend to
soubstantially enhance the trust that consumers are willing to put in technology.
2.4.3 Confidentiality
Mobile devices have particular features that assist in personalising marketing communication
individually and positional in comparison to other communication channels like the web.
Similarly, being able to access mobile phone users easily has created significant potential
threats for consumers’ privacy. Being private simply implies restricting access to individuals
and is controlled by logical and dynamic access regulation. Privacy also means being
selective on personal information that’s being put out which allows users to enjoy a private
life and maintain their social character. In today’s heavily connected society, having a
balance between private and social is becoming more difficult where information sharing
online very common. Total secrecy also suggests an introvert lifestyle which eliminates
benefits and flaws of communication and social involvement. (Gurau & Ranchhod, 2009).
If customers see the structures on the internet to be generally adequate for safe transactions,
they should be more likely to trust the multi-channel retailer's online operations, and should
also be more likely to make online purchases from the multi-channel retailer. In the mobile
banking context, security assurances promise the reliability of financial transactions, the
protection of individual privacy and transactional confidentiality. Therefore, the perceived
security assurance would improve customers' initial confidence in a service because clients
want to be protected from informational, financial, and other forms of risk and uncertainty.
Although there were advancements in internet security over the years such as digital
23
signatures, certificates and cryptography, online shoppers were found to be concerned about
security issues when purchasing products and services over the internet (Sangle & Awasthi,
2013).
2.4.4 Courtesy
Courtesy is defined as employee expressions marked by respect for and consideration of the
consumer and is generally synonymous with politeness. Courtesy fosters an immediate bond
between businesses and customers by developing emotional connectivity between customers
and employees. Courteous service is manifested through multiple forms of employee
behaviors, such as politeness, respect, consideration and friendliness of contact personnel.
(Li, Canziani, & Hsieh, 2016).
Babbar & Koufterous (2008) similarly explain that customers have been found to evaluate
quality of service based on the level of concern and civility, listening and understanding
demonstrated by employees. Furthermore, individual attention, cheerfulness, friendliness and
courtesy have also been recognized as determinants of customer satisfaction with the service
experience. Relational quality in service encounters refers to customers’ perceptions and
evaluations of service employees’ communications and behaviors such as respect, courtesy,
warmth, empathy and helpfulness, and involves customers’ feelings and emotional states
through interactions with employees.
However, what it is relatively unclear is the nature of the effect of service employees' actions
particularly their nonverbal behavior on customers' perceptions of service employees'
characteristics. This lack of clarity is unfortunate because research in the communication
field reveals that the nonverbal components are at least as important as the verbal
components of interpersonal communication in shaping the outcome of employee-customer
interactions. It’s also suggested that nonverbal communication, the form of communicating
thoughts and emotions without using words, accounts for nearly 70 percent of all
communication (Sundaram & Webster, 1998).
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2.5 Effects of Mobile Banking Services on Responsiveness in Service Quality
Responsiveness is the willingness to serve. In essence, a responsive person is willing and
happy to serve the customer and has the customer’s interest at heart. Responsiveness comes
form concern for the customer, a general interest in them, their comfort and needs. The sense
of satisfaction at the end of the visit would depend not so much on the quality of the product
which is indeed but on other factors like promptness and courtecy shown by the staff, the
general ambience of the place, respect and recognition shown (Balachandran, 2004).
Service firms that are great at problem resolution require to be accessible and respond with
promptness, competence, and courtesy. They are far more likely to repair the damage done to
their quality reputations than firms that take a casual “we will get to it when we can” attitude.
When the routine service becomes the non-routine service or when something goes awry, the
customer's sense of frustration is likely high and expectations for a quick or easy resolution
of the problem are likely low. Problem resolution is simpler in concept than in execution and
requires educating the customer in what to do when a problem occurs. It needs having
enough staff that are talented, resilient, and well trained. It needs pushing authority
downward so the problem can be resolved on the first contact with the customer. It requires
nurturing a core corporate value of being easy to do business with. Professional problem
resolution requires management to take the long view toward building a business rather than
the short view of maximizing profits next quarter (Berry, 1987).
2.5.1 Keeping Customers Informed
In essence, waiting for a service delivery at external sites such as a mobile portal differs
distinctively from waiting in a queue on company premises like a banking hall. While
standing in a line, customers can approximate wait time based on the length of the line and
the average time needed to serve each client. Similarly, mobile banking services providers
might also provide information about the expected delay or its causes. Conversely, customers
waiting elsewhere for service delivery cannot observe the service delivery process, nor do
they have information that could enable them to estimate the length of the wait. In addition,
customers waiting for online service delivery lack direct contact with service staff and rarely
receive detailed information about delivery times. Therefore, they suffer more uncertainty,
25
which is related not only to the period of waiting but also to the outcome of the transaction
(Demoulin & Souad, 2013).
Metters, King-Metters, Pullman and Walton (2006) explain that it is imperative that
companies facilitate customer feedback and find opportunities to correct any failure
situations that a delighted customer. In addition, this feedback procedure needs to be part of
the initial service design process. A key consideration focuses on empowering front line
personnel to remedy the situation immediately. Similarly, all attempts to rectify the situation
should occur at the time and place most critical from the customer’s perspective.
Effective communication can be particularly important when a company faces a crisis.
Services are much more variable than manufactured goods and occasionally services
organizations face major crises. Communication is critical to reassure customers that the
company can still be trusted and indeed, if handled well, a crisis can even add to a company’s
credibility (Palmer, 2014).
2.5.2 Prompt Service
Demoulin and Souad (2013) demonstrate that the understanding of customers’ reactions to
service delivery time has great importance. Transaction speed is one of the most important
service attributes for electronic banking. Similarly, another key dimension of e-service
quality is on-time delivery for online retailers and this has the greatest impact on customer
satisfaction. Delivery time even influences customers’ channel choice because if customers
perceive that an online purchase will result in shorter delivery times than offline purchases,
they change to online services.
On the contrary, Chatain et al. (2008) suggested that prompt service of mobile banking can
pose as a threat. The fact that transactions can be performed virtually anytime and any place,
is percieved to be a boon to terrorist financers and money launerers. This new means of
access to transferring funds both within and outside jurisdictions from, in the case of money
laundering terrorist financing and criminal organizations poses problems.
26
Long waits have been shown to be a major source of customer dissatisfaction. Customer’s
dissatisfaction with long waits affects both their overall satisfaction with the service and their
future intentions to use providers. However, there are many ways of dealing with the long
waits and queues; an attempt should be made to understand the psychological world of
consumers when they enter the service process. With younger people expecting gratification
in a wide range of goods and services, their expectations of delay may be quite different from
thos of an older customer who has long memories of waiting for goods and services.
Secondly, organizations should be careful about the promises they make with regard to the
queing time. Where expectations of a short wait are held out, any lengthening of the waiting
tim will be percieved as a service failure (Palmer, 2014).
2.5.3 Willingness to Help Customers
A responsive person is willing and happy to serve the customer and has the customer’s
interest at heart. This is observed by what they say, do and also the body language. Similarly,
a responsive person does not find the first available excuse to say no to a customer’s request.
Responsiveness can be tested by for instance asking the cashier for change and this factor
does not arise when the service is provided through automation (Balachandran, 2004).
Ku, Kuo and Chen (2013) on the contrary a level of service that exceeds expectations may
result in delighted customers and influence subsequent behaviour positively. A feeling on
their part that the performance has been overdone is more likely to influence them negatively
as the hard sell might be in a sales setting. Service deemed to be over-attentive is that which
goes well beyond most service protocols and may even be considered by typical customers to
be a denial of their freedom of action and choice. Unusual and atypical behaviour by service
providers may trigger cognitive or affective responses that call the quality of the exchange
into question.
Service fairness has the highest overall effect on customer loyalty, higher than relationship
quality and service quality. This shows that fair treatment of customers is the most crucial
factor for creating customer loyalty. If customers feel good about the treatment they get from
their service provider, they are likely to perceive a higher service quality for services
27
rendered and they will be more willing to enter a long-term relationship with the provider
(Glovanis, Athanasopoulou, & Tsoukatos, 2015).
Banks should focus more on customer perceptions, especially about the safety of
transactions, employee behavior, employee courtesy, and employee ability to answer the
customers’ questions. Employees should always be prepared and willing to help their
customers and stay polite in all their service deliveries to meet customer expectations. The
banking organization should design service standards that promote reliability to customers,
consistency in service delivery and not promise more than what they are able to deliver
(Islam, Ahmed, & Razak, 2015).
In essence, decentralising service performance puts a different perspective on the role of a
centralized staff marketing department. In a services company, everybody is responsible for
the customer. Productive staff marketing departments are those that are very smart in getting
their staff in the organization to practice marketing. A marketing department's role is to
facilitate good marketing and practicing marketing is everyone's responsibility (Berry, 1987).
In order for banks to retain their customers and as well increase the level of customer
satisfaction, they should train their staff on how to deal with customers in a better way. This
can be done by opening up help centres for the customers where customers can get guidelines
that will aid them to fully benefit from the utility (Zameer et al., 2015).
Strandberg, Wahlberg and Ohman (2012) in addition stated that all employees in contact with
customers are indeed engaged in marketing the organization and its products. Employees
outside the marketing department who are in contact with customers are considered part-time
marketers. In banking, a customer centric organizational climate is important to perceived
service quality. This includes how the customer is met and whether the customer is treated
warmly by everyone in the organization.
Also in readiness, personal needs, site organization and user friendliness have been found to
have both positive and compelling influence on the satisfaction level of customers. The
management of banks should evaluate their performance individually, in association with the
28
e-service quality. The management of online banking should also require being conscious
about the role and significance of the services which have been provided conventionally to
encourage enduring relationships with the customers (Raza, Jawaid, & Ayesha, 2015).
The real opportunity for most services firms is to be simultaneously high tech and high touch.
High technology can lower service delivery costs, speed up service delivery, control quality,
and free service personnel to provide better and more varied services. High touch capabilities
can mean more customized service, superior problem resolution, effective cross selling, and
greater customer confidence in the technology as there will be personnel in case of
technology failure. For instance, the growth of electronic funds transfer (EFTS) has made
capable personal service more important in banking, rather than less important. This is
because EFTS results in fewer face to face encounters between financial institutions and
many of their customers. It means fewer branch opportunities to cross sell services or
impress customers. Accordingly, it is all the more important to handle the face to face
opportunity well when it arises. Electronic banking also makes richer the opportunity to
compensate for the depersonalizing aspects of technology with superior personalization of
service when it is a banker and not a bank machine that the customer requires. Identifying
and then implementing the optimum mix of high tech and high touch is a priority marketing
opportunity in many service organizations today (Berry, 1987).
An increasing business problem for micro finance institutions is the inadequacy of current
staff training. As micro finance institutions in rural areas grow, the staff in these areas need
practical, timely, as well as accessible training. One potential solution is distance learning, an
alternative to face-to-face training. Virtual training allows for inexpensive, continued follow-
up. The lower cost of training also reduces the dependency on donors to subsidize training.
Similarly, distance learning reduces the time lag between training and implementation.
Finally, distance learning encourages leadership and personal accountability for independent
learning by staff members. An essential component of any training is cultural sensitivity and
specificity. A training curriculum that recognizes the specific cultural context of the clientele
will be more successful in creating and retaining a trusting together with a loyal client base
for the firm (Reeves & Sabharwal, 2013).
29
One of the tools that have emerged as an important means for providing higher customer
satisfaction in the banking industry are customer call centres. In call centres, human agents
together with automatic voice response machines handle computer assisted telephonic
communications with customers. Organizations use call centres for establishing direct
communication with their customers and most importantly providing customer care services
in order to achieve high levels of customer satisfaction. A majority of business organizations
see call centres services as a potentially effectual means of keeping customers happy and
satisfied and also gain a competitive advantage (Jaiswal, 2008).
2.6 Chapter Summary
In the provision of mobile banking services to clients, there are mainly three perspectives that
are looked into when considering service quality which are empathy, reliance along with
assurance. Empathy refers to the extent which providers of a service understand a consumer's
needs, ease of access to the service being provided as well as communicating the service.
Secondly, reliance refers to the extent to which a service can be depended on and are also
accurate thus are able to see the value for their money. Lastly, assurance refers to the
courtesy, credibility and security of mobile services provided. Financial services are sensitive
as issues of trust of the service provider with the clients must be guaranteed. The following
chapter described the proposed method that will be used to test the framework in the
research. This provided a much better understanding of mobile banking services.
30
3.1 Introduction
Investigate the effects of mobile banking services on service quality among United States
International University students was the purpose of the study and this chapter proceeded to
explain the research methodology that was used in this study. It outlined the procedure of
collecting the data in particular the choice of the research design, the population and
sampling design in the study, data collection methods and research procedures used. Finally,
it explained the data analysis methods employed in the study.
3.2 Research Design
A research design is a plan for addressing the research objectives or hypotheses (McDaniel &
Gates, 2010). The study implemented a descriptive research design and as described by
(Burns & Bush, 2010), a descriptive research is undertaken to find out questions such as who,
what, where, when and how. In addition, the research design also collect in depth information
about the population under study. It is important as well to state that the independent
variables in the study were empathy, reliability, responsiveness and assurance whereas
service quality was the dependent variable.
3.3 Population and Sampling Design
3.3.1 Population
By definition, population is the cumulative of all the elements that share some common set of
characteristics and that comprise the universe for the purposes of the marketing research
problem (Malhotra, 2007). The population of the study that was examined were students
from the United States International University-Africa. As at August 2015, the university had
a total of 5,932 students enrolled (United States International University–Africa, 2015) and is
located in the Kasarani area, in the outskirts of Nairobi City, Kenya. These students come
from 65 nationalities representing 15 % of international students. It was easier to carry out
the research from a sample rather than from the entire organization due to the logistical
aspect and time constraints.
Source: USIU (2015)
3.3.2 Sampling Design
3.3.2.1 Sampling Frame
A sampling frame is some master list of all the sample units in the population (Burns &
Bush, 2010). McDaniel and Gates (2010) describes the sampling frame as a list of the
members or elements of the population from which units to be sampled are to be selected. It
defines the next step after the clear definition of the population. Therefore, the sample frame
for this particular study comprised of students in different levels of education at the United
States International University-Africa. Similarly, the listing of the sample frame was drawn
from their most recent, publicly released enrolment data that was found on the official
university website. There were a total of 5,932 students enrolled at the university whose
distribution among levels of education and further among schools of study as well as gender
are summarised as shown in Table 3.1.
3.3.2.2 Sampling Technique
The researcher adopted the stratified sampling procedure to identify the study participants.
Stratified random sampling procedure involves categorising the target population into
homogenous groups (McDaniel & Gates, 2010). In this study, stratified sampling was
adopted by dividng the student popualtion into Undergraduate, Masters and Doctorate
Student groups. This procedure was deemed the most appropriate as it allowed the researcher
to give an equal chance of representation to each member of the popualtion into the sample
size of the study.
3.3.2.3 Sample Size
According to Yamane (1976), the sample size can be determined by the formula:
n= N
n = sample size,
N = study population,
e = tolerance at preferred level of confidence, take 0.05 at 95 % confidence level.
Thus the sample of USIU students shall be;
n = 5,932 / 1 + (5,932) 0.0025
= 5,932 / 15.83
= 375
The sample size for each category was calculated as follows: the population of individual
category of students divided by the total population of all categories (target population)
multiplied by the sample size of 375 thus the sample size of the study becomes 375.
Population of the individual category of student’s × 375
Total target Population
Strata Population Sample Size
3.4 Data Collection Method
The researcher opted to collect primary data through the use of a structured questionnaire
developed by the researcher (See Appendix 2). The questionnaire was deemed the most
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appropriate tool for data collection due to the large sample size. The questionnaire has been
adopted in past studies by (Sagib & Zapan, 2013) and (Bonke, 2015) in measuring service
quality. Section A of the questionnaire captured the demographic information such as the
age, gender as well as questions that captured information that would give an idea of the
nature of the mobile banking consumer with respect to how they consume mobile banking
services. Section B comprised of questions that measured the effects of mobile banking
services on empathy. Section C comprised of questions that measured the effects of mobile
banking on reliance. Section D of the questionnaire captured questions based on the effects
of mobile banking services on assurance and section E comprises of questions based on the
effects of mobile banking services on responsiveness. Section F represents the customer
perceptions of service quality. Sections B, C, D, E and F are close ended questions which are
based on a 5 point Likert scale. Where 1=Highly Reject, 2=Reject, 3=Neutral, 4=Accept and
5=Highly Accept
3.5 Research Procedures
The researcher conducted a pre-test to establish the reliability of the instrument. A pre-test
was done by randomly selecting 20 respondents from the sample size. The pre-test of the
instrument was done by administering two tests to the same respondents and correlating the
scores from the two tests. The second test was administered after a duration of one week. The
reliability of the scale was tested using Cronbach’s alpha. According to Arasli, Ekiz and
Katircioglu (2008) Cronbach Alpha values greater than 0.70 are deemed acceptable. The
reliability of the instrument was established at 0.73 (73%) reliable.
The researcher personally handed out the questionnaires in 4 already seated class rooms.
However, the researcher had to seek an audience with the relevant lecturers presiding over
the lessons in those classrooms to seek their authorization. This facilitated time saving and
convenience as compared to conducting the exercise in terms of a collective group of
students in one place. The researcher requested the students to fill the questionnaires in
approximately 5 – 7 minutes so as not to completely disrupt normal learning. The students
were similarly assured that their feedback would be handled in the strictest of confidence and
professionalism on the part of the researcher.
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In addition, the researcher handed out the questionnaires in the school library to the students
who were willing to fill in the forms. The researcher approached students in the library and
politely int