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It has been observed that the incredible growth of Internet use by individuals as well as business organizations has altered the competitive arena, which is quite unique and considerably different from that of the traditional, physical marketplace. Accordingly, the distinctive character of a virtual market has prompted companies to alter their strategies of conducting business with consumers. The banking industry is no exception. Numerous banks have already been employing the Internet as an alternative service delivery channel (Such banks are referred to as e-banks hereinafter.) to traditional ones, such as face-to-face and telephone banking, in providing their customers with a variety of financial services. It has been pointed out that the introduction of internet banking services could offer both bankers and customers diverse benefits (Broderick and Vachirapornpuk, 2002). For instance, the direct interaction between the customer, and the e-bank’s Web site or employees over the Internet enables the e-bank to lower its operating and fixed costs by reducing the number of employees, branch offices, and other physical facilities while maintaining a high quality level of customer service. These cost benefits could make favorable conditions for the e-bank to provide customer services with lower fees and higher interest rates on interest bearing accounts than traditional brick-and-mortar banks (e.g., Gerlach, 2000; Jun and Cai, 2001).
Thus, in order to take advantage of this new information technology, most of the traditional banks have already invested a huge amount of money in the e-banking infrastructure and served their customers through multiple service delivery channels. This financial market change creates even more stiff competition than ever before among e-banks. Moreover, e-banks have been facing increased challenges from nontraditional institutions, such as money management companies, securities companies, and insurance companies, erosion of product and geographic boundaries, and changes in consumers’ financial awareness. This unprecedented competitive market situation presents e-bankers with severe marketing and operations challenges.
Unfortunately, although many e-banks have long centered their attention on improving their internet banking service quality, they still appear to be lagging behind their customers’ ever increasing demands and expectations, and struggling with retaining and expanding their loyal customer base. Obviously, to compete successfully in such a highly competitive e-banking industry, the banks should provide customers with high quality service (Mefford, 1993). In doing so, e-banks should thoroughly understand what dimensions are utilized by customers in evaluating internet banking service quality. Then, the banks can effectively take appropriate steps to enhance their internet banking service quality, and customer satisfaction and loyalty.
Up to now, a great deal of literature has identified key dimensions of customer service quality, customer satisfaction, and customer loyalty in the setting of traditional banking, where human interactions between customers and bank employees are dominant (e.g., Baumann et al., 2005; Beerli et al., 2004; Calik and Balta, 2006; Ehigie, 2006; Veloutsou et al., 2004). However, very little research has addressed those issues in the banking environment, where non-human interaction is a primary service delivery and communication channel (e.g., Flavian et al., 2004; Jabnoun and Al-Tamimi, 2003; Jun and Cai, 2001; Maenpaa, 2006; Siu and Mou, 2005).
Moreover, these studies have been primarily taken in the context of North America and Europe (Daniel, 1999; Mols, 2000; Pikkarainen et al., 2004) and to a lesser extent in other regions including a mix of developed and developing countries, such as Singapore (Tan and Teo, 2000), Taiwan (Shih and Fang, 2004), Malaysia (Suganthi and Suganthi, 2001), and Thailand (Jaruwachirathanakul and Fink, 2005).