ELECTRONIC MARKETING IMPACT ON BANKING SECTOR OF PAKISTAN
(A Customer Behavior Perspective)
Ph. D
Dissertation
Submitted
by
Muhammad Imran Khan (Ph. D Scholar)
Department of Management Sciences QURTUBA UNIVERSITY OF SCIENCE AND
INFORMATION TECHNOLOGY DERA ISMAIL KHAN
KPK, PAKISTAN 2012
APPROVAL SHEET
A dissertation Entitled “Electronic Marketing Impact on Banking Sector of Pakistan: A
Customer Behavior Perspective” submitted by Mr. Muhammad Imran Khan be accepted in
partial fulfillment of the requirement for award of the degree of Doctor of
Philosophy in Management Sciences.
APPROVED BY:
Supervisor & Internal Examiner: _________________ Dr. Qadar Bakhsh Baloch
Assistant Professor,
Department of Management Sciences,
Islamia College University, Peshawar.
Co-supervisor & Internal Examiner: _______________ Prof: Dr. Khair-uz-Zaman
Dean of Sciences,
Gomal University, D.I.Khan.
External Examiner: _______________ ______________________
Pakistan
External Examiner: _______________ ______________________
Foreign
External Examiner: _______________ ______________________
Foreign
DEPARTMENT OF MANAGEMENT SCIENCES Qurtuba University of Science & Information Technology
D. I. Khan, KPK (PAKISTAN) 2012
i
Table of Contents
Chapters Heading Number
Title Page No
Remarks
Chapter-1
INTRODUCTION
1.1 General 1 1.2 Background of the Research Study 4 1.2.1 Pakistan’s Internet and Communication
Technology Background 4
1.2.1.1 Mobile Usage in Pakistan 6 1.2.1.2 Internet in Pakistan 7 1.2.2 Pakistani Banking Sector 11 1.2.3 Online Banking in Pakistan 16 1.2.4 Review of internet Banking Research 18 1.2.5 Islamic Banking in Pakistan 25 1.2.5.1 Islamic Commercial Bank Meezan Bank
Limited Pakistan 26
1.2.5.2 Conventional Commercial Bank– Citibank Pakistan
27
1.3 Significance of the Research 29 1.4 Statement of the problem 29 1.5 Objectives of the Research 29 1.6 Research Methodology 31 1.7 Theoretical Framework 32 1.7.1 Terminologies 32 1.7.2 Theoretical Framework/ Model 35 1.7.2.1 Online Banking Environment Theoretical
Model 35
1.7.2.2 Online Banking Services Theoretical Model 36 1.7.2.3 Research Model of User Acceptance of
eMarketing 38
1.8 Limitations of the Research 39 1.9 The Roadmap of the Study 40 1.10 References 44
Chapter-2
REVIEW OF THE RELATED LITERATURE
2.1 Theoretical Background 45 2.1.1 Doctoral Thesis 46 2.1.2 Research Articles and Related books 49 2.2 Definition of Working Concepts 58 2.2.1 The Nature of Services 58 2.2.2 Conventional Services Quality 60 2.2.3 Literature on Conventional Banking Services
Quality 62
2.2.4 Electronic Services (E-Services) 63 2.2.4.1 The Nature and Features of E-services 63 2.2.4.2 Electronic Services Quality 64 2.2.4.3 Online Systems Quality 65 2.2.4.3.1 Definition and Importance in Relation to the
Study of E-service Quality 65
ii
2.2.4.3.2 Literature on Online Systems Quality 66 2.2.5 E-SQ (E-S-Qual and E-RecS-Qual) Instrument
for Measuring Online Services Quality 68
2.2.6 The Online Environment 70 2.2.6.1 Formational design of a website 70 2.2.6.2 Website plan guidelines 72 2.2.7 Customer Online Services 74 2.2.7.1 Structural design of Customer Service 75 2.2.8 Technology Acceptance Model and Associated
Studies 77
2.2.9 Conceptualization 79 2.3 References 89
Chapter-3
RESEARCH METHODOLOGY
3.1 General 95 3.2 Nature and Type of Research 97 3.2.1 Nature of Research 97 3.2.2 Type of Research 97 3.2.3 Statements of Research Questions 98 3.2.4 Sources of Data 99 3.2.5 Research Instruments 99 3.2.6 Sample Design 100 3.2.6.1 Sample Survey 100 3.2.6.2 Selection of Sample 101 3.2.6.2.1 The Population 101 3.2.6.2.2 The sampling Frame 101 3.2.6.2.3 Sample Design 102 3.3 Collection of Data 104 3.4 Analytical Framework 104 3.5 Analytical Techniques 105 3.5.1 Interviewing 106 3.5.2 Questionnaire 107 3.5.3 Field Operation 108 3.6 Limitations 108
Chapter- 4
DATA COLLECTION
4.1 CASE ONE: Online Environment of Meezan
Bank Pakistan (www.meezanbank.com) 111
4.2 Customer Service of Meezan Bank Pakistan 113 4.3 CASE TWO: Online Environment of Citibank
Pakistan (www.citibank.com.pk) 117
4.4 Customer Service of Citibank Pakistan 120 4.5 User Acceptance of eMarketing Data
Collection 123
4.5.1 Response Rate 125
4.6 References 125
iii
Chapter-5
DATA ANALYSIS 5.1 RQ1: How can the online banking environment
(web site) be described in web based marketing?
126
5.1.1 Within-Case Analysis of meezanbank.com 126 5.1.2 Within-Case Analysis of Citibank.com.pk 128 5.1.3 Cross-Case Analysis (Meezanbank.com vs.
Citibank.com.pk) 130
5.2 RQ2: How can customer services within online environment are described in web based marketing?
134
5.2.1 Within case analyses of www.meezanbank.com.pk
134
5.2.2 Within case analyses Citibank.com.pk 135 5.2.3 Cross-Case Analysis (Meezanbank.com.pk vs.
Citibank.com.pk) 138
5.3 User Acceptance of eMarketing Findings 143 5.3.1 Descriptive Results 143 5.3.1.1 Demographic Classification of the Respondents 143 5.3.1.2 Descriptive Statistics of the Research Variables 146 5.3.2 Testing of Hypotheses 147 5.3.2.1 Demographic Impacts 147 5.3.2.2 Prediction of the User Acceptance of
eMarketing 154
5.4 References 158
Chapter-6
CONCLUSIONS AND RECOMMENDATIONS
6.1 General Discussion 159 6.2 RQ1: How can the online environment be
described in web based marketing? 160
6.3 RQ2: How are such websites used for enhancing customer service in web based marketing?
162
6.4 User Acceptance of eMarketing Conclusions 164 6.5 Implications & Future Directions 166 6.5.1 Implications for Practitioners 167 6.5.2 Implications for Theory 168 6.6 Recommendations for further Research 168
Bibliography 172
iv
List of Tables
Chapters Table Title Page
No Remarks
Chapter-1
1.1 ICT indicators of selected countries in Asia pacific region.
6
1.2
World internet usage and population statistics 8
1.3 Internet Usage and Population Statistics of Pakistan 10 1.4 Pakistan telecom sector- internet- historical data and
forecasts 10
1.5 Scheduled banks Pakistani and foreign 13 1.6 Scheduled banks and their reporting branches by
group 14
1.7 Scheduled banks operating in Pakistan 15 1.8 Review of internet banking 19
Chapter-3 3.1 Distribution of sample respondents 103
Chapter-5
5.1 Variable of the speed 130 5.2 Variable of content and design 131 5.3 Variable of interactivity 132
5.4 Variable of Navigation 133
5.5 Variable of Security 134
5.6 Properties of Trustworthiness 138
5.7 Properties of Communication 139
5.8 Properties of convenience/ Accuracy 140
5.9 Properties of Feedback and Complaint management 140
5.10 Properties of Efficiency 141
5.11 Properties of Accessibility 142
5.12 Properties of Customization 142
5.13 Classifications of Groupings of Respondents across Gender
143
5.14 Classifications of Respondents across Qualification
144
5.15 Classification of Respondents across City
144
5.16 Groupings of Respondents across Age
144
5.17 Groupings of Respondents across Income
145
5.18 Descriptive Statistics 146 5.19 ANOVA Statistics for Differences based on City
147
5.20 Statistics on ANOVA for the Differences due to 149
v
Qualification 5.21 Statistics on t-Test for the Differences due to Gender
150
5.22 Statistics on t-Test for the Differences due to Age
151
5.23 Statistics on ANOVA for the Differences due to Income
152
5.24 Showing the Correlation Statistics 154 5.25 Showing the Models Summary of Regression 156 5.26 ANOVA 156 5.27 Coefficients 157
List of Figures
Chapters Figure Title Page
No Remarks
Chapter-1
1.1 ICT indicators of selected countries in Asia Pacific
5
1.2 Internet users in the world by geographic regions
8
1.3 Year wise entry of players 25
1.4 Theoretical Framework 38
Chapter-2
2.1 Total perceived quality 60
2.2 Classification of internet banking services 68
2.3 Model for measuring the quality of online banking services
69
2.4 Research Model 88
Chapter-3 3.1 Research Model 105
List of Annexes / Appendices
S No Annexure Title Page No
Remarks
1 Annexure- I
Online Banking Acceptance Questionnaire 188
2 Annexure-II
Focus Group Interview Guide 191
3 Annexure-III
Focus Group Interview Guide 195
ABSTRACT
Key Words: Electronic Marketing, Web Based Marketing, Online Banking
Environment, Web site, Online Banking Services, Customer Behavior,
Banking Sector, Pakistan.
This thesis aims to provide a better understanding and measurement of electronic
marketing concepts, online banking acceptance and its impact on banking sector of
Pakistan from customers’ behavior perspective. This research study has been divided into
two parts. Initially for achieving qualitative aspect, a cross-case analysis two case studies
regarding Meezan and Citibank have been considered from leading Islamic and
conventional banks of Pakistan. And data has been collected on the basis of a focus group
interview (Annexure-II, III) from banking professionals, computer experts and customers.
This purpose is achieved via two research questions with focus on “online banking
environment” (website) as well as the “customer services” within this online
environment.
While in second part for exploring the quantitative nature of this research, researcher has
implemented “Technology Acceptance Model” (TAM), for the measurement of user
acceptance of eMarketing. On the basis of a focus group interview with banking
professionals, TAM literature and e-banking studies, researcher developed a model
indicating online-banking acceptance among banking customers in Pakistan. The model
was tested with a survey sample of 800 respondents and got 84% responses. Descriptive
statistics of demographical variables indicate 70.2% male and 29.8% female’s response.
A total of 88% respondents are in between 15 to 30 years of their age, most of them were
having master’s qualification and utilize online banking services in the capital cities
mainly in Karachi, Islamabad, Lahore and Peshawar and Quetta of Pakistan respectively.
The research findings also indicate that perceived usefulness, perceived ease of use,
quality of internet service, and amount of information are the main factors influencing
online-banking acceptance. Using quantitative research method including the design
and distribution of a questionnaire, empirical data was collected on which statistical
analysis has been performed. So that the model for measuring consumer acceptance
of online banking environment includes six quality dimensions (perceived usefulness,
perceived ease of use, perceived enjoyment, information on online banking, security and
privacy and quality of internet service ) with total of 37 items (Annexure-I). Based on the
results of data analysis; managerial recommendations, suggestions, need for further
research on consumer interaction with online banking environment are also offered.
ACKNOWLEDGEMENT
This acknowledgement is to thank Allah Almighty, who has enabled me to complete this
dissertation successfully. It also provides me with an opportunity to acknowledge all
those generous, whose kind guidance; assistance and good wishes helped me to complete
this arduous task.
I am highly indebted to my supervisors Dr. Qadar Bakhsh Baloch and Dr. Khair-uz-
Zaman, whose kind attention, thought provoking ideas and scholarly supervision has
contributed to its enrichment and completion of this research study in time and in a
befitting manner. I express my profound gratitude to Professor Abdul Aziz Khan Niazi,
Prof. Dr. Hameed ullah Khan, prof. Dr. Khaliq Ahmad, Prof. Dr. Ghulam Farid, Dr.
Allah Nawaz, Dr. Bahadar Shah and Prof. Muhammad Akram Khan who have always
been a source of inspiration and ever encouraging motivational force, which kept me
going.
Second I would like to express my thanks to all interviewees who are the Citibank and
Meezan bank’s internet banking users. They have helped me a lot in understanding the
problems they are facing while using the websites and the level of satisfaction they were
getting from the customer services available in the online environment. Then I would like
to express my special thanks to all my teachers, friends and colleagues who have
provided me the courage to cope with the problems and those were an essential part of
this intellectual journey.
I wish to take this opportunity to express my sincere gratitude to my parents, for their
whole hearted support and encouragement throughout the study. Finally warm thanks go
to my wife, for her encouragement and all-out help and support especially in the days of
my thesis work.
Muhammad Imran Khan
1
CHAPTER
ONE
1. Introduction
This chapter tends to introduce the research dissertation; i.e. general background of the
research, purpose and objectives of the research, theoretical framework, customer acceptance
model, brief overview of the research methods and limitations encountered by the research
study. At the end, the chapter provides outline/ organization of the research study.
1.1 General
Marketing is a complete practice which consists of each and every component of a business
ranging from product designing, adjusting price to evaluate sales statistics and gathering
customer’s feedback. The marketing objective are usually to get the right product, its
promotion, selling it through effecting pricing, and product distribution efficiently with profit
maximization, according to “http://www.emarketing.ie/resources/glossary.html”, retrieved on
30th October, 2011.
Whereas, eMarketing makes possible the online transactions through network and interactive
settings, according to (Kalyanam & McIntyre 2002).
.
2
Chaffey (2005), defined e-marketing that it’s the technological application using internet
i.e.(Website, electronic-mail, database, or cellular phone & digital Television) to facilitate
marketing efforts for achieving organizational goals by increasing user knowledge.
Rafi et al. (2002) stated that “The aim of internet marketing is to build and maintain the
relationship between customers through online exchange of information about the goods and
services from buyer and seller”.
Electronic commerce normally refers to business transactions using the wide area network. On
the other hand, according to different scholars e-commerce is something more than exchange
process, and is the combination of both financial and informational exchanges.
Today, to reap the benefits of technology, most of the banking organizations are trying to
become automated. Thus eBanking simply refers to provide banking services electronic
modes of communications, mainly the Internet. The eBanking concept basically deals with
both computer-based and telephone-based banking. While e-Banking, Internet banking, on-
line banking or PC banking terms may be seen or used interchangeable.
Electronic banking usually consists of ATM, wire transfer, phone banking, EFT and credit
cards etc. Because the provision of online financial services is secure, easy to use, cost saving
and 24 hrs available to customers. In Pakistan eBanking has started taking off in recent years.
E-commerce task force has been formulated and the Banks have expanded their online branch
networks. In the past 2-3 years Banks have also launched Internet Banking and the internet
3
banking is now improving with more sophistication and services for corporate banking
customer (Chaffey, 2002).
Due to recent technological developments in banking sector, old banking system is shifting
from a product-oriented system to a customer-oriented system as they introduced their new e-
banking capacities. For a long time period electronic and telecommunication networks have
been used to deliver a variety of services. These services have been offered through dial-up
connections, local and public networks, and through different instruments i.e. phone, PC
consisting the ATM etc. Therefore due to familiarity of personal computers and internet,
banks have also increased the use of internet as a medium of exchanging information about
the goods and services.
Internet based banking may be performed through two ways, first one is through internet
website with physically existing branches and second way is only virtual banking. There are
three basic levels of online banking services: (i) The Basic service level which only provides
the information about products and corresponding is possible through e-mails etc. (ii) In
second level, simply Transactional Websites are used to fill, submit and ask about the
balances etc. (iii) While in third level of normally Fully Transactional sites are used to
operate different online financial functions like payment of bills etc. (RBI, 2001).
Therefore there is a key role of website in online banking. A properly maintained Website
must provide the to the point information, and should be the source of getting feedback from
the customers (Jayawardhena & Foley, 2000).
4
A properly maintained website develops a good relationship between the customer and
organization (Gronroos et al., 2000). Therefore, provision of quality online services should be
the matter of prime concern regarding electronic commerce (Griffith and Krampf, 1998). The
perfect utilization of internet may play a significant role for providing high standard products
in different sectors (Griff and Palmer, 1999).
Chaffey (2002), states that a website of a bank may be a better source of information. While
evaluating a website, the internet communication must be very carefully designed both from
Business to customers and from customer to business organization.
Up till now, limited research studies have been conducted regarding customer’s views of
service quality in online banking, Yet, Zeithaml (2000) identifies that, while due to no direct
human interaction in inaccessible services, all service components offered prospect for the
organization to support or develop value opinion for users.
1.2 Background of the Research Study
1.2.1 Pakistan’s Internet and Communication Technology background
Currently the information & communication technological changes are improving nationwide
developments globally and many developed and developing nations are finding methods of
making easy their growth processes in the course of progress, improvement with the
exploration of Internet and Communication Technology inside their economical structures.
5
Pakistan is rising and performing a vital role in the development of ICT globally. Few years
back, Pakistani government has kept a major focus in the development of IT sector, including
the development of telecommunication networks, which was the 20% of 130 main investment
projects, according to ministry of information technology (www.moit.gov.pk), accessed on
June, 2009.
For comparison of the Pakistan ICT indicators with some of the Asia-Pacific countries, data
on total teledensity, cellular mobile teledensity, TV sets, PCs and the Internet subscribers
from the website of International Telecommunication Union are shown in the following figure
1.1.
Figure 1.1
Source: http://www.statpak.gov.pk/depts/fbs/publications/pakistan_ict/pict-part-1.pdf
Retrieved April 4, 2009
ICT Indicators of Selected Countries in Asia-Pacific Region millions
6
Table 1.1
http://www.statpak.gov.pk/depts/fbs/publications/pakistan_ict/pict-part-1.pdf, Retrieved April 4, 2009
As shown in the above table 1.1, Singapore and Hong Kong remained on top followed by
Japan with respect to ICT indicators especially on teledensity while with regard to use of PCs
and Internet. In Pakistan one can see that there is still potential for further growth like Hong
Kong, Singapore and Japan, while telephone, cellular mobile and internet use Pakistan has to
catch up.
1.2.1.1 Mobile Usage in Pakistan
Pakistan ended 2010 with 102.78 million mobile subscribers, up from 101.641 million in
November, according to figures from the Pakistan Telecommunication Authority (PTA).
Mobilink led with 31.79 million subscribers, up from 31.54 million a month earlier, followed
7
by Telenor which had 24.69 million customers, compared with 24.401 million customers in
November.
Ufone had 20.28 million subscribers in December, up from 20.192 million, and Warid ended
the month with 17.52 million versus 17.474 million a month earlier. Zong grew its customer
base to 8.50 million from 8.028 million customers in the previous month. Total mobile
teledensity stood at 61.7 percent compared with 61 percent in November.
Furthermore, the number of WLL subscribers stood at 2.76 million in December, down from
2.85 million in November. PTCL led in WLL customers with 1.32 million versus 1.30 million
a month earlier, followed by Telecard with 710,942, World Call with 456,048 customers and
Wateen with 228,623 customers. Link Direct had 33,970 subscribers in November and NTC
ended the month with 11,823 customers. WLL teledensity remained at 1.6 percent (ITU
Telecommunication/ICT Statistics , 2011).
1.2.1.2 Internet in Pakistan
Internet is basically the mother of all networks, connecting computers through internet
protocols. And through different application software, information can be seen and
disseminated easily. It can also be used as a medium for the transformation of data in
documents form. The Internet has totally changed the way and style of communication. Due
8
to growth in Internet, a competitive environment has been created, with provision of little
cost, broadband uninterrupted internet access worldwide, free internet services particularly for
public sector higher institutions and maintaining the development of Internet nationwide. In
the following figure# 1.2 additionally in table# 1.2, table# 1.3 and table# 1.4 show a
worldwide internet statistics regarding use and its population % age to give a base for future
trends concerning world, Asia and particularly about Pakistan.
Source: http://www.internetworldstats.com/stats3.htm, retrieved on 30th Nov, 2011.
Table 1.2
WORLD INTERNET USAGE AND POPULATION STATISTICS March 31, 2011
World Regions
Population ( 2011 Est.)
Internet Users
Dec. 31, 2000
Internet Users
Latest Data
Penetration (%
Population)
Growth 2000-2011
Users % of
Table
Africa 1,037,524,058 4,514,400 118,609,620 11.4 % 2,527.4 % 5.7 %
Asia 3,879,740,877 114,304,000 922,329,554 23.8 % 706.9 % 44.0 %
Europe 816,426,346 105,096,093 476,213,935 58.3 % 353.1 % 22.7 %
Middle East 216,258,843 3,284,800 68,553,666 31.7 % 1,987.0 % 3.3 %
Figure 1.2
9
North America
347,394,870 108,096,800 272,066,000 78.3 % 151.7 % 13.0 %
Latin America / Carib.
597,283,165 18,068,919 215,939,400 36.2 % 1,037.4 % 10.3 %
Oceania / Australia
35,426,995 7,620,480 21,293,830 60.1 % 179.4 % 1.0 %
WORLD TOTAL
6,930,055,154 360,985,492 2,095,006,005 30.2 % 480.4 % 100.0 %
Source: http://www.internetworldstats.com/stats3.htm, retrieved on 30th Nov, 2011.
In Pakistan internet service has been provided since 1990. And PTCL offered this service
through their local networks since 1995. The DigiCom also provided the first international
internet access in 1995. Commercially internet facility was provided through ISPs in 1996.
During 1999 approximately 100 ISPs were officially given licenses, and 40 of which were
offering their services. In 2000 total numbers of internet users were 0.5% of the whole
population. Currently this figure has reached up-to 20 millions, with 150 Internet service
providers and 2.5 million internet connection in different cities of Pakistan. And now this
figure is up-to 166 million of the whole population of country (www.moit.gov.pk, accessed
on June, 2009).
Due to improper internet infrastructure, each Internet Service Provider leased lines for both
international and domestic connections. Particularly in 2000, developmental changes made
different network access point (NAP) for ISPs traffic exchange.
According to Pakistan Telecommunications Report (2008), particularly in south Asian
countries there is a high growth regarding ICT; but in case of Pakistan IT sector has achieved
extraordinarily maximum growth. Therefore in Pakistan’s telecom sector the total teledensity
10
was 46.9% during 2007, which was more than India, Bangladesh and Sri Lanka. Following
table # 1.4 shows the latest facts and figures regarding Internet usage and population statistics
of Pakistan, which identifies that there is approximately 10% internet penetration rate w.r.to
the whole population of Pakistan.
Table 1.3
Internet Usage and Population Statistics of Pakistan:
YEAR Users Population % Pen. GDP p.c.* Usage Source2000 133,900 163,985,373 0.1 % N/A ITU
2006 12,000,000 167,806,831 7.2 % US$ 821 ITU
2009 18,500,000 174,578,558 10.6 % US$ 1,017 ITU
2010 18,500,000 177,276,594 10.4 % US$ 1,068 ITU
Note: Per Capita GDP in US dollars, source: International Monetary Fund, http://www.internetworldstats.com/asia/pk.htm#links, retrieved on 30th Nov, 2011.
Table 1.4
11
Table # 1.4 identifies that there is a continuous increase in the usage of internet in Pakistan.
Therefore its usage rate will cross 17 million after 2007, with 11% diffusion rate.
Additionally, due to improper telecommunication setup the downloading speed is very
slow. That’s why there is a need of providing broad band services, matched by the purpose
of PTCL to recover the standard of its internet business is likely to change this in time. On
the other hand, high costs of broadband services in Pakistan mean that this change could be
very slow, and BMI forecasts that penetration will remain at below 1% until well into
2012.
1.2.2 Pakistani banking sector
Pakistan’s central bank is the state bank of Pakistan. It has been established and started
functioning from 1st of July, 1948. State bank is having the responsibility to provide domestic
currency and implement foreign currency regulations. The purpose of this bank is to manage
the monetary security, stability and promoting the monetary structure for getting continuous
development by decreasing variations. Due to enhancements in responsibility and scope work,
staff has also been increased in size. To manage the ever-increasing workload and staff, that’s
why the importance and need for computer system integration have been also increased. In
this regard State Bank is trying to develop a new setup of computers which will interconnect
approximately 17 national branches in Pakistan (www.sbp.org.pk, accessed on June, 2010).
12
Pakistani financial sector consists of following financial institutions:
1. De-Nationalized Banks (DNB),
2. Development Financial Institutions (DFI),
3. Foreign Banks (FB),
4. Investment Banks (IB),
5. Micro Finance Banks (MFB),
6. Nationalized Commercial Banks (NCB),
7. Private Scheduled Banks (PSB),
8. Provincial Banks (PB),
9. Specialized Schedule Banks (SSB).
According to the present regulatory structure the controlling powers concerning Banks, DFI,
and Microfinance Banks relies under the legal capacity of State Bank of Pakistan while
remaining financial organizations are normally controlled and supervised by SECP and
Insurance Controller. Currently according to the banking statistics the total number of
scheduled banks is sixty four, there are eight DFI, and two MFB working in Pakistan that are
totally supervised and controlled by Pakistan state bank. In Pakistan’s commercial banks there
are 4 national banks, two privatized Banks, fourteen IBs, twelve private banks, sixteen FBs,
two provincially scheduled banks, and four specialized financial institutions. Who are
working with the collaboration of international monetary agencies like International Finance
Corporation, World Bank and International Monetary Fund (www.ibp.org.pk, accessed on
July, 2010).
13
In 1985 a grant was given to develop commercial banks in the Punjab for the first time.
Therefore slowly and gradually in 1992, 14 commercial banks were established in Pakistan.
And then these statistics increased to 64 in 2006.
Initially it was very easy and popular to form a commercial bank in the start of 1992 due to
non availability of legal restrictions to form a bank. Organization of Islamic Conference also
supported banking sector framework. Pakistani banking sector was also influenced by foreign
investors through privatization. In the following tables # 1.5, 1.4, and 1.5 State Bank of
Pakistan has mentioned all facts and figures regarding Scheduled, Pakistani, foreign and all
other banks of Pakistan.
Table 1.5
Scheduled banks Pakistani and Foreign
Retrieved on April 1, 2010
14
Table 1.6 Scheduled Banks and Their Reporting Branches by Group
Bank Branches Bank Branches
A) Public Sector Commercial Banks 1592
39
1245
35
273
D) Foreign Banks 68
28
26 3
2
1
9
1 First Women Bank Ltd.
2 National Bank of Pakistan
3 The Bank of Khyber
4 The Bank of Punjab
1 Al-Barka Islamic Bank BSC
2 Citi Bank NA
3 Deutsche Bank AE
4 Oman International Bank SAOG
5The Bank of Tokyo- Mitsubishi Ltd.
6 The Hong Kong Shanghi Banking Corporation
B) Specialized Banks 539 *Indian Banks 9
1 IDBP
2 SME Bank Ltd.
3 The Punjab Provincial Co-operative Bank Ltd. (PPCB) 4 Zarai Taraqiati Bank Ltd. (ZTBL)
20 15
159
345
7State Bank of India 8The Bank of India Ltd.
9The Central Bank of India
10The Oriental Bank of Commerce Ltd.
11The Punjab National Bank
12The United Commercial Bank
2
1
3
1
1
1
C) Domestic Private Banks 5,970
* Indian Banks-Vested in the custodian of enemy property since September 1965
Source: www.sbp.gov.pk , Retrieved on April 1, 2011
1ABN AMRO Bank (Pakistan) Limited
2Allied Bank Ltd.
3Askari Commercial Bank Ltd.
4Atlas Bank Ltd 5Arif Habib Rupali Bank Ltd.
6Bank Al-Falah Ltd.
7Bank Al-Habib Ltd. 8BankIslami Pakistan Ltd.
9Crescent Commercial Bank Ltd.
10 Dawood Islamic Bank Ltd
11Dubai Islamic Bank Pakistan Ltd
12Emirates Global Islamic Bank Ltd
13Faysal Bank Ltd.
14 Habib Bank Ltd.
15Habib Metropolitan Bank Ltd.
16JS Bank Ltd.
17KASB Bank Ltd.
18 MCB Bank Ltd.
19 Meezan Bank Ltd.
20my Bank Ltd.
21NIB Bank Ltd.
22PICIC Commercial Bank Ltd.
23Saudi Pak Commercial Bank Ltd.
24Soneri Bank Ltd. 25Standard Chartered Bank(Pakistan) Ltd. 26United Bank Ltd.
86 760 149 26 13
223
174 36
29
5
17
10
105
1449
100
9
36
1022
100
61
66
130
55
91
141
1077
15
Table 1.7 Scheduled Banks Operating in Pakistan
As on 30th June, 2008
Source: Statistics & Data Warehouse Department, SBP . Retrieved April 1, 2011. from http://www.sbp.org.pk
Bank Name Total
Branches
Website
A. Public Sector Commercial Banks
1. First Women Bank Ltd
2. National Bank of Pakistan 3. The Bank of Khyber 4. The Bank of Punjab
B. Local Private Banks
1. ABN Amro Bank NV 2. Allied Bank Ltd 3. Askari Commercial Bank Ltd.
4. Arif Habib Rupali Bank 5. Atlas Bank Ltd. 6. Bank Al-Falah Ltd. 7. Bank Al-Habib Ltd. 8. Bankislami Pakistan Ltd
9. Crescent Commercial Bank Ltd. 10. Dubai Islamic Bank Pakistan Ltd 11. Emirates Global Islamic Bank Ltd 12. Faysal Bank Ltd. 13. Dawood Islamic Bank Ltd
14. Habib Bank Ltd. 15. JS Bank Ltd. 16. KASB Bank Ltd. 17. Meezan Bank Ltd. 18. Habib Metropolitan Bank Ltd
19. my Bank Ltd. 20. MCB Bank Ltd. 21. NIB Ltd. 22. Saudi-Pak Commercial Bank Ltd. 23. Soneri Bank Ltd.
24. Standard Chartered Bank (Pakistan) Ltd 25. United Bank Ltd
C. Foreign Banks
1. Al- Baraka Islamic Bank B.S.C (E.C) 2. Citi Bank N.A 3. Deutsche Bank AE 4. Oman International Bank SAOG 5. The Bank of Tokyo-Mitsubishi Ltd. 6. The Hong Kong & Shanghai Banking Corporation Ltd.
D. Specialized Banks
1. Industrial Development Bank of Pakistan
Ltd. 2. Punjab Provincial Co-operative Bank Ltd. 3. SME Bank Ltd. 4. Zarai Traqiati Bank Ltd.
Commercial Banks (A+B+C) All Banks (A+B+C+D)
1,592 39
1,245 35
273 6,143
80 760 154 12 32
223 202 36 28 18 25
111 11
1450 9
40 110 100 69
1025 241 55 92
178 1,082 60
18 26 3 3 1 9
539 20
159 15
345 7,795 8,334
www.fwbl.com.pk www.nbp.com.pk www.bok.com.pk www.bop.com.pk www.abnamro.com www.abl.com.pk www.askaribank.com.pk www.arifhabibbank.com.pk www.atlasbank.com.pk www.bankalfalah.com www.bankalhabib.com www.bankislami.com.pk www.cresbank.com www.dibpak.com www.egibl.com www.faysalbank.com.pk www.dawoodislamic.com www.habibbankltd.com www.jsbl.com www.kasbbank.com www.meezanbank.com www.metrobank.com.pk www.mybankltd.com www.mcb.com.pk www.nibpk.com www.saudipakbank.com www.soneri.com www.standardchartered.com/pk www.ubl.com.pk www.albaraka.com.pk www.citibank.com.pk www.db.com www.oiboman.com www.btm.co.jp www.hsbc.com.pk www.idbp.com.pk www.smebank.org www.ztbl.com.pk
16
1.2.3 Online Banking in Pakistan
In Pakistan initially internet banking was launched to provide a limited number of services. But
in recent years there has been greater understanding and development towards various services
being offered by banks through internet banking. A major portion from investment was
allocated to promote electronic banking, human resources, applications and security concerning
electronic payment components. In financial sector, budget was also increased by 200% in the
last five years, with maximum utilization of US$300 millions/year. With the satisfaction of
legal issues of security assurance and easy access, there is increase in usage of internet banking.
More than 50% of the total bank branches are online. E-banking infrastructure in Pakistan is
growing at a considerable pace and the totals of online network branches are more then 2500.
Due to recent developments in electronic banking it’s very easy for account holders to transfer
their funds and remittances through any automatic teller machine (Danish, 2007).
During the last ten years Pakistan has successfully developed ICT infrastructure although it was
technologically very backward among Asian countries. Pakistan is located at the junction of the
Middle East and South Asia. Iran is its neighbor while Afghanistan is located in the West, China
is in the North-east, India in the East, and the Indian Ocean in the South. Therefore there is an
economical, political, social impact on the growth of Pakistan. Through the implementation of
monetary policies there was a big change in banking sector reforms which were started in the
late 1980s. Therefore now Pakistan has emerged as an advanced market in Central Asian
countries. And also became the member of Organization of Islamic Conference in 1972
(www.finance.gov.pk accessed on Jan, 2011).
17
The GDP growth of 8.4% in June 2005 places Pakistan among the fastest developing
economy in the region. There was a growth in the economy by 6% each year since 1999. Due
to continuous growth in exports to western and Middle East countries, collaboration with
Asian markets, and legal restructuring has thus made a solid base for continuous economic
development (State Bank of Pakistan, 2006).
Azeem Y. (2012) stated that the use of internet banking has remarkably increased in the country
with surging number of customers opted for hassle-free and rapid mode of money transactions
through their banks, depicting 89 per increase in the service utility with volume of money grew
by 112 percent in first quarter of financial year 2011-12. The State Bank of Pakistan’s “Payment
Systems Review” stated that Rs 84.85 billion were transferred through internet banking in
Pakistan in Jul-Sep 2011, with 1.6 million number of transactions.
According to the statistics, the money transferred through mobile-banking services were
recorded at Rs 4.27 billion against the transactions of 1.06 million through services of different
banks. The volume and value of overall e-banking transactions in the country during the quarter
under review was recorded at 63.7 million and Rs.6.15 trillion respectively, showing a decrease
of 3.9 percent in the volume and 1.34 percent in value as compared to the previous quarter.
The number of ATMs increased to 5,318 across the country with addition of 118 units in July-
September 2011 in the market. A total of 7,885 bank branches are now offering RTOB out of
total 9,651 bank branches in the country whereas 469 more bank branches were upgraded/
added to Real-Time Online Branches (RTOBs). ATM transactions showed 5.46 percent
decrease in number of transactions and 0.04 percent decrease in value which resulted in an
average value of Rs: 9,222 per ATM transaction.
18
The aim of study is to identify and describe the issues that are effecting the adoption of internet
banking in banking sector of Pakistan and to give awareness to the banks by high lighting these
issues. This research is organized as follows: firstly it provides a brief description of Pakistani’s
ICT as well as IT, Pakistani banking sector, Internet banking definition, overview of Internet
banking in Pakistan. Problem areas and problem issues, utilized in the study, is outlined prior to
a discussion of the results obtained.
1.2.4 Review of Internet Banking Research
As the traditional online banking research focus is transferring to the behavior of customers as
compared to technological developments. To know about the customers’ perceptions and beliefs
is compulsory in order to understanding and predictions of the customers’ behaviors. While few
research study show that there are some deficiencies between actual behavior and thinking
(Kerlinger 1979; Runyon and Stewart 1987). Literature review also indicates the significance of
relationship among behavior, intention and perception (Davis, F. 1986; Fishbein and Ajzen
1975).
Table 1.9 shows that several studies have investigated the adoption of internet banking in
different countries. In past, limited research studies addressed the difficulties concerning
internet banking acceptance. Previous research studies have often addressed the plus dimensions
of online/ internet banking. Quantitative studies are also very limited regarding investigating the
drivers, barriers and customer’s perceptions towards the use of internet banking.
19
Table 1.9 Review of internet banking
Study Topic Findings
Lockett and Litter (1997) Adoption of direct banking services in the UK
Used a model of perceived innovation attributes and the personal characteristics of adoption and non-adopters. The results indicated that the most important perceived positive attribute of direct banking was its 24*7 availability, whereas complexity and risk of series were the two negative attributes.
Mols (1998) Strategic distribution channel strategies for internet banking.
The existence of barriers towards the use of internet banking plays a crucial role in predicting the pace with which the expected development will take place.
Athanassopoulos and Labrouskos (1999) Electronic banking in Greece.
Product-specific attributes such as price and speed are conceived differently by customers. Price, speed and bank’s reputation are important criteria in the adoption of e-banking.
Daniel (1999) Provision of e-banking in the UK and Ireland.
Examined online banking issues, e.g., culture of innovation, market share, organizational restrictions, and related them to the bank’s adoption of online banking.
Mols (1999) Adoption process in the Danish retail banking sector.
Most Danish retail banks give more importance to offering a customer-friendly PC bank service, whereas fewer of them give equal importance to telephone, Internet and branch banking. A multiple channel strategy combining several channels is the most popular.
Sathye (1999) Adoption of internet banking in Australia.
Identified security, ease of use, awareness, pricing, resistance and infrastructure issues as the main obstacles to non-adoption of internet banking. Young, educated, and wealthy were the most relevant customer segments.
Jayawardhena and Foley (2000) Changes in UK banking Sector.
Listed the advantages for banks: cost savings, increased customer base, mass customization, marketing and communication, innovation, and development of non-core business.
Mols (2000) Internet banking marketing in Denmark.
To retain loyal customers, banks must adopt and customize their offerings, First- movers will have the advantage to build customer relationships, brand name and awareness among internet users. Late-movers may learn from the mistakes of early movers and thus lower their costs.
20
Aladwani (2001) Drivers and challenges for online banking in Kuwait.
Drivers of internet banking from Bank’s perspective are: providing faster, reliable and easier service to customers, improving bank’s image and competitive position, creating new markets, reducing operational and administrative costs and work force.
Jun and Cai (2001) Service Quality in internet banking.
Classified 17 service quality dimensions into three categories: customer service quality, online service quality, and banking service product quality.
Gurau (2002) E-banking in transition economies (Romania).
The implementation of e-banking in transition economies is limited because of: incomplete legislations, risky financial systems, slow internet connections. Low internet penetration, lack of knowledge about internet, and opportunistic behavior of banks.
Howcroft et al. (2002) Preferred delivery channels for purchasing financial services.
Branch network is still the most popular delivery channel. Consumers are not predisposed to change their behavior radically and adopt widespread use of internet banking. They prefer a mix of delivery channels.
Karjaluoto et al. (2002) Attitude formation towards online banking in Finland.
Prior experience, attitude towards computers, and Demographics influenced the attitude towards online banking and actual behavior. A typical online banking user was found to be relatively young, well educated with high income, and a family man with a good job.
Liao and Cheung (2002) Consumer attitude towards e-banking in Singapore.
Individual expectations regarding accuracy, security, transaction speed, user-friendliness, user involvement, and convenience are the most important quality attributes in the perceived usefulness of internet banking.
Suh and Han (2002) Internet banking adoption in South Korea.
Trust, perceived usefulness, and perceived ease of use were found to be most significant belief in explaining customer’s attitude towards the use of internet banking.
Gerrard and Cunningham (2003) Diffusion of internet banking in Singapore.
The eight influential factors of internet banking adoption are social desirability, compatibility, convenience, complexity, confidentiality, economic benefits, and PC proficiency.
Joseph and Stone (2003) US customer’s perceptions of technology on service delivery.
Technology based delivery channels are linked with the customers’ perceptions of how the banks services are delivered to them; these perceptual outcomes affect their level of satisfaction.
21
Mattila et al. (2003) Internet banking adoption among mature customers in Finland.
Household income and education had a significant effect on the adoption of internet banking among mature consumers; whereas perceived difficulty in using computers combined with the lack of personal service in e-banking were the main barriers.
Mukherjee and Nath (2003) Modeling trust in online banking in India.
Shared value and communication played a significant positive role on trust in internet banking and that trust had a significant positive influence on commitment.
Rotchanakitumnuai and Speece (2003) Adoption of Internet banking among corporate customers in Thailand.
Users of internet banking have more confidence in the reliability of the system, whereas non-users are much more service conscious, and don’t trust financial transactions made via Internet channels. Non- internet banking users tend to have more negative management attitudes towards adoption and are more likely to claim lack of resources. Legal support is also a major barrier.
Sohail and Shanmughamn(2003) Malaysian customers’ preference in E-banking.
Internet access, awareness of e-banking, security concerns, ease of use, and customer’s reluctance to change affects the usage of internet banking.
Chan and Lu (2004) Internet banking adoption in Hong Kong.
Applied Social Cognitive Theory and the Technology Acceptance Model to internet banking adoption. Subjective norms, self-efficacy, perceived ease of use, and perceived usefulness plays significant role in internet banking adoption.
Shih and Fang (2004) Internet banking in Taiwan.
Applied the theory of Reasoned Action and Theory of planned behavior to internet banking adoption context. Found relative advantage, compatibility, complexity, normative influence, efficacy, and facilitating conditions as determinants of intentions to adopt internet banking.
Singh (2004) Trends in south African internet Banking.
Security was found to be major barrier in the adoption of Internet banking potential users wanted guaranteed safety and loyalty rewards to adopt internet banking.
Eriksson et al. (2005) Customer acceptance of internet banking in Estonia.
Applied the Technology Acceptance Model to internet banking context. Trust affects the perceived ease of use and perceived usefulness which leads to greater use of internet banking.
Lasser et al. (2005) The relationship between consumer innovativeness, personal characteristics, and online banking adoption.
Studied the relationship between consumer innovativeness and personal characteristics; found that domain specific consumer innovation, self efficacy, and utilitarian-based web use positively
22
affects the adoption of online banking.
Yousafzai S. Y. (2005) Internet banking in the UK: A customer behavior perspective.
The internet banking acceptance model, proposed and validated in this thesis, advances theory and research on this important issue.
Guriting P. & Ndubisi N. O. (2006) Borneo online banking; evaluating customer perceptions and behavioral intention.
This research examines the factors that determine intention to use online banking in Malaysia Borneo. Perceived ease of use and perceived usefulness factors are considered to be fundamental in determining the acceptance and use of various information technologies. This study extends the model to include user computer experience and confidence. The results indicate that perceived usefulness and perceived ease of use are strong determinants of behavioral intention to adopt online banking.
Khan S. (2007). Adoption Issues of Internet Banking in Pakistani' Firms.
The purpose of this research was to explore and analyze the issues that influence Pakistani’s firms’ intentions toward Internet banking services adoptions. Based on a detailed literature review, a research model was developed. Five sub issues were selected from system trust area in order to gain a better understanding of Internet banking service quality and customer thoughts about these services. A qualitative research approach was used to get a better understanding of these issues. The empirical data were collected from three different Pakistani’s firms by using questionnaires and consulting case-studies. Data analyses were done in accordance with the research questions and research model. The findings from respondent data show that they have greater level of worry regarding trust, and they do not have confidence to make any big financial transactions over internet, and have no satisfaction from Internet banking services.
Kaleem A. & Ahmed S. (2008). Bankers’ Perceptions of Electronic Banking in Pakistan.
This paper aims to collect bank employees’ perceptions of the potential benefits and risks associated with electronic banking in Pakistan. Primary sources were used to collect the data and were analyzed via frequency analysis and mean score analysis. The results suggest that bankers in Pakistan perceive electronic banking as tool for minimizing inconvenience, reducing transaction costs and saving time. The results show that public bank employees who have professional degrees consider ‘minimizing transaction costs’ and ‘reduction in HR requirements’ as the most and the least important benefits of electronic banking respectively. Private bank
23
employees, who have masters or bachelor degrees, and less than 10 years experience, perceive ‘time saving and minimizing inconvenience’ as the major benefits of electronic banking.
Chang C. (2009). Consumers’ Adoption of Online Financial Services: The Case of Taiwan.
The research framework of this study is constituted by the extended version of the Technology Acceptance Model (TAM 2). Other variables, which have proven academically important in influencing consumers' intentions to use information technology, were added to the conceptual framework. The quantitative analysis was conducted through descriptive statistics, chi-square analyses, Spearman's correlation coefficient, Mann-Whitney test, and logistic regression analysis. The results strongly support that the extended TAM (TAM 2) is a valid model to predict Taiwan consumers' intention to use online financial services and to explain the intention difference between adopters and non-adopters.
Khan M. A. (2010). An Empirical Study of Automated Teller Machine Service Quality and Customer Satisfaction in Pakistani Banks.
The study investigates significant dimensions of ATM (automated teller machine) service quality and its effect on customer satisfaction. Questionnaire was used to collect the data from a convenience sample of 500 customers of multinational and national banks of Pakistan. Regression results indicate that convenience, efficient operation, security and privacy, reliability and responsiveness are significant dimensions of ATM service quality and that ATM service quality positively and significantly contributes toward customer satisfaction.
Rehman R. & Raoof A. (2010). Efficiencies of Pakistani Banking Sector; A Comparative Study.
This paper investigates a comparison between public, private and foreign banks efficiencies. This study also finds that whether high profitability of the banking sector shows their high efficiency or not. For this purpose, a sample of forty commercial banks is taken from the period of 1998-2007. A data envelopment analysis (DEA) is applied to compute the efficiencies of the respective banks. The results show that the overall efficiency of the banking sector in the initial year is matched with the world banking efficiency, but in later years an unsystematic sequence is observed.
Shamim S. & Sardar K. (2010). Electronic banking & e-readiness adoption by Commercial Banks in Pakistan.
This study firstly examines the current literature concerning the electronic banking problems during implementation of electronic problems in Pakistan and causes that hinders this process. To investigate in the real-time scenario we have taken the case study of Muslim Commercial Bank Limited in Pakistan in order to understand “why” and “how” the electronic banking could not be implemented successfully. The data was collected via interviews, surveys and bank website. Both
24
qualitative and quantitative research approach has been used to investigate and have proper understanding of current e-banking issues. The response of interviews and surveys showed that there are certain issues that hinder the use of e-banking in Pakistan.
Oye et. al. (2011). EBanking; A Case Study of Askari Commercial Bank Pakistan.
This paper has covered the operational issues related to e-banking as well as customer’s perception on usage of e-banking a case study of Askari Bank, Pakistan. 40 staff members and four customers are selected as sample for this study. Both qualitative and quantitative methods are used to present the results. Descriptive statistics was applied to describe the demographic variables while for operational problems correlation was used. Finally the cross case analysis presented customers’ perception about e-banking practices. Analysis showed that customers are not ready to adopt new technology that is why their satisfaction level with e-banking is low. TAM model was used to judge the perception of customers to accept or reject technology.
Sumra et al. (2011). The Impact of eBanking on the Profitability of Banks.
The aim of this paper was to examine the impact of e-banking on the profitability of Pakistani banks, in particular. This paper covered twelve banks across Pakistan. The study was qualitative in nature which examines different objectives which determined the performance of banks mainly in terms of profitability. The study was done through taking interviews from the managers of these banks. The results showed that e-banking has increased the profitability of banks; it has enabled the banks to meet their costs and earn profits even in the short span of time.
1.2.5 Islamic Banking in Pakistan
Meezan bank is the first and the largest Islamic bank in Pakistan that is why authors have
considered it as a basis for comparison, refer to Fig.-1.6 given below:
25
Figure 1.3
Year-wise entry of players
2003
1. Meezan Bank
2. Bank of Khyber
3. MCB Bank
4. Bank Alfalah
2005
1. Habib Bank
2. Bank Al Habib
2006
1. Dubai Islamic Bank
2. Bank Islami Pakistan
3. ABN Ambro N.V. (Now RBS Bank)
4. Askari Bank Ltd.
5. National Bank
6. United Bank Ltd.
2007
1. Emirates Global Islamic
2. Dawood Islamic Ban
Source: Islamic Banking Sector Review 2003 TO 2007 State Bank Of Pakistan, (2009).
26
1.2.5.1 Islamic Commercial Bank – Meezan Bank Limited Pakistan
According to Meezan Bank’s web site it is stated that it is a public enlisted company, was
formed on 27th Jan, 1997 and started its full functions in Aug, 1997 as an investment bank.
During 2002 officially Meezan bank was given a license from State Bank of Pakistan to
operate as a full-fledged commercial bank in Pakistan.
Due to fast development, Meezan Bank has been considered as the largest Islamic Bank,
with 166 working branches all over the Pakistan. The Pakistani banking sector is presenting
a major change from conventional methods of doing transactions, and is presenting a high
demand for financial consumer who is also becoming well aware of Islamic Banking
concepts. Meezan Bank has the significant task to lead the linked banks for the
establishment of sustainable and multidimensional Islamic Banking infrastructure in order
the meet the requirement of competitive environment.
During past 10 years of its functions and operations as an Islamic bank (from 2002 to
2011), offered full-fledged banking facilities to their account holders, that’s the reason that
Meezan Bank has achieved the max growth rate in the history of Pakistani banking sector.
According to statistical figures its average growth rate is 55% annually with extension in
total number of branches from 4 to 166 in the 40 cities of Pakistan. There is a competent,
strong, trustworthy and committed organizational team including professional and
experienced team members, who have attained a solid financial ratios, with maximum
profitability, as a result the bank has been placed as a leading bank in the banking industry.
Therefore currently Meezan Bank has attained a long-term entity rating of A+ and a short-
term entity rating of A-1.
27
Some major and leading financial organizations are the key investors; Kuwait based
companies i.e. Noor investment company, and Pak-Kuwait Investment Company.
In Jeddah the Development Bank has also recognized the ranking, goodwill, soundness of
these organizations which enhance adjoin worth to the Bank through Board representation
and applied synergies.
Solid technology management has also been the main focus of Meezan Bank. That is why
the bank has invested a major portion of their budget in the state-of-art software and
hardware for the purpose of handling expected situations.
With the help of implementing excellent and forceful long term decisions regarding retail
banking, Meezan Bank is targeted to provide easy accessibility and convenience to therir
customers, according to the customer’s needs, wants and preferences. Due to bank’s
aggressive strategies, has achieved a high growth rate regarding the expansion of its
network in different cities of Pakistan. Meezan Bank and its committed team is trying its
level best to deliver value added services to their customers regarding their daily lives and
business in accordance to Shariah. They are also trying to provide competitive environment
concerning risk adjusted profits to their shareholders (www.meezanbank.com, Accessed on
10th June, 2009).
1.2.5.2 Conventional Commercial Bank – Citibank Pakistan
The Citibank is an international bank, established in 1812 with the name as “ Citi Bank of
New York” and then called as “ First National Citi Bank of New York”. This is now
dealing with consumer banking and working under the collaboration and supervision of a
28
giant Citigroup, belonging to one of the largest organizations all over the world. As on Mar,
2007, it has been considered as the leading bank in the USA. Citibank and its branch
network is operating within 100 countries all over the world. About 800 of its offices are
located mostly in different states of United States of America.
Moreover with reference to standard banking services, Citibank deals with insurance,
electronic money (credit cards), and investment services. That is the reason that their online
services sector is considered as the most advanced in the field, including about fifteen
millions customers.
After the merger of Travelers Group Inc., Citibank attained a greater thrust to expand its
network all over the world in 1998. And it was the biggest financial organization in the
world. Citibank's prime concern is to provide standardized quality services based on
commitment, motivation, and expertise of its organizational team members.
Citibank Pakistan has also established its capability to recognize market based demands
and provide services which are exceptional in concept and satisfies customer’s needs. In
order to become a true market leader, Citibank has taken maximum quality measures to
maintain long lasting relationship with customers.
Its distinguishing features include; its strong branch network, online channels, a wide range
of financial services according to customers preferences, variety of product capacities –
which is the necessary requirement of today’s market. This is what permits us to present
organizations all over the world with all financial solutions, 24 hrs a day and 7days in a
week (www.citibank.com.pk, Accessed on 10th June, 2011).
29
1.3 Significance of the Research
This research study is exceptional in terms of organizational sector and country. This study
has considered both customers and employees perspective. For providing detailed
information about customer’s perception about the quality of online banking regarding
online environment, online services and user acceptance of eMarketing. Researcher has
used both qualitative and quantitative approaches, as the aim is to provide a detailed study
on how electronic marketing is evolving in banking sector of Pakistan.
1.4 Statement of the problem
Electronic marketing is making footholds across the world however user acceptance of
electronic marketing through online banking depends on several factors or criteria which
determine the acceptance of electronic marketing and online banking. Furthermore, the
user-acceptance is affected by his/her demographic attributes. This study explores these
questions of user-acceptance in Pakistan, while keeping in view the customer behavior
perspective.
1.5 Objectives of the Research
From the problem as discussed above, the objectives of this study are to provide a better
understanding of electronic marketing impact on online banks of Pakistan.
30
In order to achieve the objectives of this study, research questions are stated as below:
RQ1: How can the online banking environment (website) be described in web based
marketing of banks?
RQ2: How can quality customer services within this environment be described in web
based marketing of banks?
RQ3: How much customer’s acceptance to the new technology?
RQ4: What is the impact of electronic marketing on banking sector of Pakistan?
Research related Hypothesis
User acceptance of Electronic Marketing is determined by a number of factors however,
this behavior is mediated by demographic attributes of the users (respondents). H1
A list of the sub-hypotheses is mentioned as under starting from H2 to H8.
Hypotheses Test Code 1 All the Predictors are Correlated
with the Dependent Variable. Correlation Analysis H2
2 All the Independent Variables Predict the User Acceptance.
Stepwise Regression Analysis
H3
3 Demographic attributes (Five) bring the mean differences among the groups on their response .
Tests of Significance H4 to H8
31
1.6 Research Methodology
Research methodology followed in the study is a compound one, comprising historical,
descriptive, analytical, empirical, comparative as well as statistical approaches. It
encompasses both types of sources of data i.e. secondary as well as primary.
Primary Data: Data have been collected through survey conducted in the capital cities of
Pakistan to ascertain the ground realities through recording the views of all stakeholders of
online banking customers including: employees, students, businessmen, and other
professionals.
Secondary: The study at macro and micro levels is based on secondary data. The study’s
scope is about the user acceptance of eMarketing and its impact on banking sector of
Pakistan. Which is taken in general, embraces: overview of banking sector development at
the respective levels; economic growth, improvement in government policies, technological
developments, and competition etc. Secondary sources of the data collected include;
annual reports of State Bank of Pakistan, PhD dissertations, and various books, journals,
periodicals, newspapers and others.
32
1.7 Theoretical Framework
The theoretical framework of research study consists of following terms and related
research models.
1.7.1 Terminologies
The researcher has presented the following concepts with their short description, which
have been repeatedly used in this thesis, in order to develop a clear understanding of the
terms and their meanings and can follow more with no trouble the inside of the thesis.
Source: Marketing Concepts, http://www.emarketing.ie/resources/glossary.html accessed on 30th Oct,
2011.
ATM — Using Automatic Teller Machines, customers can easily complete their electronic transactions or withdrawal of money, 24 hrs in a day and 7 days in a weak.
E-Commerce — Electronic Commerce usually deals with doing business through electronic means. This can also be a helpful tool for the development business relationships with customers, vendors and suppliers. And normally provides additional support in the areas of design, production, operations, customer service, as well as all commercial activities. e-Marketing — In order to achieve marketing objectives, we normally use different following electronic marketing tools, which includes:
Business URLs Internet surveys Email E-newsletters/electronic magazines
33
Internet-catalogues Website competitions Banner advertising Mobile-marketing Online press-releases Website news Using Search Engines Online customer service Customer Relationship Management etc.
Electronic Funds Transfer (EFT) — These are computerized systems that process financial transactions and information about financial transactions, or that affect an exchange of value between two parties. Electronic Mail (email) — The exchange of messages over a computer network. Early systems transmitted text-only messages over local area networks, but today e-mail is primarily sent over the Internet and can range from typed text to photographic images to downloadable music. In the last decade, e-mail has become a transforming force in global communications. E-Cash / Electronic Money — This brand-based currency is purchased from financial institutions and is legal tender on the Internet to those vendors that accept the specific brand. It is aimed at low value payments, both cross border and domestic. Electronic money can be stored on various ways including on smart cards, in hardware based electronic purses, or on the computer system of a trusted third party. Electronic Payment — The payment and receipt of payment over the Internet. Email Surveys — Refers to questionnaires / surveys designed to collect information from customers and/or potential customers. They are similar to the traditional paper based forms but they are emailed to recipients. e-Marketing Electronic marketing (e-Marketing) is simply using the internet to market products and services. There are a variety of online marketing strategies currently being used on the internet.
FAQ (frequently asked questions) — These are the part of providing basic information in the form of questions and answers located on a same web site.
34
Hyperlink — This is basically very important element of a website, which normally helps us to find required information or to navigate within or different WebPages.
Marketing — Marketing is a wide-ranging practice that includes each and every feature of a business from designing its Products, setting the pricing strategy to analyzing sales statistics and collecting customer feedback. The main goal of marketing is to: produce/ get the right product, promotion in an effective manner, selling it on a suitable price, and its distribution efficiently.
Spam — Unwanted electronic mail or electronic scrap/ junk mail. Search Engine — Using a search engine is a helpful tool, consisting websites databases for the purpose of finding any site with reference to any query, using different searching techniques. There are different search engine which we normally use i.e. Google, Yahoo and Alta Vista etc. Search Engine Optimization — This is an electronic marketing technique, and normally deals with getting a proper place in the search engine while searching any URL for the purpose of selling products online. Security — It an important element used for the protection of any program and saved/ used on computer system. And using antivirus application software is the most authenticated security program.
URL — It stands for “Uniform Resource Locator”. A World Wide Web deal with particular website, page, document, or graphics on the Internet. E.g. www.sbdc.com.au/sect11.html
Web Site — It is an interconnection of different webpage, normally consisting main/homepage, usually saved on the same server location, and maintained by a web developer. A website can be directly seen on internet using URL. Website Surveys —
35
Normally these are questionnaires designed to collect data from the respondents using internet websites. 1.7.2 Theoretical framework/ model
Following research variables are related with online banking environment, online services
and User Acceptance of Electronic Marketing.
1.7.2.1 Online banking environment Theoretical Model:
In the previous section, we have studied the online environment (website), including the
design, models, development and strategies. We found that there were quite many items
overlapped. In order to find out how web site designs in Internet banking should be, I think
that model of Jayawardhena & Foley (2000) is the suitable one as it is specifically related
to internet banking industry.
Speed to download
• Simple graphics
• Animation and/or multimedia plug-in
Content and Design
• Product information content
• Amount of product information
• Product information format
• Language alternatives
• Layout features
36
Interactivity
• Technical banking facilities:
• Loan calculators, exchange rate converters, mortgage calculator etc
Navigation
• Homepage hyperlinks
• Links
• Consistent navigation.
• Search engine in the site.
• Site maps/guides
Security
• Encryption
• Purchase /operation confirmation
Automatically log off
1.7.2.2 Online Banking Services Theoretical Model:
Web-based customer service level and nature of customer participation, they should be
integrated with website design to be intact and leading to enhance customers services. Cai
& Jun (2003) discussed service quality in online retailing. Joseph et al. (1999) investigated
the influence of technology such as ATM, telephone and Internet, on the delivery of
banking services. Their study acknowledged six dimensions of electronic banking customer
service. In order to find out how websites could be used for enhancing customer service in
Internet banking, the theories of Joseph, Cai & Jun (2003), as well as from Joseph et al.
(1999) are deemed appropriate for this study, as they are both more recent.
37
Trustworthiness (Cai & Jun, 2003)
• Security
• Trust/risk
• Privacy
Communication (Cai & Jun, 2003)
• Communication tools
• Frequently asked questions
• Information updated
• Information understandable
Convenience/accuracy (Joseph et al., 1999)
Convenient
• Accurate
• Easy to use
Feedback/complaint management (Joseph et al., 1999)
• Feedback service
• Friendly environment
• Complaint management
Efficiency (Cai & Jun, 2003)
• Menu options
• Demo
• Exchange rate conversion
• Calculators
Accessibility (Joseph et al., 1999)
38
• Connectivity
• Special service for disables
• Language options
Customization (Joseph et al., 1999)
• Personalized service
1.7.2.3 Research Model for User Acceptance of eMarketing
A research model of “User Acceptance of Electronic Marketing” has been formed on the
behalf of past research findings and includes various variables i.e., perceived ease of use,
perceived usefulness, the amount of information, security and privacy, perceived
enjoyment, and quality of internet connection. In the following figure 1.4 a schematic
diagram of interrelated variables has been shown, developed by researcher.
Figure 1.4
39
1.8 Limitations of the Research
The time available for this study was limited; while keeping in mind the diverse nature of
research area, an attempt was made to narrow down the topic. The study will focus both on
the customers and employees’ perspectives but the sample has been taken from the
respondents having professions i.e. students, businessmen, and banking officials. As the
aim was to provide a better understanding on how web based marketing is evolving in
banking sector of Pakistan.
Other limitations of the underlying study includes: limited sample size, considering capital
cities of Pakistan, limited interview question guidelines and limited questions regarding
questionnaire, due to time limitations and the situations under which the study was
undertaken. The researcher is fully aware of all this might have effect on the collected
data and the analysis done on each of the extent later on as the more richly the scope
are described, the better it would have been for the consistency of the study.
40
1.9 The Roadmap of the Study
The study has been divided into following six chapters
INTRODUCTION
Chapter 1 introduces the study and its justification, describes the problem under
study and identifies the objectives of the study.
REVIEW OF THE RELATED LITERATURE
Chapter 2 contains review of the related literature, which serves as a basis of the
study and lays down theoretical framework.
RESEARCH METHODOLOGY
Chapter 3 explains approach, method, sample selection, data collection plus
reliability and validity of data regarding research process.
DATA COLLECTION
Chapter 4 explains the collection and management of data, analyzing through
descriptive statistics to elaborate the research problem.
CONCLUSIONS AND RECOMMENDATIONS
Chapter 6 presents the finding of the analysis and conclusions drawn followed
by the recommendations to thoroughly understand the problem statement.
DATA ANALYSIS
Chapter 5 explains the collection and management of data, analyzing through
structural equation modeling to elaborate the research problem.
41
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technology on service delivery. International Journal of Bank Marketing, Vol. 17 No. 4, pp. 182-91.
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35. Khan S. (2007). Adoption Issues of Internet Banking in Pakistani' Firms. Masters thesis, Lulea University of Technology thesis, Sweden.
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39. Liao, Z., & Cheung, M. (2002). Internet-based e-banking and consumer attitudes: An empirical study.
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41. Mattila, M., Karjaluoto, H. & Pento, T. (2003). Internet banking adoption among mature customers: early
majority or laggards. Journal of Services Marketing, Vol. 17 No. 5, pp. 514-26.
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45
CHAPTER
TWO
2. Review of the Related Literature
The previous chapter provided the introduction, background and the problem discussion of the
problem under study. In this chapter researcher will present literature review. The aim of this
chapter is to provide the relevant literature in the selected field for research. The chapter is
divided into three sections including detailed indication of prior research, definition of the
working concepts and conceptual model for this study.
2.1 Theoretical Background
To recognize and describe the electronic marketing impact on banking sector of Pakistan
regarding customer behavior perspective a thorough study of all possible academic and non-
academic works in the related field has been done, which includes;
Doctoral thesis/ dissertations,
Articles came into sight in academic/ non academic journals.
Organizational study, case studies and internet research related to the topic,
Text and reference books.
46
In the literature review process, limited literature of direct interest to this study with focus on
Pakistani context was found. However, doctoral and master’s thesis, articles, case studies, books
and survey reports have been reviewed, for the purpose of providing related information in
connection to this study. These research studies have been considered for evaluation and
analysis. In accordance to the main idea of this study a few more related literature has been
reviewed too.
2.1.1 Doctoral Thesis:
A Doctoral thesis on “Internet Banking in the UK: A customer behavior perspective” was
Submitted by Shumaila Yakub Yousafzai to the Cardiff Business School, Cardiff University, UK
in 2005. The primary objective of this thesis was to develop a conceptual model that determined
how intentions towards the use of internet banking were formed and to what extent they were
related to the actual use of internet banking. The thesis also examined the role of customers’ trust
in internet banking acceptance and the perceptual differences among customers on the basis of
their technology readiness and demographic characteristics of gender and age. The thesis
integrated variables related with behavioral and environmental insecurity (trust and perceived
risk), technology acceptance constructs (perceived usefulness and ease of use), and users’
personal characteristics (technology readiness, age and gender) into a coherent and parsimonious
model. The structural equation modeling technique was used to rigorously test the validation of
measurement models and to examine the extensive set of interrelationships among these
variables and their comparative effect on customers ‘intentions and actual use of internet
47
banking. The data used was collected in collaboration with Halifax Bank of Scotland through
postal questionnaire survey and actual internet banking usage logs of the respondents.
Overall, the thesis indicated that while Technology Acceptance Model (TAM: Davis 1989) was
useful in explaining internet banking acceptance, extending the theory to include the combined
effect of new variables and moderators increased our understanding of the phenomenon. Users’
acceptance of technology remained a complex, elusive yet extremely important phenomenon.
Research on the TAM starting from Davis in 1989 has made significant contribution towards
exploring some of its mysteries. The internet banking acceptance model, proposed and validated
in this thesis advances theory and research on this important issue.
This research thesis on “Internet Banking in Pakistan” was Submitted by Shahzad Shariq to
The Department of Business Administration and Social Sciences, Division of Industrial
marketing and e-commerce, Lulea University of Technology, Sweden in 2006. This thesis was
aimed to provide a better understanding of how Internet banking was prevailing in Pakistan. This
purpose was achieved via different research questions which focused on the bank’s website and
its related services. A multiple case study strategy was used, focusing on only two banks of
Pakistan. Using Interviews and website interaction data was collected, keeping in view the
feedback collected from the customers using online banking via websites. While using these
online banking websites, results identify that reduction in cost, saving in time and efficiency in
output is the main advantages obtained. From customer’s service perspective, information about
loans, different language choices, and a menu of several services were all found to be significant.
And the lack of dependence was found the major constraint regarding current online banking
48
channel by users.
An another research thesis on “Quality online banking services” was Submitted by Vasya
Kenova and Patrik Jonasson to The Department of Business Administration, Jonko Ping
International Business School, JÖNKÖPING UNIVERSITY, Sweden in May, 2006. With the
help of an already existing research model for the measurement of online services quality, the
researcher of this study developed and then modified an instrument for the measurement of
online services quality. An empirical data was also collected, using quantitative research
techniques through designing of a questionnaire for the purpose of statistical analysis. After
finding the results of statistical analysis, the previously developed model has been changed with
some modification and finally modified model for measuring the quality of online services
included the following variables, like Service Performance, Website Characteristics, Efficiency
and Communication. In addition, on the basis of modified research model, the customer’s
satisfaction can be evaluated with respect to various dimensions of online banking services.
After a detailed analysis of empirical data, few managerial recommendations were provided.
Suggestions for further research on quality of online banking services were also presented in this
research study.
Khan B. (2006) in his Ph.D. thesis he examined the “Privatization of banking sector in Pakistan”,
its impact on efficiency, economy, employment and new products and services as well as on legal
environment. For this purpose an economic model was used to judge efficiency of banking sector for pre-
and- post period of privatization.
Aman Q. (2010) in his Ph.D. dissertation titled as “Privatization and economic development: A case
49
study of financial sector (banks) of Pakistan” was submitted for presentation in Qurtuba University
D.I.Khan. This examined the role and impact of privatization concerning banking sector, in the economic
development of Pakistan. This study was based on secondary data for the last 15 years, and used different
econometric models to analyze data in order to find out the solution of a specific problem.
2.1.2 Research Articles and Relevant Books:
Coming to research articles, a research study was conducted on “The Adoption of Direct
Banking Services” was Submitted by Lockett, A. & Litter, D., to the Journal of Marketing
Management, 13, No. 8, November, 791-881, in 1997. Its main theme was related to the
adoption of direct banking services in the UK. In which researchers used a model of perceived
innovation attributes and the personal characteristics of adopters and non-adopters. After getting
response from the questionnaires, results indicated that the most important perceived positive
attribute of direct banking was its 24*7 availability, whereas complexity and risk of series were
the two negative attributes.
Mols, N.P. (1998) study was also related with “The behavioral consequences of PC banking”.
This was linked with the strategic distribution channel strategies for internet banking. After
doing a survey, researchers concluded that the existence of barriers towards the use of internet
banking plays a crucial role in predicting the pace with which the expected development will
take place.
50
Athanassopoulos, D., Labroukos, S. (1999). This research was titled as “Corporate Customer
Behavior towards Financial Services: Empirical Results from the Emerging Market of Greece”.
Its main effort was about electronic banking in Greece. While doing a field survey, researchers
suggested that, product-specific attributes such as price and speed are conceived differently by
customers. Price, speed and bank’s reputation are important criteria in the adoption of e-banking.
Daniel, E. (1999). Also worked on “Provision of electronic banking in the UK and the Republic
of Ireland” and was published in an International Journal of Bank Marketing. After doing content
analysis and field survey they examined online banking issues, e.g., culture of innovation, market
share, organizational restrictions, and related them to the bank’s adoption of online banking.
Mols, N. (1999). Has also a great research effort towards “The Internet and the Banks” regarding
adoption process in the Danish retail banking sector. After a thorough content analysis,
researcher found that many of the Danish banks normally prefer to provide maximum bank
services through personal computers, while few of them generally give equal preference to
phone, Internet and manual banking. So using different channels strategy is the most effective
decision by different organizations.
Sathye, M. (1999). Has also contributed about “Adoption of Internet banking by Australian
consumers: an empirical investigation”, with respect to adoption of internet banking in Australia.
Finally after a detailed empirical study researcher identified security, ease of use, awareness,
pricing, resistance and infrastructure issues as the main obstacles to non-adoption of internet
banking. Young, educated, and wealthy were the most relevant customer segments.
51
Zugelder et al. (2000) mentioned that customers are having great concern regarding security and
protection issues in performing internet marketing. Except these matters, customer safety related
problems and false trade practices by suppliers, illegal right to use, such as hacking, or failure of
systems. Safe online transaction is the most important factor because her everything takes place
without the involvement of officials face to face, and there is a great chance of occurring
mistakes through website. In remaining factors, the easy access to internet connection is also
having significance. There are also many other protection related issues which may influence the
user’s preference towards using online banking services.
According to research, Social psychology indicates that there are different types of customer’s
relationships which they want to develop with banks. It means few people who are interested to
develop personal and social contact with the bank employees, usually prefer to meet them face-
to-face. In this particular situation it has damaging effect on such online banking users. While
considering the other dimension, it is very effective for those customers who are interested to
avail services effectively and efficiently.
One further research proposes that customer’s relationships with the bank may vary in terms of
online banking services. Reynolds and Beating (1999) identified that such relationship is
maintained to obtain the social and financial advantages, one more study concluded that
customers normally vary on the basis of value received, by (Gremler and M.J. Bitner, 1999).
As technology willingness of corporate customers plays an important role in their attitudes
52
toward a new system. New technology adoption has both advantages and disadvantages, as few
people feel that using latest technology is a source of improvement, but few the them think it
makes life more difficult and problematic (Parasuraman, 2000). With reference to other
research, it also indicates that customer perceptions about technology are normally linked with
their intentions to use it (Dabholkar, 1996).
Due to lack of trust in web based system there may be restriction for the implementation of new
technology. In this study, researchers identified that trust can be defined as an expectation t=of
ability to do, with reliability and intention of a partner. Furthermore, Morgan and Hunt (1994)
defined trust as: “the perception of confidence in the exchange partner’s reliability and integrity”.
Both trust definitions point out the significance of self-confidence and consistency in the
formation of belief.
Barczak (1997) identified four consumer motivational clusters that shall be given due emphasis
in internet banking service. These clusters include; Trust of the system, Legal support, instant
gratification and Hassle avoiders.
Aladwani, A. (2001). Research efforts were concerning to “Online banking: a field study of
drivers, development challenges, and expectations”. In which researcher worked about the
drivers and challenges for online banking in Kuwait. He also suggested after a detailed field
survey that drivers of internet banking from Bank’s perspective are: providing faster, reliable and
easier service to customers, improving bank’s image and competitive position, creating new
markets, reducing operational and administrative costs and work force.
53
Jun, M., & Cai, S. (2001) contributed about “The key determinants of Internet banking service
quality: A content analysis”, their research effort was about service quality in internet banking.
And after a thorough content analysis they classified 17 service quality dimensions into three
categories: customer service quality, online service quality, and banking service product quality.
Liao, Z., & Cheung, M. (2002), have explained the concept of “Internet-based e-banking and
consumer attitudes: An empirical study”, in their book titled as “Information and
Management” and considered the consumer attitude towards e-banking in Singapore. And
discussed that individual expectations regarding accuracy, security, transaction speed, user-
friendliness, user involvement, and convenience were the most important quality attributes in the
perceived usefulness of internet banking.
Suh, B., & Han, I. (2002), have also discussed about “Effect of trust on customer acceptance
of Internet banking”, in their book titled as “Electronic Commerce Research and Applications”,
1:247-263. In which main focus was about Internet banking adoption in South Korea. And
authors concluded that trust, perceived usefulness, and perceived ease of use were found to be
most significant belief in explaining customer’s attitude towards the use of internet banking.
Gurau, C. (2002) this research effort was related with “E-banking in transition economies: The
case of Romania”, in his case study he finally suggested that the implementation of e-banking in
transition economies is limited because of: incomplete legislations, risky financial systems, slow
54
internet connections. Low internet penetration, lack of knowledge about internet, and
opportunistic behavior of banks.
Howcroft et al. (2002) stated that “Consumer attitude and the usage and adoption of home-based
banking in the United Kingdom”. And researchers finally discussed about preferred delivery
channels for purchasing financial services and branch network was still the most popular
delivery channel. Consumers were not predisposed to change their behavior radically and adopt
widespread use of internet banking. They preferred a mix of delivery channels.
Karjaluoto et al. (2002) contributed towards “Electronic banking in Finland: consumer beliefs
and reactions to a new delivery channel”. After getting response from the survey researchers
concluded that prior experience, attitude towards computers, and demographics influenced the
attitude towards online banking and actual behavior. A typical online banking user was found to
be relatively young, well educated with high income, and a family man with a good job.
Gerrard, P., & Cunningham. B. (2003) discussed and contributed towards “The Diffusion of
Internet Banking among Singapore Consumers”, in the context of Singapore. In the completion
of descriptive research they concluded that the eight influential factors of internet banking
adoption are social desirability, compatibility, convenience, complexity, confidentiality,
economic benefits, and PC proficiency.
Joseph, M., & Stone, G. (2003) contributed towards “An empirical evaluation of US bank
customer perceptions of the impact of technology on service delivery in the banking sector”.
55
This study was about US customer’s perceptions of technology on service delivery. And they
concluded that technology based delivery channels are linked with the customers’ perceptions of
how the banks services are delivered to them; these perceptual outcomes affect their level of
satisfaction.
Rotchanakitumnuai, S., & Speece, M. (2003) while working on “Barriers to Internet Banking
Adoption: A Qualitative Study among Corporate Customers in Thailand”, researchers concluded
in a qualitative study that internet banking users are more confident in the consistency of the
computerized system, while non users are relatively more conscious about services, and having
no confidence over internet based financial services. Those people who don’t use online banking
have more pessimistic management attitudes regarding adoption and claim non-availability of
resources. Non availability of legal protection is also a main obstacle.
Chan, S.-C., & Lu, M-T. (2004) worked on “Understanding internet banking adoption and use
behavior: a Hong Kong perspective”, which was the further explanation of the concept of
Applied Social Cognitive Theory and the Technology Acceptance Model to internet banking
adoption. And concluded that subjective norms, self-efficacy, perceived ease of use, and
perceived usefulness plays significant role in internet banking adoption.
Eriksson et al. (2005) worked on “Customer acceptance of internet banking in Estonia”, and
discussed the concept of Applied the Technology Acceptance Model to internet banking context.
And concluded that trust affects the perceived ease of use and perceived usefulness which leads
to greater use of internet banking.
56
Qureshi et. al. (2008) this research was linked with “Customer Acceptance of Online Banking in
Developing Economies”. The basic purpose of this research was to evaluate the customer
acceptance of online banking. Almost 50% of the clients shifted from traditional banking to
online banking system. The core reason of this transfer is perceived usefulness, security and
privacy provided by online banking.
Kundi G. M. & Shah B. (2009) also worked on “IT in Pakistan threats and Opportunities for e-
business”. This study identified the characteristics of the independent variables i.e.
governmental, organizational, human and technological conditions and the dependent
phenomenon of the success/failure of e-Business projects in the background of Pakistan. The
study was based on survey approach; a questionnaire on continuous scale was used, where t-test,
ANOVA, correlation and regression analysis were done for statistical analysis of primary data.
Out of 31 hypotheses, 22 were substantiated and the rest were rejected. This study finds that
though the conditions are not much promising for e-Business at the moment, yet growing interest
of the private sector through viable investment and gradual improvement in infrastructure
indicates more opportunities than threats for e-Business in Pakistan.
Zahid et al. (2010) researched on “Consumer Acceptance of Online Banking”. This research
study was an attempt to investigate the effects of perceived usefulness, security and privacy, and
quality of internet connection on acceptance of online banking in Pakistan. The behavioral
characteristics of online banking users were examined. Respondents from three renowned
universities within Rawalpindi and Islamabad areas participated in the survey. The results
showed that perceived usefulness was the key factor in explaining the variation in online banking
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acceptance. Furthermore, the issue of security and quality of internet connection were found to
be the least important factors that motivated consumer adoption of online banking. Implications
are discussed based on the findings of the study.
Ahmad A. & Rehman K. (2010) this study was related to “Islamic Banking Experience of
Pakistan: Comparison between Islamic and Conventional Banks”. This study examined the
relationship between service quality and customer satisfaction regarding Islamic banks as well as
conventional banks in Pakistan. It also investigated how service quality affects customer
satisfaction by assessing the magnitude of the relationship between selected variables. This study
is important due to an emerging trend of Islamic banking practices in Pakistan in the existence of
conventional banking system. Data were collected from 720 bank customers by using stratified
random sampling. SPSS 15.0 version is applied for data analysis. The results reflect that there is
strong positive relationship between service quality and customer satisfaction in case of Islamic
banks as well as in case of conventional banks.
Akhlaq M. A. (2011) worked on “Internet Banking in Pakistan Finding Complexities”. This
research investigates complexities (factors) that have resisted or obstructed the adoption of
Internet Banking in Pakistan. Traditional innovation diffusion model (IDT) was used to develop
the research model indicating the proposed complexities and acceptance of Internet Banking
among Pakistani users. The model is tested with a survey sample (n=45). Out of the nine
complexities identified, six are found significant. The findings of the research signify that 67 %
of the proposed complexities, Familiarity with the technology, Concerns for Download Speed,
Unfriendly Website Design, Fear of Government tracking transactions, Security and People
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Gaining Access/Misusing, hinder the users in accepting and adopting internet banking
technology in Pakistan.
Omer et. at. (2011) contributed towards “Customer Perception towards Online Banking Services:
Empirical Evidence from Pakistan”. This study examined the customer perception, preferences,
problems and suggestions about online banking in Pakistan. The study revealed that mostly
customers prefer internet banking (IB) services over branch banking due to reliability,
convenience, speed, safety and security, cost effectiveness, user-friendly, and error free system.
In contrast the parallel finding showed that security problems, lack of trust and knowledge, ATM
machine problems etc. affect the adoption decision of customers of internet banking services.
The services which are not in Pakistan e.g. Cash depositing facility through ATM machines,
“SMS/E-mail Alert” Service, Transfer funds through ATM machines, Payment of utility bills
through internet are found most required / demanding services by the customers in this study.
2.2 Definition of Working Concepts
2.2.1 The Nature of Services
Presently the significance of service sector can be depicted by increased contribution of service
sector in the economy of any country. Due to significant change in service sector in the world
economy, number of service providers has also been increased consistently. With reference to
competitive environment, that’s why the service providers are trying their best to become more
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effective in terms of service quality within a competitive environment.
According to Gronroos (2000), during 1960-80 there were many remmended definitions of
services. So in 1990, a definition was projected that a service is a set of intangible attributes or
activities which usually, happen after the interaction between client and organization,
organizational resources, or processes of an organization, which are normally providing solutions
to the customer complaints.
On various basis goods and services may be differentiated. According to Grönroos (2000), some
of the major points of differences between goods and services are that services deal with process;
these are heterogeneous in nature, it’s impossible to store them, it’s ownership cannot be
transferred, its distribution, production, and utilization are concurrent processes in the service
framework; the core value is formed through the interaction of buyer and seller and most
significantly keeping in mind the background of services users normally take part in the process
of production. The last service characteristic is the most significant issue while explaining the
quality of services. Because customers take part in the process of service production, therefore
on the spot during the production process the quality of services can be directly judged by the
consumers. Now quality service can be defined as the “something judged by customers” by
(Gronroos, 2000), and that is the reason to improve the quality of service is a great challenge for
service producers.
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2.2.2 Conventional Services Quality
During last twenty years different research scholars have worked on the quality of services and
its importance, the role of rendering services and for the purpose of getting a competitive edge
have been recognized by (Zeithaml et al., 1996). Keeping in view the early contribution of the
scholars it was suggested that quality of services is basically the comparison between customer
demands and company’s actual output concerning services (Zeithaml et al., 2000). According to
another researcher it was proposed that service quality is something linked with the perception
and trust of customers (Gummesson, 1979). Grönroos also introduced the notion of “Total
Perceived Service Quality” which defines how a customer perceives the difference between the
perceived and the practiced service.
Figure 2.1
Total Perceived Quality.
Source: Grönroos C. (2000). Service Management and Marketing: A
customer Relationship Management Approach.
Keeping in mind all early research findings, the quality of service was considered as how
effectively customers want may be satisfied. According to the definition of Parasuraman et al.
(1988), service is considered as the complete assessment of a firm’s services, regarding the
overall comparison of customer’s expectations and organizational performance.
Expected Quality Experienced Quality Total Perceived Quality
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Different researchers tried to discuss the extent of service quality. There are two main used
approaches to define the aspects of service quality, (Santos, 2003). Considering the first
approach, service quality can be explained in terms of functional quality (“how” the service is
delivered in the form of process) and technical quality (“what” service is delivered regarding
outcome), Grönroos (2000). The next approach defines service quality regarding particular
features of a specified service. As Parasuraman et al. (1988) explain service quality in
approximately five to ten dimensions (i.e. responsiveness, reliability, assurance, tangibles and
empathy). These five dimensions of service quality form the SERVQUAL instrument
formed by Parasuraman et al. The purpose of developing such instrument was to measure
service quality depending on the dissimilarity of customers’ expectations and perceptions for a
particular service. It has been very famous and generally acceptable in the areas of Service
Management and Marketing.
The conception of evaluating service quality by comparing customers’ expectations and
perceptions of a particular service has been censured currently. Critics of this idea argued
that measuring only customers’ expectations is more realistic.
Some of the challengers Cronin and Taylor, who formed the SERVPERF model in 1992. This
model is similar to the SERVQUAL model, but it measures service quality only on the
basis of customers’ perceptions of a given service. Other critics to the disconfirmation
method are Dabholkar, Shepherd and Thorpe, (2000) who explained that measuring only the
view of customers can better evaluate their meaning. In addition, Dabholkar et Al. (2000)
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stated that, detailed service quality studies can be provided with the use of more simpler and
multidimensional designs. All previously discussed findings have led to defining service quality
as an overall valuation of service excellence.
While defining service quality in all way, based on expectation and perceptions, it becomes
understandable that service quality is a multi-dimensional concept, which means to meet
different requirements of different people according to Brady & Cronin (2001).
2.2.3 Literature on Conventional Banking Services Quality
According to the findings of Cowling & Newman (1995), SERVQUAL have been used by
different researchers, as a tool to analyze the quality of services. After a detailed analysis they
came with findings that during 1995, when SERQUAL was used to measure the service quality
of a bank, they found a large gap between the customers’ expectations and their perceptions
regarding consistency, sensitivity, and sympathy. While using the Critical Incident Technique,
concerning banking industry, perception of service quality was observed by Johnston (1995), and
he came up with eighteen attributes of service quality i.e. helpfulness, access, aesthetics, ,
availability, care, tidiness, comfort, communication, commitment, competence, flexibility,
courtesy, friendliness, functionality, responsiveness, reliability, integrity, and security.
In addition, Bahia and Nantel (2000) suggested a tool for the measurement of service quality,
consisted 31 items with 6 main attributes i.e. assurance and effectiveness, reliability, access,
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tangibles, service portfolio and price.
Furthermore, Oppewal and Vriens (2000) identified and suggested another tool for the
measurement of service quality of a retail bank with 28 features consisting 4 quality aspects like
competency, accuracy, tangibles and friendliness.
2.2.4 Electronic Services (E-Services)
2.2.4.1 The Nature and Features of E-services
Electronic Services are normally presented with the help of internet. There are different types of
problems which are usually faced by online service providers. Primarily, there is lack of face to
face personal contact between both parties and on the other side the way of providing services is
totally different. Iwwarden et al., (2003) identified that a well designed website may play very
vital role for developing relations between customer and the company. Finally, easy and high
level user interface may determine the level of satisfaction regarding services to the customers.
Usually online customers try to compare the offerings of a company and how they offer it. In this
case due to lack of connectivity, electronic services are delivered and evaluated through online
interface for the measurement of services quality. Therefore successful companies normally
judge the functions and designs of their websites very well. Because there may be some
frustration and finally customers will be discouraged to visit that vary website, with its
accessibility and accession problems. Additionally Gronroos, (2000) mentioned that, the
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informational contents of any website are also considered as the important factor for online
judgment.
2.2.4.2 Electronic Services Quality
The quality of electronic services can be defined as the “Total customer evaluation and opinion
regarding provision of electronic services in an online market”, Santos, (2003). Yang, (2001);
Zeithaml, (2002), also stated that it is the practice of successful organizations to maintain their
relations with customers besides the online presence and low price, the breakdown factors also
comprise the quality of electronic service. Electronic services quality is getting more significance
because by using internet, it becomes very easy for everyone to compare the variety of service
offerings than through conventional media, Santos, (2003). Conclusively it may be stated that the
level of online services quality is more than level of conventional services quality, by Santos,
(2003).
The significance of providing quality electronic services has been recognized by many
organizations, but still there is the difficulty of how the quality of online services is defined,
which are its determinants and how it may be truly measured. There are a lot of models and
approaches for evaluating the quality of conventional services according to Cowling & Newman,
1995; Johnston, 1995; Bahia & Nantel, 2000; Oppewal & Vriens, (2000), but due to
limited research made on the quality of services provided using Internet by Cox & Dale
(2001). In recent times, there are two methods to studying e-services that can be
65
differentiated. The first method recommends the knowing of electronic service quality on
behalf of previously available service quality theory Grönroos (2000); Zeithaml et Al. (2000).
On the other hand second approach recommends the knowing of e-service quality on the
behalf of empirical research and the expansion of latest classifications of e-services by
Szymanski & Hise (2000).
Yang, (2001) stated the use of seven online service quality aspects which line up
SERVQUAL scale. These aspects consists of reliability, responsiveness, access, ease of use,
attentiveness, credibility and security. In addition the usage of presented approaches on the
e-service quality measurement and evaluation, some scholars have currently suggested new
quality aspects, particular for the e-services.
According to most recent studies regarding quality of online services of 23 travel agencies,
Kaynama and Black (2000) have used seven quality dimensions resulting from SERVQUAL:
responsiveness, content and purpose derived from reliability, accessibility, navigation, design
and presentation, background, and personalization and customization.
2.2.4.3 Online Systems Quality
2.2.4.3.1 Definition and Importance in Relation to the Study of E-service Quality
While opposing online services, it’s not possible for us to measure its quality, just from
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finding the online service quality dimensions. The cause for that is that online services are
fairly dissimilar from the conventional services, where an interrelated service confrontation
occurs.
In an interrelated service confrontation, where customers have direct contact with service
employees, the way service employees behaves, talks, smiles etc. will effect to a high degree the
satisfaction of the customers with the service provided. In the cyber space customers
correspond with the business using information system. Through the help of Internet as a
service delivery medium, organizations must be conscious of the truth that some
dimensions of the human being communication of conventional service settings cannot be
changed by technology, they also mentioned its different dimensions as: courtesy, friendliness,
helpfulness, care, commitment, flexibility and cleanliness (Cox & Dale 2001).
Due to limited dimensions of human communication through which quality can be provided to
customers will have to be rewarded by other quality aspects, i.e. different traits of the
organization’s website, through which the online services are provided. Therefore a literature
analysis on the online systems quality is essential for the reason of this study.
2.2.4.3.2 Literature on Online Systems Quality
A lot of research studies conducted on the quality of online information systems and websites in
particular. Doll & Torkzadeh, (1988) suggested five main quality aspects that affect customer
liking with the Website of a given organization. These aspects consists of: content, accuracy,
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format, ease of use and timeliness. In recent years, numerous researches have been done on
the sensational features of a websites. In few more studies, Liu and Arnett (2000) present that
key features of a website achievement are the subsequent dimensions: system use, system
design quality, information quality and playfulness.
Keeping in mind websites’ quality, Cox & Dale (2001) stated four quality dimensions for a
website: ease of use, customer confidence, online resources and relationship services (Yang et
al., 2004). Abels et al. (1999), state user criterion for a high-quality website structure consist of
use, content, structure, linkage, search and appearance. Afterward, using the results of Abels et
al. (1999), Santos (2003) has mentioned five features of online systems quality: ease of
use, appearance, linkage, structure and layout, and content.
A particular feature which a website must have in order to be successful and add to the service
quality based upon high degree for providing a particular service. For instance, the
characteristics of a website for purchasing music and books are expected to differ from those of a
bank’s website. In case of online banking websites, Jayawardhena and Foley (2000) suggested
website attributes significant to improve customer contentment: the speed to download,
content, design, interactivity, navigation and security. Moreover, Waite & Harrison (2002)
have discussed about seven features that affect customer liking regarding banks’ websites:
transaction procedure, decision making convenience, interactive interrogation, specialty
information, search efficiency, physical back-up and machinery excitement. The following
figure 2.2 shows the classification of Internet banking services.
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Figure 2.2
Source: Centeno, C., “Adoption of Internet Services in the Enlarged European Union: Lessons from the Internet Banking case”, European Commission Joint Research Centre, Report EUR 20822 EN, June 2003.
2.2.5 E-SQ (E-S-Qual and E-RecS-Qual) Instrument for Measuring Online
Services Quality
There is also a same tool related to SERVQUAL scale, designed especially for knowing online
services quality. Which consists of two scales: the E-S-QUAL scale consists of 4 dimensions
with 22 attributes, consisting efficiency, fulfillment, system availability and privacy and
the E-RecS-QUAL scale which includes of 3 dimensions with 11 features, having
responsiveness, compensation and contact according to Parasuraman, Zeithaml & Malhotra
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(2005).
Finally Kenova, V. and Jonasson, P. (2006) used a revised version of the E-S-QUAL and E-
RecS-QUAL scales mentioned by Parasuraman et Al. in 2002.
Figure 2.3
Source: Model for measuring the quality of online banking services adapted from
Parasuraman et Al., 2000 and 2002.
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2.2.6 The online environment
A website is the most important source for electronic commerce. An organization be able to
show its uniqueness and promote its products. In addition, organizations can obtain response
directly from customers. A website can improve the organization's representation and provides
benefits both to the company as well as management, Sullivan (1996). A website can also increase
interactions with other organizations, therefore developing the effectiveness of company
processes by rising direct sales and dropping costs according to (Zona Research, Inc., 2000).
2.2.6.1 Formational design of a website
Many dimensions described, which may add to deliver good service quality using a website has
been classified into following four categories (Cox and Dale, 2001):
1. Ease of use
2. Customer’s confidence
3. On-line resources
4. Relationship services
Each class relates to a different part of the website experience and serves to enhance customer’s
satisfaction to the extent that the customers will return. Ease of use is given to the all factors
relating to the design of the website. To minimize the customer frustration, is usually the main
navigational aim. So virtually anyone can communicate with customers through text, images and
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animations via website. Normally different hyperlinks and search engines are provided for guidance.
All of these elements are related with the designing and usability factor of a website. So due to
poor website design, it would be difficult for users to navigate within a site to explore their
purpose and try to hesitate from making dealings.
The self confidence of a customer usually deals with the feelings of a visitor regarding customer
service, its speed, consistency, and fast access to a website. The main factors i.e. safety and
customer’s confidence should develop a good experience for users, while getting relevant
information or making any business dealings with others.
Self-belief is a very important factor regarding online business and making secure online
transaction is the most important issue, but due to such customers are having some ambiguities
regarding their personal details. Therefore developing trust is also a main issue which can be
linked with customer services. That is why is need of the users/ customers to understand that in
the problematic situation they can contact with company’s employee via e-mail, telephone or
SMS online. In this case Frequently Asked Question may help the customers and encourage
them from using customer service, but the capacity to deal with and individual intensifies the
feeling of trust in the website.
Different resources via internet normally means providing variety of products on the website,
with its ability to give enough information for users to make right choice and with be capable to
make business transaction online. In case of making online purchases, sufficient details about
the products should be provided for making choices. After the selection and order, details of
confirmation and delivery should be rapidly provided to the online customers, with the tracking
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facility of online orders. Few researchers also suggest that there should also be a proper way to
get feedback either during or after performing the online transaction, which is very helpful for
maintaining the record customer’s records.
Interrelated services also consist of main variables that may increase value to the customer
experience through developing a long lasting relation with them by providing some additional
information and services. Keeping in mind the quality factor, it enables a website to develop
link with the user via continuous buying motives, by presenting value added services and also
providing the facility of customization.
Jayawardhena & Foley (2000) stated that a website is exclusive in its hypermedia features.
Hypermedia links multimedia content with hypertext connection. They recommended that the
attributes of online banking websites, such as:
1. Speed
2. Content
3. Design
4. Interactivity
5. Navigation and
6. Security
2.2.6.2 Website plan guidelines
There are two generic web site design strategies:
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1. Communicational/ Informational strategy and
2. Transactional/Online strategy
1. Communicational/Informational strategy
Liu et al. (1997) mentioned in their studies that 93 percent of “Fortune” 500 companies have
publicly accessible sites, but less than 26 percent of those sites support transactions. On the
other hand, without any doubt that communication/ informational design on the web can also
produce significant sales in other areas of business. For example, Insight Direct, a discount
computer cataloger selling mostly to business, generates only 10 percent of its sales from its on-
line catalog, but more than 75 percent of its new customers come from the Website.
2. Transactional/ Online strategy
An online transactional strategy always provides a list of for sale electronically. It’s very easy
for users to see a catalogue and purchase a product online. While by using an informational
model we can simply provide an electronic list of products with its ordering information, which
is not very helpful regarding online dealing. In the absence of online ordering database, it
simply exploits the interactive features of the web as an interactive medium. Griffith & Krampf
(1998), identified that a company’s website may play a vital role in enhancing the overall sales
volume. But still due to some security reasons, most of the organizations are getting maximum
advantages through electronic marketing, particularly in case of small and medium
74
organizations. Practically and professionally, some of the successful transactional designs i.e.
Amazon.com etc. are its amazing examples. Due to their success these organizations are
growing day by day. Therefore most of the organizations are having rationales to believe that
the web may used as useful tool for money making during online transactions.
2.2.7 Customer Online Services
Internet is a primary driver of internal changes (Jayawardhena & Foley, 2000). Internet has
changed the way of interaction between customers and firms. It has also modified methods to
initiate, develop and stop relations with customers (Mols N. P., 2000). Different scholars stated
that the quality of service is one of the most important factor regarding successful retailing,
which is primarily based on two following reasons (Griffith and Krampf, 1998; Zeithaml et al.,
2000). First reason states that there is a positive relationship between quality of service and
customer’s satisfaction. Secondly, service quality has also a significant role in the attraction of
prospective customers.
Financial institutions websites may provide a variety of functions starting from preliminary
information full-fledged transactions. Knight (1999) stated that information can be provided in
four basic categories: At initial level, due to the availability of internet, information about the
financial organization can be easily seen, without having any interaction between customer and
institution except using email. The second level allows and institution to get information, for
example taking a loan application electronically. While third level presents and opportunity to
the user for sharing data and information, i.e. transactional and balances detailed information.
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According to Cox and Dale (2001), while considering conventional quality services i.e. comfort,
cleanliness, competence, courtesy, and friendliness, are not directly linked with online retail
businesses, whereas communication, credibility, accessibility and online business appearance
are the most important variables regarding an online business.
2.2.7.1 Structural design of Customer Service
Different research studies have described that high levels of customer service quality may have
a strong effect on customer retention, Parasuraman et al. (1988). Contrasting the manufacturing
product quality that can be easily managed, service quality is an indefinable and intangible
make that poses meaning and measurement problems. According to different studies, service
quality is formed by the comparison between customer’s wants of service provider’s efficiency
and their assessment of the services they received, Parasurman et al. (1985, 1988).
During research Parasuraman et al. (1985, 1988) have discussed main service quality features
which may influence service quality. Parasuraman et al. (1988) afterward came up with ten
features within five attributes. These five features are:
1. Tangibles
2. Reliability
3. Responsiveness
4. Assurance and
5. Empathy
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In case of banking industry, Johnston (1995) explained banking customer’s expectations about
the service quality and come up with the following 18 features.
1. Access
2. Aesthetics
3. Helpfulness
4. Availability
5. Care
6. Cleanliness/tidiness
7. Comfort
8. Commitment
9. Communication
10. Competence
11. Courtesy
12. Flexibility
13. Friendliness
14. Functionality
15. Integrity
16. Reliability
17. Responsiveness and
18. Security
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2.2.8 Technology Acceptance Model (TAM) and Associated Studies
Online banking acceptance has gained special attention in past few years, especially in the
academic studies. Banking journals have devoted special issues on the topic (Karjaluoto et al.,
2002; Waite & Harrison, 2002; Bradley & Stewart, 2003; Gerrard & Cunningham, 2003;
Mukherjee & Nath, 2003). It is explicated by Sathye (1999), Robinson (2000), and Giglio
(2002), that, online banking channel is the cheapest delivery channel for banking products once
established which results in notable cost savings and is considered one of the fundamental
reasons underlying online banking development and diffusion. The other fundamental reason is
highlighted by Karjaluoto et al. (2003) that due to reduction in banking network and also reduced
number of staff members, whicha has changed the way of delivering services in order to save
time, efforts and money. That’s why due to saving of time, cost and having freedom of place,
customers usually prefer to accept online banking, according to Polatoglu & Ekin, (2001); Black
et al., (2002); Howcroft et al., (2002). Therefore different research studies indicate online
bankers are more profitable and richer than conventional bankers (Mols, 1998; Robinson, 2000;
Sheshunoff, 2000). That’s the reason no one can ignore the significant role of using the power of
online media.
As discused, online banking offer many benefits to banks as well as to customers, still there are
majority of private bankers, in global terms, overlooking the importance of online banking
channel and therefore, not using it. There are multiple reasons to this and among those one of the
major reasons is that customers need to have an access to the Internet in order to utilize the
service. Further, Mols et al. (1999) highligted that, new online users need first to learn how to
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use the service. Another reason of ignoring online banking is it’s laxity of social dimension, i.e.
you are not served in the way you are in a face-to-face situation at branch (Mattila et al., 2003).
The last reason is the issues of security (see e.g., Sathye, 1999; Hamlet & Strube, 2000;
Howcroft et al., 2002), which has been considered by the customers.
Businesses normally make nvestments in computerised information systems for different
reasons, for the sake of low costs, getting maximum production within minimum input, and also
to improve the quality of goods and services (Lederer et al., 1998). Usually customer’s attitude
about acceptance of new technologies has a great influence on successful adoption of
informational systems (Venkatesh & Davis, 1996; Succi & Walter, 1999). If customers or users
are not interested to use the information systems, it would be very difficult for an organization to
get maximum benefits by Davis, (1993); Davis and Venkatesh, (1996). Succi & Walter (1999)
aslo stated that the acceptance and willingness to use new technologies both are positively
correlated. Therefore it is compulsory to sort out the root cause why people are interested or not
interested to use an information system.
In order to examine and understand different variables which normally affect the informational
systems acceptance, several models have been suggested. These different research models
conserning adoption, acceptance and usage behavior are; Theory of Reasoned Action (TRA)
developed by Ajzen & Fishbein (1980), Technology Acceptance Model (TAM) recommended by
Davis, (1989); Davis et al., (1989), the Theory of Planned behavior (TPB) given by Ajzen
(1991); Mathiesen (1991), the Decomposed theory of planned behavior (Taylor and Todd, 1995).
Innovation diffusion theory (Rogers, 1983) etc. But, in our research study Techonology
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Acceptance Model is considered as a focal point. Because this is very helpful tool for
understanding the concepts of perceived usefulness (PU) and perceived ease of use (PEOU)
concering the perceptions towards use that is linked with determinationa and finally to action,
and such variables are considered as the main elements during this research, which is reletive
more important than any other model.
Keeping in mind the Technology Acceptance Model, Perceived Usefulness and Perceived Ease
of Use are considered as the most significant beliefs regarding acceptance of computer. PU
means customers willingness towards computerized applications and having positive relationship
with their performance (Pikkarainen T. & Pikkarainen K. 2004).
While PEOU can be expressed as the extent to which custmer feels relax or free from efforts, by
(Davis et al., 1989). TAM has been testified regarding various samples, locations and used as
avalid and trustworthy tool conserning acceptance of informational systems and its use
(Mathieson, 1991; Davis and Venkatesh, 1996). Finally it is suggested that perceived usefullness
and percieved ease of use influence acceptance of all kinds of informaltional systems.
2.2.9 Conceptualization
Mile & Huberman (1994) stated that the purpose of the conceptualization is to explain either
graphically or narrative, the main things that are going to be studied, in order to collect data and
answer the research questions, a conceptualization of the research questions and User acceptance
of eMarketing, via the literature just reviewed, are given.
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1: How can the online banking environment (website) be described?
In the previous section, we have studied the online environment (website), including the design,
models, development and strategies. Researcher found that there were quite many items
overlapped. In order to find out how web site designs in Internet banking should be, researcher
finalized after a detailed review of literature that model of Jayawardhena & Foley (2000) is the
most suitable one as it is specifically related to internet banking industry.
Speed to download
• Simple graphics
• Animation and/or multimedia plug-in
Content and Design
• Product information content
• Amount of product information
• Product information format
• Language alternatives
• Layout features
Interactivity
Technical banking facilities:
Loan calculators, exchange rate converters, mortgage calculator etc.
Navigation
• Homepage hyperlinks
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• Links
• Consistent navigation.
• Search engine in the site.
• Site maps/guides
Security
• Encryption
• Purchase /operation confirmation
• Automatically log off
2: How can customer services within this environment be described?
Web-based customer service level and nature of customer participation, they should be
integrated with website design to be intact and leading to enhance customers services. Cai &
Jun (2003) discussed service quality in online retailing. Joseph, McClure & Joseph (1999)
investigated the influence of technology such as ATM, telephone and Internet, on the delivery
of banking services. Their study acknowledged six dimensions of electronic banking customer
service. In order to find out how websites could be used for enhancing customer service in
Internet banking, the theories of Cai & Jun (2003), as well as from Joseph, McClure & Joseph
(1999) are deemed appropriate for this study, as they are both more recent.
Trustworthiness (Cai & Jun, 2003)
• Security
• Trust/risk
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• Privacy
Communication (Cai & Jun, 2003)
• Communication tools
• Frequently asked questions
• Information updated
• Information understandable
Convenience/accuracy (Joseph, McClure & Joseph, 1999)
• Convenient
• Accurate
• Easy to use
Feedback/complaint management (Joseph, McClure & Joseph, 1999)
• Feedback service
• Friendly environment
• Complaint management
Efficiency (Cai & Jun, 2003)
• Menu options
• Demo
• Exchange rate conversion
• Calculators
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Accessibility (Joseph, McClure & Joseph, 1999)
• Connectivity
• Special service for disables
• Language options
Customization (Joseph, McClure & Joseph, 1999)
Personalized service
3: User Acceptance of eMarketing Conceptualization
Perceived usefulness (PU) and Perceived ease of use (PEOU)
TAM posits that PU is a significant factor affecting acceptance of an information system
(Davis et al., 1989). PU is defined as the degree to which a person believes that using a
particular system would enhance his or her job performance (Davis, 1989). According to
TAM PEOU is a major factor that affects acceptance of information system (Davis et al.,
1989). Davis (1989) defined PEOU as “the degree to which a person believes that using a
particular system would be free of effort”. Hence user will more likely to accept an
application perceived easier to use than another.
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Perceived enjoyment
Davis (1993) explicated that the extent to which the activity of using a computer is perceived
to be enjoyable in its own right refers to enjoyment. Perceived enjoyment (PE) is an intrinsic
motivation to use information systems which is in contrast to the PU, which can be seen as an
extrinsic motivation. According to various studies conducted on Perceive Enjoyment, by
Davis, (1993); Igbaria et al., (1995); Teo et al., (1999) suggested that perceived enjoyment
positively influence the acceptance of using computers. By Igbaria et al. (1995) recommended
that perceived enjoyment has a positive link with time of using but has no relations with the
frequency of use total number of activities. But on the other hand, Teo et al. (1999) noticed
that there is a positive relationship between perceived enjoyment and frequency plus routine
daily usage.
Amount of information on online banking
Sathye (1999) mentioned that the use of online banking services is fairly new experience to
many people, low awareness of online banking is a major factor in causing people not to adopt
online banking. One of the major factors impacting the adoption of online banking has been
identified as the amount of information consumers have about it.
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Security and privacy
Sathye (1999) found that privacy and security were the significant obstacles to the adoption of
online banking in Australia. People have a weak understanding of online banking security
risks although they are aware of the risks (Roboff & Charles, 1998). Furthermore, they found
that consumers often rely that their bank is more concerned about privacy issues and protect
them. Consumers’ confidence in their bank was strong, their confidence in technology was
week, they argued. With the rapid growth of internet, consumers are more and more
concerned about security and privacy issues. Generally speaking, many consumers are
unwilling to give private information over the telephone or the internet, for example credit
card information (Hoffman & Novak, 1998).
In this article we concentrated only on the aspects consumers are most concerned about
because the issues of trust, security, and privacy are multidimensional constructs and need
further explanation. We concentrated on the level of confidence in the technology and online
banking service provider.
Quality of Internet connection
The importance of a decent internet connection and its quality is one of the factors affecting
the adoption of online banking (Sathye, 1999; Pikkarainen et al., 2004). Without a proper
Internet connection the use of online banking is not possible.
86
Based on the literature review and a focus group interview with business professionals,
technically expert persons and related customers as well as employees from the banking sector, a
model indicating the User Acceptance of eMarketing is developed (Figure 2.4) and details
regarding related determinants are as follow:
i. Determinants of the User Acceptance of eMarketing
a. Perceived Usefulness
b. Perceived Ease of Use
c. Perceived Enjoyment
d. Information on Online Banking
e. Security & Privacy
f. Quality of Internet Connection
g. Customer Acceptance
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ii. Demographic Impacts of the Respondents
a. Gender
b. Age
c. Qualification
d. Income
e. City
iii. List of the Extracted Concepts
Table 2.1: Showing the List of Extracted Concepts (Variables)
Variables Definitions Code1 Perceived Usefulness PU 2 Perceived Ease of Use PEU 3 Perceived Enjoyment PE 4 Information on Online Banking IOB 5 Security & Privacy S&P 6 Quality of Internet Connection QIC 7 Customer Acceptance CA
Table 2.2: Showing the List of Extracted Concepts (Demographics)
Variables Definitions Code 1 Gender GDR 2 Age AGE 3 Qualification QUA 4 Income INC 5 City CTY
88
iv. Theoretical Framework
Figure2.4: Research Model
Source: Researcher
v. List of Main and Sub-Hypotheses
H1 (Main Hypothesis): User acceptance of Electronic Marketing is determined by a
number of factors however, this behavior is mediated by demographic attributes of the
users (respondents).
Hypotheses Test Code 1 All the Predictors are Correlated
with the Dependent Variable. Correlation Analysis H2
2 All the Independent Variables Predict the User Acceptance.
Stepwise Regression Analysis
H3
3 Demographic attributes (Five) bring the mean differences among the groups on their response.
Tests of Significance H4 to H8
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CHAPTER
THREE
3. RESEARCH METHODOLOGY
The following chapter on Methodology will describe general introduction of the study, type and
nature of research, statement of research questions, sources of data, research approaches in
data gathering, population and sampling techniques adopted with rationale, explanation of
reliability and validity of research. It will further describe that how the results of this research
can be used/ generalized. Furthermore, this chapter describes the way the data for study has
been collected and techniques used to analyze the data.
3.1 General
The key objective of this research study is to evaluate the nature web based marketing, factors
that control the nature of customer’s behavior towards online banking acceptance and its impact
on banking sector of Pakistan. In order to achieve the desired results initially, using qualitative
approach the case study of two leading conventional and Islamic banks (Citibank & Meezan
bank) has been taken to evaluate and analyze the nature of web based marketing and secondly,
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through quantitative approach to understand that up to how much extent online banking users/
customers are accepting eMarketing, which is the extension of Technology Acceptance Model
(TAM). And its impact on banking sector has also been analyzed through finding the nature and
extent of association among different variable used in (TAM). Therefore main objectives of the
study are to find out:
To describe the impact of online banking environment (website) as projected in web based
marketing upon customer behavior.
Describing the influencing role of online banking services upon customers.
To provide the descriptive statistics of demographical variables in regarding users acceptance
of eMarketing.
To find out the nature and degree of association among different variables used in user
acceptance of eMarketing.
And finally evaluating electronic marketing impact on banking sector of Pakistan from
customer’s behavior perspective.
Therefore, this study is addressing the concept of eMarketing and its acceptance on online banks
of Pakistan particularly with reference to the federal and provincial capital cities i.e. Islamabad,
Lahore, Peshawar, Quetta and Karachi. Where the units of study are:
Students
Businessmen
General public
Employees of relevant banks
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3.2 Nature and Type of Research
3.2.1 Nature of Research
Research study is descriptive as well as exploratory in nature and it aims at exploring the nature
of e-marketing, online banking acceptance, its impact on banking sector and different variables
related with it. The study is based on both secondary and primary data, supplemented by
information secured through informal interviews, and the talk and walk around target population.
Step by step methodological approach is explained as follows:-
3.2.2 Type of Research
Research methodology followed in the study is a compound one, comprising historical,
descriptive, analytical, empirical, comparative as well as statistical approaches. It encompasses
both types of sources of data i.e. secondary as well as primary.
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3.2.3 Statements of research questions
So for as the electronic marketing impact on banking sector of Pakistan is concerned only a little
research covers usually Singapore, Hong Kong and China, which are very developed economies
and not representative of all Asian countries. Thus to gain thorough understanding of the issues
in the Pakistani context, this research will be conducted to explore the electronic marketing
impact on banking sector, keeping in view of customer behavior perspective.
In order to reach this purpose the research questions are stated as below:
RQ1: How can the online banking environment (website) be described in web based
marketing of banks?
RQ2: How can quality customer services within this environment be described in web
based marketing of banks?
RQ3: How much customer’s acceptance to the new technology?
RQ4: What is the impact of electronic marketing on banking sector of Pakistan?
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3.2.4 Sources of data
Primary: Results of the survey (Questionnaire and Focus group interview) conducted in the
federal and provincial capital cities of Pakistan i.e. Islamabad, Lahore, Peshawar, Quetta and
Karachi from all individuals of online banking users (Students, Businessmen, General public and
Bank employees).
Secondary: In order to get a thorough understanding of e-marketing, online banking acceptance,
and its related research models researcher has taken help from a lot of secondary sources.
Secondary sources of the data collected include; Annual reports and websites of State bank of
Pakistan (SBP), Meezan bank, and Citibank in Pakistan. Other sources include encyclopedias,
books, online and offline research journals, periodicals, newspapers referring to area of the
study.
3.2.5 Research Instruments
The research used combination of different data collection techniques, which include
questionnaire, interview, observation, focus group and case study. And data is collected from all
individuals of related area, who impacted the decision-making process at different levels. These
target individuals included students, businessmen, general public and banking officials, given the
relevancy and relativity subject to their availability and access of the researcher.
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3.2.6 Sample Design
3.2.6.1 Sample Survey
This survey was basically conducted in two stages. In first stage a case study of two leading
conventional (Citibank) and Islamic (Meezan) banks in Pakistan has been taken for the purpose
of cross-case analysis with the help of focus group interview. This focus group interview was
conducted in Islamabad including eight online banking users (Web developers, programmers,
customers, and bank officials of respective banks) on 2nd Feb, 2009. This session was started
from 9 am to 2 pm in the conference room of Islamabad guest house. And collected data based
on online banking environment (website) and online banking services of respective banks in
order to find out the web based marketing comparison between these two banks.
While in the second stage of field survey a detailed questionnaire regarding User Acceptance of
eMarketing/ Technology Acceptance Model (TAM) was distributed in federal and provincial
capital cities to a sample 800 online banking users in Pakistan. These questionnaires were posted
to the online banking users (students, businessmen, general public and bank employees/
officials). Questionnaires response was collected by the help of different university officials,
bank officials, and through personal visits in major markets of Pakistan. As a result we got 84%
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of response from the respondents, and distribution of questionnaire was according to population
of respective city. Details are given below.
3.2.6.2 Selection of Sample:
3.2.6.2.1 The population: The population of this research can be defined as:
Element: All Individuals: related to online banking use.
(Students, Businessmen, General public, and Bank employees)
Sampling unit: Online Banking User/ Customer
Extent: Federal and provincial capital cities of Pakistan
(Islamabad, Lahore, Peshawar, Quetta and Karachi)
Time: Jan – 2009
3.2.6.2.2 The sampling frame: - 800 customers who used online banking during 2009.
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3.2.6.2.3 Sample design:
Selected areas were divided into federal and provincial capital cities of Pakistan, keeping in view
their population, technological development, and education of the respondents. The main reason
for selecting non probability sampling was the accessibility and the availability of infinite
respondents. Therefore initially for a cross-case analysis, data collected from a focus group about
web based marketing of two leading conventional and Islamic banks of Pakistan. Later on for
User Acceptance of eMarketing data had been collected from a sample of 800 respondents i.e.
(students, businessmen, general public and bank officials). In multi-stage sampling, area and
convenience sampling was used to select a sample of 800 online banking users from the whole
population according to their population density. A sample size for online banking acceptance
survey has been calculated by the following formula (when population is infinite/ unknown)
keeping in mind the calculations of Standard Deviation, Variance, and Zee score derived from a
pilot study of 200 respondents.
n = (Zee square)*(Variance square) / (Standard Error square)
Values of Z (at 95% confidence level) =1.96, from a given table
V (Variance) = 0.092 and S.E (Standard Error) = 0.0064
Where n (sample size) = 786
Source: Calculated from data matrix 2009.
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The selected destinations for the purpose of sampling were following:
Citibank Pakistan.
Meezan Bank Pakistan.
Colleges and universities of federal and provincial capital cities of Pakistan.
Different online banks of Pakistan.
Different markets of Islamabad, Lahore, Peshawar, Quetta and Karachi.
Table 3.1: Distribution of Sample Respondents
S # Activity Islamabad Lahore Peshawar Quetta Karachi Total
1 Students 50 50 25 25 50 200
2. Businessmen 50 50 25 25 50 200
3. Bank officials 50 50 25 25 50 200
4. General public 50 50 25 25 50 200
Total 200 200 100 100 200 800
Source: Field Survey –2009
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3.3 Collection of Data
Data on various indicators of e-marketing, online banking acceptance and its impact on banking
sector of Pakistan were collected from the students, businessmen, banking officials, web-
developers, programmers, and other people engages in online banking related activities. In this
regard, data for cross-case analysis was collected from a focus group interview containing eight
group members regarding web based marketing. In this regard a case study of two leading banks,
one from conventional (Citibank) and other Islamic (Meezan bank) was considered. On the other
side, 84% customers’ response for online banking acceptance was collected through a
questionnaire from a sample of 800 respondents. Majority of questionnaire response was
collected by post in different universities, colleges, markets, and banks.
3.4 Analytical Frame Work:
This following research model is related to User Acceptance of eMarketing/ (TAM) and
variables included are, perceived usefulness, perceived ease of use, perceived enjoyment, the
amount of information, security and privacy, internet connection. This is shown in figure 3.1:
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Figure 3.1 Research Model
Figure3.1: Research Model
Showing the Schematic Diagram of the Theoretical Model
Source: Researcher’s Analysis (2009)
3.5 Analytical Techniques
With-in case analysis, Cross case analysis, Correlation analysis, Regression analysis, Descriptive
Statistics i.e. Simple average, means differences, percentages, diagrams and graphs are used to
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analyze and interpret the data. SPSS 17 is used to analyze quantitative data by using computing
variables in data matrix.
3.5.1 Interviewing
Using qualitative research for the purpose of comparative study of two banks two Interviews
were held related to online environment and its services from a focus group i.e. (web developers,
online banking users, and bank officials) to capture their perceptions. This helped our study to a
great deal. (Interview guidelines are provided in Annex.-II) and are main cover the following
areas:
1. Online Banking Environment related variables
Speed to download
Content and Design
Interactivity
Navigation
Security
2. Online Banking Services related variables
Trustworthiness
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Communication
Convenience/accuracy
Feedback/complaint management
Efficiency
Accessibility
Customization
3.5.2 Questionnaire
For quantitative analysis one Questionnaire (Annex-I) related to User Acceptance of eMarketing,
an extension of (TAM) was used, which helped in statistical analysis of the study.
This questionnaire was divided into two parts, first was related to respondents (Demographical
variables) and second part was linked with the topic (Continuous variables). It covered six main
variables and a lot of their attributes. There were total 37 questions included in this
questionnaire. Main questions were directed to know the following concepts:
1. Usefulness
2. Ease of Use
3. Enjoyment
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4. Information of online banking
5. Security and Privacy
6. Quality of Internet
3.5.3 Field Operation
The field operation in the form of field survey was started from Islamabad on 1st of Jan, 2009
and was finished at Karachi on 1st of June 2009.
3.6 Limitations
The study suffers from some limitations, as is usually the case in managerial and organizational
research of this type. Most of the difficulties cropped up in analyzing the human behavior, their
guesses / personnel views upon effects of e-marketing and online banking acceptance. The
analysis of the human behavior, and socio- economic effects was affected by factors discussed
below:
It was very difficult to get response from all area/ cities of Pakistan that’s why the
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federal and provincial capital cities have been included for field survey.
We have considered non probability sampling instead of probability just because
of availability and accessibility of the respondents.
It was found difficult to get the response from respondents of whole population.
The proportion of reliability of information given by the respondents.
It is also very important to understand that most of e-marketing and online banking
acceptance are not easily quantifiable, and also that many of these effects surface in the
long run.
Most of the findings of the study are based on the information obtained from the primary
data and field survey. The study is interested not in the exact measurement but rather in
the direction of change and its approximate magnitude. Time and resource constraint
prevented a more through probe.
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CHAPTER
FOUR
4. DATA COLLECTION
This chapter has been divided into two sections and will present the empirical data collected
from the different case studies (focus group interview) and field survey (questionnaires)
through various bank customers. This chapter presents the collected data in the same order as
our research questions are posed, conceptualized and the literature is reviewed. Keeping in
view all the major areas of the topic; Online banking environment, Online banking services
and Technology Acceptance Model in order to find out their impact on banking sector from
customers’ behavior perspective.
In the first part of this chapter, two case studies have been taken and data has been collected
from Meezan and Citibank Pakistan’s websites, as mentioned in the methodology; the data is
qualitative and is collected by means of direct observation and focus group interviews (Annex-II)
from a group of eight technically expert customers (web developers, programmers and banking
professionals). Focus group interview was conducted for a maximum duration of five hours on
2nd Feb., 2009 in the Islamabad Guest house.
Initially data collected regarding online banking environment by the help of focus group
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interview guidelines (Annexure-II) and later on the online banking services’ response was
obtained using Annexure-III. Furthermore collected data is analyzed by a within-case analysis
and a cross-case analysis in the next data analysis chapter.
While in second part of this section, data has been collected regarding online banking acceptance
in the banking sector of Pakistan. A field survey has been conducted for data collection from a
sample of 800 respondents in the federal and provincial capital cities of Pakistan. Data has been
collected by means of questionnaire (Annexure-I) and is analyzed statistically using SPSS in
chapter # 5.
4.1 CASE ONE: Online Environment of Meezan Bank Pakistan
(www.meezanbank.com)
In the response of Q# 1 and 2 (Annexure-II) regarding speed to download, six out of eight focus
group members stated that Meezan Bank web site has few moving elements such as graphics or
pictures that are flashing, moving or uneven in shape. There was a multimedia used to increase
its attractiveness.
While asking Q# 3,4,5,6 and 7(Annexure-II) regarding contents and design, seven out of eight
respondents stated that Product information content was available and one could search the
desired information of all products and services provided by the bank. About amount of product,
the visitor generally did not need to scroll pages to observe all information. On some pages there
was a next page link. Regarding product information format, the information about products and
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service is available in text and downloaded format. The annual reports and some other important
report can be downloaded from the web. But there are no language options available for visitors.
All information is only available in English. As far as layout features are concerned, colors of
Meezan’s web site, the background is white. Some important heading and links are in blue and
black color. In pictures and icons a great deal of colors are used. Most text on the site is black
and green. Meezan bank has mostly used one font on its web pages.
The font used is Verdana. There are in addition a few different sizes of the text depending on if it
is a hypertext link, heading, or a paragraph of information. Regarding the speed of the web site,
visitors are able to move further in the structure of a web page in a few seconds. The link for
system requirements is mentioned but not connecting to the server properly. Regarding
interactivity opportunities, the e-mail to bank, filling a form to the office and call centre facilities
are also available. And “Contact us” which was also made on almost all pages. Website provided
personalized solution in shape demo facility. The person who is operating internet banking first
time could demonstrate his transaction in written form and learn how to operate transaction in
the internet banking.
While responding Q#8 (Annexure-II) concerning interactivity all respondents stated that the
website is furnished with the facility of different calculators like home, investment and
insurance.
Responding to Question # 9-13(Annexure-II) about navigation 80% respondents stated that, a
visitor can easily reach from homepage to any important information through homepage
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hyperlinks. When visitors open home page of the bank, they can see horizontal links on the top
including bank name with dark blue/black colors. The homepage is providing important
information regarding personal customers, corporate customers and information about site map,
there are also locators on the main page. There are no dead and end pages on the site. The links
are well prominent and so that visitors do not face any problem in reaching the required page or
information. In all of its web pages, meezanbank.com managed consistent navigation with the
same style; same color, same background, same logo, same layout, etc. Furthermore, the pages
are adjusted to the size of the screen. There are few areas; bottom of the pages with empty spaces
in some pages. Search engine facility is also provided on the website.
About security issues in Q#14-16, 90% respondents confirmed that the bank has taken all
security measures for the satisfaction of their customers, using advanced encryption technology.
4.2 Customer Service of Meezan Bank Pakistan
Trustworthiness: In the response of Question # 1-4 (Annexure-III), 70% interviewees replied
that worries always lie in human mind when you deal with somebody with respect to finances
especially when you do not see him face to face. The interviewees were asked about the
“security” concerns when dealing with suppliers, dealers or other transactions they made through
online service of MBL. They said that they had never gone through such issue, as they knew that
Meezan Bank’s information transfers are encrypted using 128-bit SSL encryption technology.
They further added that encryption is the process of transforming using an algorithm to make it
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unreadable to anyone except those possesses special knowledge. Interviewees also told that they
came to know by Bank officials that 128-SSL (Secure Socket Layer) encryption is so secure that
a hacker with the time, tool and motivation to attack using the brute force would require a trillion
years to break into session.
When interviewees were asked about “Trust” they replied that they are using online services of
Meezan bank from the beginning and they had never faced such problem. Because the access to
personal details and account details are controlled through login process. The facility of changing
the password of account frequently is permitted in website. On suspicion password could be
changed and call center help can also be taken in this matter.
The participants concerning “privacy” were also asked, majority of them said that Meezan bank
guarantees that the emails and cell no’s of customer are not sold and provided to any other party
and even Meezan bank itself don’t send emails to its customers until request is made by the
account holders by registering themselves for emails. So majority of them were much satisfied in
terms of privacy policy of the bank.
On questioning about “communication tools” according to Q# 5-9 (Annexure-III) 80%
participants said that there is a “contact us” option provided on website, where phone numbers of
required call centers and senior bank officials are provided and they all were satisfied. The
interviewees further described that to get more help there is “knowledge and media center” link
on website of bank is provided where required services can be searched quickly. Site map link is
also given on the site where the user can study the whole services, information regarding to
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Islamic banking is given for the ease of customer and new users. Interviewees were not satisfied
with the link of FAQ’s, it was not present on the home page but it available on the e-banking
page and it should be pasted on the home page of the site. Information given on the site was
easily understandable. Respondents also came out with a suggestion that there should be an
option of Islamic banking glossary with Arabic and English translation of the banking terms.
Convenience/Accuracy: On asking questions (10-16, Annexure-III) from interviewees about the
“convenience” of online services of Meezan bank, 60% of them replied that we feel comfortable
while visiting the site. The online banking of Meezan bank is easily accessible and much easy to
use. There is a link for registration of online banking. A very simple registration form is
available for filling personal data and account data to avail banking services. User name and
password are written along with text boxes. About “accuracy” customers were relaxed because
they stated that Meezan bank’s online services are much accurate and satisfying because
whenever a transaction is made the bank send a SMS of balance information on cell phone to
customer which means that their system is quite sophisticated. MBL also gives full detail
regarding bank statement, mini statement and other transactions of multiple accounts. The
interviewees further added that these details can also be downloaded in different formats.
Feedback/ Complaint management: During asking Q#17-20 (Annex-III) Customers replied
that there is a link of feedback on the page of contact us, which leads to feedback forum where
you can get response back from customer service of bank. Similarly “complaint management
“link is also present on contact us page where predefined problems are stated during use of
online banking services which are much helpful for customers to explain their problems clearly.
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The five out of eight interviewees also told us about” friendly online environment “of Meezan
bank, they stated that the environment of online service is great because there is no formality and
detail in the use and in the text provided on website
Efficiency: When the interviewees of focus group were questioned (Q# 21-23) about the
“efficiency” of MBL online services, 50% of them replied that today every person is in urgency
and Meezan bank has solved this problem for their customers. Account details, balance check,
and transfer request etc. can be handled by just sitting in the home in front of computer. Further
interviewees were asked about “menu option” 90% of them said that they feel good with menu
option because they are arranged deliberately with drop down menus and which are helpful for
the customer to access the online services quickly.
Interviewees were also asked about “demo” option but the answer was negative. The
interviewees were also not satisfied with “exchange rate conversion” information, because it was
not simplified and updated daily even not on weekly basis. And when they were asked about the
online “calculator” service of MBL? They replied that they can easily use home, car and
insurance calculators any time.
Accessibility: Interviewees were also asked about the questions (Q# 24-27, Annex.-III) of
“connectivity” of MBL online environment, 70% of them said that whenever they want to use
the MBL online services, it can be easily connected/ accessible. They also told that the site
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downloading and navigating in the site is much faster due to the usage of Oracle business
software.
While asking about the “special services for disables”, 80% interviewees said that there are no
special services for disables available in the online environment of MBL and they feel sorry for
it. Interviewees also answered about the “multi language “option availability and their answer
were also negative. They said only English language is available on the site.
Customization: 90% focus group members’ views were positive about the “personalized
services”, when they login in the online banking services which give them a feeling of care and
privacy.
4.3 CASE TWO: Online Environment of Citibank Pakistan
(www.citibank.com.pk)
In the response of Q# 1 and 2 (Annexure-II) regarding speed to download, six out of eight focus
group members stated that single animation used to increase its attraction but its downloading
speed may be a little bit affected. That is why Citibank.com.pk has simple graphics on its
website (Observation/interaction).
While asking Q# 3,4,5,6 and 7(Annexure-II) regarding contents and design, seven out of eight
respondents stated that the content and design citibank.com.pk devoted a lot of work on its web
pages. When visitors open its home page, they would see a horizontal links on the top of the
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page. These links are the headlines of the main content of, Citibank.com.pk covering all of its
products and services both online and offline, such as visa card, private banking, corporate
banking, investment banking, E-banking, etc. In the middle part of homepage, there were option
bars under the heads, look for product and services, apply for new account, find a location, and
other information about online shopping. Single click on any link of the category then we will
browse detailed and relevant information of banking product or service in a same window. All of
the information of banking products and service is provided on web pages and no other format to
download. Citibank’s home loan application form is in PDF format. Moreover Citibank
Rewards is loaded with thousands of gifts of your choice. For some specific amount you spend
on your Citibank Credit Card you earn one Rewards Point and you can also enjoy discounts in
different transactions.
Currently Citigroup has built franchises over nearly 200 years, with more than 200 million
customer accounts in over 100 countries. Through this unique global network, we enable people
to reach out and to work together across the world, its website for Pakistan only provide one
language versions for Internet visitors i.e., English. However some credit cards information is
available in Urdu. A link for internet banking can be found in the right top corner of home page
right under the name bar. The main color used in citibank.com is blue, which is being used
commonly in website of most international banks; Light grey and white are colors of web
background and black, blue, orange, red and is some time green for the text. Links of all content
within website can be found on homepage in color of white , black and a few in golden, only one
banner is found on the website, having static and animated advertisements but very simple one
(Observation/interaction).
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While responding to Q#8 (Annexure-II) about the Interactivity 60% interviewees stated that
Citibank.com.pk offer many personalized solution to its customers. There are no calculators and
exchange rate converter facilities available in Pakistan’s website (Observation/interaction).
Responding to Question # 9-13(Annexure-II) about navigation, 90% respondents stated that
Citibank.com.pk has a link as “Home” in all of its sub pages, positioned on the top right side of
every web page, which would allow users to return to homepage. The links has been well-labeled
and lead customer to the wanted page although the amount of links looks so many. In all of its
web pages, Citibank.com.pk managed consistent navigation very well and kept the same style;
same color, same background, same logo, same layout, etc. A simple search engine could not be
found in the home page, which can also be regarded as one method of keeping navigation
consistent. Sitemap can be found among the top horizontal links of every page easily
(Observation/interaction).
About security issues reference to Q # 14-16, 90% respondents confirmed that we could see all
encryption technology, operation confirmation and automatic log-off have been used by
Citibank.com. There is a security note for private customers before log-in to the internet banking;
definitely ATM Card number and ATM PIN number are needed. Operation confirmation is
shown after every transaction and a list of all records would be monthly sent to register’s
appointed email box (Observation/interaction).
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4.4 Customer Service of Citibank Pakistan
During focus group interview, trustworthiness was the first topic and in the response of
Question # 1-4 (Annexure-III), 70% interviewees replied that it’s the most suggestive issue when
they consider about Internet banking in Pakistan. The participants do not feel secure over
Internet banking. Although banks and social mediums publicized a lot on the security of banking
online, participants felt that it’s still risky to deal with banking through Internet for few people
have 100 percent confidence on that there is absolute security in Internet banking, especially now
a days in Pakistan. Another reason is that according to them it is at very initial stages and it will
take some time to mature internet banking in Pakistan. Though, he is using internet banking of
well established bank in the world.
When they were asked about transferring of money between accounts, 70% respondents
mentioned that they performed with little confidence but not very often. They also added that
there should be a little risk of transferring money but not too much to imagine, currently it’s only
an issue of confidence and in the coming future he might transfer more and often. About privacy,
they never received any email from which they feel that the information leaks through his bank,
but they totally believed bank’s professional regulations and not giving away his personal
information.
Concerning to communication, while asking about Q # 5-9 (Annexure-III) 80% participants
viewed that it is important for Internet banking especially there is no face-to-face contact when
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they deal with banking matters. When asked whether the bank’s web site is updated regularly,
90% of respondents said that website was not updated frequently. Usually they visited the
website every week or longer so that they do not pay attention on it. In spite of ignoring whether
it is updated, they thought the content of banking products and services is easy to understand and
follow, which contains construction of all business of the bank. When asked whether website is
showing the addresses and telephone numbers of relevant departments on web site, 80% of them
responded positively, in addition, they said that as individual customer they really need it very
much, for the reason that in Pakistan some banking business has to be handled in branch office
and impossible through Internet.
Concerning FAQ’s, 90% interviewees made no complaint on it. There were direct link of FAQ
put on various pages, also very easy to find them through sitemap. They added that at first they
do not know how to find FAQs, although it did exist somewhere, and several times when they
were confused about how to choose a better method to make a deposit, and gain long-term
benefit, it really took them too much time to find relevant information and analyze. However,
after finding it, they admitted that FAQ could serve most of the answers of their queries or at
least provide relevant links. When asked about the convenience, first of all, participants agreed
that it is once been the most important factor attracting them to do banking online. There were
problem performing the first time internet banking; they solved their problem with the help of
bank employee. About 90% Respondents complained about demo facility which is missing. It
can be very helpful while using the internet banking very first time.
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In case of financial transaction, 80% participants feel that it is easy to transfer money between
two different accounts of the same bank, but if transaction involved another bank, no matter
Pakistani bank or foreign bank, it is always troublesome and hardly performable. Moreover,
Citibank.com.pk provides accurate record of all transactions for its customers, which made it
possible to check account anytime and anywhere so that the participants felt satisfied and
comfortable. So far applying credit card was considered, but neither opening of account nor
applying any kind of loan is possible without visiting the bank.
After asking Q # 17-20 (Annex-III) regarding feedback/complaint management, Customers
replied that they were satisfied. However, considering the undeveloped situation of Pakistan
internet banking, they said it is understandable about complaint management of Citibank.com.pk.
Comparing with the inefficiency of traditional banking, they are agreed that the internet banking
provided a customer pleasant environment.
With reference to the efficiency, when the interviewees of focus group were questioned (Q# 21-
23) about Citibank’s online services, 70% of them replied that Pakistani interviewees believed it
is one of two most attractive factors of Internet banking, besides convenience. They could
perform basic banking transaction anytime and anywhere if there’s accessibility between
computer and internet. Comparing to traditional banking, Internet banking saved time and
decreased boring waiting in queue if they go to any bank branch. Online tutor or demo and
brochure are also considered as necessary facilities for customers. Interviewees thought that
these facilities made Internet visitors understand and follow the right way to deal with their
banking transactions. Even offline transactions not available through internet operating are also
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conducted, which could provide internet visitors detailed information on each step of procedure
before they take actions in physical world.
Interviewees were also asked about (Q# 24-27, Annex.-III) “accessibility” of Citibank Pakistan,
70% of them said that www.citibank.com/pk is providing special service for disabled people.
Interviewees had no idea of whether Citibank.com provided special service for disabled persons,
but they thought it is technically possible and necessary and disabled persons should also benefit
from internet banking same as normal people. Then they mentioned that they could open
Citibank homepage and login their personal account from any internet-connected computer,
therefore which made it convenient to deal with banking at any needed time. Sometimes there
might have speed difference due to the reason of net problems, but they mentioned it is
acceptable and most of time it doesn’t make too much problem.
When queried about the opinion of customization, 90% of focus group members’ insisted that
when logging on the bank’s web site, they noticed about they are welcomed by their names on
the web page, but it has no special feeling for them as it is just a machine message. Then they
added that it made them sure that account information browsed on webpage is private-only.
4.5 User Acceptance of eMarketing Data Collection
While in the second section of data collection, quantitative research has been conducted. A “
“User Acceptance of eMarketing Model” has been used in order to find out the empirical impacts
of online banking acceptance on banking sector of Pakistan. As mentioned in the methodology;
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the data is quantitative and is collected by means of questionnaires (Annex-I) from eight hundred
respondents/ customers (students, business professionals, general public and bank officials). And
questionnaires have been distributed according to the usage and population in the provincial and
federal capital cities of Pakistan.
In this research effort "Convenience Sampling" and “Area Sampling” has been used. This
method is used to make research procedure faster by obtaining a large number of accomplished
questionnaires rapidly and efficiently. The platform which helped us to choose the banking
sector is the website of The State Bank of Pakistan and the respective websites of banks. These
websites provide all essential information of the online banking.
Management sciences related research studies have normally used mail survey methods of data
gathering. We also adopted the same method. Just because of limited time and insufficient
finances, we mainly used mail survey for data gathering and with the help of different officials.
By using this approach we collected a large number of responses from the respondents of
different disciplines, but few troubles reduced the response rate efficacy. Consequently the data
collection was not so much speedy. To deal with such situation, one to one interviewing method
was also started, as a result response rate was getting faster with high quality, but we also faced
other difficulties as well, like time and traveling constraints. For the survey, questionnaires
designed supporting the literature and considering five-point Likert scale, 5 for strongly agree, 4
for agree, 3 for neutral, 2 for disagree and 1 for strongly disagree. Many a time, it happened that
the customers were not clear about the terminologies used in the questionnaire but this matter
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was solved through detailed explanation and by one to one discussion in exceptional cases where
possible.
4.5.1 Response Rate
From the customers’ behavior perspective, information concerning online banking and user/
customer acceptance eMarketing was collected from the students, business persons and general
public, and bank officials availing online banking services. All the respondents were requested to
reply to all the questions to the best of their knowledge. Out of 800 questionnaires we got only
675 responses. Overall response rate was 84%. After data collection, we coded and analyzed it
in SPSS version # 17. For analysis purpose statistical tools like Descriptive, Correlation and
Regression analysis are used.
1.6 References
Meezan bank official website, www.meezanbank.com, accessed on 1st Jan, 2010.
Citibank Pakistan official website, www.meezanbank.com, accessed on 5th Jan, 2010.
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CHAPTER
FIVE
5. DATA ANALYSIS
In the data analysis chapter author presented the data collected for a case study of different
banks and online banking acceptance in Pakistan. As mentioned in the methodology chapter,
the data are qualitative as well as quantitative and were collected by means of focused group
interviews and questionnaires. In this section, collected data will be analyzed on the basis of
the frame of reference of this study and will be analyzed by a within-case analysis and a
cross-case analysis. Furthermore, quantitative data will be analyzed statistically regarding
online banking acceptance.
5.1 RQ1: How can the online banking environment (web site) be described
in web based marketing?
5.1.1 Within-Case Analysis of meezanbank.com
There is a significant association between web downloading speed and web user satisfaction,
revealed by the findings of Jayawardhena & Foley (2000). In order to provide better online
services, meezanbank.com ignored using any animated objects i.e. objects that are flashing,
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changing their shapes not to disturb customer’s concentration in using their visit to bank web
site. On the other hand two moving images have been used which come one by one. For its
content and design, meezanbank.com didn’t put a lot on their business description on homepage
but provided important information regarding personal customers, corporate customers, and
some other important links about its Islamic products. One can say it is more than enough for
customers to find what they need to know. Regarding the layout features of bank’s website, the
background is plane white. Most text on the site is black but some important headings and links
are in green color. In pictures and icons a great deal of colors are used to attract customer’s
intention.
In addition, for the menu black color is used. In short, the website is not much complex and
look simple. As Jayawardhena and Foley, (2000) affirmed that pages on a website should
preferably be short. In the case of meezanbank.com, information of banking products and
service mostly organized in related web pages and users mostly don’t need to scroll web pages
to see all information. For additional information they can click the links of next page or sub
page, all this make visitors feel convenient (interviewees). Design of the web site looks good
regarding color contrast and font size. The font size in the menu and icons is quite good.
Additionally, there are little blank spaces on the web pages but does not look uncomfortable.
Some product images are also available. As a final point, there is no alternative language option
provided by meezanbank.com, which may be difficult for non-English customers.
In case of interactivity, meezanbank.com had the choice for Questions, remarks and
Suggestions offered under a heading “contact us” on average each page. Search engine and site
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map options are also available on the home page. Different options regarding product
calculators are also available on its webpage.
Concerning its navigational efficiency, meezanbank.com had a structured navigational
arrangement in order to make it easy for visitors to reach any specific page by the help of menu
or link, for this reason site map is also given. When visitors open home page of the bank, they
see the horizontal links on the top, which lead visitors to move on every important sub page, at
same time, it is possible to get to the homepage from any page in the site by clicking homepage
hyperlink. In addition, No dead end pages existed on the site. With the similar color, same
background, similar logo, identical layout, etc, author think meezanbank.com managed
consistent navigation very well and kept all pages the same style.
In order to secure banking operation, meezanbank.com had encryption mechanism, which is
regarded the most common element at all bank sites according to Jayawardhena & Foley,
(2000). It also provides operation verification and had detailed records of all banking
transactions listed on the private page. After a visitors logged in, if visitor has inactivity on the
webpage for a short fixed time, meezanbank.com will automatically logs users off his account
in order to make sure privacy secure.
5.1.2 Within-Case Analysis of Citibank.com.pk
As said by Jayawardhena & Foley, (2000) speed is a significant factor away from the control of
a site owner and it is essential to recognize that speed is also reliant on the user's computing
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hardware and means of connection. Concerning its speed to download, Citibank.com used some
small objects of multicolored graphics on its homepage; on the contrary, there is only simple
and meaningful graphics. Moreover, Citibank.com.pk did not use any complex animation and/or
multimedia and their file extensions are also light. However, the use of graphics and simple
animation in Citibank.com.pk don’t affect the speed of opening its website.
For its content and design, Citibank.com.pk home page provided links of all important
information of its banking products and services, including visa card, personal banking,
corporate banking, investment banking, E-banking, foreign exchange, settlement services etc.
Besides that, there were also some piece of latest bank smart deals that are located in the central
middle part of its homepage, which made it look more like one method of bank internal medium
and according to interviewees they had no interest to read these banks news when they were
making banking transaction. The main color used in Citibank.com.pk is blue, which is very
common in international banks websites. White is the background color in order to make the
text in black and blue easy to read and recognize. A colorful outlook give a good impression at
first, actually its sub pages were very simple and less colorful. English was the only language
option on the website.
Citibank also provides the incentives as a encouragement scheme; for a specific amount spend
on your Citibank Credit Card you may earn 1 Rewards Point. Collect your points and select
from a wide array of stimulating categories and offerings.
Jayawardhena & Foley, (2000) mention that for fast navigation links play a vital role and these
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should be understandable and relevant, and sometimes it can be observed by the
Citibank.com.pk that the links should be well described and lead the customer to the preferred
page while the number of links looks so many and some links of non-banking content exist on
the homepage. For the continuous navigation inside site, Citibank.com also maintained the
similar color scheme, similar background, same logo, and similar layout etc. to keep all pages in
the identical style. In the Citibank.com, sitemap can be observed among the top horizontal links
on each page.
In the security of banking process, Citibank.Com also used encryption tools, process
verification and automatic log-off in order to make it safer for its customers while dealing
internet banking. While a few sites need information to be input in a random order, the order
changing with each log in, Citibank.com only regularly needs account code and private
password for logging.
5.1.3 Cross-Case Analysis (Meezanbank.com vs. Citibank.com.pk)
In this segment a comparative study is made for both banks. The research question will be
analyzed in comparison with each other.
Table 5.1: Variable of the speed
Speed www.meezanbank.com www.citibank.com.pk
Simple graphics A little Colorful but meaningful Simple and meaningful
Animation/multimedia More used to some extent used
Source: Respondent’s response (2010)
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After comparison in above table 5.1 it is quite clear that downloading speed is more important
than its appearance because citibank.com.pk has used very simple graphics plus simple and
meaningful animations with respect to meezanbank.com. After opening the required page we
may experience that still Citibank has more speed than Meezan bank, however Meezan bank has
also used graphics and animations very carefully but still there is some space for more quality of
speed.
Table 5.2: Variable of Content and Design
Content and design www.meezanbank.com www.citibank.com.pk
Product information
content
Detailed information of
banking products and services
Detailed information of
banking products and services
Product information
format
Only annual reports but easy to
find (pdf).
Only annual reports but difficult to
find (pdf).
Amount of product
information Good enough Good enough
Language alternatives
Only English
Only English but for some links
Urdu option is available.
Layout features Neat and simple with short
pages Well organized yet simple
Source: Respondent’s response (2010)
From the table 5.2 it is easy to understand that both of two banks give a lot on presenting their
products and provided services in order to ensure customers have a better understanding on
banking business. The variable related with product and service information’s are similar on
two websites; plenty, detailed and no format to download except Meezan’s annual report. As far
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as layout features are concerned, neat and simple web pages make it easy and convenient for
customers to handle banking transaction in Citibank.com.pk, on the other hand,
Meezanbank.com make it little colorful more like a promoting channel, primary target of which
seems to attract the visitor’s have a good look and then give as much information as possible.
Usually both the banks have their websites in English but Citibank offers plastic money
information in Urdu too.
Table 5.3: Variable of Interactivity
Interactivity www.meezanbank.com www.citibank.com.pk
Technical banking
facilities
Currency exchange rates,
calculators & product
broachers
Monthly loan installment,
and product broachers
details.
Source: Respondent’s response (2010)
From the table 5.3 we can conclude that different attitude of two banks to personalized solution
probably is due to the reason of banking style and history. But they all concerned the
importance of technical banking facilities that influence customer satisfaction. Study reveals
more facilities would bring more customer satisfaction than no or less facilities.
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Table 5.4: Variable of Navigation
Source: Respondent’s response (2010)
Jayawardhena & Foley, (2000) stated that one of the features of a good site is that the site index
should always be in display, thus making it very useful and speedy for anybody to get there at
the preferred location. According to table 4.0 researchers can finalize that both
Meezanbank.com and Citibank.com perform well on homepage hyperlink setting, links
organizing and reliable navigation, which make sure that visitors browsed between sub pages
and homepage, simply and efficiently. Although meezabank.com is providing search engine
option on homepage and sitemap on each page, there still seem some practical issues existing
that should have been solved. There is no search engine but sitemap is accessible in
Citibank.com.pk, most likely bank has self-assurance on its ordered content and links, but study
beliefs the ignoring the important and ordinary services would make its customer disturb in the
future.
Navigation www.meezanbank.com www.citibank.com.pk
Home page hyperlink Text (home) Text (home)
Links Proper &Accurate Proper &Accurate
Consistency in navigation Consistent Consistent
Search engine Provided Not provided
Site maps Available Available
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Table 5.5: Variable of security
Security www.meezanbank.com www.citibank.com.pk
Encryption Used Used
Purchase /operation
confirmation
Provided Provided
Automatically log off Available Available
Source: Respondent’s response (2010)
In table 5.5, it seems that these two banks lay emphasis on all factors relevant to security. For
all of its private customers, meezanbank.com uses a very good encryption operation system to
ensure the security of logging and operating. Citibank.com.pk also provides Purchase
confirmation along with automatically log off which are the other two important secure factors
adopted.
5.2 RQ2: How can customer services within online environment are
described in web based marketing?
5.2.1 Within case analyses of meezanbank.com.pk
Initially when customers were asked about the trustworthiness of on line transactions they
showed a lot of doubts. But simultaneously when they were asked about the security issue they
depicted their trust. This does not support the results of Yang & Jun, (2002) that online users are
more worried about online payments. And that was due to the sureties given to participants by
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bank employees. The customers’ reply about the trust was also positive because of the process
of becoming on line. About the privacy the interviewees were much confident and have no
complaint about it.
According to (Cox & Dale, 2002) stated that frequently asked questions to be described on
home page In the matter of FAQ’s participants were not satisfied because they told interviewer
that the FAQ’s were on e-banking page and were not present on the home page. So the site of
MBL is opposite in supporting this view. About information understanding customers were
satisfied. The interviewees also manifested their satisfaction and comfort ability regarding the
element of convenience in banking services.
The satisfaction of customers from accounts regarding ability to download the bank statement
and other account details support the recommendation of Joseph, McClure, Joseph (1999) that
bank should provide statements of transactions electronically.
The interviewees felt sorry demo which is not available on MBL website and felt that demo
helped a lot to conduct transaction in Internet banking. The participants also liked the friendly
on line environment. This is similar finding of Jayawardhena & Foley (2000) studies that most
of people associate a bank transaction with human interaction.
5.2.2 Within case analyses citibank.com.pk
Grönross (1984), stated that customers usually make trust based on the image and repute. The
observations of participants supported views of researchers that trust builds on the base of the
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likeness and goodwill. The participants felt unconfident over Internet banking because they
heard and read news that Internet was not secured medium for transactions. While, they had
never happened any fault with them so far. The respondents perceived a certain risk performing
payment between the accounts. This also supports the conclusions of (Yang & Jun, 2002) that
online users are more worried about online payments.
Interviewees also claimed that they had full confidence on the bank. The Bank cannot disclose
their privacy due to banking rules. This is rather appropriate which was affirmed by Grönross,
(1984) about privacy that customers have self-belief about some organization. Web site of
Citibank.com.pk was not frequently rationalized; the interviewees pointed out that there was no
direct link of FAQs put on the homepage.
This negates the findings of Cox & Dale, (2002) that business offer link to FAQs on their
homepage. The interviewees felt problems dealing with Internet banking initially. It is
supporting with the conclusions of Sathye, (1999) that Internet banking is complex for
customers. The respondents said that online banking provided 100% accuracy in transactions
and used transactions independently according to their determination. The interviewees were
irritable about demo option and felt that it should be used by the bank regarding online banking.
The participants also provided information about pessimistic attitude of Citibank.com.pk. They
sent an email to ask for few queries about their credit card, but they did not get reply. After two
weeks, they sent reminder but they did not get any reply again. So, they became too much angry
about the services of the bank. According to Cai & Jun (2003) that the customers prefer to use
email. The views of participants does not support to it.
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The interviewees argued that Internet banking is simpler as compared to conventional banking.
Convenience is a prime benefit required by customers. Citibank.com.pk gives facility to their
customers to ensure statements of transactions that had been done. This supports the suggestions
of Joseph, McClure, Joseph (1999) that bank should provide statements of transactions have
been conducted electronically. The participants informed that material shown on the website
was reasonable and quite clear. Even about offline data was also understandable. So, this
negates the results of Broderick & Vachirapornpuk (2002) that customers frequently require
assistance from banking officials in online banking for getting the information. The
interviewees replied that their time was saved and avoid waiting in line for their turn.
The participants replied that Internet banking is pleasant setting. This is against the finding of
Jayawardhena & Foley (2000) that a lot of people experience typing on a keyboard to complete
a bank deal seems very isolated method of banking. Citibank.com.pk also provided currency
conversion rate option on their website which was supported by respondents. The interviewees
could open Citibank.com.pk homepage and log in their personal account from any Internet-
connected computer, therefore which made it very easy to do transaction with bank at any time.
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5.2.3 Cross-Case Analysis (Meezanbank.com.pk vs. Citibank.com.pk)
Table 5.6 : Properties of Trustworthiness
Source: Respondent’s response (2010)
Perhaps the most important issue in the internet banking is trustworthiness for the customers,
how much it is safe for them to use a web site and to conduct financial transactions over the
internet. One can say that the customers in Pakistan are feeling more secure with internet
banking using international banks owing to their international experience than national banks.
However, comparing trustworthiness of the customers with some other international countries,
for example with Sweden, from previous studies, it is mentioned that Swedish customers (as per
previous studies) feel more secure performing transaction in internet banking as compare to
Pakistanis customers. May be one the reason is that internet banking was started in Sweden in
1996 and in Pakistan very recently. Second, Sweden is number one in adoption modern
information technology since last some years (IDC Research). Furthermore, (Grönross, 1984),
stated that customers traditionally build trust based on the image and reputation. Pakistani
customers still felt insecure performing transactions on internet due to reason they read/heard
news about errors happened over internet banking transactions. Subsequently, they built image
that internet is not secure so far.
Trustworthiness MBL’s Customer Citi Bank’s Customer
Security Secure Un Secure
Trust/Risk Confident Lack of Confidence
Privacy Not scared Not scared
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Table 5.7: Properties of Communication
Communication MBL’s Customer Citi Bank’s Customer
Communication tools Used Used
FAQ’s Easy to find out/ but not
available on home page
Easy to find out/ but not
available on home page
Info Updates Frequently Not Satisfied
Info understandable Clear and understandable Clear and understandable
Source: Respondent’s response (2010)
Web site has the replacement of the banking staff, customers directly communicates with the
web site in the cyber space in place of staff of the bank. Importance of communication tools like
email, telephone number, swift number, and addresses are realized everywhere. So, there is no
big difference between both banks sites. Both the banks providing link for “frequently asked
questions” but not on the home page. According to the number of researchers recommended such
as (Cox & Dale, 2002) that each organization must make FAQs link on the home page and
participants also demanded for it. It is un-understandable that why banks are not giving links to
FAQs on their home pages. Information furnishing on the internet is updated regularly by
Meezan bank and Citi bank is lacking in this quality. Both banks have understandable
information. It is very important for enhancing customer confidence on internet banking that
information is updated regularly on the web. Information about products, services are clear and
understandable for both the customers from their banks sites.
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Table 5.8 : Properties of Convenience/Accuracy
Convenience/Accuracy MBL’s Customer Citi Bank’s Customer
Convenient Yes Yes
Accurate Easy to Use Easy to Use
Ease To Use Easy Easy
Source: Respondent’s response (2010)
The rapid growth of the internet banking depends on different factors, one of the important
factors, which is grabbing customers attention is convenience. Convenience is acting vital role
on the behavior of both customers irrespective of their banks. Customers prefer to save their
time, money and avoid waiting in queue for their turn in the bank. In term of accuracy all factors
are showing same results in the above table.
Table 5.9: Properties of Feedback and Complaint management
Feedback/Complaint Mgt. MBL’s Customer Citi Bank’s Customer
Feed back Satisfied Not Satisfied
Friendly environment Yes Yes
Complaint Management Satisfied Less Satisfied
Source: Respondent’s response (2010)
Quick responses to customer’s inquiries especially e-mail plays key role in internet banking for
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the customer loyalty with the bank. Our findings of the study are showing very surprised results
that MBL’s customer was satisfied with feedback services and complaint management of the
Bank, where Citi bank customer was not satisfied because he gets aggressive after not getting the
reply from the bank on sending his email. In the competitive market, customer is a king. No
organization can excel without support of their customers.
Companies must make special option or form on their web site regarding the services provided
for customer’s feedback. MBL bank providing such facility and services to the customers for the
feedback, but City bank is not providing. In opinion of both customers, internet banking is a
friendly environment which is a healthy sign for internet banking in Pakistan.
Table 5.10: Properties of Efficiency
Efficiency MBL’s Customer Citi Bank’s Customer
Menu Options Limited Limited
Demo Not Provided Not Provided
Exchange Rate Conversion Not Provided Not Provided
Calculators Provided Not Provided
Source: Respondent’s response (2010)
The menu options or links allow the company to highlight products or services that may be
relevant in a particular context Feinberg & Kadam, (2002). Customer of MBL is satisfied from
the menu option but both customer of Citi bank and MBL bank are not satisfied from the Demo
unavailability to customer where customer can learn how to use online services. To calculate the
monthly installment MBL bank has provided the calculator for monthly payments.
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Table 5.11: Properties of Accessibility
Accessibility MBL’s Customer Citi Bank’s Customer
Connectivity Good Good
Special Services for Disables Not Provided Not Provided
Language Options No other option then English
Source: Respondent’s response (2010)
One of the findings of my study is that MBL bank is offering single language option i.e. English
to the customers. Both banks are not providing special services to disable persons. Both
participants had similar view in regard to connectivity. They were not feeling any problem in the
matter just they need computer and internet connection for performing internet banking. For
disabled persons, no bank was providing special services for them.
Table 5.12: Properties of Customization
Customization MBL’s Customer Citi Bank’s Customer
Personalized Services Yes Yes
Source: Respondent’s response (2010)
Internet banking is, using technology to improve its personalized services, with the ultimate goal
of helping customers gain greater control over managing their money transactions. However,
customers demanded personalized services from their banks. This is typical philosophy of the
customer.
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Banks understand the requirement of their customers so they are trying to provide personalized
services. This is one main reason that none of interviewees said that they wanted to change the
bank. No doubt they had mentioned few complaints about their banks that were of general
nature, which can be ignorable. Furthermore, findings of the study supported these comments.
5.3 User Acceptance of eMarketing Findings
5.3.1 Descriptive Results
This section gives detail of groupings across the demographic classifications of the respondents.
All these categorizations have been used for further analysis through tests of significance to
examine the mean differences among the groups divided on their demographic attributes.
5.3.1.1 Demographic Classification of the Respondents
Table 5.13
Classifications of Groupings of Respondents across Gender
GENDER Frequency
Percent Valid Percent
Cumulative Percent
1 Male 474 70.2 70.2 70.2 2 Female 201 29.8 29.8 100.0 Total 675 100.0 100.0
Source: Researcher’s Analysis (2010)
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Table 5.14
Classifications of Respondents across Qualification
QUALIFICATION Frequency Percent Valid
Percent Cumulative Percent
1 Bachelor 85 12.6 12.6 12.6 2 Master 524 77.6 77.6 90.2 3 PhD 66 9.8 9.8 100.0
Total 675 100.0 100.0 Source: Researcher’s Analysis (2010)
Table 5.15
Classification of Respondents across City
CITY Frequency Percent Valid
Percent Cumulative Percent
1 Islamabad 140 20.7 20.7 20.7 2 Peshawar 137 20.3 20.3 41.0 3 Lahore 126 18.7 18.7 59.7 4 Quetta 81 12.0 12.0 71.7 5 Karachi 191 28.3 28.3 100.0
Total 675 100.0 100.0 Source: Researcher’s Analysis (2010)
Table 5.16 Groupings of Respondents across Age
Frequenc
y Percent Valid
Percent Cumulative Percent
Valid 15 to 35
594 88.0 88.0 88.0
>35 81 12.0 12.0 100.0 Total 675 100.0 100.0
Source: Researcher’s Analysis (2010)
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Table 5.17 Groupings of Respondents across Income
Frequency Percent Valid
Percent Cumulative Percent
1 <5000 110 16.3 16.3 16.3 2 5000-20000 478 70.8 70.8 87.1 3 >20000 87 12.9 12.9 100.0 Total 675 100.0 100.0
Source: Researcher’s Analysis (2010)
All of the above demographic attributes of the respondents show that the proportion of male
users is more than the female respondents both regarding eMarketing acceptance of online
banking (see table 5.13). This ratio also explain that Pakistan is male dominant which might be
due to some cultural aspects like most of the people normally do not allow their females (wife,
daughters, and sisters) to use online banking even they get a highly specialized educations. In
addition results also indicate that majority of the respondents are having masters, bachelors and
Ph.D degrees respectively (see table 5.14) which means Ph.D degree holders were very few. As
table# 5.15 shows that most of our respondents were belonging to Karachi, Islamabad, Peshawar,
Lahore and Quetta respectively.
Result also reveals that majority of the respondents having 15 to 35 years of their age, while
remaining were more than 35 years of their age. This means that most of eMarketing users are
young people and they can easily operate latest technology (see table 5.16). In addition table 5.17
explore that most of our respondents were having Rs. 5000 to Rs. 20000 of their income, while
146
remaining were less than Rs. 5000 and few were having more than Rs. 20000 income
respectively. This depicts that mostly middle class are the users of eMarketing of banks.
The following tables will show the mean values, standard deviation, and the demographic
impacts on the research variables by using the t-test and ANOVA application.
5.3.1.2 Descriptive Statistics of the Research Variables
Table 5.18
Representing the Descriptive Values on Research Variables
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
quality of internet service 675 1.0000 6.0000 3.870370 1.1577422
information of online banking 675 1.0000 6.0000 3.391852 1.2353625
perceived usefulness 675 1.0000 6.0000 4.336543 .9698460
perceived ease of use 675 1.1667 6.0000 4.160247 .8806778
perceived enjoyment 675 1.8000 6.0000 4.060444 1.0548840
security and privacy 675 1.0000 6.0000 3.970123 1.0315120
customer acceptance 675 1.0000 6.0000 4.401481 1.1659095
Valid N (listwise) 675
Source: Researcher’s Analysis (2010)
Table 5.18, descriptive statistics of the research variables shows that most of users are accepting
eMarketing regarding banks. The mean values and standard deviation for the overall customer
acceptance was (m=4.4014, SD=1.16), perceived usefulness (m=4.33, SD=.97), perceived ease
of use (m=4.16, SD=1.03), perceived enjoyment (m=4.06, SD=1.05), security and privacy
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(m=3.97, SD=1.02416), quality of internet service (m=3.87, SD=1.16), and information of online
banking were (m=3.39, SD=1.23).
Therefore it was observed that mostly respondents are agreed to accept the eMarketing of online
banks in different regions of Pakistan.
5.3.2 Testing of Hypotheses
5.3.2.1 Demographic Impacts
a. Significance of the Mean Differences across the Cities (ANOVA)
H4: City has a positive relation with all predictors of user acceptance of eMarketing.
Table 5.19
ANOVA Statistics for Differences based on City
Sum of Squares df
Mean
Square F Sig.
quality of internet service Between Groups 3.554 4 .888 .661 .619
Within Groups 898.576 669 1.343
Total 902.129 673
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information of online banking Between Groups 15.020 4 3.755
2.48
5 .042
Within Groups 1010.996 669 1.511
Total 1026.015 673
perceived usefulness Between Groups 3.012 4 .753 .798 .526
Within Groups 630.840 669 .943
Total 633.852 673
perceived ease of use Between Groups 2.155 4 .539 .693 .597
Within Groups 519.889 669 .777
Total 522.044 673
perceived enjoyment Between Groups 9.254 4 2.313
2.09
2 .080
Within Groups 739.876 669 1.106
Total 749.130 673
security and privacy Between Groups 4.990 4 1.248
1.17
4 .321
Within Groups 710.863 669 1.063
Total 715.853 673
customer acceptance Between Groups 4.466 4 1.117 .819 .513
Within Groups 911.571 669 1.363
Total 916.037 673
Source: Researcher’s Analysis (2010)
Above Table 5.19 shows that only Information of online banking (F=2.48, p<.05) is significant
while all other research variables are not significant therefore it can be easily stated that overall
city has no significant impact on the user acceptance of eMarketing. Because out of 7 variables 6
variables are not significant therefore H4 is rejected.
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b. Mean Differences across the Qualification (ANOVA)
H5: Qualification has a positive relation with all predictors of user acceptance of eMarketing.
Table 5.20
Statistics on ANOVA for the Differences due to Qualification
Sum of Squares df Mean Square F Sig.
quality of internet service Between Groups 3.894 2 1.947 1.454 .234
Within Groups 899.514 672 1.339
Total 903.407 674
information of online banking Between Groups 59.299 2 29.650 20.556 .000
Within Groups 969.306 672 1.442
Total 1028.605 674
perceived usefulness Between Groups 8.452 2 4.226 4.540 .011
Within Groups 625.514 672 .931
Total 633.965 674
perceived ease of use Between Groups 4.021 2 2.010 2.604 .075
Within Groups 518.729 672 .772
Total 522.750 674
perceived enjoyment Between Groups 9.715 2 4.857 4.409 .013
Within Groups 740.299 672 1.102
Total 750.014 674
security and privacy Between Groups 21.570 2 10.785 10.419 .000
Within Groups 695.578 672 1.035
Total 717.147 674
customer acceptance Between Groups 1.757 2 .879 .646 .525
Within Groups 914.441 672 1.361
Total 916.199 674
Source: Researcher’s Analysis (2010)
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Above Table 5.20 shows that only customer acceptance (F=0.65, p>.05), perceived ease of use
(F=2.6, p>.05) and Quality of internet service (F=1.4, p>.05) are not significant while all other
research variables are significant therefore it can be easily stated that overall Qualification has
significant impact on the user acceptance of eMarketing. Because out of 7 variables, 4 research
variables are highly significant, therefore H5 is accepted.
c. Mean Differences across the Gender (t-Test)
H6: Gender has a positive relation with all predictors of user acceptance of eMarketing.
Table 5.21
Statistics on t-Test for the Differences due to Gender
F Sig. t df Sig. (2-
tailed)
quality of internet service Equal variances assumed 7.606 .006 1.853 673 .064
Equal variances not assumed 1.745 331.590 .082
information of online
banking
Equal variances assumed .332 .565 2.342 673 .019
Equal variances not assumed 2.337 375.175 .020
perceived usefulness Equal variances assumed .600 .439 1.344 673 .179
Equal variances not assumed 1.306 353.813 .192
perceived ease of use Equal variances assumed 11.584 .001 .482 673 .630
Equal variances not assumed .511 432.144 .610
perceived enjoyment Equal variances assumed .686 .408 -1.923 673 .055
Equal variances not assumed -1.774 318.773 .077
security and privacy Equal variances assumed 4.588 .033 2.691 673 .007
Equal variances not assumed 3.075 520.387 .002
customer acceptance Equal variances assumed 2.905 .089 1.641 673 .101
Equal variances not assumed 1.719 420.137 .086
Source: Researcher’s Analysis (2010)
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The results of t-test for the mean comparisons presented in table 5.21 indicate that quality of
internet service (t=2.3, p<0.05), perceived ease of use (t=0.48, p<0.05) and security & privacy
(t=2.6, p<0.05) are highly significant while remaining research variable are not significant.
Therefore, results are significant on nine (3) variables out of 7 research variables. Thus, H6 is
rejected.
d. Mean Differences across the Age (t-Test)
H7: Age has a positive relation with all predictors of user acceptance of eMarketing.
Table 5.22
Statistics on t-Test for the Differences due to Age
Sum of Squares df
Mean
Square F Sig.
quality of internet service Between Groups 53.062 1 53.062 41.995 .000
Within Groups 850.346 673 1.264
Total 903.407 674
information of online banking Between Groups 22.739 1 22.739 15.214 .000
Within Groups 1005.866 673 1.495
Total 1028.605 674
perceived usefulness Between Groups 11.588 1 11.588 12.530 .000
Within Groups 622.377 673 .925
Total 633.965 674
perceived ease of use Between Groups 32.575 1 32.575 44.725 .000
Within Groups 490.175 673 .728
Total 522.750 674
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perceived enjoyment Between Groups 7.883 1 7.883 7.148 .008
Within Groups 742.131 673 1.103
Total 750.014 674
security and privacy Between Groups 4.422 1 4.422 4.175 .041
Within Groups 712.726 673 1.059
Total 717.147 674
customer acceptance Between Groups 8.407 1 8.407 6.233 .013
Within Groups 907.791 673 1.349
Total 916.199 674
Source: Researcher’s Analysis (2010)
Above Table 5.22 shows that all the research variables are highly significant and none of them is
insignificant therefore it can be easily stated that overall Age has significant impact on the user
acceptance of eMarketing. Because out of 7 variables, all research variables are highly
significant, therefore H7 is accepted.
e. Mean Differences across the Income (ANOVA)
H8: Income has a positive relation with all predictors of user acceptance of eMarketing.
Table 5.23
Statistics on ANOVA for the Differences due to Income
Sum of Squares df
Mean
Square F Sig.
quality of internet service Between Groups 18.502 2 9.251 7.025 .001
Within Groups 884.905 672 1.317
Total 903.407 674
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information of online banking Between Groups 7.756 2 3.878 2.553 .079
Within Groups 1020.849 672 1.519
Total 1028.605 674
perceived usefulness Between Groups 1.865 2 .932 .991 .372
Within Groups 632.100 672 .941
Total 633.965 674
perceived ease of use Between Groups 5.477 2 2.738 3.558 .029
Within Groups 517.273 672 .770
Total 522.750 674
perceived enjoyment Between Groups 7.480 2 3.740 3.385 .034
Within Groups 742.534 672 1.105
Total 750.014 674
security and privacy Between Groups 1.784 2 .892 .838 .433
Within Groups 715.364 672 1.065
Total 717.147 674
customer acceptance Between Groups 3.973 2 1.987 1.464 .232
Within Groups 912.225 672 1.357
Total 916.199 674
Source: Researcher’s Analysis (2010)
Above Table 5.23 shows that perceived enjoyment, perceived and quality of internet service are
highly significant while the remaining research variables are insignificant. Because out of 7
variables, 4 research variables are insignificant, it means income has less impact over the user
acceptance of eMarketing, therefore H8 is rejected.
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5.3.2.2 Prediction of the User Acceptance of eMarketing
a. Associations between Predictors & Criterion (Correlation Analysis)
H2: All the Predictors are correlated with the User Acceptance of eMarketing.
Table 5.24
Showing the Correlation Statistics (n=675)
customer
acceptan
ce
quality of
internet
service
informatio
n of
online
banking
perceived
usefulnes
s
perceived
ease of
use
perceived
enjoymen
t
security
and
privacy
customer acceptance Pearson
Correlation 1 .411** .379** .748** .666** .328** .276**
Sig. (2-
tailed) .000 .000 .000 .000 .000 .000
N 675 675 675 675 675 675 675
quality of internet service Pearson
Correlation .411** 1 .405** .497** .587** .291** .293**
Sig. (2-
tailed) .000 .000 .000 .000 .000 .000
N 675 675 675 675 675 675 675
information of online
banking
Pearson
Correlation .379** .405** 1 .371** .451** .191** .146**
Sig. (2-
tailed) .000 .000 .000 .000 .000 .000
N 675 675 675 675 675 675 675
155
perceived usefulness Pearson
Correlation .748** .497** .371** 1 .722** .290** .302**
Sig. (2-
tailed) .000 .000 .000 .000 .000 .000
N 675 675 675 675 675 675 675
perceived ease of use Pearson
Correlation .666** .587** .451** .722** 1 .411** .366**
Sig. (2-
tailed) .000 .000 .000 .000 .000 .000
N 675 675 675 675 675 675 675
perceived enjoyment Pearson
Correlation .328** .291** .191** .290** .411** 1 .134**
Sig. (2-
tailed) .000 .000 .000 .000 .000 .000
N 675 675 675 675 675 675 675
security and privacy Pearson
Correlation .276** .293** .146** .302** .366** .134** 1
Sig. (2-
tailed) .000 .000 .000 .000 .000 .000
N 675 675 675 675 675 675 675
**. Correlation is significant
at the 0.01 level (2-tailed).
Source: Researcher’s Analysis (2010)
Table 5.24 above gives statistics on the correlations between independent and dependents
variables as well as correlations within each group. The results on the associations between
predictors and criterion variables are highly significant with strength of correlation score. It is
said that higher correlations between the independent variables show the problem of ‘co-
linearity’ however, as the table shows this problem is very nominal in the current analysis. Given
the figures in correlation analysis, it is concluded that H2 is accepted saying that there are
substantial correlations between the predictors and dependent variables of the study.
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b. Predicting the User Acceptance (Regression Analysis)
H3: All the Independent Variables Predict the User Acceptance of eMarketing.
Table 5.25
Showing the Models Summary of Regression
Model R R Square
Adjusted R
Square
Std. Error of the
Estimate
1 .776a .603 .599 .7379980
a. Predictors: (Constant), security and privacy, perceived enjoyment,
information of online banking, perceived usefulness, quality of internet
service, perceived ease of use
Source: Researcher’s Analysis (2010)
Table 5.26
ANOVAb
Model Sum of Squares df Mean Square F Sig.
1 Regression 552.378 6 92.063 169.034 .000a
Residual 363.820 668 .545
Total 916.199 674
a. Predictors: (Constant), security and privacy, perceived enjoyment, information of online banking,
perceived usefulness, quality of internet service, perceived ease of use
b. Dependent Variable: customer acceptance
Source: Researcher’s Analysis (2010)
157
Table 5.27
Coefficientsa
Model
Unstandardized Coefficients
Standardized
Coefficients
t Sig. B Std. Error Beta
1 (Constant) -.192 .169 -1.137 .256
quality of internet service -.058 .031 -.057 -1.842 .066
information of online banking .072 .026 .077 2.744 .006
perceived usefulness .672 .043 .559 15.674 .000
perceived ease of use .297 .054 .224 5.473 .000
perceived enjoyment .081 .030 .073 2.727 .007
security and privacy .024 .030 .022 .819 .413
a. Dependent Variable: customer acceptance
Source: Researcher’s Analysis (2010)
The overall user acceptance of eMarketing/ Customer accpetance (CA) of all the respondents is
predicted by quality of internet service (β= -0.05, p> .05), information of online banking(β=
0.07, p< .05), perceived usefulness (β= .55, p< .05), perceived ease of use (β= .220, p< .05),
perceived enjoyment (β= .07, p< .05), and security & privacy (β= 0.022, p< .05) according to
(Table 5.27). Therefore, it was found that these variables form the ‘Best-Fit’ combination of
factors which collectively giving the highest score of R2 (0.60), showing that 60% of the
variation (Table 5.25) in the overall user acceptance is determined by 4 variables, which have p-
values for less than the critical value of 0.05. While two of the predictors’ security and privacy
plus quality of internet service are not significant saying that they have no significant role in the
prediction process. Thus, the H3 is accepted.
After testing a total of seven hypothesis, 4 have been accepted and 3 have been rejected,
therefore it can be derived that H1 (Main Hypothesis) has been accepted means; User
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acceptance of Electronic Marketing is determined by a number of factors however, this behavior
is mediated by demographic attributes of the users (respondents).
5.4 References
Cai, S & Jun, M (2003). Managing Service Quality. MCB UP limited,13 (6), pp. 504-519. Cox, J & Dale, B.G. (2001). Key quality factors in Web site design and use: an examination. International Journal of Quality & Reliability Management, Vol. 19 No. 7,2002, pp. 862-888. Grönroos, C. (1984). Service Management and Marketing: a customer Relationship Management Approach. 2nd Ed. England: John Wiley & Sons, ltd. Jayawardhena, C. & Foley, P. (2000). Changes in the banking sector: the case of Internet banking in the UK. Internet Research: Electronic Networking Applications and Policy, Vol. 10 No. 1, pp. 19-30. Joseph, M., McClure, C. & Joseph, B. (1999). Service quality in the banking sector: the impact of technology on service delivery. International Journal of Bank Marketing, Vol. 17 No. 4, pp. 182-91.
Sathye, M. (1999). Adoption of Internet banking by Australian consumers: an empirical investigation, International Journal of Bank Marketing, Vol. 17 No. 7, pp. 324-34.
Yang, Z. & Jun, M. (2002). Consumer perception of e-service quality: from Internet purchaser and non-purchaser perspectives. Journal of Business Strategies, Vol. 19 No. 1, pp. 19-41.
159
CHAPTER
SIX
6. CONCLUSIONS AND RECOMMENDATIONS
In the closing chapter, answers to the research questions will be presented in order to attain all
the objectives of research study. Primarily, general findings will be specified, followed by
specific conclusions. The chapter will end with implications for practitioners and for theory, as
well as recommendation for future research.
6.1 General Discussion
About 80% banks in Pakistan are internet based. They have developed their websites and
providing electronic services to their customers from last few years. Unluckily the online
banking services in Pakistan are not meeting the customers’ needs. Majority of the online banks’
websites are not dynamic and have very limited information from customers perspective. There
is no direct help available for their’ customer. A lot of misunderstanding exists between banks’
management and customer, and limited banks offer e-mail facilities to their customers. Online
banking execution in Pakistan is not impulsive; as a result of poor government policies.
Therefore, banking authorities should understand the customers’ needs and wants by making
their services more reliable and durable in functioning.
160
Taking into account the gigantic investments of banks in the development of internet and
communication technologies (ICT), customer satisfaction and retention are considered the
significant factors for success in internet banking meaning that the development of positive
customer value on the Internet requires the making of long lasting customer relationships.
Through offering high quality online banking services banks can achieve customer satisfaction
and loyalty. For this purpose banks are being able to measure and evaluate the quality of their
online banking services in order to take precautionary measures against the satisfaction of the
customers, a report on ICT indicators by Federal Bureau of Statistics, Govt. of Pakistan.
Retrieved on April 4, 2009.
6.2 RQ1: How can the online bank environment be described in web based
marketing?
After making a detailed analysis in previous chapter, it is clear that both the websites are really
concerning the development of web design and banks are attempting to make an effective
website for their customer’s convenience. In the five important factors influencing website
design, the similarities is the major part between these websites, in the page loading, both banks
are ready to provide a simple and precise graphics to the customer on their website. In order to
keep high loading speed, they have used some technologies to reduce the effect caused by a lot
of information display. As a result, websites provide fine page-loading speed.
In order to maintain the customers to regularly visit the website, simple font and text should be
161
used for providing product information. Information regarding the product must be short and
clear, which facilitates the customer reading. In addition, online banking websites be supposed to
provide options of exchange rate conversions, loan calculators. By making the sites more
dynamic it would be easier for the customers to make calculations.
The online banks may offer homepage hyperlinks for the easier assessment in order to collect the
precise information. It would be better to keep a reliable navigation technique in the whole
website. For the convenience of customers it would be better to make maps and search engines
on the site. Usually, search engines depend on the volume of contents. But the particular online
banks have detailed information on the web, so they have to provide search engine facility.
For the security purpose, banks should utilize latest technology on their websites. The research
directs to the following conclusions rising from the above findings:
• The web design can play a significant role in internet banking if the products’
information is brief and understandable.
• Simple and important graphics can play role effectively in online banking as compared to
animation/ multimedia. The customers can lose their attention in making transactions due
to animation/multimedia graphics.
• Demo facility can play an imperative role for this introductory internet banking stage in
the country like Pakistan.
• The search engine facility on home page can establish a longer relationship with
customers in Internet banking.
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6.3 RQ2: How are such websites used for enhancing customer service in web
based marketing?
This study shows that both national and international internet banks are emphasizing on their
services to attract their potential customers and to retain their current customers. They developed
their websites on behalf of their customers. Up to some extent it has been observed that they
have achieved their primary objectives. Online banks are also trying their best to offer all
conventional services through the net, in order to save their expenses and provide more
appropriate services to their account holders.
Security issue is also a significant factor for the online banking users. Therefore, banks should
provide a fool proof security system which is more consistent among their users. Additionally,
the products’ information i.e. (deposit schemes, rate of interest, loans, advisory service, mutual
funds investment, cards etc) should be expressed to their customers very clearly and
comprehensibly. The customers can get a real meaning which the bank wants to inform or
communicate to them. Furthermore, the information sent through the website should be regularly
modified and updated.
The online banking users’ complaint is very essential to be dealt with a first preference by the
banks. if not, the bank can lose the self-confidence and expectation of the customer if they do not
give a response without delay. In case of new customers, the bank should provide complete
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instructional information for performing transactions online. Accuracy and convenient are the
most attractive features for internet customers. Moreover, banks may provide several language
options on their websites for attaining customers of different cultures, particularly in their
national language which can attract a lot of customers. Worldwide financial institutions are
offering special services to the students i.e. (study loans, special credit cards, computer’s and free
of charge internet banking facilities) for attracting more prospects (which are a big source of
business in future).
After a detailed discussion above, the study peculiarly concludes:
• Brief information about the loans (car, house, furniture,) can attract more customers for
the internet banking.
• More language options can play very effective role in some services for web based
marketing of banks such as account opening, abroad and worldwide payments services.
• Efficient complaint management can increase customer’s willingness and confidence on
Internet banking.
• By providing special services i.e. (study loans, special credit cards, computers and free of
charge Internet banking) to the students, banks can increase the number of online banking
users.
• Frequently asked questions (FAQs), link on home page of online bank can improve the
quality of customer services.
164
Accessibility and availability of several features on websites of online banks, i.e. (demo,
exchange rate conversion and calculators) is more attractive and interesting for the online
banking users.
6.4 User Acceptance of eMarketing Conclusions
After passing through the existing research and the current empirical study, several conclusions
can be extracted. The conclusions are the evaluations of results or findings of a study. In other
words the conclusions are the decisions about the nature, intensity and impacts (roles) of the
factors (variables) and their mutual relationships, (Hypothesis) as portrayed by the research on
hand.
In this study the secondary data (existing literature) was explored about the definition and
theories of job satisfaction, factors or determinants, consequences and the role of employees
demographic. The conclusions are drawn about the same dimensions of the topic. Furthermore,
the same factors have also been analyzed empirically; therefore conclusions include the findings
from the descriptive and inferential analysis of the field- data. Following conclusion emerged
from the analysis.
1. Descriptive statistics of demographical variables indicate 70.2% male and 29.8%
female’s response. A total of 88% respondents are in between 15 to 30 years of their age.
Most of them were having master’s qualification. Online banking users mainly avail their
165
services from the capital cities mainly in Karachi, Islamabad, Lahore and Peshawar and
Quetta respectively.
2. Study concludes that majority of respondents are accepting online banking culture
because of many favorable factors. According to descriptive Analysis, researcher
concluded that perceived usefulness and ease of use are the main perusing factors of
electronic marketing for online banking acceptance in Pakistan. An additional variable is
quality of internet service and amount of information which is normally availed by the
customers through different ways i.e. advertisement including electronic and print media
concerning online banking is very helpful for users acceptance of eMarketing in Pakistan.
And such variables have a very solid relationship with customers for accepting online
banking system. Recognition of online banking is becoming more familiar in various
parts of the country, that’s why about 60% of the users have been transferred from
conventional banking to online banking system. Guriting & Ndubisi (2006), also stated
that perceived usefulness and perceived ease of use are vital factors of online banking
acceptance.
3. Depending on the theories and research models of Technology Acceptance different
definitions of user acceptance of eMarketing can be constructed. No single theory can
explain the context and contents of online banking acceptance in a particular organization
or work settings. Although some theories are more suitable for a situation or group of
customers than the other but it cannot tell the whole story may be most of it. Therefore, it
is concluded that the definition and theoretical model to measure eMarketing acceptance
166
of banks must be tailor-made to match a specific organizational environment or type of
customers. For example, this study uses a unique theoretical model extracted from
multiple studies.
4. Different factors of user acceptance of eMarketing determine or explain the satisfaction
related attitude. In most of the research work, quality of internet service, information of
online banking, perceived usefulness, perceived ease of use, perceived enjoyment and
security and privacy are the primary variables which must be included in any study of
technology acceptance, in any organization of any type. However it is notable that all of
these six factors are neither equally important nor perceived as such. As the context of a
study changes, the role of each factor is tempered due to a diversity of factors. For
example, demographic grouping can changes the view of users about the importance of
these research variables. For instance, a user with qualification problems will respond
differently to questions on information of online banking than the one who is
educationally sound. Similarly female can respond differently than males with respect to
acceptance of eMarketing regarding online banks.
6.5 Implications & Future Directions
The above mentioned findings and results are not an ending point, but a beginning. This
research study offers implications for practitioners and has also added to theory. Finally, there
167
are new directions this research can take in the future. These are discussed below.
6.5.1 Implications for Practitioners
By the help of modern technology and innovation banking users are looking forward to the use
of Internet banking. Therefore, it is recommended on the behalf of findings of the study that:
• The online banks’ web developers should develop secure and well-designed websites that
provide brief and understandable information about the products to the online banking
users.
• Internet based banks should frequently check customer’s complaint and inquiry for
improving customer service.
• Online banks must offer all conventional services on the internet for attracting more
customers.
• Web based banks should have efficient and effective feedback complaint management
services.
. Web based banks should also offer several language options for the customers’ convenience.
. Dictionary of technical terms should also be included in the websites, while utilizing the
online banking services.
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6.5.2: Implications for Theory
As previously pointed out in this thesis that a few studies have been conducted on “electronic
marketing and its impact on banking sector of Pakistan”, therefore the author is explaining and
answering the questions that how important online environment, response to customer inquiry
and its web-based customer services are in online banking, and then provided findings and drew
the conclusion.
The contribution of this dissertation towards theory is based upon empirical data and information
collected from two target bank’s websites and different online banking users, providing internet
banking services in Pakistan regarding the purpose of studies and our research questions, so there
are still allot of issues which can be discussed and studied in more details.
For this reason the researcher hopes that method and conclusions in this research study could
give a referenced opinion to the researches of same or familiar topic in the future.
6.6: Recommendations for further Research
In online banking there are various issues, which need to be searched out from different
perspective. This study has taken as a customer perception. It is necessary to identify the
limitation of the present study. A lager sample size is attractive to precisely evaluate the
awareness of customer’s services in the online banking. Additionally in future similar research
can be conducted for other countries in order to present a comparative study between developed
169
and developing countries. It would provide useful information that how significant part online
banking plays in business sectors as well as in developing countries. In order to discuss and
explain few more issues following future research studies are possible:
• Select larger number of banking websites on the same study.
• Explain the similarities and dissimilarities between them.
• Further studies on the customer role, behavior and perceived services quality in Internet
banking.
• In addition, it would be desired to conduct this study from bank employee perspective.
• Compare the Pakistani banks with the banks especially in technically advanced countries.
As mentioned in Discussions, more research is needed and testing of the developed models for
better understanding of online banking services quality. In spite of that, the findings from the
present study have few important implications for practitioners.
After a detailed analysis this study consists of implications for banks’ managers as well as the
customers’ satisfaction level regarding online banking. Which can be used by banks’ managers
as a guideline for needed actions tends to improvements of the online banking services.
Initially, on the basis of analysis, clients have shown maximum level of frustration regarding
online banking services i.e. timely responses of the bank to customers’ enquiries by email or
through other ways; designing of website; rapidly trouble shooting; the easiness to reach the
bank by telephone and the easiness to find what the customer needs on the website. In
170
contrast, customers seemed to be most satisfied with respect to services such as: banks goodwill;
accuracy of online transactions; security in transactions with the bank and the non-misuse of
personal information from the bank. What this means for practitioners is that they have been
quite doing well in building famous name and status probably through well planned marketing
campaigns; they are also quite victorious in giving accurate and fast service and
developing confidence in customers. Moreover, after getting results from a detailed analysis it
seems that financial organizations normally perform better regarding the provision of online
services but are distinctive in case of providing traditional services. Conclusively it can be stated
that managers may underestimate this dimension of web based services and pay attention more
on conventional attributes of the services. It means that there is a some deficiency regarding
experience and understanding with particular characteristics and requirements of the virtual
space. In such situation it is strongly recommended for managers to develop more understanding
and take keen interest to the web related online services. because they are very significant
part of the customer’s practice and as a result of customer satisfaction with the online
services. Due to little interaction between internet and human, bank managers must recognize
the significant role of a bank website and it is considered as a main source of representing
maximum quality efforts of the bank.
In adding up, the Communication aspect should be also given higher priority from
employees perspective, because it consists the means banks respond to their customers’
requirements and the easiness with which the bank is accessed by phone when needed.
Both these aspects might play crucial role in the recovery part of the service delivery
process. Various studies have confirmed the importance of the revival process for the
171
whole opinion of service quality and if done fine, the recovery can have encouraging
effects on the growth of trusting relationships with customers and can lead to increased
customer liking Grönroos, (2000). As this aspect showed high discontent of customers and
taking into concern the importance it can have on the whole professed quality, it can be
suggested that managers make instantaneous corrections and developments in order to
improve overall customer willingness.
Lastly, it should be noticed that while the other aspects such as Service Performance and
Efficiency have comparatively high proportion of people whose prospects have been met, in
order for dependability and positive word-of-mouth to be created, banks should struggle to
surpass their customers’ prospects. Decisively, the aspects connected with these dimensions
can also be enhanced so that the opportunities of customers are not only met, but exceeded,
because in the current aggressive business surroundings, banks as service providers should
endeavor for excellence.
172
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Questionnaire 2009
188
Annexure-I Electronic Marketing Impact on Banking Sector of Pakistan:
A Customer Behavior Perspective
QUESTIONNAIRE
Dear Respondent!
Based on your experiences as a consumer of online banking services, please provide information on how you perceive the quality of the online banking services you use in comparison to your expectations. Please circle the number of your choice. This questionnaire is purely for academic purposes therefore your cooperation will highly be appreciated in terms of helping the student to get fair data on the topic.
Thanks a lot!
Name of your Bank: ----------------------------
Gender:
i. Male ii. Female Age:
i. < 15 ii. 15 to 35 iii. > 35
City : i. Islamabad, ii. Peshawar, iii. Lahore, iv. Quetta, v. Karachi
Profession ---------------------------------------------
Use
. I use online bank mainly I don’t know
I do not at home at work at in a in a in a in another
Use school bank library friend’s place place
On average I use online bank __________________ time(s) in a month.
On average I do _____________________________ transactions at a time.
Questionnaire 2009
189
How often you use the following online bank services?
All most never All most always 1 2 3 4 5 a. Primary current account b. Credit-based services c. Investment based services d. Insurance based services Totally disagree Totally agree I don’t know 1 2 3 4 5 Quality of Internet Connection 1. My internet connection is fast 2. My internet connection is reliable
Information of online bank
3. I have generally received enough information about online banks 4. I have received enough information about the benefits of using an online bank 5. I have received information about using an online bank from
i. A bank ii. A phone bank
iii. The internet iv. A friend
v. An advertisement vi. Another Source
Totally disagree Totally agree I don’t know 1 2 3 4 5
Perceived Usefulness
6. Using an online bank enables me to utilize banking service more quickly 7. Using an online bank improves my performance of utilizing banking services 8. Using an online bank for my banking service increases my productivity 9. Using an online bank enhances my effectiveness of utilizing banking services 10. Using an online bank makes it easier for me to utilize banking services 11. Overall, an online bank is useful for me to utilize banking services
Questionnaire 2009
190
Perceived Ease of Use
Totally disagree Totally agree I don’t know
1 2 3 4 5
12. Learning to use an online bank is easy for me
13. I find it easy to do what I want to do in online bank
14. My interaction with an online bank is clear and understandable 15. I find an online bank to be flexible to interact with 16. It is easy for me to become skillful at using an online bank 17. Overall, I find an online bank easy to use
Perceived Enjoyment
18. Using an online bank is fun 19. Using an online bank is pleasant 20. Using an online bank is positive 21. Using an online bank is exiting 22. Using an online bank is wise
Security and Privacy
23. Using an online bank is financially secure 24. I trust in the ability of an online bank to protect my privacy 25. I trust in the technology an online bank is using 26. I trust in an online bank as a bank 27. I am not worried about the security of an online Bank 28. Matters of security have no influence on using an online bank. Thank You!
191
Annexure-II
Electronic Marketing Impact on Banking Sector of Pakistan:
A Customer Behavior Perspective
2009
Focus group Interview guide
Online banking Environment (i.e. website)
Speed to download
Q1. Whether graphics are simple one while using bank website?
Q2. What do you feel about animation and/or multimedia plug-in using bank website?
Content and Design
Q3. Have you experienced enough product information contents?
Q4. Have you obtained enough amount of product information on the website?
Q5. Are you satisfied from the product information format?
Q6. What types of language alternatives are available on the site?
Q7. Are layouts features of the site user friendly?
Interactivity
Q8. Do you have any technical banking facilities i.e. Loan calculators, exchange rate
converters, mortgage calculator etc., while using bank site?
Navigation
Q9. Is there any deficiency regarding homepage hyperlinks?
Q10. Are you satisfied from links structure?
Q11. Is there consistent navigation while visiting bank webpage?
192
Q12. Do you have search engine facility in the site?
Q13. Are there enough site maps or guides in the respective site?
Security
Q14. Is there any encryption facility while performing transaction?
Q15. Do you get any confirmation after any Purchase /operation?
Q16. Do you automatically log off from the site?
193
Annexure-III
Electronic Marketing Impact on Banking Sector of Pakistan:
A Customer Behavior Perspective
2009
Check list for observation/interaction and focus group Interview guide
Online Banking Services
Trustworthiness
Q1. When you purchase something through Internet, have you felt insecure providing
sensitive information (e.g. Debit card number/cash card number)?
Q2. Do you think any risk associated with interbank money transferring? If yes, please give
explain, if not, how you are secure.
Q3. Have you received junk emails and felt that your email address has been provided to the
sender by your bank. Resultantly, you are not feeling privacy in internet banking
transaction?
Q4. Is there anything you would like to add on this topic?
Communication
Q5. Your bank updates their information about new currency rates, interest rates, and
commission charges on their banking products regularly? Have you ever noticed any
instance to please mention?
Q6. The information about the products (credit card, car loan, insurances etc) and services
(pay bill or transfer money through online, commission charged for foreign exchange
etc) are clear and understandable?
Q7. Does the Web site show important addressees of various departments and branches? If
not, please mention.
Q8. Does the “Frequently asked questions” serve mostly answer of your queries? If not,
194
kindly tell us which question must be explained.
Q9. Is there anything you would like to add on this topic?
Convenience/accuracy
Q10. Did you feel any problem during performing the first time Internet Banking (Paying
bill, transferring of money between the accounts)? And did you take help from
demo/tutor facility?
Q11. You still feel difficulty to perform new financial transaction or applying for opening of
account or credit through Internet etc.
Q12. What steps you took for log in your bank’s account for example, personal number, pass
word/ personal code etc. Please tell us. Also, do you feel it is convenient?
Q13. Do you think that Internet banking provides accurate record of all transactions? Kindly
give explanation of your answer.
Q14. Have you ever applied for loan (car, house, credit card) through online? How was your
experience?
Q15. Do you feel Internet banking is easy to use? If yes, please explain.
Q16. Is there anything you would like to add on this topic?
Feedback/complaint management
Q17. Did you send any complaint or query to the bank and got reply immediately? further,
you are satisfied with this service?
Q18. When you pay bill or transferring money between accounts or applying for loan, etc.
Do you receive confirmation of these transactions?
Q19. When you use Internet banking at that time do you feel it is customer friendly
environment? If not, why
Q20. Is there anything you would like to add on this topic?
Efficiency
Q21. Would you like to explain how Internet banking is convenient hours of operation and
save time in your opinion?
195
Q22. Do you think online tutor or demo and brochures educate you to use new services?
Please give example.
Q23. Is there anything you would like to add on this topic?
Accessibility
Q24. Does the bank’s Web site provide special services for disabled persons (sight/hearing)?
Q25. Can you log in to your account from any computer and any where?
Q26. Does the bank’s web site provide different language options other than Urdu/English?
Q27. Is there anything you would like to add on this topic?
Customization
Q28. When you log in on the bank’s web site whether bank welcome by name to you? If yes,
how do you feel?
Q29. The bank is providing all required products and services which you want? If not, please
explain which services you want more through online.
Q30. Is there anything else you would like to add to this topic?
Thanks
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