the impact of e-banking on customer satisfaction: a...

Hunjra, A. I., Ali, A. & Anwar, S. (2012). The Impact of E-Banking on Customer Satisfaction: A

Comparative Analysis on Pakistani Banking Sector. Bulletin of Business and Economics, 1(1), 1-43.

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The Impact of E-Banking on Customer Satisfaction: A Comparative Analysis on

Pakistani

Ahmed Imran Hunjra1, Amjad Ali2 and Saad Anwar3

Abstract

The present study statures the current status of electronic banking in Pakistan and its impact

towards the usage and also its impression on satisfaction of customers of the banks. Further,

based on the outcomes from the data gathered on the primary scale, the study portrays the

results of survey conducted on the level of engagement of electronic banking in the minds of

the customers. The main purpose of the study is to highlight those variables which are

considered to be the major players in raising the satisfaction of customers in Pakistan. In the

past, the financial institutions in Pakistan used to have Internet to show their presence and

provide information regarding the product and services being offered by the bank. However,

during the past recent years, numerous banks have started to offer Internet Banking as well to

cater the customers and promote their image as a friendly institution and to facilitate their

customers while allowing them to perform banking activities without visiting the bank. From

the research, it has been observed that customers who have availed the service are enjoying

the benefits yet they feel bit uncomfortable in terms of Online Service Quality. The customers

have shown their concerns about the timely response of personals. Many of the customers

have raised the objection that not all utility services have been enlisted in the options of

Internet Banking. Also, customers do have awareness but not on a large scale. Awareness

among the customers using electronic banking services is quite high but use of Internet or

Mobile Banking is a new trend and experience, and customers are reluctant to work freely

with the new environment.

Keywords: E-Banking, Customer Satisfaction, Pakistan, Banking Sector

Introduction

Earlier, a bank was considered four-wall protected building that was intended to secure

people money. During early eighty’s, when the technology revolutionized banking sector too

modernized itself while introducing new kinds of services that may be performed

electronically under a one word term known as E-Banking or in a full form as Electronic

Banking. E-banking is also designated as a branchless banking, introduced as a new notion.

The concept itself is self-explanatory. In one of the researches conducted, (Sayyar, and Wolfe,

2007) stated that the branchless banking encircles such kind of banks that do not exist

physically as mortar, and yet are able to provide their services electronically and over the

internet. Electronic Banking shortened as e-banking, thus, is an umbrella of numerous

banking activities that are offered by a bank to be performed electronically. If one needs to

1 Lecturer, UIMS-PMAS-University of Arid Agriculture Rawalpindi, and PhD Scholar Iqra University

Islamabad, Pakistan

2 Ph. D Scholar at National College of Business Administration and Economics (NCBA&E), Pakistan

3 MBA Student, Allama Iqbal Open University Islamabad, Pakistan



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identify the key distinctive features of the e-banking, the list may range from transferring of

funds to paying bills.

Ever since the era of technology started, people are finding themselves comfortable. Every

organization is trying to be equipped in order to remain in the competition. Banking industry,

like the other large organizations, is being kept on emerging at a large scale. Increasing trend

towards electronic banking is one face of its emergence. The facility of electronic banking

gets more on demand when a customer from a busy environment does not have enough time

to spare in going bank, stand in a long waiting queue to perform detailed banking activities or

paying bills even. Besides, it even gets worst when a customer is intended to find out the

working branch, want to operate for a transaction and find no access to it. The technology of

electronic banking resultantly has become indispensible while facilitating a user to have an

online access to his her account at any time.

Hence, a bank that facilitates its customer from anywhere around the world at any place even

into their homes over the internet is an “Ultimate Internet Bank (UIB)” and the banking

services that are delivered either electronically or over the internet is collectively known as

Electronic Banking.

Before getting into further detail, clarity is required for the term electronic banking. The term

e-banking is used to relate any kind of banking activity which is performed electronically.

Most of the times, Internet Banking is often taken alternatively as Electronic Banking which

is however, not a right phrase to be called. It must be kept in mind that Electronic Banking

includes several traditional banking activities like ATM, Telephone Banking, Plastic Money,

etc. The most recent additions are Internet Banking, Mobile Banking, and Digital TV

Banking. Electronic Banking is also referred as Electronic Funds Transfer (EFT) and is a

mean to transfer of funds from one account to the other. Table 1.1 explains the various

features and functions being offered under the umbrella of e-banking.

Table 1.1: Features and Functions of Electronic Banking

Features Telephone

Banking

Self Service

Terminals ATMs

Internet

Banking

TV

Banking

With drawls Y

Deposits Y

Balance Enquiries Y Y Y Y Y

Interim Statement Y Y Y

Transfer Funds Y Y Y Y Y

Cheque Book Orders Y Y

Change ATM Card PIN Y Y Y

Stop Payment of

Cheques

Y Y Y Y

Exchange Rates Y Y Y



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Stop Orders Y Y Y

Billing Y Y Y Y

Source: (FNB Brochure, 2001); (TV Banking, 2010)

Electronic banking is quite beneficial for the development of the financial sectors especially

in developing and under developing countries due to its cost effective deployment, and

widened access of its financial services for the hosting banks’ customers. (Birch, and Young,

1997) conducted the study on electronic banking with respect to customer’s perspective.

Through their research, they came on to the common ground that customers’ main intention is

to look for the efficient and effective operation in conducting any kind of financial transaction

while seeking for options in terms of fundamental and non-fundamental products offered by

the banks against the competitive prices and returns. In support to a statement made by

(Birch, and Young, 1997), certain other researchers (Polatoglu, and Ekin, 2001; Black et al.,

2002; Howcroft et al., 2002) believed that the wide acceptance of electronic banking system

is due to its time and effectiveness in terms of cost as well as the utility it offers. (De Young,

2001) ranked the concept of electronic banking with a better grade. He stated that apart of

facilitating the customers through internet, the electronic banking has eased the detailed

banking operations and has brought almost every activity under a mouse click.

(Pikkarainen et al., 2004), termed such electronic banking activity as Internet Banking.

According to him internet banking can alternatively be known as internet portal which helps

the bank’s customers to perform different kinds of banking activities that may range from bill

payment to investment making. Online banking system is advantageous both for the banks

and so for the customers. Banks may get benefited in the form of lowering of operational cost

by rendering services of electronic banking to the customers since these services may involve

fewer mortar branches and quite a few staff members. As for the customers’ perspective,

electronic banking services provide ease of handiness, swiftness and from anywhere to

everywhere user account availability. Later, at another place, (Pikkarainen et al., 2006) stated

that electronic banking is a system that assists the banks to ease the work load of handling

customers. On the other end, it also gives support to the customers to access their accounts,

conduct transactions and get relevant information. It is usually come across listening that the

tendency is growing towards the global adoption of electronic banking but it should be kept in

mind that new technology brings new issues to counter. The concerns that may arise while

dealing with electronic banking:

1. Impact of electronic banking on Satisfaction of customer/s?

2. Awareness of usage of electronic banking in terms of technology and services.

3. Level of Quality of Services being offered on Internet.

4. Soundness of System Credibility of electronic banking in order to be endured.

5. Successful implementation of electronic banking in Pakistan.

Pakistan has seen number of ups and downs in the field of investment and particularly in

banking industry in the past. (Sajjad et al., 2011, p.3) stated that in early ninety’s, the banks in

Pakistan experienced chief breakdown, more specifically in line of insurance and monetary

value. (Kaleem, and Ahmad, 2008, pg.3) stated that due to such collateral damage in Pakistan,

the foreign banks soon after, held the grip by heavily introducing ATMs and credit cards in

the mid-90s, leading some of the native financial organizations to get crumpled, although

domestic banks followed in the late 90s to cope up with the business. In an annual report,

published, (State Bank of Pakistan, 2003, p. 110) put forward the reason of this late indulgent

towards electronic banking. The report argued that regulatory hurdles, higher startup costs,

on-going banking sector reforms and lack of technical skills were the major issues. With these



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given facts, in accompanied with certain rumors of destabilization of financial institutions,

some valid concerns were raised among the people in Pakistan that resulted in losing the

confidence in own indigenous banks.

Earlier, (Kazmi, S.H., 2002) had also conferred that even with a late initiative in respect of

electronic banking; efforts were being put into the account to deal with the rising competition

across the globe. MCB (Muslim Commercial Bank) arranged ‘Pakistan Electronic Banking

Conference’ in the promotion of electronic banking which was co-funded by IBM, Teradata,

ABN-AMRO and local newspaper. Another movement was made in the mode of installation

of ATMs during 90’s to counter the emergence of foreign oriented banks. Whilst many banks

have their own ATMs installed outside their branches, numerous banks jointly introduced a

dedicated network using a leased line over the internet to improve their operations while

reducing cost. In Pakistan, this system is termed as ‘One Link’ that allows an ATM card

holder to access his/her account. The card holder/customer either from the parent bank or

from the partner bank are allowed to have an access to his/her account though using this line.

There are certain other influences that have been optimized as key factors in avoiding using

internet or computers for security reasons like lack of knowledge in using certain services,

and sniffing threat like ‘eaves dropping’. A major landmark was made, when an Electronic

Transactions Ordinance was passed in 2002. This ordinance officially permitted the digital

signatures in order to reduce the expected threats that are linked with the use of an electronic

medium business. To be an active participant of this growing economy, Pakistan must build

up its electronic commerce framework which may be consisted of three major components

like secured transactions, lawful infrastructure along with the required awareness of the

customers, and bank’s electronic readiness in terms of online availability, so to fulfill the

requirements of its users over the internet.

The purpose of this study is to examine the influences that play a role on the impact of

electronic banking on satisfaction of bank’s customers. The impact may be analyzed from the

study of banks along with the satisfaction/dissatisfaction of customers from electronically

offered services and whether the customers are satisfied with the quality of services being

offered in Pakistan. The study will also help to unleash the actual awareness of the customers

towards the usage of banking performed electronically which may lead to the tendency of

using internet and other electronic medium. This study will also cover the discussion that

whether the system is dependable enough to meet the user requirement and is useful in

maintaining the credibility of a system in terms of security and privacy of its users.

II. Literature Review

Twenty first century is marked as a revolutionized period in the field of IT and

telecommunication. The technology since has started influencing different modes of life,

modernization too gets matured. Progress and modernization in fiscal amenities, (Van Horn,

1985, p.621) identified it as the “life blood of efficient and responsive capital markets”. In

support to the statement made by Horn, (Hughes, 2001) envisaged that the rapid growth in

dissemination of data electronically has been a reason for remarkable changes in financial

industry during past few years with the increasing rate of improvement in technology, and the

competition among players with growing consumption needs.

Numbers of studies have so far been conducted on the improvisation of banking industry.

(Dewan, Freimer, and Seidmann, 2000; Seitz, and Stickel, 1988) added the argument that the

banking industry is making a shift using revolutionized services since the birth of internet.

(Tan, and Teo, 2000) supported the statement of (Dewan, Freimer, and Seidmann) and stated

that the growing impact of the Internet has lead the emergence of internet banking that



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allowed the customers to perform various banking activities to perform online through bank’s

hosted website. (Birch, & Young, 1997; Dannenberg, and Kellner, 1998) came on to the

common ground that electronic banking provides an advantage to both customers and the

banks. (Barnes, and Howlett, 1998) further explained a view of introducing information

technology. They stated that electronically dissemination of data has also reduced personal

contact between the service facilitators and the clients which unsurprisingly ended up on a

complete transformation of old-fashioned bank-customer relationships. In addition,

(Lymperopoulos, and Chaniotakis, 2004) further stated that figuring out the reasoning which

may be critical to the decision, plays a vital role in terms of service delivery. It is also

worthwhile to study the influences about the introduction of a new technology in terms of

performing transactions electronically. So to perform varied financial activities through

electronic means, different financial intermediaries such as banks; introduced a new kind of

service that covers varied banking services of a bank under its umbrella. The new era knows

the service as Electronic Banking which is shortly abbreviated as E-Banking.

Varied authors suggested diverse perspective and elucidated the concept of electronic

banking. The most acceptable definition world-wide for electronic banking, and which is

being described here in this paper as well, was originally termed by the (Basel Committee

Report, 1998, p.3). The report described e-banking as the stipulation of small valued products

of banking using electronic channels. The activities may include deposit taking, online bill

payment, management of user account through a given account management area, and

payment through electronic money etc. (Hussam et al., 2003) some of the leading bankers

explained the term E-Banking. They envisaged that e-banking or electronic banking can be

termed as an umbrella that holds the number of banking processes through which a customer

may execute numerous banking transactions electronically without visiting a brick-and-mortar

branch. (Sherrod, 2000) envisaged that electronic banking predominantly allows a customer

to perform any kind of banking activity through using any computer connected with high

speed internet connection and an interactive browser. (Banks, 2001) seconded the statement

of Sherrod and stated that electronic banking is a wide-range spectrum that holds the

savings/deposits, balance enquiry, transfer of funds, credit card services etc. Further he added

that while electronic banking does not enjoy the allure and exhilaration of electronic

tradeoffs, it is a business function that facilitates itself with the internet updated technologies.

In simple, electronic banking is not a product of bank; instead it is a sub-division of e-

business that hedges all categories of business to be performed using electronically

maintained system in order to conduct the successful transactions. (Mohammed, et al., 2009)

explained the working of e-banking. He stated that electronic banking works on electronically

configured channel through which the major banking activities may be conducted. The

example may hedges from transferring of funds to paying bills over the internet. (Aladwani,

2001, Mols, 1999, and Sathye, 1999) explained the electronic banking as a collection of

services, through which a customer is able to perform numerous banking activities to perform

e.g. stable response to the customers’ query, inter-account transfer, paying bills etc.

The major advantage is that if one needs to perform any kind of banking services or

operations; he may need not to interact with the banking personnel but can perform his

required banking activity himself. (Gonzalez, 2008) in his research claimed that electronic

banking has seen an acute progress and has surely converted outmoded practices in banking.

(Maholtra, and Singh, 2007) in their research added the concrete in the foundation of its

importance and stated that electronic banking is tilting towards the shift in the current

practices of marketing that resultantly leads to the improved performance of the banking

industry.



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(Blackwell et al., 2001) explained e-commerce and termed it as “clicks and order”

transaction. He further stated that the success in this competition depends on dealing with the

customers and to upkeep their customers better than their competitors while offering better

opportunities and solutions to their customer’s problems that were available in the past.

Electronic commerce has been variously defined over the period of time. According to

(Zwass, 1996) electronic commerce is a name of sharing of information, up keeping of

connections, and the dealings made through information technological tools. Later (Savoie,

and Raisinghani, 1999) explained electronic commerce and stated that it provides an ease of

performing transaction with just a touch of a button and a customer may have access to what

he/she desire at any time, at any place. (Lawrence, et al., 2000) envisaged that electronic

commerce is not just about the transaction. Among the main ingredients, focusing on the

customers and value maximization are the key propositions which may be a part of proactive

relationship management. (Turban et al., 2004, p.4) later, at another stage, described in detail

the electronic commerce. They stated that electronic commerce is a process of purchasing,

retailing, transporting or trading of products or services along with the concerned information

through the networks of computer like internet etc. Electronic commerce, they added, can be

explained under numerous viewpoints like communication, amenity, industrial processes and

businesses. In terms of say amenities, they stated that electronic commerce is a technological

instrument that covers the requirements demanded by government institutes, various

businesses, customers and administration to low down the cost of services with the

improvement of quality.

Quality improvement may be addressed especially in terms of customer facilities and growing

speed of delivery of service, requested. (Lawrence et al., 2002) added that the ethics of

electronic commerce strongly rely on innovations and persuasive techniques in order to

increase the efficiency of processes conducted, cost reduction, while seeking for new market

prospects. Seeing through the other perspective, electronic commerce facilitates the

accomplishment of transactions among two or more parties using unified network. These

unified networks can be a permutation of telephone systems, cable TV, leased lines, etc.

(Kalakota, and Robinson, 2000) further added that electronic commerce also include

electronically made payments in order to increase number of clients and transfer of funds.

To explain further, (Newton, 2000) envisaged that the electronic commerce which is also

termed as EDI (Electronic Data Interchange) allows the exchange of business data

electronically (such as purchases and invoices) among the organizations and their trading

partner. He argued that EDI facilitates faster and effective trading which has increased the

quality points and favor among its company players worldwide. The organizations that use

EDI technology have some nature of ‘EDI Gateway’. This ‘EDI Gateway is also frequently

identified as ‘Electronic Commerce Gateway’ (ECG). The EDI Gateway is actually an

assortment of computers and related soft wares that permit the exchange of information to

execute. The EDI Gateway acts as a heart in communication medium among the

organizations letting them to connect negotiate and trade.

(Zähres, 2012) defined the concept of Electronic Money. He stated that electronic money or

e-money is a digitally comparable of cash that can be used for delivery of payment without

the involvement of user’s bank account. While explaining further, he added, electronic money

is an instrument that acts as a prepaid deliverer. Nature wise, e-money can be software based

or it may be hardware based. For example ‘GeldKarte’ is hardware based card used in

Germany. The card can be recharged from any recharging point or any ATM that has the

facility. Another face of e-money, (Zähres, 2012) added is software based. Herein, the

electronic money may be accessible through Internet using PayPal, for example. Electronic

Money focuses a certain group of market, though the growing usage of financial service



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electronically may for sure create a big consumer market in forthcomings. (Zähres, 2012)

envisaged that the electronic money facility is designed in such a way that a user can even in

secret deliver the payment at a cheaper cost as compared to, for example, payment through

credit cards. Schemes based on e-money can recognize themselves as robust opponents

especially in milieu of delivery of payment electronically through using Internet in

forthcomings. Till today, even, the number of transactions through electronic money is not

very large. Perhaps, the convolutions in performing e-money may be one of the major reasons

of its modest progress. The quality standard must therefore be higher to maintain its

attractiveness for the customers and must be thrived from expected frauds and threats.

Electronic money needs a cryptographic technique in order to make sure that the peer-to-peer

negotiation must be controlled and monitored. Predominantly it must be ensured that the

extensive safety measurements should be taken when the electronic money is kept secured on

account of a customer. Consequently, processes to place application for fresh clients are

complex to execute electronic payment systems. The growth of digitalizing of financial

amenities perhaps may lead to gear up the usage of electronic money in forthcoming days. In

the given scenario, mobile wallets may also be a chief factor. The mobile wallets are virtual

ones that are used to store cards for payment delivery, vouchers or tickets etc. To explain it

shortly, it empowers a cellular phone to pay with a digitally stowed virtual credit card. While

discussing through the process of electronic money, (Zähres, 2012) added a concept of Virtual

Money. He stated that virtual money is another form of electronic money. It is a complete

peer-to-peer kind of e-money that permits delivery of payments online. It facilitates the two

parties payer and payee without involving the third party (financial intermediaries e.g. banks).

(Allen et al., 2001) explained the concept of Electronic Finance and stated that it is the

endowment of financial amenities and markets with the use of electronic communication and

computation. To make it simple to understand, it is about performing all kind of financial

activities, for example, sales order, payment for invoices, claims for staff expenses, and like

electronically through using internet technology. In the past few years, electronic finance has

restructured the course of action of financial landscape, specifically, in terms of electronic

banking and brokerage services worldwide. The financial services being delivered

electronically, whether online or using some remote mechanism, has spread swiftly. Even

though there are certain dissimilarities across the globe, while considering such factors like

the availability and eagerness of telecommunication infrastructure, cohesiveness among the

two may lead in spreading of electronic finance.

Electronic finance appears to be one of the most auspicious areas defined under the umbrella

of electronic commerce since monetary services are highly informative and most of the time

does not entail the physical delivery. It is now apprehended that there are not only some

comparatively simple, but also time-sensitive products such as brokerage which electronic

finance facilitate it with convenient as compared to other existing services. There are areas

which are identified to facilitate the transformation of new innovative technologies that

permits or forces to redesign the market structure at base. At some place, it may give rise to

new business models, but on the other hand, it may leave certain impact, like bank’s corporate

advisory work, for example. From the transformational view point, the Internet may

exemplify an up-to-date solution against the old problems for banks.

III. Emergence of Electronic Banking in Pakistan

Presently, it is evident that large number of commercial organizations in Pakistan are getting

engaged with electronic commerce technologies on an enormous scale. According to the

newspaper an article published regarding the growth of electronic banking in Pakistan, (“E-

Banking deal”, 2013), the growth of electronic banking has geared up raising a huge sum of



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money transactions to Rs.6.5 trillion during the first quarter (Jul-Sep 2012) of the fiscal year

2013. Looking at the current statistics of banks in Pakistan, according to the recent report of

(SBP, 2012, p.72) as on June 30th 2012, the number of scheduled banks working in Pakistan

are 34 along with 4 other financial institutions with 9,838 branches all over the country. With

the break-even analysis, there are five public sector banks with 1,748 branches, Twenty two

local private banks with 7,498 branches, Seven Foreign oriented banks with 46 branches and

four other financial institutions with 546 branches. (Kolachi, 2006) stated that banks in

Pakistan are providing the following online oriented services and products like inquiry of

account statement, balance inquiry, and fixed deposit. Payment related issues like, fund

transfer, payments made through credit card and direct payments along with utility bill

payment. Also, request may be made for acquiring cheque book, payment stoppage, execution

of demand draft and new fixed deposits. In addition, downloading can also be made in terms

to acquire customer profile, statement download, and other information along with guidelines

of using electronic banking. Table 2.1 provides the statistical overview over the development

of electronic banking system in Pakistan extracted from the SBP Annual Report (2012, p.70)

and SBP Payment Systems Review for the FY13.

Table 2.1: Electronic Banking Statistics in Pakistan

Item FY09 FY10 FY11 FY121 FY132

RTOB 6,040 6,671 7,416 9,291 9,412

ATM 3,999 4,465 5,200 5,745 5,987

POS 49,715 52,049 37,879 34,879 34,229

Source: Payment System Department (Statement Bank of Pakistan)

1. SBP Annual Report - Statistical Supplement (FY12)

2. SBP Payment System Review (FY13) 1st Qtr. Jul - Sep 2012

Statistically, about 93 percent bank branches are now offering real-time online branch

banking services in Pakistan, according to State Bank of Pakistan’s Payment System

Quarterly Review for the 1st Quarter of FY13 released on January 1, 2013 on Tuesday. It has

been estimated that a total of 242 more ATMs have been installed by various banks in

Pakistan raising the total of 5,987 in the country. Overall, total number of 121 bank branches

have been added to the network on Real-Time Online Branches (RTOB) in the first quarter of

FY13 that raised a total of 9,412 which are offering RTOB services out of 10,111 bank

branches across the country, with the percentage 93.08% (9,412/10,111). During 1st quarter of

FY13, 19.67 million plastic cards were issued in the country with 9.55 percent as compared to

preceding quarter. On the other side, overall transactions of electronic banking in terms of

volume elucidated the growth of 15 percent to 74.87 million with the volume of transaction

increased by 5 percent to record Rs.6.5 trillion as compared to other preceding quarter.

Hence for upkeep, great number of institutions has developed their websites to keep their

patrons well informed about their financial offerings and the rendering of their services.

Websites are used primarily to promote the image of a company. Certainly, there are other

cases wherein the technologies of electronic commerce may go beyond merely just

representation. The offering may allow a customer or a client to perform financial

transactions or even tradeoffs. It is noteworthy to mention that SBP has ordered all bank

branches to become ‘Swift Branch’ till June 30th, 2013. With this status, all bank accounts

will become international account and the account holder can easily receive or send

transactions abroad. The other nature of service delivery to the clients may be in the shape of

ABM or in the shape of ATM. In addition, the other facilities may include automatic funds



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transfer, electronic bill payment, call center service etc. Internet is now a biggest electronic

market across the globe, and the organizations must have to promote themselves.

IV. Conceptual Framework

To proceed further for conclusion and recommendations of the study, questionnaire survey for

these (after which the final ranking has been done) factors have been conducted. These factors

are given below:

1. Customer Awareness 2. System Credibility

3. Online Service Quality 4. Customer Satisfaction

A framework has also been designed to analyze the hypotheses and answer the investigate

quarries. The framework is depicted in following figure:

Figure 1: Conceptual Model of Electronic Banking

Table 1: Reliability of Measurement Instruments

Sr. # Constructs / Variables # of Items Cronbach’s Alpha (α)

1 Customer Awareness (CA) 08 0.838

2 Online Service Quality (OSQ) 14 0.860

3 System Credibility (SC) 11 0.874

System

Credibility

Customer

Awareness

Online Quality

Service

Customer

Satisfaction

Dependent

Variable

Independent

Variables



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4 Customer Satisfaction (CS) 08 0.861

Total 41 0.942

Source: Field data

While getting through the reliability of every variable; it may be observed that the Customer

Satisfaction with eight (8) items is a dependent variable having Cronbach’s Alpha value 0.861

(86.1%). System Credibility with eleven (11) items is an independent variable depicting the

highest value of Cronbach’s Alpha. Online Service Quality with fourteen (14) items is

another independent variable representing Cronbach’s Alpha value 0.860 (86%). However,

Customer Awareness with eight (8) items is also an independent variable that holds the

minimum Cronbach’s Alpha value 0.838 (83.8%). Finally, the reliability index of all the

variables with total forty one (41) items is 0.942 or (94.2%).

V. Results and Interpretation

Established on the information gathered from various studies, an effort has been put into

account in order to make sure that the analysis being conducted on the data gathered through

questionnaire is accurate and is true in nature to the extent it could. In doing so, a

questionnaire was designed with the help of past questionnaires which have been posed

earlier in this background. Moreover, it was re-evaluated at various discussions with the

supervisor, so that a proper and comprehensive questionnaire may build up. Additionally, it

was also kept in mind that respondents are the customers from different banks with different

set of minds, and may not like to spare enough time to fill the questionnaire form or if they

will, may fill it half-heartedly. Consequently, a 5 point Likert Scale as a closed end

questionnaire was posed to collect the data, so that customers or the individuals may find ease

in to fill the form in no time, and the study may come up with the true and genuine

representation of the current development of electronic banking in Pakistan.

When the data is gathered, SPSS tool was implemented to figure out the reliability check and

its relevancy towards the topic. In doing so, many questionnaires were discarded which were

haphazardly filled up or did not meet the requirement. Result of different understudy

variables and the degree with which the agreeableness along with its implications with respect

to the respondents and the liaison among them have been analysed by improvising varied

statistical techniques by using SPSS Tool. The results are summarized below:

In this study, three different variables have been identified which are directly or indirectly

involved in affecting the satisfaction of customers towards the usage of electronic banking.

To do the needful in Pakistani environment, focus group approach has been adapted. The

customers of the banks are put into focus in respect either they are enjoying the benefits of

electronic banking or not being offered by their banks irrespective of their age or other

demographic features. Also, the results indicating degree of agreeableness or disagreeableness

to the various statements of the selected variables by the respondents have also been analysed

by descriptive statistic.



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Table 2: Frequency Distribution w.r.t. Demographic Profile of Respondents

S/No. Indicators Category Frequency Percentage

1. Gender Male 156 62.4

Female 94 37.6

2. Age 18 – 25 145 58.0

26 – 35 72 28.8

36 – 45 25 10.0

46 – 55 7 2.8

> 55 1 0.4

3. Education Higher Secondary 14 5.6

Bachelors / Undergraduate 86 34.4

Masters 86 34.4

Ms / M-Phil 52 20.8

Doctorate 8 3.2

Other 4 1.6

4. Occupation Government / Civil Service 23 9.2

IT and Telecom 25 10.0

Education 66 26.4

Medical 17 6.8

Media 9 3.6

Trading / Business / Manufacturing 15 6.0

Student 52 20.8

Other 43 17.2

5. I am an

account

holder of

National Bank of Pakistan (NBP) 93 37.2

Habib Bank Limited (HBL) 59 23.6

United Bank Limited (UBL) 35 14.0

Bank Alfalah Limited (BAL) 17 6.8

Dubai Islamic Bank (DIB) 24 9.6

Standard Chartered Bank (SCB) 9 3.6

Other 13 5.2

Source: Field Data



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The age of respondents ranges between 18 and 55 or above with the average age of 36.5

approximately. It can be observed that among the respondents, the percentage of male

respondents is 62.4% and of the females is 37.6%. The reason of less response from female

side may be the gender imbalance due to our cultural values and since the questionnaires were

distributed randomly, the ultimate goal was to figure out those people who go bank or operate

their account regardless they are using electronic banking or not. This may be treated as

another factor of less response. Moving further, individuals range within the age 18 to 25

have come up with the response frequency of 142 followed by the individuals with the age

range 26 to 35 with the frequency 72. Customers or individuals with the age range 36 to 45

have come up with the frequency 25. Very low response has been observed from the

customers within range 46 or above.

In the area of education, individuals or customers having strong hold in educational

background viz. Bachelors or Undergraduates with frequency 86 and Masters with same

number of frequency have shown more promising attitude towards the usage of electronic

banking. While moving further, frequency distribution explores the Occupation and reveals

the maximum number of respondents is from education sector depicting the frequency 66.

Government Sector raised 23 responses followed by Telecom Sector with 25 responses.

Students are the second highest in response with frequency 52. Response from the Media

sector claims minimum number of responses. Responses from other occupation endorse 43.

Since the target customers were focused who hold the bank account, varied response has also

been observed in terms of bank accounts as well. Many of the customers who have selected

multiple banks, as they have multiple accounts in various banks, the bank was majorly

selected on the bases of their major operational account. At the top, National Bank of Pakistan

holds 37.2% from sample customers population followed by Habib Bank Limited 23.6% from

the sample population. UBL holds 14% from sample population. Standard Chartered and

Dubai bank Islami covers less populations sample holding 9.6% and 3.6% respectively. Other

category holds several other banks like CITI, Bank, Silk bank, MCB and numerous other

which were not mentioned in the option. The descriptive statistics of demographic variables is

being tabulated in the following table 2.

Table 3: Descriptive Statistics of Demographic Variable Response

Source: Field Data

From the data gathered and processed through SPSS, the results of different variables

understudy along with its frequency distribution and descriptive statistics in terms of agree,

disagree or neutral are being tabulated in the following table 3.

Table 4: Frequency Distribution and Descriptive Statistics w.r.t. Customer Awareness (α =

0.838)

Variables Mean Median Standard Deviation Variance Range

Gender 1.38 1.00 0.485 0.236 1

Age 1.59 1.00 0.813 0.661 4

Education 2.86 3.00 1.017 1.034 5

Occupation 4.73 4.00 2.426 5.886 7

Bank Account 2.59 2.00 1.786 3.190 6



13

Source: Field Data

In the table 4, the Reliability Cronbach’s Alpha α = 0.838 reveals that the gathered data is

reliable at good scale. Exploring the data, it can be analysed that large number of customers

are well aware of using electronic banking. Customers express in Q#2 and Q#3 that they are

not only well updated with the benefits of using online banking (electronic banking) but they

are also well aware of using it properly. However, customers have shown mix response and

come up with little dissatisfaction in Q#1 that they don’t get updated from the bank or bank

do not update them as much as it is supposed to be though. Customers, from Q#4, and Q#5,

also know the fact of being monitored of their banking activities and believe that they don’t

find any hidden information towards the usage of electronic banking. However, from Q#6, a

mix response has been observed in terms of being updated with the transaction activity

through some SMS or e-mails. A positive response in Q#7 and Q#8, however, has been

observed that bank encourages using online banking for data transfer and provide awareness

of strong security policy towards the usage of electronic banking. In the table 4, Online

Service Quality is being defined statistically.

Table 5: Frequency Distribution and Descriptive Statistics w.r.t. Online Service Quality (α =

0.860)

# Items

Descriptive Statistics of Response (N=250)

Dis-

Agree Neutral Agree Mean SD

1. I receive enough information of

using e-banking services from bank. 66 89 95 3.12 1.08

2. I am well updated with benefits of

using online banking (e-banking). 51 70 129 3.36 1.07

3. I am well aware of using online

banking (e-banking). 42 85 123 3.45 1.13

4. I am aware of official monitoring of

my activities made by bank. 38 92 120 3.39 1.03

5. I believe there is no hidden

information while using e-banking. 62 86 102 3.18 1.10

6. I get updated on the execution of

transaction through SMS/E-mail 60 77 113 3.32 1.27

7. Bank encourages me to transfer the

funds using online banking. 39 81 130 3.48 1.12

8. Bank increases the awareness of

secured e-banking. 44 81 125 3.48 1.06



14

# Items


Dis-


9. Technological systems are being

used for e-banking are reliable. 45 92 113 3.30 1.00

10. I find the operations performed

through e-banking are accurate. 20 82 148 3.63 0.95

11. I find the operations performed

through e-banking are specific

towards my request.

44 100 106 3.30 0.96

12. I find the operations through e-

banking get completed without any

breakage.

48 79 123 3.37 1.02

13. E-banking services are available at

all locations I need. 62 85 103 3.22 1.02

14. I never faced any congestion or

difficulty in getting connected to my

bank.

53 91 106 3.30 1.04

15. The content on the web page of the

bank is appropriate and pleasant to

understand.

33 92 125 3.50 1.01

16. Operations through e-banking are

really fast as compared to in-branch

banking

28 76 146 3.60 1.05

17. I use e-banking to meet my cash

requirement after the banks are

closed.

38 63 149 3.60 1.09

18. Online banking (E-banking) allows

easier maintenance of transaction

activities.

25 85 140 3.60 1.02

19. Bank performs the service correctly

at the first time. 40 95 115 3.40 0.99



15

Source: Field Data

From the above statistics of Online Service Quality in table 5, the Reliability Cronbach’s

Alpha α = 0.860 reveals that the gathered data is reliable at good scale. Traversing through the

data, the overall quality of services being delivered by the banks in Pakistan has improved a

lot. Since it has increased a great level of confidence, people are finding themselves attracting

towards the usage of electronic banking. From Q#9, Q#10, Q#11, Q#12, and Q#13, it can be

observed that the customers show great confidence of transaction accuracy in performing the

transactions electronically. Large number of customers have also agreed upon the reliable

connectivity. They have shown the strong positive attitude towards the usage of electronic

banking and the systems being used in the delivery of electronic services. Customers

appreciate easy access of their account from anywhere to everywhere. However, result of

Q#14 has come up with a point that the connectivity problem though has improved, but issues

are still there and are needed to be addressed. As for the content on the page, Q#15 relates the

status of understandable contents and there is a huge number of customers who speaks neutral

on the issue. Q#16 and Q#17 envisaged that banks are now able to facilitate their customers to

meet their cash demands even after the banking hours leading to a concept of 24/7 banking.

This also leads to an understanding that transactions through electronic banking are much

faster than in-branch banking. Q#19, Q#20, Q#21, and Q#22 justifies that banks have also

improved their IVR system and also focussing on training of the personales involved in

troubleshooting the complaints to satisfy the customer demands. In the table 5, Credibility of

a System is being identified statistically.

Table 6: Frequency Distribution and Descriptive Statistics w.r.t. System Credibility (α =

0.874)

20. Prompted service (e.g. account

opening, customer query) 29 103 118 3.42 0.92

21. Issues / problems are resolved well

in time. 55 78 117 3.31 1.09

22. Timely response from the personals 45 90 115 3.34 1.02

# Items


Dis-


23. I feel my personal details are well

protected and secured in performing

e-banking

32 107 111 3.41 1.03

24. I feel my financial transactions may

not be publicized to anyone. 19 90 141 3.61 0.91

25. The security policies of e-banking

give me the feeling that the

information about money

transactions is secured.

29 82 139 3.60 1.07



16

Source: Field Data

From the above statistics of System Credibility, the Reliability Cronbach’s Alpha α = 0.874

which reveals that data is reliable at good scale. Moving through the data, Q#23, Q#24, Q#25,

Q#26, reveals that the confidence level of customers on the security and data privacy has

increased over a period of time and customers can freely perform transactions through using

electronic banking. Q#27, Q#28, Q#29, and Q#30 conceal that the customers show their

confidence in accessing their account online through using bank’s webpage. Customers have

shown enough confidence in accessing online accounts and have firm believe that only

authorized customers can operate their account. But on the other hand, customers have shown

little reserve-ness too, towards opening or operating account online as they believe that the

security system can also be breeched by the hackers. Q#31, Q#32, and Q#33 that to attract the

customers towards the usage of electronic banking, banks are improvising themselves

continuously in order to update with the time and along with the continuously extemporising,

banks have started segregating the duties to enhance the security and integrity of data. In the

table 6, Customer Satisfaction is being identified statistically.

26. The security policies of e-banking

give me the feeling that sending

sensitive information may not harm

me.

44 86 120 3.40 1.03

27. Only authorized person can access

the account online. 27 81 142 3.70 1.05

28. Bank’s website is well secured for

transfer of funds 30 87 133 3.51 0.95

29. Bank’s security features encourage

me to open an account online. 22 94 134 3.60 0.98

30. Online banking make banks

vulnerable to be attacked or sniffed

by hackers.

34 87 129 3.52 1.05

31. Appropriate measures are being

taken to ensure the segregation of

duties.

19 118 113 3.48 0.89

32. Proper authorization controls are

there within e-banking systems,

database and applications.

26 90 134 3.59 0.90

33. Data integrity of e-banking

transactions, records and

information.

11 93 146 3.72 0.83



17

Table 7: Frequency Distribution and Descriptive Statistics w.r.t. Customer Satisfaction (α =

0.861)

Source: Field Data

The results achieved through the frequency distribution analysis of the response rate from the

respondents against the queries posed relating to Customer Satisfaction. The Reliability

Cronbach’s Alpha α = 0.861 which reveals that data is reliable at good scale. As a whole,

customers are satisfied with the practice of using electronic banking. Q#34, Q#35, Q#36,

Q#37, and Q#38 reveals the strong positive response towards the usage of electronic banking

with complete satisfaction. The customers believe that the range of services being offered,

under the umbrella of electronic banking are useful applications and saves the time in

performing transaction. Q#39, Q#40, and Q#41 portrays that customers are almost satisfied

with the concept of electronic banking and the consistency of standards, and they don’t find

any difference whether they perform transaction using electronic banking or meet bank

personales face to face.

The table 7 explains the correlation matrix of Customer Satisfaction with three other

understudy variables i.e. Customer Awareness (CA), Online Service Quality (OSQ), and

System Credibility (SC). Results reflect the correlational significance between different

# Items


Dis-


34. I feel relax while performing e-

banking activities. 33 80 137 3.60 1.13

35. I feel satisfaction with the

procedures of using e-banking. 21 84 145 3.63 0.97

36. I find e-banking offers best services in

most useful manner. 24 88 138 3.59 1.07

37. I am satisfied with the wide variety

of services being offered under the

umbrella of e-banking by the bank.

19 106 125 3.60 0.90

38. I am satisfied with the time I save

using e-banking 14 74 162 3.90 0.98

39. I am satisfied with the consistency of

standards. 18 80 152 3.73 0.99

40. Overall, the concept of e-banking

brings satisfaction to me. 16 61 173 3.87 0.98

41. I am equally satisfied either face-to-

face meeting or perform e-banking. 38 94 118 3.48 1.11



18

variables understudy with customer satisfaction by means of the implication of correlation

coefficient values of Pearson. Pearson reflects two things: one is direction and other is

strength between the two variables.

Apparently, seeing through the perspective of Customer Awareness with Satisfaction of a

Customer, the Pearson value has come up with 0.457 which reveals that there is a directly

proportional and strong positive relationship between the two values. This means that change

in one variable is strongly correlated with change in the other variable i.e. increasingly strong

awareness may result in strong Customer Satisfaction. Also, the sig. (2-tailed) value is 0.000,

which reflects there is a statistically significant correlation between the two variables.

Moving through to Online Service Quality (OSQ), the Pearson value has shown up 0.615,

which has come up respectively with better linearity strength revealing that there is a directly

proportional and strong positive relationship between the two values. This means that change

in one variable is strongly correlated with change in the other variable i.e. increasingly

improved online service quality may result in strong Customer Satisfaction. Also, the sig. (2-

tailed) value is 0.000, which reflects that there is a statistically significant correlation between

the two variables.

Coming to System Credibility (SC), the Pearson value has shown up 0.772, which reveals that

there is a directly proportional and very strong positive relationship between the two values.

This means that change in one variable is strongly correlated with change in the other variable

i.e. Customers have shown a strong reliability on the credibility of the system and hence are

satisfied. Also, the sig. (2-tailed) value is 0.000, which reflects that there is a statistically

significant correlation between the two variables.

Seemingly, if these variables be considered as major variables influencing the electronic

banking system, then while seeing through collective impact of these variables on customer

satisfaction on behalf of electronic banking towards the satisfaction of a customer, the

Pearson value has shown up 0.721, which reveals that there is a directly proportional and very

strong positive relationship between them and they collectively can create a huge impact on

satisfaction of a customer towards the usage of electronic banking. Also, the sig. (2-tailed)

value is 0.000, which reflects that there is a statistically significant correlation between them

as well.

As with correlation, Regression is used to analyse the relation between two continuous (scale)

variables. It helps to investigate the relationship among the variables understudy and testifies

the hypothesis framed to hold the study determining whether the hypothesis posed, validates

the study or not. Moreover, it also helps in prediction. Specifically, the regression analysis

helps to understand the changes in dependent variables with the change in independent

variable while the other independent variables are held fixed. It also helps to distinguish the

other parameters which are not the part of the understudy. Therefore, in the continuation of

this study, regression analysis has also been applied to identify the impact of understudy three

independent variables to figure out the satisfaction of customers which is being treated as a

dependent variable towards the usage of electronic banking. In order to perform detailed

analysis, a regression model along with the regression coefficients will be established with the

identification of dependent and independent variables.

Hunjra, A. I., Ali, A. & Anwar, S. (2012). The Impact of E-Banking on Customer Satisfaction: A Comparative Analysis on Pakistani Banking Sector. Bulletin of

Business and Economics, 1(1), 1-43.

19

Table 8: Correlation Matrix of Customer Satisfaction (CS) towards Electronic Banking (EB) with CA, OSQ, SC

CS CA OSQ SC EB =

{(CA+OSQ+SC)/3}

CS Pearson Correlation

Sig. (2-tailed)

N

1

250

CA Pearson Correlation

Sig. (2-tailed)

N

0.457**

0.000

250

1

250

OSQ Pearson Correlation

Sig. (2-tailed)

N

0.615**

0.000

250

0.524**

0.000

250

1

250

SC Pearson Correlation

Sig. (2-tailed)

N

0.772**

0.000

250

0.475**

0.000

250

0.699**

0.000

250

1

250

EB

Pearson Correlation

Sig. (2-tailed)

N

0.721**

0.000

250

0.819**

0.000

250

0.861**

0.000

250

0.847**

0.000

250

1

250

Note: ** Correlation is significant at the 0.01 level (2-tailed).

Source: Field data



20

Table 9: Regression Model Summarya,b between Customer Awareness (CA) and Customer

Satisfaction (CS)

Model Variables

R R2 Adjusted R

Square

Std. Error of the

Estimate

σest

Entered Removed

1. CAc,d 0.457 0.209 0.205 0.648

a. Dependent Variable: Customer Satisfaction

b. Method: Enter

c. Independent Variables: (Constant), Customer Awareness

d. All requested variables entered.

Source: Filed Data

Herein the output extracted, R is the simple correlation value 0.457; w.r.t Customer

Satisfaction as a dependent variable, and Customer Awareness as an independent variable,

from the table 4.7 (the correlation analysis). The R2 is a coefficient of determination value

indicating that Customer Awareness can explain the variances in the correlation of Customer

Satisfaction by 20.9% or 20.5% as adjusted value. However, rest 80.5% of those differences

remain unexplained in the error term. The accuracy of prediction from the Standard Error of

the estimate can be observed is somehow reasonable. Regression coefficient summary has

been tabulated in the table 10.

Table 10: Regression Coefficient Summarya between Customer Awareness (CA) and

Customer Satisfaction (CS)

Model Unstandardized Coefficients Standardized

Coefficient

(β)

t Stat Sig.

B Std. Error

1. (Constant)

CA

2.209

0.435

0.185

0.054

0.457

11.960

8.087

0.000

0.000

a. Dependent Variable: Customer Satisfaction.

Source: Field Data

From the table it can be summarized as the table provides the information to predict Customer

Satisfaction from Customer Awareness. It is evident, that both constant and Customer

Awareness (CA) contribute significantly to the model. By looking at the B column, under the

unstandardized coefficients column, the constant 2.209 is an intercept value which is also a

predicted value of “Customer Satisfaction”, when “Customer Awareness” is treated as 0. The

regression coefficient slope 0.435 claims that the change in Customer Satisfaction, when a

change takes place in Customer Awareness. Hence, the regression equation for Customer

Satisfaction can be identified as:



21

Customer Satisfaction = 2 + 0.435 (CA)

Also, from the equation, it can be stated that Customer Satisfaction differs 0.435 times for

every portion difference with the Awareness of the Customer. Standard error of coefficient

for Customer Satisfaction is 0.054. A 95% confidence interval for the regression coefficient

for Customer Satisfaction can be conducted as:

Confidence Interval = (0.435 + k (0.054))

where k is the appropriate percentile of the t distribution with degrees of freedom equal to the

Error DF from the ANOVA table and is a standard value 1.96 (for large sample size).

Standardized Coefficient Beta (β) is what the regression coefficient would be if the model

were fitted to standardized the data. Herein, 0.457 is the expected regression coefficient

subject to be fitted with the model. From the t-value it can be observed as well that the two

variables hold correlation. Also, the significant or p-value of 0.000, means that the

relationship among the variables is 100% real. Figure 4.1 explains the linearity between the

two variables i.e. Customer Awareness and Customer Satisfaction. The linear curve will be:

Figure 2: The Scattered Graph showing regression line between Customer Awareness (CA)

and Customer Satisfaction (CS).

Source: Field Data

From the figure, it can be concluded that the Correlation = r = 0.457 resulting that there is a

strong increasing positive linear relationship between Customer Awareness and Customer

Satisfaction. Hence, the first Research Hypothesis of the study is valid that there is a

significant and positive relationship between Customer Awareness and Customer Satisfaction.



22

Table 11: Regression Model Summarya,b between Online Service Quality (OSQ) and


Model Variables

R R2 Adjusted R

Square

Std. Error of the

Estimate

σest

Entered Removed

1. OSQc,d 0.615 0.379 0.376 0.574


b. Method: Enter

c. Independent Variables: (Constant), Online Service Quality


Source: Field Data.


Satisfaction as a dependent variable, and Online Service Quality as an independent variable,

from the table 4.7 (the correlation analysis). The R2 is a coefficient of determination value

indicating that Online Service Quality can explain the variances in the correlation of

Customer Satisfaction by 37.9% or 37.6% as adjusted value. However, 62.4 % of those

differences remain unexplained in the error term. The accuracy of prediction from the

Standard Error of the estimate can be observed is also somehow reasonable. Regression

coefficient summary has been tabulated in the table 12.

Table 12: Regression Coefficient Summary between online Service Quality (OSQ) and



Coefficient

(β)

t Stat Sig.

B Std. Error

1. (Constant)

OSQ

1.146

0.737

0.208

0.060

0.615

5.509

12.298

0.000

0.000


Source: Field Data


Satisfaction from Online Service Quality. It is evident, that both constant and Online Service

Quality (OSQ) contribute significantly to the model. By looking at the B column, under the


predicted value of “Customer Satisfaction”, when “Online Service Quality” is treated as 0.

The regression coefficient slope 0.737 claims the change in Customer Satisfaction, when a

change takes place in Online Service Quality. Hence, the regression equation for Customer


Customer Satisfaction = 1 + 0.737 (OSQ)



23


every portion difference with the Improvement of Online Service Quality. Standard error of

coefficient for Customer Satisfaction is 0.054. A 95% confidence interval for the regression

coefficient for Customer Satisfaction can be conducted as:









two variables i.e. Online Service Quality and Customer Satisfaction. The linear curve will be:

Figure 3: The Scattered Graph showing regression line between OSQ and CS.

Sour

ce: Field Data

From the figure, it can be concluded that the Correlation = r = 0.615, so there is a strong

increasing positive linear relationship between Online Service Quality and Customer

Satisfaction. Hence, the second Research Hypothesis of the study is also valid that there is a

significant and positive relationship between Online Service Quality and Customer

Satisfaction.

Table 13: Regression Model Summarya,b between System Credibility (SC) and Customer

Satisfaction (CS)



24

Model Variables

R R2 Adjusted R

Square

Std. Error of the

Estimate

σest

Entered Removed

1. SCc,d 0.772 0.597 0.595 0.462

a Dependent Variable: Customer Satisfaction

b. Method: Enter

c. Independent Variables: (Constant), System Credibility


Source: Field Data


Satisfaction as a dependent variable, and System Credibility as an independent variable, from

the table 4.7. The R2 is a coefficient of determination value indicating that System Credibility

can explain the variances in the correlation of Customer Satisfaction by 59.7% or 59.5% as

adjusted value and 40.5% of those differences remain unexplained in the error term.

However, the accuracy of prediction from the Standard Error of the estimate can be observed

is quite good. Regression coefficient summary has been tabulated in the table 14.

Table 14: Regression Coefficient Summarya between System Credibility (SC) and



Coefficient

(β)

t Stat Sig.

B Std. Error

1. (Constant)

SC

0.608

0.862

0.162

0.045

0.772

3.745

19.157

0.000

0.000


Source: Field Data.


Satisfaction from System Credibility. It is evident, that both constant and System Credibility

(SC) contribute significantly to the model. By looking at the B column, under the


predicted value of “Customer Satisfaction”, when “System Credibility” is treated as 0. The


change takes place in System Credibility. Hence, the regression equation for Customer


Customer Satisfaction = 0 + 0.862 (SC)

= 0.862 (SC)



25


every portion difference with the Credibility of the System. Standard error of coefficient for

Customer Satisfaction is 0.045. A 95% confidence interval for the regression coefficient for

Customer Satisfaction can be conducted as:









two variables i.e. System Credibility and Customer Satisfaction. The linear curve will be:

Figure 4: The Scattered Graph showing regression line between SC and CS.

Source: Field Data

From the figure, it can be concluded that the Correlation = r = 0.772, so there is a very strong

increasing positive linear relationship between System Credibility and Customer Satisfaction.

Hence, the third Research Hypothesis too of the study is valid that there is a significant and

positive relationship between System Credibility and Customer Satisfaction.

Table 15: Regression Model Summarya,b between Electronic Banking

(EB=(CA+OSQ+SC)/3) and Customer Satisfaction (CS)

Model Variables

R R2 Adjusted R

Square

Std. Error of the

Estimate

σest

Entered Removed

1. EBc,d 0.721 0.520 0.518 0.504



26


b. Method: Enter

c. Independent Variables: (Constant), Electronic Banking


Source: Field Data


Satisfaction as a dependent variable, and usage of Electronic Banking as an independent

variable, from the table 4.7 (the correlation analysis). The R2 is a coefficient of determination

value indicating that the Awareness of Customers, and Quality of Online Service being

delivered through E-Banking along with the Credibility of a system collectively can explain

the variances in the correlation of Customer Satisfaction by 52.0% or 51.8% as adjusted value

and 48.2% of those differences remain unexplained in the error term. However, the accuracy

of prediction from the Standard Error of the estimate can be observed is somehow reasonable.

Regression coefficient summary has been tabulated in the table 4.15.

Table 16: Regression Coefficient Summarya between Electronic Banking (EB =

(CA+OSQ+SC)/3) and Customer Satisfaction (CS)


Coefficient

(β)

t Stat Sig.

B Std. Error

1. (Constant)

EB

0.483

0.926

0.197

0.056

0.721

2.456

16.401

0.015

0.000


Source: Field Data


Satisfaction from usage of Electronic Banking. It is evident, that both Constant and Electronic

Banking (EB) contribute significantly to the model. By looking at the B column, under the


predicted value of “Customer Satisfaction”, when “Electronic Banking” is treated as 0. The


change takes place in the Awareness of Customers, and Quality of Online Service being

delivered through E-Banking along with the Credibility of a system collectively as Electronic

Banking. Hence, the regression equation for Customer Satisfaction can be identified as:

Customer Satisfaction = 0 + 0.926 (EB)

= 0.926 (EB)


every portion difference with the perception towards. Standard error of coefficient for

Customer Satisfaction is 0.056. A 95% confidence interval for the regression coefficient for

Customer Satisfaction can be conducted as:



27







variables hold correlation. Also, the significant value for constant is 0.015 which is however

significant and p-value of EB is 0.000, means that the relationship among the variables is

100% real. Figure 4.4 explains the linearity between the two variables i.e. Electronic Baking

and Customer Satisfaction. The linear curve will be:

Figure 5: The Scattered Graph showing regression line between EB and CS

Source: Field Data

From the figure, it can be concluded that the Correlation = r = 0.721, so there is a very strong

increasing positive linear relationship between Customer Awareness and Customer

Satisfaction. Hence, the last and fourth Research Hypothesis of the study is also valid that

there is a significant and positive relationship between Electronic Banking and Customer

Satisfaction.

An ANOVA is a statistical method used to compare the means of two or more groups by

evaluating the variation associated with certain degrees of freedom to figure out the expected

value while pointing out the overlaps between the groups.



28

Table 17: Analysis of Variance (ANOVAa) for between Customer Awareness (CA) and


Modela Sum of Squares Df Mean Square F Sig.

Regression 27.476 1 27.476 65.403 0.000b

Residual 104.186 248 0.420

Total 131.662 249

a. Dependent Variable: CS

b. Predictors: (Constant), CA

Source: Field Data

Since ‘F’ value is large, due to the large variance between the groups’ mean, so less is the

overlap between the means of two variables and so the sample means are far apart. In other

words, the significant value is shown 0 for Customer Awareness, explaining that there is a

statistically significant difference between the means of Customer Awareness and Customer

Satisfaction.

Table 18: Analysis of Variance (ANOVAa) for between Online Service Quality (OSQ) and



Regression 49.875 1 49.875 151.233 0.000b

Residual 81.788 248 0.330

Total 131.662 249


b. Predictors: (Constant), OSQ

Source: Field Data

‘F’ value is quite large, due to the large variance between the groups’ mean, so the overlap

between the means of two variables is very small portraying the sample means are far apart.

In other words, the significant value is shown 0 for Online Service Quality, explaining that

there is a statistically significant difference between the means of Online Service Quality and

Customer Satisfaction.

Table 19: Analysis of Variance (ANOVAa) for between System Credibility (SC) and



Regression 78.568 1 78.568 366.982 0.000b

Residual 53.095 248 0.214

Total 131.662 249



29


b. Predictors: (Constant), SC

Source: Field Data

From the table 19, it can be observed that ‘F’ value is quite large, due to the large variance

between the groups’ mean, so the overlap between the means of two variables is very small.

Therefore, the sample means are far apart. In other words, the significant value is 0,

explaining that there is a statistically significant difference between the means of System

Credibility and Customer Satisfaction.

Table 20: Analysis of Variance (ANOVAa) for between Electronic Banking (EB) and



Regression 68.503 1 68.503 268.978 0.000b

Residual 63.160 248 0.225

Total 131.662 249


b. Predictors: (Constant), EB={(CA+OSQ+SC)/3}

Source: Field Data

It can be observed from the table 20 that ‘F’ value is large, due to the large variance between

the groups’ mean, so less is the overlap between the means of two variables and so the sample

means are far apart. In other words, the significant value is 0, explaining that there is a

statistically significant difference between the means of Electronic Banking and Customer

Satisfaction.

In Pakistan, (SBP, 2012, p.72) there are 38 scheduled banks currently working in Pakistan, as

on updated till June 30th, 2012 along with 9,838 branches. According to the nature of delivery

of services and the origin, banks have been classified in 4 different categories. Table 4.20

explains the sector wise classification of Banks in Pakistan.

Table 21: Sector wise Classification of Banks in Pakistan

Banking Sector Banking Category according to

Ownership / Services

No. of

Banks

Total

Branches

Public Sector Commercial

Banks (PSCB

Nationalized, Denationalized, and

Provincial Commercial Banks

5 1,748

Local Private Banks (LPB) Private Sector Banks Incorporated in

Pakistan

22 7,498

Foreign Banks (FB) Banks Incorporated Outside from

Pakistan

7 46

Specialized Banks (SB) Specialized Banks, Micro finance,

DFIs

4 546

Total 38 9,838

Source: Statistics & Data Warehouse Department, SBP Annual Report FY12 (p.72)



30

Having a skimmed view on the classification of banks; Public Sector Commercial banks

include 5 banks that holds 1,748 branches in Pakistan. Local Private Banks have largely

introduced themselves in pakistan, heading to 22 banks in total holding 7,498 branches. It can

be concluded that during past few years Local Private Banks stepped in the banking industry

to counter the foreign banks which were getting indulged in early 90s. Foreign Banks,

however, are working with 7 banks running with 46 branches. Later, another sector was

introduced names as Specialized Banks counting to 4 in number holding 546 branches in

Pakistan. The Pie representation of Sector wise Classification of Banks in Pakistan can be

represented in Figure 6.

Figure 6: Pie Representation of Sector Wise Bank Classification

Source: Statistics & Data Warehouse Department, SBP Annual Report FY12

However, during the first quarter (Jul-Sep, 2012) of FY13, (Payment System Review, 2013,

p.1) updated that electronic banking infrastructure has maintained the increasing development

trend. In terms of ATM, 242 more machines have been added in the system raising the total to

5,987. Also, 121 bank branches have been added to RTOBs, leading to 9,412 out of 10,111

bank branches across the country. Commercial banks in Pakistan have started to broaden their

service delivery system to their customers through using electronic banking. During last two

years, a strong improvement has been observed in the banking sector in Pakistan especially in

terms of Electronic Banking. A skimmed view on the detailed statistics of infrastructure in

terms of usage of Electronic Banking during last three years is illustrated in the table 22.



31

Table 22: E-Banking Growth Trend - Yearly Comparison w.r.t. Infrastructure

Item As of September 30

2010

As of September 30

2011

As of September 30

2012

Yearly Growth

(2010-11)

Yearly Growth

(2011-12)

RTOB 6,727 7,885 9,412 17% 19%

ATM 4,562 5,318 5,987 17% 13%

POS 48,632 36,473 34,229 -25% -6%

Credit Cards

(000) 1,677 1,363 1,274 -19% -7%

Debit Cards

(000) 8,697 12,553 17,588 44% 40%

ATM Only

Cards (000) 693 613 806 -12% 32%

Source: Payment System Review (Statement Bank of Pakistan)



The review also added that during last three years, transactions conducted through electronic banking in the country too sustained the increasing

progress trend. Numeric details are being illustrated in the table 23.



32

Table 23: E-Banking Growth Trend - Yearly Comparison w.r.t Transaction

Item

Qtr1 FY11

(Jul-Sep 2010)

Qtr1 FY12

(Jul-Sep 2011)

Qtr1 FY13

(Jul-Sep 2012)

Yearly Growth

2010-11

Yearly Growth

2011-12

Volume

(000)

Value

(Rs.

Billion)

Volume

(000)

Value

(Rs.

Billion)

Volume

(000)

Value

(Rs.

Billion)

Volume Value Volume Value

RTOB 16,458.93 4,329.08 19,598.66 5,694.49 23,679.53 5,899.75 19% 32% 21% 4%

ATM 30,934.41 262.52 38,805.23 353.51 43,876.79 430.42 20% 30% 13% 22%

POS 3,426.87 15.76 4,137.25 18.01 4,328.83 20.77 21% 14% 5% 15%

Call Center 214.58 1.85 169.82 1.79 166.06 2.09 -21% -3% -2% 17%

Internet Banking 871.78 39.18 1,646.70 84.85 2,018.78 109.95 89% 117% 23% 30%

MB via Internet* 678.15 1.78 909.96 2.94 804.17 4.18 57% 140% -12% 42%

E-Banking 52,584.72 4,650.17 65,267.63 6,155.57 74,874.16 6,467.16 21% 32% 15% 5%

Source: Payment System Review (Statement Bank of Pakistan)



33

During last three years, the volume and value of overall transaction using electronic banking

depicted an average growth of 142.8 million and 13 trillion respectively. Looking at the

transaction value and volume made through ATM, the average growth noticed 843.6 million and

7.5 trillion respectively. Likewise, Internet Banking, Call Centres, Mobile Banking through

Internet has also increased tremendously. In other words, talking about the Awareness of

Customer, Credibility of a System along with the Quality of Online Services has played a major

role in adapting the technology. Yet, this trend has been observed in some targeted customers

from urban area who have just turned their banking activity through online banking. Table 4.23

explains the comparative analysis on randomly selected banks in the country.

Table 24: A Comparative Analysis on Randomly Selected Banks in Pakistan

Sr# Components NBP

1

HBL2

UBL3

BAL4

DIB5 SCB6

1. Legal Statement Security Policy Y Y Y Y Y Y

Legal Disclaimer Y Y Y Y Y Y

2. Website Informational Y Y Y Y Y Y

Transactional - Y Y - Y Y

3. E-Banking

Services

ATM Y Y Y Y Y Y

Debit / Cash Card Y Y Y Y Y Y

Credit Cards - Y Y Y Y Y

Internet Banking - Y Y - Y Y

Mobile/SMS Banking - Y Y - Y Y

Telephone Banking - Y Y Y Y Y

TV Banking - - - - - -

Call Centre Y Y Y Y Y Y

SMS Alert/ Service - Y Y Y Y Y

Account Statement Y Y Y Y Y Y

Balance Enquiry Y Y Y Y Y Y

Inter Account Funds

Transfer

Y Y Y Y Y Y

Third Party Funds Transfer Y Y Y Y Y Y

Bill Payment - Y Y Y Y Y

Cash Deposit to Own Y Y Y Y Y Y

Cash Deposit to Third

Party

Y Y Y Y Y Y

Cash With drawl through

Cheque

Y Y Y Y Y Y

Opening Accounts - Y Y - Y Y

E-Shopping - Y Y Y Y Y

Loan Application - Y Y - Y Y

Insurance - Y Y - Y Y

Brokerage - Y Y - Y Y

Remittances - Y Y - Y Y

Forex Rates - Y Y - Y Y

ATM Card Pin Change Y Y Y Y Y Y



34

Banking Procedure Guide - Y Y - Y Y

Account Management Y Y Y Y Y Y

Stop Payment Y Y Y Y Y Y

4. Infrastructure ATM 230 <NA

>

5,000 388 50+ <NA

>

RTOBs - 1450 1300 471 125 162

Branches 1295 1450 1300 471 125 162

Overseas Branches

(Outside Pakistan)

23 55 15 8 <N

A>

1538

5. Ease of Use FAQs Y Y Y Y Y Y

Tutorial / Demonstration /

User Guide

Y Y Y Y Y Y

Search / Help Function Y Y Y Y Y Y

Navigational Buttons

/Menu

Y Y Y Y Y Y

6. Aesthetic Effects Graphics Y Y Y Y Y Y

Animations - - Y - - Y

7. Performance Website Quick

Navigation

Y Y Y Y Y Y

Quick Load Y Y Y Y Y Y

1. (NBP) National bank of Pakistan www.nbp.com.pk

2. (HBL) Habib Bank Limited www.hbl.com.pk, www.hblibank.com.com

3. (UBL) United Bank Limited www.ubl.com.pk, https://www.ubldirect.com/

Corporate/ebank.aspx

4. (BAL) Bank Alfalah Limited http://www.bankalfalah.com/

5. (DIB) Dubai Islamic Bank http://www.dibpak.com/, https://ebank.dibpak.com/ ebank/

6. (SCB) Standard Chartered Bank http://www.standardchartered.com.pk,

https://online.standardchartered.com/nfs/ibank/pk/foa/login.htm

Source: Field Data

Having a skimmed view on the table 24, an analysis has been on randomly selected banks.

Starting with legal statement, every bank has some security policy and has certain disclaimer as

well. Moving further, the understudy banks are hosting two kinds of web interfaces. One is

Informational Web Interface (IWI) for the Awareness of the Customers and Visitors and second

is the Transactional Web Interface (TWI) for the customers to have an access to their account

online. However, the two banks i.e. National Bank of Pakistan and Bank Alfalah Limited doesn’t

offer Internet Banking and thus don’t have Transactional Web Interface. The web interfaces have

been designed to provide friendly interaction between the information provided by the banks and

the customer of the bank provided with Frequently Asked Questions (FAQs), user guide,

searching facility to explore the contents of the bank services along with stylish looks and

navigational menus. Graphically all web pages are strong, yet animations have been provided

either on UBL page or on SCB making their look and feel attractive for the customers to hover

http://www.nbp.com.pk/

http://www.hbl.com.pk/

http://www.hblibank.com.com/

http://www.ubl.com.pk/

https://www.ubldirect.com/%20Corporate/ebank.aspx

https://www.ubldirect.com/%20Corporate/ebank.aspx

http://www.bankalfalah.com/

http://www.dibpak.com/

https://ebank.dibpak.com/%20ebank/

http://www.standardchartered.com.pk/

https://online.standardchartered.com/nfs/ibank/pk/foa/login.htm



35

around. It is noteworthy to mention that the response, loading and navigation time of web

interfaces is quick.

Moving through to services offered under the umbrella of e-banking, ATM, Cash Card, Call

Centre, Account Statement, Balance Enquiry, Inter Account and Third Party Funds Transfer,

Cash Deposit to own and to Third Party, cash With drawl, ATM Pin Change, Account

Management, stoppage of payment is being offered by every bank understudy. However, Credit

Card, Telephone Banking, SMS Alert, Bill Payment, and E-Shopping is absent in services being

offered by NBP. On the other hand, talking about Internet Banking, Mobile Banking, Opening of

New Account, Application for Loan, Insurance, Brokerage, Remittance, Forex Rates, and

Banking Procedure Guide are absent in both NBP and BAL. Another important aspect is

electronic banking infrastructure in terms of ATMs and RTOBs. ATMs are there to represent

their parent banks to facilitate the customers of the bank, though number of their availability is

varied. However, considering e-banking in terms of RTOBs (Real Time Online Branches), they

are absent in NBP Branches. Resultantly, customers have to suffer the issues regarding the with

drawl of payment as branches are not connected with each other neither they are centrally

connected, and the customers can only with draw or meet their cash demands only from the

respective account holder branch. TV Banking is a new technology that has been introduced by

HSBC bank which was later adapted by ICICI India. Yet, no bank is offering TV Banking in

Pakistan.

VI. Conclusions and Recommendations

The present study statures the current status of electronic banking in Pakistan and its impact

towards the usage and also its impression on satisfaction of customers of the banks. Further,

based on the outcomes from the data gathered on the primary scale, the study portrays the results

of survey conducted on the level of engagement of Electronic banking in the minds of the

customers. Findings of the study conducted, are not contradictory to the studies made in the past

pertaining to the variables towards the usage of electronic banking and satisfaction of customers.

For instance, it is understood that Credibility of a System is extremely influential since, if the

credibility of the system is weak, no one will take risk to conduct any financial transaction online.

It is important to note that the variable ‘System Credibility’ has been endorsed in numerous

researches. However, Customer Awareness and Online System Quality have strong influence in

raising the motivation among the customers and have strong significant impact on successful

implementation of electronic banking and on satisfaction of customers.

The main purpose of the study is to highlight those variables which are considered to be the major

players in raising the satisfaction of customers in Pakistan. In the past, the financial institutions in

Pakistan used to have Internet to show their presence and provide information regarding the

product and services being offered by the bank. However, during the past recent years, numerous

banks have started to offer Internet Banking as well to cater the customers and promote their

image as a friendly institution and to facilitate their customers while allowing them to perform

banking activities without visiting the bank. From the research, it has been observed that

customers who have availed the service are enjoying the benefits yet they feel bit uncomfortable

in terms of Online Service Quality. The customers have shown their concerns about the timely

response of personals. Many of the customers have raised the objection that not all utility services

have been enlisted in the options of Internet Banking. Also, customers do have awareness but not

on a large scale. Awareness among the customers using electronic banking services is quite high

but use of Internet or Mobile Banking is a new trend and experience, and customers are reluctant

to work freely with the new environment. Thus, they still are confused to perform the



36

transactional activity online. However, they believe that the banks do have System Credibility

and they are comfortable with the banks in dealing. Yet again, many customers show reluctance

in using Internet Banking for their low confidence on using it freely.

Summing up the discussion, the results of the study are conformed to the studies made earlier in

this regard, ensures that the identified factors are scrutinized as essential instruments which do

not only confirm the successful implementation of electronic banking in Pakistan but will also

raise the level of satisfaction among the customers towards the usage of e-banking. Thus, the

Customer Awareness, Online Service Quality and Credibility of a System in individual capacity

and collectively in terms of Electronic Banking, all are positively correlated with Customer

Satisfaction, which is very necessary to attract the customer towards any introduced product in

the Pakistani market.

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