The Impact of Technology Based Self Service Banking, Dimensions On Customer Satisfaction

This study aimed to determine the effects of technology-based self-service banking (TBSSB), also referred to as automated banking services, in which consumers use a variety of electronic channels that are programmed to provide services. The study examined the connection between TBSSB's primary determinants and customer satisfaction. Bank customers in India were given 600 structured surveys, which were then used as samples. From the replies, only 414 samples were used. Two equally sized sub-samples of the data were taken. An exploratory factor analysis, also known as EFA was used to identify the extent of customer satisfaction and the quality of TBSSB service of one half of the sample using the SPSS software, while confirmatory factor analysis, also referred to as CFA was used on the other half of the sample using AMOS 20.0 software. This software was also used to examine the relationship between customer satisfaction and TBSSB services through the use of structural equation modeling also known as SEM to test the hypothesis. The respondents constituted of bank customers above 18 years with varying occupations in India. They filled the questionnaire as per the structured questions and gave their judgment on the use of self-service technological bank services.

The study was conducted to examine whether the emergence of TBSSB is reliable, convenient, personalized and secure, as well as the extent to which customers get satisfied by the service. The results showed a significant relationship between convenience and personalization with customer satisfaction. However, the study showed that there is no significant relationship between security and reliability with customer satisfaction. From the results, technology brings about both positive and negative impacts on the banking industry, more so on customer satisfaction, hence bringing about balance in the bank services. The findings of the study are useful to the banking industry as it makes them aware on the importance of focusing on the technological aspects that can enhance customer satisfaction. It also helps the technological experts to analyze the effect of their innovations to people. In addition, the research paves way for other researchers to analyze the impact of technology in the banking sector, as well as other financial sectors by using this as a secondary source of data.

This study echoes other studies like that of Lee and Yoo (2000) on “The determinant of perceived service quality and its relationship with satisfaction” which perceive technology as a good tool of bringing about customer satisfaction in the banking industry. It is accurate, efficient, convenient, easily accessible, and saves time. It hence brings out the need for banks to adapt the use of self-service technology based tools to offer services to their customers. According to the two studies, service channels like ATM, Telephone Banking, and Internet Banking have brought about a great impact to the bank customers. To the researchers, customers derive satisfaction from easily accessible, convenient and efficient services. Also, as seen from Safari, & Yu, (2014) on the “Impact of Information and Communication Technology (ICT) on Efficiency” instant feedback from the customers is necessary for growth and development of the banking services. Technology has come in to effectively make it possible for both customers and banks to get immediate feedback from each other, something that brings about satisfaction. This is similar to the findings of the study on impact of TBSSB on the banking sector.

Safari, M. R., & Yu, L. Z. (2014). Impact of Information and Communication Technology (ICT)

on Efficiency: Evidence from the Iranian Banking Industry. World Applied Sciences Journal, 29(2), 208-218.

The aim of this study was to investigate the impact of information technology on efficiency in the banking sector. The evidence was derived from Iranian banks. It investigated how technology influences efficiency of services in these banks. A stochastic frontier analysis, also known as SFA was applied to compare data obtained across 22 years – from 1995 to 2011. Data was extracted from bank account financial reports of the central bank in Iran. 6 publicly owned banks and 11 privately owned banks were selected for use in the study. A statistical model was used to predict the technical efficiency using the stochastic frontier production function for estimation. The data collected was used to compare the performance of the banks in different years with the emergence and adoption of information and communication technology. The study hence compared the relationship between the impact of using ICT in banks through hardware investment, software investment, IT services and time of adopting a new technology.

The expectations from the study were to show how technology impacts efficiency of banks in Iran. It was the first study to comprehensively bring out the impacts of technology on efficiency of Iran banks for a period of 22 years. The research shows a positive effect of using technology on efficiency of banks. It shows that, an increase in software investment among banks reduces the cost of operations and service provision, as well as increases speed of operations. The empirical results show that the use of highly advanced technology leads to successful performance in banks. It also shows that privately owned banks offer more efficient services when they use information and communication technology than publicly owned banks due to the differences in the governance structure between the two banks. The significance of this study is to show the impact of technology on efficiency of bank services. It comprehensively shows how adoption of technology by banks drastically changes their performance. The information is hence useful for banks to know how they can improve their performance. The results would also help them to identify the loopholes in the use of technology and how they can work to avoid harmful effects. Also, the use of secondary data helps in compiling information from several researchers who do research under the same topic to ensure that the study is relevant, as well as it contributes information to the topic of study. This will help future researchers and academicians in their studies, and in addition solve real life problems that affect people in the information technology and banking sectors.

This study relates to the Sindwani, & Goel, (2015) on “The Impact of Technology Based Self Service Banking Dimensions On Customer Satisfaction” which showed a positive relationship between the impact of technology and efficiency. Also, previous studies had examined the impact of modern information technology on industrial services. Most of them concluded that it resulted to greater savings, greater flexibility, improved efficiency, and better products in banks. Since neither of them had researched on the impact of ICT on the banking sector, this study narrows down its study to the banking sector. The impact of using ICT on banks relates to those of previously conducted studies. The results mainly show that technology improves efficiency.

ABUBAKAR, A. A., & Tasmin, R. B. H. (2012). The impact of information and communication

technology on banks’ performance and customer service delivery in the banking industry. International journal of latest trends in finance and economic sciences, 2(1)

The main purpose of this study was to determine the impact of information and communication technology on banks performance and customer delivery in the banking industry. It uses scholarly, peer reviewed and organizational literature that is related to the impact of ICT on the performance of banks. First, its aim is to examine if banks successfully succeed through online delivery platforms to minimize costs and maximize revenue. Various research papers are used to examine, criticize and draw conclusions. Sources were chosen based on their relevance to the topic. The use of different scholarly research papers brings in findings from several researchers. This helps in coming up with valid conclusions.

The research aimed at finding out if there is a positive relationship between electronic banking and profitability in banks. The results showed that the most profitable banks in developed countries get higher returns on equity when they incorporate ICT in their services. The banks become more profitable. However, the impact reduces as banks adopt more innovative services and products. From the same study, it is concluded that technology does not bring about a significant change in profit due to the high cost involved in adopting it, the cost of maintenance, as well as that of wear and tear. The study also found out that computer insecurity is increasing as innovation emerges. This drags the adoption of new technology behind while some banks may lose large amounts of money to fraudsters. This study would help bank owners to realize the effective ways of adopting new technology, as well as researchers on examining more technological impact on bank performance and customer service delivery. On the contrary, the research work concentrated more profitability and failed to examine other impacts. This shortcoming led to insufficient findings on the impact of technology in banks.

Previously, a study conducted by DeYoung (2005), on “The performance of Internet-Based Business Models: Evidence from the Banking Industry” is similar to this study. DeYoung analyzed the performance of conventional banks to the modern banking in the US. He found out that the start-up banks face increased profits on adopting the use of modern technology. However, those banks that use multiple technological channels may find it hard to get more profits by adopting new technology. To the researcher, adopting new technology is not a solution to success, but rather being smart on the adoption of the technology. These two studies relate to each other by coming out with the conclusion that information and communication technology affects banks performance. To both, a positive impact on banks is achieved. In another aspect, it relates to the Safari & Yu study. There is a positive relationship between information technology and service delivery to customers. Both studies conclude that ICT brings a greater performance and attracts more customers. However, this study goes to an extent of determining the impact of ICT on the start-up banks and the already established ones.

Romdhane B.S. (2013). Impact of Information Technology on the Performance of Tunisian

Banks: A Stochastic Frontier Analysis with Panel Data. Asian Academy of Management Journal of Accounting & Finance, 9(2).

This study investigates the impact of information technology in the banking industry. A sample of the performance of fifteen Tunisian banks – ten commercial banks including Amen Bank, BTS, BIAT, BH, UIB, BTS, ATB, BTK, BT, and Attijari and five universal banks including TQB, BTL, BTK, BTE and STUSID within the period 1998 to 2009 is used. The research employs standard stochastic frontier approach using panel data to estimate on the cost of efficiencies. It compares between the results found from the use of data envelopment analysis and stochastic frontier analysis. This is important as it helps in giving credible and trusted information of the data gathered from the period selected. In addition, the research uses sources from other researchers. It uses data from both primary and secondary to help in gathering enough information to analyze the results.

The main objective of the study was to determine the impact of information technology on banks. From the research, investing on IT for banks brings a positive impact on performance. The internal determinants of the efficiency levels in banks show that the managerial capacity and size significantly affects the operational cost. In addition, investing in services that use computer software and hardware is cost efficient. The research compares what the productivity paradox says, and what is found from the study. It is found that productivity is directly related to the kind of technology adopted by a bank. If a bank invests more on technology, its productivity and efficiency in service delivery is improved. The significance of this research is that it opens new lines of research since little has been done on this topic. It also gives Tunisian banks the chance to study performance of several banks over a long period of time, how they work with emergence in new technology, as well as how it affects their performance. Moreover, it highlights the role of information technology on the performance of banks, hence acting as a source of educating both the start-ups and established banks. The use of panel data strengthens the validity of the study as data is analyzed across different years

This study is a continuation of previous research works on the impact of technology in the banking sector. Beccalli (2007) found a positive relationship between performance and investment in technology among the European banks. He found out that technology improves profitability and brings a competitive edge. Romdhane comes in to research more on the impact of information technology among the banks. He brings in a more comprehensive explanation to effect of IT in the banking sector. It narrows down to a specific industry – that of financial sector in order to bring out a more analyzed conclusion about the topic. The studies have had small differences in their findings but support each other in their conclusions. Romdhane supports Kablan 2009 on the fact that restructuring the banking sector brings in more profits to the banks.