Article

Vision
19(4) 312–323
Validation of a Scale for Measuring © 2015 MDI
SAGE Publications

Problems in Internet Banking and sagepub.in/home.nav

DOI: 10.1177/0972262915610856

their Effect on Customer Satisfaction http://vision.sagepub.com

Ajimon George1
G.S. Gireesh Kumar2

Abstract
The use of IT in the banking sector has contributed to the emergence of more flexible and user-friendly self-service banking
technologies (SSBT) to address the rapid and changing needs of banking customers. The emergence of SSBT such as ATM, internet
banking (IB) and mobile banking (MB) ushered the concept of anytime and anywhere banking. IB uses the Internet to deliver banking
services to customers irrespective of their geographical location. The present study is a customer-centric study to validate a scale for
measuring the problems associated with the use of IB and their effect on customer satisfaction. The study identified four problems,
namely, customer support problems, service problems, web-based problems and password problems. Customer support problems
and web-based problems have significant negative effect on customer satisfaction and hence these hinder customer satisfaction.

Key Words
Internet Banking, Perceived Ease of Use, Perceived Usefulness, Self-Service Banking Technology, Technology Acceptance Model

Introduction IB refers to systems that enable bank customers to get

Banking sector plays a significant role in the development
of an economy. The advent of information technology
(IT) and its convergence with communication technology
have drastically changed the landscape of banking services
across the globe. Over the past few decades, banks all over
the world have been investing substantial amounts of
money in IT with the avowed objectives of improving
operational efficiency, competitive position and product
innovation. The use of IT in the banking sector has contri-
buted to the emergence of more flexible and user-friendly
self-service banking technologies (SSBT) to address the
rapid and changing needs of banking customers. The emer-
gence of SSBT such as ATM, internet banking (IB) and
mobile banking (MB) ushered the concept of anytime
and anywhere banking. With the advent of the Internet, it
becomes easy for banks to share their databases and main-
tain a centralized database at a low cost. The Internet facili-
tates banks to create their own web pages, and customers
can access these web pages through the web browsers
even while sitting at home. This kicked off the IB.
access to their accounts and general information on bank
products and services through the use of bank’s website,
without the intervention or inconvenience of sending
letters, faxes, original signatures and telephone confirma-
tions (Henry, 2000 as cited in Dube, Chitura & Runyowa,
2009). Pikkarainen, Pikkarainen, Karjaluto and Pahnila
(2004) define IB as an ‘Internet portal, through which
customers can use different kinds of banking services
ranging from bill payment to making investments’. Thus,
IB is the use of Internet by bank customers for their bank-
ing transactions. In other words, it is the use of the Internet
by banks to deliver banking services to customers irrespec-
tive of their geographical location. It is the delivery of
traditional ‘brick and mortar’ banking services via non-
personal communication channel, namely, the Internet.
IB users face various problems because banking services
are availed through the medium of the Internet and there
is no face-to-face contact and communication between
customers and banking personnel. This paper attempts
to measure the problems in IB from a users’ perspective
and the effect of these problems on customer satisfaction.

1 Associate Professor, Research and Post Graduate Department of Commerce, Marian college, Kuttikkanam, Kerala, India.
2 Associate Professor, Nirmala College, Muvattupuzha, Kerala, India.

Corresponding author:
Ajimon George, Associate Professor, Research and Post Graduate Department of Commerce, Marian college, Kuttikkanam, 685 531, Kerala, India.
E-mail: georgeajimon@rediffmail.com
George and Kumar 313
This paper is presented in six sections. Section one gives
an account of the survey of existing literature, section two
identifies the research gap and objectives, section three
explains the materials and methods including the pro-
cedures followed for validation of a scale for measuring
problems in IB, section four is a discussion of the results
and their practical implications, section five narrates the
limitations of the study along with directions for further
research and section six concludes the study.
Review of Literature
Review of extant literature reveals that a flurry of studies
on IB is conducted in the past. Adoption, perception and
usage of IB by customers, service quality dimensions and
their effect on customer satisfaction are the topics heavily
examined in IB literature. Davis (1989) developed a techno-
logy acceptance model (TAM), according to which users’
adoption of computer system depends on their behavioural
intention to use, which in turn depends on attitude, consist-
ing of two beliefs, namely, perceived ease of use (PEOU)
and perceived usefulness (PU). There is no dearth of studies
that examined the direct or indirect effect of PEOU and
PU on adoption of IB (Aldas-Manzano, Navarre-Lassala,
Mafe-Ruiz & Blas-Sanz, 2009; Awameh & Fernandes,
2006; Bomil & Ingoo, 2002; Cheng, Lam & Yeung, 2006;
Guozhang, Faming, Xi-Wang & Ya-Zhang, 2008; Kent,
Katri & Daniel, 2005; Lee, 2009; Padachi, Rojid &
Seetanah, 2008; Pikkarainen et al., 2004; Al-Somali,
Gholami & Clegg, 2009; Safeena, Date & Kammani, 2011;
Sudeep, 2008; Suh & Han, 2002; Wang et al., 2003b).
Previous studies have also demonstrated the effect of
PEOU, PU on customer satisfaction. Al-Gahtani and King
(1999) stated that TAM is a valuable tool in predicting
satisfaction. Devraj, Fan and Kohli (2002) found that
TAM components—PEOU and PU—are important in form-
ing consumer attitudes and satisfaction with e-commerce
channel. George and Kumar (2013) found that PEOU and
PU have positive effect and PR has negative effect on IB
customer satisfaction. The high levels of uncertainty asso-
ciated with services delivered through the medium of
Internet makes them more risky than products. Many
studies found that consumers security and risk concerns is
a major inhibitor for the adoption of IB (see, e.g., Geetika
et al., 2008; Gerrard Cunningham & Devlin, 2006;
Guangying, 2009; Laukkanen, Sinkkonen & Laukkanen
T, 2008; Manzano-Aldas, Navarre-Lassala, Mafe-Ruiz
& Blas-Sanz, 2009; Ozdemir & Trott, 2009; Ramayah,
Ismail & Ling, 2002; Srivastava, 2007; Sujana, 2008;
Winnie & John, 2002; Yiu, Grant & Edgar, 2007).
Many studies found that service quality dimensions
such as reliability, responsiveness, efficiency, security,
privacy and fulfillment emerge as key to the delivery of
optimum e-service quality (Gupta & Bansal, 2012; Jun &
Cai, 2001; Kadir, Rahmani & Masinaei, 2011; Khan,
Mahapatra & Sreekumar, 2009; Liao & Cheung, 2008;
Loonam & O’Loughlin, 2008; Nupur, 2010; Nuseir,
Akroush, Mahadin & Bataineh, 2010; Siu & Mou, 2005;
Santourdis, Trivellas & Reklitis, 2009; Sohail & Shaikh,
2008; Sunayna, 2009; Yu, 2008;). Empirical studies that
examined the relationship between perceived service
quality and customer satisfaction have shown that service
quality determines customer satisfaction (Arasli, Mehtap-
Smadi & Katircioglu, 2005; Bloemer, De Ruyter & Peeters,
1998; Culiberg & Rojsek, 2010; Wang et al., 2003a; Yavas,
Benkenstein & Stuhldreier, 2004).
Customer satisfaction is a collective outcome of per-
ception, evaluation and psychological reactions to the
consumption experience with a product/service (Yi, 1990).
In the context of IB, customer satisfaction denotes
e-customer satisfaction. E-customer satisfaction is defined
as the contentment of the customers with respect to their
prior purchasing experience with a given electronic com-
merce firm (Anderson & Srinivasan, 2003). This study
used the concept of e-customer satisfaction for measuring
customer satisfaction in IB.
Research Gaps and Objectives
Though there is plenty of literature that examined adop-
tion, perception, service quality dimensions and their
relationship with customer satisfaction, customer-centric
studies that explored the problems in IB using a validated
scale were hardly found in the literature. Further, it is felt
imperative to investigate whether the occurrence of prob-
lems affect the satisfaction in using IB. Therefore, follow-
ing the recommendation of Ombati Magutu, Nyamwange
and Nyaoga (2010) that a study should be carried out to
establish the challenges encountered by the customers in
the process of using IB in the service delivery, the study
attempts to fill the void in the literature and hence the
study is quite relevant and timely from the point of view of
both academic and banking industry. Since the Internet is
used as a medium to deliver IB services, users expect quick
and uninterrupted services, and therefore, any problems
encountered during IB service delivery may hinder cus-
tomer satisfaction. The specific objectives of the study are:
1. To validate a scale for measuring the problems asso-
ciated with the use of IB.
2. To investigate whether these problems have adverse
effect on customer satisfaction in the use of IB.
Materials and Methods
The study is empirical in nature, and survey method has
been used to collect primary data from IB users from
Kerala. The respondents were identified through different
stages of selection. In the first stage of sample selection,
banks were divided into three strata (categories), namely,
public sector banks (PSB), old private sector banks (OPSB)
and new private sector banks (NPSB). The categorization
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of banks into PSB, OPSB and NPSB by the RBI for the
purpose of assessment of performance of banks is followed
in this study. State Bank of India, State Bank of Travancore,
Canara Bank and Punjab National Bank were selected
from PSB, Federal Bank and South Indian Bank from
OPSB, HDFC Bank, ICICI Bank and Axis Bank from
NPSB. These banks were selected because they are in the
forefront in harnessing technology and have won accolades
for their excellence in banking technology from Institute
for Development and Research in Banking Technology
(IDBRT) for many years. To accommodate geographical
importance, as the second stage of sample selection, one
district each from North Kerala, Central Kerala and South
Kerala were selected. Accordingly, North Kerala is
represented by Kozhikode, Central Kerala by Ernakulam
and South Kerala by Thiruvananthapuram. These districts
were selected due to the maximum number of urban bank
branches in their respective region as on 31 March 2009
(RBI, 2009). A sampling frame which contains the contact
details of IB users could not be obtained from banks
because of bank’s privacy issues, topic sensitivity and
competition reasons. Therefore, IB users were located
from ATM outlets of the selected banks and from the
selected districts. The customers who used IB for a period
of 1 year or above, visiting ATM outlets on the days of
survey were selected to participate in the survey. Thus,
in the third stage, 450 responses were collected of which
44 responses were discarded as these were either incom-
plete or answered the demographic questions only. Finally,
there were 406 usable responses. Alreck and Settle (1985,
p. 45) state that, for populations of 10,000 and more, most
experienced researchers would probably consider a sample
size between 200 and 1,000 respondents. The minimum
sample size required for the statistical tests used in the
study was also taken into account while finalizing the
sample size. For example, for stepwise multiple regression,
the guidelines given by Garson (2010) that N greater than
or equal to 40 × m (where m = number of independent
variables) was followed. In the light of all these, the sample
size of 406 was considered adequate.
The steps used for validation of a scale for measuring
problems in IB are narrated in sub-sections Generating the
Item Pool for Measuring Problems in IB to Confirmatory
Factor Analysis. But the scale for measuring customer sat-
isfaction is based on previous research. According to
Churchill (1987), any single item cannot provide a perfect
representation of the concept and therefore, multi-item
measures were used to capture customer satisfaction of IB
services in Kerala. Following Nuseir et al. (2010) who
measured customer satisfaction of e-service quality as a
multi-item measure in the context of commercial banks of
Jordan, customer satisfaction is measured as a multi-item
measure to indicate the degree of customer contentment
with regard to various dimensions of IB service quality.
The level of customer satisfaction in respect of (i) Website
related to design and ease of use (CS1), (ii) Reliability and
Vision 19(4)
confidence in bank (CS2), (iii) Responsiveness of bank
(CS3), (iv) Fulfillment of IB services (CS4), (v) Efficiency
of IB services (CS5) and (vi) Privacy/Security of IB trans-
actions (CS6) were captured on a five-point Likert-type
scale from ‘Very satisfied’ (5) to ‘Very dissatisfied’ (1).
Generating the Item Pool for Measuring
Problems in IB
An exploratory qualitative study with 20 IB users was
undertaken to gain insights about the problems associated
with the use of IB and to develop scale items for the empir-
ical study. For this purpose, users were approached with
open-ended questions and in-depth personal interviews
were conducted. The qualitative study aimed at finding
answers to the following two major questions.
• What are the problems faced by IB users while
availing banking services using the Internet?
• Does the occurrence of problems adversely affect
their satisfaction?
Consensus emerged from the study provided valuable
insights for developing a scale for measuring the problems
associated with the use of IB. Their major highlights
include lack of proper guidance on the use of IB; and as a
result, they make mistakes and when they approach the
officials, they even do not have proper idea as to how to
rectify the mistakes. They also face website-related prob-
lems like low speed, connection lost while accessing IB
account, etc. Most of the respondents answered in the
affirmative on the question of whether the problems have
adverse effect on their satisfaction. Discussions with four
officers of State Bank of India, two officers each of South
Indian Bank, Federal Bank and Axis Bank were held to
understand the type of complaints made by IB users.
Furthermore, the complaints posted by customers on
their blogs hosted in the Internet were also accessed for
identifying 27 items (Table 1) for measuring the problems
encountered by customers in the process of using IB.
The questionnaire was piloted on 40 respondents, and suit-
able modifications in the wording of items were made.
Respondents were asked to indicate the frequency of
each of the problems faced by them on a five-point scale
as ‘Always’ (5), ‘Often’ (4), ‘Sometimes’ (3), ‘Rarely’ (2)
and ‘Never’ (1). The scores assigned to each response are
shown in brackets. Table 1 shows the list of problems along
with their respective item acronyms.
Deletion of Insignificant Items
In order to delete insignificant items, the mean values of
each of the 27 problems are calculated, and these mean
values are compared with the standards set out on the basis
of Q1, Q2 and Q3 values. The values of Q1, Q2 and Q3 are
1.5, 3.0 and 4.5, respectively. One sample t–test with test
George and Kumar 315

Table 1. Problems Encountered during the Process of Service value equal to 1.5 is used to see if the mean values are
Delivery significantly different from 1.5 (two-tailed). The mean
scores of each of the 27 problems along with the results
Item Acronym Problems
of one sample t–test are displayed in Table 2. If the mean
Pm-1 Money lost without my knowledge score is significantly below 1.5, they are considered as
Pm-2 Transaction failed but amount is deducted
frivolous problems which may not call for serious attention
Pm-3 For a single transaction amount is deducted
more than once from the part of IB service providers, and they are dropped
Pm-4 Refund amount for cancellation of tickets, from further analysis. Thus, seven items were dropped.
etc., not received
Pm-5 Money not received into my account but
deducted from sender’s account Exploratory Factor Analysis
Pm-6 Low speed Exploratory factor analysis is used in order to reduce the
Pm-7 Connection lost while processing transactions
20 problems (whose mean values are either significantly
Pm-8 No access to server/IB site not working
Pm-9 Account temporarily locked by bank
not different from 1.5 or significantly above 1.5) associated
Pm-10 My personal information leaked out with the use of IB into fewer factors, which explain much
Pm-11 Lack of training and guidance on the use of IB of the original data more economically. To check whether
Pm-12 Inadequate support from bank employees the data are suitable for factor analysis, the following
Pm-13 Poor response from bank on complaints steps are taken: (a) The correlation matrices are computed
Pm-14 No/delayed support from complaints redressal and it is found that there is enough correlation between
agencies (ombudsman, etc.) measures to go ahead for factor analysis. (b) Kaiser–
Pm-15 Unable to login/operate the account Meyer–Olkin measure of sampling adequacy of 0.887
Pm-16 Transaction details missing
which is above the threshold level of 0.50 (Hair et al.,
Pm-17 The service I want is not available through IB
Pm-18 The option I want is not working 2006) indicates that all the variables can be considered for
Pm-19 Non-delivery of cheque book/draft/passbook/ factor analysis. (c) Factor analysis would be meaningless
ATM card, etc., ordered online if the correlation matrix of 20 items is an identity matrix.
Pm-20 Non-delivery of tickets booked online The results of the Bartlett test of sphericity (Chi-square =
Pm-21 Unsuccessful transaction but service charges 2814.713 with df 190, p = 0.000) suggested that the
deducted correlation matrix is not an identity matrix.
Pm-22 Lengthy procedure to complete transactions After the standards indicate that the data are suitable
Pm-23 Occurrence of transaction errors
for factor analysis, principal components analysis (PCA)
Pm-24 Problem of forgetting username/password
Pm-25 Unable to get One Time Password (OTP) is employed for extracting the factors, their eigenvalues
Pm-26 Receipt of unknown emails that ask for ID and the cumulative percentage of variance. It is seen
and passwords from Table 3 that four factors with eigenvalues greater than
Pm-27 Delay in getting new password in place of 1 is extracted which together account for 54.17 per cent
password forgotten of the total variance. Since the extraction technique sug-
Source: Compiled by the researchers. gested that there are four factors, the extracted factors are

Table 2. Mean Values of Problems Encountered during Service Delivery

Mean Sig. Mean Difference

Item Acronym Values t df (2-tailed) (T Value = 1.5)
Pm-1 1.20 −11.426* 404 .000 −.300
Pm-2 1.68 4.193* 404 .000 .179
Pm-3 1.31 −6.048* 404 .000 −.194
Pm-4 1.36 −3.606* 402 .000 −.140
Pm-5 1.34 −4.693* 404 .000 −.164
Pm-6 2.51 21.402* 404 .000 1.011
Pm-7 2.61 22.666* 404 .000 1.107
Pm-8 2.39 18.272* 404 .000 .888
Pm-9 1.54 1.044 404 .148 .043
Pm-10 1.16 −13.598* 402 .000 −.339
Pm-11 1.76 5.529* 402 .000 .262
Pm-12 1.90 7.979* 404 .000 .396
Pm-13 1.90 8.135* 404 .000 .401
Pm-14 1.55 1.134 402 .128 .051
Pm-15 1.84 8.221* 404 .000 .344
Pm-16 1.35 −4.684* 404 .000 −.154
(Table 2 continued)
316 Vision 19(4)

(Table 2 continued)

Mean Sig. Mean Difference

Item Acronym Values t df (2-tailed) (T Value = 1.5)
Pm-17 1.82 7.147* 404 .000 .317
Pm-18 1.74 5.497* 404 .000 .241
Pm-19 1.46 −.966 401 .167 −.040
Pm-20 1.30 −5.740* 401 .000 −.197
Pm-21 1.47 −.764 404 .222 −.031
Pm-22 1.84 7.337* 404 .000 .337
Pm-23 1.87 8.348* 404 .000 .374
Pm-24 2.14 12.056* 404 .000 .643
Pm-25 1.82 6.070* 400 .000 .320
Pm-26 1.82 5.714* 404 .000 .317
Pm-27 1.83 6.249* 401 .000 .328
Source: Primary data.
Note: *Significance at 5% level.

Table 3. Result of Exploratory Factor Analysis

Factors FL C EV VE CA
F1 - Customer Support Problems 6.564 32.82 0.792
Lack of training and guidance on the use of IB 0.499* 0.452
Inadequate support from bank employees 0.818 0.736
Poor response from bank on complaints 0.790 0.707
No/delayed support from complaints redressal agencies 0.661 0.575
F2 - Service Problems 1.67 8.36 0.799
Transaction failed but amount is deducted 0.480* 0.403
The service I want is not available through IB 0.735 0.598
The option I want is not working 0.649 0.540
Non-delivery of cheque book/draft/passbook/ATM card etc., ordered online 0.525 0.543
Unsuccessful transaction but service charges deducted 0.682 0.501
Lengthy procedure to complete transactions 0.426* 0.410
Occurrence of transaction errors 0.573 0.552
F3 - Web-based Problems 1.448 7.24 0.743
Low speed 0.674 0.585
Connection lost while processing transactions 0.792 0.683
No access to server/IB site not working 0.779 0.637
Account temporarily locked by bank 0.454* 0.403
Unable to login/operate the account 0.507* 0.413
F4 - Password Problems 1.149 5.74 0.701
Problem of forgetting username/password 0.773 0.658
Unable to get One Time Password (OTP) 0.700 0.586
Receipt of unknown emails that ask for ID and passwords 0.460* 0.449
Delay in getting new password in place of password forgotten 0.751 0.671
Source: Authors’ calculation.
Notes: * Item dropped due to poor loading/communalities FL – Factor Loadings, C – Communalities, EV – Eigen Value, VE – Variance Explained,
CA – Cronbach’s alpha.

then rotated using the widely used varimax rotation
method. The rotated factor matrix gives the loadings of
each measure on each of the extracted factors as shown in
Table 3. The items with factor loadings or communalities
less than 0.50 were dropped. Thus, 6 items are dropped
and the remaining 14 items are reduced to four factors suit-
ably named based on the characteristics of their composing
items as (F1) Customer support problems, (F2) Service
problems, (F3) Web-based problems and (F4) Password
problems.
Although the interpretation of each factor is self-
explanatory on scanning the items in each factor, the
authors’ definition of factors is summarized below.
1. Customer support problems: These are the problems
faced by users when the service providers fail to
support them by providing quick response on their
queries and complaints relating to IB services.
2. Service problems: These are problems faced by
users during the process of IB service delivery such
George and Kumar 317

as non-availability of certain services through
IB, non-delivery of services as promised and
occurrence of errors due to fault of the service
provider.
3. Web-based problems: These are problems related to
websites of service providers hosted in the Internet
such as low speed, interruptions during transaction
processing and denial of access to the web site.
4. Password problems: These are problems faced by
IB users in connection with the password used to
login the IB account such as forgotten password,
its subsequent delay in getting the new one and non-
receipt of One Time Password (OTP) as and when
needed.
Reliability Testing
The reduced four factors are subjected to reliability testing
using Cronbach’s alpha. Nunnaly (1978) suggests that
for any research at its early stage, a reliable score or alpha
that is 0.70 or above is sufficient. As shown in Table 3,
Cronbach’s co-efficient alpha (α) for all the factors sur-
passed the required minimum, and the alpha co-efficient
for all the factors taken together is 0.888.
Confirmatory Factor Analysis
Confirmatory factor analysis (CFA) is a way of testing
how well-measured items represent a latent construct
(Demirbag, Koh, Tatoglu & Zaim, 2006). The four
dimension model of problems associated with the use of
IB, emerged from EFA, are tested for the reliability and
validity using CFA. Besides using |2/df, the following
additional indices from the literature were also considered
for assessing the model fit. They are goodness of fit (GFI),
adjusted GFI (AGFI), comparative fit index (CFI), normed
fit index (NFI) and root mean square error of approxi-
mation (RMSEA). The fit indices of the four dimension
measurement model shown in Table 4 indicate that all the
fit indices were within the acceptable level suggested by
previous research.
In addition to the model fit indices, standardized regres-
sion weights and CR estimates were also used to evaluate
the four-dimension model. Besides, the psychometric
properties of the model in terms of reliability, convergent
validity and discriminant validity were also evaluated.
Reliability and convergent validity of the factors were
estimated using composite reliability co-efficient (CRC)
and average variance extracted (AVE) (Hair et al., 1998).
The following criteria are generally adopted for evalu-
ating CFA models: (1) Standardized regression weights
between measures (indicators) and constructs should
be greater than 0.50 (Hair et al., 1992). (2) The critical
ratio values should be above ±1.96 (Hair et al., 1998).
(3) A minimum cut-off criteria for AVE greater than 0.5
and CRC greater than 0.7 (Hair et al., 2006). The model
estimates and psychometric properties of the model are
exhibited in Table 5.
As shown in Table 5, all standardized regression
weights of indicators (measures) in the model are greater

Table 4. Fit Indices of the Measurement Model

Fit Indices Measurement Model Recommended Value References

|2/df 3.050 <5 Bentler (1989)
GFI 0.934 >0.90 Hair et al. (2010)
AGFI 0.897 >0.80 Gefen, Karahanna and Straub. (2003)
NFI 0.897 >0.80 Hooper, Coughlan and Mullen (2008)
CFI 0.928 >0.90 Bentler (1992)
RMSEA 0.071 <0.08 Hu and Bentler (1999)
Source: Authors’ calculation.

Table 5. Model Estimates and Psychometric Properties of Four-dimension Model

Constructs Indicators SRW CR P (Sig. level) CRC AVE

Customer Support Problems Pm-12 0.793 14.265 *** 0.835 0.629
Pm-13 0.870 14.944 ***
Pm-14 0.709 *
Service Problems Pm-17 0.784  9.306 *** 0.829 0.495
Pm-18 0.697  9.585 ***
Pm-19 0.642  8.892 ***
Pm-21 0.733  9.719 ***
Pm-23 0.650 *
Web-based Problems Pm-6 0.762 * 0.782 0.545
Pm-7 0.684  8.473 ***
Pm-8 0.765  7.515 ***
(Table 5 continued)
318
(Table 5 continued)
Constructs Indicators SRW
Password Problems Pm-24 0.698
Pm-25 0.646
Pm27 0.776
Source: Authors’ calculation.
Notes: SRW – Standardized Regression Weight, CR – Critical Ratio.
* Unstandardized regression weights assumed as 1.
AVE – Average Variance Extracted, CRC – Composite Reliability Co-efficient
*** Significant at p < 0.05 level.
Table 6. Discriminant Validity of Constructs
Customer Support
Constructs Problem
Customer support problem 0.629
Service problem 0.476
Web-based problem 0.227
Password problem 0.213
Source: Authors’ calculation.
Note: Diagonal values are AVE and off diagonal values are inter-construct squared correlations.
than 0.60, with most of them close to or above 0.70. The
unstandardized regression weights are significant from
the critical ratio (CR) test (CR > ±1.96, p < 0.05). The CRC
of all the constructs are found above the cut-off criteria
0.70, and the AVE of all the constructs is found above the
threshold of 0.50 except service problems which is very
close to 0.50.
Convergent validity measures the extent to which the
indicators truly represent the intended latent construct.
Standardized factor loadings greater than 0.50, CRs higher
than 1.96 and AVE close to or above 0.50 indicate conver-
gent validity of the latent constructs used in the model.
Fornell and Larcker (1981) present a method for assessing
discriminant validity of two or more factors (constructs).
According to them, AVE for each construct should be
greater than its shared variance with any other construct.
Shared variance is the square of the correlation between
any two factors. Discriminant validity of the constructs is
shown in Table 6.
It is evident from Table 6 that AVE for each construct is
larger than their corresponding squared inter-construct
correlations. This indicates high level of discriminant
validity of the constructs used in the model. It means that
the measured items have more in common associated with
the latent construct than with other latent constructs. In
summary, the four-dimension model of problems associated
with the use of IB demonstrated good model fit, adequate
reliability, convergent validity and discriminant validity.
Validation of Customer Satisfaction Construct
EFA using PCA applied on six items of customer satisfac-
tion indicated that all the items were loaded on one and
only factor with eigenvalue (3.35) greater than one
Vision 19(4)
CR P (Sig. level) CRC AVE
* 0.751 0.502
 9.040 ***
 9.577 ***
Service Web-based Password
Problem Problem Problem
0.495
0.353 0.545
0.319 0.143 0.502
(KMO = 0.847, approx. Chi-square = 905.384, df – 15
p < 0.000). The factor loadings of the six items range
from 0.618 to 0.819 and communalities range from 0.544
to 0.671. The Cronbach’s alpha for customer satisfaction
construct is 0.840. The mean values are 4.15 for CS1,
4.14 for CS2, 4.30 for CS3, 4.25 for CS4, 4.12 for CS5 and
4.06 for CS6.
The customer satisfaction construct is also validated
using CFA. The model fit indices indicate good model
fit. The |2/df (Normed Chi-square) |2 – 18, df-7 is 2.578,
GFI – 0.985, AGFI – 0.956, CFI – 0.986, NFI – 0.977
and RMSEA – 0.063. However, standardized regression
weight of CS5 is 0.46 and for all other measures it is above
0.50. Therefore, CS5 is dropped and the model is re-run.
The fit indices of the modified model indicate very good
model fit. The |2/df (Normed Chi-square) |2 – 9.6, df-4 is
2.410, GFI – 0.991, AGFI – 0.964, CFI – 0.991, NFI –
0.986 and RMSEA – 0.060. The unstandardized regression
weights are significant from the CR test (CR > ±1.96,
p < 0.05). The CRC of customer satisfaction construct
is calculated as 0.82 and AVE 0.49 which is very close
to 0.50. In short, the model of customer satisfaction
demonstrated good model fit, adequate reliability and
convergent validity.
Results and Discussion
Sample Profile
Out of 406 respondents, 76 per cent are male and 24 per
cent are female. This is in line with the findings of similar
studies in India; for example, the studies conducted by
Srivastava (2007) and Gupta and Islamia (2008) found that
males form the majority of the IB users in India. About
George and Kumar 319
Table 7. Results of Regression Model
Independent Variables R2
Customer support problem 0.220
Web-based problem
Source: Authors’ calculation.
Note: Constant 4.900 t = 60.164 (Sig = 0.000). Dependent variable: Customer Satisfaction.
74 per cent of the respondents are below 35 years of
age and 26 per cent are above 35 years of age. This sup-
ports the findings of Ajay and Garima (2008) that young
generations have affinity towards the use of IB. About
three-fourths (74 per cent) of the total respondents are
postgraduates/professionals and out of the remaining,
22 per cent are undergraduates and a meager 4 per cent
have plus-two/diploma and below. This indicates that
most of the IB users are well-educated banking customers.
This corroborates the findings of Srivastava (2007) that
educated people constitute the majority of the IB users
in India. About 71 per cent of the respondents are emplo-
yees, 16 per cent are self-employed professionals like
chartered accountants, cost accountants, company secret-
aries, doctors, lawyers, etc., and the rest 13 per cent are
students and businessmen. This corroborates the findings
of Mannan (2010) that well-to-do persons are the major
users of IB in Maharashtra, India. Majority (66 per cent)
of the respondents have monthly income ranging from
15,000 to 45,000. This supports the findings of Prasad and
Harish (2010) that customers of high income group are
the highest users of IB. To put it succinctly, young males,
well-educated employees with a moderately high level of
monthly income are the major users of IB in Kerala.
Construct Index for Regression Analysis
For the purpose of regression analysis, the construct indices
of problems in IB and customer satisfaction are formed
by adding scores of individual items in the construct. The
percentage scores ({Construct score ÷ Maximum possible
score} × 100) of each construct are also calculated and
the mean of percentage score is highest for web-based
problems (43.58 per cent) followed by password problems
(38.08 per cent), customer support problems (35.55 per
cent) and service problems (33.96 per cent). The conclu-
sions emerging from the above analysis is that four pro-
blems are associated with the use of IB as perceived by
IB users in Kerala. They are web-based problems, pass-
word problems, customer support problems and service
problems. But IB users perceive these problems on a lesser
gravity.
Multiple regression analysis examined the effect of
problems on customer satisfaction. Pursuant to initial
regression run, multiple regression assumptions are
examined according to the methodologies recommended
by Hair et al. (1998). They suggest that the analysis of
Beta (b) t value Sig.
−0.368 −7.508 .000
−0.173 −3.521 .000
residuals provide the best information about regression
models errors, which are used to examine the regression
assumptions. The assumption of normally distributed
residual error is examined by Shapiro–Wilk test for the
standardized residuals. This test returns a finding of non-
significance (p = 0.097), which provide evidence that the
residual error is normally distributed. The Durbin–Watson
statistic tests for autocorrelation. As a rule of thumb, the
value should be between 1.5 and 2.5 to indicate independ-
ence of observations (Garson, 2010). The value of the test
is 2.01 which indicate independence of observations. Other
assumptions like linearity, homoscedasticity and absence
of outliers are also examined. The results of regression
model are exhibited in Table 7.
Customer support problem has the highest beta
coefficient followed by web-based problem. Out of the
predictor variables, the b coefficients of all the independent
variables except service problem and password problem
are found to be statistically significant (p < 0.05). Service
problem and password problem are excluded from the
step-wise regression model and they are not significant at
5 per cent significance level (service problem p = 0.090,
password problem p = 0.891). The findings indicate that
customer support problem and web-based problem have
a negative and significant effect on customer satisfaction.
Service problems and password problems are found to
have no significant effect on customer satisfaction.
Practical Implications
The finding that customer support problems and web-
based problems have significant negative effect on cus-
tomer satisfaction indicates that these factors hinder
customer satisfaction in the use of IB. Previous studies
indicate that there is relationship between customer satis-
faction and customer retention (see, e.g., Cronin & Taylor,
1992; Patterson, Johnson & Spreng, 1997; Rust & Zahorik,
1993)). Given the above context, it is the need of the hour
for banks to maximize customer satisfaction in IB so that
the existing IB customer base remains intact and also to
entice more and more customers to embrace IB. The main
advantage of IB for banks is that the cost per transaction
is even lower than those of an ATM. This is primarily
because IB as a delivery channel does not require physical
infrastructure, thus saving on prohibitive real estate costs
(Indian, 2002). The cost of handling a banking transaction
at a traditional branch is estimated to be 100 times higher
than on the Internet (Renato, 1998).
320
In order to alleviate customer support problems, a bank
should have accessible and responsive employees who
can respond to all customers’ requirements and complaints
quickly and professionally. Skilful and experienced staff
who can also handle problems associated with the use of
IB may be devoted for this purpose. In order to provide
hands-on training to potential IB users on how to use
IB, banks may arrange live demos at branch offices when
the customers approach the banks for IB facility. Though
the website of some of the banks provide demos, demos
in the presence of experienced bank staff may be more
beneficial from the point of view of customers. Customer
support in the form of periodic articles in newsletters
and in email or SMS messages and on bank websites
about the precautions to be taken while using IB services
may reduce the perception that there is inadequate support
from service providers.
Most of the web-based problems, such as low speed,
connection lost while processing transactions, etc., may
not be within the reach of banks and they may not have
much to solve these problems. However, for problem of
forgetting passwords, what the banks can do is to advice
users to choose passwords which are easy to remember for
them but difficult to be guessed by others. OTP is a mecha-
nism to improve security, where the banks SMS/mail
OTPs to customers upon activation of an IB account. The
problem of non-receipt of OTPs due to various technical
problems can be resolved if ‘hardware tokens’ are given
to users which displays a new OTP every 60 seconds. This
password has to be entered into the website of banks for
accessing the account/completing a banking transaction.
Limitations and Scope for
Further Research
The major limitation of the study is the lack of previous
empirical studies on problems in IB from users’ perspec-
tive. Furthermore, the study considered the perceptions
of retail banking customers only and the perceptions of
wholesale banking customers who use IB were not con-
sidered. The study focused on a specific user group, that
is, those user groups who use IB. Therefore, special caution
should be taken when extrapolating or generalizing the
findings of the study to other user groups, for example,
ATM, mobile banking user groups, etc. Further research is
expected to authenticate the generalizability of the findings
of the study to user groups of other banking technologies.
The present study was a cross-sectional study in which
subjects are contacted at a fixed point in time, and relevant
information is obtained from them. Additional research
efforts are needed to evaluate the validity of the findings
of this study by conducting a longitudinal study at some
point in future.
Future research may replicate this study with wholesale
banking customers to evaluate the validity of the findings
Vision 19(4)
of this study. Wholesale banking customers may use IB
more frequently and therefore to enquire whether their
problems are similar to those of retail banking customers
would be of interest to future researchers. The low R-square
reported by the model represents another limitation. Hence,
there is a research need to search for additional measures
and constructs that will improve predictive power of the
model used.
Concluding Remarks
The advent of IT has offered endless opportunities not
only for the banks but also for the people and institutions
all over the world, and the importance of IT in the field
of banking has grown astoundingly. However, there are
customers who are wary of using Internet-based banking
services such as IB because of negative issues that pop up
while using it. Besides identity theft and hacking frauds
which can be minimized if customers are properly edu-
cated on the precautions to be taken while using IB, there
are certain other problems associated with the use of IB.
The present study was a customer-centric study to validate
a scale for measuring problems associated with the use of
IB and their effect on customer satisfaction. Using the vali-
dated scale, the study identified four problems, namely,
customer support problems, service problems, web-based
problems and password problems. Customer support prob-
lems and web-based problems have significant negative
effect on customer satisfaction and hence these hinder
customer satisfaction. The most important theoretical con-
tribution of the study is the development of a scale for
measuring the problems associated with the use of IB.
Although the study has been conducted in Kerala (India),
the findings would also provide insights to the global
markets as IB defies geographical boundaries.
The government and the RBI are taking efforts to bring
down the usage of cash in the society by giving more
emphasis on information and communication technology
(ICT) solutions such as MB and IB, core banking and elec-
tronic fund transfers (Press Trust of India, 13 September
2012). In such a context, banks should take necessary steps
to alleviate the above-mentioned problems that affect
customer satisfaction especially at a time when the usage
of IB services are gaining acceptance among the banking
customers in Kerala, which is evidenced from the fact that
State Bank of Travancore, the premier bank in Kerala with
a market share of 23.78 per cent, has added 90,434 new IB
registrations during the year 2011–2012. The increase is
24.86 per cent over the registrations during 2010–2011.
The total number of IB registrations as on 31 March 2012
is 454,131 (SBT, 23 April 2012). This shows that more and
more banking customers in Kerala are entering into the
foray of IB, and there is a need from the part of service
providers to seriously look into such problems.
George and Kumar 321
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Authors’ bio-sketch
Ajimon George (ajimon.george@mariancollege.org),
M.Com. (first rank), M.Phil., PhD is associate professor
of Commerce at Marian College, Kuttikkanam, Kerala. He
has been selected by the Department of Economic Affairs,
Ministry of Finance, Government of India to serve as
lecturer in commerce on deputation to Sherubtse College,
Bhutan, under the Technical Co-operation Scheme (TCS)
of Colombo Plan from 2005 to 2008. He has published
25 research articles in various journals including the
Journal of Indian Institute of Management (IIM) Calcutta
(Decision) and Global Business Review. He has presented
a research paper on Internet banking at the 2013 meetings
of World Finance & Banking Symposium held at Central
University of Finance and Economics, Beijing (China).
He was in the conference committee as a reviewer of
research papers in the World Conference on Banking and
Finance held in July, 2014, in Venice, Italy. He has penned
five text books.
G. S. Gireesh Kumar (gireeshkartha@yahoo.com), M.Com.
(first rank), M.Phil., PhD is associate professor of com-
merce at Nirmala College, Muvattupuzha, Kerala. He is
a research guide and six PhD degrees have been awarded
under his guidance. He has published papers in various
journals including Decision, Management Accountant,
Management Research, Indian Commerce Bulletin, Profes-
sional Banker, Global Business Review and International
Journal of Management and Social Sciences. He is the
recipient of best paper award at the international confer-
ence organized by Planetary Scientific Research Centre,
Thailand. He has written three books, Business Environ-
ment (2005, Prakash Publications, Changanacherry), Value
Added Tax (2006, Prakash Publications, Changanacherry)
and Business Communication (2008, Prakash Publications,
Changanacherry).
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