CUSTOMER SATISFACTION IN ONLINE BANKING SERVICES IN

KATHMANDU VALLEY

By

GRISHMA UPRETY

Project Paper Submitted in Fulfillment as the Requirement for the Masters in

Business Administration by Research Degree in the Faculty of Business
Administration
IUKL
2021
 ABSTRACT

Abstract of thesis presented to the Infrastructure University Kuala Lumpur in

fulfilment of the requirement for the degree MBA.

CUSTOMER SATISFACTION IN ONLINE BANKING SERVICES IN

KATHMANDU VALLEY

By

GRISHMA UPRETY

Customers' satisfaction is one of the most important aspects for banks to remain
competitive as good customer satisfaction allows the bank to retain existing clients
while simultaneously attracting new ones. Banking environment in Nepal has
undergone tremendous changes with the infusion of innovative practices like the
online banking services and it is essential for the bank to comprehend the level of
customer satisfaction with these services. This study therefore explores the Consumer
Satisfaction in Online banking services provided by the banks of Kathmandu and
evaluates the impact of online banking service dimensions Ease of Use, Security and
Responsiveness on customer satisfaction. The data is collected by formulating the
questionnaires in five-point Likert scale and correlation analysis and regression
analysis is implied to the collected data to test hypotheses. The results show that the
dimensions ease of use, security and responsiveness all have a positive significant
influence on customer satisfaction, with ease of use being the dimension with the
strongest impact and therefore the all the hypotheses under study are found to be
significant. These dimensions under study explain 73.7 percent of variance in
customers’ satisfaction leaving margins for researchers to consider others dimensions
of online banking not accounted.

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 ACKNOWLEDGEMENT

This Project Paper entitled “Customer Satisfaction in Online Banking Services

of Kathmandu Valley” has been submitted to satisfy the requirement for the
degree of Masters of Business Administration of Infrastructure University,
Kuala Lumpur, Malaysia. I would like to express my sincere gratitude to all
those who made this project paper possible. I would also like to express my
gratitude towards Sunway International Business School for providing us with
this learning opportunity.

Firstly, I would like to thank my supervisor Mrs. Ava Shrestha for her constant
support, guidance and supervision throughout the journey of this project paper.
This project paper would not have been possible without you. I am also
grateful to Mrs. Shoba Sapkota, Academic Coordinator of Sunway International
Business School, for her encouragement, support, and cooperation in the
execution of this project. I would also like to thank all of the respondents who
helped me out by filling out my questionnaire without hesitation.

Grishma Uprety
MBA, 4th Semester

3
 STUDENT DECLARATION

I declare that the project work “CUSTOMER SATISFACTION IN ONLINE

BANKING SERVICES IN KATHMANDU VALLEY” is the presentation of my
original research except for quotations and creations which have been duly
acknowledged. I also declare that the research has not been previously, and is not
concurrently, submitted to any other degree at Infrastructure University Kuala
Lumpur or at any other institutions.

..................................

GRISHMA UPRETY
Date: 5th May, 2022

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TABLE OF CONTENTS Page
ABSTRACT.................................................................................................................II
ACKNOWLEDGEMENT........................................................................................III
STUDENT DECLARATION...................................................................................IV
LIST OF TABLES...................................................................................................VII
LIST OF FIGURES................................................................................................VIII
CHAPTER 1.................................................................................................................1
INTRODUCTION........................................................................................................1
1.1 Background of the Study..................................................................................1
1.2 Problem Statement............................................................................................4
1.3 Objectives.........................................................................................................6
1.4 Research Questions...........................................................................................6
1.5 Significance of the Study..................................................................................7
CHAPTER 2.................................................................................................................8
LITERATURE REVIEW............................................................................................8
2.1 Thematic Review..............................................................................................8
2.1.2 Theory of Planned Behavior (TPB)...........................................................20
2.1.3 SERVQUAL Model (Service Quality Gap Model)...................................21
2.2 Empirical Review............................................................................................22
2.3 Research Framework......................................................................................25
2.4 Research Hypothesis.......................................................................................26
CHAPTER 3...............................................................................................................27
RESEARCH METHODOLOGY..............................................................................27
3.1 Research Design..............................................................................................27
3.2 Nature and Sources of Data............................................................................27
3.3 Instrument for Questionaries...........................................................................28
3.4 Population and Sampling................................................................................28
3.5 Sampling Procedure........................................................................................29
3.6 Method of Data Analysis................................................................................29
3.7 Limitations of the Study..................................................................................30
CHAPTER 4...............................................................................................................31
PRESENTATION AND ANALYSIS OF DATA....................................................31
4.1 Demographic characteristics of the respondent..............................................31
4.1.1 Distribution of Respondents based on gender...........................................33

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 4.1.2 Distribution of respondents based on age..................................................33
4.1.3 Distribution of respondents based on academic qualification...................34
4.1.4 Distribution of Respondents based on Income level.................................35
4.1.5 Distribution of respondents based on Profession......................................36
4.1.6 Distribution of Preference for digital banking as a method of Payments..37
4.1.7 Distribution of methods of Payments........................................................38
4.2 Correlation Analysis.......................................................................................39
4.3 Regression Analysis........................................................................................40
4.4 Hypothesis Testing:........................................................................................42
4.5 Major Findings................................................................................................43
CHAPTER 5...............................................................................................................45
CONCLUSION AND RECOMMENDATION.......................................................45
5.1 Summary.......................................................................................................45
5.2 Conclusion......................................................................................................46
5.3 Recommendations...........................................................................................49
REFERENCES...........................................................................................................50
APPENDICES............................................................................................................58

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 LIST OF TABLES

Table 3.3: Instrument for Questionaries (Coefficient of Cronbach’s Alpha)..............28

Table 4.1 Demographic characteristics of the respondents..........................................31

Table 4.3:Pearson’s Correlation Analysis....................................................................39

Table 4.4: Regression results of Ease of Use (EU), Security(S) and Responsiveness
(R) on Customer Satisfaction (CS)...............................................................................41

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 LIST OF FIGURES

Figure 2.3: Research framwork....................................................................................25

Figure 4.1.1: Distribution based on gender..................................................................33

Figure 4.1.2: Distribution of respondents based on age...............................................34

Figure 4.1.3: Distribution based on academic qualification.........................................35

Figure 4.1.4: Distribution based on income level.......................................................36

Figure 4.1.5 Distribution based on Profession.............................................................37

Figure 4.1.6: Preference of digital banking.................................................................38

Figure 4.1.7: Distribution of methods of payments.....................................................38

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9
 CHAPTER 1

INTRODUCTION

1.1 Background of the Study

Consumer Satisfaction is defined as a metric that assesses the satisfaction levels of

consumers with the goods or services offered by an organization, management, and
capacities. The data of satisfaction of customers through reviews and ratings, can
assist the organization in determining strategies to improve or change its services and
product style or delivery pattern. Satisfaction is an important factor for any
organization because it examines the gap between the offerings of that organization
and the expectations of the consumer. Customer satisfaction has an impact on the
company as well as the product because satisfied customers mean more products and
profits (Copley,2017; Akoi & Yesiltas, 2020). The satisfaction of customers is
regarded as the essence of success in the competitive banking industry. The success of
any organization is dependent on the satisfaction of its customers. Good service
quality leads to high satisfaction of consumers and build customer loyalty. As a result,
customer satisfaction is critical because it provides marketers and businesses with a
metric to successfully manage their operations (Adeoy and Lawanson, 2012).
Customers are always "first" when a company launches a product, followed by profit.
Companies that are successful in fully satisfying their customers will maintain their
market leadership. Today's corporate has recognized that contentment of customers is
a critical component for business success and also plays an essential part in increasing
the goodwill in the market. Customers are people who purchase goods and services
from a market or business that meet their needs and desires. The loyalty of users is
bound to follow if the contentment of consumers is gained (Gunawardana et al.,
2015). Furthermore, a corporate would not exist in the absence of a customer. It is
critical to develop customer satisfaction in order to increase the number of customers.
Rise in the contentment of customers can provide business advantages such as
customer loyalty, broadening user's life cycle, maximizing of merchandise purchased
by the customer, and increasing customers' positive influence on brand
communication through word of mouth. When a customer is pleased with their

1
experience through the offered products or service of an organization, the customer is
more likely to return and recommend the organization’s products or services quality
to others through word-of-mouth communication. It is difficult for companies to
progress if it overlooks or dismisses the needs of its customers. (Tao, 2014).

The usage of internet banking as a feasible and suitable instrument to enhance the
value of clients is incredibly growing in the banking industry. The electronic
delivering of traditional as well as digital banking available goods and services to the
users directly via automated, interactive forms of communication is referred to as
digital banking (Pradhan, 2019). Users, individual people, financial firms, and
companies are able to gain access to their accounts, conduct business, and receive
financial product and service information through an internet-based public or private
network. Online banking includes debit cards, credit cards, ATMs, wire transfers,
telephone banking, electronic funds transfers, QR codes, and mobile transfers via
various banking apps or electronic systems such as SWAP machines. Most financial
firms now provide electronic banking services to their customer base in order to start
new accounts, process customer support queries, fund transfer and accept loan
applications. This reform has also been embraced by Financial Institutions of Nepal.
In today's competitive market, substantial numbers of banks of Nepal have been
working on building their competitive advantage and providing services better than
their competitors. This allows them to better connect their services with growing user
requirements and technological advancements, as well as allows them to substitute
conventional bank operations. The digitalization of banking services with growing
technological advancement along with the pandemic that has compelled financial
institutions and organizations to change the pattern of their services from traditional
or conventional to online (Awan et al., 2020). Online banking is the computerized
distribution of contemporary and existing banking products and services to customers
via digital, participatory communication channels. It includes systems that allow
customers or businesses of financial institutions to access accounts, transact business,
perform cashless transactions, or obtain information on financial products or services
via the internet. Globally, digitization of technologies is expanding in every industry,
along with banking (Toor, 2016). Newly developed and adopted technologies, in
particular, are changing people's lifestyles and consumption habits, having a
significant impact on the structure of business-customer relationships. This is due to

2
the evolving expectations of digital consumers who are well informed of technology,
and expect their banks to offer solutions that are digital as per their needs. (Sharma et
al., 2015).

In Nepal, digital banking had been a relatively new practice with the introduction of
credit cards by Nabil Bank in the early 1990s that marked the beginning of modern
banking in Nepal. Later, Himalaya Bank introduced Nepal's ATM and credit cards to
the domestic market in 1995. Moreover, Kumari Bank introduced Nepal's first online
banking service in 2002. The same year, Laxmi Bank became the first bank in Nepal
to offer SMS banking. Customers previously lacked a thorough knowledge of the
purpose and use of digital banking. It took some time for digital banking to gain
popularity. The electronic conversion has been fueled by modern tech with the
COVID-19 outbreak. As a result, the banking industry's service and quality structures
have had to change. A smooth transition from the old to the new world requires a
focus on multilevel governance (Awan et al, 2020; Leal Filho et al, 2020). Online
Banking has been introduced by all banks in order to improve customer service,
expand information, and cut expenses (Rahi and Ghani, 2019). Because these areas of
innovation are new to Nepalese clients in the Kathmandu Valley, there were just a
few mobile banking and online banking users at first. Banks are eager to take use of
these new technology in order to stay competitive in the market. As a result, we may
conclude that Nepalese finance is increasingly transitioning to a medium based on
technology such as electronic payment and electronic banking. According to Isaac and
Driga (2015), internet banking is intended to be a new and innovative distribution
channel for financial services, which is required to keep the organization competitive.
Banks' use of internet banking as an e-commerce tool has enhanced their operations
and services significantly, particularly in terms of cost savings. Due to ongoing
technological advancements, banks can currently provide a diverse range of products
and services.to individual consumers via the internet (Mutesi, Mutingi and
Chakraborty, 2016). The adoption of these ground-breaking new technology has sped
banking process modifications and attracted new clients (Rahi, Ghani and Alnaser,
2017).

Nepal was placed under lockdown as a result of the COVID19 pandemic to prevent
the spread of the coronavirus. Consumers' shopping habits have gradually changed as

3
a result of social distancing requirements. Consumers learn to adapt and form new
habits. People are urged to modify their habits and acquire new behaviors in a variety
of ways, from distant learning to discovering new ways to perform basic social
activities, adapting to the digital lifestyle, and immersing themselves in health and
safety. The oversight report of Nepal Rastra Bank shows the success of digitization in
Nepal. Debit card users increased by 9.25 per cent in 2020 as compared to 2019.
Credit card users increased by 30.17 per cent in 2020 as compared to 2019. Prepaid
card users decreased by 5.36 per cent in 2020 as compared to 2019. The total number
of ATMs increased by 23.82 per cent in 2020 compared to 2019. In the Year 2019/20,
the number of mobile banking users increased by 35.46 per cent and reached
11,306,797. Similarly, the number of internet banking users increased by 12.41 per
cent and reached a staggering 1,031,227.  COVID19 has expedited the shift in
preferences,” digital banking is growing in popularity, and contactless payment
techniques are gaining traction swiftly. All of these data reflect the population's
willingness to adopt new online ways and adapt to the digitalization process.
Consumers' daily lives and habits are transforming the digital product landscape as
they integrate new digital technology into their lifestyles. In the world of
globalization, today's banking company must be more flexible, rapid, and easy, and it
must rely on cutting-edge technology. Any business anywhere in the world is
dependent on the experience of their customers. Product and Profit always depends on
the customer demands, which is why they must be treated as the market king.
Nowadays, customer satisfaction is a critical aspect of a company's product because it
measures the level of expectation between the company's product and the customer's
expectation.

We use SERVQUAL approach to figure out how much digital banking service quality
affects the satisfaction of customers in Kathmandu, by putting it through the model's
three dimensions of service quality: (1) Ease of use, (2) Security, and (3)
Responsiveness to analyze level of satisfaction of customers towards dimension of
online banking service quality and to assess which aspect of online banking has the
greatest potential impact on satisfaction of customers with respective to Nepalese
Banks.

4
1.2 Problem Statement

The most crucial aspect for banking industry to remain competitive in this business
hinges on satisfaction of customers. As huge number of customer satisfaction assists
the bank with retention of customers. However, low customer satisfaction is a
common reason of business failure. (Agarwal and Kothari, 2018). When this scenario
arises, it has the potential to negatively impact a company's reputation and brand
image. The usage of Digital banking as an effective and practical instrument to
produce customer value has been quickly increasing in Nepal's banking industry and
Nepal has a huge space for growth (Pradhan, 2019). It is a common service provided
by traditional banks to give online users with faster and more dependable services.
According to Miah (2018), Customers prefer banks that offer prompt, personalized,
and reliable services. As a result, understanding the level of customer satisfaction with
digital banking services is critical.

As of June 2017, Nepal's online account penetration rate was predicted to be about
54.7 percent. (Internet world stats, 2018) and substantial users are within Kathmandu
Valley. Online payments nearly doubled in the first quarter of the current fiscal year,
which began in mid-July 2020, owing to a rise in the number of people adopting to
online payment. In the first quarter of this year, Nepal's digital payment systems saw a
94 percent increase in business as customers began using them to pay for everyday
necessities at local retailers as well as premium items. Turnover reached Rs1.22
trillion in the first three months of the fiscal year (mid-July to mid-October), up from
Rs. 630.85 billion in the previous fiscal year. Electronic transfer of funds at point of
sale (retail transactions) also swelled to Rs4.84 billion in the review period from
Rs2.34 billion previously, as per the oversight report of Nepal Rastra Bank of FY
20/21. With the swift advancement of computer technology as a commercial tool,
Digital banking can be used to entice more customers to conduct banking transactions
at related banks. A study to understand the concept of customer satisfaction with
digital services in the banking sector is required due to a lack of awareness regarding
consumer satisfaction with digital services (Gaudel, 2021).

Although digital banking has gained popularity in Nepal in recent years, adoption
rates are still modest when compared to other Asian countries as per the Global

5
Findex Database 2021(Demirguc-Kunt et al., 2022). Several problems have developed
as a result of this phenomena, which will be addressed in this study. Is Nepalese
distrust about online banking security preventing them from using the service? Is it
difficult for the majority of Nepalese to use the user interface of online banking
websites or applications? Is the bank's response to online banking difficulties or
inconveniences among user’s prompt? This study will look into all of the difficulties
outlined above to see what factors influence customer satisfaction with online
banking.

1.3 Objectives

 General Objective
To analyze the Consumer Satisfaction in Online Banking services.

 Specific Objectives
 To identify the major online banking service dimension that influences
customer satisfaction.
 To examine the relationship between Ease of Use of online banking
service and customer satisfaction
 To analyze the relationship between Security of online banking service and
customer satisfaction.
 To access the relationship between Responsiveness of online banking
service and customer satisfaction.

1.4 Research Questions

 Which dimension of online banking is more influential to gain customer

satisfaction?
 Is there a relationship between Ease of Use of Online Banking and Customer
satisfaction?
 Is there a relationship between Security of Online Banking and Customer
satisfaction?

6
  Is there a relationship between Responsiveness of Online Banking and
Customer Satisfaction?

1.5 Significance of the Study

This project paper carries a huge importance in Nepal's banking industry. Knowing
how much people know about the internet and how satisfied they are with it allows
bankers to better deal with client issues and, in turn, tailor their online banking
products and services to match their demands. Customers in modern banking can
interact with a bank in a variety of ways, including online banking, at an ATM, and
over the phone. Customers prefer consistency across channels, which is one of the
most significant things we've noticed. Everything matters, whether it's quickly
moving information between channels or guaranteeing uniform deposit timings
regardless of deposit method. To create an excellent customer experience, banks must
match their consumers' expectations across all channels.

Online banking services are a wide range of digital channels for conducting financial
transactions via technological advancements. As technology is evolving and growing,
the expectations and needs of the banking customers are growing as well. Presently,
customers want to conduct all their financial transactions without having to visit
banks or conduct their transactions conventionally which is why they are seeking
digitalization to save time along with being able to complete their transactions swiftly.
As a result, the standard to digital services offered by banks should be reliable, easy to
use, have a strong security and match up to the expectations of customers (Gaudel,
2021). Moreover, this research paper offers policymakers recommendations for
designing policies, rules, and regulations for online banking. This research should be
useful to academic institutions and individuals who want to conduct related research
in the future. According to the study, there are variables associated with online
banking that have a significant impact on the satisfaction level of consumers.
Contentment of customers for any services provided far exceeds the customer's
expectations, and satisfaction will rise. Several factors influencing customer

7
satisfaction while using e-banking services have been identified as a result of this
research.

CHAPTER 2

LITERATURE REVIEW

2.1 Thematic Review

Thematic Review is related with all possible concepts related with customer
satisfaction and online-banking some of which are discussed below:

Customer Satisfaction in Online Banking Services

Customer satisfaction and Online Banking services have been linked in several
researches. Using Digital Banking services helps to build customer satisfaction in the
banking sector (Asiyanbi and Ishola, 2018). Multiple researchers define the term
satisfaction differently: Satisfaction, according to Ismail and Alavamleh, (2017), is
"the outcome of the perspective, analysis, and psychological response to the personal
observation of using the product or service." Asian users are rapidly adopting digital
banking services, according to Barquin and HV (2015). There are currently 670
million customers using digital banking in Asia, with that figure anticipated to rise to
1.7 billion by 2020 (McKinsey & Company, 2014). Users of Asia are becoming
dependable and content with digital banking to great extent. (Barquin & HV, 2015).

As per Akoi and Yesiltas (2020), Customer satisfaction is a broad as well as complex
concept. The author points out that the level of satisfaction and experience will be
different for different people, as per products and services. Customers perceive
service products. Service that is on time surpasses your expectations (Hamzah, Lee
and Moghavvemi, 2017; Amin, 2016). In today’s scenario, consumers depend on the
sources available on the internet or go through reviews of various consumers before
making any decisions regarding the purchase of goods or services. Consumers are

8
hugely influenced by the internet and technologies which is why e-banking also plays
a big role on influencing their perceptions. Moreover, the consumers are spreading
negative or positive word of mouth as per their experience through the reviews of the
applications which is why lack of satisfaction of consumers in digital services offered
by the banks result to negative word of mouth on the applications of services through
the internet that has the ability to influence the minds of other consumers who go
through the internet before willing to start their online banking services journey (Ali
and Raza, 2017). The satisfaction of consumers can be measured in various ways and
it could be done through surveys. Customer Satisfaction refers to fulfilling the need of
customers in the market and keeping up with their expectations from what they are
receiving. So, if the particular product or service meets up to their expectations, they
are content and this could mean the organization has gained a loyal customer and it
could be beneficial for them as these spreads positive word of mouth. On the other
hand, lack of quality product or service could dissatisfy them. (Awan et al., 2020).
One of the most important factors while purchasing any goods or getting services is
the quality. It plays a big role in all customers purchase decision. Also, it is also a
competitive advantage of any organization because eventually quality determines how
far the organization will go. Contentment can cause to buyback, review, and loyalty
intentions, which can lead to higher returns (Narteh, 2018; Ofori et al, 2017; Mandal,
2016; Yoon, 2010). The customers who are not content with the present services
offered by the organization are likely to explore other substitutes. However, those
customers whose expectations have been met by the same services are likely to use
them over again and use the same digital site to make any financial transactions or
purchase any goods. As the technology advancement is growing, financial intuitions
are also advancing their services through digital means and making it convenient to
customers, matching up their growing needs and working on the quality of the
services as well (Narteh 2018). In the present scenario, providing services through
digital means is a significant strategy in developing customer relation, meeting their
expectations and gaining new customers. The satisfaction of customers is a significant
criterion in achieving a competitive edge and increasing a company's profitability in
today's business world (Gašević, Vranješ and Drinić, 2016). In the digital age, the
quality of electronic services is critical to attracting and connecting long-term bank
customers. In addition, Malik and Oberoi (2017) found that be it traditional or
digitalization of services are essentially irrelevant. Therefore, banks pay more

9
attention to customer satisfaction and service quality in order to improve customer
loyalty.

The Satisfaction of Customers and service quality are controversial topics among
academics and researchers. A few believe that customer satisfaction is a precedent for
quality service and vice versa; however, it has been mentioned in the banking industry
- availability and ease of online banking can improve loyalty of customers along with
their satisfaction. (Amin, 2016; Kundu and Datta, 2015). (Ofori et al, 2017) found that
service quality is one of the most important prerequisites for achieving customer
satisfaction. More so after the pandemic hit in the market, the online transformation of
traditional services of financial institutions is likely to increase and the banks and
such institutions should keep with their pace with the evolving digitalization of
financial services. Satisfaction of consumers is a factor which is exceptionally
significant in the method of evaluating the products and services offered by any
organization which is experienced by customers and this directly or indirectly impacts
on the goodwill of the company and long-term relationship with customers (Gaudel,
2021). As mentioned by Zhang (2018) in the literature, the evolution of products and
services of the banks with the growing technology keeps the banks in the pace with
changes and the performance of those services on how the consumers felt, their
notion, along with all the positive and negative experiences determine their level of
satisfaction. The banks will only be able to sustain in the market in this era of
technology if they are able to progress with their strategies as per the requirements of
customers. Furthermore, this will also be being growth in the profits of the financial
institution along with improving the level of satisfaction of their users (Grima et
al.,2021). According to Roche (quoted in Shrimali, 2015, p. 92),"service quality is a
prerequisite for meeting customer needs, and in a virtual environment this becomes
more difficult for banks". (Ochuko et al., 2019) found the main focus of digitalization
of banking services are not limited only on the acquisition of new customers, but also
on their loyalty; It is observed that the cost of acquiring new customers for banks can
be five times higher than the cost of retaining existing customers.

Online Banking

10
Digital banking is considered as a platform that allows users to access a wide range of
banking services and finish all financial transactions with a single click via the
Internet. Digital banking, according to Sikdal et al., (2015), is an amalgamation of
conventional bank and networking technologies, and financial firms all over the world
are gradually adopting such technologies. In the current market scenario, Digital
services are invariably one of the most important factors in gaining new consumers
and also maintaining a competitive advantage in the market. The core competency of
any financial institution is the quality of their offered digitalized services. As per
Shetty and Sumalat (2015), online banking is quite the same as conventional bank and
the only difference is that the users need not visit the branch to complete a transaction.
Users who provide services via the Internet reduce the need for face-to-face
interaction with bank personnel (Liao, Huang & Hsieh, 2016). The conveyance of
services by financial institutions through digital means such as the telephone, cell
phone, computer, and internet are known as electronic banking. Technological
conversion of financial institutions has given them a new image with moving the
traditional pattern and process to digital system (Awan et al., 2020).

According to Ling et al. (2016), many private banks in developed countries provide
online banking services, through which customers can get services at home or in the
office more efficiently. Retail banking provides services to consumers traditionally
where there was engagement between staffs and consumers from the start till the end
of the service delivery. The era of technological evolvement has influenced on how
services are offered by financial institutions as they are also moving towards
digitalization. Moreover, it is cost effective and it can also fulfill the demand of the
consumers regarding the financial activities without having to interact with staffs of
the financial sectors (Zhang et al., 2018).

Online banking differs from it in various ways as the consumers using digital
measures to conduct their banking activities engage directly through the applications
and not staffs which indirectly also assists in upgrading the customer service.
Makarevich, Sekimand Toikan (2014) also suggested that customers can easily access
e-banking and because of the convenience they use it again as it reduces customer
time, and it is also observed that customer satisfaction depends on gender, age and
various demographic factors. In contrast, although the advantages mentioned, a big

11
number of users have still hesitated to use online banking. However, Amin (2016)
believes some standards such as efficiency and security and the confidentiality of
personal account information obtained from bank transactions have not been
emphasized in detail. In addition, Malinković et al (2013) also believes that
sometimes it is difficult in measuring customer satisfaction, because it is a latent
variable that depends on the individual's perception of the product and the individual
customer's service quality. In the market where there are substantial substitutes
available for banks, ensuring quality services to the customers and matching up to
their needs can assist the bank in staying ahead of the competition, and with the
satisfaction of customers it can maintain not only its reputation but also huge
consumer base. This will also excel the image of the banks with customers spreading
a positive word of mouth. Customer satisfaction can only be measured by identifying
the parameters that affect customer satisfaction (Mandal, 2016). It is extremely crucial
to recognize as well as examine relevant determinants, so we can conduct online
research on banking literature to determine Attributes closely related to customer
satisfaction. With the evolving and advancement of digital technologies and their
usage, organizations have to increase their swiftness in digitalization measures and
stay ahead of competitors through offering valuable services to the customers
(Gunawardana et al., 2015). Two of the very significant pros that online banking has
provided over the time is that the financial institutions are able to market their
services and convey them among consumers online which is prompt and less costly
whereas consumers are able to make their financial transactions or conduct their
financial activities swiftly without having to visit the banks. Moreover, the services
are available all the time. (Rahi, Ghani and Alnaser, 2017). The growth of digital
means in this pace has compelled organizations and financial institutions to come up
with effective and market feasible and relevant strategies to develop a value in the
market and gain customers. Therefore, banks should focus on creating such value
through their digital services along with maintaining its quality as service quality is
what determines the satisfaction of customers (Amin, 2016). The internet and digital
era have transformed the way banks offered their products and services, especially
after the pandemic. As the growing expectations of customers from their banks in the
services, they should come up with such innovation where traditional services
measures are substituted by online means with no compromising in the quality
offered. In the financial sector, it is necessary that customers are given effective, swift

12
and convenient services so that they are influenced to use the services again.
Therefore, it is crucial for online backing services to be accessible to consumers.
Agarwal and Kothari (2018) mentioned that the online services provide by financial
institution examination is opposite from conventional services provided by them
because in online services the engagement of human in very less While measuring the
online services of banks or any financial institutions, the major issue that arises is
establishing a size along with scale for measurement. In today’s scenario,
digitalization is an extremely strategic means to enhance the quality of services
provided by the financial institutions along with matching up with the demands of the
consumers they have which is evolving with time. Consumers have become more
aware of the technological advancements over the time in the sector of banking.
According to Amin (2016), one of the most important aspects of online banking
service quality measurement is determining the accurate interconnection between the
perspective through experience of customers along with their contentment and their
loyalty.

Gunawardana et al., (2015), studied retail banking technologies that affect customer
satisfaction. Consumers who are enthusiastic regarding the advance digitalization
have been demonstrating a great willingness into adapting the online banking.
According to Miah (2018), the standard of service is a significant component in
determining a customer's view on dimensions such as usability, assurance,
responsiveness, and sensibility. However, contentment is mostly influenced by the
perspective developed by the customers from their experience of the services.
Moreover, personal traits and demographics also play a huge role in determining the
satisfaction level of consumers. Gasevic et al., (2016) studied the interconnection
between the satisfaction levels of consumers with the quality of services and
concluded that demographic profile plays a significant role which is my banks should
also consider that while developing any services. Online banking can be understood
as a phenomenon where all of the activities and transactions related to the finance
happens through the internet via mobile phones or other such gadgets. To gain a
competitive advantage in the market along with meeting the user’s requirements, the
financial institutions should enhance as well as assure customers access to a standard
digital service (Miah, 2018). Presently, those firms along with consumers who were

13
rigid to convert their pattern into digital mediums have been appreciating the
efficiency and simplicity the digital services bring. Moreover, raising the possibility
of shift in their behavior pattern making it sustainable (Grima et al., 2021).

Customers can access banking services through a variety of electronic banking

delivery channels. The most extensively utilized include ATM, POS, QR code mobile
banking, and internet banking, which are detailed below.

ATM: The Automated Teller Machine (ATM) is a mechanism that allows withdrawal
of cash without having entered the commercial bank. It also retails transfers funds,
and it is open 24 hours a day, seven days a week (Fenuga & Kolade,2016).There are
about 2624 ATM machines in Nepal and about 5.2 million debit card and 0.12 million
credit users in Nepal as per the Nepal Rastra Bank (2018). World Bank (2017)
mentioned that about 14 % of total withdrawal of money from bank was through
ATM. ATM provides a number of banking functions including the withdrawal of
cash, balance inquiries and transfer of money from one account to another using a
plastic magnetic stripe card and personal identification number provided by the
banking institution. ATM being the oldest of digital banking service with the highest
level of acceptance among the customers (Mynuddin,2016), people in Nepal is still
finding safe and convenient to withdraw money from bank teller. (Shrestha, 2020)

Internet banking: Bank account holders can utilize internet banking to conduct
monetary operations on a secure network owned by the institution, which could be a
retail or digital bank, community bank, or society. It could encompass any online-
based transactions (Yang, 2017). The growing information technology has brought a
huge transformation in the banking sector along with financial institutions. Financial
institutions must keep in pace with the advancement of growing technology and
update their services accordingly as it not only lowers the expenses but also builds
value to the customers (Ali and Raza, 2017). Banks are increasingly providing
websites where clients may check account balances, interest rates, and currency rates,
as well as conduct a range of activities. Unfortunately, there is a scarcity of statistics
on Internet banking, and definitional discrepancies make cross-national comparisons
problematic. (Gaudel, 2021)

14
POS: A transaction takes place at the point of sale (POS), also known as the point of
purchase (POP) or the checkout. A 'checkout' is a POS terminal or, more broadly, the
hardware and software used for checkouts, the electronic cash register's counterpart.
A POS terminal with a salesperson-accessible interface controls the selling process.
The same mechanism can be used to construct and print the receipt. (Worku, Tilahun,
& Tafa,2016). A point of sale (POS), also known as a point of purchase, is the
location where a customer pays for goods or services, whether it is in a physical shop,
in which POS stations and structures have been used to perform card transactions, or
digital sales point such as a computer or mobile electronic device.

QR Code: QR codes have quickly spread to all service sectors due to their versatility
and information speed. QR codes appear to be most widely used in the industry by
displaying the codes on signboards with company or association information (Pillai et
al., 2017). Furthermore, the use of QR codes may provide a competitive advantage to
a number of businesses (Alom, Patwary, & Khan, 2019). Hotels use mobile
technology to enhance their websites and mobile applications for marketing purposes,
resulting in competitive advantages (Kirlar Can et al., 2017).

Mobile Banking: Mobile payments is a word used to describe the process of

conducting balance checks, account money transfers, payouts, forms of credit, and
other banking transactions using a mobile device such as a cell device or Personal
Digital Assistant (PDA). The first mobile banking services were delivered via SMS,
which was known as SMS banking. Mobile banking is used in many parts of the
world where infrastructure is lacking, particularly in remote and rural areas. This part
of digital payments is also prevalent in areas with a high unbanked population. Banks
are only found in major cities in most of these areas, and customers must travel
hundreds of miles to the nearest bank. The range of services provided may include the
ability to conduct bank and stock market transactions, manage accounts, and access
customized information (Tiwari & Buse, 2017).

The ATM was among the first electronic banking products, debuting in the mid-
1970s. Customers could withdraw or deposit funds, check account balances, transfer
funds, and view check statement information. Electronic Funds Transfer (EFT) is

15
another electronic banking product that allows funds to be transferred quickly from
one branch of a bank to another (Pradhan,2019). Telephone banking is a relatively
new electronic banking service. It is quickly being one of the most common products.
Customers can conduct a variety of transactions from the comfort of their own home
or office. In fact, they can call from anywhere they have access to a phone. Customers
can view balances and statements, transfer funds from one account to another, and
pay bills. (Oberoi et al., 2018).

The term "service quality" refers to a customer's assessment of the performance of a

financial institution, which could be both positive, negative and average as per their
experience. As a result, banks strive to build a great service quality for their customers
in order to maintain retention of customers (Pradhan,2019). Consumers are likely to
purchase the service they purchased earlier as long as the service the bank or any
financial institution provide is of great quality. However, if the users are not content
with the services provided by the bank, then this could not only mean that the bank
could lose its customers but this is also a threat to the bank as customers can provide
negative reviews along with negative word of mouth (Gasevic et al., 2016).
Consequently, other banks could develop a competitive advantage by bringing
services that is standard and contains a good quality that will assist them in gaining
their competitors dissatisfied customers and build their customer loyalty. The
distinction between what a firm offer its users and the expectations the customers
carry from that particular product or service is referred to as service quality and for
developing an effective service of banking through digital means, it is important to
understand the customers’ base. (Copley, 2017). On the basis of the study on the
satisfaction level of customers with the online banking services dimension in the
banking sector of Pakistan, the relationship among the dimension of service quality
including tangibility, usability, empathy, security and responsiveness have a positive
relationship and carry a huge significance in the satisfaction of customers (Toor et al.,
2016).

With reference to SERVQUAL model, the three core attributes/dimensions used in

the research—Ease of Use, security and responsiveness—will be discussed in more
detail in the next section.

16
17
Ease of Use

The ease-of-use known universally to the consumers' perspective as well as their

evaluation of the ease of use of digital banking (Alhassany and Faisal, 2018).
According to Malarvizhi (2011), another influential factor in the practice of online
banking is ease of use. There is a positive relationship between ease of use and service
delivery via online banking, where the bank can set up various services needed by
customers online. While customers use mobile banking, they expect their transactions
to be swift and simple i.e. ease of use because sometimes the system can become
quite complex. Ease of Use during the usability of online applications while
performing financial activities can be understood as how simple it is to operate
through these applications and the level of ease consumers experienced while
completing their transactions without having to visit banks and perform the same
transactions traditionally through staff engagement and visiting banks (Kumar and
Gaire, 2018). If the applications offered by financial institutions are tough, scattered
and complicated to use then this could demotivate the user’s willingness to adapt to
online measures of banks. Therefore, it is crucial that the pattern and information
involved in such applications are convenient enough to access, comprehend and use
for customers to arrive back to the services again. The researcher also mentioned that
the perspective of customers towards the digital services offered by the banks will be
positive if they do not find their transactions complex Which is why the notion, they
carry from their experience of ease of use of that particular they carry from the digital
apps influences their behavior towards the services. According to Philipos and Singla
(2017), ease of use is an important aspect of customers' use of computer technology
(such as online banking technology), especially for new users, and it is also an
element and a key factor of service quality along with customer satisfaction factor.
Moreover, Zhangh et al., (2018) argues that for consumers to adapt the online services
of banks, the simplicity of use of the digital applications plays a huge role. Enhancing
the productivity with which services are used is thus an essential component for
determining the effectiveness of information systems. The adaption in these online
services offered by financial institutions could be to a small extent if the usability is
challenging and the transactions measures are complex. It is frequently used in the
literature and has an impact on users' attitudes toward technology and its use
(Marakarkandy and Yajnik, 2018). According to Gunawardana et al., (2015),

18
Customers tend to avoid systems that require additional physical and mental
expenditure; research shows that customers benefit from the ease of use of online
banking (Munusamy et al, 2014). The usability attribute has a significant relationship
and has a positive impact on customer satisfaction.

Consumer Security

The ability to secure information from potential threats is referred to as security. The
importance of online space security is being explored in depth, according to
Damganian, Zareya, and Siahsarani Kojuri (2016). Where the risk and fear are
eradicated, it can be understood as the dimension of security in online banking. A
sense of safety while completing transactions, and such financial operation process
adds a positive impact on the mind of customers increasing their chances to use such
digital services often. Not only in gaining consumers, but security also impacts on
how the users perceive the performance of the bank along with the prestige of the
brand along with their reliability. To increase customers willingness in online banking
services, it is significant to gain their trust and that is only applicable if they feel
secure enough to conduct their financial transactions online and are convinced that
their financial information’s or operations are safe. Any firm must be concerned about
online security. The website has two main components: personal data protection and
confidentiality, both of which are related to the company's gathering and use of
consumer information (Brun et al., 2016). Despite the fact that online banking
security has improved, phishing and cyber-attacks can still be used to access
consumer information (Bala, 2015). Customers' aspirations to utilize the internet were
previously hampered by non-financial and financial activity. When it comes to
conducting financial transactions, consumers generally consider it as a risk factor.
There have been several studies where the issues of security concern the consumers.
Moreover, the security issues that comes along with online banking is excessive
(Pradhan, 2019). One of the factors that consumers are mostly concerned about while
making their financial transactions digitally is how secure their transactions are. So, it
is security. However, those users conducting their transactions online would not feel
safe or secure until those online websites or such applications security is strong
enough. As a result, banks and financial institutions must ensure the security of
customer information and their funds (Awan et al., 2020).

19
There have been several studies to examine the impact of online banking services
security dimension on customer satisfaction, and there is a positive correlation
between online banking providing customers with a significant degree of security
(Asad et al, 2016). Chang and Shin (2012) also pointed out that there is a direct link
between safety and customer happiness, implying that there is a strong link between
the two.

Service Responsiveness

One important variable to measure the quality of services delivered by banks is

responsiveness. According to Sheng and Liu (2010), responsiveness measures the rate
with which virtual operators respond to users of the service. The capacity of the staffs
of the organization to communicate with the consumers regarding their queries and
problems in a flexible and polite manner is understood as responsiveness. The
engagement of customers is enhanced through responsiveness, and rapid responses
can improve user loyalty along with satisfaction (McNesh, 2015; Ali and Raza, 2017).
Responsiveness can be understood as handling the grievance, queries and feedbacks
of the consumers by the staffs of an organizations with generosity and courtesy. The
willingness of the staffs of the organization to provide service along with their
engagement at times of issues influences on how the consumers perceives that
organization. Users are more likely to be loyal to those organizations when their
grievances are promptly addressed and demands are granted. Suleman et al., (2012)
investigated responsiveness as a crucial driver of digital banking quality in order to
determine its impact on user trust and retention. According to Zhanget al., (2018),
responsiveness ensures that users receive timely service and promotes overall
satisfaction and retention. Responsiveness, according to Hammoud et al. (2018), can
be divided into four stages. First, the Internet banking system can properly regulate
and operate the service; second, the Internet banking network can properly guide
customers toward proceeding if there is a failure; third, it can provide a quick way to
handle any error in Internet banking transactions; and fourth, it can provide a quick
response to any client's query. According to Hammoud et al., (2018) responsiveness
has a favorable and considerable impact on electronic customer satisfaction.

20
2.1.1 The Theory of Perceived Risk

According to Raymond A. Bauer's Perceived Risk Theory (TPR), advantages in the

context of consumer behavior are frequently associated with hazards (Bauer, 1960).
Bauer formed the theory of perceived risk in 1960s. The purchasing patterns of
customers are usually unpredictable. Moreover, the unpredictability of the end result
is factored into consumers' buying decision, which was the authentic conception of
perceived risk.

Perceived risk was always an essential factor for scholarly research. The reader's
motivational participation was measured using Wu and Shaffer's paradigms, which
included prior knowledge and understanding, perceived danger, and information need
(1987)."Users' perceived risks of the network correlate with their perceived risks of
specific applications," According to Martin et al., (2015), Hussain et al., (2017), and
Yang (2017).Financial risks include potential capital loss and uncertainty as a result
of transaction failures or exploitation of the account in bank." According to a
research, many clients dislike using IB and are concerned about the absence of human
touch and inaccessibility throughout the performance. (Kuisma et al., 2017).

2.1.2 Theory of Planned Behavior (TPB)

The Theory of Planned Behavior is a theory that explains how way of behaving and
attitudes interact. It is a notion that tries to improve predictive thinking in behavior
theory by merging perceptual behavior control and is considered as the most
predictable theory of belief, with perceptual behavior control (Gunawardana et al.,
2015). Human behavior is influenced by three components, according to TPB:
behavior, subjective norms, and a sense of control over conduct, which leads to the
establishment of behavioral intents. The better the control over perception, the more
positive attitudes and subjective norms there are. Miah (2018) researched at the
residual effects of previous behaviors on subsequent actions and came to the
conclusion that this component exists. Behavior is defined as one's thoughts about the
effects of one's activities. Controlling beliefs (beliefs that there are circumstances that

21
might encourage or hinder the execution of the conduct) Subjective norms or
Normative belief (beliefs based on the prescribed expectations of others) when
people's behavior changes, Aizen's three factors come into effect: behavioral beliefs
establish favorable or unfavorable attitudes toward the acts in their respective
collections, and normative beliefs produce views of societal or subjective norms.
Through perceptual behavior control, stress and control beliefs are strengthened
(Zheng, 2018). In conclusion, this mindset is not as addictive as many people believe.
When goals and behaviors are complementary, the residual effects of previous
behaviors are decreased, and when there are powerful objectives and properly formed,
expectations are realistic, and precise action plans are created, the residual effects of
prior behaviors are eliminated.

2.1.3 SERVQUAL Model (Service Quality Gap Model)

SERVQUAL is a measure used in the service industry to evaluate satisfaction level

with service quality (Parasuraman, Zeithaml, and Berry, 1988). The concept is
focused on the assumption that the standard of customer service is determined by the
disparity between what customers expect from a service provider and what they
actually receive. A study on the contentment level of customers and the quality of
services offered in the banking of India was conducted by Mandal (2016) using the
dimension of SERVQUAL model. The conclusion drawn from the research
mentioned that there is a positive relationship between the qualities of service with the
satisfaction of customers.

A "gap model" of perceived service quality was established by (Parsuraman,

Zeithaml, and Berry, 1985). There are five gaps in the model: 1. Understanding of
customer expectations. 2nd gap: management awareness. Gap 3: Service quality
specifications against service performance 4. Communication gap with the outside
world. 5. Service Expectations vs. Actual Service Gap's customer expectations and
management's interpretation of these needs are similar in that neither knows what the
customers demand. Customers can assess service quality using the SERVQUAL
model's five dimensions. As tangible as the appearance of the service's actual
premises and products. The ability to perform the service accurately and consistently

22
is defined as reliability. The eagerness in assistance of users and provide prompt
service is defined as responsiveness. Assurance is defined as the system's competence,
as well as its security, credibility, and civility. Empathy is defined as the ease of
access, approachability, and effort put forth to understand the needs of clients.
Because it employs perceived rather than actual service received, the SERVQUAL
indicator is related to satisfaction but not the same as satisfaction. (Parasuraman,
Zeithaml, & Berry, 1988; McNesh, 2015; Ali and Raza, 2017). SERVQUAL model
was used to access the relationship between the satisfaction levels of consumers with
the quality of the services offered in the study conducted by Nguyen et al., (2020) and
concluded that the dimensions of the model on service quality carries a significant
relationship with the contentment of customers. Likewise, the impact of the standard
of services in the dimension of the same model showed that the relationship between
the variables is positive with a huge influence of responsiveness along with sensibility
on the satisfaction levels of the consumers. (Fida et al., 2020).

2.2 Empirical Review

Pradhan (2019) investigated the contentment level of users as well as their desire to
employ electronic services of banks provided by Nepal SBI bank. The bank provided
75 respondents for this study. From the analysis of the questionnaire results, the
researcher draws the conclusion that online banking customers are satisfied with the
products ease of use, website design, security and privacy, perceived cost,
responsiveness, and computer self-efficacy. However, the researcher discovered
during the analysis that many customers, particularly adult SBI bank customers, are
still unaware of the e-banking services. As a result, considerable effort should be
taken to educate them on the subject of various digital banking mediums through
promotion and advertising. The bank should focus on educating consumer on using
digital banking services and their advantages.

To analyze service quality amongst public, foreign venture, and private sector banks
in Nepal, Durgapal and Bhatta (2016) identified six service quality factors: reliability,
assurance, tangibility, empathy, access, and responsiveness. A total of 300 people
from the public, foreign, and private sectors were surveyed for this study. ANOVA,

23
Kruskal Wallis tests, Tukey's HSD, and Dunn's test were used to compare the data
collected from these respondents. The study found no significant differences across
banks in the service quality parameters assurance and tangibility.

In Finland, Miah (2018) looked on the satisfaction of users with digital banking
services. Customer satisfaction is measured using six independent variables, including
performance expectancy, effort expectancy, responsiveness, reliability,
personalization, and security, as well as customer satisfaction as a mediator between
independent variables and the dependent variable (i.e., customer loyalty). A total of
190 eligible respondents took part in an online survey for the study. The partial least
squares structural equation modelling (PLS-SEM) method is used to examine the data.
According to the data, solely responsiveness has no impact on satisfaction level of
users among the six attributes. The satisfaction level of customers is positively
influenced by all other variables, and customer loyalty to digital banking services in
Finland is positively influenced by customer satisfaction.

The impacts of service quality on satisfaction of customers with their loyalty was
investigated by Awan et al., (2020). The research found that reliability, and
responsiveness had a significant influence on the satisfaction of customers along with
their loyalty. As per the study on the contentment level of customers and the quality
of services offered in the banking of India conducted by Mandal (2016) with the use
of the dimension of SERVQUAL model, conclusion drawn from it stated that there is
a positive relationship between the quality of service with the satisfaction of
customers while the dimension reliability did not have a significant impact on the
contentment of the bank’s users. Khatri and Dhungel (2013) conducted research on
the uses and challenges of digital banking in Nepal. The study's findings reveal some
critical aspects of digital banking in Nepal. According to the findings, substantial
amount of account holders has access to the internet and are connected to their
account as well as they have understanding regarding the online banking services their
bank has provided, but they have not formed the habit of using these services.
Customers' lack of knowledge about internet banking and its benefits and security was
identified as the primary reason for their low use of internet banking. Customers'
educational levels, knowledge of computers and the internet, electrical problems and

24
password theft, and the country's internet infrastructure were recognized as important
hurdles for the bank in developing its online capabilities.

Kumar and Gaire, (2018) conducted research on the satisfaction of consumers with
online banking in Nepal. The conclusion drawn from the study mentions that the
online banking dimensions through SERVQUAL model i.e. Ease of Use, Security,
Privacy along with convenience have a positive influence on the levels of satisfaction
on consumers in Online Banking. Kumbhar (2011) assessed the main factors (such as
service quality, brand awareness, and perceived value) which impact the contentment
level of users with the online banking environment. This research also examines the
influence of service quality on online banking brand awareness, contentment and
value perception. It is developed on the basis of literature research and discussions
with bank managers and customer service, customers and marketing experts, from
customer surveys to completion of communication managers and customer surveys.
Convenience, problem solving, security, and speed are significant elements in e-
banking customer satisfaction. The description variance is 48.30%. Contact data,
system availability, compliance, efficiency, and rewards are relatively unimportant,
because these parameters account for 21.70% of the customer satisfaction distribution.
Perceived e-banking brand, efficiency, safety, responsiveness, convenience,
profitability, problem management and remuneration are all predictors of the
perceived value of e-banking. The problems facing banks are getting more and more
difficult. "Ochuko et al. According to observations, the cost of acquiring new
customers for banks may be five times the cost of existing customer loyalty (Liébana,
Cabanillas et al, 2016) found that e-banking is an important aspect of the bank’s
overall business strategy, which can improve service quality and thereby increase
customer satisfaction. The satisfaction of online banking is usually about 20% higher
than that of general banks (Gašević et al, 2016). Convenience factors of online self-
service technology and customer satisfaction are regarded as customer satisfaction
Degree factor. From the customer's perspective, research shows that customers benefit
from the ease of use of online banking (Munusamy et al, 2014). Shanmugam et al
(2015) describes that even the introduction of card readers to provide security services
does not take into account the safety of customers; however, this technological
advancement limits the user experience and restricts its use anytime and anywhere,
because a card reader is required to access online banking. In online banking, built-in

25
security procedures and convenient website access should be able to meet customer
needs in the future. Gasevic et al., (2016) found that e-banking is an important aspect
of the bank's overall business strategy, which can improve service quality and thereby
increase satisfaction level of consumers. Furthermore, it is very important to measure
customer satisfaction with online banking to determine its salient characteristics.
Krishnasamy et al., (2018) found that mobile banking also brings benefits and
challenges, and found that even in the face of challenges, consumers are satisfied with
mobile banking.

2.3 Research Framework

This conceptual framework consists of the independent variables and the dependent
variable related to this study. This framework describes the relationship between the
variables used in this study to understand customer satisfaction in online banking, the
following variables ease of use, security and responsiveness are used in this study.

Figure 2.3 Research framwork

Source: Gunawardana et al., (2015), Miah (2018)

Dependent Variable: In this study Customer Satisfaction with Online Banking is a

dependent variable.

26
Customer Satisfaction: Customer satisfaction can be understood as the performance
of an organization with its products or services meet customers’ needs and
expectations. This includes to all the encounters between the organization and its
customers during the phase of sale.

Independent Variable: There are various dimensions of online banking service but
this study considered Ease of use, Security and Responsiveness attributes of online
banking service.

Ease of use: It is a concept that describes how simple a product is to use.

Security: Protecting your internet profile is part of security (data, identity, assets).
Simultaneously, cyber security Controls access to entire networks, computer systems,
and other digital components, as well as the data they contain.

Responsiveness: The quality of how well and promptly an organization responds to

complaints and issues.

2.4 Research Hypothesis

The hypothesis in this study is to determine the relationship between the dependent
variable and the independent variable in this study. To investigate the relationship
between the dependent and independent variables in this study, three hypotheses were
generated. These hypotheses were derived from the research's theoretical framework.

H1: There is a significant relationship between Ease of Use of online banking and
Customer Satisfaction.
H2: There is a significant relationship between Security of online banking and
Customer Satisfaction.
H3: There is a significant relationship between Responsiveness of online banking and
Customer Satisfaction.

27
 CHAPTER 3

RESEARCH METHODOLOGY

3.1 Research Design

Descriptive Survey research design will be used in the research. This type of research
design has the advantage as it solely summarizes the data and characteristics of the
examined population using statistical data (Sharma, 2015). The research is also
explanatory in nature. It seeks to discover the degree and nature of the relationship
between the dependent and independent variables (Narteh, 2018). Essentially, the
research plan is used to evaluate the consumer's response to the online banking
services, and the questionnaire is used to gather raw data and distribute to customers
of different banks in the Kathmandu Valley. Quantitative research assists in
generating data that are objective in nature which can be explained more precisely
with the use of statistics (Miah, 2018). Quantitative research will be used to undertake
this study for measuring the relationship of variables.

3.2 Nature and Sources of Data

The data used in this study is primary in nature. The structured questionnaire and the
field survey are used to obtain all data from the respondents. This study will be using
primary data in order to meet the objectives mentioned in this research to extract
findings via questionnaires. Similar strategy as applied on literature (Gunuwardana et
al., 2015) is considered where the information is gathered by creating a questionnaire
and sending it to respondents, ensuring that the conclusions are totally dependent on
the data and facts of the sample respondent. Questions on a five-point scale will be
used (1-Strongly disagree to 5-Strongly agree).

28
3.3 Instrument for Questionnaires

The study's construct's internal consistency is measured by reliability. If the Alpha

score is more than 0.70, the construct is considered reliable (Pradhan, 2019).
Cronbach's Alpha is utilized to assess the reliability of data that is primary in this
study. It enables researchers to assess the consistency of several categories (Ofroi et
al., 2017). It is determined by the number of test items and their average inter
correlation. A coefficient of greater than or equal to 0.7 is generally deemed
satisfactory and indicates construct reliability (Minjoon, 2016). Construct reliability
was assessed using Cronbach’s Alpha and the results revealed that ease of use,
security, responsiveness and customer satisfaction scale with five items were found to
be reliable. Reliability results are summarized in the Table 4.3

Table 3.3: Instrument for Questionaries (Coefficient of Cronbach’s Alpha)

Variables Number of questions Cronbach's Alpha

Ease of Use 5 0.766
Security 5 0.771
Responsiveness 5 0.743
Customer Satisfaction 5 0.729
Source: Researcher’s survey, 2022

The Cronbach's alpha coefficients for the independent variables of Ease of Use,
Security, and Responsiveness, as well as the dependent variable of Customer
Satisfaction, are shown in Table 3.3. All of the variables' Cronbach's Alphas are
greater than 0.7, thus they are considered acceptable. As a result, the tools utilized in
this study are thought to be reliable.

3.4 Population and Sampling

The survey and the overall study are led by the first chapter's aims, which are to
explore the relationship between internet banking and consumer satisfaction in

29
Nepalese society. Customers of various banks in Nepal who have used digital banking
are taken as the study’s target group.
Because entire population is unknown for this study, the researcher (Cochran, 1997)
uses the following formula to determine the minimal sample size.
Calculation of the size of the sample.
S = Z*P*(1-P)/M^2
Here,
S= Sample size
Z= Z-Score (1.96 determined on Confidence level of 95 %.)
P= Population proportion (assumed to be 50%= 0.5)
M= Margin of Error0.5

Furthermore,
S = 1.96*0.5*(1-0.5)/0.5^2
S= 384.16

As per the calculation, the minimum sample size considered in this study will be 384.

3.5 Sampling Procedure

Simple Random Sampling will be suitable in this research since it carries pros such as
availability and speed with which data can be collected Samples are collected from
customers of different banks in Nepal. With this sampling technique, the subjects are
selected based on their ease of access and proximity to the researcher (Ofroi et al.,
2017). In the survey, all respondents must answer a completed questionnaire. There
will be a total 384 sample size. Likert scale questions will be used ranging from (1-
Strongly disagree to 5-Strongly agree). However, 150 respondents were selected out
of the total sample size because of eliminating those responses that were incomplete.

3.6 Method of Data Analysis

The primary purpose of data analysis is to assess the impact of Ease of use, Security
and responsiveness of online banking on satisfaction of customers. First, all the data

30
will be collected through questionnaire. After collecting all of the respondents'
completed questionnaires, it will be analyzed and presented through proper tables and
diagrams. The questionnaire will include personal information about respondent such
as gender, age, education level, and income per month and Descriptive, correlation
methods of analysis will be used in the study that has been used in several research
papers (Miah, 2018; Gunawardana et al., 2015; Pradhan, 2019). The descriptive
statistics including mean, standard deviations; minimum and maximum values of the
variables will be used to describe the characteristics of respondents. Correlation and
Regression analysis will be used to evaluate the direction in which the dependent and
independent variables are related.

3.7 Limitations of the Study

While conducting such study, the biggest issue that usually arises in Nepal is the lack
of data. Spite of the attempt taken to draw relevant conclusions from the study,
various limitations must be addressed in order to evaluate the data with confidence.
The following are the study's significant limitations:

 The research is entirely based on original data sources. Consequently, the

correctness based on data collected through the respondents sets the study's
findings' reliability.

 The data gathered from the respondents is presumed to be accurate. The

results of the survey are based on the data provided by the respondents.

 Only 150 observations of primary data were included in the sample. As

expected, a smaller sample size may result in a less significant result.

31
 CHAPTER 4

PRESENTATION AND ANALYSIS OF DATA

The analysis of and discussion of the findings are included in this section. It starts
with the gender, age group, educational attainment, income level, profession, and
preferences of the respondents. The results then illustrate how respondents feel about
a variety of customer satisfaction factors, including simplicity of use, security, and
response. Finally, Pearson's correlation and regression analysis reveal the magnitude
of the relationship between variables, as well as the explanatory power of each
independent variable on the dependent variable.

4.1 Demographic characteristics of the respondent

This section contains descriptive information about the respondents' demographic

profiles. The profile of the respondents demonstrates the respondents' personal traits
integrated on several personal factors including gender, age group, and academic
qualification, income level, Profession and the preference of digital banking payment
methods. The demographic profile of the respondents plays an important role in
interpreting their behaviors.

Table 4.1 Demographic characteristics of the respondents.

Respondent’s profile Frequency(N) Percentage (% )

Gender
Female 82 54.67
Male 45.33
Total 150 100.00
Age
Under 25 39 26
25-35 47 31.3

32
 36-45 58 38.7
above 45 6 4
Total 150 100.00
Income per month
Below Rs.20,000 35 23.3
Rs.21,000- Rs.40,000 60 40
Rs.41,000- Rs.60,000 36 24
Above Rs.60,000 19 12.7
Total 150 100.00
Academic qualification
Intermediate and below 9 6
Bachelor's degree 67 44.7
Master's degree 71 47.3
M. Phil/ Ph. D Degree 3 2
Total 150 100.00
Profession
Students 39 26
Self Employed 15 10
Private Employee 70 46.7
Government Employee 15 10
Others 11 7.3
Total 150 100.00
Preference of Digital Banking
Yes 146 97.33
NO 4 2.67
Total 150 100.00
Methods of Payment
ATM 86 57.33
QR Code 56 37.33
Mobile Banking 5 33.34
E-banking 3 2.00
Total 150 100.00
Source: Survey, 2022

33
4.1.1 Distribution of Respondents based on gender

Gender plays a vital role in how people express themselves and respond to the
problems. As a result, this study looked into the variable gender. Figure 4.1.1 shows
how the respondents were classified according to their gender.

Male
45.33% Female
54.67%

Female Male

Figure 4.1.1: Distribution based on gender

The figure shows that majority of the respondents (54.70 percent) are females.
Similarly, figure indicates that 44.30 percent of the respondents are males.

4.1.2 Distribution of respondents based on age

One of the most essential variables in understanding respondents' perspectives on

specific issues is their age. The respondent's age is divided into four categories: under
25 years, 25-35 years, 35-45 years, and over 45 years. Figure 4.1.2 depicts the
respondents' age classification in percentage terms.

34
 70

60 58

50 47

40 39 38.7

31.3
30 26.0

20

10 6
4.0

0
Under 25 25-35 35-45 Above 45

Number of respondents Precentage

Figure 4.1.2: Distribution of respondents based on age

Majority of the respondents, i.e. 58 out of 150 respondents lie in the age group
between 35 to 45 years, constituting 38.7% of total respondents. 47 respondents
constituting 31.3% of total respondents are between 25 to 35 years of age group.
Similarly, among 150 respondents, 39 respondents (26%) lie in the age group of under
25 years and 6 respondents (4%) lie in above 45 age group.

4.1.3 Distribution of respondents based on academic qualification

Since academic education is also an essential trait that could influence an individual’s
views, thinking pattern, and comprehension of any given social phenomenon, it's
crucial to know the respondents' educational backgrounds.
As a result, the respondents' academic qualifications were analyzed, and the
educational data is provided in Figure 4.1.3.

35
 80
71
70 67

60

50 47.30
44.70
40

30

20
9
10 6.00
3 2.00
0
Intermediate and Bachelor Degree Master Degree M. Phil/ Ph. D
below Degree

Number of respondents Precentage

Figure 4.1.3: Distribution based on academic qualification

Figure 4.1.3 shows that the majority of the respondents (71 respondents) constituting
47.3% of total respondents hold Master's Degree, which is followed by Bachelor's
Degree hold by 67 respondents constituting 44.7 percent of total respondents.
Intermediate and below hold by 9 respondents constituting 6% of total respondents
and 3 respondents constituting 2% of the total respondents hold M. Phil/ Ph. D
Degree.

4.1.4 Distribution of Respondents based on Income level

The spending and saving opportunity obtained by an entity or consumers within a

specific duration, stated in monetary terms, is referred to as income level. The
respondents' income levels are divided into four groups: below Rs.20,000, Rs.20,000-
Rs.40,000, Rs.40,000-Rs.60,000, and above Rs.60,000. Figure 4.1.4 depicts the
categorization of respondents based on their income level.

36
 70

60
60

50

40.00
40 36
35

30
23.30 24.00

20 19

12.70
10

0
Below Rs.20,000 Rs.21,000-Rs.40,000 Rs.41,000-Rs.60,000 Above Rs.60,000

Number of respondents Precentage

Figure 4.1.4: Distribution based on income level

Figure 4.1.4 shows that the majority of the respondents i.e. 40% have income between
Rs.20,000 to Rs.40,000 per month while 24% of the respondents have income
between Rs.41,000 to Rs.60,000 per month. Likewise, 23.3% percent of the
respondents have income below Rs.20,000 per month and 12.7% of the respondents
have income level above Rs.60,000 per month.

4.1.5 Distribution of respondents based on Profession

An individual's work or business, especially as a method of making a living, is

referred to as their occupation. The classification of respondents according to their
occupation is shown in the Figure 4.1.5.

37
 80

70
70
60

50
46.70
40
39
30
26.00
20

15 15
10
10.00 10.00 11
7.30
0
Students Self Employed Private Employee Government Others
Employee

Number of respondents Precentage

Figure 4.1.5: Distribution based on Profession

Figure 4.1.5 shows that majority of the respondents i.e. 70 respondents work on
Private sector constituting 46.7% of total respondents whereas 39 respondents
constituting 26% of total respondents are students. Similarly, 15 respondents (10%)
each are self-employed and government employee whereas 11 respondents (7.3
percent) work on others beside mentioned profession.

4.1.6 Distribution of Preference for digital banking as a method of Payments.

The figure 4.1.6 below shows the demographic distribution based on the preference of
using digital banking system. Out of 150 respondents, 97% prefer digital banking as a
method of payment.

38
 DO you Prefer Digital Banking Service?

3%

97%

Yes NO

Figure.4.1.6: Preference of digital banking

4.1.7 Distribution of methods of Payments

Digital banking Payment Methods

ATM
86

QR Code
56

Mobile Banking
5

E Banking
3

0 10 20 30 40 50 60 70 80 90 100

Fig.4.1.7: Distribution of methods of payments

39
The bar chart shows the demographic distribution of most preferred digital banking
payment methods. Out of 150 respondents, 86(57.3%) responded ATM as the most
preferred digital banking payment method followed by QR code with 56(37.33%),
Mobile banking with 5(0.33%) and E-banking with 3(0.02%).

4.2 Correlation Analysis

To discover relationships between variables, correlations analysis was used. For

variables with simple multi-option answers, Pearson's correlation analysis was used.
To determine the extent or degree of association between the research variables, a
correlation matrix was created. Table 4.3 shows the correlation between independent
and dependent variables.

Table 4.3: Pearson’s Correlation Analysis

Ease of Use Security Responsiveness Customer
Satisfaction

Ease of Use 1
Security .407** 1
Responsiveness .559** .577** 1
Customer .781** .592** .680** 1
satisfaction
** Correlation is significant at the 0.01 level (2-tailed).
Source: Researcher’s survey, 2022
The Pearson Correlation coefficients between the independent variable Ease of use,
Security and Responsiveness of e-banking service attributes and dependent variable
Customer Satisfaction are 0.781, 0.592 and 0.680 at 1 percent significant level
respectively.

The correlation coefficient greater than 0-signifies the two variables move in the same
direction. When r is +1, it signifies that the two variables being compared have a
perfect positive relationship; when one variable moves higher or lower, the other
variable moves in the same direction with the same magnitude. The correlation
coefficient between Ease of use and customer satisfaction is r=0.781 which is

40
positively correlated and closer to +1. Therefore, relationship between Ease of use and
customer satisfaction has a strong positive correlation which indicates that easier it is
to use the digital banking more is the custom satisfaction. The correlation coefficient
between Security and Customer satisfaction is r=0.592 which is positive but lower to
that of ease of use. This indicates that the correlation between the security and
customer satisfaction in this study is also positive and higher the security provided by
digital banking services provider more the customer satisfaction. Similarly, the
correlation coefficient between responsiveness and customer satisfaction is r=0.680
which is positively correlated and shows that better the response of digital banking
service provider more is the satisfaction in the customer.

4.3 Regression Analysis

Regression analysis is done to access the strength of a relationship between the

variables. It helps in predicting how much variance is being accounted in a variable
by a set of other variables. The regression analysis is done to test the hypothesis
mentioned on this research where Ease of use, security and Responsiveness are used
as independent variables and customer satisfaction as the dependent variable.

41
 Table 4.4: Regression results of Ease of Use (EU), Security(S) and Responsiveness
(R) on Customer Satisfaction (CS)

Hypothesis Regression Beta R2 F T Hypothesis

weights coefficient Supported
H1 EU CS 0.544(.000) 10.473 Yes
H2 S CS 0.239(.000) 0.737 136.05 4.73 Yes
H3 R CS 0.250(.000) 4.483 Yes
The number in the parentheses are p-value.
Source: Researcher’s survey, 2022

The hypothesis(H1), (H2) and (H3) of this research test if Ease of use (EU),
Security(S) and Responsiveness (R) have a significant impact on customer
satisfaction. The dependent variable customer satisfaction (CS) is regressed on
predicting Variables (independent variables) EU, S and R to test the hypothesis H1,
H2 and H3. EU, S and R significantly predicted CS, F (3, 147) =136.05, P<0.001,
which indicates that EU, S and R play a significant role in predicting customer
satisfaction (CS). The beta coefficient of EU, S and R 0.544, 0.239 and 0.250
respectively. This result directs the positive affect of the Ease of Use, Security and
Responsiveness. Moreover, the R2=0.737 depicts that the model explains 73.7% of
the variance in CS.

The beta coefficient of all the independent variables is significant and the value of t is
also greater than 1.96, therefore all independent variables have positive impacts on
customer satisfaction. However, since the model only account for 73.7% of the
variance in CS, other additional variables of digital banking service that have not been
considered in this research can also be accounted for explaining customer satisfaction.

42
4.4 Hypothesis Testing:

H1: There is a significant relationship between Ease of Use of online banking and
Customer Satisfaction.
This hypothesis test if ease of use carries a significant impact on customer
satisfaction. The dependent variable customer satisfaction was regressed on predicting
variable Ease of use to test the hypothesis H1. Ease of use significantly predicted
customer satisfaction which indicates that ease of use plays a significant role in
customer satisfaction ( β=0.544 , p< 0.001¿. Therefore, the hypothesis H1 is
supported.

H2: There is a significant relationship between Security of online banking and

Customer Satisfaction.

This hypothesis test if Security carries a significant impact on customer satisfaction.

The dependent variable customer satisfaction was regressed on predicting
(independent) variable security to test the hypothesis H2. The Security significantly
predicted customer satisfaction which indicates that security play a significant role in
customer satisfaction ( β=0.239 , p<0.001 ¿. Therefore, the hypothesis H2 is
supported.

H3: There is a significant relationship between Responsiveness of online banking and

Customer Satisfaction.

This hypothesis test if responsiveness of online banking carries a significant impact

on customer satisfaction. The dependent variable customer satisfaction was regressed
on predicting variable responsiveness to test the hypothesis H3. The responsiveness
significantly predicted customer satisfaction which indicates that security play a
significant role in customer satisfaction ( β=0.239 , p<0.001 ¿. Therefore, the
hypothesis H3 is supported.

43
4.5 Major Findings

 54.7% of the digital banking service users in this research are female followed
by male (45.3%)
 Majority (46.7%) of the digital banking service user work on Private sector
followed by students (26%). 10% of users in this research are self-employed
and government employee each whereas 7.3 percent work on others beside
mentioned profession.
 38.7% of respondents lie in the age group between 35 to 45 years, 31.3% of
total respondents are between 25 to 35 years of age group, 26% lie in the age
group of under 25 years and 4% lie in above 45 age group.
 The majority of the respondents have income between Rs.20,000 to Rs.40,000
per month (40%), followed by income between Rs.41,000 to Rs.60,000 per
month (24%), below Rs.20,000 per month (23.3%) and income level above
Rs.60,000 per month (12.7%)
 The majority of the digital banking service user have Master's Degree (47.3%)
followed by Bachelor's Degree (44.7%). Intermediate and below (6%) while
other 2% have M. Phil/ Ph. D Degree.
 The most preferred digital banking payment method is ATM followed by QR
code (37.33%), Mobile banking (0.33%) and E-banking (0.02%).
 The overall average mean value of Ease of use is 3.78, which show that
respondents agree that ease of use is an important factor of digital banking
service that affects level of customer satisfaction.
 The overall mean of Security is 3.97, which show that the respondents give
importance to the security of digital banking service and it influences on
customer satisfaction.
 The overall mean of Responsiveness is 3.56, which show that respondents
agree that Response of digital banking service is an important factor that
affects level of customer satisfaction.
 The aggregate mean of Customer Satisfaction is 3.96, which show that the
level of customer satisfaction with digital banking service attributes is good.
 Construct reliability was assessed using Cronbach’s Alpha and the results
revealed that the alpha value of ease of use, security, reliability and customer

44
 satisfaction scale with five items were found to ben0.76, 0.771, 0.743 and
0.729 respectively and therefore reliable.
 The Pearson Correlation coefficients between the independent variable Ease of
use, Security and Responsiveness of e-banking service attributes and
dependent variable Customer Satisfaction are 0.781, 0.592 and 0.680 at 1
percent significant level respectively. This means all these variables are
positively correlated to dependent variable customer satisfaction.
 Based on the regression analysis, the R2 value implied that 73.3% of total
variation in customer satisfaction is explained by the independent variables
(Security, Ease of Use and Responsiveness).

45
 CHAPTER 5

CONCLUSION AND RECOMMENDATION

5.1 Summary

The banking industry to sustain their competitiveness in this ever-changing world

hinges on the satisfaction of customers. High customer satisfaction allows the bank to
keep existing customers while also recruiting new ones. The usage of Digital banking
as an effective and practical instrument to produce customer value had been
increasing in Nepal's banking industry which has been further boosted by COVID-19
pandemic. With the swift advancement in computer technology and increased cases of
COVID-19, digital banking has been introduced by almost all banking sectors to
entice more customers to conduct banking transactions. This study therefore evaluates
the customer satisfaction of online banking service users based on the dimensions of
Ease of use, security and responsiveness of online banking service providers. Based
on the theoretical framework of this research, three hypotheses were developed to
determine the relationship between the dependent variable (Customer satisfaction)
and the independent variables (Ease of Use, Security and responsiveness). A total of
150 respondents’ data were collected and analyzed as mentioned on the research
methodology. Construct reliability was assessed using Cronbach’s Alpha and the
results showed that the adopted model was reliable. Correlation analysis and
regression analysis were implied to the collected data to test hypotheses. The Pearson
Correlation coefficients between the independent variable Ease of use, Security and
Responsiveness of e-banking service attributes and dependent variable Customer
Satisfaction were found to be 0.781, 0.592 and 0.680 at 1 percent significant level
respectively which means all these variables were positively correlated to dependent
variable customer satisfaction. Regression analysis was done to access the strength of
a relationship between the variables and to test hypotheses mentioned on this
research. The dependent variable customer satisfaction (CS) was regressed on
predicting Variables (independent variables) EU, S and R to test the hypotheses. EU,
S and R significantly predicted CS, F (3, 147) =136.05, P<0.001, which indicated that
EU, S and R play a positive and significant role in predicting customer satisfaction

46
(CS). Moreover, the R2=0.737 depicted that this research model explains 73.7% of
the variance in CS. This study therefore is significant for banking sectors of Nepal as
the results obtained from this paper will highlight the level of customer satisfaction
based on dimensions of ease of use, security and responsiveness. The result showed
that ease of use is the main factor that mainly determines the customer satisfaction of
online banking users of Nepal. Therefore, by making the online services easy to use
higher level of customer satisfaction can be attended.

5.2 Conclusion

Banks have been driven to provide creative and high-quality services as a result of
recent reforms, legislation, and technology improvements. Because of enhanced
internet technology, retail banks have begun digitalization of their services to the
customers. Gradually Banks are eliminating limiting tradition approach to their
services andare encouraging their clients to go digital and move to online banking for
their financial transactions or similar works related to their finance and create such an
economy where people can move around without cash with the help of digital banking
(Scott, 2018). To summarize, digital banking is the way of the future, and digitization
will supplant traditional banking processes. Financial Institutions have started using
technological advancements as a core instrument for their financial services. The
digital services functions as a digital branch and a point of contact for customers.
Banks can work efficiently and competitively in the financial sector thanks to
technology integrated systems, giving excellent services to consumers and eventually
leading to customer satisfaction. The way banks use to interact and deliver their
services have evolved with growing preferences of their users, and growing
technology has led in a move from traditional banking approaches to online delivery
of services.

The satisfaction of customers is critical for a firm to acquire a competitive advantage.

Moreover, it is critical for the financial institutions determine whether the customer's
expectations have been fulfilled to assess the level of their satisfaction that gives the
banks or any such financial institution a check on where they stand as per their
performance. Analyzing the digitalization banking of Nepal provides insight into

47
customers' attitudes toward digital banking and their views on banking technology
and industry. According to statistics, Nepalese digital banking usage is growing at an
exponential rate, with a major increase expected in the near future more so after the
pandemic. Because of the intangible nature of digital banking, banks must focus on
satisfaction of customers in order to retain customers, as stated in the literature study
(Malik and Oberoi, 2017). The standard of digital banking services and their potential
to improve client satisfaction through intangible benefits were thoroughly explored.
Through this project paper, the closure we can extract is that banks must provide such
services that consists of distinguishing characteristics in order to maximize customers’
satisfaction and retention.

The aim of this project paper is to examine the relationship between online banking
services dimension with satisfaction of customers considering the customers of banks
of Kathmandu valley, Nepal. The project paper has achieved its objectives
successfully as mentioned. The first objective to identify the major online banking
service dimension that influences customer satisfaction has been achieved by the
survey; the Nepalese customer indicated that all the three online banking attributes are
vital for customer satisfaction. However, the security dimension influences the most
as per this survey. Therefore, security along with ease of use are the most dominant
feature. The second objective involved examining the relationship between ease of
use of online banking attribute and customer satisfaction, it was noted that there is a
positive relationship. Likewise for other two objectives, security and responsiveness
have positive relationship with customer satisfaction. The substantial responses from
the sample population agreed, that security for online banking is critical for
conducting financial transactions and that advanced technological characteristics
should not limit access to services. The findings suggest that, Online banking should
also be available in Nepali language because for any product to gain maximum
consumers localization is extremely important. In addition to protecting against cyber-
attacks and security risks, banks should explore bridging the gap between easy access
and high-end technological security for online banking. According to the results of the
study's respondents, we can say that there are a large number of customers of bank in
Kathmandu valley who use online banking and are very much content with the digital
services offered by their bank. According to prior research, the ease of usability
element has an impact on application security along with other variables, which is one

48
of the most important criteria for user satisfaction and responsiveness having the least
impact on customer satisfaction. (Miah, 2018).

In this research paper, SERVQUAL model dimension was used to determine the
relationship between online banking service quality (Ease of Use, Security,
Responsiveness) and satisfaction of customers. Moreover, all the variables had a
significant relationship with customer satisfaction where Ease of Use was the most
influencing variable on the satisfaction level of consumers. Similar to the research
paper conducted by Kumar and Gaire (2018), Mandal (2018) using the SERVQUAL
model where all the dimensions i.e., ease of Use, security, confidentially and
convenience have a positive relationship with the satisfaction of consumers. In Nepal,
banks started their journey to online banking from traditional through introducing
ATM cards initially. Huge number of banks of Nepal in Kathmandu Valley are
considering creative measures in making the experience of their consumers in banking
incredibly easy, standard and effective through their online banking services.
Therefore, it is extremely needed to determine the perspective of consumers on their
services offered by banks, its quality and their level of contentment. The survey on the
level of satisfaction could give banks insights on the retention of customers along
with their loyalty. Moreover, it will assist them in coming up with feasible and
powerful strategies for using efficient customer service as a differentiator in this
highly customer-oriented business. This study attempted to address concerns of
contentment of customers with Nepalese banks' digital banking services within
Kathmandu. In the field of digital banking service quality and satisfaction level of
customers, this paper added value to the current literature. Future research could
include more financial institutions and a larger number of banks, allowing the
findings to be more broadly applied to the Nepalese digital banking system of
Kathmandu. This study was limited to the Kathmandu city; however, upcoming
research could expand to other sections of the country.

49
5.3 Recommendations

Localization of digital banking services is a must. Therefore, banks should provide

their banking services through digital means in Nepali language along with English
language so that more customers can become familiar with it.

As the collection of data was focused only in the Kathmandu valley, the country's
capital. This emphasizes the importance of expanding this study to include a bigger
and more geographically diverse sample of customers. Understanding the
characteristics of online banking allows banks to deal with consumer difficulties and,
as a result, personalize their online banking products and services to meet their
requirements.

This research looks at the entire online banking experience and how it affects
consumer satisfaction. Future research could concentrate on the amount of consumer
satisfaction among various groups of e-banking users. This will provide a better
understanding of consumer behavior, e-banking characteristics, and the impact on
consumer satisfaction levels while using e-banking services.

When investigating the customer perspective on digital banking's impact on their

satisfaction level, a two different research method consisting of a qualitative interview
with a quantitative questionnaire survey is recommended, as using one measure might
not be able to provide the necessary and relevant key information.

50
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 APPENDICES

Customer Satisfaction in Digital Banking services in Kathmandu Valley

Graduate Research Project

Dear Respondent,

I am Grishma Uprety, one of the Master in Business Administration (MBA) students

pursuing my studies at Sunway International Business School.

I am doing research entitled “Consumer Satisfaction in Digital Banking Services in

Kathmandu Valley”. The information provided by you will be used only for the
research purpose for MBA.

I will be grateful if you provide just a few minutes to answer my questions appearing
in the enclosed questionnaire. Your ideas and information will be of great importance
for my research. I do assure you that your information will be kept confidential and
used for academic purposes only.

Thank you for your cooperation.

60
 Section A: Demography of Respondents

Please tick (√) according to the answers in the boxes that best represent you.

1. Please select your gender

□Male □Female

2. Please select your age (in years)

□Under 25 □25-35 □35-45 □above 45

3. Educational level

□ Intermediate and below □ Bachelor Degree

□ Master Degree □ M. Phil/ Ph. D Degree

4. Income per month

□ Below Rs.20,000 □ Rs.20,000-Rs.40,000 □ Rs.40,000-Rs.60,000 □

above Rs.60,000

5. Profession

□ Government Employee □ Private Employee □ Self Employed □ Student

□ others

Please tick mark (✔) in one of the best options that best matches your opinion.

1. What digital banking services do you use the most?

□ E banking □ Mobile Banking □ QR code □ ATM

2. Do you mostly prefer E banking services for payments?

□ Yes □ No

3. What digital Banking service do you often use for Payments?

□ E banking □ QR code □ ATM

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 Section B: Independent Variable

The statement is measured in five-point Likert scales: 1 as strongly disagree (SD), 2

as disagree (D), 3 as neutral (N), 4 as agree (A) and 5 as strongly agree (SA).

1. Ease of Use

S. N Statement Strongly Agree Neutral Disagree Strongly

Agree Disagree
5 4 3 2 1
1 Using Online Banking
services is user friendly.

2 I am able to finish any

transaction swiftly using
the Online Banking
service channels.

3 Online banking services

are available in a number
of languages.

4 I find it simple to learn

and operate the Online
Banking system.

5 The organization of
information in online
banking services is clear.

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2. Security

S. Statement Strongly Agree Neutral Disagree Strongly

N Agree Disagree
1 Online banking services
prevent outsiders from
gaining access to my
accounts.

2 The bank sends messages

and mails during every
transaction to alert or
notify.

3 Session timeouts occurred

in the bank’s website after
some time.

4 The data that I send is

protected by the security
devices of the Online
Banking services.

5 My online banking site

does not share any of my
personal information with
third parties.

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3. Responsiveness

S. Statement Strongly Agree Neutral Disagree Strongly

N Agree Disagree
1 Services for Online
banking are provided 24/7

2 Online banking responds

promptly to the requests of
the users.

3 Assistance is provided
right away in occurrence
of any problem.

4 Inquiries are answered by

online banking services.

5 Customer Complaints
about online services are
handled carefully and
smoothly by the bank.

64
65
 Section C: Dependent variable

4. Customer Satisfaction and Quality of Service

S. Statement Strongly Agree Neutral Disagree Strongly

N Agree Disagree
1 I am satisfied with the
transaction processing via
Online Banking services.

2 I think I made the correct

decision to use the Online
Banking services.

3 My satisfaction with the

Online Banking services is
high.

4 I am satisfied with the

present Online banking
services quality.

5 Overall, Online Banking

services is better than my
expectation

66