Albinalsheikh, Abdullah Ali (2022) The Influence of Online Service Quality on Customer Satisfaction, Loyalty and Preferences: A Study of the Banking Sector in Saudi Arabia. Other Degree thesis, Victoria University.

Abstract

Advances in technology and innovation have expanded global online banking services. The banking industry continues to develop to be less geared towards physical retail banking. The continued transformation of online banking services is integral in offering innovative financial solutions to customers. Understanding the effects of online banking service quality on customers assists bank executives in developing appropriate strategies to improve financial service provision. Although numerous studies have investigated the relationships between the quality dimensions of online banking services and its influence on customer satisfaction and attitude in different regions, further investigation of online service quality in emerging markets, such as Saudi Arabia, is needed. This market is the largest economy in the Middle East and having a reputable banking system represents a necessary core competency for the country. Therefore, this research investigated the influence of online service quality on customer satisfaction, attitudinal loyalty and preferences as regards Saudi banks. The present investigation extends the related literature that has mainly utilised the service quality (SERVQUAL) model by employing both the Electronic Service Quality (E-S-QUAL) and Electronic Recovery Service Quality (E-RECS-QUAL) scales. The E-S-QUAL scale comprises four dimensions—fulfilment, system availability, efficiency and privacy—and the E-RECS-QUAL scale consists of three dimensions—compensation, responsiveness and contact. A mixed methods approach was adopted to address the hypotheses and achieve the study’s objectives. Data were collected through an online survey from a sample of 430 respondents and through post hoc qualitative semi-structured interviews with 11 chief digital banking officers (CDBOs). Covariance-based structural equation modelling was employed to test the posited relationships. Then, a thematic analysis was applied to organise and code the qualitative data. The main findings indicate that online service quality dimensions significantly affect customer satisfaction, attitudinal loyalty and preferences. Further, customer satisfaction is a mediating construct that positively and significantly influences customer attitudinal loyalty. Moreover, customer satisfaction has a negative, non-significant impact on customer preferences. In addition, albeit with a very small sample, the results revealed that gender has a moderating effect on customers’ perceived quality of online banking services. Last, bigger brands might engender more loyalty, a finding that is in line with double jeopardy principles (McPhee 1963). The post hoc qualitative results revealed that Saudi banks have established mechanisms to evaluate online banking service quality. Furthermore, banks have adequate digital communication channels, such as kiosk services, to support customers who access financial platforms. In addition, nearly all banks administer online surveys to measure customer satisfaction about online banking service quality and conduct commercial campaigns to nurture brand image via digital media. Moreover, most CDBOs agreed that brand size is a vital factor in shaping customer loyalty. Hence, bank executives should establish various key performance indicators for digital online services, such as the number of successful transactions, number of active users and demand for services, to enhance customer experience. Last, the study suggests that future research should explore the relationship between online service quality and customer purchase behaviour using the present conceptual framework in the Saudi banking industry.

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