Dissertation

E-banking in Vietnam: service quality and consumer reactions

Table of Content

Table of Content ......................................................................................................................... 1

List of Figures ............................................................................................................................ 5

List of Tables.............................................................................................................................. 6

Chapter 1. Introduction ........................................................................................................... 7

1.1 Rationale for chosen topic ............................................................................................ 7

1.2 Research Aim and Objectives ....................................................................................... 8

1.3 Research Significance ................................................................................................... 9

1.4 Research Structure ........................................................................................................ 9

Chapter 2. Literature Review ................................................................................................ 10

2.1 Introduction: ............................................................................................................... 10

2.2 Overview about e-banking and e-banking services .................................................... 10

2.2.1 Definition: ........................................................................................................... 10

2.2.2 Development of electronic banking .................................................................... 10

2.2.3 Service quality ..................................................................................................... 12

2.2.4 Relationship between service quality and customer satisfaction ........................ 13

2.2.5 Relationship between service quality and customer satisfaction ........................ 13

Chapter 3. Methodology ....................................................................................................... 15

3.1 Research Design ......................................................................................................... 15

3.1.1 Preliminary study ................................................................................................ 16

3.1.2 Formal study (Quantitative study)....................................................................... 16

3.2 Research model and scale ........................................................................................... 17

3.2.1 Hypotheses .......................................................................................................... 17

3.2.2 Scale .................................................................................................................... 18

3.3 Summary ..................................................................................................................... 21

Chapter 4. Results and Discussion ........................................................................................ 22

4.1 Sample description ..................................................................................................... 22

4.2 Scale assess with Cronbach Alpha reliability coefficient ........................................... 22

4.2.1 SERVQUAL model............................................................................................. 22

4.2.2 Gronroos model ................................................................................................... 24

4.3 Scale assess with EFA ................................................................................................ 26

4.3.1 SERVQUAL model............................................................................................. 26

4.3.2 Gronroos model ................................................................................................... 28

4.3.3 Satisfaction scale ................................................................................................. 29

4.3.4 First adjusted model ............................................................................................ 30

4.4 Research model testing with multiple regression analysis ......................................... 31

4.4.1 SERVQUAL model: ........................................................................................... 31

4.4.2 Gronroos model ................................................................................................... 34

4.4.3 Second adjusted model ........................................................................................ 36

4.5 Comparison between SERVQUAL model and Gronroos model ............................... 37

4.5.1 Observation ......................................................................................................... 37

4.5.2 Comparison with previous studies ...................................................................... 38

4.6 Summary ..................................................................................................................... 38

Chapter 5. Conclusion ........................................................................................................... 40

Reference.................................................................................................................................. 41

List of Figures

Figure 3-1 Research design ...................................................................................................... 13

Figure 3-2 Research hypothesis ............................................................................................... 15

Figure 4-1 E-banking service quality and customer satisfaction relationship (1st adjusted).... 28

Figure 4-2 E-banking service quality and customer satisfaction relationship (2nd

adjusted) ... 35

List of Tables

Table 3-1 Coded variables ....................................................................................................... 17

Table 4-1 Cronbach Alpha coefficient of variables based on the SERQUAL model .............. 21

Table 4-2 Cronbach Alpha coefficient of variables based on the Gronroos model ................. 23

Table 4-3 Cronbach alpha of the scale of customer satisfaction .............................................. 24

Table 4-4 EFA based on the SERQUAL model ...................................................................... 25

Table 4-5 EFA based on the Gronroos model .......................................................................... 27

Table 4-6 EFA about customer satisfaction ............................................................................. 28

Table 4-7 Correlation matrix among variables in SERVQUAL model ................................... 30

Table 4-8 Analysis statistics of regression coefficients in SERVQUAL model ...................... 31

Table 4-9 Statistics of each variable in SERQUAL model ...................................................... 31

Table 4-10 Correlation matrix among variables (Gronroos model)......................................... 33

Table 4-11 Analysis statistics of regression coefficients (Gronroos model) ........................... 33

Table 4-12 Statistics of each variable in the model (Gronroos model).................................... 34

Chapter 1. Introduction

1.1 Rationale for chosen topic

The event that Vietnam became an official member of the WTO on January 11th

2007 has

opened a new page for Vietnamese banking sector: Vietnamese commercial banks must know

how to improve the competitiveness and maximize business opportunities from open markets

(Leung, 2009). Facing the biggest challenge that competitive pressure increases right on the

domestic market when Vietnam is open for integration, along with fickle customer demands,

Vietnamese commercial banks are forced to apply banking technology in order to meet the

increasingly diverse needs of customers in the Vietnam’s market and help banking sector

become more integrated with the development of the regional as well as international banking

sector. By the application of modern banking technology, Vietnamese commercial banks have

launched a new method of products and services provision, which is to provide goods and

services through electronic distribution channels called “electronic banking”.

As stated in Ashtiani and Iranmanesh (2012), the advent of electronic banking has totally

changed the relationship between customers and banks. In the past, if customers want to do

transactions with banks, they have to meet banking staff directly; however, with the advent of

electronic banking, customers can perform banking transactions remotely. Therefore, the

investment as well as the development of electronic banking services is considered as one

method to increase the competitive position of a bank in the current market. Indeed, electronic

banking services are increasingly becoming such an essential method for banks to provide

banking products and services (Yousafzai et al., 2005; Andoh-Baidoo et al., 2010). Apart from

the race of providing e-banking services, Vietnamese commercial banks also seek to offer the

standardized electronic banking services and achieve customer satisfaction about the quality of

these services.

From these facts, the assessment about the quality of e-banking services and the study about

the relationship between service quality and customer satisfaction play important role in

improving the quality of e-banking services in the future (Jalal et al., 2011; Chatzipoulidis and

Mavridis, 2010). With the understanding about the important role of service quality, the

researchers around the world have done many researches about service quality. Bauer et al.

(2005) triggered the study on service quality and his study has been considered as relatively

comprehensive by many researches (Gerrard and Cunningham, 2005; Liao and Cheung, 2005;

Wong et al., 2008; Gonzalez et al., 2008). Currently, there are two popular service quality

models in the world, namely the SERVQUAL model and the Grönroos's service quality model

(Seth et al., 2005). In order to measure the quality, the SERVQUAL model gives the scale with

five components, including reliability, responsiveness, empathy, service capability, and visible

means. The Grönroos's service quality model supposes that service quality is judged based on

two criteria including technical quality and functional quality. In order to assess the quality of

services in different areas, there are many researches which apply the SERVQUAL model such

as Saleh and Ryan (1991) for hospitality industry, Fick and Ritchie (1991) for travel and tourism

industry, Donnelly et al. (1995) for local government, Kumar et al. (2009) in banking sector,

Jemmasi et al. (2011) for service industry; and Grönroos model such as Kang and James (2004),

Lassar et al. (2000), Seth et al. (2005). However, there are few studies comparing these two

models. Lassar et al. (2000) has studied on the satisfaction and the perception about the quality

of banking services among the US private banks by comparing these above models. The research

results show that the quality model of Gronroos can assess service quality better than the

SERVQUAL model.

With the topic “Electronic banking in Vietnam: service quality and consumer reactions”, it is

used two mentioned models, namely the SERVQUAL model in order to assess the components

affecting the quality of e-banking services, study the relationship between the quality of e-

banking services and customer satisfaction, and compare these two models to identify which

model can assess the quality of Vietnamese e-banking services better.

1.2 Research Aim and Objectives

The study was carried out with the aims:

Develop the model about the relationship between e-banking services and customer

satisfaction based on two models: the SERVQUAL model and the Gronroos model.

Adjust the scale of service quality components to match with electronic banking services

based on two models: the SERVQUAL model and the Grönroos model.

Test theoretical model and identify the components affecting customer satisfaction on e-

banking service quality based on each service quality model.

Compare the results between two models: the SERVQUAL model and the Grönroos

model.

1.3 Research Significance

This topic has practical significance for the research as well as the development of electronic

banking services as follows:

Assist the managers and e-banking service businesses in Vietnam to know which

components affecting the quality of services and customer satisfaction on e-banking

services quality in commercial banks in Vietnam.

Help banks focus on the plans to improve the quality of e-banking service quality, allocate

resources, and stimulate the employees to promote better service quality.

Help the managers combine two service quality models to adjust the scale of service

quality in each condition, each environment and each industry in Vietnam.

1.4 Research Structure

The topic is divided into 5 chapters with the specific contents as follows:

Chapter 1: Overview of the dissertation

Chapter 2: Literature review on theoretical and empirical studies related to e-banking and

service quality assessment

Chapter 3: Research methodology used in order to achieve the study purposes

Chapter 4: Research results observed through data analysis

Chapter 5: Conclusion conducted throughout dissertation

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