Introduction
Electronic banking is one of the most recent channels of communication used by modern financial institutions. The term ‘online banking’ also known as e-banking is traditionally defined as the delivery of bank’s information via different internet platforms so that customers could access their accounts and execute certain transactions online. Established in the mid 1990s, this method has become more important within the recent decade.
At first sight, it may seem logical for banks to transfer as many activities online as possible. The speed of transactions and the cost savings potential are the significant advantages of e-banking. Therefore, according to the cost-driven and technological perspectives, by carrying out banking activities via the internet, banks can economize their resources and reap the benefits of creating a competitive advantage on the web.
However, the concerns of customers’ loyalty to online banking need to be taken into account for investigating the factors driving customers to use online banking instead of offline banking and give preference to a specific supplier.
Floh and Treiblmaier (2006) noted that a thorough understanding of the main antecedents of customers’ loyalty to online banking is essential for developing appropriate marketing strategies and gaining a competitive advantage on the web. Furthermore, there is evidence that a positive relationship exists between the customers’ loyalty and the profitability of a firm (Floh & Treiblmaier, 2006, p. 97).
The new forms of delivering the bank’s information to customers not only offer opportunities for the customers’ retention, but also intensify the competition between different service suppliers. In terms of company-controlled interaction, by using the internet portals, banks can customize the users’ information adapting it to the individual needs of customers and encouraging them to provide feedback.
On the other hand, the customer-controlled internet communication gives rise to new challenges, such as the growing need for positive branding of a particular e-service provider.
The analysis of explanatory variables is required for understanding the influence of attitudinal behaviors of individual users and promoting their increased loyalty in the online context. Then, banks will be able to focus on the most important aspects of their relationships with consumers in order to strengthen their brands and achieve customers’ loyalty.
Whereas the importance of customers’ loyalty has been recognized for several decades, the issue of customers’ loyalty in the online context has not been properly addressed. Luarn and Lin (2003) admitted that a thorough understanding of the main antecedents of the customers’ loyalty remains one of the crucial issues of present-day management theories.
With the intensified competition in the market, the ability to develop brand loyalty in customers is recognized as an important factor in winning additional market share and creating a competitive advantage. Success of e-banking as a strategy adopted by a particular firm heavily depends upon the consumers’ loyalty to a particular e-service supplier.
Due to the changes in patterns of buyer-seller interactions and significant deviations in customers’ attitudes and behaviors in online and offline environments, further research is required for integrating the internet technology into the concept of customers’ loyalty.
Research problem of how to keep customers loyal to online banking
Whereas there is a substantial amount of literature on relationship marketing addressing the link between the customers’ loyalty and profitability of bank’s offline activities and differences in customers’ online and offline behaviors, the problem of what specific determinants keep customers loyal to online banking has not been properly addressed until recently and deserves serious consideration.
The main research problem illuminated in this paper will define the core antecedents of customer loyalty to online banking, combining those which are specific for the online environment only and those which are common for online and offline contexts.
Taking into account the fact that attracting new customers to e-banking service provider is significantly more expensive compared to a traditional brick-and-mortar bank, it can be stated that retaining customers and preventing them from switching to other service providers is a financial imperative in the e-service context.
Different dimensions of customer-bank relationships need to be analyzed to define the main constructs that fuel the customers’ interest and encourage them to give preference to a particular e-service provider and execute repetitive transactions via a particular service provider.
Customers’ trust to a particular e-service provider they cannot touch is recognized as one of the most influential factors determining the customers’ attitudinal commitment and loyalty (Luarn & Lin, 2003, p. 158). Due to particular psychological characteristics, consumers can be afraid of using e-services. This peculiarity of online context should be taken into consideration for developing customers’ trust and loyalty.
Furthermore, the construct of trust relates to the concerns of privacy and security, which have a striking influence upon the customers’ willingness to participate in the online transactions. Another important aspect of the bank-customer relationship is the convenience of accessing the online portal and navigating it.
On the one hand, an opportunity to access an online bank account whenever and wherever they may need to attracts attention of potential customers. At the same time, particular service determinants need to be integrated into the design of the internet portal to enhance the customers’ satisfaction and encourage them to use a particular e-service provider again.
In terms of aesthetic design, the website should look attractive and enjoyable. Also, the information should be properly structured and presented in accordance with the specifics of the consumers’ perception. The specific content, speed and functionality offered by a particular internet portal can have a significant impact upon the customers’ attitudes and choices.
As a cost-effective alternative to offline banking services, e-banking allows banks to offer lower or no fees for their services and higher interest rates on the internet-based account deposits, which can also contribute to the consumers’ satisfaction.
Customers’ loyalty as the customers’ willingness to use services of a particular service provider again depends upon a number of factors related to different dimensions of the customer-service provider relationships.
The main objective of this research is to define the main antecedents of the customers’ loyalty to e-banking as the main factors making customers to choose online banking instead of offline banking and use e-banking services of a particular bank.
Literature review of how to keep customers loyal to online banking
Analyzing the existing literature on the main antecedents of the customers’ loyalty to e-banking service providers, it can be stated that the main influential factors include the quality of e-banking services, reliability of the internet platforms in terms of privacy and security of data, the convenience and perceived value of services, service provider-customer relationship and overall customers’ satisfaction.
The internet portals as channels of communication allow banks to reduce their costs and provide customers with better quality of services. Ahmad and Al-Zu’bi (2011) stated that the ease of use can have a significant impact upon the quality of services as perceived by the customers.
Floh and Treiblmaier (2006) stated that the quality of a website, its design and content are significant only for the online context. Luarn and Lin (2003) noted that service quality is difficult for the competitors to copy and can become an important aspect of gaining a competitive advantage and market share.
Therefore, the quality of a website with its numerous parameters can have impact upon the customers’ loyalty to e-banking offered by a particular service provider.
Due to the specifics of the innovative channel of communication and the customers’ attitudes towards the innovations, the developers of the internet portals for e-banking should give serious consideration to the issues of reliability.
Floh and Treiblmaier (2006) noted that the age, gender, variety seeking and potential technophobia of the target audience of customers are important issues that should be addressed for developing customers’ loyalty.
Casalo, Flavian and Guinaliu (2008) noted that the word of mouth as a mode of informal communication between the users is perceived as a more reliable and trustworthy source of information and one of the most influential factors affecting the customers’ loyalty to e-banking.
Though the use of internet portals implies the enhanced convenience for customers, such as the opportunities to access their accounts whenever and wherever such a need arises, banks can increase the convenience of their services by using appropriate designs and options. Silver and Berggren (2010) stated that the convenience of the offered online services is an important condition of the firm’s long-time survival and sustainability.
Ahmad and Al-Zu’bi (2011) admitted that by including the interactive loan and mortgage calculators and exchange converters, banks can draw attention of both users and non-users of e-banking to their websites and significantly increase the popularity of online banking services.
The perceived value of the online e-banking services heavily depends upon the branding strategies implemented by the firms for developing the customers’ understanding of the main advantages offered by online service providers.
Silver and Berggren (2010) put the main emphasis upon the corporate branding strategies that enhance the customers’ understanding of the advantages offered by online service providers, such as the accessibility and convenience of services, not to mention the increased interest rates and decreased fees for services if any.
The customers’ attitudes towards e-banking in general and a particular service provider are one of the most important factors contributing to the customers’ loyalty to e-banking.
Floh and Treiblmaier (2006) stated that the customers’ attitudinal behaviors have a significant impact upon their loyalty to particular service providers. Therefore, different dimensions of interaction between customers and service providers should be taken into account for improving the relationships between the service providers and customers and enhancing the perceived value of online banking services.
Customers’ satisfaction depends upon a wide array of factors, including the afore-mentioned aspects of service quality, reliability, convenience, perceived value of online services and effectiveness of interaction between the service providers and consumers.
Casalo, Flavian and Guinaliu (2008) pointed out at customers’ overall satisfaction as one of the most influential drivers leading to their loyalty to e-banking and particular service providers. Successful experience of using e-banking services can encourage customers to give positive feedbacks and spread a positive word of mouth increasing the popularity of certain websites among non-users of online services.
Reference List
Ahmad, A. & Al-Zu’bi, H. (2011). E-banking functionality and outcomes of customer satisfaction: An empirical investigation. International Journal of Marketing Studies, 3 (1), 50-65.
Casalo, L., Flavian, C., & Guinaliu, M. (2008). The role of satisfaction and website usability in developing customer loyalty and positive word-of-mouth in the e-banking services. International Journal of Bank Marketing, 26 (6), 399-417.
Floh, A. & Treiblmaier, H. (2006). What keeps the e-banking customer loyal? A multigroup analysis of the moderating role of consumer characteristics on e-loyalty in the financial service industry. Journal of Electronic Commerce Research, 7 (2), 97-110.
Luarn, P. & Lin, H. (2003). A customer loyalty model for e-service context. Journal of Electronic Commerce Research, 4 (4), 156-167.
Silver, L. & Berggren, B. (2010). The close relationship strategy – corporate brand development in banking. Journal of Brand Management, 17 (4), 289-300.