Khóa luận tốt nghiệp: Impacts of E-banking services on customer loyalty: the case of commercial banks in Vietnam

VIETNAM NATIONAL UNIVERSITY, HANOIUNIVERSITY OF ECONOMICS & BUSINESS FINANCE AND BANKING GRADUATION THESIS Topic: IMPACTS OF E-BANKING SERVICES ON CUSTOMER LOYALTY: THE CASE OF COMMERCIA

VIETNAM NATIONAL UNIVERSITY, HANOI

UNIVERSITY OF ECONOMICS & BUSINESS

FINANCE AND BANKING

VIETNAM NATIONAL UNIVERSITY, HANOI

UNIVERSITY OF ECONOMICS & BUSINESS

FINANCE AND BANKING

GRADUATION THESIS

Topic: IMPACTS OF E-BANKING SERVICES ON CUSTOMER LOYALTY: THE CASE OF COMMERCIAL

BANKS IN VIETNAM

ACKNOWLEDGEMENT During the time of researching and implementing this GRADUATION THESIS, I have

received very enthusiastic help and valuable encouragement With all due respect and

gratitude, I extend my sincere thanks to:

The Board of Directors of University of Economics - VNU has built a scientific research

environment that helps me as well as students of the whole university to have motivation,

opportunities to approach and practice scientific research

I sincerely thank the teachers and experts of the Faculty of Finance - Banking and other

faculties in the university for taking the time to answer and analyze the questions,

contributing to creating a foundation for the group to be confident in carrying out the

research assist

In particular, I would like to express my gratitude and deepest thanks to Ms Cù Nguyễn

Ha Trang The instructor is enthusiastic with new directions, detailed communications,

and frank suggestions Thanks to that, I have more confidence to be able to complete the

research even though he himself is under a lot of pressure about work, time and family

Due to the limited knowledge and time, the research paper inevitably contains errors and

omissions I look forward to receiving your comments and suggestions to improve the

I hereby declare that this graduation thesis on the topic of IMPACTS OF E-BANKING

SERVICES ON CUSTOMER LOYALTY: THE CASE OF COMMERCIAL BANKS IN VIETNAM

is solely my own work and property The reference materials used in this thesis have been

properly cited and acknowledged in the reference section Additionally, all research

findings are completely truthful and original, without any plagiarism or duplication from

any previously published works

If any of these statements are found to be inaccurate, I take full responsibility for any

consequences and will accept any disciplinary actions deemed necessary by the

department and the university

Hanoi, May 12, 2023

Student

Nguyễn Hoang Giang

TABLE OF CONTENTS

LIST OF EIGURES e-cscsesesnhEnhHHYHHYHHHYHhHYRHTRHRTRHRSERHESESERRESEREEESEEESESHESEREESESESAESEE 3LIST OF ABBREVIA TIONS s«sseseseeersrerrsrrrrrrsrrsrsrarrirarsrsirrsrrirrsrisrsrrrsrrrirser 4

CHAPTER 1: INTRODUCTION cccssssssscsssscssssssssescscsscsssvecsnsecsseecsneasecsseavsseaveseneecsneaveneavenenrensneas 5

1 The ULGeNncy Of the tOPiCessesessssesesssesesesneresssssnsnsnsnescesensnssnsssssessnsesnsnsssssessnsesesssesssenssenssninesssns 5

2 Research Purpose Of the ÊOJDÍC: e-c«ceeceekeererserrrtrrrsrkrrrrerrrsrerrsrerersrrrrsrsrrersrrrsrie 5

3 RESCALCH QUESTIONS: usesssssssssssrsnsesnsesessscsenensnsnsnsnsnsnenensssnsnensnsnsnseuausasenssensnsnensnsnunnsnsassonsnsnsnsnsess 6

4 Objects Of the SCUAY! sresesesessesssssssssrsrsnesssssssnsesnsssssessnsnsnsnsnesesssnsnscsnenessevensesssnenssesnsnsnsestensnnensninens 6

5, CONCHIDUCION Of the CHESIS! sesssssssesesssssesescssnsssnsnssssesesscsenensnsesnsnsesscssesscsensnsnsnsssnsnevesessenensnsnsnsess 6

6 THESES SETUICÊUIT: cesssecsssessscnsessssnsecssscsnsecscsesecsnsncensecncsnsecssecncansncensacnvansncsnsncevsasavensacncnesncnnsnsansess 7

CHAPTER 2: LITERATURE REVIEW & THEORETICAL BASIS -.-. «-«c<-se- 8

2.1 Lit€ratUre LeViICW? tnnninnini 8

2.1.1 E-Banking S€rViCeS? cesseesssssesssesssessseesseessecssessueesseesessseesseessessesseeesieeseestecseessneeaeessteeneesseenssees 8

2.1.2 Customer lOyalty o eeeseesssessseesssessesstessseesseesseesseesseesseesueesseeseeseesteeseesteeseeeateeateeseeeaeesstesneeeateeneeey 9

2.1.3 ResearCh Gaps reeeceecseessessesseeseesseesecsseesecssecsecsecseecseecseecaeeeseecseesseseseesaeeeseesneesaeesseesueesseesseesees 11

2.2 Overview of electronic DANKING S€T'VÏCGS -«csec<cseserersrrrrsrrrrrsrrersrrrrsrsrrersrre 12

2.2.1 Definition of electronic banking Se€TVÏC@S: cxcsceerkerrrrtrirrrirrirrirrrrrriee 12

2.2.2 The formation and development process of electronic banking services 12

2.2.3 Characteristics of electronic banking Service cc-cceccrreerirrrirrrriee 13

2.2.4 The role of electronic banking S€TVỈC@S cssccxtstirrkierkrtrrrtkirrrrrirrrrrerriee 14

2.2.5 Types of electronic banking ServiCes? sccrxetstetrrirtrtirtrrirrriirriirrrirrriiee 15

2.3 Overview Of CUSCOMEL LOVAILY ress 18

2.3.1 Definition of customer ÌoyaÌÏf -c<+cxc+rertrittritkittiitiririiriiiirrrirrre 18

2.3.2 The role of customer lOyalty c ssc+xesrxeErkttrkettrketrrkrtrrkrtrrkrrrrkrrrrkrrrkerrrrrree 18

2.4 The impact of e-banking services on customer lOYAItY: wees 20

CHAPTER 3: RESEARCH METHODS ccsesiesesinirsneiininrinrsnnniiiiansrsnnsrsnse 22

3.1 RESCQLCH PVOCeSS sesssssssssssrsssssesssesessssnensnsnssnssnsvssevscsenensnsnsnsnssssssscscsensnsnsnsnsnsnsvesssssnsnsnsnsnsas 22

3.2 Data description ANd AACA SOUITCG . «-5-c«csececeeeerersrrersrsrrsrserrrsrrrsrsrrersrrrrsre 22

CHAPTER 4: THE IMPACTS OF ELECTRONIC BANKING SERVICES ON CUSTOMER

LOYALTY AT VIETNAM COMMERCIAL BANKS ce«ceesereerieiiiriririrrsrsie 23

4.1 Overview of electronic banking services in Vietnam Commercial Banks 23

4.1.1 Card S€TVÌC€S HH nHHHnHHY HH nà HH Hà Hà Hà Hà THẾ HH1 1.110 10110011 24

4.1.2 Internet Banlking -«++xcc+kktrH HH HH HH HH HH HH HH Hư 27

4.1.3 Mobile Banking -. s-ccxxecrktrtrkittrktrrirtrr tri re 28

4.2 Current trends in electronic DANKING S€TVÏCS vss 29

4.3 The impact of electronic banking services on customer ÏoydÏty: - 31

4.4 Challenges and Opportunities 35

CHAPTER 5: CONCLUSION -«ce<ssesseseerrrsrsrrsrrrrrrrrrrsrrsrrrrsrarsrrrsrsairrsrrrsrsir 37

REFERENCES sesssssssssecsssssssesscscsseensecsocsorsesecsarsoseneocsecsassneeceaveoteneaceacsaneneeneateneeneaneacsoneneacearennenseceas 38

LIST OF FIGURES

Figure 4 1: Number of cards issued in the period 2017 - 2022 -« c rec-rx

Figure 4 2 :Number of ATMs and POS machines in the period 2017 - 2022

Figure 4 3: Number of customer using E-banking of Techcombank from 2019 - 2022 32

Figure 4 4: Number of customer using E-banking of BIDV from 2019 - 2022 34

LIST OF ABBREVIATIONS

E-BANKING ELECTRONIC BANKING

TECH TECHNOLOGY

NAPAS NATIONAL PAYMENT CORPORATION OF VIETNAM

ATM AUTOMATED TELLER MACHINE

POS POINT OF SALE

COVID-19 CORONAVIRUS DISEASE 2019

QR QUICK RESPONSE

ID IDENTIFICATION

mPOS MOBILE POINT OF SALE

VIETCOMBANK JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM

SBV STATE BANK OF VIETNAM

TECHCOMBANK VIETNAM TECHNOLOGICAL & COMMERCIAL JOINT STOCK BANK

BIDV BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM

APP APPLICATION

CHAPTER 1: INTRODUCTION

1 The urgency of the topic

The increasing popularity of internet usage and smart devices has brought about a

significant transformation in the banking industry With the increasing use of

smartphones and other mobile devices, commercial banks are offering electronic banking

services (e-banking services) that allow customers to perform transactions and manage

their accounts online with ease This feature is especially useful for customers who are

always on-the-go, as they can access banking services quickly and easily without having

to visit a bank branch Therefore, the adoption of electronic banking services is a solution

that can help commercial banks to offer a more simplified, convenient, and accurate

banking experience (Amin, 2016)

Apart from offering a more convenient banking experience, e-banking services also help

commercial banks to improve customer loyalty (Brun et al., 2014) The use of electronic

banking services enables banks increase customer satisfaction, which contribute to

higher customer loyalty In addition, the adoption of electronic banking services helps

banks to retain their existing customers and attract new ones However, due to the

increasing rate of adoption of e-banking systems, banks, in turn, face stiff competition in

attracting and retaining customers (Shankar and Jebarajakirthy, 2019) Furthermore,

many customers are still worried about possible risks of safety, information security,

fraud and technical issues while using e-banking services

As a result, in order to retain current customers and stay competitive, it is important for

the commercial banks to have a clear view on the impacts of their e-banking service

quality on customer loyalty as well as the determinants of e-banking services that

influence customer loyalty That is why I have chosen the topic ": IMPACTS OF E-BANKING

SERVICES ON CUSTOMER LOYALTY: THE CASE OF COMMERCIAL BANKS IN VIETNAM "

for my graduation thesis This research would provide the current situation of e-banking

development in Vietnam Moreover, this study attempts to examine the impacts of

e-banking on customer loyalty and the determinants of e-e-banking service that affect

customer loyalty in the context of Vietnam Based on this research results, commercial

banks can identify the key determinants that affect their e-banking service quality This

identification, in turn, can enhance the competitiveness of commercials banks

2 Research purpose of the topic:

» Examine the current situation of electronic banking service in Vietnam

¢ Examine the impacts of electronic banking on customer loyalty in Vietnam.

¢ Examine the determinants of electronic banking services on customer loyalty in

Vietnam.

3 Research questions:

e What is the relationship between e-banking and customer loyalty?

e What are the factors of e-banking services that influence customer loyalty?

4, Objects of the study:

Research scope: The impact of electronic banking services on customer loyalty at

Vietnamese commercial banks

Research space: Commercial banks in Viet Nam

Time: 2017-2022

5 Contribution of the thesis:

The thesis "Impacts of E-Banking on Customer Loyalty at Vietnam Commercial Banks"

makes several important contributions to the field of banking and customer loyalty First

of all, the thesis provides an overview of the current state of e-banking in Vietnam and the

different types of e-banking services offered by commercial banks in the country This

information can be useful for policymakers, researchers, and practitioners to understand

the e-banking landscape in Vietnam.

In addition, the study investigates the impact of e-banking on customer loyalty at

commercial banks in Vietnam By doing so, the thesis contributes to the existing literature

on customer loyalty in the banking industry and provides insights into how e-banking can

affect customer loyalty

The thesis also identifies several factors that influence customer loyalty in the context of

e-banking, including perceived usefulness, perceived ease of use, trust, and satisfaction

By identifying these factors, the thesis provides insights into how banks can improve their

e-banking services to increase customer loyalty

Last but not least, it offers several recommendations for commercial banks in Vietnam to

improve their e-banking services and increase customer loyalty These recommendations

can be useful for banks that want to enhance their e-banking offerings and retain their

customers.

6 Thesis structure:

CHAPTER 1: Introduction

CHAPTER 2: LITERATURE REVIEW

CHAPTER 3: RESEARCH METHODS

CHAPTER 4: THE IMPACTS OF ELECTRONIC BANKING SERVICES ON CUSTOMER

LOYALTY AT VIETNAM COMMERCIAL BANKS

CHAPTER 5: CONCLUSION

REFERENCES

CHAPTER 2: LITERATURE REVIEW & THEORETICAL BASIS

2.1 Literature review:

2.1.1 E-Banking services:

Prior research has identified several benefits of e-banking services for customers,

including convenience, accessibility, and time-saving (Hess, 2018; Malaquias & Pefia,

2019) E-banking services allow customers to access their accounts and conduct

transactions from anywhere and at any time, without the need to physically visit a bank

branch This saves customers time and reduces the need for them to wait in long queues

Moreover, Saha et al (2020) state that e-banking services provide customers with greater

control over their finances, allowing them to monitor their account balances, track their

transactions, and set up automatic payments and transfers This enables customers to

manage their finances more efficiently and make informed decisions about their spending

and saving habits

However, despite the numerous benefits offered by e-banking, there are also risks

associated with this mode of banking One of the main challenges associated with

e-banking services is security Customers may be hesitant to use e-e-banking services due to

concerns about the safety of their personal and financial information (Hess, 2018) Ojo et

al (2021) examine the challenges faced by customers in adopting e-banking services in

developing countries and find that many customers are reluctant to use e-banking

services due to a lack of trust in online financial transactions Customers in developing

countries may be more likely to rely on informal financial networks, such as cash-based

transactions and community-based savings schemes, due to a lack of access to formal

financial institutions This lack of trust in e-banking services may be further compounded

by issues such as poor internet connectivity and inadequate digital literacy skills Allen

and Javoby (2007) outlines a number of hazards linked with e-banking services, including

online fraud, identity theft, and computer viruses, that are associated with e-banking

services Moreover, the authors suggest that banks should develop and implement

effective risk management techniques in order to minimize these risks and safeguard

their customers’ financial data In similar vein, Ertugal and Arasli (2013) discovered that

security and privacy concerns were the primary factors hindering the acceptance of

e-banking services in Turkey To overcome these obstacles, the study recommends that

banks should take essential security measures, such as enhancing encryption

technologies and implementing two-factor authentication, to increase the security of their

e-banking services Electronic banking or e-banking services are exposed to a

considerable risk of fraudulent emails, commonly known as phishing Harjinder Singh

Lallie and David V Gibson's research (2006) extensively focuses on the negative impact

of such scams on e-banking customers The study reveals that phishing can cause financial

losses and deteriorate customer confidence in e-banking services The authors suggest

that banks should conduct awareness campaigns about phishing and employ advanced

anti-phishing technologies to combat these scams Several other studies have been

conducted on the risks associated with e-banking services For instance, Dhaliwal and

Benyoucef (2018) highlight hacking as a significant risk associated with e-banking

services The study suggests that banks need to implement more effective security

measures to prevent hacking and safeguard their customers’ financial information Chen

and Lu (2017)also find that mobile banking applications are susceptible to cyber-attacks,

and banks need to enhance the security of their mobile banking applications to counter

such attacks

Besides, according to Al-Ali and Alqurashi (2021), security concerns pose a significant

challenge to the adoption of e-banking services in the Middle East Customers in this

region are worried about the safety and security of their personal and financial

information when using e-banking services Fear of account being hacked or personal

information stolen, leading to financial loss and identity theft, is a major obstacle for

customers This reinforces the need for banks and financial institutions to deploy robust

security measures to protect their customers’ data and ensure their trust In addition, the

study highlights that limited access to technology is another significant difficulty in the

adoption of e-banking services This shows that financial institutions must prioritize the

accessibility and availability of technology to ensure that customers can access e-banking

services without strings attached Overall, the results of the study indicate that security

concerns and dependence on technology are important factors that need to be addressed

to increase adoption of e-banking services in the Middle East (Al-Ali and Alqurashi, 2021)

Many people in the region do not have access to high-speed internet or mobile devices,

making it challenging for them to use e-banking services effectively.

2.1.2 Customer loyalty

Customer loyalty refers to the degree to which a customer continues to do business with

a particular company over time (Reichheld, 1996) Accordingly, Keiningham et al (2015)

conclude that customer loyalty is important for businesses as it can lead to increased

profitability and customer lifetime value Therefore, many businesses, including banks,

aim to build strong customer loyalty by providing high-quality products and services

9

Over the past decade, several studies have been conducted to investigate the impact of

e-banking services on customer loyalty (Ranaweera et al., 2018; Naeem et al 2019; Huang

and Su, 2019; Wu et al., 2020; Li and Su, 2021) For instance, Alalwan et al (2019)

conclude that e-banking services have a positive impact on customer loyalty through the

mediating effects of customer satisfaction, trust, and commitment Furthermore, Alalwan

et al (2019 also find evidence that perceived usefulness, ease of use, and perceived

security of e-banking services are important factors that influence customer loyalty In a

similar vein, when investigating the impact of e-banking services on customer loyalty in

the United Arab Emirates, Khalifa and Liu (2007) identify that perceived usefulness, ease

of use, and perceived security of e-banking services as important factors that influence

customer loyalty On the other hand, another study by Nguyen et al (2019) study the

impact of e-banking services on customer loyalty in the Vietnamese banking industry The

authors conclude that e-banking services positively influence customer satisfaction, trust,

and commitment, increasing customer loyalty Specifically, the authors find evidence that

perceived usefulness, ease of use, and perceived security of e-banking services are

important factors that impact customer loyalty of using banking services and products

Furthermore, previous studies also focus on analysing the relationship between service

quality and customer loyalty (Ranaweera et al., 2018; Naeem et al., 2019; Wu et al.,2020;

Raza et al.,2020) For example, Ranaweera et al (2018) find evidences that e-banking

service quality has a positive impact on customer satisfaction and loyalty Based on this

finding, the authors suggested that commercial banks should focus on improving

e-banking service quality to enhance customer satisfaction and loyalty Wu et al (2020) also

looked into how the quality of the e-banking services affected customer satisfaction, trust,

and loyalty in the Taiwanese banking sector According to the survey, consumer

satisfaction, trust, and loyalty are positively impacted by the quality of the e-banking

services The study also discovered that the relationship between service quality and

loyalty is mediated by consumer satisfaction and trust As a result, the study

recommended that Taiwanese banks concentrate on raising the quality of their e-banking

services in order to increase customer satisfaction, confidence, and loyalty The effect of

e-banking services on client loyalty in the Pakistani banking sector was the subject of a

study by Raza et al (2020) Through the mediating effects of customer pleasure and trust,

the study discovered that e-banking services had a favorable impact on customer loyalty.

Similar to this, the survey identified e-banking services' perceived utility, usability, and

security as crucial elements that affect client loyalty The study did not, however, take into

account how other variables, such as convenience, service quality, or cultural variables,

can affect consumer loyalty

Overall, prior studies highlight the importance of e-banking service quality in enhancing

customer satisfaction and trust as a way to increasing customer loyalty The findings also

suggest factors such as perceived usefulness, ease of use, and perceived security of

e-banking services positively contribute to customer loyalty As more and more customers

shift towards using e-banking services, banks need to prioritize delivering high-quality

services that meet customer expectations to retain their loyalty

2.1.3 Research gaps

Despite the extensive research conducted on the impact of e-banking services on

customer loyalty, there are still some research gaps that need to be addressed Many

researchers have acknowledged the advantages of e-banking services, such as ease and

availability However, more studies are necessary to investigate the prolonged effects of

e-banking on customer satisfaction and loyalty Additionally, it is essential to conduct

more research on the adoption of e-banking services in various areas, especially in

underdeveloped countries, where technological infrastructure and internet connectivity

might be insufficient Although there are studies that discuss the downsides and dangers

of e-banking, such as security concerns, more extensive research is needed to analyse the

different categories of risks and how they affect customer behaviour

Furthermore, there is a lack of research on the role of personal and situational factors in

the relationship between e-banking services and customer loyalty Personal factors, such

as age, gender, and education, may influence customers’ perception and use of e-banking

services, while situational factors, such as service failure or external events, may affect

customers’ loyalty to the service provider Therefore, future research should explore the

moderating effects of personal and situational factors on the relationship between

e-banking services and customer loyalty.

Finally, most of the studies have focused on the direct impact of e-banking services on

customer loyalty, without considering the role of other factors, such as marketing

activities, brand image, and competitive environment Therefore, future research should

investigate the moderating effects of these factors on the relationship between e-banking services and customer loyalty to obtain a more comprehensive understanding of the

factors that influence customer loyalty in the e-banking industry

11

2.2 Overview of electronic banking services

2.2.1 Definition of electronic banking services:

E-banking services refer to banking services that are provided through electronic

channels such as the internet, mobile devices, and Automated Teller Machines (Hess,

2018) E-banking services have become increasingly popular in recent years due to the

convenience they offer to customers According to a report by the World Bank (2020), the

number of people using mobile banking services globally has increased significantly in

recent years, with over 1 billion registered users

2.2.2 The formation and development process of electronic banking services

The growth of e-banking services is driven by advances in technology and changes in

customer behaviour (Sathye, 2019) The advent of online banking in the 1990s marked

the beginning of e-banking services, followed by the introduction of mobile banking in the

2000s The growth of banking services Electronic banking is driven by the increasing use

of smartphones and the internet, making it easy for customers to access banking services

from anywhere and anytime According to Sathy (2019), e-banking services have gone

through several stages of development, starting with the advent of online banking in the

1990s This early form of e-banking allowed customers to access their account

information and perform basic transactions such as transferring money and paying bills

over the internet Online banking was initially limited to personal computer users with

internet access, but it quickly gained popularity as more customers started adopting this

new technology The next major development in e-banking was the introduction of mobile

banking in the 2000s (Hassan, 2017) Mobile banking allows customers to access their

accounts through mobile devices such as smartphones and tablets This development is

important as it allows customers to perform banking transactions on the go without going

to a bank branch or using a personal computer The growth of mobile banking was also

facilitated by the growing popularity of smartphones and the widespread popularity of

mobile Internet In recent years, e-banking services have continued to grow with the

advent of new technologies such as e-wallets, biometric authentication, and artificial

intelligence (AI) (Sahye, 2019) Digital wallets allow customers to pay with their mobile

devices, while biometric authentication uses unique physical characteristics such as

fingerprints or facial recognition to verify customer identity AI is being used to enhance

the customer experience, by providing personalized recommendations and improving

fraud detection

In general, the formation and development of e-banking services is driven by advances in

technology and changes in customer behaviour As technology continues to evolve, it is

likely that e-banking services will continue to evolve and provide new and innovative

ways for customers to access banking services

2.2.3 Characteristics of electronic banking services

Electronic banking services offer several unique features that differentiate them from

traditional banking services, providing a wide range of benefits to customers One of the

most prominent features of e-banking is convenience Customers can access their

accounts and conduct transactions anytime and anywhere without physically visiting a

bank branch This convenience is cited as a significant factor in the adoption of e-banking

services by customers (Hess, 2018; Malaquias & Pefia, 2019)

Accessibility is another key characteristic of e-banking services Customers can access

their accounts and conduct transactions from any location around the world with an

internet connection This feature is particularly useful for individuals who travel

frequently or reside in remote areas with limited access to physical bank branches

E-banking services also offer customers greater control over their finances Customers

can monitor their account balances, track their transactions, and set up automatic

payments and transfers This level of control allows customers to manage their finances

more efficiently, make informed decisions about their spending and saving habits, and

avoid late payment fees or overdraft charges (Saha et al., 2020) However, there are also

security and privacy concerns associated with e-banking services Customers may worry

about the security of their personal and financial information when using e-banking

services This concern has been identified as one of the significant challenges related to

the adoption of e-banking services in the Middle East (Al-Ali & Alqurashi, 2021)

Customers may also be concerned about the possibility of online fraud, identity theft, and

computer viruses (Allen & Jacoby, 2007)

Finally, service quality and perceived value are also basic characteristics of e-banking

services Customers expect reliable, easy-to-use and efficient e-banking services They

also expect services that provide value for money Service quality and perceived value

have been identified as important factors affecting customer satisfaction and loyalty

towards e-banking services (Liao & Cheung, 2008).

13

In summary, e-banking services offer a number of unique characteristics, including

convenience, accessibility, greater control over finances, security and privacy concerns ,

service quality and perceived value These characteristics play an important role in

influencing customer acceptance and satisfaction for e-banking services.

2.2.4 The role of electronic banking services

In the realm of banking, electronic services have become an indispensable tool for

enhancing customer satisfaction and strengthening loyalty These services empower

customers to manage their finances with greater efficiency by providing them with

greater control over their accounts and transactions (Hassan, 2017) By offering

convenient and accessible banking services, electronic banking can foster stronger

relationships between customers and their banks Additionally, by automating several

banking processes, electronic banking services allow banks to reduce their operational

costs, which can result in cost savings that may be passed on to customers in the form of

lower fees or higher interest rates (Hassan, 2017) These advantages can contribute to a positive customer experience and help to cultivate customer loyalty.

According to research, the use of electronic banking services has a significant impact on

customer loyalty Alalwan et al (2017) reveal that customers who utilized electronic

banking services had higher satisfaction levels and loyalty as compared to those who

didn't Furthermore, Ahmad and Al-Debei (2018) conclude that there was a positive

correlation between increased usage of electronic banking services and customer loyalty

Therefore, customers are more likely to stick with a bank that offers electronic banking

services.

Electronic banking services can also boost customer loyalty by delivering tailored

experiences based on customer data and transaction history analysis According to

Hassan (2017), banks can provide personalized products and services that cater

specifically to the unique requirements of each customer, thereby fostering stronger

relationships and increasing customer loyalty No details can be left out when rephrasing

the original text Moreover, the employment of electronic banking facilities can enhance

customer engagement and interaction By utilizing various digital channels such as online

portals and mobile applications, banks can efficiently communicate with their customers

by sharing pertinent account information and real-time updates (Sathye, 2019) This

practice can foster a sense of confidence and openness between customers and their

banks, resulting in increased customer retention

To sum up, electronic banking services are crucial for improving customer satisfaction

and loyalty The provision of easy-to-use and readily available banking services,

personalized attention, and efficient communication can result in a favourable customer

experience and foster stronger bonds between customers and their banks These

advantages can ultimately lead to increased customer loyalty, which is crucial for the

sustained success of banking institutions

2.2.5 Types of electronic banking services:

First, Mobile Banking is an online service that dates back to the 90s and is accessible via

mobile phones With the advancement of science and technology, smartphones with

larger memory capacity have been developed Users can install bank-provided

applications that act as clients on their computers if there is an internet connection In

addition, Telecom Developers can be pre-installed on SIM Toolkit, making it possible for

customers to transact with any network-connected bank without an internet connection

The advantage of this method is the flexibility of the phone, which the customer always

carries with him However, the downside is that the information provided to the customer

is very simple and requires several small steps to complete any transaction Therefore, this method was born to meet the needs of Micro payment transactions or automatic

services without a server To join this service, customers must register as an official

member, provide basic information such as mobile phone number, personal account

number Customers will then be provided with an ID and converted to a barcode for their

mobile phone, allowing for quick and accurate receipt of payment information With a

15-digit ID, customers are also provided with a personal identification number (PIN) to

confirm payment transactions when required by payment service providers After

completing the necessary procedures, the customer will become an official member and

be eligible to pay via mobile phone Mobile Banking services include: viewing information

on interest rates and exchange rates; view balance of payment deposit account, card

account; receive messages when the balance of payment account, card account changes;

view the list of the most recent transactions (up to 5 lists); transfer money to card account;

check identity card or passport; pay bills for electricity, water, internet, telephone, cable

TV

Second, Internet banking is a type of electronic banking that is accessed through a web

browser, also known as online banking It is a widely used channel for banks to distribute

their products and services to customers anywhere, anytime To use this service,

customers simply need to register with their bank and have a device such as a tablet,

15

laptop, or desktop computer with an internet connection The advantages of this service

are that it does not require complex installations or the need to download client

applications, which means customers do not have to spend money on maintenance fees

The user interface is visually appealing with a clear layout, and has a large size on the web

browser The disadvantage is that scrolling can be inconvenient due to the size of the

computer screen With an internet-connected computer, customers can access the bank's

website through access codes and passwords provided by the bank They can view their

current account balance, transaction history, exchange rates, interest rates, and securities

information Customers can transfer money within and outside the banking system, and

can submit any questions or feedback about the bank's products and services which will

be promptly resolved They can also make payments for various bills such as electricity,

water, cable TV, telephone bills, and internet charges

Next is Phone Banking is the bank's server and management software system is connected

to customers through a service switchboard, which enables customers to access their

banking information and personal account information using their phones, at any time

and from anywhere The system is an automated answering service that operates 24/7,

and customers can simply press the keys on their phone keypads to request the system to

respond to their required information However, it should be noted that the information

provided via this service is only updated at the end of the previous day To use the Phone

Banking service, customers need to register and provide their necessary information and

sign a contract Once registered, customers are provided with a customer code, system

access key, and an account code to ensure security during transactions When customers

call the operator, the system will automatically enter their codes, and customers can select

the service they need to transact Customers can change or edit the transaction before

confirming it with the bank The bank will print and send the transaction documents to

the customers when the transaction is completed The services offered through Phone

Banking include checking account balances, information on interest rates, exchange rates,

securities, and the latest deals Customers can also request transaction listings, savings

interest rates, stock quotes, and exchange rates by asking the bank to fax them

Next, Home Banking is a service that can be accessed through either the Software Base or

Web Base platforms via personal computers and the Internet Customers can carry out

various banking transactions, such as money transfers and electronic payments, from

their home or office The service is highly secure due to the VPN system, which enables

communication between the customer and the bank via an internal network (Intranet).

The process of using Home Banking services involves connecting to the bank's computer

system via the Internet, logging in, performing transactions, checking, and confirming

them, and then exiting the network For business customers, the process is more

complicated and requires the registration of two or three User access levels Home

Banking services include transfers within and outside the banking system, bill payments,

funds transfer through ID card or passport, currency conversion, and account balance

inquiries and transaction histories

In addition, the Call Center is a banking service that allows customers from any branch

to call a central phone number for flexible information or to have their inquiries

answered Unlike PhoneBanking, which only provides pre-programmed information, the

Call Center provides more personalized assistance, but requires 24/7 staffing Services

offered by the Call Center include introducing telephone card products, providing

information on payment and savings accounts, receiving complaints and inquiries, and

more.

Kiosk Banking is an electronic banking service that uses touch screens placed in stations

or centers on the streets to allow customers to perform various transactions such as

depositing savings, transferring funds, and paying bills With this service, customers only

need to enter their personal identification number and password to confirm their

transactions The use of Kiosk Banking can help banks reduce the number of ATMs and

the amount of cash in circulation while providing customers with high-quality and

convenient service However, this service is currently less widely provided by banks.

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2.3 Overview of customer loyalty

2.3.1 Definition of customer loyalty

According to Kim (2010), Loyalty can be defined generally as a positive feeling a customer

has toward a brand, service, or activity, which is more of a feature of the customer than

something inherent in the brand, where we see that researchers have not agreed on a

definition of loyalty being characterized by compliance and fork dimensions Arafa (2006)

define loyalty as people's desire to repeat buying a particular brand, as well as customer

turnout towards a specific brand more than other brands Another definition for cusomter

loyalty is that customers’ insistence on buying a product or a specific service despite

promotional and marketing environment surrounding that may contribute to change in

buying behaviour (Kotler and Keller, 2006)

Loyalty is based on a combination of attitudinal and behavioural factors, including

satisfaction, trust, and emotional attachment to the brand (Oliver, 1999) Satisfaction is a

key determinant of customer loyalty as it reflects the customer's overall evaluation of the

product or service received (Anderson & Sullivan, 1993) Trust is another important

factor as it reflects the customer's confidence in the company to deliver on its promises

(Morgan & Hunt, 1994) Emotional attachment to the brand can also influence customer

loyalty as it reflects the customer's personal connection to the brand and its values

(Fullerton, 2005)

Customer loyalty on e-banking services refers to a customer's commitment to using

electronic banking services offered by a particular bank (Ahmad & Al-Debei, 2018)

Electronic banking services have revolutionized the way banking services are delivered

to customers, and customer loyalty on e-banking services has become an important

measure of the success of banks in the digital age

2.3.2 The role of customer loyalty

Customer loyalty plays a crucial role in a company's success as it can lead to increased

profitability and a competitive advantage Loyal customers are more likely to make repeat

purchases and spend more per transaction, which can increase a company's revenue and

profitability (Reichheld & Sasser, 1990) In addition, loyal customers are more likely to

recommend the company or brand to others, which can lead to new customers and

increased sales (Reichheld, 2003) Customer loyalty can also provide a competitive

advantage by increasing barriers to entry for competitors Loyal customers are less likely

to switch to a competitor and are less sensitive to price changes, making it more difficult