Internet banking is increasingly used to adapt selling and servicing to new and changing customer needs. Indeed, the Internet is pivotal in recent changes in the banking industry. Banks use the Internet to operate outside their physical locale (Howcroft and Durkin, 2000; Mols, 1999), cut costs (Humphreys, 2000), offer highly customized services (Dannenberg and Kellner, 1998), innovate (Prescott and van Slyke, 1997), foster greater understanding of the customer (Yiu et al., 2007),
and/or develop side businesses and increase the customer base (Sohail and Shaikh, 2008). Such benefits to the business, however, have been neither free nor cheap to banks and customers. The implementation of services online has increased the service complexity for bank administration while simultaneously introducing greater uncertainty and risk for the users. In fact, some current deficiencies in the banking system belong to the new process, such as the lack of personal interaction between the bank and its customers and the twilight zone created in the use of customer information, particularly the
information considered private and sensitive (Casaló et al., 2007).
Consequently, there is a need to reduce bank complexity and reduce customer risk in the Internet banking environment. There is a need to increase trust between the parties. A greater trust between the bank and its customers may contribute toward diminishing the impact of drawbacks of Internet banking by offsetting the effect of customer perceived risk in an atmosphere that is more vulnerable than traditional banking (Pavlou, 2003). Logically, banks are interested in knowing and
using the drivers of customer trust in Internet banking so that they can be more effective in reaching customers and gaining their loyalty. Panel data research shows that customers become more loyal, in terms of repeated purchase, after they adopt online banking (Hitt et al., 2008).
Research shows that service quality plays a vital role in the generation of trust, and that the effect of service quality is direct on customer satisfaction and indirect on customer trust. The indirect effect on trust is mediated by customer satisfaction. More importantly, the findings point to service quality's role in this context as being a multidimensional construct, not a group of isolated, independent influences, as previous studies have shown. Service quality is a latent
variable (a second-order construct), where each of its dimensions interacts with the others. Therefore, the potential effect of each dimension on trust is influenced by the other components of service quality. This study contributes with findings and evaluations supporting a six dimension construct of service quality: security/privacy, accessibility/availability, usability, responsiveness, accuracy, and product quality.
These results have important implications for the management of online banks. In accordance with the results of this study, management of consumer trust in this type of banking must treat different factors of service quality as interrelated whole, not as separate and unrelated, as other studies have proposed. The implications for the practice are straight forward. Banks may not only appreciate the importance of customer trust in the generation and sustenance of Internet services, they can also trace the origin of trust back to its sources, fundamentally customer satisfaction and service quality. In addition, they can follow a path that allows them to place their resources appropriately by, first, securing service quality in tandem in order to produce customer satisfaction and, then, using customer satisfaction as leverage to attain customer trust. In securing service quality in tandem, banks should pay attention not only to the products and services offered via Internet, but also to the delivery process and the potential problems created when not reaching customer expectations. Once customer satisfaction is secured, banks can reasonably expect to obtain the derived benefit of satisfaction, customer trust. More specifically, banks have to work on the elements that make service quality appreciated by the customer, as reflected in the six quality dimensions identified and corroborated in the study. A key element is structural security of the web site, including protection of customers’ personal information (Casaló et al., 2007; McKnight et al., 2002). Another customer-driven element is web accessibility and availability, including useful content and dynamic interfaces. Internet bank users expect to experience an errorless registration process for transactions (accuracy) and to easily understand the structure of the web site, its functions, interfaces, and the contents offered (responsiveness). They also favor usability or perceived ease of site navigation involving both time required and action necessary to obtain the desired results, and speed in finding what they are looking for on the web site. Bank managers should understand that Internet banking is not only a technological tool, it is a path to reach and secure customers, who in turn expect service quality, as characterized in this study, and satisfaction, as preconditions to customer’s trust in e banking.

Question

With reference to the relevant literature and the information in the above case study, analyse the major benefits of Ecommerce to consumers. 

Make use of practical examples to justify your answer.

Answer rating: 100% (QA)

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