Recovery from service problems commercial use of internet banking
Abstract
As banks utilise internet banking as a main transaction tool, commercial banking customer
needs must be considered. Research suggests that although problems in service delivery do
occur, it is how businesses recover from service problems that is important to customers. This
paper reviews the results of qualitative research looking at problems with internet banking.
Commercial bank customers discussed the problems they faced with the technology and their
relationship with the bank. Customers tended to fall into two categories- relationship-oriented
and transaction-oriented customers. Findings suggested that transaction-oriented customers
were more likely to have problems than the relationship-oriented customer group. A series of
implications from this research are provided, particularly focused on way in which banks
build relationships with their business customers.
Introduction
Technology has impacted the way businesses operate in a business-to-business (B2B) context
and has influenced services by altering the way services are delivered (Bitner, Ostrom and
Meuter, 2002) however can also result in problems. Electronic banking, encouraged by banks
as a way to reduce service delivery costs and improve service quality for customers, is one
technology that has streamlined business transactions (Sathye, 1999; Hughes and Hughes,
2004). Literature regarding internet banking tends to focus on adoption, use, benefits or
barriers to adoption. In contrast, this paper provides an overview of problems occurring with
internet banking use by commercial customers. This paper reviews the results and
implications of an exploratory study conducted with a sample of Australian business bank
customers and interviews with six Australian financial institutions.
Problems in service delivery
In a service context, it is essential to build trust between a marketer and customer. This is
particularly important in a business-to-business context. If a customer trusts a service
provider, they are likely to return to that service provider (Berry, 2002); ultimately increasing
commitment to the relationship. Commitment is also an important consideration in a service
context, due to the interactive nature of service delivery (Kelley and Davis, 1994). Perceived
risk (Sheth and Parvatiyar, 1995) and intangibility, however, can be discouraging for
customers in a services marketing context and highlights the importance of developing strong,
trusting relationships with customers. Customers understand that from time to time, problems
occur in service delivery, however the way in which organisations recover from service
failures with customers has major implications for customers evaluations of a firm and
effective resolution of problems can be beneficial to a relationship (Reichheld, 1993; Morgan
and Hunt, 1994; Tax, Brown and Chandrashekaran, 1998). This also occurs in a self-service
context as customers expect prompt repair of any service failures or they lose trust in the
marketer and get frustrated (Bitner et al., 2002). Problem solving must be effective to build
trust and commitment in the relationship (Morgan and Hunt, 1994). Where there are problems
with technology it is essential for marketers to deal with these issues effectively to maintain a
positive relationship. Furthermore, dissatisfaction with the amount of technology use in a
relationship impacts on the customer’s perception of the service delivery. When considering
internet banking, therefore, it is essential that to enhance relationship commitment in a service
context, banks must work well with customers, focus on their needs and recover from, or fix,
any service failures promptly, regardless of whether it is a service delivered by a marketer, or
a self-service delivery. Appropriate service delivery contributes to the building of trust, and
this is followed by relationship commitment.
According to Pujari (2004: 203), “there is an urgent need for understanding SST encounters in
the wider context of technology based service delivery systems”. This is why it is important to
understand problems related to business use of internet banking. When self-service
technologies fail, the customer is often dissatisfied with both the failure and resulting action
by the firm. The way in which these problems are solved can have large implications for
customer evaluation of a firm (Reichheld, 1993; Tax et al., 1998) as well as impacting on the
overall perception the customer has about the brand. Criticisms regarding using the internet in
business-to-business relationships indicate that the separation of buyers and sellers can be
problematic (Ratnasingam and Pavlou, 2003). This potentially impacts on trust and,
ultimately, the commitment to the relationship.
Method
Utilising qualitative research, this research explores the impact of self-service technologies on
interfirm relationships. Semi-structured interviews with both banks and business customers
were undertaken, utilising an interview guide. The data was analysed using two computer
programs (NVivo and Leximancer) as well as thematic analysis. The organisations in the
study varied in industry and size. Organisations were categorised into small (less than ten
employees), medium (between ten and ninety nine employees) and large (over one hundred
employees) organisations. This allows data to be compared on the basis of organisation size
so as to determine whether size impacts on usage, satisfaction and training. There were
thirteen small organisations, seven medium organisations and five large organisations
explored in the research. Although this is an unbalanced sample, with more small and medium
organisations than large organisations, it does provide an understanding of how size impacts
on relationships. Organisation size was based on employee numbers, rather than turnover,
because it was deemed that employee numbers would be more indicative of distance between
the user and the bank and decision makers. Furthermore, turnover for some smaller
organisations is viewed as confidential and it was considered to be more difficult information
to obtain than would employee numbers. In this study a total of thirty-one interviews, or
‘cases’ (Patton, 1990), were conducted. Twenty-five interviews were conducted with business
customers and a further six interviews were undertaken with banks to discuss their strategy
decisions. At this point, it was determined that data saturation was reached.
Problems with banking
In order to determine the impact problems with self-service technologies had on relationships,
respondents were asked about any issues they had faced. It was evident that customers fell
into one of two categories: transaction-oriented or relationship-oriented. Problems were more
apparent for the transaction-oriented customers, rather than for relationship-oriented
customers. Using Leximancer, the concept ‘problem’ was focused on to determine what the
problem areas are in banking relationships. Figure 1 indicates the graphical representation of
these linkages with the concept ‘problem’ located on the top right hand side of the document.
Figure 1: Linkages to the term ‘problem’
This concept map indicates the way the concept ‘problem’ has links to other concepts in the
study. It can be concluded from the analysis of this map that problems with ‘service’ and
‘transactions’ and other transaction-oriented issues were problematic for customers. Table 1
indicates some of the specific relationships between the term ‘problems’ and other themes:
Table 1 – Exploring the concept ‘problem’ in more detail
Code identified
in Leximancer
Problem
Major concepts
relevant to the term
‘relationships’
Service
Easy
Transaction
Time
Money
Account
Pay
Meaning
The concerns relating to service were about the bank’s
consideration of the customer as an individual business
versus ‘just another customer’.
It is best if online banking is ‘easy’. Transactionoriented respondents expressed statements such as “I
want to do everything online, however this brings a
point of failure” if something goes wrong.
Ease of transacting was essential. “I just want to walk in
and transact – quickly, easily, cheaply” indicates the
comments related to transactions.
Transaction-oriented respondents indicate that having a
relationship with a bank manager does not save them
time. Rather, these respondents prefer to transact
quickly, ultimately saving their business time.
This concept related to the physical money that could be
transferred and was necessary for business. ‘Running
around’ and ‘chasing things up’ were problematic for
customers. If funds were not available at the right time,
customers found this problematic. Furthermore, if they
had to chase matters up themselves, they felt
disappointed with the bank.
Account is a relatively minor concept related to the daily
management of accounts and any problems that may
occur.
This concept also relates to the daily management of
accounts, however, payroll issues were raised by
respondents as problems with internet banking.
Figure 2 indicates the map that demonstrates the relationship between problems and
transactions. It indicates that the relationships between the term problem and other concepts in
the Leximancer system. Many of the issues related to the day to day management of accounts.
This was focused on ‘time, and the essential requirement of ‘people’, however despite the
inclusion of the term ‘people’, problems were mostly related to ‘transactions’ for both
segments of customers. Furthermore, further analysis of the quotes that generated these maps
and were related to these concepts indicated that respondents, particularly transaction-oriented
respondents, sought easy management of accounts with limited time-wasting or running
around. This provides an in-depth understanding of problems with online banking for
business customers and indicates a necessity to provide fast support when issues arise.
Figure 2 Map indicating the pathway between the concept ‘problem’ and ‘transaction’
It is also evident through the analysis that the two segments have distinct concerns. Problems
in relationships tended to occur for the customers that were transaction based. Through
increasingly utilising technology in business banking, customers are increasingly become
transaction-oriented, highlighting a possible concern that customers will ultimately become
less satisfied. It is important to understand customer perceptions of switching costs to
determine the level of commitment to the relationship. Although the majority of customers
were satisfied with their bank’s internet banking, problems did arise from time to time. One
respondent explained that problems were generally caused by the user, stating “they’re really
only been our mistakes, rather than the bank’s mistakes” (R9, User). This respondent also
said that delays for payments were sometimes not explained and this caused problems but did
not affect loyalty.
Implications
The research findings indicated that transaction-oriented customers were more likely to
experience internet banking problems than the relationship-oriented customers. Perhaps this
could link to loyalty, where customers experiencing problems were more likely to report
lower levels of loyalty. While there was no real pattern in terms of loyalty, with a fairly even
mix between ‘low’ and ‘strong’ levels of loyalty, there were differences with relationshiporiented customers. Table2 indicates the strong level of loyalty reported for relationshiporiented customers, compared with transaction-oriented customers:
Table 2 – Loyalty to bank as rated by interviewees
Level of Loyalty
Low
Medium
Strong
Transaction based customers
R5, R8, R13, R15, R16
R20, R21, R23
R9, R10 , R14, R17, R19
Relationship based customers
R2
R3
R1, R4, R6, R7, R11, R12, R18, R22, R24,
R25
Although the table above indicates both relationship based customers and transaction-oriented
customers can have a strong degree of loyalty, there is more diversity in loyalty for
transaction-oriented customers. This table indicates that it could be expected that relationshiporiented customers are loyal to the relationship. Although not all relationship-oriented
customers have a strong loyalty to their bank, this was only apparent when there have been
problems and they would like to move but feel they cannot (in the case of R2) or when a user
feels their boss is loyal, but has no particular reason to be loyal themselves (in the case of R3).
In contrast, it is very difficult to predict how loyal a transaction-oriented customer is likely to
be, due to the diversity of responses.
Loyalty, or commitment to the relationship, is essential to understand in this study. It
indicates how likely it is that relationships will be maintained and also indicates the potential
impact self-service technologies could have on these business relationships. As indicated in
the literature review, relationships in a business-to-business context are perceived as being
essential. Furthermore, relationships within banking are considered very important and
therefore a sense of commitment, or loyalty, to the bank is important to understand. Through
the interviews there was evidence of a strong loyalty to the banks, or at minimum, a
perception of high switching costs. As it would be expected, transaction-oriented customers
expressed much lower levels of commitment than relationship-oriented customers did. In
contrast to the respondents, banks held mixed views about commitment. The banks felt that
switching between banks was quite common due to perceptions of problems, indicating a
transaction view of business banking, rather than a relationship perspective. This research
suggested several key points: Problems with banking are generally related to user issues, or
the business structure; New software and other changes can be problematic to business
customers; Help desk support is essential when utilising self-service technologies; While user
errors can be problematic, customers still require support and Customers separate their
perception of technology from the relationship with the marketer. In the past, most service
encounters occurred face-to-face (Bitner, 1990) however with the introduction of information
technology, service encounters can now occur remotely (Makarem, Mudambi and Podoshen,
2009). This research has examined the impact of the reduction of face-to-face contact on
business relationships. While the findings seem to suggest that customers were satisfied with
the use of information technology and could still have an interpersonal relationship with their
bank if they desired, customers mostly made a choice to be transaction or relationship
oriented.
The research results indicate that previously established trust of the bank, established prior to
the use of technology, impacted on the perception of technology. This was unexpected and
significant. This means that businesses that perceive their relationship is unsatisfactory will
also have an unsatisfactory opinion of the technology, and organisations with a positive
impression of the bank will also have a positive impression of the technology. This is
particularly interesting because customers also seemed to perceive a separation between the
technology and the relationship, viewing technology issues as separate from the bank
particularly when there was a positive relationship with the bank and problems with the
technology. This requires further exploration.
Reference List
Berry, L. (2002) Relationship Marketing of Services Perspectives from 1983 and 2000,
Journal of Relationship Marketing, 1, 59-77.
Bitner, M. J. (1990) Evaluating Service Encounters: The Effects of Physical Surroundings and
Employee Responses, Journal of Marketing, American Marketing Association, 54, 6982.
Bitner, M. (2001) Service and Technology: opportunities and paradoxes, Managing Service
Quality, 11, 375-379.
Bitner, M. J., Ostrom, A. L. & Meuter, M. L. (2002) Implementing successful self-service
technologies, Academy of Management Executive, Academy of Management, 16, 96119.
Eisenhardt, K. (1989) Building theories from case study research, Academy of management
Review, 14, 532-550.
Hughes, R. & Hughes, A. (2004) The Adoption of Internet Banking services by young
Australian consumers, Proceedings AusWeb Conference, The Gold Coast.
Kelley, S. & Davis, M. (1994) Antecedents to customer expectations for service recovery,
Journal of the Academy of Marketing Science, 22, 52-61.
Makarem, S., Mudambi, S. & Podoshen, J. (2009) Satisfaction in technology-enabled service
encounters, Journal of Services Marketing, 23, 134-144.
Morgan, R. & Hunt, S. (1994) The Commitment-Trust Theory of Relationship Marketing,
The Journal of Marketing, 20-38.
Patton, M. (1990) Qualitative evaluation and research methods, 2nd Edition, Sage, Newbury
Park
Peters, T. & Austin, N. (1985) A Passion for Excellence, Random House, New York.
Pujari, D. (2004) Self-service with a smile? International Journal of Service Industry
Management, 15, 200-219.
Ratnasingam, P. & Pavlou, P. (2003) Technology Trust in Internet-Based Interorganizational
Electronic Commerce, Journal of Electronic Commerce in Organizations, 1, JanMarch, 2003, 17-41.
Reichheld, F. (1993) Loyalty-based Management, Harvard Business Review.
Sandelowski, M. (1995) Sample size in qualitative research, Research in Nursing & Health,
18, 179-183.
Sathye, M. (1999) Adoption of Internet banking by Australian consumers: an empirical
investigation, International Journal of Bank Marketing, 324, 334.
Sheth, J. & Parvatiyar, A. (1995) The evolution of Relationship Marketing, International
Business Review, 4, 397-418.
Tax, S., Brown, S. & Chandrashekaran, M. (1998) Customer evaluations of service complaint
experiences: implications for relationship marketing, The Journal of Marketing, 62,
60-76.