FULL RELATIONSHIP AMONG E-SATISFACTION, ETRUST,

Journal of Theoretical and Applied Information Technology

15

th November 2011. Vol. 33 No.1

© 2005 - 2011 JATIT & LLS. All rights reserved.

ISSN:

1992-8645 www.jatit.org E-ISSN: 1817-3195

1

FULL RELATIONSHIP AMONG E-SATISFACTION, ETRUST,

E-SERVICE QUALITY, AND E-LOYALTY: THE

CASE OF IRAN E-BANKING

SOHEILA GHANE

1, M. FATHIAN2, M. R. GHOLAMIAN3

1, 2, 3

Emails:

Department of Industrial Engineering, Iran University of Science and Technology, Iran, [e-mail]1, [e-mail]2, [e-mail]3

ABSTRACT

Customer e-loyalty is an important issue in the very competitive environment of e-banking. Different

studies show that e-loyalty is influenced by e-satisfaction, e-trust and e-service quality. However, little

attention has been given in the literature to fully understand the full relationships among them. The purpose

of this study is to empirically investigate the impacts of e-satisfaction, e-trust and e-service quality on eloyalty,

in e-banking as an aspect of B2C e-commerce context. Data was collected to test the model from

faculties and students of Tehran universities as respondents, and empirical analyses were performed using

SEM. The analytical results indicate that although service quality, e-satisfaction, and e-trust have strong

direct effect on e-loyalty, impacts of indirect effects (with e-satisfaction and e-trust playing mediating

roles) are more significant. Additionally, this study represents a framework that indicates the full

relationship among the three factors and their (direct and indirect) effects on e-loyalty, a phenomenon that

has not previously been explored.

Keywords:

E-Satisfaction, E-Service Quality, E-Loyalty, Relationship, E-Banking, IRAN

1 INTRODUCTION

A number of studies have examined the

development of electronic banking (or e-banking)

and its operations (e.g., [1] and [6]). Electronic

banking, which can be defined as the provision of

information or services by a bank to its customers

over the Internet, has been one of the major

developments in the financial service sector.

Beerli, Martin and Quintana (2004) state that today

most banks offer the same type of products and the

core product is not the attribute that makes the

customer loyal [2].

Customer loyalty is a concept that has been

discussed in a great number of articles. Not that

many discuss loyalty within service sectors, maybe

because of the lack of standardized products and

the difficulty to measure the service concept. Not

only do loyal customers increase sales and profits

of the business, they also enable it to reduce costs

associated with attracting new customers. In

particular, since the competition is just a mouse

click away, e-loyalty appears to be essential for

electronic banks both in an economic as well as a

competitive sense [1]. These previous findings

point to the need for understanding how e-loyalty

is developed.

Studies have shown that e-service quality (e.g.

[12]), e-satisfaction (e.g. [19]), and e-trust (e.g.

[5]) are key factors for establishing e-loyalty.

These factors have direct and indirect effects on eloyalty.

It means that, each factor affects e-loyalty

individually and furthermore impacts on other

factor(s) that it has direct effect on e-loyalty itself.

However, different studies indicate only some

parts of relationships between these factors and

their influence on e-loyalty ([8], [1] and [19]). In

other word we see a gap in the literature that there

is not a comprehensive view on all of effects that

e-trust, e-satisfaction, and e-service quality have

on each other and on e-loyalty in B2C context

specially in electronic banking . In this paper we

propose a comprehensive model of relationship

between e-trust, e-satisfaction, e-service quality

and e-loyalty in the context of e-banking. We first

review the relevant literature leading to our

research hypotheses. This is followed by

discussions of the research method and results of

the empirical study conducted in Tehran. We

conclude the paper with the implications of the

findings and give some suggestions for future

research.

Journal of Theoretical and Applied Information Technology

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th November 2011. Vol. 33 No.1

© 2005 - 2011 JATIT & LLS. All rights reserved.

ISSN:

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2

2 LITERATURE REVIEW AND RESEARCH

HYPOTHESES

2.1 E-Loyalty

Customer loyalty has been defined as “a deeply

held commitment to rebuy or repatronize a

preferred product/service consistently in the future,

thereby causing repetitive same-brand or same

brand-set purchasing, despite situational influences

and marketing efforts having the potential to cause

switching behavior” [9]. The concept of e-loyalty

extends the traditional loyalty concept to online

consumer behavior. Cyr, Hassanein, Head and

Ivanov (2007) defined e-loyalty as intention to

revisit a website or to make a transaction from it in

the future [4]. Strauss and Frost (2001) suggest

that, given the relatively compressed buying cycle

time, the main emphasis of e-loyalty should be on

converting behavioral intent to immediate buying

behavior [18].

These definitions appear to apply to e-loyalty as

well but have emphasized the behavioral

dimensions of loyalty, such as repeat purchase

behavior, concentrating on the development of

models designed to predict repurchase rates. Later,

this was considered insufficient, because it did not

distinguish between true customer loyalty and

spurious customer loyalty, possibly resulting from

a lack of alternatives. Chang and Chen (2009)

cover this weakness and define e-loyalty as “A

customer’s favorable attitude toward an ecommerce

website that predisposes the customer

to repeat buying behavior”. This definition

considers customer loyalty as attitudes construct

and is more near to real states.

2.2 E-Service Quality

Delivering quality service is considered to be

essential strategy for success in today’s

competitive environment. According to

Parasuraman, Berry and Zeithmal (1985), a

perception of service quality is a result of a

comparison between what consumers consider the

service should be and their perceptions about the

actual performance offered by the service provider

[10].

Service quality and overall satisfaction

implicitly include issues such as price perception,

which is usually only felt rather than objectively

measurable. The argument supporting service

quality as an antecedent of satisfaction is that

customers do not necessarily purchase the highest

quality service, but may also weigh convenience,

price and availability factors [8]. While e-service

quality dimensions are occasionally considered to

be causing e-loyalty directly [19], a majority of

studies view them as antecedents of e-satisfaction

(Chang and Chen, 2009), i.e. satisfaction is

conceptualized as a mediator of the relationship

between quality and loyalty.

The quality elements of the e-service are expected

to affect e-trust directly, because they represent

trust cues that convey the trustworthiness of the

site and the system to customers. Trust was

captured as the client’s confidence in a supplier’s

integrity. Gefen and Straub (2004) investigated

effects of different determinants of e-service on etrust

and show that predictability and integrity of

e-services have significant affect on e-trust [3].

Radwan, AL-Dwairi, Mumtaz and Kamala (2009)

introduced integrity, ability, and quality services as

attributes of e-vendor and showed that these

factors have influence on customer trust [13]. Zha,

Ju and Wang (2006) showed in their research that

dimensions of e-service quality are strongly

predictive of customer satisfaction and trust [20].

Therefore we propose that:

H1: Service quality dimensions are positively

related to customer satisfaction in e-banking

settings.

H2: There is a positive relationship between eservice

quality and e-trust in e-banking settings.

2.3 E-Satisfaction

Zeithaml and Bitner (2000) defined customer

satisfaction as the customers’ evaluation of a

product or service in terms of whether that product

or service has met their needs and expectations

[21]. Satisfaction has been shown to be positively

related to loyalty [9] and this effect also occurs in

online environment. Shankar, Smith and

Rangaswamy (2003) indicated that the effect of

satisfaction on loyalty is stronger online than

offline [17]. Satisfied customers tend to have

higher usage of service, possess stronger

repurchase intention, and are often eager to

recommend the product or service to their

acquaintances than those who are not satisfied. In

addition, dissatisfied customers are more likely to

search for alternative information and switch to

another retailer, and is also more resistant to

developing a close relationship with the retailer.

Customer satisfaction is closely related to

interpersonal trust and is considered as antecedent

of trust. A positive effect of satisfaction on trust

can be expected in the online environment as well,

though empirical research in this domain is scarce

Journal of Theoretical and Applied Information Technology

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th November 2011. Vol. 33 No.1

© 2005 - 2011 JATIT & LLS. All rights reserved.

ISSN:

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[16]. Customers’ satisfactory experiences with a

specific e-tailor are expected to increase their

willingness to make more online purchases from

that e-tailor (loyalty), as well as their trust in the

online medium as such. Satisfaction with a specific

application of the e-tailor will increase confidence

in the e-tailor as a whole. It is therefore expected

that e-satisfaction directly and positively affects etrust.

Therefore we propose that:

H3: E-satisfaction is positively related to e-loyalty

in e-banking settings.

H4: E-satisfaction directly and positively affects etrust.

2.4 E-Trust

Most industries have been influenced, in one way

or another, by electronic commerce. However,

nowhere has the presence of electronic commerce

been more apparent than in the banking and

financial services industry. Using

telecommunication systems and technologies, a

bank can reach out to customers and provide them

with not only general information about its

services but also the opportunity of performing

interactive retail banking transactions. However,

customers have not adopted B2C e-commerce and

e-banking in the same degree, primarily because of

risk concerns and trust-related issues [7].

Internet banking is a new kind of IS, but, from the

marketing perspective, it is also a new kind of

channel where a bank makes contact with its

customers. Researchers in the marketing area have

considered trust as one of the key constructs of

relationship marketing [16]. They have empirically

verified that customer trust has an impact on store

loyalty, which can be defined as a customer’s

enduring desire to maintain a valued relationship

with a store.

Trust has been defined as the degree of confidence

or certainty the customer has in exchange options

[15]. E-trust will therefore be defined as the

degree of confidence customers have in online

exchanges, or in the online exchange channel [5].

Stewart (1999) claimed that the failure of the

Internet in retail banking is largely attributable to

the lack of trust consumers have in the electronic

channels [6]. So, customer trust is considered as

another important antecedent of loyalty.

As said in the first part, we expect e-trust to not

only have a direct impact on e-loyalty but also to

have an indirect influence through e-satisfaction.

In previous studies that come mostly from

developed countries trust is empirically found to

be a strong predictor of satisfaction in online

settings (Chang and Chen, 2009). Razzaque and

Boon (2003), for instance, found a significant

effect of trust on satisfaction in the context of

channel relationship. In line with the previous

arguments, we propose that trust should be

established in order for the customers to be

satisfied with the online bank [14]. Therefore we

propose that:

H5: E-trust is positively related to E-loyalty in ebanking

settings.

H6: E-trust directly and positively affects esatisfaction.

According to these hypotheses our research model

is presented in figure 1.

3 METHODOLOGY

3.1 Sample Data

For educated people, the greatest proportion of

Internet and electronic services in Iran are in the

field of banking. Thus, university faculty, Master

of Science and doctorate students were selected as

statistical community. 835 electronic

questionnaires were sent as email to faculties and

students of Tehran, Amirkabir, Sharif, and Iran

Science and Technology universities. Also, 130

questionnaires were distributed to Master of

Science students of Iran Science and Technology

University. The survey contained measures of eservice

quality, e-satisfaction, e-trust, and eloyalty.

All responses were assessed on five point

Likert scales ranging from 1 (strongly disagree) to

5 (strongly agree). Totally 121 questionnaires were

recovered and all of them were valid.

Journal of Theoretical and Applied Information Technology

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3.2 Measures

3.2.1 e-service quality

Three attributes website design, website construct,

and website content namely were modified from

the measures used by Parasuraman et al. ([10] and

[11]) to depict the nature of e-banking service

quality (ESQ). Each attribute was measured with

three items (website design: alpha=0.870; website

construct: alpha=0.890; website content:

alpha=0.895). Further, we conducted confirmatory

factor analysis using AMOS 5.0 to examine the

ESQ attributes, and the results suggest that the

three-factor conceptualization fits the data

appropriately ( =54.69, df=24; GFI=0.956;

NFI=0.966, TLI=0.965, CFI=0.970, RMR=0.037).

Thus, the

measuring instrument of ESQ which includes 3

dimensions and 9 items has good psychometric

properties.

3.2.2 customer satisfaction and loyalty

The scale used by Ribbink et al. (2004) was

modified for the current study to capture customer

loyalty and trust in e-banking, including four items

(Do more business with this site; Recommend this

site, or internet bank, to other people; Consider

this site to be your first choice; Prefer this site to

competitors ) for e-loyalty and three items (Trust

to information on the site; Pleasure from presented

services; Trust to security of site) for e-trust [16].

Also, five items (I am satisfied with doing my

works via internet; I have truly enjoyed purchasing

from this site; I have always good experience with

using these e-services; I am satisfied with my

decision to purchase from this site; I will choose

electronic bank for doing my future banking tasks)

were modified from the measures used by

Zeithaml and Bitner (2000) to depict the nature of

e-banking customer satisfaction. Analysis reveals

an acceptable internal consistency for the three

constructs (customer satisfaction: alpha=0.941;

customer trust: alpha=0.925; customer loyalty:

alpha=0.920).

3.3 Statistical Analysis Method

The structural equation modeling (SEM) approach

was used to validate the research model. This

approach was chosen because of its ability to test

casual relationships between constructs with

multiple measurement items. Numerous

researchers have proposed a two-stage modelbuilding

process for applying SEM. Confirmatory

factor analysis (CFA) was conducted to test the

validity of the measurement model, and the

structural model was also analyzed to examine the

associations hypothesized in the research model.

4 ANALYSIS AND RESULTS

4.1 Assessing Fit Between Proposed Model And

Data

AMOS 5.0 statistics software was utilized to

conduct linear structure relation analysis. All

parameter estimates for the model are statistically

significant (

goodness-of-fit indicators of the research model.

For the model, the divided by the 24 degrees of

freedom yields a value of 1.63, which is better

than the demanded maximum of 3.0 for a good

model. The other fit indices (GFI=0.948;

AGFI=0.903; NFI=0.968; TLI=0.981; CFI=0.987)

and the low standardized root mean square

residual (RMR=0.062) are all within acceptable

ranges and show that a substantial amount of

variance is accounted for by the model. Hence the

model is a reasonable representation of the data.

p<0.001). Table1 reports the

4.2 Hypothesis Testing

H1 posited that e-service quality would positively

affect e-Satisfaction, and the results in Table 2

provided support for this hypothesis ( = 0.32, p <

0.01). The results also showed that e-service

quality positively influenced customer e-trust ( =

0.53, p < 0.001), providing support for

H2.Unexpectedly. As predicted in H3 and H4, esatisfaction

were positively related to customers’

e-loyalty ( = 0.69, p < 0.001) and e-trust ( =

0.55, p < 0.001), and both hypotheses were thus

supported. H5 proposed that customer e-trust

would positively affect customer e-loyalty, and the

results supported this ( = 0.64, p < 0.001).

Finally, e-trust significantly affected customer esatisfaction

( = 0.55, p < 0. 01), providing

support for H7.

Journal of Theoretical and Applied Information Technology

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th November 2011. Vol. 33 No.1

© 2005 - 2011 JATIT & LLS. All rights reserved.

ISSN:

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5 CONCLUSIONS AND FUTURE WORK

5.1 Discussion On The Result

In an e-commerce context, building e-loyalty is a

difficult challenge that may require consideration

by online firms wishing to differentiate themselves

from competitors. E-loyalty brings high rate of

customer retention and reduced cost for recruiting

new customers which leads to long-term

profitability to the online retailer [5]. The purpose

of this study is to propose a comprehensive model

of the e-loyalty development process by

conceptualizing that e-loyalty is influenced by esatisfaction,

e-trust, and e-service quality. This

study tests all of the direct and indirect impacts

that these factors can have on each other and in

turn on customer e-loyalty, and presents a

comprehensive model on their relationship witch

goes beyond what previous researches have

studied.

Our results confirm that loyalty of e-banking

customers is directly affected by satisfaction and

trust in an online bank, which in turn are

determined by e-service quality. These results

have several implications for those banks which

want to increase loyalty on the World Wide Web.

The quality of e-services has a direct and an

indirect impact on both e-satisfaction and e-trust. It

means that the better e-service quality, the more

customer e-satisfaction and e-trust of the internet

banking services. Further, e-trust not only has a

direct impact on e-loyalty but also has an indirect

influence through e-satisfaction. Since an online

transaction is perceived to be associated with

higher risk, trust has been considered as a critical

component in online retailing context. Therefore,

online retailers should realize that to build eloyalty

and e-satisfaction, there has to be a prior

development of e-trust. In addition, this study

indicates that e-satisfaction, like e-trust, has direct

and indirect effects on e-loyalty. Therefore, if

internet banks can provide the sound e-service

quality to increase customer e-satisfaction, it

would enhance customer uses frequency of these

services, intention to recommend, and likelihood

of repurchase from these services in the future. So,

we can name the e-service quality factor as the

major factor in e-loyalty witch managers should

pay special attention to it.

5.2 Limitations And Future Research

Directions

This study had two primary limitations. First, the

sample employed academic community as

subjects, which may not be representative of the

general population of online shoppers. The

analytical results presented here thus may have

limited generalizability. Second, since this study

only considered B2C aspect of internet banking, it

Journal of Theoretical and Applied Information Technology

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th November 2011. Vol. 33 No.1

© 2005 - 2011 JATIT & LLS. All rights reserved.

ISSN:

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is unclear whether the analytical results can be

generalized to other types of e-commerce that is

used in banking (e.g. B2B and B2E). Further

research can apply the research model to examine

other types of online retailers.

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