Online banking is growing immensely in the modern days. It is a convenient way favored by customers because it enables them to transfer money, pay bills, and access their financial information online. On the other hand, financial institutions favor this industry because it is cost effective. However, online criminals who try to steal firms’ and client information, as well as their money have plagued online banking. Pharming and phishing are the most common attacks experienced by online account holders (Singhal & Padhmanabhan, 2008). Therefore, using an online account has become a risky endeavor that has resulted into serious loss. As a result, clients no longer obtain their expected outcomes that would yield satisfaction. Instead, clients have lost trust in the online banking services, unless the financial institutions employ better and improved measures that enhance customer security.
Introduction to Customer Satisfaction Concept
The definition of customer satisfaction takes two approaches; satisfaction as a process and satisfaction as an expectation of the consumption experience. As a process, customer satisfaction is an evaluation of the service received compared to the customer's expectation. It emphasizes on the perceptual, evaluative, and psychological process that add up to customer satisfaction. The concept of satisfaction as a process is the most adopted description of customer satisfaction. The discrepancy theory forms the origin of this approach (Singhal & Padhmanabhan, 2008). The theory argues that the determination of satisfaction is the perception of the difference between some standard and actual performance. Other theories such as the contrast theory show that clients would exaggerate the contrast between expectations and product evaluation. Assimilation theory, on the other hand, perceives that quality is directly increasing with expectations.
Expectation disconfirmation theory states the customers' understanding of the differences between the perceived performance and the expected performance. When there is positive disconfirmation, there is an increase in customer satisfaction and vice versa. Customers purchases goods and services with prior expectations about anticipated performance and compare the satisfaction derived with the expectations pre-perceived (Usman, 2013). In such a scenario, positive disconfirmation occurs when service performance exceeds expectation. It implies that, therefore, customer satisfaction occurs when the derived satisfaction after the services equal or exceeds the customers’ prior expectation.
Customer relationship management has become an important field for companies as they try to increase their revenues and profits as well as retain their customers. There is a changing ideology in company operation from focusing on increasing or gaining new customers to retaining the current clients (Usman, 2013). Companies achieve this by ensuring customer satisfaction and employing similar high priority operational goals to ensure customer satisfaction.
Problem Identification and Analysis
Internet banking has become a popular mode of banking because of its convenience and flexibility. E-banking customers have expectations from the online banking system and their aim is to maximize their satisfaction. Customers use online banking for transferring funds, paying bills, paying mortgages, withdrawing and depositing cash, as well as viewing, and checking their account balances among others. These services should be convenient to the customers so that they can derive maximum satisfaction. Online banking is very convenient to the customers and the financial institution because it is not bound to operational timings. E-banking has no geographical barriers and the services can be offered at an infinitesimal cost. Since the electronic banking is convenient and costs effective, it has experienced explosive growth and transformed traditional practices of banking.
Since customers’ desire is to maximize their satisfaction from online banking services, it is important to analyze this relationship. The growing patronage of the online-banking services is anticipated to dominate the banking services in the near future. The online banking service uses automated services such as Automated Teller Machines, mobile banking and internet banking. However, various factors affect the customer satisfaction from the use of these machines and services. Models developed to measure customer perception of the service quality and customer satisfaction utilizes face-to-face interactions. Since the technological advancement in the banking industry does not provide for customer employees’ direct interaction, customers have an expectation that they will yield quality services and attain their perceived satisfaction from the use of these technologies (Usman, 2013). However, practitioners tend to concentrate on the automated service usability other than focusing on the service quality.
Global failure in the realization of customer satisfaction issues from insecurity, limited internet access, and legislation as well as E-banking frauds. Customers therefore are left unsatisfied posing a major weakness in the online banking industry. It is necessary to improve the security of these services in order to prevent stakeholders from losing confidence in the system. Some of the methods to employ include technological advancement, internal controls, staff and customer education. However, technological advancement is the most effective way to ensure client and firm online security.
Online banking services continue to decline in customer trust. Though the system has witnessed a dramatic user increase in the past several years, the trend is shifting with many customers dissatisfied with the services. Despite the perception of online services as convenient and cost effective, it is important for the financial institutions to understand the risks faced by customers. A major factor that has contributed to customer dissatisfaction and distrust to these services is insecurity. Customers continue to lose trust and satisfaction from online banking services as banks fail to provide adequate information on their ability to protect customers’ online account.
According to reports by some of the leading technology research and advisory firms such as Gartner, the United States adult consumer are experiencing dissatisfaction and loss of confidence on online banking. In the reports, it was disclosed that customer personal data was accessible to third parties and an increase of phishing attacks has had a negative impact on consumer confidence in online commerce. Other organizations that conducted and obtained the similar results include Ponemon Institute, RSA Security, and Entrust. In that accord, clients do not derive satisfaction from these services making it expenses for the firm and inappropriate for the clients. Insecurity expands to the use of Automated Teller Machine where customers are targeted by robbers and hackers who either rob them the cash or hack their ATMs and withdrawal their cash.
E-banking fraud refers to the use of deliberate misrepresentation using technological expertise fraudulently to obtain money or other assets from a bank or clients’ online account. The most common forms of frauds in the online banking sector include purchase fraud, sales fraud, cheque payment fraud and ATM fraud. These fraud activities and others that involve the collaboration of security agents, bank personnel and local or / and international networking, reduces customer trust on these services (Williamson, 2006). As a result, third parties access customers’ personal information and records. Customers are, therefore, dissatisfied with the online services. Another mechanism used by fraudsters to obtain customer information is phishing. Due to phishing activities, banks, and customers loss millions of dollars; this necessitates the use of biometrics to check these activities. It shows that fraud and theft are not only in the rise but also the security measures employed are insufficient.
Statement of Key Problems and Issues
Phishing and data breaches are some of the major risks experienced by online customers and financial institutions. As a result, there is a need for change aimed at addressing the attacks (Williamson, 2006). These risks affect the financial institution, have an effect on the consumer satisfaction, and lower the trusts on the online services. Some of these risks are:
- Loss of consumer confidence: E-commerce is a multi-million dollar investment and a key revenue-generating infrastructure for many companies. In that accord, online attacks, frauds and theft causes customer to lose confidence in the organizations' ability to protect them on the internet. When consumers receive phishing emails or hear of new breaches, consumer feels vulnerable when transacting companies online (Williamson, 2006). The firm suffers from the loss of integrity when it becomes a victim of an online attack. Consequently, consumers feel insecure since the company cannot protect itself. Customers cannot derive adequate satisfaction from such a firm that fails to give them online protection.
- Reputation result: online attacks damage the image of the firm and it loses its faith with its customers and competitors. Such attacks destroy the firm’s brand. Fraud attacks kill the firms trust by failing to provide security to its clients. As a result, clients are reluctant in associating with a damaged firm since its services cannot meet the expectations.
- Financial impact: phishing is expensive for a firm and consumers. According to Anti-Phishing report, a single phishing attack cost the financial institution between $100,000 and $150, 000 per attack. The cost extends further as the firm tries to unveil the source of the emails and to clean up its systems (Williamson, 2006). These costs include telephone costs incurred when calling its clients to warn them of the threat. When customers’ online accounts get attacked, they lose their money and their account security is in doubt. As a result, they lose trust on the online banking services and they cannot realize their perceived and expected satisfaction from these services.
Generation and evaluation of alternative solutions
In the provision of security to their online customers, financial institutions will ensure customer safety. They can achieve this by establishing stronger authentication. Though the firms cannot stop attackers from launching new attacks, they can control the authentication level required to enter the online accounts. The firms should make it difficult for attackers to access their customers account, therefore, establishing a sense of trust with their customer base (Williamson, 2006). To achieve this security measures, the firms should move from the current protocol to adopt a stronger authentication methods. Multi-factor authentication is an appropriate way of enhancing an authentication because it more than one factor. When the level of authentication is high, the security becomes reliable and the level of fraud prevention increases.
There are three sets of fragmentations of the authentication techniques. These sets are;
Something a person is such as biometric, fingerprints, facial recognition, and voice recognition
Something a person knows such as PIN, password and a name.
Something a person has such as credit card, key fob and identity card.
The current trend involves the use of something that an individual knows (first level) as most online account requires username and password to log into the account. These accounts are prone to online phishing and, therefore, it is important for financial institutions to use advance level of authentication. The firms can include a one-time password token that may make it troublesome for the phisher to have access to the account. Such measure might restore customer trustworthy on the firm’s online services and enable them achieve the satisfaction accrued from the same.
The use of a common protocol that includes a username, a password, and secret question is easy to compromise. The protocol is easy to use from the customer’s end because it has little requirement during customer login. It is cost efficient since the customer does not have to purchase or install any additional software (Saleh, 2013). However, since the institution stores the shared secret, the protocol can be compromised and, therefore, it does not offer customer satisfaction. Additionally, customers may use the same secret information increasing the probability of their accounts being compromised.
In order to curb online account phishing and to realize customer satisfaction, the financial institutions should employ the following methods
- Second level authentication/ something a person has
- Third level authentication/ Something a person is
Second level authentication/ something a person has
It involves a physical device that an individual uses in a multi-factor authentication protocol. The second level is more secure than the first level protocol (Williamson, 2006). It involves the use of USB device, a grid card, password generator or the use of smart card. Another authentication to use includes one-time password and / or PC fingerprinting. The USB token is used as a unique identifier detected when the customer tries to login into their account. Once the hardware is detected, they are permitted to continue with the process by entering a password (Williamson, 2006). It is safe because the customer can carry it since it portable and it is not easy to duplicate or tamper with it.
A grid card is safer than a USB token because it provides the customer with additional authentication. It contains a variety of numbers, characters and letters which are arranged in a grid. Smart cards contain a microprocessor chip that allows it to store and process data (Saleh, 2013). A password generator gives the customer a new password every time they try to login, therefore, it is very safe from hackers and phishers. Machine authentication uses the clients’ computer as a form of authentication by accessing the computer information.
Final level authentication/ Something a person is
The final level and the safest authentication involve the use of biometrics (Williamson, 2006). Biometrics involves the use of the client's physical; features such as facial structure, finger prints, voice and iris configuration. However, in the online banking, fingerprint recognition is the most practical. It is a high level of authentication that offers high level security for the clients. However, this protocol is very expensive as it means supplying each client with a fingerprint identifying hardware.
The implementation of the authentication protocol takes two modes namely blanket and risk based authentication. The blanket authentication involves the use of the enhanced authentication method in every login (Williamson, 2006). For example, if the chosen enhanced is a USB token, the client will have to use it every time they login their account. Blanket implementation is strong because it encourages the clients to use the enhanced authentication every time. It, therefore, guarantees the safety of the customer accounts and customer yield satisfaction from the online services.
Risk based implementation is the most effective because it allows the financial institutions to trigger enhanced authentication when there is minimal risk (Williamson, 2006). If the bank program does not identify the computer used by the client, the customer is asked for additional verification. When the risk is appropriate, the enhanced authentication is triggered. It is appropriate when customers perform high risk transaction. It is also advantageous because it offers the clients with additional steps when the account is logged in from a different machine.
The popularity of internet banking is growing each day. However, the services are not meeting customers’ expectations due to fraud and insecurity associated with online accounts. As a result, financial institutions policy and decision makers should focus on trust, confidence and awareness of users (Williamson, 2006). To achieve these features, they should enhance the security features, utilize proper e-legislation, and secure every transaction in order to inspire customer confidence and promote e-banking culture. The firms can ensure customer satisfaction by ensuring online security using biometrics and other second level authentication protocols such as grid and USB device.
Saleh, Z. (2013). The Impact of Identity Theft on Perceived Security and Trusting E-Commerce. Journal of Internet Banking and Commerce, 18(2), 1-11.
Singhal, D., & Padhmanabhan, V. (2008). A Study on Customer Perception towards Internet Banking: Identifying Major Contributing Factors. The Journal of Nepalese Business Studies, 5(1), 102-111.
Usman, A. K. (2013). Critical Success Factors for Preventing e-Banking Fraud. Journal of Internet Banking and Commerce, 18(2), 1-14.
Williamson, G. D. (2006). Enhanced Authentication In Online Banking. Journal of Economic Crime Management, 4(2), 1-42.