Relationship between Security & Privacy and Customers’ Satisfaction…29

protection to secure the safety of customers and avoid hackers’ violation on customers’ privacy. On the other hand, privacy is also an important concern for the customers as they always seek for protection on their personal and financial information when conducting financial transactions via online banking (Goh et al., 2016). Besides, Jalil, Talukder, and Rahman (2014) stated that the security of online

banking system is always the main interest for customers and serious destruction can be incurred in the banking sector if the security provided for online transfer of funds is not convincing enough. Thus, secure financial transaction matters to majority of the online banking customers as their main concern is to protect their money in the banks (Ndubisi & Sinti, 2006; Fatima, 2011). According to Singhal and Padhmanabhan (2008), one of the crucial elements to online banking users is the security of information. Security risks arise when there is an unauthorized access into the online banking users’ bank accounts.

A well-planned security can increase customers’ satisfaction in using online banking transactions due to the powerful influence of trust on customer's willingness to adopt in online transactions of money and personal sensitive information (Friedman, Kahn, & Howe, 2000; Wang, Wang, Lin, & Tang, 2003).

According to Heikkinen and Iivarinen (2011), an important aspect regarding the security of customers’ transactions was to construct a relevant security against fraudulent transactions to avoid dissonance from happening. Saleh (2011) mentioned that if the three main tools namely, password, encryption, and firewalls or server security are established in an online banking system, the security of the system is said to be strong enough to protect the security of the customers.

Nowadays, encryption technology, a technology converting all information into a series of unrealizable numbers before they are exchanged over the internet is widely adopted by banks to safeguard the security of customers’ information. The security is strengthened by adding few unique identifiers such as a password, mother's maiden name, a favourite colour, or a few minutes of inactivity automatically logs users off the account (Ahmad & Al-Zu’bi, 2011).

Based on the previous empirical studies, many researches have concluded that security and privacy is statistically significant in affecting adoption of online banking. For example, Lee (2008) stated that security risk was the most relevant factor towards the usage of online banking as the higher security risks tended to restrict the adoption rates of online banking. This is due to the fact that most of the online users fear about fraud and identity theft during online banking transaction (Lee, 2008). In this case, the level of customers’ satisfaction will be greatly affected if the customers are not satisfied with the online security provided by banks. In addition, customers’ satisfaction will be hugely reduced if there is a possibility of losing confidential data (Lichtenstein & Williamson, 2006). This is because Lichtenstein and Williamson (2006) stated that data corruption which caused by viruses, noise, hacking, and system crash is always the main concern for internet users as they are worrying about losing their confidentiality. Lu, Cao, Wang, and Yang (2011) also mentioned that security and information disclosure in the online medium have always been the main focus for customers when it comes to online banking. Besides, it was found that a higher security authentication is more preferred for most of the Internet users (Lee, Rao, Nass, Forssell, & John, 2012).

Furthermore, Ahmad and Al-Zu’bi (2011) pointed out that security and privacy have a positive significant influence on customer satisfaction. They mentioned that user’s willingness in engagement of online exchanges of money and confidential information is highly dependent on trust. So, a long run relationship between customer and bank can be established if the customers trust the bank’s privacy protection. However, Goh et al. (2016) found that security and privacy does not have a significant relationship on customer’s satisfaction towards online banking.

This is because the online banking users assume that those online banking providers play an important role in protecting the consumers’ privacy as it was their obligations to provide a secured online banking platform for the customers (Goh et al., 2016).

Therefore, in this study, it is hypothesized that security and privacy have a positive impact on customers’ satisfaction towards online banking. This is because there are more evidence had shown that security and privacy are important in fulfilling customers’ satisfaction towards online banking.

2.2.2 Relationship between Customer Loyalty and Customers’ Satisfaction Customer satisfaction is one of the most important keystones when creating customer loyalty in the bank sector (Ribbink, Riel, Liljander, & Streukens, 2004;

Leverin & Liljander, 2006; Methlie & Nysveen, 1999). According to Dowling and Uncles (1997); Osman, Mohammad, & Mohammad (2015) showed that customer loyalty is a very important factor and become a critical issue because of positive impact on long-term profitability. Customer loyalty is a deeply held commitment to rebuy or repatronize a preferred product or service consistently in the future (Oliver, 1997). According to Methlie and Nysveen (1999) showed that customer satisfaction on customer loyalty can be differentiated into two stage which are affective loyalty and conative loyalty, whereas according to Kuo, Lai, Chang, & Cheng (2011) showed that customer satisfaction on customer loyalty can be differentiated into three stage which are cognitive loyalty, affective loyalty and conative loyalty.

Cognitive loyalty is the customer based on past or current experience to determine their satisfaction towards their preferred bank. Affective loyalty is how much the

customer satisfied their preferred bank and their attitude towards the bank. Conative loyalty is the customer satisfied to the services by the bank and intends to use their preferred bank in the future. According to Ioanna (2002) showed that product differentiation in banking industry is almost impossible as the banks offered similar services and core products to customer. Therefore, Ioanna (2002) stated that banks should differentiate themselves from their competitors by improving the quality of services delivered in order to retain their customer’s loyalty. According to Myftaraj and Nexhipi (2014) showed that attracting new customers is an expensive process, but it will become profitable when the customers have relationship with the bank.

This relationship will become less costly when a customer becomes loyal to the bank.

The relationship between customer satisfaction toward online banking and customer loyalty has been found to be significant in numerous studies (Anderson &

Srinivasan, 2003; Park & Kim, 2003; Rodgers et al., 2005). Many studies on the online buyers also showed strong relationship between customer satisfaction and customer loyalty (Osman, Mohamad, & Mohamad, 2015). According to Koupai, Alipourdarvish, and Sardar (2015), there is a positive relationship between customer loyalty and customer satisfaction towards online banking. When the level of customer satisfaction is high, the possibility of the customer becoming loyal will increase (Bei & Chiao, 2001). This means that customer desires to have a long lasting relationship with the bank if they have strong loyalty towards the banks (Palmatier, Dant, & Grewal, 2006). Loyal customers who are satisfied with the online banking services may have some benefits to the marketing effort. This is because they are willing to buy additional products through online banking and

spread positive word of mouth as well as their reliability as a source of continuous revenues to the banks (Zeithaml, Berry, & Parasuraman, 1996). However, there are negative relationship between customer loyalty and customer satisfaction.

According to Zeithaml (2000); Afsar, Rehman, Qureshi, and Shahjehan (2010) showed that customer satisfaction has very low impact and not significant towards customer loyalty.

Based on previous studies, although there are some researchers proved customer loyalty and customer satisfaction have negative relationship, majority of the researchers found that customer loyalty has positive relationship with customer satisfaction. Therefore, it is hypothesized that customer loyalty is positively related with customer satisfaction.

2.2.3 Relationship between Service Quality and Customers’ Satisfaction