Abstract

Purpose: This study considers perceived online service quality and online service recovery as antecedents to online satisfaction for the purposes of investigating which factor has the most significant impact on online customer satisfaction and loyalty. Design/methodology/approach: An online questionnaire method approach was used to survey 428 customers of online banking (123 of whom reported a service failure). Exploratory factor analyses, oblique rotation and varimax rotation were used to assess scale validity. The hypotheses were tested using structural equation modelling based on partial least squares and bootstrapping analysis. Results: Perceived service quality and service recovery have direct/indirect effects on customer loyalty through customer satisfaction. The mediating role of satisfaction was also confirmed. Rather than service recovery, e-quality is the most important predictor of customer satisfaction and loyalty. Management implication: Antecedents such as online service quality, service recovery and satisfaction can be used to forecast customer loyalty in e-banking. However, it is more important to increase customer satisfaction, which requires placing an external focus on developing what will ‘go right’ in the first place by enhancing online perceived service quality, instead of preventing dissatisfaction through recovery, which is an internal focus on fixing what has ‘gone wrong’. Original value: This study is the first to provide important insights into both the direct and indirect impacts of e-service quality and e-service recovery on building relationships characterised by customer satisfaction and loyalty as well as providing definitive evidence in terms of the various sub-dimensions of service quality and service recovery.

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