UNIVERSITI TEKNOLOGI MARA

RESEARCH PROPOSAL

DIGITALIZATION IMPACT ON CUSTOMER

EXPERIENCE OF BANKING INDUSTRY
IN MALAYSIA

AIMAN IDAYU BINTI GHAZALI

Master of Customer Service Management

Faculty of Business Management

February 2022
 AUTHOR’S DECLARATION

I declare that the work in this dissertation was carried out in accordance with the
regulations of UniversitiTeknologi MARA. It is original and is the result of my own
work, unless otherwise indicated or acknowledge as reference work. This thesis has
not been submitted to any other academic institution or non-academic institution for
any degree or qualification.

I, hereby acknowledge that I have been supplied with the Academic Rules and
Regulations for Post Graduate, UniversitiTeknologi Mara, regulating to conduct of my
study and research.

Name of Student : Aiman Idayu Binti Ghazali

Student I.D. No. : 2021667778
Programme : Master of Customer Service Management
-BA734
Faculty : Faculty of Business Management
Research Proposal Title : Digitalization Impact On Customer
Experience of Banking Industry in
Malaysia.

Signature of Student : ………………………………………

Date : 4th February 2022

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 LIST OF TABLE

Table Title

Table 1.0 Cronbach's Alpha value

ii
 LIST OF FIGURES

Figures Title

Figure 1 Determinants and consequences of customer experience

in fintech. Source: Adapted from Becker and Jaakkola,
2020, p.638.
Figure 2 Theoretical Research Model

iii
 LIST OF ABBREVIATION

Abbreviation

CX Customer experience

iv
 TABLE OF CONTENTS

Page
AUTHOR’S DECLARATION i
LIST OF TABLES ii
LIST OF FIGURES iii
LIST OF ABBREVIATIONS iv
TABLE OF CONTENTS v-vi

CHAPTER ONE: INTRODUCTION 1

1.1 Introduction 1
1.2 Research background 2
1.3 Problem statement 3
1.4 Research questions 4
1.5 Research objectives 5
1.6 Scope of study and limitations 5
1.7 Significance of study 5
1.8 Definitions of key terms 6

CHAPTER TWO:  LITERATURE REVIEW 6

2.1  Underlying theories/models 6-7
2.2  Variables relating to the study 7-8
2.2.1  Customer experience 8
2.2.2  Ease of use 8-9
2.2.3  Perceived value 9
2.2.4  Customer support 9-10
            2.2.5  Assurance 10-11
2.2.6  Speed 11
2.2.7  Perceived Innovativeness 11
2.2.8  Customer loyalty intention 11-12

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 2.3  Relationship between independent and dependent variable                             12-13
           2.4  Gaps in the literature 14
2.5  Theoretical framework 15
2.6  The hypothesis 15

CHAPTER THREE:  RESEARCH METHODOLOGY 16

3.1  Research approach 16
3.2  Population and sample size 16
3.3  Data collection and procedure 16
3.4  Research instrument 16-17
3.5  Pre-test and pilot study 18
3.6  Plan for statistical analyses 18

REFERENCES 19-21

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CHAPTER 1

INTRODUCTION

1.1 Introduction

Every sector, economy, and society has been impacted by the pandemic. Its
ramifications will have a long-term influence on how financial services develop in the
months and years ahead. Banks must prepare for further turbulence and
unpredictability. They must, however, use the chance to enhance how banks service
their clients while also increasing their resilience and efficiency, therefore undoing the
damage caused by COVID-19. There are two factors to consider when it comes to
creating and maintaining digital banking acceptance. The first is customer experience
and the requirement (or desire) for human touch, whereas the second is digital access
and literacy.

According to consumer finance research, to properly engage with and acquire the
confidence of customers in a completely digital environment, banks must closely
follow the growth of the online e-commerce giants, which have now built up entire
connected ecosystem experiences and value propositions. Banks will need to create a
full understanding of their clients' context.

Customer experience encompasses all facets of a company's offering, including, of

course, excellent customer service, as well as advertising, packaging, product and
service features, ease of use, and reliability. Few people in positions of power, on the
other hand, have consistently paid attention to how their decisions affect the consumer
experience; to the extent that they do, they all have different ideas about what
constitutes a good customer experience, and no one more senior monitor’s everyone's
efforts. Customer experience refers to a customer's internal and subjective reaction to
any direct or indirect interaction with a company. Typically, the client initiates direct
engagement via a purchase, usage, or service. Indirect contact, which can take various
forms, is characterized as unforeseen contacts with representations of a company's
products, services, or trademarks.

According to Digital Banking Reports' Retail Banking Trends and Predictions report,
the number one trend and top strategic aim among global banking CEOs is improving
the customer journey and providing a fantastic customer experience. However, most

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financial institutions are not yet prepared to meet the demands of their clients. Only
37% of organizations have a clear customer experience plan, according to the
Improving the Customer Experience in Banking survey. As banks improve their
digital capabilities to respond to the crisis, they now have the chance to collect vital
data in a methodical manner and offer associated experiences. As a consequence,
interactions will be more tailored and intuitive across all platforms. The human aspect,
on the other hand, is still vital. According to the consumer study, empathy and
understanding must be included in all interactions with customers. It matters less if
their point of contact is a screen or a human being than whether the bank is aware of
their unique circumstances and responds "humanely."

Consumers today are smarter, savvier, more well-informed than ever before, and they
demand a high level of personalization and ease from their banking experience.
Changing consumer demographics contribute to these increasing expectations; each
new generation of banking customers brings a stronger awareness of technology and,
as a result, a higher expectation of digital experiences. The millennial generation has
been at the forefront of the digital revolution. When questioned, five out of six
millennials stated they prefer to interact with businesses through social media.
Millennials were also the most likely to utilise mobile banking, accounting for 47% of
all users. Based on this trend, banks may anticipate future generations, beginning with
Generation Z, becoming even more engaged in omnichannel banking and digitally
proficient. Baby boomers and senior members of Generation X, on the other hand,
value personal interaction and prefer to visit genuine branch locations.

1.2 Research Background

The banking sector's transformation is fueled by new FinTech rivals, growing

business models, rising regulatory and compliance requirements, and disruptive
technology. Although the specific technology that has produced this upheaval may be
valuable in fixing financial issues, the transfer from obsolete procedures to creative
solutions has not always been simple. Banks, on the other hand, must embrace digital
transformation if they are to not just survive but prosper in the present environment.
Traditional banks must learn from FinTechs in order to stay competitive. Banking has
earned a reputation for itself by offering a plain and easy-to-understand client
experience."I am loyal to some companies, but once I have a terrible experience with

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them, I will go," said 76 percent of customers in an Acquia (2018) study. According to
KPMG (2020), the fintech sector's growth is reliant on technological innovation, as
well as merging creative processes with the design and delivery of individualized,
24/7 financial services that enhance the customer experience. (P. Gomber; R.J.;
Kauffman; C. Parker; and R.J.; Weber ;,2018).

Fintech involves financial business model innovation as well as service innovation. R.

Alt, R. Beck, R. Smits (2018), M.A. Nagin, I.R.G. Barus, Wahyoedi (2020). Fintech
organizations are more technologically focused than traditional counterparts; financial
services may be delivered to clients in a more fast, more convenient, and cost-
effective manner using information technology. Nicoletti, B., Meyliana, F., and
Surjandy, E. (2017). (2019). Recent advancements have the ability to change how
people think about and behave when it comes to financial services, possibly having a
significant impact on traditional business. I. Kuzmina-Merlino and S. Saksonova
(2017).

1.3 Problem statement

Al-Wugayan (2019) looked into customer experience as a determinant of relationship

quality and relational outcomes for retail banks in a recent study, emphasizing the
importance of future research to improve the psychometric properties of existing
scales to demonstrate "indigenous behaviors in host cultures." For example, the
KPMG customer experience barometer for all sectors contains seven primary factors:
"accessibility, ease of doing business, executional quality, customized offering, staff
participation, value for money, and reputation" (Loureiro and Sarmento, 2018).These
current indicators are uniform and do not reflect elements unique to a single sector,
which limits their value in guiding business strategy formulation. Wasan (2018)
recommended that banks analyze their operations in terms of customer experience and
provided ideas for analyzing and enhancing customer experience in order to improve
bank economic performance. In an attempt to develop a more industry-specific
customer experience scale, Sultan (2018) provided a technique for reviewing business
processes and developing a staged customer experience with aspects relevant to the
telecom sector.Different studies have been undertaken, and several models have been
given, in order to enhance the correctness of the process, strengthen the customer-
banking relationship, and create a win-win scenario for both parties. In order to

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improve service quality and the banking customer experience, banks must adapt to the
latest technological technologies employed in the digital world. The banking business
is benefiting from technological advancements. Digital technology should be used in
the banking business to make client banking transactions more fluid and
spontaneous.Fortunately, digitalization has resulted in a slew of applications that may
help banks maximize productivity, ushering in a new age in financial services. This is
a contentious issue to which the study will add. With both banks and customers
adopting digital banking, there has been little attention on the ramifications of digital
banking on customer relationships and the value major participants in the industry
may derive from understanding the repercussions. Furthermore, the majority of
research on the subject has been conducted in industrialized countries with well-
established technology infrastructures, in contrast to Malaysia's economy.A
reassessment of the situation in the Malaysian banking industry is required. The
characteristics of customer interactions in banks, according to Chen and Popovich
(2003), include transaction process convenience, access to customer service
interaction, and information provision. The client's experience with five key
components of the customer relationship can make or break a bank-customer
relationship. Chen and Popovich have a long history together (2003).

1.4 Research Questions

Banks are more technologically oriented than their conventional counterparts;

financial services may be supplied to clients in a more timely, convenient, and cost-
effective manner by leveraging information technology, according to Meyliana (2018)
and Nicoletti (2018). (2017). According to Saksonova (2019), digitalization has the
potential to influence clients' views and behaviours toward financial services,
potentially having a major impact on the conventional business. The overarching
purpose of the study was to look at the impact of digitization on customer experience
in Malaysian banking.The purpose of the study is to gather the information that will
assist banks in their efforts to produce digitalization that will appeal to customer and
meet local cultural needs in order to attract more potential customers. The fierce
competition in Malaysian banking should be imaginative and creative, with the clear
goal of being competitive enough to stay in the market.

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1.5 Research objectives

1.5.1To examine the relationshipbetweenease of useand customer experience in the

banking industry in Malaysia.

1.5.2. To examine the effects of the perceived value on customer experience in the
banking industry in Malaysia.

1.5.3. To determine the effects of customer support systems on customer experience in

the banking industry in Malaysia.

1.5.4. To examine the effects of speed and assurance on customer experience in the
banking industry in Malaysia.

1.5.5. To determine the relationship of customer experience and loyalty intention on

digitalization

1.5.6 To examine different age groups’impactonthe customer experience

ofdigitalization in the banking industry.

1.6 Scope of study and limitations

This study has certain limitations, such as sample sites and methodology. It has only
been examined in Lembah Klang and at two tiny banks, Affin Bank and Bank Islam,
out of a total of 27 throughout Malaysia. Other banks or localities may have different
outcome. The inclusion of respondents of all ages and maturity levels, on the other
hand, is likely to make the findings more meaningful and generalizable in the
Malaysian context. Furthermore, the data gathered is confined to quantitative analysis
and can be supplemented with more qualitative data and interviews in the future.
Furthermore, the data collection is limited to quantitative analysis, which may be
augmented with extra qualitative data, such as interviews, in the future.

1.7 Significance of study

This study makes significant contributions to both theory and practise by exploring the
customer experience in digitalization.We expand the application of the S-O-R
approach with new insights from customer experience in the fintech sector,
highlighting several factors that influence the customer experience while formulating

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a set of actionable recommendations for a more relevant customer experience from a
managerial standpoint.

1.8 Definition of key terms

digital banking; digitalization; customer experience;banking industryFintech

CHAPTER 2

LITERATURE REVIEW

2.1 Underlying theories/models

In a number of scenarios, the S-O-R model (Mehrabian, A.; Russell, J.A., 1974) is
used to assess customer experience (Waqas, M.; Hamzah, Z.L.B.; Salleh, N.A.M,
2021). An external stimulus creates an internal reaction in the individual, which
defines a certain response, according to the S-O-R framework (Chopdar, P.K.;
Balakrishnan, J.2020).Bank services affect the customer experience in digital banking,
which has particular implications (Figure 1). The impact that arouses the individual is
known as the "stimulus" component. Banks offer technology-based financial services,
and they create and organize service stimuli to surprise and entice customers.The
qualities of digitalization are communicated through a variety of techniques, including
mass advertising and targeted advertising (Chahal, H.; Wirtz, J.; Verma 2019). The
term "organism" refers to the emotional and cognitive states of consumers, which are
composed of internal processes activated by stimuli ( Kamboj, S.; Sarmah, B.; Gupta,
S.; Dwivedi, Y.2018). Within the "organism," these actions create the client
experience. It's made based on a customer's assessment of a variety of firms, brands,
and/or items' stimuli (Rose, S.; Clark, M.; Samouel, P.; Hair, N, 2012).Customer
experience is a subjective act affected by socio-cultural elements, customer training,
expectations, and technology application capabilities. The "response" is the outcome
of a customer's interaction with a fintech company. Positive customer experience
outcomes include repurchase intent, customer loyalty, positive word-of-mouth, and
customer trust (Hollebeek, L.D,2011).However, a less relevant experience might have
negative consequences, such as the discontinuation of digital application services, a
loss of confidence, and poor word-of-mouth. We investigate consumer loyalty
intentions as a function of customer experience in this study. A previous study

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discovered a relationship between customer satisfaction and customer loyalty (Iyer, P;
Davari, A.; Mukherjee, A, 2018).

The S-O-R theory can be linked to the concept of the customer journey. The customer
journey depicts the customer's interactions with the company before, during, and after
the purchase (Folstad, A.; Kvale, K., 2018).During the pre-purchase stage, customers
learn about the company and make contact with prospective "stimuli." The "organism"
generates the customer experience throughout the customer journey as a result of the
interaction between the consumer and the stimuli. Beginning with the purchase stage,
"responses" collect as a result of the client's experience.

2.2 Variables relating to the study

Customer experience in banking is described as a collection of meaningful cognitive,

emotional, and social responses emerging from the customer-company relationship.
The consumer experience, according to us, is neither low nor high, average nor
extraordinary, negative or positive, weak or intense, but it is a meaningful experience
for both the customer and the firm. A memorable customer encounter is one that a
customer remembers and that has a favorable outcome. The customer internalizes and
interprets the event. The relevant experience possesses four characteristics: it has an
impact, is remembered, has significance, and elicits a response.As a result of
consumer reactions, businesses may take action to provide a relevant customer
experience. Taking the aforementioned factors into account, a higher score on a
customer assessment indicates that relevant experiences are valued above all others
and that businesses should seek out and repeat these experiences. Components related
to the system and those involved with the delivery process, in addition to service
performance, are crucial for a meaningful customer experience in banking (Van Thiel,

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D.; Van Raaij, F,2017).Customers assess a banking deal based on perceived
advantages.These advantages influence the consumer's experience. The studyaims to
investigate the following customer experience elements in banking: simplicity of use,
perceived value, customer assistance, assurance, rapidity, and perceived
innovativeness.

2.2.1 Customer experience

Customer experience is a relatively new idea in modern marketing, and as a result of

rising digitalization, its use in developing and becoming more complex. During the
last decade, several research on customer experience (CX) was published in marketing
publications. According to popular belief, successful businesses add an extra layer to
their quality that embodies the essence of their products and the beauty of their look;
this additional layer is none other than customer experience, particularly pleasant
customer experience (Rekettye, 2018).The majority of the customer experience can be
linked back to the touchpoints with which the consumer interacts, particularly the
people engaged in handling, manufacturing, and delivering the items, as can be seen
from this statement. It imbues the entire situation with a "service aspect." In fact, the
great majority of examples in the literature concern services. Customer experience, on
the other hand, is critical in the case of tangible items.In reality, we are undergoing a
paradigm change as well. The assertion made by Kenesei and Kolos (2018) that the
new paradigm is right is correct. Technology is a crucial channel in the financial
industry, and this would be an excellent chance to investigate the efficacy of offering
a better experience and convenience to customers (Devadevan, 2013). To put it
another way, it leads to the consumer's performance perception of the encounter's
finish (Chuang et al., 2016; Wonglimpiyarat, 2017).

2.2.2 Ease of use

Usability and seamlessness of financial applications are determined by how easy they
are to use. The emotional component of the client experience is improved through
ease of use, which leads to a sense of control ( Rose, S.; Clark, M.; Samouel, P.; Hair,
N., 2012). Customers would rather not waste time learning how to use a financial
service or waiting for it to finish. The ease of use and perceived control of customers'
financial surroundings impact their financial environments (Lee, M.C., 2004), with the
latter being especially important for technologically illiterate customers (Parasuraman,

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A.; Gremler, D.D.; Gwinner, K.P., 2000).Customers who are not really as tech-savvy
will have a lower level of enthusiasm. Engaging with technology until a fair degree of
competency is achieved as a result of the fintech app's perceived simplicity of usage.
It is difficult for them to learn and adapt new technologies. Because of the tension, the
experience with new technology may be less than ideal, at least at first. Even though
simplicity of use isn't a priority for tech-savvy and tech-dependent customers like
Millennials and Generation Z (Dabija, D.-C.; Bejan, B.M.; Tipi, N., 2018), it allows
for the creation of value customer experiences.The ease of use also boosts customer
loyalty intentions (Kim, Y.; Park, Y.-J.; Choi, J.; Yeon, J.,2015). The ease of use
decreases the anticipated challenges of starting a fintech company (Ryu, H.-S.; Ko,
K,2020). A multistage approach for fintech businesses to promote usability includes
conscientization, capacity, incentivization, enrichment, and nurturing (Tan, T.; Zhang,
Y.; Heng, C.S.; Ge, C,2020).

2.2.3 Perceived value

Correlating a service's quality and price may assist you in determining its perceived
worth (Fornell, C.; Johnson, M.D.; Anderson, E.W.; Cha, J.; Bryant, B.E,1996)
Financial service users may be charged both in terms of time and money. The
monetary advantage of the client is computed using the perceived value (Agarwal, S.;
Teas, R.K,2001).The higher the perceived value, the more relevant the consumer
experience (Mbama, C.I.; Ezepue, P.O,2018). One of the most frequently touted
benefits of financial institutions is the ability to save money ( Gomber, P.; Kauffman,
R.J.; Parker, C.; Weber, B.W,2018).Mobile banking's ubiquity and novelty are
attempting to boost perceived value, which is necessary to maintain relying on mobile
banking (Prodanova, J; Ciunova-Shuleska, A.; Palamidovska-Sterjadovska, N, 2017).
Ubiquity is critical for financial services because it allows clients to conduct financial
transactions from any location and at any time.Fintechs provide clients ongoing
financial e-services that save them time and money. Customers with technical skills
are more likely to accept new technologies if their perceived value is higher (Shiau,
W.L.; Yuan, Y.; Pu, X.; Ray, S.; Chen, C.2020).

2.2.4 Customer support

Organizations assist customers who are encountering issues by offering customer

service and being accountable for the meaningful client experience (Parasuraman, A.;

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Zeithaml, V.A.; Malhotra, 2005). The company must comfort the customer and offer
assistance in the case of a possible catastrophe, such as a financial loss. In order to
protect the consumers' assets, a quick response is required. Privacy issues and
economic factors are two further areas of concern. Digitalization must deliver
meaningful experiences to overcome negative consequences and win clients' trust,
experience, and loyalty. Companies are being driven by digitalization to offer the most
innovative technology-intensive services with agility while retaining a strong
emphasis on the customer journey through ongoing interaction (Muthukannan, P.;
Tan, B.; Gozman, D.; Johnson, L,2020). Financial technology enterprises' success is
also attributed to better and more customized client service as compared to traditional
banking (Lee, D.K.; Teo,2015). "Badly structured organizations, ill-suited for
experimentation and cooperation in a digital business world, damaging both product
creation and value delivery" is the most essential component of a failed digital
transformation (Wilson et al., 2020, citing Lepaket et al., 2017, Curado, 2006).
Employees at a digital company are responsible for designing automated solutions and
algorithms that aid in delivery and value capture, in addition to creating and selling
items. Organizations that use digital technology to change key procedures will be able
to expand more effectively and provide better care for their employees. If a company
uses digital agents for customer service, for example, it must be prepared to give the
required training to help with reskilling. Because their employees do everyday jobs,
employers must understand the influence of these technologies on them. In addition,
new technologies are changing the job of managers and business owners by requiring
them to act as "organizational designers" rather than just doing routine and repetitive
activities. To create a pleasant customer experience, managers and business owners
must be able to develop a robust customer support system.

2.2.5 Assurance

When it comes to digitization, assurance refers to a customer's personal and financial

data being protected (Yang, Q.; Pang, C.; Liu, L.; Yen, D.C.; Tarn, J.M.,2015).
Customers must have confidence in the security of digitization transactions, especially
in the case of e-financial transactions. The feeling of a meaningful customer
experience is influenced by safety and trust (Zhou, T, 2013). As part of digitalization,
customers' perceived dangers, data theft, data violations, and/or fraudulent usage are
all addressed by technology (Mehrban, S.; Khan, M.A.; Nadeem, M.W.; Hussain, M.;

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Ahmed, M.M.; Hakeem, O.; Saqib, S.; Kiah, M.L.M.; Abbas, F.; Hassan, M.,
2016).Digitalization involves several security checks, such as electronic keys,
encryption, and biometric identity, as well as service, platform, network, and device
security, to avoid such security breaches (Lim, S.H.; Kim, D.J.; Hur, Y.; Park,
K,2019). A good reputation, as well as privacy and security rules, are vital (Jünger,
M.; Mietzner, 2020).

2.2.6 Speed

The term "speed" refers to the fast completion of digitization (Garg, R.; Rahman, Z.;
Qureshi, M,2014). On-time service delivery is a vital component of client happiness.
New Internet-based technologies are increasing the speed with which services are
delivered (Gomber, P.; Kauffman, R.J.; Parker, C.; Weber, B.W,2018). Digitalization
ensures that services are delivered on time and in a secure manner (Weichert,
M,2017). Time is a precious asset, especially when digitization is used to increase
efficiency and output by both consumers and enterprises. Customers engage with
fintech enterprises to avoid physical shop visits, carry out e-services, and profit from
the speed and ease of use associated with new technology (Ryu, H.-S.; Ko, K,2020).

2.2.7 Perceived innovativeness

Fintech is commonly thought to necessitate a high level of innovation (Berman, A.;

Cano-Kollmann, M.; Mudambi, R,2021). Consumers' cognitive and emotional
feelings are influenced by innovation (Shams, R.; Alpert, F.; Brown, M,2015). An
innovative firm is seen to be technologically advanced, as well as generating
enthusiasm and optimism in its customers. Better remedies to customer concerns, as
evidenced by market effect, might be a source of perceived innovation (Shams, R.;
Alpert, F.; Brown, M,2019).The capacity of banking institutions to employ technology
to develop individualized services that improve the client experience is praised
(Imerman, M.B.; Fabozzi, F.J,2020). In fact, digital innovation can be broken down
into four categories, each of which has an impact on the customer experience: product
innovations, process innovations, organizational innovations, and business model
shifts (Nicoletti, B.,2017).

2.2.8 Customer loyalty intention

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Customer loyalty, along with customer involvement, is one of any company's most
desirable outcomes. Businesses strive to discover the most appealing characteristics
that will entice customers to return. Because customer experience has a positive
influence on loyalty, the outcomes benefit the organisation in a number of ways,
including enhanced trust, customer loyalty, commitment, and positive word-of-mouth
(Becker, L.; Jaakkola, E, 2020).A meaningful customer experience defines customer
loyalty (Keiningham, T.L., Ball, J., Moeller, S.B., Née Bruce, H.L., Buoye, A.,
Dzenkovska, J., Nasr, L., Ou, Y.-C., and Zaki, M., 2017). Cognitive and emotional
experiences have a favourable impact on consumer loyalty, according to a study on
customer experience with online shopping applications (Iyer, P.; Davari, A.;
Mukherjee, A, 2018).

2.3 Relationship between independent variables and dependant variable

Based on prior research findings, they could consider concentrating on consumer

attitude management. The convenience of use, as well as the mindset of the user, have
a significant influence. According to this study, controlling the ease of use has a
bigger influence on E-banking adoption than consumer sentiment. The findings are
especially important for bank executives as they decide how to allocate resources to
preserve and improve current client satisfaction.Rather of focusing on the other two
challenges, managers should devote more time and resources to making online
banking systems easier to use and regulating client attitudes. Management should
search for more user-friendly ways when developing new goods or constructing E-
Banking systems, according to the findings (Al-Gharaibah,2020).

Perceived costs refer to both monetary and non-monetary sacrifices (time, stress).
Perceived value is becoming more popular as the economy transitions from a
production-based to a service-based strategy (Wang and Teo, 2020).As a result,
consumer perceived value is the trade-off between all of a service's benefits and
negatives (Jiang et al., 2016). Because service providers must build long-term
connections with their clients, equity theory looks to be essential in the field of e-
services. Clients believe they have been treated fairly when they identify a trade-off
between their advantages sacrifices and those provided by the firm.The customer often
compares the service provider's benefits-to-sacrifice ratio to that of its competitors.
With technological advancement, internet communication has emerged as more

12
efficient than traditional means, garnering larger market share and communication
success for any organization (Momen et al., 2019). Beseah et al. (2017).

The human connection that occurs between consumers and boundary spanners is
described by the service interaction (Buttle, 2009; Parasuraman et al., 2005).
Customers are more likely to be satisfied when employees are dependable and
efficient as service providers (Kajetan, 2018; Du Plessis and de Vries, 2016). Service
interaction in the banking industry refers to interactions between consumers and front-
line staff including bank tellers, customer assistant officers, and personal bankers
(Chahal and Dutta, 2014). When a customer interacts with a service provider in a bank
or through call centers, this is referred to as a service interaction (Chahal and
Dutta,2014; Kajetan, 2018).

Digital financial services' quality is determined by its reliability, tangibility, empathy,

responsiveness, and assurance. The PLS-SEM structural model evaluation
demonstrates the investigation of predicted connections. The bootstrap process is
highlighted because it generates the statistics required for determining the statistical
significance of path coefficients (Hair et al., 2013). The bootstrapping approach
entails resampling using replacement data from the original sample (Chin, 2001;
Ramayah et al., 2016).The goal of this study was to see if there was a link between the
quality of digital banking services in Malaysian banks and consumer happiness. A
cross-sectional survey approach was used for this study in the Malaysian banking
industry. According to the research, dependability, tangibility, empathy, and assurance
all have a favourable impact on client satisfaction in the commercial banking industry.
Several prior studies have demonstrated that customers' perceptions of innovation are
critical in deciding whether or not to utilise mobile banking services (Venkatesh and
Davis, 1996, 2000; Venkatesh and Morris, 2000). Users demand a simple,
uncomplicated, and quick financial transaction process and environment.Customers
choose mobile banking because it is more convenient. Users, regardless of their
educational level, are more likely to complete a simple task using current technology
than a complex assignment. Because they only have a limited amount of time to learn
how to use new technology, people may be hesitant to adopt it.Malaysian research has
looked at the relationship between digital banking, customer satisfaction, and loyalty
(Moghavvemi et al., 2018; Magotra, 2018), which is critical to any service's success
and helps Malaysian banks retain their market leadership. As a result, in order to

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improve its digitalization policies and processes, the Malaysian banking industry must
understand how digital service quality influences consumer pleasure and loyalty.

2.4 Gap in the Literature

There have been few studies that have looked at the various consumer perspectives on
Malaysia Commercial Bank Limited's service performance. This is a considerable
discrepancy because consumer views of service delivery are a key indicator of a
bank's strengths and faults (Chesaina, and Gitonga, 2019). More research should be
done to explore access, financial aspects, and staff capabilities as critical components
of service quality dimensions alongside the other subscales, according to Pakurar et al.
(2019).This study addresses a gap in the literature by focusing on the influence of
digitalization on customer experience in Malaysia's banking industry. The findings of
the study stress the importance of the customer experience. These studies look at the
relationship between digitization, customer experience, and consumer loyalty.

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2.5 Theoretical Framework

Independent variables Dependent Variable

Ease of use

Perceived value

Customer support
Customer Loyalty intention
experience

Assurance

Speed

Perceived
innovativeness

Figure 2: Research Model

2.6 Hypothesis

(H1). Ease of use is positively relatedto customer experience.

(H2). Perceived value is positively relatedto customer experience.

(H3). Customer support is positively relatedto customer experience.

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(H4). Assurance is positively relatedto customer experience.

(H5). Speed is positively relatedto customer experience.

(H6). Perceived firm innovativeness is positively relatedto customer experience.

(H7). Customer experience is positively relatedto loyalty intentions.

CHAPTER 3

RESEARCH METHODOLOGY

3.1 Research approach

The research focuses on how digitalization affects the customer experience in

Malaysia's banking business. The research applies a quantitative method.

3.2 Population and sample size

Respondents from Lembah Klang's three banks, Affin Bank, Bank Islam, and MBSB
Bank, will be polled online using a Google Form that will be disseminated to 300
people. Convenience sampling, a sort of non-probability sample, will be used in this
study.

3.3 Data collection procedure

Due to lack of customer lists from financial institutions, the study will be conducted
using a convenience sample approach. This sampling approach is often utilized in
social science research due to its close proximity, accessibility, willingness, and quick
response (Jager, Putnick, & Bornstein, 2017). Participants will have been fully
informed about the study's purpose and will have shown a willingness to participate.

3.4 Research instruments

The impact of digitization on the banking industry's customer experience in Malaysia

will be assessed using a structured research questionnaire. The survey questionnaire's
measures and sources are shown in Table 1. Despite this, the questionnaire uses a 7-
point Likert scale to ensure that the study's reliability is maximized and that the real
respondent evaluation is represented (Joshi, Kale, Chandel, & Pal, 2015). Cronbach's

16
Alpha is more than 0.7 for all of the suggested constructs (see Table 1), indicating that
the questions are reliable (Hair, Black, Babin& Anderson, 2010).

Table 1:

Variables Questions Cronbach’s Sources

Alpha
Ease of use 3 0.854 Adapted from
Rose et al. (2012);
Gefen (2003)
Perceived value 3 0.844 Adapted from
Fornell et al.
(1996); Agarwal
and Teas (2001)
Customer support 3 0.858 Adapted from
Parasuraman et al.
(2005)
Assurance 3 0.843 Adapted from
Swaid and Wigand
(2009)
Speed 3 0.893 Adapted from
Garg et al. (2014)
Perceived 3 0.832 Adapted from
innovativeness Kunz et al. (2011)
Customer 6 0.808 Adapted from
experience Bleier et al.
(2019), Adapted
from Rose et al.
(2012)
Loyalty 3 0.860 Adapted from
Parasuraman et al.
(2005)

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3.5 Pre-test and pilot study

A preliminary reliability study will be conducted prior to the real data collection to
assess whether the questionnaire is valid and acceptable. A questionnaire will be
delivered to 30 clients as part of the preliminary survey.

3.6 Plan for statistical analysis

Statistical software such as SPSS will be used to analyze the data once it has been
collected. The following statistical approaches are used in this study:

Frequency tables are used as a descriptive tool to convey more information about the
demographics of the target groups, as well as the fundamental findings of each
questionnaire question.

In all cases, the factor scores are calculated.

To assess the internal consistency of the sample groups' results, reliability tests such
as the Cronbach-alpha test are used.

The various factors' descriptors are also identified. This included the analysis of
variance (ANOVA), which determined if the means of the various groups were equal
and generalizable.

Correlations between the various aspects or components will be examined in-depth

since they assisted to demonstrate a predictive relationship that can be used and
improved in practice. The statistical procedures described above were acceptable for
achieving the study's stated objectives and rating the following research topics.

18
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