Journal of Retailing and Consumer Services 60 (2021) 102424

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Journal of Retailing and Consumer Services

journal homepage: http://www.elsevier.com/locate/jretconser

A study on factors affecting service quality and loyalty intention in

mobile banking
Qingji Zhou a, b, Fong Jie Lim c, Han Yu a, c, Gaoqian Xu d, Xiaoyu Ren d, Dan Liu d,
Xiangxin Wang d, Xinda Mai d, Hong Xu a, e, *
a
Joint NTU-WeBank Research Centre on Fintech, Nanyang Technological University, Singapore
b
School of Marine Science and Technology, Tianjin University, PR China
c
School of Computer Science and Engineering, Nanyang Technological University, Singapore
d
WeUX, WeBank, PR China
e
School of Social Sciences, Nanyang Technological University, Singapore

A R T I C L E I N F O A B S T R A C T

Keywords: Mobile banking (MB) is one of the most recent innovations for financial sectors which could have practical value
Mobile banking to both users and banks. This study aims to explore the dimensions affecting mobile banking loyalty intention
Service quality and examine their interrelationships and effects on service quality and loyalty. By referring to service quality
Loyalty intention
model, customised factors affecting mobile banking service quality and loyalty intention were proposed. Survey
Structural equation modelling
data were collected from 224 mobile banking users and were analysed based on structural equation modelling
(SEM). The results of SEM analysis directly or indirectly highlight the importance of the interface design, system
quality, security assurance and service quality in mobile banking loyalty intention. Meanwhile, the implications
of the findings on both theoretical and managerial are discussed, as well as the limitation of this study.

1. Introduction Ciciretti et al., 2009; Lee and Chung, 2009). Mobile banking has become
one of the most promising innovations recently, which could be proved
User experience evaluation has been widely applied to explain users’ to have practical values to both banks and users (Baabdullah et al.,
behaviour on a product or service in existing scientific literature 2019). The cashless transactions through mobile phones can improve
(Sharma, 2019; Martínez-Torres et al., 2015; Liébana-Cabanillas et al., the efficiency of banks and users’ quality of life. More and more people
2014). The relationships between consumer satisfaction, service quality make mobile banking as a part of daily life, they can use it for payment
(SQ) and loyalty intention have been studied by many researchers (Zhou and transaction, inquiring the account, investment, linking with credit
et al., 2007; Pappas et al., 2014; Liébana-Cabanillas et al., 2016; Hamidi cards, and so on. Especially in China, mobile payment has become the
and Safareeyeh, 2019). Loyalty intention and customer satisfaction is most popular method of payment from high-end fashion outlet to the
important in the assessment of the experience with regard to shopping, local newsstand, by using a QR code for customers to scan and make the
product or service usage, which will affect consumer’s long-term payment. However, the user experience of mobile banking is far from
behaviour (Grönroos, 1991). In order to evaluate users’ satisfaction fully understood. In order to attract and retain users and increase their
and loyalty intention, the study carried out by Liébana-Cabanillas et al. use of financial and banking services, financial research institutes have
(2016) showed that a strong interest in fulfilling users’ need determined made large efforts on mobile banking technologies. In this respect, a
their subsequent purchase behaviour. number of studies, for instance, those by Khan et al. (2016), Malaquias
Financial sectors have also paid growing attention to customer loy­ and Hwang (2016), Arcand et al. (2017), Chaouali et al. (2017), Shareef
alty evaluation to increase their competitiveness. Since financial com­ et al. (2018), Albashrawi and Motiwalla (2019), etc. have been con­
panies provide similar banking products and services, in order to ducted in the literature to examine mobile banking service.
increase the retention rate, different attempts have been made to find Therefore, this study aims to evaluate the dimensions that affecting
out user preference among different services (Bhattacherjee, 2001; mobile banking service quality and loyalty intention, as well as to

* Corresponding author. Joint NTU-WeBank Research Centre on Fintech, Nanyang Technological University, Singapore.
E-mail address: xuhong@ntu.edu.sg (H. Xu).

https://doi.org/10.1016/j.jretconser.2020.102424
Received 16 June 2020; Received in revised form 1 December 2020; Accepted 9 December 2020
Available online 24 December 2020
0969-6989/© 2020 Elsevier Ltd. All rights reserved.
Q. Zhou et al. Journal of Retailing and Consumer Services 60 (2021) 102424

evaluate the interrelationships among those dimensions and the con­ SERVQUAL and bank service quality dimensions. Amiri Aghdaie and
nections between service quality (SQ) and loyalty intention in mobile Faghani (2012) applied SERVQUAL model to evaluate the relationship
banking in China. Customised factors affecting the SQ by combining the between mobile banking services and user satisfaction, and found that
service quality model, SERVQUAL, dimensions were proposed, explor­ four variables, i.e. reliability, responsiveness, tangible and empathy,
atory factor analysis was applied to evaluate the relationships among the have significant correlations with satisfaction. Ali and Raza (2017)
proposed factors, the service quality perception and loyalty intention by proposed an improved SERVQUAL model by using compliance dimen­
applying confirmatory factor analysis (CFA) and structural equation sion to evaluate the correlations between SQ and customer satisfaction.
modelling (SEM). The remaining parts of this paper are organised as The results showed that there are positive and significant connections
follows. The following sections reviews the literature on service quality, between the multidimensional SQ scale and the unidimensional scale of
especially service quality analysis in banking service, and mobile user satisfaction. Shareef et al. (2018) evaluated consumers’ intentions
banking loyalty intention. The third section presents the research to use mobile banking services in three adoption stages, i.e. static stage
methodology, including customised factors discussion, data collection, (“where consumers can only check account balances or view account
as well as the research hypotheses. The next section presents the analysis and investment related information and interest”), interaction stage
of results and discussions, including respondent statistics, measurement (“where consumers can communicate with service providers for
analysis, structural model analysis and discussions, and SEM effect two-way communication”) and transactional stage (“where consumers
analysis. The conclusions with implications, limitations and recom­ can accomplish some sensitive financial operations such as money
mendations for future study are also presented in the last part. transfer from one account to another and payment of bills”), and found
that driving factors of consumers’ behavioural intentions to adopt mo­
2. Literature review bile banking at the three stages are significantly different. Shokouhyar
et al. (2020) applied SERVQUAL dimensions to categorise customer
Mobile banking (MB) empowers customers to do financial services by satisfaction elements and revealed that different after-sales services
using handheld devices, such as mobile phone (Oliveira et al., 2014; quality elements affect customer satisfaction.
Boor et al., 2014), which connects the customers to a server, to make
payments and transactions, or to perform other services. Customers’ 2.2. Loyalty intention
attitudes and loyalty intentions on MB are important to the banks and
application providers, which will help them to get a real advantage by The loyalty concept has been extensively investigated and defined
enhancing the understandings of key factors affecting loyalty intention using different dimensions by many scholars. Edvardsson et al. (2000)
to use MB services (Mohammadi, 2015). considered loyalty as a customer’s predisposition or intention to rebuy
from the same company. Loyalty has been considered as a determinant
2.1. Service quality in banking industry for a company to achieve success (Flavián et al., 2006). High customer
loyalty enhances their future purchase intention (Flavián et al., 2006),
User’s experience may be inconsistent due to the intangibility, which will help companies to obtain more business from the existing
inseparability, heterogeneity and perishability of services (Ladhari, customers and increase the market share. The main objective of bank
2009). Service quality (SQ) was decided by human attitudes and managers is to make the users increase usage of their MB services to
perception, which was argued to be difficult to be replicated (Yuen and improve customer loyalty. Thakur (2014) evaluated customer loyalty in
Thai, 2015). Service quality involves different service dimensions or mobile banking through PLS-SEM (partial least squares structural
attributes which are desirable to users (Zeithaml et al., 1990). Those equation modelling) model, the results showed that satisfaction on
dimensions are different across business contexts and individuals, which mobile banking had a positive effect on user’s loyalty. Avornyo et al.
cannot be directly measured or observed. (2019) explored mobile banking discontinuous usage intentions based
Subsequently, many researchers had paid attention to SQ model on the trait hierarchical model and the optimum stimulation level the­
based on the revolutionary study by Parasuraman et al. (1985), who ory, the results supported most of the hypothesised paths in the study.
proposed SERVQUAL model. Originally, SERVQUAL model has 10 di­ Baabdullah et al. (2019) tested the main factors affecting the use of
mensions to measure service quality. The 10 dimensions were then mobile banking and user loyalty in the context of Saudi Arabia, the re­
reduced to five dimensions with 22 items afterwards, i.e. (1) Reliability; sults revealed that user behaviour and user satisfaction were noticed to
(2) Tangibles; (3) Responsiveness; (4) Empathy; (5) Assurance. Those have strong effect on customer loyalty. Sampaio et al. (2017) found that
dimensions were claimed to be generic and can be used in different users who are satisfied with their experience in MB service were more
scenarios (Yuen and Thai, 2015). likely to be loyal toward the banks.
Service quality is an important dimension which affects customer The existing literature focused more on the relationship between
satisfaction in banking industry. As discussed above, service quality customers’ satisfaction and their loyalty. To the authors’ knowledge, the
model (SERVQUAL) can be applied to evaluate the quality of services, relationship between SQ and loyalty intention in mobile banking with
which has been applied and adapted by many academic researchers and regard to the customised dimensions affecting the customers’ perception
service industries in various research fields, such as home appliances has not been well evaluated in the existing studies. Since mobile banking
business, after-sales services (Murali et al., 2016; Shokouhyar et al., service is one of the most popular technologies in recent years, in order
2020), especially in banking service evaluation (Kumar et al., 2009, to capture customer satisfaction and expectation of mobile banking
2010; Islam, 2012; Amiri Aghdaie and Faghani, 2012; Ali and Raza, service, this study aims to propose the dimensions to evaluate their in­
2017). Moreover, some researchers argued that the SERVQUAL model terrelationships and effects on SQ and loyalty intention of mobile
may not be suitable in all contexts as the scenarios may be different. banking.
Thus, the original five dimensions of SERVQUAL model may not be
appropriate to different scenarios (Gilmore, 2003). 3. Methodology
Kumar et al. (2009) proposed four critical dimensions, i.e. tangi­
bility, reliability, competence and convenience, to evaluate the level of 3.1. Factors affecting customer satisfaction of mobile banking
bank service quality and revealed that there were significant differences
between the participants’ expectations and perception. The four critical Identifying the factors that affect the actual use level and customer
dimensions are also applied to examine the relative importance of the satisfaction of a technique is an essential process, which can be used to
dimensions between two types of banks (Kumar et al., 2010). Tsoukatos change the characteristics of the technique to make it more attractive
and Mastrojianni (2010) built a specific quality scale by combining (Kuisma et al., 2007; Albashrawi et al., 2019). Banking environment

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Q. Zhou et al. Journal of Retailing and Consumer Services 60 (2021) 102424

around the world is significantly influenced by the factors with regard to speed, and so on. MB security assurance mainly refers to the safety and
technological, structural and regulatory. In order to capture customer security when using the application, which is usually the top concern by
satisfaction and expectation of mobile banking, customised factors by the users. MB loyalty intention mainly refers to the innovations of the
combining the dimensions of SERVQUAL model are proposed to find out application, which makes customers willing to use and recommend to
the factors affecting customer satisfaction and loyalty intention of mo­ others. MB service quality mainly refers to the functions of the appli­
bile banking. This research first reviews the existing studies regarding to cation, which can fulfil the needs of the users.
service quality indicators, especially the five dimensions of SERVQUAL According to the findings from mobile banking users and bank
model. In order to ensure the proposed indicators genuinely reflect SQ in managers, some factors affecting user experience of mobile banking
mobile banking service, face-to-face interviews were carried out among service were proposed. In order to indicate the customised factors pro­
the bank managers and mobile banking users. Subsequently, a survey posed in this study academically, related papers were surveyed by
was conducted by mobile banking users. Factor analysis was applied to searching the key words of “mobile banking adoption” with “interface
analyse the collected data to extract meaningful dimension of SQ in design”, “system quality”, “service quality” and “loyalty”. Afterwards,
mobile banking. Based on the general consensus proposed by the bank 13 papers were selected to support the proposed factors as shown in
managers and mobile banking users, the indicators are shown in Table 1. Table 1.
In this study, MB interface design mainly refers to the interface layout
and the ease of use of the application, as well as the navigation func­ 3.2. Data collection
tions. MB system quality mainly refers to the performance of the
application, such as the compatibility with mobile phone, the response In this study, the surveys were conducted by targeting at the users of
mobile banking services from a bank in China, as they are the most
suitable respondents to evaluate service quality and loyalty intention of
Table 1
Factors affecting user experience of mobile banking service. mobile banking as compared to the bank staff. An online survey ques­
tionnaire was created with a web link. The survey includes the back­
Construct ID Measurement Source
ground of the study, significance and objectives of the research, the
MB interface INT1 It is easy to use mobile Bharati and Chaudhury proposed 19 factors to evaluate the interrelationships among the con­
design banking. (2004); Schierz et al.
structs, as well as the demographic of the participants. To evaluate the
(INT) INT2 The interface design of (2010)
mobile banking application importance of each indicator, a five-point Likert scale from 1 (strongly
is of good appearance. disagree) to 5 (strongly agree) was applied. The survey was conducted
INT3 The Navigation design is from July to September in 2019. During the survey conduction, the
easy to find out various questionnaire web link was sent to the mobile banking users randomly
functions.
MB system SYS1 Mobile banking is of good McKnight et al. (2002a &
by message. Meanwhile, the respondents can also access to the ques­
quality compatibility, stable and b) tionnaire survey through the official website, official WeChat public
(SYS) smooth operation. account, and the official mini programme of the bank.
SYS2 Mobile banking response
speed is fast.
3.3. Conceptual model and research hypotheses
SYS3 Online customer service is
professional, timely and
effective to solve problems. 3.3.1. Introduction of SEM
MB security SEC1 Mobile banking is of high Luarn and Lin (2005); Structural equation modelling (SEM) is a popular statistical analysis
assurance security, which can ensure technique which is widely applied in the behavioural sciences. It can be
(SEC) the security of account and
funds.
used to analyse the structural relationships among the variables and
SEC2 The transaction process and Gewald et al. (2006) factors. To evaluate and test the adoption and user experience of mobile
data are transparent and banking (MB) in various context, structural equation modelling (SEM)
traceable. was applied in many studies, e.g. Lee and Chung (2009), Zhou et al.
MB service SER1 Mobile banking functions Cronin et al. (2000);
(2010), Bhatiasevi (2016) and Yu (2012), and Albashrawi et al. (2019).
quality can fully meet the needs of McDougall and Levesque
(SER) daily business. (2000); Petrick and Lee and Chung (2009) applied SEM method on three proposed quality
SER2 I am satisfied with payment Backman (2002); factors (system quality, interface design quality, and information qual­
transaction business service. Shankar et al. (2020) ity) affecting users’ trust and satisfaction on mobile banking in the
SER3 I am satisfied with loan context of South Korea, the results showed that system and information
business service.
SER4 I am satisfied with inquire
qualities significantly influenced users’ satisfaction and trust. Zhou et al.
business service. (2010) proposed an MB user adoption model by combining the unified
SER5 I am satisfied with theory of acceptance and usage of technology (UTAUT) and task tech­
investment business service. nology fit (TTF) to evaluate the user experience of the mobile banking in
SER6 I am satisfied with credit
the context of China, the SEM results showed that performance expec­
card business service.
SER7 I am satisfied with the tancy, task technology fit, facilitating conditions and social influence
diversity of business. have significant influence on user experience. Bhatiasevi (2016)
SER8 The service price is extended the existing UTAUT model and applied SEM as the primary
rationality. method to test model in the context of Thailand, the results showed a
Loyalty LOY1 The bank improves the Arcand et al. (2017); Lee
intention service experience of the and Chung (2009);
positive relationship between performance and effort expectancies, so­
(LOY) mobile banking through Baabdullah et al. (2019) cial influence, perceived credibility and convenience, behavioural
service innovation. intention and usage of mobile banking. Similar studies had been carried
LOY2 The innovative service out by Yu (2012) and Albashrawi et al. (2019). Lee et al. (2019) applied
makes customers willing to
SEM to analyse the factors affecting mobile payment services from the
use and recommend to
others. perspectives of both consumers and retailers. Chaouali and Souiden
LOY3 There are good coordination (2019) investigated mobile banking resistance among elderly people by
and cooperation between SEM model and indicated that tradition and image barriers affect usage,
the mobile banking and value, and risk barriers. Therefore, in this study, SEM was applied to
offline branches.
evaluate the interrelationships among the factors affecting SQ and

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loyalty intention of mobile banking. improving the service experience of the mobile banking through service
innovation, the innovative service makes customers willing to use and
3.3.2. Research hypotheses recommend to others, and there are good coordination and cooperation
Mobile banking interface design examines how information is shown between the mobile banking and offline branches.
and displayed (Bharati and Chaudhury, 2004), as well as the perceived Therefore:
ease of using mobile banking (Davis, 1989). Wang and Liao (2008)
assumed that ease of use of MB will affect the usage of MB, which will H7: MB service quality has a positive effect on loyalty intention.
encourage customers to use it in their financial services. Furthermore,
perceived ease of use of MB application will also affect the attitude to­ Based on the above hypotheses, Fig. 1 presents the theoretical model
wards the usefulness and service quality of MB (Schierz et al., 2010). with the hypotheses.
Moreover, the interface is the first impression of MB by users, good and
efficient design of mobile banking application will attract people’s 4. Results and discussions
attention as customers will generate their impressions according to the
initial information. Good interface design quality can enhance the for­ 4.1. Statistics of respondent
mation of trust in the MB system quality and MB security assurance
(Everard and Galletta, 2005). Improperly designed interfaces of mobile The survey questionnaire was conducted by mobile banking users of
banking would cause unnecessary work and can negatively influence a bank in China, so the results and discussions are more applicable to the
customers’ utilisation of MB. Therefore, based on the above discussions, scenarios of banks in China. After the survey conduction, there were 397
the following hypotheses are proposed: respondents returned the survey questionnaires. After data cleaning, i.e.
remove the samples with incomplete survey questionnaires and the
H1: MB interface design has a positive effect on MB system quality. same ratings for all questions, as well as remove the samples with a very
H2: MB interface design has a positive effect on MB security short survey time, there were 224 respondents with completed and valid
assurance. survey questionnaires, the valid response rate is 56.4%. Table 2 presents
H3: MB interface design has a positive effect on MB service quality. the profile and mobile banking using frequency of respondents. The
majority of the respondents (78.6%) are frequent users (either every day
Mobile banking system quality is regarded as the quality of an or at least once per week) of mobile banking.
application system’s performance, which can be evaluated by the users’ Since the number of respondents across age groups are different,
perception (Liu and Arnett, 2000; Delone and McLean, 2003). Perceived Wilcoxon rank sum test was applied to determine the effect of age in the
quality is considered to be an important factor and the key determinant overall satisfaction on the mobile banking application (Zhou et al.,
for customer loyalty (Parasuraman and Grewal, 2000). In this study, MB 2020). The respondents’ overall satisfactions were compared among the
system quality refers to the compatibility, stability and response speed of 4 age groups, as shown in Table 3. The comparisons of the different age
the system, as well as the online customer service of MB. High quality of groups did not find any significant difference in the overall satisfaction
mobile banking system will probably have high security assurance, and on the mobile banking application for respondents younger than or
customers will have high level of trust and loyalty intention (McKnight equal to 50 years old (all p’s > 0.05). However, the comparisons of group
et al., 2002a, b). Moreover, studies carried out by Wessels and Drennan 4 (greater than 50 years old) and the other groups are significant (all
(2010), Shaikh and Karjaluoto (2015), and Chen (2013) revealed that p’s≤0.001), which suggests a significant transition of overall satisfaction
the compatibility of the application will be of significant influence on at 50 years old. The sampled users who are 50 or younger are generally
the adoption of MB. Obviously, high compatibility will lead to an less satisfied with mobile banking than those who are older than 50.
increased chance of use and increase the loyalty intention. Further analysis of gender difference of overall satisfaction by Wil­
MB security assurance is defined as mobile banking is of high secu­ coxon rank sum test did not find any significance (p = 0.294), which
rity, which can ensure the security of account and funds, meanwhile, the suggests male and female respondents have similar overall satisfaction
transaction process and data are transparent and traceable in this study. on the mobile banking application.
Mobile banking offers customers to use financial services wherever and
whenever they need it (Luarn and Lin, 2005). The perception risk of 4.2. Measurement model
customers usually determined by the doubts with regard to the level of
inconsistency between their judgement and real behaviour (Koenig-Le­ Before testing the hypotheses, the overall model fit of the scales was
wis et al., 2010; Lee et al., 2007). Although the internet transaction examined by a confirmatory factor analysis (CFA), as shown in Table 4.
service has been existing for a long period, risk may increase in trans­ The CFA model evaluation results include the composite reliability (CR),
actions via mobile devices (Ndubisi and Sinti, 2006). Perceived security the average variance extracted (AVE) and the standardised factor
of MB application will have an impact on the service quality of mobile loadings. The AVE and CR can be calculated by Equations (1) and (2).
banking. Therefore: The fit indices, i.e. the RMSEA (root mean square error of approxima­
tion), SRMR (standardised root mean square residual), the CFI
H4: MB system quality has a positive effect on MB security assurance (comparative fit index), the TLI (Tucker-Lewis fit index), and the GFI
of mobile application. (goodness of fit), are used to assess the goodness of fit of the model.
H5: MB security assurance has a positive effect on MB service quality According to Hu and Bentler (1999), the RMSEA and SRMR should be
of mobile application. lower than 0.08 and 0.10, respectively; the CFI and TLI should be greater
H6: MB system quality has a positive effect on loyalty intention. than 0.95; the GFI should be greater than 0.90. As to the proposed
research model, the fit indices satisfy the recommended cut-off values,
Service quality has been found to be a significant determinant of which indicates the good fit of the measurement model. In addition, all
customer satisfaction and loyalty intentions (Cronin et al., 2000; of the standardised factor loadings are larger than 0.7, the AVE and CR
McDougall and Levesque, 2000; Petrick and Backman, 2002). In this of each construct are larger than 0.50, which indicates that comparing to
study, MB service quality refers to mobile banking functions that can the constructs’ errors, the scales have better variance explanation (i.e. >
fully meet the needs of customers. Those functions include payment 50%) (Hair et al., 2010; Yuen et al., 2020).
transaction service, loan service, enquiry service, investment service, ∑n 2
and credit card service. Moreover, mobile banking can provide various i=1 λi
AVE = (1)
services with reasonable fees. The loyalty intention refers to the bank n

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Q. Zhou et al. Journal of Retailing and Consumer Services 60 (2021) 102424

Fig. 1. Theoretical model with the hypotheses.

Table 2 Table 4
Profile of respondents. CFA evaluation results.
Number of respondents Percentage Construct Measure Standardised factor AVE CR
loadings
Gender
Male 120 53.57% MB interface design (INT) INT1 0.82 0.73 0.89
Female 104 46.43% INT2 0.85
Total 224 100% INT3 0.90
Age group MB system quality (SYS) SYS1 0.96 0.91 0.97
≤ 20 1 0.45% SYS2 0.95
20 - 30 (included) 58 25.89% SYS3 0.94
30 - 40 (included) 76 33.93% MB security assurance SEC1 0.85 0.79 0.88
40 - 50 (included) 41 18.30% (SEC) SEC2 0.93
>50 48 21.43% Loyalty intention (LOY) LOY1 0.93 0.80 0.92
Total 224 100% LOY2 0.93
Mobile banking using frequency LOY3 0.81
Everyday 91 40.63% MB service quality (SER) SER1 0.85 0.71 0.82
At least once per week 85 37.95% SER2 0.89
At least once per month 29 12.95% SER3 0.79
others 19 8.48% SER4 0.88
Total 224 100% SER5 0.84
SER6 0.77
SER7 0.87
SER8 0.82
Table 3
Age group difference of satisfaction with mobile banking. Notes: CMIN/DF = 2.42 (p < 0.01); SRMR = 0.026; RMSEA = 0.080; CFI = 0.97;
TLI = 0.95.
Age range Age group Age group 2 Age group 3 Age group
1 30 - 40 40 - 50 4
≤ 30 (included) (included) >50
Table 5
≤ 30 – p = 0.316 p = 0.498 p < .000* Square root of Average variance extracted (AVE) and correlations of constructs.
30 - 40 – – p = 0.861 p < .000*
(included) INT SYS SEC LOY SER
40 - 50 – – – p = .001* INT 0.86a
(included) SYS 0.78b 0.95
>50 – – – – SEC 0.45 0.64 0.89
LOY 0.65 0.87 0.54 0.89
* Significant difference at .05 level.
SER 0.49 0.67 0.46 0.59 0.84

( ∑n )2 Notes.
a
i=1 λi Main diagonal values: the square root of AVEs.
CR = ( ∑n )2 ( ∑n ) (2) b
Below main diagonal values: the correlations.
i=1 λi + i=1 (1 − λi )

where λi is the factor loading of measurement i, n is the number of the 4.3. Structural model analysis and discussions
measures in each construct.
The discriminant validity of the research model was evaluated by The structural equation modelling results of the conceptual model is
comparing the factor correlation coefficients to the square roots of the shown in Fig. 2. The values of the model fit indices (RMSEA = 0.065;
AVEs, as shown in Table 5. The square root AVEs (main diagonal values) SRMR = 0.023; CFI = 0.98; TLI = 0.97) indicate the good fit of the
are larger than the correlations (the values below the main diagonal), proposed model. Moreover, the R2 of the endogenous variables, i.e. MB
which indicates the good discriminant validity of the model (Gefen system response, MB security assurance, MB service reliability and bank
et al., 2000). SEM model was applied to estimate the proposed con­ brand attachment, are above 0.6, which suggest adequate model fit in
ceptual model as shown in Fig. 1. the context of behavioural science or psychology (Cohen et al., 2003). As
shown in Fig. 2, MB interface design and MB system quality have sig­
nificant, positive effects on MB security assurance, with the standardised

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Fig. 2. SEM results of the proposed model. *indicates that the path estimate is significant (p < 0.05). Model fit indices: χ 2 /df = 1.95 (p < 0.01); SRMR = 0.023;
RMSEA = 0.065; CFI = 0.98; TLI = 0.97.

effects of 0.51 and 0.35 accordingly. Therefore, H2 and H4 are sup­

Table 6
ported by the findings. MB interface design has a relatively higher
Direct, indirect and total effects.
positive effect on MB security assurance (β = 0.51, p < 0.05). MB system
quality have a relatively smaller positive effect on MB security assurance Endogenous (j) MB system MB security MB service Loyalty
Exogenous (i) quality (1) assurance (2) quality (3) intention (4)
(β = 0.35, p < 0.05).
Moreover, MB interface design also has significant and positive effect Direct effects
(aij ) of
on MB system quality (β = 0.85, p < 0.05) and MB service quality (β =
MB interface 0.85 0.51 0.36
0.36, p < 0.05), which indicates the acceptance of H1 and H3. Interface –
design (1)
design refers to good appearance and perceived ease of use of MB MB system – 0.36 – 0.21
application, since the interface is the first point of contact in MB by quality (2)
users, good and efficient design of mobile banking application will make MB security – – 0.65 –
the users perceive good system quality and high security. Therefore, as assurance (3)
MB service 0.75
supported by the results, MB interface design has a high effect on MB
– – –
quality (4)
system quality (β = 0.85), the users are more likely to perceive high
quality of the MB application based on their first impression of the Indirect effects
application. (bij ) of
MB security assurance has a relatively high and positive effect on MB MB interface – 0.30 0.53 0.84
design (1)
service quality (β = 0.65, p < 0.05), therefore, H5 is supported. MB
MB system – – 0.23 0.17
security assurance refers to the safety guarantee of the application. quality (2)
Obviously, it is an important concern by MB customers, because it will MB security – – – 0.49
ensure the security of their daily use of the mobile banking, which covers assurance (3)
payment transaction service, loan service, enquiry service, investment MB service – – – –
quality (4)
service, credit card service, and so on. Therefore, this finding supports
the previous research which suggested that perceived high security by Total effects (cij )
users can make them feel good service quality (Chang and Thai, 2016). of
It is noted that MB system and service qualities have significant, MB interface 0.85 0.81 0.88 0.84
positive effects on loyalty intention, while MB service quality has a design (1)
relatively high effect on loyalty intention (β = 0.75). Collectively, they MB system – 0.36 0.23 0.38
quality (2)
account for 86% of the variance in loyalty intention of mobile banking
MB security – – 0.65 0.49
(R2 = 0.86). All banks have the challenge to keep their customers as assurance (3)
loyal as possible. Nowadays, MB customers are more concerned on MB service – – – 0.75
where, when and how they can use financial services, different novel quality (4)
mechanisms have been considered by banks to fulfil their customers’
demands regarding to banking services (Leong et al., 2017; Baabdullah
high security assurance of mobile banking applications will make the
et al., 2019).
users perceive good service quality. Meanwhile, MB service quality has a
high direct effect on loyalty intention (a44 = 0.75).
4.4. Effect analysis As to the indirect effects, although MB interface design has no direct
effect on loyalty intention, it has the largest indirect effect on loyalty
According to the theoretical model, the effects of the exogenous intention (b14 = 0.84), followed by MB security assurance (b34 = 0.49)
variables on endogenous variables of the constructs are obtained, i.e. and MB system quality (b24 = 0.17). This is mainly due to the presence of
direct effect, indirect effect and total effect, as sown in Table 6. As to the several indirect paths that MB interface design has on loyalty intention
direct effects, MB interface design (a12 = 0.51) has a higher effect on MB (1. MB interface design → MB system quality → loyalty intention; 2. MB
security assurance than that of MB system quality (a22 = 0.36). This is interface design → MB service quality → loyalty intention; 3. MB
mainly due to the fact that the interface design is the first contact and interface design → MB security assurance → MB service quality → loy­
impression of the MB by the users. MB security assurance has a high alty intention). The findings are consistent with the demonstrations by
direct effect on MB service quality (a33 = 0.65). Safety is always a Cyr et al. (2006), who revealed that design/aesthetics of MB application
concern of the users when they use mobile banking services. Obviously, indirectly affect users’ loyalty intention. The results highlight the

6
Q. Zhou et al. Journal of Retailing and Consumer Services 60 (2021) 102424

importance of MB interface design. Moreover, MB interface design also services, etc.) can enable customers to trust their mobile banking.
has a relatively high indirect effect on MB service quality (b13 = 0.53). Meanwhile, the developers also need to provide multi-level security
For the total effects, MB interface design has the largest effect on MB features to increase the users’ perceived security when using MB ap­
service quality (c13 = 0.88), followed by MB security assurance (c33 = plications. The banks should provide structural assurances with well-
0.65) and MB system quality (c23 = 0.23). The results present the documented policy to users, to increase the privacy level and indicate
importance of improving the interface design, system quality and se­ the potential risks when using the MB services, such as transactions,
curity assurance of mobile banking applications which will enable the investment and so on. The level of service quality needs to be increased
service quality of mobile banking. However, more attention can be paid by the banks to support the users at any time, which can enhance users’
to the interface design because it will also improve the perceptions of satisfaction and increase usage of MB services.
system quality (c11 = 0.85) and security assurance (c12 = 0.81) by the
users. Furthermore, MB interface design has the largest total effect on 5.3. Limitations
loyalty intention (c14 = 0.84), followed by MB service quality (c44 =
0.75), MB security assurance (c34 = 0.49) and MB system quality (c24 = Since this study applied survey data to evaluate and test the proposed
0.38). These results highlight the importance of interface design and conceptual model, although the data were of convergent validity and
service quality of mobile banking application. reliability, as well as discriminant validity, because of data were ob­
tained through questionnaire surveys, the estimated results may not
5. Conclusion fully reflect the true parameters, but the findings can still be used by
banks to retain their mobile banking users.
5.1. Summary The sample data were collected from a big bank in China, which
covers different kinds of financial services (e.g. loan, credit card, etc.), as
This study examines the determinants of mobile banking service some small banks in China may not provide some of the services, such as
quality and loyalty intention through customised factors by combining credit card and loan services, which may affect the generalisability of
the SERVQUAL model. A theoretical model was developed to reveal the the results, and hence need to be interpreted with precaution. Based on
determinants of MB service quality and loyalty intention. The in­ the current data, the findings are more applicable to the scenarios of
terrelationships among the determinants were analysed. Survey ques­ banks in China. Future research can be conducted in other countries and
tionnaires were conducted on 224 mobile banking users, the obtained regions and may consider identifying other determinants affecting
data were analysed based on SEM. The results are consistent with the customer loyalty.
aforementioned hypotheses. Collectively, MB interface design and MB
security assurance have a very large explanation to the variance of MB Acknowledgements
service quality (R2 = 0.92); MB system quality and MB service quality
also have a large explanation to the variance of mobile banking loyalty This research is supported, in part, by the Joint NTU-WeBank
intention (R2 = 0.86). MB service quality has a high, positive direct Research Centre on Fintech (Award No: NWJ-2019-006), Nanyang
effect on loyalty intention. MB interface design has the largest indirect Technological University, Singapore; the RIE 2020 Advanced
and total effects on loyalty intention. The results directly or indirectly Manufacturing and Engineering (AME) Programmatic Fund (No.
highlight the importance of interface design, system quality, security A20G8b0102), Singapore; and Nanyang Technological University,
assurance and service quality in mobile banking loyalty intention. Nanyang Assistant Professorship (NAP).

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