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International Academic Journal of Human Resource and Business Administration Volume 2, Issue 2, pp. 41-63the practice of inter-bank/inter-branch banking transactions (CBK, 2011). Developments athome, such as the introduction of mobile telephone in 2001 and improved access to personalcomputers and Internet service facilities have also added to the growth of electronic banking inthe country.However, whereas local banks most commonly practice real time online intranet banking, theintegration of customers into the process is far from been realized. Many of the reasons areattributed to the high prevalence of internet fraud and lack of an adequate regulatory frameworkto protect the banks from the volatility of risks associated with Internet banking, especially at thelevels of communication and transaction. In Kenya, most of bank customers have raisedcomplaints on improving service delivery, an issues banks have overlooked, especially whenusing modern technologies (Aker, 2010). The high level of commercial bank customerdissatisfaction with the services has been previously identified (Aker, 2010; Bichanga & Wario,2014; Kombo, Paulík & Kwarteng, 2016). Key challenges of electronic banking are: getting thebalance between convenience, speed and security. The problem is designing products that offer abalance between competitive pricing and functionality, keeping abreast with dynamism ofcustomer needs and innovation and lack of proper legislative framework to support the growth ofe-banking. Statistics obtained on the number of over the counter transactions in these banks inthe past indicated that indeed, over the counter transactions are still preferred by many clients.The question that is raised then is why? One problem associated with this financial innovation iscard fraud, particularly on counterfeit cards. Fraudulently authorized EFTs and RTGSs are theother avenues through which financial losses occur as customers utilize these avenues of servicedelivery. Frequent system failure especially on ATM machines has also been of concern andaffects quality customer service delivery especially during end month and during festive seasonswhen the service is most needed by customers. In addition, complaints have also been raised onfailures at Point of Sale terminals in stores whenever access to the host bank fails, thus causinginconveniences to customers, sometimes leading to litigations.Adoption of technology in the financial sector have been examined in several studies Anbalagan(2011) and Gikandi and Bloor (2010) observed that half of the people that have tried bankingservices through internet banking will not become active users. Berger (2013) claims thatinternet banking is not living up to the hype. Juma (2013) studied the influence of electronicbanking services on customer service delivery in banking industry, in Bungoma County. Adudaand Kingoo (2012) also studied the Relationship between Electronic Banking and FinancialPerformance among Commercial Banks in Kenya. In addition, Kaburu (2010), evaluated Ebanking in Kenya, Maitha (2010) analyzed the effects of E-banking in commercial banks inKenya in promoting international business, Mchemi (2013), studied E-banking Technology InKenyan Commercial Banks while, Munyoki and Ngigi (2012), investigated Challenges of ebanking adoption among the commercial banks in Kenya. Moreover, Mutunga (2013) analyzedInternational Academic Journalswww.iajournals.org Open Access Peer Review Online Journal Publishers45 Page

International Academic Journal of Human Resource and Business Administration Volume 2, Issue 2, pp. 41-63Operational Challenges In The Implementation Of E-banking At The National Bank Of Kenya,Nyabiosi (2010) also studied Taxing e-commerce in the banking industry: the case for financialtransaction tax in Kenya while, Rono (2015) evaluated the determinants of electronic bankingand operational performance of commercial banks in Kenya. However, none of the aboveresearchers has studied the effect of electronic banking on customer satisfaction amongcommercial banks in Kenya. Thus this study sought to fill this research gap.OBJECTIVES OF THE STUDYThe general objective of the study was to determine the effect of E-banking on customersatisfaction in selected commercial banks in Kenya.SPECIFIC OBJECTIVES1. To establish the effect of internet banking on customer satisfaction among commercialbanks in Kenya.2. To determine the effect of automated teller machines on customer satisfaction amongcommercial banks in Kenya.3. To evaluate the effect of mobile banking on customer satisfaction among commercial banksin Kenya.4. To assess the effect of Point of sale service on customer satisfaction among commercialbanks in Kenya.THEORETICAL REVIEWTheory of Reasoned ActionTheory of Reasoned Action, (TRA) was developed to better understand relationships betweenattitudes, intentions and behaviors (Fishbein, 1967). This is one of the most important theoriesthat are used to explain human behaviors (Poon 2008). Behavioral intention to use technology isexplained by people's attitudes toward that behavior and subjective norms. Intensifiedcompetition and deregulation has led many services and retail businesses to seek profitable waysto differentiate them; one strategy that has been related to success in these businesses is thedelivery of high service quality (Cheah, 2011). So service quality has become a significantresearch topic in past decade due to high revenues, increased cross sell ratios, higher customerretention, purchasing behaviors (Kaynak & Harcar, 2015) and expanded market share. Thesignificance of customer service in the banking sector came to force to compete in a marketdriven environment. The service sector as a whole is very heterogeneous and what isheterogeneous may hold true for one service and may not hold for another service sector. Due tothis differentiation, services in this industry could not be standardized, moreover these servicesInternational Academic Journalswww.iajournals.org Open Access Peer Review Online Journal Publishers46 Page

International Academic Journal of Human Resource and Business Administration Volume 2, Issue 2, pp. 41-63are intangible in nature which could not be compared or seen. The concept of customersatisfaction and service quality is interrelated with each otherAs electronic banking is becoming more prevalent, so is the level of customer service deliverythus the level of customer satisfaction is also changing the scenario of technological environment(Hamisah, 2013). Informational technology in form of e-banking plays a significant role inproviding better services at lower cost. Increase satisfaction in turn increases the mutualunderstanding, customer retention and a bond of trust between customer and bank. The bankswhich are providing these services at large extent to customers are more reputed in the eyes ofcustomers. As the customer satisfaction is the function of customer expectation level and servicequality level provided by the organization, e-banking plays a pivotal role in giving satisfaction tothe customers because e-banking fills the gap between the expected and perceived servicequality.Innovation Diffusion TheoryThis theory postulated by Roger (1983) explains individuals’ intention to adopt a technology as amodality to perform a traditional activity. The critical factors that determine the adoption of aninnovation at the general level are the following: relative advantage, compatibility, complexity,trialability and observability. Many banks have found it advantageous to adopt ICT in theiroperation in order to improve their efficiency. This is achieved through development of websitesand mobile applications that suit the customer needs. Customers are therefore able to access theiraccounts anywhere as long as they are connected to the internet. This theory is concerned withthe manner in which a new technological idea, artefact or technique, or a new use of an old one,migrates from creation to use. According to IDT, technological innovation is communicatedthrough particular channels, over time, among the members of a social system.The stages through which a technological innovation passes are: knowledge (exposure to itsexistence, and understanding of its functions); persuasion (the forming of a favourable attitude toit); decision (commitment to its adoption); implementation (putting it to use); and confirmation(reinforcement based on positive outcomes from it) (Arnaboldi & Claeys, 2008). In the sameway internet banking has been enhanced due to cyber threats and fraud.Early users generally aremore highly educated, have higher social status, are more open to both mass media andinterpersonal channels of communication, and have more contact with change agents. Massmedia channels are relatively more important at the knowledge stage, whereas interpersonalchannels are relatively more important at the persuasion stage.Innovation decisions may be optional (where the person or organization has a real opportunity toadopt or reject the idea), collective (where a decision is reached by consensus among themembers of a system), or authority-based (where a decision is imposed by another person ororganization which possesses requisite power, status or technical expertise). Barnes and CorbittInternational Academic Journalswww.iajournals.org Open Access Peer Review Online Journal Publishers47 Page

International Academic Journal of Human Resource and Business Administration Volume 2, Issue 2, pp. 41-63(2013) advises that managers need to understand the capabilities of any particular technologyand the benefits that ensue from its use in considering what technology to use with theiroperations, as well as understand associated costs and limitations of operating that technology.He advises the general issues to consider as the volume and variety of output that the technologycan achieve, the fit with existing technology used with the organisation and the level of maturityof the technology. Internet banking heavily relies on the ICT since it is carried out on theinternet. Customers are able to access their accounts remotely without having to physically visitthe bank.Contrast TheoryContrast theory was first introduced by Hovland, Harvey and Sherif (1987). Dawes et al (1972)define contrast theory as the tendency to magnify the discrepancy between one’s own attitudesand the attitudes represented by opinion statements. Contrast theory presents an alternative viewof the consumer post-usage evaluation process than was presented in assimilation theory in thatpost-usage evaluations lead to results in opposite predictions for the effects of expectations onsatisfaction. Through the introduction of automated teller machines, customers are able to accessfunds in their accounts ore conveniently and at any one time as compared to the old systemwhere money could only be withdrawn on the counter. A bank seeking to increase customersatisfaction must invest heavily in the ATM networks or join the existing local or internationalnetworks such as visa card or master card.While assimilation theory posits that consumers will seek to minimize the discrepancy betweenexpectation and performance, contrast theory holds that a surprise effect occurs leading to thediscrepancy being magnified or exaggerated. According to the contrast theory, any discrepancyof experience from expectations was exaggerated in the direction of discrepancy. If the firmraises expectations in his advertising, and then a customer’s experience is only slightly less thanthat promised, the product/service would be rejected as totally un-satisfactory. Conversely,under-promising in advertising and over-delivering will cause positive disconfirmation also to beexaggerated (Prathima 2003). In line with this theory, commercial banks must continue to bringin new products that increase customer satisfaction and at the same time keep up with marketstandards.Assimilation-Contrast TheoryAssimilation-contrast theory was introduced by Anderson (1973) in the context of post-exposureproduct performance based on Sherif and Hovland’s (1961) discussion of assimilation andcontrast effect. Assimilation-contrast theory suggests that if performance is within a customer’slatitude (range) of acceptance, even though it may fall short of expectation, the discrepancy wasdisregarded – assimilation will operate and the performance was deemed as acceptable. Ifperformance falls within the latitude of rejection, contrast will prevail and the difference wasInternational Academic Journalswww.iajournals.org Open Access Peer Review Online Journal Publishers48 Page

International Academic Journal of Human Resource and Business Administration Volume 2, Issue 2, pp. 41-63exaggerated, the produce/service deemed unacceptable. The assimilation-contrast theory hasbeen proposed as yet another way to explain the relationships among the variables in thedisconfirmation model. This theory is a combination of both the assimilation and the contrasttheories. This paradigm posits that satisfaction is a function of the magnitude of the discrepancybetween expected and perceived performance. As with assimilation theory, the consumers willtend to assimilate or adjust differences in perceptions about product performance to bring it inline with prior expectations but only if the discrepancy is relatively small (Frame & White,2009).Commercial banks should ensure that transfer of funds from one account to another should be asefficient as possible. This may be effected through electronic transfers either by the bank or bythe customer through internet banking. Assimilation-contrast theory attempts illustrate that boththe assimilation and the contrast theory paradigms have applicability in the study of customersatisfaction. Variables other than the magnitude of the discrepancy that might also influencewhether the assimilation effect or the contrast effect would be observed, when productperformance is difficult to judge, expectations may dominate and assimilation effects wasobserve, contrast effect would result in high involvement circumstances. The strength of theexpectations may also affect whether assimilation or contrast effects are observed (Frame &White, 2009).Commercial banks must also keep up to the expectations of the customers if they are to achievethe desired customer satisfaction. If they do not do this customers was dissatisfied and develop anegative attitude about them and this may lead to low customer loyalty. Assimilation-Contrasttheory suggests that if performance is within a customer’s latitude (range) of acceptance, eventhough it may fall short of expectation the discrepancy was disregarded – assimilation willoperate and the performance was deemed as acceptable. If performance falls within the latitudeof rejection no matter how close to expectation, contrast will prevail and the difference wasexaggerated, the product deemed unacceptable (Bauer 2006).Disconfirmation TheoryDisconfirmation theory argues that ‘satisfaction is related to the size and direction of thedisconfirmation experience that occurs as a result of comparing service performance againstexpectations. Szymanski and Henard found in the meta-analysis that the disconfirmationparadigm is the best predictor of customer satisfaction (Gardachew, 2010). Fang, Tian, and Tice(2010) cites Oliver’s updated definition on the disconfirmation theory, which states Satisfactionis the guest’s fulfillment response. It is a judgment that a product or service feature, or theproduct or service itself, provided (or is providing) a pleasurable level of consumption-relatedfulfillment, including levels of under- or over-fulfillment.International Academic Journalswww.iajournals.org Open Access Peer Review Online Journal Publishers49 Page

International Academic Journal of Human Resource and Business Administration Volume 2, Issue 2, pp. 41-63Karjaluoto, Mattila and Pento (2012) observes that amongst the most popular satisfactiontheories is the disconfirmation theory, which argues that satisfaction is related to the size anddirection of the disconfirmation experience that occurs as a result of comparing serviceperformance against expectations. Basically, satisfaction is the result of direct experiences withproducts or services, and it occurs by comparing perceptions against a standard e.g. expectations.Research also indicates that how the service was delivered is more important than the outcome ofthe service process, and dissatisfaction towards the service often simply occurs when guest’sperceptions do not meet their expectations. Commercial banks must at all times ensure that theyhave satisfied their customers if they are to expect any positive feedback from them. Customersmay also be a major source of new business through referrals. Banks should therefore invest inthe current technology; adopt new ways of doing business such as internet banking, mobilebanking and electronic fund transfers. Automated teller machines should also be user friendlyand be multifunctional such that a customer can withdraw or deposit cash through the sameATM.CONCEPTUAL FRAMEWORKInternet banking (e-banking) is the use of internet and telecommunication networks to deliver awide range of value added products and services to bank customers (Ovia, 2012) through the useof a system that allows individuals to perform banking activities at home or from their offices orover the internet. Some online banks are traditional banks which also offer online banking, whileothers are online only and have no physical presence. Online banking through traditional banksenables customers to perform all routine transactions, such as account transfers, balanceinquiries, bill payments, and stop-payment requests, and some even offer online loanapplications. Customers can access account information at any time, day or night, and this can bedone from anywhere.Recent literature has a narrow focus and ignores internet banking almost entirely; it equatesinternet money with the substitution of currency with internet gadget. For instance Nupur (2010)suggests that internet banking and internet money consists of three devices; access devices,stored value cards, and network money. Internet banking is simply the access to new devices andis therefore ignored. Internet money is the sum of stored value (smart cards) and network money(value stored on computer hard drives).Review of the literature has attempted to address the aspects of adoption of mobile phonefinancial services. It has however, not adequately linked the adoption of mobile phone financialservices on customer satisfaction. In addition, most of the previous studies (Dass and Pal, 2011),(Shin 2010), (Kumar and Ravindran, 2012), (Cheah, 2011), (Puschel et al (2010), (Kaynak andHarcar, 2015), (Poon 2008) and (Nupur 2010) Kotzab, 2009 are emanating from develop

Virtual banking includes all non- traditional and electronic means of banking such as ATM, Phone Banking, Internet Banking (IB), Credit Cards and Debit Cards etc. A special feature of virtual banking is the physical absence of the person seeking banking services at the premises and out of premises even abroad. The sophisticated and