Over the past 15 years technology has increasingly been employed in the delivery of services. The adoption of technology into service industries is becoming a strong trend as service providers are now being urged by industry bodies to invest in technology (Australian Coalition of Services Industries Annual Review, 1997) as a way of securing their future in the electronic age. The role of technology in service organizations as discussed by Kelley et al (1998) has been predominantly employed to reduce costs and eliminate uncertainties. In the service sector, technology has been used to standardize services by reducing the employee/customer interface. The majority of consumers now more than ever prefer to opt for a technology-based service delivery over that of the employee (The European Magazine for Applications of Computer Telephony, 1997). This emerging trend raises some important issues about the impact that technology will have on service quality and customer satisfaction levels.

The growth of technology in the delivery of services has had a dramatic effect on the nature of the core offering. Gilbert (1997) uses an analogy to make it simpler to understand the "revolution" that has taken place in technological development in the past two decades. The increasingly competitive environment in the financial services market has resulted in pressure to develop and utilize alternative delivery channels. The most recent delivery channel to be introduced is Internet banking. The term Internet banking is used to describe the provision of information or services by a bank to its customers, via a page on the World Wide Web (www) (Joseph, et al, 1999).
The Internet is the driving engine of the new economy and it has given birth to Internet banking (Daniel, 1999). Internet banking is predicted to transform this traditional industry. The Internet offers banks the opportunity to better meet customer needs through enhanced interaction, data mining and customization (Mols, 1999).

The rapid development of information and communication technologies during the 1990s has enabled companies to introduce more and more high-tech services. Internet banking and other completely new services add value to existing products by substituting or complementing personal interactions with service staff by means of technological solutions (Jun & Cai, 2003). Taking into account these developments, it is evident that service researchers need to pay more attention to consumer evaluations of technology-based services (Parasuraman, 2000).

Internet-based services are believed to be superior to those delivered through the regular channels because of their convenience, interactivity, relatively low cost and high degree of customization/personalization among other advantages. There is very little understanding, however, of the factors that affect customer satisfaction with Internet-based services (Khalifa & Liu 2002).

This research aims to explore the key factors of the internet service quality and perceptions of banking customers of Cyprus, and to analyze and evaluate the customers’ perception and adoption of this service. The objectives of this research study are to:

a. Identify how many people are using internet banking.
b. Identify the purpose of using the internet banking.
c. Investigate the reasons of not using it.
d. Explain the advantages and disadvantages of this service.
e. Suggest changes for improvements that can be generally implemented.