African Journal of Business Management Vol. 6(26), pp. 7727-7735, 4 July, 2012 Available online at http://www.academicjournals.org/AJBM DOI: 10.5897/AJBM11.1776 ISSN 1993-8233 ©2012 Academic Journals Full Length Research Paper Representing a combination algorithm (AHP and Kano) in order to priority effective factors on customer needs in e-banking: The case of Bank-e-Saderat of Tehran Province Younos Vakil Alroaia* and Marzi Ardekani Department of Management, Semnan Branch, Islamic Azad University, P. O. Box 35145-175, Semnan, Iran. Accepted 12 January, 2012 This paper intends to present a combined algorithm proposed by Kano and data hierarchical analysis to prioritize indicators affecting customers’ needs in electronic banking because implementation of customer’s satisfaction measurement and survey as the most important indicator in performance improvement is considered an essential prerequisite for modern organizations in banking industry. Hence, in this research, for conceptualization of relationship between customers’ satisfaction and needs and evaluation of service quality, Kano’s model was used and in order to compensate for this model’s qualitative weak point, phased hierarchical analysis technique was employed. Thus, in order to show the effectiveness of this model, an investigative type of research aimed to identify prioritization of Bank-e-Saderat electronic banking customers’ needs in Tehran Province was carried out. For this purpose, a questionnaire comprising 18 questions with stability coefficient of 0.81 was designed which has been completed by 454 customers of Bank-e- Saderat’s first grade branches in Tehran Province. The obtained results confirmed the reliability of the above model and indicated that services’ high security and assurance in must classification, easy and online access to different accounts in performance classification, possibility of installment payment through automatic money dispensers in attractiveness classification are among customers’ first priority. And other needs in each class are respectively placed in next priorities. Key words: Service quality, customer’s satisfaction, e-banking, Kano’s model, phased hierarchical analysis process. INTRODUCTION In recent years, due to the depth of technological changes by electronic business, goods trade’s monetary payments and service offering have been observed to be carry out through electronic systems connections (Joeiqui et al., 2010). This has resulted in public welfare improvement and rise in standard of living in various societies as well as increased customers’ awareness and expectations. *Corresponding author. E-mail: younos11@yahoo.com. Tel: +989122316247. Today, in the world of business, management recognizes the principle that customers are the main axis of business and company’s success depends on improvement of managerial relationships. Therefore, the importance of customer’s satisfaction and customer retention in strategy formulation for customer-oriented and market-oriented enterprises cannot be under-estimated. Hence, banking like other industries, is faced with new technologies, market rapid change, economic indefiniteness, intense competition, customers’ diverse needs and changing atmosphere which give rise to a series of unprecedented challenges (Kumar, 2008). The enterprises which compete for the market hegemony, constantly seek ways