In the business industry, information technology is changing the way business is conducted. New business models are taking the place of traditional model and organizations are reconsidering business process designs and customer relationship management strategies. In a competitive sector like the banking industry banks are keeping up with technology revaluation and transformation in the banking industry. This study examines The level of satisfaction of using Electronic banking system (e-banking) It also covers a brief overview of facilities and risks associated with e-banking and highlights the ways of overcoming these challenges. 1. Introduction Since the new age, Internet banking has played an important role in the growth of the banking sector and changed the traditional banking practice.
Internet banking has been in tremendous development changes in the way of providing services to their customers; by offering traditional financial institutions seek to lower operating costs, improve customer banking services, Internet banking services, retain customers, shrink their branches, and downscale the number of their service personnel. There are several definitions for electronic banking Burr (1996) described e-banking as “an electronic connection between the bank and customer in order to prepare, manage and control financial transaction” other researches defines e-banking as different types of services in which a bank customer can access through the internet. Hock Bee (1999) “states that the term PC banking, online banking, internet banking, telephone banking or mobile banking refers to a number of ways in which customer can access their banks without having to be physically present at the bank branch”. Over time e-banking has improve many bank’s efficiency and competitiveness this led to an increase level of convenience offered by bank and also led several banks to depend heavily on information technology by using the Internet. These days’ banks have to cope with technology development to survive and exist in such a competitive environment. To have a better understanding about internet banking, we must understand the types and levels of internet banking. 1.1. Informational: This is the basic level of internet banking with the lowest risk involved. The bank will have marketing information about its products and services in a stand-alone server in which existing and potential customers on a wide geographic range can access to have a better understanding about the bankA¿A½s services. It is equivalent to having a website of the bank.
However security of the website must be maintained to prevent unauthorized alteration of the information displayed. 1.2. Communicative: This is a slightly more advanced form of internet banking. It allows more interactive environment for the customers. Customers can inquire about their accounts, loan applications and update their information (address, name, contact number). In this case the bank should operate through linking customers to their main server which is where the risk of unauthorized access of the bank’s internal network occurs. 1.3. Transactional: This level of internet banking allows transactions to take place online and hence there is a direct path to the bankA¿A½s main server.
This is a huge risk since actual transaction of funds occurs. This study is focusing mainly on the transactional level of internet banking and the risks involved in doing banking on a wide geographical range. 2. Statement of the Problem Over the past 20 years, the banking industry has been facing major problems within associated with individual banking institutions or entire banking systems, problems related to the delivery reliability, quality of delivery service including speed. The security and privacy of the e-banking system, another problem is limitation on payment options available to online customers and finally unfamiliarity /uncomfortable to use the computer system placing them in a disadvantageous position (who are non-computer “genius” like most senior citizens). 3. Purpose of the study The development in information and communication technologies is growing rapidly. Business firms are increasingly revolving toward the Internet and associated to information technologies to progress business competence and service quality, maintaining existing customers and attracting new customers. In this study, 5 point Likert type questionnaire were designed and distributed to 110 respondents feedback were between choices of strongly agree, disagree, neutral, agree and strongly agree. RespondentsA¿A½ results were analyzed to accomplish the goal of this study which is measuring the level of satisfaction of using e-banking system. 4. Significance of the Study The study will focus primarily on e-banking system and Impact of e-banking customer level of satisfaction, and potentially help banks to expand by having better understanding of their customer preferences and offering additional services that will lead to customer loyalty. 5. Challenges and Proposed Solution Even though many benefits can arise from using Electronic banking, many challenges may arise.
Internet allows individuals and institutional customers to benefit from services online conveniently from anywhere in the world which makes it easier for users. However, major challenges may arise such as legal risk for banks potentially expanding geographically they might be exposed to adapting to new regulations and laws. Also Operational risk Integrity of the system and confidentiality of data considers crucial to operational risk. The operational risk arises from fraud, processing errors, hacking and system disruptions can cause a security threats from inside or outside the system, therefore banking regulators and supervisors must ensure that banks have the data appropriate practices in place to guarantee the confidentiality of data. In order to minimize potential operational risk, banks focus on security needs to be regularly checked by experts and tested for large number of transactions. Banks must adopt effective policies and procedures and control as a precaution against any unexpected potential operational risk exposure. E-banking may face some reputational risk in the event of loss of trust due to unauthorized activity on customer account, failure to provide reliable service. Top management must adopt effective policies and procedures to meet the new risk exposure introduced by electronic banking.
Board of Directors in Banks must ensure business continuity and contingency planning process against any unexpected events. Privacy has been an issue of concern among customers. Some banks that recognize the issue understand it seek to make it an advantage over their competitors try to emphasize A¿A½high levels of privacyA¿A½ in their marketing campaigns. Consumers are concerned about misuse of their personal and financial information through the internet. Banks may develop a proper information security control system that will ensure confidentiality and integrity of customer information. Authentication is also a challenge in internet banking.
When conducting an online transaction, the server must be able to authenticate the identity of both parties and their consent to conduct the transaction. Inability to authenticate will result in unauthorized transactions and transfer of funds leading to huge problems that may require compensation to the customer by the bank and hence lost of trust and reputation in the customersA¿A½ point of view. Nowadays, banks use password administration, and password security in the event of another party obtains the password, security administration should ensure the protection of password files. 6. Variables of the study 6.1. Customer Demographics: Internet banking allows banks to offer a broad array of service to their banking customers based on their different ethnicity, gender, age, disabilities, mobility, employment status, and even location. 6.2. Security and privacy: Electronic Banking offer massive advantages and opportunities however security risk can be involved therefore banks take wide-ranging of security measures to protect the information transmitted on online transactions, this include guarantee confidential data sent over the internet cannot be accessed or modified by unauthorized persons, Security and privacy is an essential factor in shaping the choice of consumers to use Internet banking. In a study ABF (1997) stated that security fear that keeps both consumers and bankers away from Internet banking. OA¿A½Connel (1997) accomplished a study in Australia established that security worries were exposed as the major reason for the slow progress of Internet banking. Thorton Consulting (1996) carried out a survey concentrating on banks resulted that 67% of US banks believe that security worries is the major difficulty for Internet banking. The finding results matches the finding of study of Booz et al. (1997), disclose that security worry among users was the major difficulty for not adopting Internet banking in Latin America.
The Walls report (1997) also described that except security and privacy is enhanced, more domestic consumers would be keen to carry out their transactions over the Internet. The Walls report (1997) also described that except security and privacy is enhanced, more domestic consumers would be keen to carry out their transactions over the Internet. 6.3. Level of education: Researchers have found highly educated individuals are more likely to adapt to new changes in technologies, and that they are more comfortable in using technology like the Internet banking.
One of the reasons is that education regularly positively correlated with an individual’s adaptation to new technology. 6.4. Level of Satisfaction: The results of level satisfactions are important to be measured and usually depend on customerA¿A½s satisfaction of services provided electronically. Level of satisfaction is linked with the quality of services. Cooper (1997) recognized “accessibility” as one of the significant features from customerA¿A½s perception for adoption of innovative service. Scarbrough and Corbett (1992) recognized the understanding of consumers as an important aspect for the transmission of advance technology.
For successful execution of e-banking, banks must be sure that services provided are user friendly with high quality and accessibility to guarantee customer fulfillment in order to sustain online customers. Dover (1998) and Daniel (1999) studies in USA and UK correspondingly discovered that accessibility one of the features for customer adopting E banking. A study conducted by Cyber Dialogue concluded that more than 3 million adults in the United States have terminated the online feature due to system complexity of obtaining account information and details. 7. Literature Review Rotchanakitumanuai and Speece (2003) explored why corporate customers reject e banking, which can support banks to employ this technology more efficiently. The majority of Thai banks are currently applying e banking. Banks that offer e banking service argue that it decrease costs and help banks to have a competitive advantage. On the other hand many corporate customers are not keen about adopting e-banking service. The primary data collected through interviews shows that the main concern is related to security of the Internet is a major issue holding back the corporate customers from adopting e-banking services.
The Confident and reliable seems to be much higher among existing e banking services users , where as non users do not trust e-banking transactions made through e banking. Non e-banking users lean to have pessimistic attitudes concerning adoption e-banking. Eriksson et al. (2005) has made in depth studies of technology of internet banking in Estonia, data gathered by using quantitative study regarding the usage and the attitude concerning the E banking channel. The conclusion of the study showed as consumers find E banking useful, E banking usages increases, also the study recommended that models of technology should be Re-formulated to concentrate on the main key importance of E banking effectiveness of the service implemented in the technology. (Joseph; Stone, 2003) has stated that due to the increased internet transactions and agreements. The fact that there has to be an open network to allow the transactions to take place is a huge security risk.
Therefore, banks must improve their security infrastructure in order to ensure maximum privacy. Banks should adopt procedures such as authentication of both parties in order to ensure their identities. To ensure maximum privacy, data exchanged on the internet should be encoded. Viewing transaction details and information should be exclusive to the parties involved. Banks should make use of a unique digital signature to each party involved in a transaction. This signature should be binding when legal contracts are signed online. Gan et al. (2006) carried out a research to inspect clients selected among E banking and non E banking in New Zealand as a narrow number of experimental studies have been available in the marketing journalism about E banking, and the aggressive landscape of financial institutions is shifting. E banking is not a aggressive improvement but a aggressive indispensable for banks.
The choice to use E banking is assumed to be a function of service quality scope, apparent risk issues, user contribution issues, price issues, service product uniqueness. According to El-Sherbini et al. (2007) who examined the customers’ observation of E banking, their alleged significance, usage example and problems increasing on its consumption. The paper talks about the strategic implications of the research findings.
Experimental data were collected from bank consumers in Kuwait to accomplish the research goal. All bank consumers in Kuwait were considered as population sample of research interest. The results demonstrated the alleged importance of internet banking services by consumers, current and prospective use of E banking services in Kuwait and problems suspected by bank customers in using E banking. The researchers’ hypothesis examined that the top five important services in Kuwait banks. Sathye (1999) investigated the reason affecting the acceptance of Internet banking by Australian clients.
The sample was gathered from party group of people and business companies in Australia. The study concentrated on resident of cities where exploit of internet and population was expected to be high. The date gathered from directory, White and yellow pages to border of quotation for personal and business clients, correspondingly. As a result recommended that security related to lack of awareness about e banking and its advantages show up as being the difficulty to the implementing of e banking in Australia. He recommended how to address these barriers. Further, he recommends that delivery of financial services over the e banking must be a branch of on the whole client service and branch of the strategy. These procedures could help in fast movement of customers to e banking, follow-on in substantial savings in operating costs for banks. Gerrard and Cunningham (2003) made in depth study to analyze what drove e-banking users to accept internet banking services, results were beneficial to bank managers who are hesitating in put into action the self-service technology that sacrifice millions of dollars.
Investigative meeting were also conducted and the study identifies characteristics that influenced the rate of adoption. Results showed that adopters of Internet banking distinguish the use to be simpler and less difficult, and friendly use for computer users. Md. Atiqur Rahman Khan and Md. Masud Karim conducted a study of e-banking and extended risks their study focus on dealing with challenges. The study covers variety of risks associated with adopting e-banking services and recommendations to overcome those challenges. The banking industry hopes that by adopting new technology such as e banking, they hope that they will be able to counteract the aggressive marketing from their competitors. Banks would also like to maintain their customer base by offering enhanced customer service.
Banks would also like to expand their market and attract more customers through new technology which includes e banking. (Graven, 2000) Presently, the e-banking operations are concentrated on normal traditional banking services such as lending and credit cards, others depend on deposits for funding. Smaller banks seek to diversify their income through offering e banking services and reduce their dependence on core deposits. More than 50% of the profits of small banks come from other non traditional banking services as opposed to banks who did not adopt e banking. Thus, these banks have utilised e banking to attract wealthier consumers through providing online services that require a fee. (Stamoulis, 2000). Many banks have come to realize that there are many customers who actually like doing their banking online. As a result, many banks have innovated and adopted important e banking services that enabled consumers to do their banking anytime they needed. Services include bill payments, transfer of funds and account statements. (Morral, 1995). Banks have realized that there was a gap in the market to be filled through adopting e banking. E-banking has been proven to reduce costs and expenses related to maintaining a physical branch and employing customer service staff. E banking allows larger banks to reduce their expenses due to their many physical branches whereas smaller banks tend to incur costs and take time to recover initial investment in e banking technology (Treadwell 2000). The only motivation for smaller banks to invest in e banking technology was the reduction of costs in the long term and competitive advantage over their competitors (Timmons 2000). It is perceived that less consumers adopt e banking coupled with low development costs of e banking will limit the effects of e banking on financial institutions regardless of whether these effects are good or bad. (Marenzi, et al., 2001). Birch and Young, (1997) assert that consumers would also enjoy the privilege of access to far more providers of financial services. As a result of a wider choice of Internet bank service providers, the costs searching, negotiating and concluding deals will be lower as the comparison of products and services would be made easier over the Internet. Birch and Young, (1997) emphasize that consumers will be able to access more financial institutions that were not geographically feasible before the arrival of internet banking. Consumers would enjoy more variety and competitive products and offers in addition to higher bargaining power over banks due to increased competition.
Comparison between different products and services is made easier through internet banking. This means more satisfaction from the consumerA¿A½s side. Previous studies were focusing on advantages and disadvantages of adopting e-banking services; risk associated as a result of adopting e-banking services and solution to over come them.
This research will focus on measuring the level of satisfaction of using e-banking system. 8. Research Methodology To measure the objectives, experimental data had to be gathered and afterward be utilize for evaluating and concluding the results. To obtain the experimental data, a questionnaire had to be put together. 9. Questionnaire Design The initial phase concerned analysis of the literature and pointer from specialist in the area of interest to acquire information and discover out how previous researchers conducted their studies. Then, experimental data was pull together from bank customers in Bahrain to reach the research purpose. Build on the research purpose, a trial questionnaire was developed to collect the data. Anonymity was also taken into account to assure high response rate. 10. Data Collection All bank customers in Bahrain were taking into account as population of research.
Research data was collected by exploiting a controlled questionnaire instead of unstructured questions. The sample size was 110; valid responses were 77 and non-respondents were 33. The data was gathered in various local banks in Bahrain and areas of major shopping malls, questionnaires were carefully reviewed. SPSS software was utilized to evaluate the data and obtain the results and confirm whether the validity of the hypothesis. 11. Hypotheses: H01: There is no significant difference among customer demographics and level of satisfaction using E-banking system. H1: There is significant difference among customer demographics and level of satisfaction using E-banking system. H02: There is no significant difference in terms of Education level between E-Banking system users. H2: There is significant difference in terms of Education level between E Banking system users. H03: There is no significant difference between E-banking system and the traditional system in terms of security and privacy. H3: There is significant difference between E-banking system and the traditional system in terms of security and privacy. H04: Obtaining accounts status and details is not significant than other services that require carry out transactions. H4: Obtaining accounts status and details is more significant than other services that require carry out transactions. 12. Research results: In order for us to measure the level of satisfaction and trust of e-banking users questionnaire were distributed online for respondents, successfully we received a feedback from 77 respondents, the main purpose was to measure respondents feedback based on 5 point likert type scale in a range of strongly disagree to strongly agree. The result of the questionnaire showed that approximately 37.6% of respondents agreed that e-banking is more convenient than in branch banking. Majority of respondents agreed that through e-banking transactions can be done quicker and permit simpler maintenance of transaction dealings than in branch banking. In general the majority of users come to an agreement that e-banking is better than in-branch banking, however, in terms of E-banking reliability and safer and secure results showed uncertainty where slight changes between respondents agree and neutral. The conclusion of the results showed that current e-banking users are usually contented with the service, which confirm the hypothesis 1 that there is significant difference among customer demographics and level of satisfaction using e-banking system.
Results of T-Test analysis using One Sample Test in hypothesis 1 where t is 5.332 which is greater than 1.85 and Sig is 0 less than 5 percent. The respondents were also asked further questions to indicate the current satisfactory level of e-banking services. The questions designed were closed ended; and choices were given to respondents. Possible answer varies from very unsatisfied to very satisfied. Questionnaire results showed 36.36% of respondents were somewhat satisfied with e-banking services, 28.57% of respondents were very satisfied, and 28.57% were Neutral. In this study respondents’ output varies; some support using e-banking whereas others were against using e-banking.
The results of questionnaire below were designed as a 5 point Likert type agreeing scale, respondents were given choices of strongly agree, disagree, neutral, agree and strongly agree, the results would give an indication of respondents feedback. Respondent’s feedback showed that the majority prefers in-branch banking rather than e-banking this might be because of not having confidence in using e-banking, which proves hypothesis 3 to be null as results showed that t is negative and Sig is 95 percent higher than 5 percent hence we reject the hypothesis and accept null hypothesis. Feedback also indicates that lack of knowledge and familiarity of using e-banking services considered one of the obstacles of using e-banking. Results have shown that strong relationship the educational level and e-banking system users, this proves hypothesis 2 is null. Refer to T-Test table. Feedback results indicates that the top e-banking services were acquire detailed account, transaction record, check credit cards balances, check accounts balances and check credit cards transactions. This advocates that in general the majority of the respondents did not have faith in the e-banking in terms of performing their banking business, but apparent it as very effective and vital for acquiring account status and information, which confirm hypothesis 4 of this research to be null. As results showed that t is 4.613 higher than 1.83 and Sig is lower than 5 percent. The outputs of correlation were tested, by using both Pearson correlation and Spearman’s analysis; accordingly there was no strong correlation except for few ones.
For instance, results showed that there was a well-built positive correlation between question 22 and question 25 , as E-banking users comfortable using the service of transferring funds to other person’s accounts, another strong relationship were found between question 22 and question 20 . Refer to Appendix. Regression analysis was applied in this research by using descriptive statistics. Pearson Correlation and Sig (1-tailed) both considered the educational level as a dependant variable. Moreover, there was a strong relationship between question 17 (Review accounts balances question 18 (Review credit cards balances) question 19 (Obtain detailed account transaction histories) and question 20 (Review credit cards transactions) related to obtaining information about account status.
Results have been tested and it proves hypotheses 4 according to results shown in One Sample Test analysis; and regression which supports obtaining account status and details is more vital than other services that require carry out transaction refer to appendix. 13. Discussion Results of Rotchanakitumanuai and Speece 2003 study match the results of this research. Both results share the main concern related to security of the internet as a major concern in e-banking. To summarize comparing between studies we concluded that both studies share the common factor of trust especially after several studies results showed that non users do not trust e-banking transactions. A study by Eriksson et al. (2005) proof that the usage of Internet technology in continuous demand and growing rapidly. The study also recommended reformulating technology. This goes in line with our study, as the Banking Industry grows, Banks all over the world are adopting to this advance technology era.
Summarizing Eriksson et al. (2005) study with our study, we conclude that both studies emphasized on the importance of moving with the advanced technology. (Joseph; Stone, 2003) study matches the results and concerns of this research. Both studies focused on improving their security infrastructure as a solution to ensure maximum privacy. For the purpose of this research, Banks and Financial Institutions were focusing on having proper policies and procedures as a guideline to be followed, alike (Joseph; StoneA¿A½s 2003 research) who recommended banks to use a unique signature between parties involved in transaction. A study by Gan el al (2006) proves that e-banking services have been a competitive necessity for banks and financial institutions. The study highlighted several advantages with e-banking however, it did not emphasized on the disadvantages or challenges of adopting e-banking. In our research, we have not only highlighted several advantages and potential activities of e-banking but also highlighted major challenges may face banks and financial institutions adopting e-banking services and solutions to overcome those challenges. Both studies have identified variables influencing consumerA¿A½s choice of e-banking and traditional banking. In addition to Gan el alA¿A½s (2006) study, a study by Sathye (1999) focused on factors affecting the adaptation of Internet banking, the study results found that lack of awareness and knowledge about e-banking were main reasons for not using e-banking services. Moreover, a study by Md. Atiqur Rahman Khan and Md. Masud Karim highlighted risks associated with e-banking and focused on ways to deal with challenges. A study by El-Sherbini et al (2007) observed customerA¿A½s top important services in e-banking, results have shown reviewing account balance, opening accounts, obtaining detailed histories and relocate funds among specific accounts and pay bills. In our research, hypotheses were tested and results showed that obtaining information online is more important than transacting an online business. Gerrard and Cunningham (2003) attempted to discover the reasons behind consumersA¿A½ adoption of internet banking.
This report targets managers who are considering the implementation of e banking. Whereas our report acts as evaluation of the current e banking services available in the market; hence gives an idea of the areas that need improvement. Our report focuses on evaluation, which is the key to the success of any business including banking. Graven (2000) believes that e banking will allow banks to survive in the highly competitive market they face today. Internet banking is a new technology that will allow banks to gain customers which they would not have gained due to consumer mobility problems. In addition, internet banking fills the missing gap of physical banking; i.e. geographical and timing flexibility. On the other hand, Stamoulis (2000) believes that internet banking acts as an additional income other than traditional (deposits) face to face banking in the case of larger banks.
According to Stamoulis, internet banking is a method in which larger banks can diversify their income. Stamoulis thinks that smaller banks have a greater profitability from internet banking in which he backed up his opinions by statistics that proved that smaller banks generate over 50% of their income from fees of nontraditional internet banking services. To summarize, Graven views internet banking as an expansion to the banking industry whereas Stamoulis argues that internet banking is not very significant. Stimoulis views internet banking as a complimentary feature to be added to the banking sector. E-banking was introduced with the realization that there was a gap in traditional banking that had to be filled. Electronic banking enables customers to have online access to services such as bill payments, fund transfer and account statements. (Morral 1995). Several studies have proven that e banking will lead to a reduction in costs and expenses associated with maintaining a physical branch and the employment of customer service staff. (Treadwell, 2000). E-banking is a new technology in which people are still reluctant to utilize. Therefore the number of people who actually use e banking is low. In addition, the cost of development of e banking is relatively lower than traditional banking costs.
Both these factors will limit the effect of e banking on the banking industry. (Marenzi, 2001). Electronic banking has eliminated geographical boundaries which mean that everyone is a direct competitor. Consumers now have access to a larger number of banks. E-banking also makes it easier to compare between different products and service which means the consumer is very powerful in terms of negotiation and bargaining. (Birch and Young, 1997). 14. Conclusion and Recommendation: Similar to other global industries, the banking industry has been in tremendous development specially with launching the internet. In this research paper, we found that several banks spent huge amount in having a proper e-banking services to have a competitive advantage. Despite the advantages and facilities of e-banking services; security and privacy remains customers’ major concern.
Based on a survey, in the kingdom of Bahrain evidence has shown that only few numbers of customers are fully utilizing electronic banking services. As a result, it is believed that banks must ensure having a proper procedure related to security and privacy concerns. Also it is recommended to familiarize customers with how to use e-banking services which will eventually lead to an increase in the rate of e-banking services.
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