Online Banking in the USA - Research Proposal Example

Online Banking in the USA Introduction Through the internet there is a main technological change within the last few years on trading, service and banking actions. All stages of business from acquiring through supply chain management throughout sales and payments financing have been impacted. Banking has a main role in all conversions and trading actions as the vital part of business itself. Taking into description current trends in e-commerce and on-line trading, expansion of Internet users and vital need of rapid transactions, it is probable to say that online banking is one of the potential fields in business at present. In prompt varying environment, the internet is used further as a source of information than as a place to buy. All communication is instant, and distance and length of communication have impact on cost. As a source of information, the internet is demand driven in the users have the option of getting the information they want - if it is available -when needed. For instance, in February 2002, the research company Datamonitor predicted that within three years, 120 million people will bank online in the Western Europe alone and in United States (Estell, Myers, 2002). Taking into account IT and the Internet projections, it is possible to say that in the next ten years the world will enter a new era of internet capability that will transform online activity (Berners-Lee to star in debate, 2005). Banking on the internet allows accessing the account at any time of the day or night without having to visit a local branch. Transferring money between accounts and paying bills is simple and straightforward and the system allows viewing and changing standing orders quickly and easily. Round-the-clock account access can make it easier to manage your money and thus avoid unnecessary bank charges. Savers will find that internet-only banks offer attractive rates. The purpose for online banking is to be a luxury, by making things easy. If it is hard to understand, the user will be tempted to leave that service or quite possibly leave online banking overall. When determining how user friendly online banking is, the user normally measures it by their first time usage. When they sign up or login for the first time, user friendliness is at its most crucial time for the user. That first time will determine whether or not the people will ever come back. People have been so used to walking or driving to a bank and performing their transactions there with the help of a Teller, that it will be hard to convince the general public to change their ways. So, by making online banking usage as easy as possible to use, more and more people will then continue to draw closer to this new technology. When using online banking, the user may come across a problem in which personal assistance is needed. Another problem online banking systems have is service interruption or breakdowns. This is nothing more then a major inconvenience to the user and could cause the user lose opportunity. The user wants to do their transactions as quickly and easily as possible, but breakdowns prevent them from doing that. When a service interruption occurs, everything gets shut down. Service interruptions can last as short as a second or as long as several days. This is obviously a problem to the online banks because they're losing money while the system is down. There is also that possibly that if a service interruption occurs while in the middle of a transaction, that all the transactions that the user made will become erased. This in turn will quite possibly make the users get so fed up to the point that they might forget about using online banking again or even pursue legal action against the bank if the user can prove the banks incompetence caused him monitory loss. What the online service should do to limit this occurrence is to hopefully find the problem before it becomes a problem. They should check more often their equipment and connections. Also, the service should have back up systems in place, so that if a breakdown does occur, then the back up will then boot up. Research Question What are the perceptions and views of account holders related to online banking? Literature Review Tremendous growth of online banking in future is explained by growth of the internet population around the world. Special regions include Asia, Eastern European countries, and Africa. Although, today, European countries show the remarkable growths of online banking. In Spain for instance, by 2005 the number of online banking clients in Spain is projected to jump from 3.9 million to 6.8 million. Banks inter clients carry out 46 percent of their transactions online, but the bank primary mode of recruiting new clients is still through the branch offices. Electronic transitions are more favourable for majority of companies operating on the global scale. In this case, the migration from paper checks to electronic payments and online banking has been dramatic. Today the proportions are reversed: 15% paper, 85% electronic (Quittner, 2005). While estimates of the present volume of online banking vary widely, it is clear that it is growing at a rate that is nearly exponential. (Bright future for online banking, 2001). Online banking and online transaction will increase greatly in several years because online banking is the base for international e-commerce, which refers to trade that actually takes place over the internet, usually through a buyer visiting a seller's website and making a transaction there. Online banking serves all types of business, large and small, service and production, B2B and B2C. B2B accounts for most of the business, perhaps as much as 80-90 per cent. Online banking, being a relatively new approach in finance, reports on the magnitude of e-commerce globally varies widely. A strong link exists between banking, bill payments, and the Internet (Pastore, 1999). Data Interchange (EDI), Interpersonal Mail (IPM) and Electronic Funds Transfer at Point of Sale (EFTPOS) is causing changes in the way companies interact and exchange information with their partners, suppliers and customers worldwide. The slowness in introducing electronic banking has been because of the lack of a reliable networking and communications infrastructure, and inadequate planning and control techniques. This will be of increasing use in online banking, especially when the wireless technology and systems are uniform across countries throughout the world. Online banking is the nest stage in financial service development, because: the development of stronger international banking requires a well developed infrastructure such as: procedure and systems that are in line and support application of a real-time updated risk management and fast service with advanced information technology and operational automation support. In China, business to business (B2B) will be the main application as the country requires a large base of prosperous consumers and somewhat few Chinese customers have credit cards. In their need to remain the internet under State control, the government through the Ministry of Information Industry has issued an enormous rules controlled what dot-corn organizations can do and expurgating what they say. In effect, Asian countries have established intranets which are isolated from the rest of the world. There are people who can get around these barriers. However, the majority of the people access the internet from work or from a public place, where the government controls the software and car, track what users do, and where they risk being seen if they go to an illegal site (Yan, Li, 2002). The main problem is that online banking is not as secure as it seems. Many companies report fraud and theft caused by insecure transactions and information damage (Kandra, 2006). So, the future of online banking is closely connected with software development and high security in order to prevent theft on the global scale (Yan, Paradi, 1998). Today, the main motivation for investing in online banking is to reduce costs, improve productivity and become more competitive and efficient. Also, there is a need to develop more interlinked processes, and share information both within the organization and among trading partners at home and abroad. The advent of global trading, just-in-time management and more collaborative business activities requires information to be shared between trading partners, nationally and internationally (Quittner, 2005). Both the material and prospect of shaping associations with further buyers and with the brand's managers work as a magnet, drawing consumers back to the site on a normal and regular basis. Connecting financial services and the social aptitude of community participants potentially creates a new marketing tool Mergers and acquisition activity is another stage in online banking of the future (Garcia, 2001). For instance, Ninety-eight percent of successful online banks were created from mergers, however, as a bank grows, it loses its ability to understand the needs of customers and be high touch, which gives smaller online banks the competitive edge (Fugazy, 2001). In addition, online banking will make it possible to take market segmentation to another level, by providing an economical means by which firms can deliver individualized products and services to each and every customer, based on feedback and interaction with the customers. A short-term focus on transactions is rejected in favour of an emphasis on the development of mutually beneficial long-term relationships with customers. Not only is the long-term approach viewed as serving the customer's best interests, but it is viewed as serving a firm's self-interest as well, since it is often more costly to attract customers than to retain them. Some analysts see online banking as a part CRM strategy as the main tool to deliver customer satisfaction. The area of opportunity is strategy that connects manufacturers and suppliers, suppliers and buyers directly. Connections that sell directly to the customer or buy direct from the manufacturer without additional transactions is the main driven force of online banking in the future. Online banking means stepping in order to assess and gratify future people desires and to improve and develop the intrinsic capacities of people their assistance, prospective and employability (Fugazy, 2001). Thinking in terms of systems online banking provides business with numerous advantages. To begin, online banking perspective focuses on how the individual components that make up business transactions interact. Furthermore, online banking perspective emphasizes the relationships between the various system components, employees, technology and customers. Taking into account changing technology and growth of on-line trade it is possible to say that online banking will rapidly growth in the next years in order to meet requirements of business world. It is expected that there is a strong interdependency between online banking and marketing activity. To be more proficient in pursuing and achieving objectives, banks will introduce new systems to keep abreast of time. Hypotheses Is there any significant effect of online banking? Is there any significant difference in the views about online banking in male and female account holders? Methodology Underlying the purpose and research question of the study conducted, the research design that was selected for the study is an exploratory correlational research design. While the use of an experimental research design is critical for the purpose of predicting and /or establishing causal relationship, as explained by Zechmeister, Zechmeister and Shaughnessy (1997, 18), the implementation of a correlational research design has permitted the researcher to explore and discover relationships amongst a large number of variables within a study. In correlational research, according Zechmeister et. al., the main purpose is to establish whether two variables are related, and if so, establish the direction of the observed relationship. According to Zechmeister et al., (1997, 19), correlational research may be considered to be non-experimental in that there is no manipulation of the independent variable and no attempt to established causality. Instead variables are simply measured to determine if a correlational relationship exist between them. As explained by Zechmeister et al., survey research represents a general approach to be used when the correlational research design is implemented. There are many advantages that have been identified in the use of the survey method. According to Babbie (2001, 13), these advantages include: 1. One can collect a large amount of adapt in a fairly short time. 2. Surveys are easier and less expensive than other forms of data collection. 3. Questionnaire can be used to research almost any aspect of human perceptions regarding the variables under study. 4. They can be easily used on field settings. Sample The population of interest for this study includes selected account holders in different banks in U.K. It is projected that the sample consisted of 100 account holders. For the purpose of study a form of non-probability sampling used. As explained by Trochim (2001, 23), in purposive sampling, the researcher samples with a purpose in mind from one or more specific and predefined groups, believed to be representative of the larger population of interest. Trochim (2001, 23), noted that one of the benefits of purposive sampling is that it can be very useful for situations in which the researcher wants to reach a targeted group that otherwise might not be readily available. Instrument The instrument used in this study is the questionnaire consists of four demographic questions and there were remaining 16 questions are related to perceptions and views of account holders regarding online banking. Five point Likert scale for measure will be used in this questionnaire in which 1 = Strongly Disagree to 5 = Strongly Agree. A well design questionnaire is critical for achieving the purposes of survey research. Additionally, concerns with validity (i.e. the degree to which an instrument measures what it was intended to measure) and reliability (i.e. the degree to which an instrument provides measurements that are consistent and accurate) must always be at the forefront of the questionnaire selection/construction process. For the purposes of the study, a questionnaire will be located and used for which validity and reliability have already been established. Data Collection The survey method will be used as the means by which data is collecting within the study. Prior to initiating the data collection phase of the study, permission to conduct the survey, will be obtained from appropriate officials. Data collection will commence once approval granted. Questionnaires and the cover letter explaining the purpose of the survey and anonymity associated with participation in the survey will be distributed to participants and will collect from them upon completion of the questionnaire. Data Analysis In order to process and organize the data, a database will be created by using a computer data base software program, (i.e., SPSS). The questionnaire this is selected has a scale response format, which allow for a number to be assigned for which response given for each item. For each respondent, the numerical response will provide for each item as well as descriptive data will obtain during survey, after gathering the completed questionnaires it will enter into the database during the data-coding phase of the study. Within the study following the recommendations of Torchim (2001, 24) statistical analysis are conducted through a progression or series of analysis using the SPSS. During the initial phase descriptive statistics is used to describe and summarize the data obtained within the study. Limitations There might be few limitations when we will find the result of this study, firstly as we are taking the sample from particular area so there might be difference in views of other areas’ account holders and the small sample size may also give the results not very much accurate. Ethical Considerations While conducting research there will be some ethical considerations. Before conducting the research the permission will be taken from the appropriate management. Researcher’s personal biases and opinions should not get in the way of the research. Research should be conducted under the assumption that researchers will keep research findings anonymous in any case. During research process, it should be made sure that researchers will not take advantage of participants who are easily accessible; participants should be chosen according to their availability. Participants can be with draw any time if they want to quit. The results of the experiment will be kept confidential and researchers will use results with participants’ permission for research purposes. Participants should feel free to ask any question about the research and they will be provided with the outcome of the research. Plan This research plan is divided into 3 months. During first month I will collect preliminary information, sample selection and I will prepare survey questions, in second month the survey will be conducted and the responses will collect from the participants, in last month there will be analysis and interpretation of the survey responses, and the report will be finalize. References Babbie, E. R. Survey Research Methods. Belmont, CA: Wadsworth Pub. Co., (1990), 11-16 Berners-Lee to star in debate on the future of the World Wide Web, Computer Weekly, 11/29/2005. Bright future for online banking. September 26, 2001. Available at: http://www.zdnet.com.au/news/business/0,39023166,20260621,00.htm Estell, B., Myers, J. (Spring 2002). e-Security Overview, Online Banking - Security vs. Profit Available at: http://misbridge.mccombs.utexas.edu/knowledge/topics/online_banking/ Fugazy, D. (2001). Tower Group CEO Mark Sievewright Looks at the Future of Online Banking, Web Finance, 02/19/2001, Vol. 5 Issue 4. Garcia, Erica, (2001). What's Left Of The Online Banks. Money, Vol. 30, Issue 10. Kandra, Anne, (2006). Banking on the Web: Risky Business? PC World, Vol. 24 Issue 3. Pastore, M. (1999). Future of Online Banking Bright. Available at: http://www.clickz.com/stats/sectors/finance/article.php/152841 Quittner, Jeremy, (2005). Ten Years On, Mulling Web Banking's Future, American Banker, 00027561, 8/9/2005, Vol. 170, Issue 152. Trochim, W. (2001). The research methods knowledge base, 1st edition. OH: Atomic Dog Publishing, 23-25. Yan, G., Paradi, Joseph C. (1998). Internet - The Future Delivery Channel for Banking Services? Available at: http://csdl2.computer.org/persagen/DLAbsToc.jsp?resourcePath=/dl/proceedings/&toc=comp/proceedings/hicss/1998/8242/04/8242toc.xml&DOI=10.1109/HICSS.1998.655285 Yan, Li.(2002). China to Get Access to Online Banking System. Available at: http://english.people.com.cn/200205/30/eng20020530_96796.shtml Zechmeister, E. B. (1997). A practical introduction to research methods in psychology (3rd Ed.) NY: Mc Graw Hill, 18-20. Read More