REVIEW OF RELATED LITERATURE
Internet banking refers to the utilization of the Internet for performing transactions and payments by accessing a bank’s secure website. It also pertains to the application of financial services and markets through the use of electronic communication and computation (Humphrey et al. 2004). The developments can be subdivided into two main areas. The first is the impact of Internet banking on financial services. Most economists perceive that the existence of the Internet and other electronic communication processes has significantly changed many aspects of the banking industry. A majority of the services normally provided by banks can already be provided by other financial entities (Jayaratne et al. 2001). The second main area is the major transformation that occurred on most financial markets. Nowadays, these no longer need to be related with a physical place. In effect, trading systems for foreign exchanges are gradually becoming global. All these changes have gained significance for public policy towards the improvement of the financial services industry and markets. They are able to consider the implied information for the safety of regulations and global public policy (Keeton, 2002).
There are three main important trends in Internet Banking which have been hastened through the emergence of the Internet. These are the improvements in terms of price transparency, differential pricing and transformation of distribution channels. Economists greatly consider the impact of these trends on the financial services industry (Loughran et al. 2004). Improved price transparency has the capability to increase the level of competition and reduce the margins of profit. Evidences from other marketable industries that use the internet services extensively, however, suggest that there are also limitations to this process. It appears that costs of search transactions remain significantly high that makes differential pricing possible, and this will further become important in financial services (Mester, 2000). Since the increased utilization of the internet services leads to the promotion of disintermediation, there will undoubtedly be a transformation of distribution channels and restructuring of the industry.
The impact of e-finance technologies on financial services firms is broad. Online banking began in the mid 1990s and is increasingly becoming more important until today. In contrast to banks, however, a majority of insurance companies have used the internet in a relatively small amount. Electronic brokerage services have been an important economic development in recent years. While the internet is bound to be new and exciting to use, other e-finance technologies which have been existing much longer than the internet, have also done their part in reshaping the financial services industry, particularly the banking sector. For instance, in the 1970s, Automated Teller Machines (ATMs) began to change the ways that consumers used to process their transactions with banks. In the 1980s, the extensive utilization of electronic computation and data analysis altered the way in which credit decisions are made; these innovations have helped to reduce the lending costs on average and enhanced the liquidity of loans (McAndrews et al .2001).
The utilization of electronic communication in finance, in fact, goes back much further than the 1970s. As early as 1918, the Fedwire payment system made use of the electronic settlement of payments among banks over the telegraph (Mishkin et al. 2002). This particular use of electronic communications in payment systems has gradually increased through time. Now, almost all huge payments among banks and corporations are being done electronically. In some countries, especially in Scandinavia, electronic payments systems are gradually becoming widely used at the consumer level. In the United.States, however, the paper-based check clearing system is still widely used (O’Hara, 2004).
METHODOLOGY
Methods of Research Used
For this study, the descriptive method was utilized. In this method, it is possible that the study would be cheap and quick. . It could also suggest unanticipated hypotheses. Nonetheless, it would be very hard to rule out alternative explanations and especially infer causations. Thus, this study used use the descriptive approach. This descriptive type of research utilizes observations in the study. To illustrate the descriptive type of research, Creswell (1994) guided the researcher.
The purpose of employing this method is to describe the nature of a situation, as it exists at the time of the study and to explore the cause/s of particular phenomena. The researcher opted to use this kind of research considering the desire of the researcher to obtain first hand data from the respondents so as to formulate rational and sound conclusions and recommendations for the study.
To come up with pertinent findings and provide credible recommendations, this study utilized two sources of research: primary and secondary. Primary research data were obtained through this new research study. Questionnaire survey and in-depth interview were conducted. On the other hand, the secondary research data were obtained from previous studies on the same topic.
The Research Design
In order to come up with the most suitable research approaches and strategies for this study, the research process “onion” is undertaken. This is because conducting a research is like peeling the back layers of an onion—in order to come to the central issue of how to collect the necessary data needed to answer the research questions and objectives, important layers should be first peeled away. With the said process, the researcher was able to create an outline on what measures are most appropriate to be applied in the study.
Saunders et al (2003) said that while it is not unusual for a researcher to first think of his research undertaking by considering whether one should, for instance, administer a questionnaire or conduct interviews, thoughts on this question should belong to the centre of the research ‘onion’. That is, in order to come to the central issue of how to collect the data needed to answer one’s research questions, there are important layers of the onion that need to be peeled away: the first layer raises the question of the research philosophy to adopt, the second considers the subject of research approach that flows from the research philosophy, the third examines the research strategy most applicable, the fourth layer refers to the time horizon a researcher applies to his research, and the fifth layer is the data collection methods to be used.
Figure 1 shows how the researcher conceptualized the research approach to be applied in this study by Saunder et al (2003), in order to come up with the pertinent data needed to answer the research questions stated in the first chapter, as well as to arrive to the fulfillment of this research undertaking’s objectives. Then again, the research philosophy that is reflected in this study is positivism. With this research philosophy, a researcher prefers to work with an observable social reality in order to come up with law-like generalizations similar to those produced by the physical and natural scientists (Remenyi et al, 1998), and in this tradition, the researcher becomes an objective analyst, coolly making detached interpretations about those data that have been collected in an apparently value-free manner (Saunders et al, 2003). In addition, the emphasis is on a highly structured methodology to facilitate replication (Gill & Johnson, 1997) and on quantifiable observations that lend themselves to statistical analysis (Saunders et al, 2003). In here, the assumption is that the researcher is independent of and neither affects nor is affected by the subject of the research (Remenyi et al, 1998; Saunders et al, 1998).
Meanwhile, the second layer shows that this study has undertaken a deductive approach. Accordingly, this approach has five sequential stages: deducing a hypothesis; expressing the hypothesis in operational terms; testing this operational hypothesis; examining the specific outcome of the inquiry to either confirm the theory or indicate the need for its modification; and finally, modifying the theory in the light of the findings (if necessary) (Robson, 1993, p. 19). Further, the deductive approach has a number of important characteristics. First, this approach is a search to explain causal relationships between variables, which consequently leading to the development of a hypothesis. Second, it involves the collection of a quantitative data (although it can, as well, use qualitative data), and these data are important to test a hypothesis that has been previously developed. The third characteristic of a deductive approach is that it controls to allow the testing of hypothesis. However, one must remember that with this approach, it is important that the researcher is independent of what is being observed—that is, the researcher should be objective and not subjective—so that the principle of scientific strictness will be pursued, as this approach emphasizes scientific principles. (Saunders et al, 2003) Also, it is important that concepts are operationalised, which will enable facts to be measured quantitatively. Finally, the deductive approach is generalization (e.g., to be able to generalize about regularities in human social behavior, one must be able to select a sufficient numerical size of samples). (Saunders et al, 2003)
Respondents of the Study
The study involved a sample of 60 Internet banking users. Because the study was conducted in a single location using a small sample, the representation may not be superior and can affect the results of this study.
Data Collection
Data were collected from multiple sources, allowing for a number of different perspectives to be taken into consideration in the development of the recommendations.
The data sources that were examined included:
· A review of the appropriate research literature. This included examining studies where customer satisfaction had been used either in a research or organizational setting. Both technical articles and “how-to” articles were included in the review;
- An examination of the regulations and practices related to Internet banking.
- Focus groups and interviews with the guests, staff members and managers. During the focus groups, participants will be asked about their perceptions on the service quality of Internet banking.
Instruments used
A self-administered questionnaire, or the type of questionnaire that was usually completed by respondents, was constructed by the researcher to gather the needed data (Saunders et al, 2003). To further enhance the study on the customer satisfaction, the researcher prepared a survey-questionnaire wherein the respondents graded each statement. Every statement constituted of five levels of responses indicated below. The equivalent weights for the answers were:
The decision was made to use a questionnaire for the data collection for this project due to the sensitivity of the information being obtained. It was important for the respondents to be open and honest in their responses. The use of the questionnaire provided the researcher with the ability to test the views and attitudes of the respondents.
The survey-questionnaires also used open-ended questions to obtain as much information as possible about how the interviewee feels about the research topic. Interviews took between one and two hours. The questions used during the interview were based on the research questions for this project; they have been reviewed, refined and approved by the project supervisor. The researcher designed a semi-structured interview. Here, the researcher encouraged the interviewee to clarify vague statements and to further elaborate on brief comments. The interviewer did not share his/her own beliefs and opinions.
PRESENTATION OF RESULTS
A total of 60 Internet banking users were used for the data gathering process. For the purpose of gathering pertinent and reliable data, respondents of 30 years old and above were included in the sample. Of the 60 participants, the sample was divided equally according to three categories. These categories include the respondents’ gender, age and position in the company. See table 1 for
As seen on the table, the respondents were equally divided according to the three categories as selected by the researcher. This was for the purpose of giving an equal representation of the respondents regarding the subject matter. Since the research could not afford for a much bigger sample due to time and budgetary constraints, the equal representation of respondents can represent the significant sample categories.
A. Level of Efficiency
As most of the respondents of the study were members of different banks, the way they perceived the level of efficiency of the Internet Banking services offered by their respective banks appeared to be varied as well. In Figure 1 although a greater number of respondents said that the level of efficiency of the Internet Banking services offered by their respective banks was high, the results of the participants’ responses seemed to be slightly well-distributed among the survey choices given.
Figure 1
B. Level of Quality
Generally, the participants of the study evaluated that the level of quality of the Internet Banking services offered by their respective banks were high. They did not consider it a problem to easily access the Internet banking services offered by their banks. The time that the respondents spent to use these Internet banking services appeared to be reasonable. As shown in Figure 2, majority of the respondents strongly agreed that the level of quality of the Internet Banking services offered by their respective banks were high. In fact, during the interview, most of the respondents commonly observed this factor.
Figure 2
C. Level of Speed
Bank users are able to make the most of the benefits provided by the Internet banking services when they are fast and highly accessible. As this survey revealed, most banks were doing a relatively good job in making sure their Internet banking services were fast and highly accessible for their customers. Operational hours of the banks were also accessible for the tourists. With these things under consideration, the respondents were able to find the Internet banking services as advantageous and beneficial. See Figure 3 for the percentage distribution of the participants’ replies with regards to the level of speed of the Internet banking services they use.
Figure 3
D. Cost-efficiency
As most of the respondents of the study were members of different banks, the way they perceived the cost-efficiency of the Internet Banking services offered by their respective banks appeared to be varied as well. In Figure 4 although a greater number of respondents said that the Internet Banking services offered by their respective banks were cost-efficient, the results of the participants’ responses seemed to be slightly well-distributed among the survey choices given.
Figure 4
CRITICAL REVIEW
Internet banking has constantly developed over the years worldwide. With the current boom in Information Technology, Internet banking has benefited much from it. However, with the continuous influx of interested customers, the lack of preparation and inadequate Internet banking facilities will decrease the interests of bank customers in further accessing Internet banking services. As a further consequence, the number of unsatisfied bank customers might increase yearly and this could only get worse. From the recent statistics, significant values of customer un-satisfaction have been identified and feared to further grow in the years to come. In response to this Internet banking crisis, banks must implement an Internet banking development program. This program must be geared towards the development of Internet banking services and facilities in banks by specifying a certain percentage of funds to be allotted in this program.
Although this development program may be effective in helping improve the Internet banking services in general, the effect of the program may not be ultimately maximized without the adequately trained professionals. Thus, necessary education or trainings must be formulated and conducted. Most importantly, these programs will increase the effectiveness of the Internet banking services of banks in terms of attracting customers.
Establishing Internet banking development programs entail several procedures. In order to be effective, programs should begin with strategic plans that would meet the client’s needs and are appropriate with their level of satisfaction. Certain factors and concepts are to be considered in the formulation of Internet banking development plans.
REFERENCES
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