Online Banking - Research Proposal Example

INTRODUCTION Today, most banks offer some form of internet banking sometimes known as home banking, PC banking, online banking or electronic banking. Internet or online banking allows customers the flexibility to conduct financial transactions via a secure website managed and run by a virtual bank, retail, building society or credit union. Online banking has with it brought great change on how financial and non-financial transactions are carried out today everywhere in the world. With online banking, one is able to apply for loan, shop, get insured, pay bills, deposit checks and even mortgage property from the comfort of one's home. Several studies have been conducted to with an aim of showing trends in the adoption of internet banking among adults and different geographic areas. Online banking services and products include both wholesale and retail products. Wholesale products are generally meant for corporate customers while retail and fiduciary products are meant for consumers. BACKGROUND TO INTERNET BANKING Online banking has become a popular and safe way for individuals, institutions and organizations to stay connected with their bank accounts. Online banking is mostly preferred above over-the-counter-banking since it is cheap and it offers the flexibility that is desired by clients (Hossein, 2004). It however also remains a high-risk subject considering that frauds are more easily conducted online and over remote distances than when banking activities are conducted offline. While several studies have been conducted on online banking, there is a clear gap that needs to be filled; how do different gender relate to internet banking. This study is therefore aimed at finding how different sexes respond to online banking. Of great interest is the ratio of online banking users in terms of gender, the specific services that are preferred by each sex and for what reasons other services are not preferred. BROAD OBJECTIVE 1. To compare the level of use of online banking services between females and males aged between 25 and 40 in the United Kingdom. SCOPE OF THE STUDY In this study, the following assumptions will hold. 1. The study will be restricted to the United Kingdom. 2. During the study the population under study will be restricted to people in the range of 25 to 40 years. 3. The study will presume the direct effects of other factors relating to internet marketing in its data collection and analysis. SPECIFIC RESEARCH OBJECTIVES 1. To determine what percentages of women and men aged between 25 to 40 use online banking services in the UK 2. To determine which particular services are preferred my men and women (transactional, non-transactional, financial institution administration or ASP/Hosting administration services). 3. To find out the reason some banking services are not equally embraced by certain gender. LITERATURE REVIEW HISTORY OF INTERNET BANKING Today's internet banking has succeeded distance banking services that were conducted electronically during the early 80s. The term online banking was commonly adapted inn the late 1980s to refer to the use of keyboard, monitor and a terminal to access the electronic banking system using a phone line. It was in New York in 1981 that online banking services began. The city's major banks Chase Manhattan, Citibank, Manufacturers and Chemical offered home banking services by use of the videotext system. United Kingdom's first online banking service was established by NBS (Nottingham Building Society) in 1983. The online system was based on the Prestel system, a television set, a computer and a telephone system. The system allowed viewing of statements online, bill payments, and bank transfers (John, Levine & Carol, 2007). In order for bill payment and bank transfers to be effected, written instructions had to be first sent to the NBS who then updated the Homelink system of the intended transaction. Many banks today offer secure, fully functional internet banking for a small fee or sometimes even free of charge. As online banking activities become more and more function oriented, customers continue to adapt to online services which have gradually become as commonplace as ATMs (Automated Teller Machines). Virtual banks or e-banks are those banks that do not exist in brick; they exist purely on the World Wide Web where they offer similar services to those offered by other banks and more or less under the same federal regulations (Hossein, 2004). FACTORS THAT AFFECT ONLINE BANKING Numerous factors are known to motivate banks to assess and evaluate their internet banking, electronic commerce strategies. Some of these factors include customer service, competitive cost and demographic considerations. The challenge that banks face in whatever action they take is how to ensure savings that accrue from their online banking technologies gainfully exceeds the risks of conducting business online. In order to make sound strategic decisions, banks must accurately assess risks and potential gains from data collected during research. Market factors such as competition, cost efficiencies, geographical reach, branding and customer demographics play a vital role in determining how profitable the bank will be (John, Levine & Carol, 2007). The demographic characteristics of a place will help the bank understand its customer base and hence enable it come up with a right mix of services for various market segments. INTERNET/ONLINE BANKING SERVICES Banks have for a long time applied information system technology in processing cheques, produce reports and drive ATM machines. In the past, computer banking systems that were behind the operation of their information systems rarely were noticed by customers. Today, electronic mail, Electronic Bill Presentment and Payment systems and websites are commonly used by banks to get in touch with their customers. Internet or online banking allows customers the flexibility to conduct financial transactions via a secure website managed and run by a virtual bank, retail, building society or credit union. Online banking services have several capabilities and features common with offline banking, while other applications remain specific to online banking. Features that are common to both online and off-line banking include wire transfer, transaction approval process and multi-user support. Features or applications that are unique to online banking include the capability to import data into personal accounts and account segregation which allows customers to monitor their accounts wherever they are - whether they are in the main bank or in other institutions. Common online service features may be broadly categorized into transactional, non-transactional, financial institution administration and ASP/Hosting administration services. Transactional services include conducting inter-account transfers, paying bills, new account opening, loaning, paying bills and wire transfer services. Transactional services may broadly be categorized as funds transfer, loan transactions, investment and electronic bill presentment and payment. Non-transactional services include chat, co-browsing, check linking and online statement services. It is widely agreed that online banking is not geared towards changing people's money habits, but simply applies today's information and communication technology to replace traditional paper-based, time-consuming banking in order to make financial management quick, efficient and effective (John, Levine & Carol, 2007). Banks also view internet banking as a value-adding mechanism that attracts and retains customers while simultaneously helping in the reduction of teller interactions and costly paper handling systems in a banking environment that is continuously getting competitive. ONLINE BANKING SECURITY, ATTACKS AND COUNTERMEASURES The issue of security when using online services has remained one of great interest. Single-password authentication is in most cases considered insufficient to prevent possible frauds in some countries. Two main security methods are applied in online banking: the PIN/TAN and the signature-based systems. One main problem with online banking is its susceptibility to attacks by pharming and phishing. Trojan horses/Keylogger and cross-sight scripting can also be applied to steal user login information successfully. According to an FDIC Technology Incident Report, every quarter of the year, banks note 536 cases of intrusion into their computer systems with close to 30,000 US dollars lost for each case of intrusion. This figure summed up to about 16 million US dollars in the 2nd quarter of 2007. The report further disclosed that such intrusions increased by 150 per cent between the first and second quarters of 2007. According to the same report, in roughly 80 % of the cases, the intrusion source remained unknown although it occurred during internet banking. In order to guarantee the security of internet bankers, several countermeasures have been put in place (Ravi & Andrew, 1997). Phising and pharming are countered using digital certificates, while class-3 card readers are used to avoid the manipulation of transactions when signature-based online banking services are used. Trojan horses and other viruses are countered by scanning email attachments and downloaded software using virus scanners. PREVIOUS STUDIES ON INTERNET USE AND INTERNET BANKING There is a strong correlation between the use of internet and use of online banking services since the more a person gets accustomed to internet use, the more likely that the person will use it to manage daily baking activities. Within a relatively short period of time since internet banking was introduced, it has become a first choice for people regardless of age, socio-economic background, gender or location. It has generally been predicted that by 2010, twenty percent of adults will be able to access the net through non PC devices such as wireless communication devices and mobile phones. Also, about 38% of adults will use online services by the year 2010. This represents a huge rise considering that in 1999, only 4% of adults used the services. According to an American study, men tend to use internet more than their female counterparts. The research also showed that men spend more time on the internet to participate in auctions, for recreation and to pay bills compared to women. The research however concluded that women and men are likely to use online shopping and banking services (Ravi & Andrew, 1997). Contrary to the above findings, the internet banking comptroller's report states that women between the ages of 25 - 34 spend more time on the internet compared to men of the same age, and the rate of their internet usage is growing faster as compared to men's. UK internet banking experts predict that online banking among adults will increase ten fold over the next decade. This prediction is based on the fact that the digital divide that exists between age, gender and social groups online is steadily crumbling. While it is true that women will slightly less engage in all kinds of online banking actions, a notable difference persists when managing investment is the subject; 21% of men prefer online investing compared to only 12% of women. The face of online banking has experienced several significant changes in the past with a sharp increase witnessed in the number of women using online banking services. The report further indicated that the average internet user will more likely be middle-aged males or females of ages between 35-44 years (Ravi & Andrew, 1997). While internet use has become prevalent among adults between 55-64 years, only half of this group prefers to use online banking services. On the other hand, this figure rises to over 68% of internet users between 30-55 years of age. During most previous surveys, it is noted that analysis is based on adults without restricting age. Another issue that previous surveys have had to deal with is how to ensure that respondents do not complete questionnaires more than once. This is a great challenge considering that it is difficult to determine which respondent could have completed multiple questionnaires. A number of surveys conducted in the past applied random sampling but different methods of data collection depending on the nature of the surveys conducted. Surveys conducted in different geographical areas will definitely show different levels of variations. In view of this fact, research conducted at one place could give significant differences in another area of which it is truly representative. Despite these and numerous other challenges, many researchers have come up with truly representative data and conclusions that can be relied on (Ravi & Andrew, 1997). SPECIFIC QUESTIONS TO BE ADDRESSED In line with the survey's broad and specific objectives, a number of questions must be answered. In consideration of this fact, the survey will be directed towards gathering data that will make it easy to draw inferences and achieve all the objectives. Like it has happened with other web-based research, it is anticipated that there could be chances of multiple responses from one respondent. While this challenge is appreciated, it is quite difficult to deal with and besides every survey much depends on the loyalty and truthfulness of the respondents. It is therefore expected that in this survey such chances will remain minimum or even non-existent. During the study therefore, data to be collected will include the sex of the respondent, age, country, whether or not the respondent has subscribed to any internet banking services, which particular banking services he/she has subscribed to, which online banking services (if any) the respondent would not willingly subscribe to and why, and how often the respondent uses the internet. RESEARCH METHODS/TECHNIQUES TO BE USED: During research, it is important to choose and apply best methodologies that will reflect the true state of events in the field. This section is wholly dedicated to describing how the research will be conducted. Of great interest in this study is the ratio of online banking users in terms of gender, the specific services that are preferred by each sex and for what reasons. The research will be conducted using web-based questionnaires targeting a random sample of 3,000 respondents aged between 25 and 40 years of age. Since the survey will purely be based on random sampling, no restriction will be placed on the maximum number of men and women to be interviewed. In other words, the number of men or women must not necessarily be 1,500 - half of 3,000. This is done with an aim of ensuring that the data used in the survey is unbiased and truly representative of the population of the target group in UK. The web-based method of collecting data will be used since it easily draws respondents from across the United Kingdom at a relatively cheap cost, at offers respondents the flexibility and privacy that they need during the survey. ANALYSIS OF FINDINGS The results will clearly show what percentages of women and men aged 25 to 40 that use online banking services. The results collected from primary data will also show which services are most preferred by people of different gender. The results will be further analysed to determine reasons why certain online banking services are shunned especially by women. Also, the correlation between gender and online banking activities as well as that of internet usage and subscription to internet banking services shall be determined. Further, regression analyses will be conducted to ascertain the strengths of these correlations. RESEARCH ETHICS It is important to adhere to ethical standards when conducting research of any kind. This goes a long way in creating confidence in the research and in encouraging cooperation among respondents among other interested parties. In line with the principles of professional research, all personal data will be lawfully and fairly processed and in a manner that is compatible with the purpose for which the data is being collected. Since respondents are above the age of 18 years, the research will not require the consent of respondents' parents to participate freely. Participation in the survey will be out of the respondent's free will with complete assurances that their rights of privacy will be upheld. Respondents shall be informed of the purpose of the research in the website in order to keep them in light before getting involved in the survey. All data collected from respondents shall be used within the country and at a level that ensures protection of the freedoms and rights of all respondents. In general the survey will be conducted within law and in strict adherence to internationally recognised professional code of conduct EXPECTED RESULTS AND CONCLUSIONS This section is wholly dedicated to the presentation of the empirical data obtained from the field and the evaluation of the implications of the findings. It is expected that the results of the survey will clearly show what percentages of women and men aged 25 to 40 use online banking services. The results collected from primary data will also show which services are most preferred by men and which are preferred by women. The results when analysed will point to reasons why certain online banking services are not readily adopted by men and women. Also, the correlations between gender, online banking activities and internet usage shall be determined. Further, regression analyses will be conducted to ascertain the strengths of these correlations and to make predictions of how the results could be used to make adjustments in internet banking activities. As it has been noted before, the demographic characteristics of a region plays a great role in determining the bank's success. The results of this report, when carried out without any biases, could be used by banks and other interested parties to monitor their online banking activities and make necessary adjustments that may be related to survey's conclusions. STRUCTURE OF THE PROJECT DOCUMENT The questionnaire to be used during the survey will require responses to the following two main sections: 1. Respondents' personal information: sex, age and nationality 2. Respondent's subscription status: has subscribed to any internet banking services, which particular banking services he/she has subscribed to, which online banking services (if any) the respondent would not willingly subscribe to and why, and how often the respondent uses the internet. ACTION PLAN This research is set to cover a period of three months and covers six main research activities. The research will be broken down into research preparation, material acquisition, questionnaire design and printing, data collection, data analysis and report presentation stages. The following Gantt chart shows how the research will be conducted. It specifically shows how progress of the research shall be monitored in order to ensure that all work is completed within scheduled time. Table 1: Gantt chart Months April May June July August Preparation for research Acquisition of necessary materials/resources Design of questionnaires Actual survey and data collection Data Analysis Presentation of report REFERENCES Hossein B 2004 The Internet Encyclopedia Edition illustrated Published by John Wiley and Sons John R Levine Y and Carol B 2007 The Internet for Dummies Edition 11 illustrated Published by For Dummies Internet banking comptroller's handbook 1999 http://74.125.47.132/searchq=cache:HnYOBetlQwYJ:www.occ.treas.gov/handbook/intbank.pdf+internet+banking&cd=6&hl=en&ct=clnk&client=firefox-a Introduction to face and mind bubble http://www.facegroup.co.uk/up_video/learn/FinalWeb2.0WomenReport.pdf MRS code of conduct 1999 http://www.mrs.org.uk/standards/downloads/code.pdf Ravi K and Andrew B1997 Electronic commerce a manager's guide Edition 2 illustrated Published by Addison-Wesley Read More