The Four Major Online and Mobile Banking in the UK - Case Study Example

How s currently perceive and use internet banking Table of Contents Executive Summary 3 Introduction 4 Online Banking 5 The Leading Banks ofUnited Kingdom 6 Barclays 6 Lloyds 7 NatWest 8 HSBC 9 The Internet Banking 10 Barclays 10 Lloyds Bank 11 NatWest Bank 13 HSBC 14 Industry Analysis 15 The Road Ahead 18 Recommendations 20 Conclusion 21 References 22 Bibliography 24 Executive Summary The online banking and the mobile banking has been the need of the hour to keep pace with the changing business scenario. The report throws light on the performance of the leading four banks of the United Kingdom namely NatWest Bank, Barclays Bank, HSBC and Lloyds Bank with respect to online banking and the perception of the customers. At the outset, the report provides light on the four banks and their brief history and present status. At the next level, the various features of the online banking provided by the financial companies are analysed. The report subsequently deals with the industry analysis and the future trends with respect to online banking. The report also has certain recommendations before the concluding words. Introduction In the present era of globalisation and privatisation, the only word that is presumed to be constant is the word 'change' itself. With the effects of globalisation reaching all nook and corners of the world along with the remarkable development and innovation in the field of communication and technology, the tricks of the trade are changing very fast. The development of communication and technology has definitely make the world much smaller and brought it within the periphery of our living room. The satellite television and the electronic media have kept the world on its toes by their commendable coverage. But the most beneficial has been the evolution of internet. Internet and its allied services have really done wonders in almost every aspect of life. The commercial world has been one of the most beneficial sectors from the upsurge of internet. The internet covers almost all the aspects of life. The online aspects have really made the financial world much better place to be it. Most importantly it has brought in the transparency and promptness that was long due. Among the various financial sub-sectors, it is the commercial banks that are the most important. And the introduction of internet in the daily operation of such financial banks have made the transaction all the most beneficial for all the concerned parties be it the valued customers, be it the commercial bank, be it the government or the monetary authority be it the media. Online Banking In simple words, online banking is referred as the internet banking where the customer can operate and transact from any computer or terminal through internet and need not be present at the bank branch. The online banking is basically operated from a secured website (https) and the customer of the bank is provided with a specified 'login' and secret 'password', through which he can initiate almost all the operations that is done at the bank branch like that of account statement, fund transfers and bill payments, etc. With in the purview of the online banking also fall the debit and the credit cards. Debit card deals with withdrawing money from one's account from any counter of the banks' or other banks; anywhere in the world (the card has to be supported by the withdrawing bank). The credit card assists the holder to have a certain specified sum of money from the bank even if he does not have the money in his account, in lieu of a loan, again any where in the world (where the card is supported). The debit and the credit cards are also used to pay bills at the major brands like that for travelling, shopping and dinning. The cards, an important aspect of online banking have made life easier for billions as one does not have to carry cash while travelling any more. With the advent of mobile technology and increasing use of internet through the GPRS and WAP enabled mobile handsets, the facilities of banking is with in one's pocket, thanks to the online nature of banking. It has enhanced the pace of our life as banking transactions are the lifeblood of our life. The Leading Banks of United Kingdom Barclays Though a leading bank of United Kingdom, Barclays Bank is headquartered at the United States and has branches in more than 50 nations. The group is more than 300 years world and is one of the most prestigious with in the financial sector all across the globe. The Barclays Commercial Bank is with in the group of Barclays which has Absa, Barclayard, Barclay Capital, Barclay Global Investors and Barclay Wealth as other remarkable initiatives. The bank has whole of sections with in the United Kingdom ranging from home insurance, travel insurance, motor insurance, loans like home and personal, current accounts, savings accounts, e - savings, mortgages and remortgages along with credit cards, health coverage and Barclaycard among others services. The bank basically has four types of customers namely in the form of Personal, Premier, Business and Commercial. The bank has a very dedicated website which offers wide array of services like the information required by the existing and prospective customers, the rates available on various schemes, the special offers and offerings and the various aspects of online banking. The bank also intends to travel the extra mile for its customers as it takes up their duty for financial planning (Barclays, n.d.). Lloyds Recently Lloyds TSB Group has been renamed as Lloyds Banking Group as HBOS Plc was acquired by the group. The group has the claim that out of every three people, one of them bank with the group. The acquisition has made the Lloyds Banking Group, the largest retail bank with undisputed leadership in many of the verticals. The group expects to be the most acclaimed bank socially. It has multiple brands under the group. It has also the mission to serve the esteemed customers through competitive pricing and favourable positioning of its products. The brand under the group includes Lloyds TSB and Halifax in England and Bank of Scotland in Scotland. The unique belief that the group follows is that of shared services and it aims to keep the costs down and improve its efficiencies to serve the customers better. The bank also has high expectations that through such initiatives, it can successfully create value for the share holders, colleagues and the customers as it has the requisite expertise (Lloyds Banking Group, n.d.). The bank has basically five divisions like that of personal banking, business banking, private banking, corporate markets and international banking. The product rages include whole lot of financial services e.g. current accounts, savings and investments, credit cards, insurance, mortgages and other commonly practiced banking services. NatWest The NatWest Bank is part of the leading banking group of Royal Bank of Scotland i.e. RBS. The NatWest Bank is the merged unit of the two erstwhile contemporary banks namely the National Provincial Bank (established in 1833) and that of the Westminster Bank (established in 1836) in the year of 1968 though the real history of the bank could easily traced back to the period of 1650s. The Royal Bank of Scotland could complete the acquisition by the year of 2000 March with a hopping amount of ' 21 million which had been the largest take over dead with in the purview of the banking industry in Great Britain. According to recent figures the bank has more than 3600 branches. The first credit card of this banking major was first distributed in the year of 1972 while the computer linked cash dispensers in 1976. The County Bank, the renowned merchant bank of the group came up with the securities business in 186 after the deregulations while the International Banking Divisions looked for international tie-ups in USA, Europe and the Far East. The bank included the facilities of telephonic banking by the decade of 1980s specifically to cope up with the privatisation initiatives of the government. The section of Home Loans for the bank was initiated in the year 1982 as Small Business Unit in 1982. The remarkable achievement of the first transfer of money was successfully achieved in way back of 1988. In another remarkable decision in 1990, due to various changes in the global financial market, the National Westminster Bank changed its name into NatWest Bank and with such a step the bank exited from many of the markets as it also entered in to some new industries (NatWest, n.d.). HSBC Listed in the Hong Kong, New York, London, Bermuda and Paris stock exchanges, HSBC, Plc is registered in London is one of the leading and most reputed financial service organisation across the globe. With more than 220,000 share holders from 119 nations, this brand of repute is traded at New York Stock Exchange in the form of American Depository Receipts (ADRs). Under the umbrella of the group, the business is diversified in to 86 different nations through out the region of Asia-Pacific, Middle-East, Africa and Americas with more than 8500 offices across the globe. The group with the acronym of Hong Kong and Shanghai Banking Corporation established in the year of 1865 have diversified in into almost all of the financial products and services like that of investment banking, personal financial services, commercial banking, corporate and private banking among others. Therefore, it is visibly understandable the requirement of successful implementation of e-commerce in the company. The bank has two basic divides in its product ranges namely the personal mode and the business mode. The various products and services of the business mode banking corporation includes savings and pensions, finance and borrowing, business insurance, business accounts, cards and payments and online services among others. The personal mode includes that of financial planning, current accounts, HSBC Premier, HSBC Plus, savings account, investments, credit cards, loans, mortgages and insurance. Again online banking is a major attribute of this large baking group. The Internet Banking The internet banking is the call of the hour. Because of the ever increasing competition, it is always accepted by all the business leaders that it is difficult to get a new customer than to retain an existing one. Therefore, onus lies on the service provider that the best of the amnesties and facilities are provided to the existing customers so that they do not shift their business to other new entrant or an existing player. It is all the same for the banking industry. Even if the leading banks of the world like that of Barclays, Lloyds, HSBC or NatWest do not align with the latest technologies and upgrade them, it is almost certain that they would lose their customer base. The leading four banks of the United Kingdom have the following facilities with in the purview of the online banking i.e. the internet banking and the mobile banking. Barclays The Barclays play tremendous importance on the fact of online banking. The leading bank tries to put emphasis on the point that the customer should be able to keep track of the money and should also have the opportunity to withdraw when ever and where ever he feels so as after all it is his money. The bank rightly says that the online banking also enabled the customer to check statements, transfer funds and pay the bills. Barclays depend upon three important pillars to promote online banking among its customers namely convenience, easy operations and secured transactions. In its website, the bank specifies in clear terms the steps through which the valued can register for the online banking services along with generation of 5 digit passcode or PINsentry which would ultimately enable the customer to get the full access of the online banking. Pertaining with the fact that major part of the customers might not be yet conversant with the online banking system, Barclays Bank have a special section in its website containing the detailed demonstration, online banking system for business needs and most importantly the online banking guarantee (Barclays, n.d.). Lloyds Bank The Lloyds TSB has brought in whole lot of services under the department of internet banking. Some of the basic facilities can be enumerated below: Search Statements - This facility enables the customer to search and verify statements by payment type, date or amount since July of 2002. It also facilitates him to download the statements into spreadsheets or any of the financial software packages. Stop paper statements - This feature serves as the corporate social responsibility as the usage of paper reduces as statements can be viewed electronically. Also the features allow the customer to get the duplicate copy whenever required. Real time balances - The balance can be checked on the transaction basis and a track can always be kept on the account. Moving money and paying bills - The money can be transferred with in the Lloyds bank accounts instantly and also bills can be paid apart from paying to families and friends through faster services. Manage bills online with Lloyds TSB Bill Manager - it includes receiving bills online, getting email alerts and paying as and when the customer wishes. Managing Lloyds TSB accounts - All the Lloyd Bank accounts can be checked and the credit limit of the credit can also be fixed. Getting Free Tax alerts - The customer has the option to register for free tax alerts. Also he can order cheque and paying books through the online mode. Managing direct debits and standing orders - The bank also allows setting up, changing and cancelling standing orders and managing direct debits. Hassle free application for products and services - The customer can apply new or increased overdraft as well as loan, opening online savings account and also can upgrade current account. Ordering travellers' cheque as well as foreign currency - This feature is very helpful to the international customers as it initiates commission free online travel money. In case of mobile banking of Lloyds Bank, a nominal cost of ' 2.5 per month is charged and tax alerts are made available along with the facilities like checking of balance and mini-statements and transferring of funds. Also, the bank allows ordering debit card, credit card, cheque book and paying-in book through mobile banking. NatWest Bank The NatWest Bank provides whole lot of features through online banks and thereby increases competition in the sector ultimately benefitting the end customers. The online banking features assist the customer of NatWest Bank to stay top of his finances as it helps him to check the balance, statement and details of the accounts. The facility also facilitate to pay bills, transfer fund and also to set up with in the fraction of seconds. Another very prudent initiative that the online banking of NatWest Bank takes care of is that it enables the customer to stay in track with the his spending as it helps him to pay and check the credit cards online. The other and most important aspect that the bank claims has been taken care of is the security of the hard earned money of the customer as the security has always been one of the major drawbacks of the online banking system. Among the other facilities of NatWest Bank online system, having paperless transaction, credit card reading facility, fund transfers are quite notable. The NatWest Bank values the fact that most of the customers are yet not comfortable with the online mode of transactions and there fore have a dedicated demonstration of the entire system on their website. Also, it has a section named 'Got a question'' (NatWest, n.d.) HSBC Hong Kong and Shanghai Banking Corporation has a reward winning Personal Internet Banking Service which according to the bank is secure, fast and easy. The bank provides the details of the procedures in its website regarding the opining and the eligibility criteria of having the HSBC Bank Account. It also provides with a six to ten digit number chosen by the customer. The bank takes the pain to inform the customers that all the transactions of online banking is guided by the Internet Banking Terms and Conditions which is available in pdf format on the website. The various online benefits that the HSBC Bank promises to its customers are as follows: Online fraud guarantee methodology 24 * 7 online access Paying bills and making payments in fast and secured manner Money transfer between accounts Saving at least ' 13 while international transfer of funds Balance check Managing the standard orders and Direct Debits Request for a new Permanent Identification Number Stopping or reducing paper statements The bank understands the customer psychology and ratifies the fact that the customer deserves peace of mind. For the purpose, it has an interactive demonstration of the various methods with in their corporate website which includes the steps like learning the basics, securing the customer and the steps that are to be followed if the customer suspects any fraud. Also, the online banking system of HSBC provides for free McAfee security software, online fraud guarantee and jargon free information and expert advice (HSBC, n.d.). Industry Analysis Internet is the biggest thing that has been rocking the world for quite some time now and if the predictions are true it all set to continue for next few years too. To align the life with this biggest and the most amazing as well as technological upsurge, almost all services and products all across the life has been using internet in its favour. The data of the increasing users of internet proves the fact that it just can not be ignored. Studies conducted by British Banking Association reveals that the there has been increase of hopping 156% registered users to access their accounts with in the Major British Banking Groups (or simply MBBG). Table 1: The Number of Personal Customers of the MBBG Registered to Access their Accounts by Computer (000 and index 2002=100), 2002-2007 Source: Annual Abstract of Banking Statistics, 2007, British Bankers' Association/Key Note The figure suggests that there has been steady rise of the electronic customers for the banning majors of United Kingdom and as more and more of the banks get into it along with large number of customers, they can reduce cost in terms of manpower employed and increase profitability thus creating value for the share holders. Also, the fact is that still large number of banking persons solely depend on branch banking and the banking companies should try and tap them into online banking by making them understand the various benefits of the system. Nevertheless, proving all the misconceptions wrong and to reap the benefits of the online banking industry, the numbers of persons using online banking for various reasons are also on the rise. Table 2: The Number of Transactions by Computer by Personal Customers of the MBBG Registered to Access their Accounts by Computer (000), 2002-2007 Source: Annual Abstract of Banking Statistics, 2007, British Bankers' Association/Key Note From the above table, it can be undermined that in the five years time (i.e. from 2002 to 2007) there had been more than 450% increase among the customers who checked their account balance from the online banking system. Account queries also had a major leap i.e. 400% increase. During the five years period, the online bill payment increased by more than 280% and also the inter-account fund transfers recorded an increase of more than 414%. All the above figures suggest that there is a huge boom in the online banking system and the customers are increasingly getting hooked to it because of its superb features. The Road Ahead Almost all of the major banking groups all across the globe has divulged in to online banking understanding the call of the hour and the big four commercial banks (Lloyds, NatWest, Barclays and HSBC) of the United Kingdom is no different. The prime reasons of such enormous popularity of the online banking system has been the vital factors of cost savings (by reducing the man power), increased customer base (more and more people are getting themselves under the banking system and it is almost impossible to serve all of them manually at the branches), mass - customisation (the individual can be targeted personally and his own choices can be addressed in place of standardisation), increased innovation and development of non core business and less expensive marketing campaigns. But there are certain other factors upon which the quality of the online banking system depends and which needs to be properly taken care of in future. Some of them can be assessed as below: Speed - The initiating party of the online banking system should not only just prepare the website but also ensure proper functioning of such services. Speed is very important in the cyber world. One of the prime reasons of the success of internet is its fastness and now if the web service initiated by the bank is very slow, the neti-zens would be utterly disappointed and it might even so happen that they turn away from the service or even changes their banking partners (Muylle et al., 1998). Content and design - The website should have all the proper banking options with well developed content. Even the design of the website matters and therefore should be soothing. As the online banking system also serves the marketing and advertising aspects of the commercial banks, therefore usage of the terms and concepts should be carefully done with the purpose of search engine optimisation. The other important features should be the layout, languages, product information content, amount of product information and others. Navigation - Navigation depends upon lot many factors. It comprises of the hyperlinks, web pages, homepages, and amount of hyperlinks, hyperlink encoding and personal contact possibilities among others which would influence the satisfaction of the user (Gatian, 1994). The initiating bank should take due care along with the web content developer so that this crucial point is not missed as much of the impression and professionalism that is to be expected from the bank depends upon the navigation. Security - The only demerit that one could associate with the online banking system has been its easily susceptible security system. There have been many such experiences where the password or the security number of the consumer has been hacked and money chiffoned out. Banks have been taking many measures to protect the consumers as they have been using 'secured' website. Also, they have been advising the customers not to use the public computers for online banking. These are few of the area that the banks should put in more efforts to make the online baking successful as the policies of the monetary bodies and the governments are increasingly provide scope for it. Recommendations The online banking and the mobile banking has been the need of the hour. As the life style of the people has been becoming increasingly fast and they become global citizens, the requirement arises of online transactions. The onus lies on the banks to provide a safe and secure money transaction terminal. The banks with the online banking procedures can reduce the pressure on their branches and reduce cost. Therefore, it is prudent for the bank to have a dedicated website with high navigation and speed. The banks in order to serve and address the global customers should have tie-ups with the online system like that of PayPal, Alert Pay, Visa or Master Cards. Though in spite of all the careful measures, the bank cannot guarantee efficient and effective fraud free system still it is with in the purview of the banks that they have require checks on their online address and there are no such malwares and spywares that would take away the personal data of the valued customers. The banks should advise and guide the customers about the usage time and again and also support them in case of any unfortunate and unprecedented event. Conclusion There is absolutely no doubt that the online banking system is one of the most happening and beneficial services that has really changed the tricks for one of the most traditional industry i.e. banking. The trends have always favoured the fact that the number of online banking users are on the rise. The big four leading commercial banks have played pivotal role in the upsurge of the system in the United Kingdom. But still the bottom line fact remains that he online banking system can easily accommodate more of users and serve them with hassle free transactions with utmost speed and safety. The banks should encourage such practises and initiate measures which are beneficial to the customers as well as the share holders. References Barclays, No Date. Home. Barclays Group Sites. [Online] Available at: http://group.barclays.com/Home [Accessed 04 November, 2009]. Barclays, No Date. How do I get Online Banking' Why do your banking online. [Online] Available at: http://www.barclays.co.uk/onlinebanking/ [Accessed 04 November, 2009]. Gatian, A.W., 1994. Is user satisfaction a valid measure of system effectiveness' Information and Management. Vol. 26, pp. 119-31. HSBC, No Date. Why Register for Internet Banking' HSBC Internet Banking. 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