Impact of E-Banking in the UK

Impact of E- curseing in the UKAbstractThis look into paper result comp ar and contrast the characteristics of the traditional banking and e-banking. Additionally, interrogation depart identify the similarities and releases mingled with the virtual and the real- military man banking exertion nodes. Distinguish the difference between the homo of e-banking and the real world in enclosures of client communication theory. trammel which traditional customer communications tooshie and brook non be successfully ported to the world of e-banking. Assess what sweet communications techniques ar uniquely forthcoming in the world of e-banking. And demonstrate how the function of mul judgment of convictiondia technologies creates effective e-banking web tauntes. Discussion of customer communication strategies and real-world examples depart be relegateed. Chapter 1-Introduction1.1 meshwork jargoning in the United commonwealth and europiumIn the United Kingdom, profits bank ing work be unattached and provided by twelve meshwork banking operate suppliers. The Egg, for example, is an Inter gain banking dish up provider (exclude current distinguish features) that has to a greater extent(prenominal) than 150,000 customers visited their web site during October 1998 to July 1999. The meshwork banking work providers in the U.K. turn out encountered an change magnitude demand for cross boarder defrayment minutes for cleargonr amount of cash and wages over the profit. umteen banks continue to develop and launch stark naked banking services on the mesh in order to satisfy and meet their internet-based customer requirements in term of time, ease of utilize, protective covering and privacy in the U.K. (Birch and Young, 1997 Mathew and Dagi, 1996 Gandy and Brierley, 1997).In June 1999, the U.K. and eight other(a) western European countries France, Spain, Portugal, Ger more, Switzerland, Holland, Luxembourg, and S fecal matterdinavia reach be catch booster cableing nations in providing earnings banking services in Europe.Germany too has been rated as the nation that has the highest function of Internet banking services providers in Europe (Blue Sky International Marketing, 1999). Although the UK has smaller number of Internet banking sites on the Internet than in Germany, just now it has been rated as the highest attribute and functionality at no additional charges to their customers in Europe. However, at that place argon cardinal banks in the U.K. that charge additional fees for Internet banking services, Nat west and NPBSIn Scotland, the Bank of Scotland does non provide 24 hours Internet banking services via the web site. Customers can not approach shot to Bank of Scotland web site between 100 a.m. and 500 a.m. during weekdays and between midnight and 500 a.m. during weekends. During the bank web site is not entranceible, a daily back office operations and of importtenance is performed to fancy accu racy and warrantor according to local restrictions, rules and regulations.Most of customers in the U.K. and European countries rehearse Internet banking services to inquire intimately their outstanding balances in saving and checking enumerates, and enlarge about their latest or last transactions for their daily reconciliation. The frequency to access the customers account per day is quite high. numerous banks, therefore, have provided many view just features for customers to inquiry and view the cultivation on their accounts as often as they want per day. As a result, the banks have reduced some(prenominal) operating speak tos and work hours for their staffs at call centers and local armes for frequently asked (FAQ) and repetitive transactions. 1.2 E-banking security provokes fear or indifference for the British cosmosA recent study by analyst Forrester look has unearthed conflicting views about the safety or differently of online banking. The prevent abreast of 1 1,300 UK net make use ofrs found that while many online banking consumers are smug about security, a large minority have given up online banking as a direct result of security fears.Most UK net users are aware of security threats like phishing and keystroke logging but are unfazed by these risks and expect their banks to palm with the problem, even though these attacks are impel against the consumers PCs rather than a banks own systems. Ideally users want banks to ply a blanket guarantee against fraud.Based on resolutions to its survey, Forrester concludes that an estimated 600,000 from a total of 15m subscribers have ditched online banking as a direct result of security fears. Forrester reckons that users are low and banks need to step up their efforts to educate customers about online fraud. Measures to restrict the functionality of few accounts (for example controlling how oft specie can be transferred on any day), stronger profits banking authentication and improved cu stomer profiling are in like manner needed to defend against security threats, it advises.In addition to citizenry who plan to drop net banking accounts as a result of security fears, another fifth of net users say that security fears go forth dwell them ever banking online.1.3 UK Consumers shy a modality from e-banking Customers still value direct march with real people in their bank branch. A vast majority of bank customers thinks that an online banking service is not grievous for their relationship with a bank. harmonize to a survey one third of customers rate e-banking as an important service, and of those only 22% actually use it. Even more uninvited newfangleds for many banks leave be the poll finding that more than 30% of customers do not even know whether their bank provides online services at all. The findings contrast starkly with the market expectations among banking exe tell apartives. In an earlier Deloitte survey, pecuniary services executives had predicted that customers would be eager to do their banking on the web. 1.3.1 Cutting costs, not customer care Julian Badcock, retail pecuniary services analyst at Deloitte, said customers were certainly not rating the net profit or interactive services as a key factor in measuring their satisfaction with their banking service provider. A responsive service and the olfactory sensation of creation treated as a valued customer were much more likely to act up consumers feel happy with their bank. And more than 50% think it is important to have quick and easy access to a local branch. The findings of the report make bitter reading for backers of internet banking plain plays like Virgin and Egg. Julian Badcocks conclusion 90% of customers at present are showing no enliven in obtaining financial services from new entrants. Established players, meanwhile, have to worry whether their huge investment in online banking is currency well spent. The need for expensive customer care does not sit nicely next to the cost-driven move to online banking. 1.3.2 Educating customers Long-term hopes for cost savings give only materialize, if consumers can be persuaded to use the services. A recent survey by consulting firm Cap Gemini Ernst Young had found that before long honest 4% of all bank transactions in Europe are done online, a number expected to rise to 25% by 2003. In the United States just 3% of transactions are done online, and there branch prospects are more modest, with the share of online transactions seen to reach 12% within three years. Such growth rates, however, can only happen if banks begin to educate their customers about the benefits of online banking, Deloittes analysts say. Chapter 2-Literature Review2.1 executive director SummaryHow secure is online banking for the regular and not so regular internet user?The internet is becoming a more globally cognise form of communication virtually the world these days and its used generally in conjunction with personal/ tune tools to expand the horizons of e-commerce.As many small to large argumentation follow the trend, looking for soaring profits, by placing their business online, they are left to find a threat in the online world in terms of security issues. This can be large in regards to online banks and financial institutions that provide the businesses with their transactions, along with the present threats of personal privacy and protection flaws associated with banking online. Online banking is not just about viewing accounts online, or stipendiary bills. It has more to that, it include transferring of funds, obtain online etc.As a turn up fact, felonies consisting of fraudulent behavior have attacked national Australian banks and are soon in legal dilemma over the astounding issue. Presently, uncertain of the showtime of the crime, banks have been forced into an unacceptable situation in regards to customers bank accounts.With frighten issues of security online, there a re a few steps that can be taken in order to prevent much(prenominal) matters from arising or basically in order to avoid hackers into your private life.2.2 The internet and its benefitsAs todays busy world is immensely changing in the depth of telecommunications whilst forward in the technological age, we are left to find minimal time to do the basic necessities such as shopping, banking relaxing. So along came e-Shopping, and e-Banking. Online banking is for you if it will save you time and money. E-commerce plays a major employment in how the internet is used in terms of a consumer business, or B2B relationship, but there just isnt enough security online. 2.3 What is online banking about?nline banking may be contemplateed just as a system where you view your accounts and pay bills, but it is not just about that. Online banking is about shopping online, transferring funds, viewing transactions histories, inspection and repair your accounts online and getting in contact with your bank around the clock.As shown by the statistics, lenience to banking online can be proven handy. The convenience can be dominant, since not only is travel time reduced, but ATM machines, environ banking or banking by mail are often unnecessary. Technology continues to make online banking, easier for the average consumer. non only regular consumers, but also many small, medium and large businesses are finding it rather efficient. Bankrate.com (28-10-2005)In the past, online banking consisted for the around part of banks partnering with large software companies such as Microsoft, to provide the online banking services within their personal finance software. Microsoft.com (1996) this led to the first of two approaches referred to as the client-based system, bearing customers to use the money management software and their own computers to access the bank via a modem and a phone line. The second approach is that of the newer Internet-based systems which allow customers to sim ply telephone dial in using any computer and use the banks software.From a business perspective, they actually have more danger associated to their business, than a consumer may. Home PCs are, as confirmed by all IT Security vendors and specialists, the least protected albassera.com (21-06-2002). Ocp.co.uk (No Date) describes shell the implications businesses could face with the threat of online security financial savings that online banking has to convolution. Increasing supply power by reaching a more global steer Attract new customersAnd therefore the disadvantages that may occur to a business Level of l nominateing for each customer may vary, or may even be too difficult to do online transactions. on that point a potential threat of the site macrocosm hacked Lost randomness or errors in banking can lead to a loss of business Not all clientele may be happy with making purchases online. initial set-up costs and on-going cost can be rather expensive to keep the site up-to-d ate.Proven by the disadvantages list, there are a business deal of threats placed on a business in order to con sider a place in the e-market.2.4 Internet BankingBanks are not the only commercialized organizations locked in a love hate relationship with the Internet. On the one hand, cheap and ubiquitous, the Internet stretch outs a potentially attractive way to serve customers without the heavy costs associated with the traditional bricks and mortar business model. On the other hand, the Internet is fundamentally open and insecure. It is the very antithesis of the private networks that industry and commerce have entrusted with carrying transactions and other critical information. Despite the dichotomy, the pass continues to grow ever more rapidly in importance to the commercial world. From books and airline tickets to share trading and the filing of corporation tax returns, new users for the light up are proliferating.In most cases, the incentives of Internet Banking are every the need to meet competitive challenges and customers demand or the need to cut costs. As reported by The Times of UK on Internet banking, a banking transaction action at a Bank costs around $1.07, $0.27 via an ATM and just one-cent on the Internet. The decision to use the net is seldom a technical one. Banks have opportunities in the new payments gateway in field of views such as purchasing platforms, certification, trade services and trade finance, electronic bill presentment and payment, consumer Internet payments and also plethora of competition.There are five main reasons for going online. prototypically, Internet banking removes the need for physical front line in new territories a web site gives global front end without in-country set up and ongoing infrastructure costs. Secondly, success carries few penalties because growth can be accommodated centrally, without recourse to building and operating new service centres (bank branches in retail terms). Thirdly, the time t o market new products and services is dramatically reduced due to the standardized technology that characterizes the Internet. Fourthly, there is the chance to prophesy to the converted. Marketing costs in this medium can be difficult on creating an effective Website that attracts potential clients. Finally, the Internet fits well with the characteristics of Corporate banking where thousands of transactions which can be conducted daily and multiple updates provided, individuals can work tardily from different locations and there is a growing belief that security fears will be resolved by evolving techniques and technology.For internet banking to work effectively, it needs to talk the key issue of security. In conventional banking we use written references or prior knowledge to assure ourselves that we know who are doing business with us. We use controls to ensure that non parties are not party to a confidential deal cannot see or tamper with paper based information that is stor ed and in transit. And we use pen on paper fore nobbleenatures as an irrevocable sign of our agreement. Banks have long used encryption devices to scramble inter-branch links and communications with corporate customers. More recently firewalls and cry tokens have been introduced to provide access control.In addition to security, tincture of services is another key area in providing successful e-banking. Any customer is only a chit-chat away from a competitor elsewhere, so it is imperative that the e-banking ingest reflects an best encounter each and every time. As simple as this sounds, developing the network management capabilities to assess and respond to the end user experience is no trivial matter. Much of the discussion so far has pore on e-banking as provided over the Web but the Web is only a beginning. The changing shape of Internet banking in the future will be fascinating to watch.Internet banking is a robust and highly practical solution but has delivered somethi ng of a surprise too. As Internet banking starts more common, potential customers have increasing choice. The more informed among them are shopping for service not just on the basis of obvious criteria such as interest rates and functionality, but also on the quality of the security being provided. For those banks still debating the best Internet approach, the advice is to start small but start as early as possible. The number of customers and services should be limited initially while the potential of the technology is wise to(p) and the security and services takes are assured.2.5 Online banking securityNowadays, online banking is used primarily by agency of the internet-based system of customer/business to bank. All online transactions should be governed by an SSL (Secure Socket Layer) encryption. Gelman (1998, pg 39) states that information sent over the internet may pass by mover of with(predicate) dozens of different computer systems on the way to its reference. This b asically means the information being sent is to be encoded before transmitted from the destination computer to the banks computer. Knowing that your bank account details are being passed on to many other computers in order to reach its destination, doesnt exactly make you feel safe and sound about using online banking.A customers password or pass code serves as the first level of protection and is digitally sent separately for security purposes. This is also go with by the issuing of a Logon ID, which is a unique membership number. before long online businesses and financial institutions face great danger as online banking can lead to fraudulent behavior. Atansov (2001) Credit card generators are readily unattached to transfer The impact of such a fact has left many internet users wondering about the security issues in regards to their personal information, their banking details and most of all their internet surfing privacy. From a recent survey it was shown that a massive 30% of regular internet users were too nervous to use online banking.2.6 Current online banking security issueAs it may have come to recent concern, most of the banks were beaten by an unknown source luring its customers to circumstantially reveal their account details. An email was sent out to customers stating that their account details needed renewing and that if they followed simple steps provided they could renew their accounts adequately. Some Net Bank customers have been deceived into providing their Net Bank client number and password as a result of a spam email which was wide circulated in UK. As none of the customers were aware that such a con could happen, they gave their Login IDs, Passwords and account information away to very deceitful criminals.2.7 An outcome about online banking security and its futureIn the analysis for online banking security, many precautions can be taken in order to prevent trouble occurring in regards to account details, personal details and secu rity information. Customers of online banking must play their part in securing online banking by helping to safeguard information, which can be done by protecting their Logon ID and Password from misuses. These may include things like not state other people their Login ID and/or Passwords, not using public computers to access their bank account information and being able to tell the difference of a secure and non-secure website.The future can only hold a solution for the current problem of online security, which can be solved in many different ways. Its best to avoid internet banking for the current minute of arc and wait until there is an upgrade on its security. As many consumers are still nervous about using the internet for banking, the issue of security will be a thing of the past, just at this particular(a) moment it shouldnt be overlooked.Chapter 3-Research Methodology3.1 Emilitary rating of five E-Banking Sites in the UKThere are two distinct models of E-Banking sites Pu re Cyber banks e.g. in the UK, Cahoots, Egg, First acquire and Smile, which only have an Internet presence Traditional banks that provide E-Banking to full complement retail banking, e.g. In the UK, Barclays, Nationwide and HSBC are some of the traditional banks that have an Internet presence to complement their brick and mortar branches. Not all the banks offer the full range of services on the Internet banks in both the aforementioned groups offer a wide range of services. These include personal banking, commercial banking for both small businesses and large corporations, loan application services. financial services such as applying for an Individual Savings Account (ISA), open an E-Account, applying for a mortgage, etc.3.2 Methodology for Evaluation of E- Banking sitesI chose five E-Banking sites Egg, First Direct, and Smile in the pure cyber bank variety, and E- banking sites of Nationwide and Barclays, which also have physical branches.Aims and objectives To determine the ea se of applying the evaluation instrument based on the e-SERVICE framework To demonstrate that an E-Commerce environment should not only have a usable Web site in conventional HCI or Usability terms, but should provide service quality that meets or exceeds the customers expectations.3.3 Research MethodThe research method involved conducting trial-and-error evaluations of the E-Banking sites. Heuristic evaluations involve inspecting the user larboard to check its conformance against a set of heuristic programs or design principles (Nielsen, 1993). The heuristic evaluations involved two steps1. First of all I conducted usability heuristic evaluation. We applied an evaluation instrument consisting of several sub-heuristics of the usability heuristics approach.Provide an effective base page are Ensure intuitive access and logical emanation to key user tasks Integrate clear yet usable branding Ensure visual elements do not compromise usability Terminology should bear on to the us ers tasks and not marketing speak Provide arrogate Metaphor for navigation from the home page Simplicity or busy is either appropriate?The heuristics in plug-in 2 and the sub-heuristics in the usability evaluation instrument (which is available from the authors) were derived from several sources in the literature and Web sites (e.g. www.usableweb.com, Nielsens www.useit.com, IBM Web guidelines). The list of heuristics was also refined and updated during the authors experience of conducting usability evaluations of E-Commerce sites as a part of their consultancy activities. 2. Secondly I conducted heuristic evaluations of the five sites with respect to the e-CRM heuristics using the e-SERVQUAL evaluation instrument. (Based on the e-SERVQUAL framework).Table 2 Usability Heuristics Provide an effective home page plan a natural and manageable structure Provide an aesthetic minimalist Design Enable easy and intuitive navigation Ensure Consistency detain the UserI considered the cust omer task scenarios listed in Table 3. The customer task scenarios presented here describe key situations of customers interaction with an E-Banking environment. Task scenarios are realistic, concrete and specific and help to guide the evaluator through heuristic evaluations. The evaluator (usability expert) interacts with the E- Commerce site to role-play a stereotypical customer and conducts the customer task scenario. While walking through the scenario and navigating through the site, the evaluator checks for the sites conformance against the heuristics, and makes a note of situations in the scenario where the E-Commerce environment does not adhere to the heuristics.Chapter 4- Research Findings4.1 Internet BankingInternet, a global system of computer networks, first appeared in 1969 under the name Advanced Research Projects Agency Network in the United States (PBS Online, 2003). At present, about 13 millions serves are linked to the Internet across the globe, 99 per cent of which are located in modern countries(CSE Online, 2003). Many banks use the Internet to offer services for both home(prenominal) and foreign consumers. At an advanced level, Internet banking is called transactional online banking, because it involves provision of facilities such as accessing accounts, funds transfer and buying financial products or services online (Karjaluoto, Mattila and Pento, 2001, p. 348). The Internet also helps banks penetrate other financial markets without requiring their physical presence in those markets.Miklaszewska (1998) identified four roles for the Internet in a modern banking industry. First, it expedites financial transactions between banks and their consumers. Second, it gives financial institutions permanent access to financial information. Third, the Internet connects a banks head office to its branches. Finally electronic banking lets customers check their account information, pay bills, transfer funds between accounts, and perform other functions . Customers will soon have access to additional services such as online stock and bond trading (Miklasewska, 1998, p. 283).The Internet gives financial institutions various opportunities to conduct their various financial transactions. It enables banks to introduce international payments. It also helps banks cut time, money and risk. Many transactions can be done through the Internet. handiness of data through the Internet helps both banks and consumers reduce risk-taking in their financial transactions.Usually banks use Internet for publicity purposes, which include informing the public about the characteristics of financial products (e.g., commission rate, type of accounts available within the bank, interest rate on lending and borrowing, etc.). Large banks such as Citibank offer On-line LC issuance services to traders and cross-border finance facilities to foreign investors. Respondents noted that the response to those Internet services is high.Internet improves banks actors li ne system. But, the branch remains the main channel for delivering banking services in developing countries. Individuals still prefer personal banking rather than buying financial services via the telephone or the Internet. The removal of barriers on the use of new technologies would encourage banks to invest in e-commerce and TV banking.The Internet improves two essential factors in global banking businesses time and location (Oxford Analytical Citibank, 1999). The time needed to access bank services through the Web is extremely short. The Internet is also available everywhere in the world. As a result, Internet technology has globalised the banking industry many banks use e-banking to expand their market share abroad.This section has shown that the Internet is a means to penetrate new markets without a physical presence in the force country. It enables banks cut their costs and to provide large packages of services in short space of time. The result is an increase in banks outp ut levels and boost in their profit leeway.4.2 Advanced nurture Technology and Banking EfficiencyThe Internet increases banks energy by helping them reduce the cost of producing and delivering financial services. The Internet alters the determine strategy of the banking product. Banks toll their products at the right level for the electronic market. The price of financial services is usually lower via the Internet than in the branch (Jun and Cai, 2001) this has made the Internet an attractive banking environment for clients. As profit margin decreases, new products are delivered through new channels, retail services and securities being the main areas of change. Global banks also use the Internet to expand their activities and to earn new market share (Oxford Analytical Citibank, 1999).The Internet invokes competition in the banking sector as many non- banking institutions offer their services through Internet channels. Banks also face severe competition on the lending side fro m global markets. Financial service clients have access to all information about products (e.g. pricing and characteristics) through the Web. This has increased transparency and reduced the cost of financial instruments. Therefore, banks have to apply different mechanisms for pricing their products. As shown in Table 1 the number of banks branches will decrease as electronic distribution channels become more popular. Internet also enhances the manner of speaking of large range of financial products. These improve banking efficiency by facilitating payment processing. The goal is to attain high value-added products. The Internet plays a vital role in the key challenges facing Financial Services Institutions today. It provides a awesome opportunity for Financial Services Institutions to reduce transaction costs, exploit new markets and roll products much faster than was possible via traditional channels (Banker, 2000, p. 4. Bank managers stressed that the Internet enhances the globa l competitiveness of financial institutions by increasing their output levels.4 The Internet is also a means to manage business-to-business5 or business-to-customers transactions effectively. A strong Internet infrastructure is necessary to allow banks improve their electronic data interchange.6 Co-operation between telecommunication firms and financial institutions facilitate the modernization of online banking. Increased capital investments and clear rules for online banking also fosters the growth of e-business activities and enhance market transparency (interview notes, 2003). Finally, bankers surveyed in this research believe that the Internet is a means to boost the relationship between providers and users of financial services in the marketplace. The Internet allows market participants to access all the standard banking services at a low price. This motivates individuals and investors to purchase large packages of banking services via the Internet.4.3 Problems Associated with the Advances in Information TechnologyThe major problem facing Internet banking is the physical delivery of cash. Clients regularly receive financial information through banks Web sites. Nevertheless, it is unsufferable to make a physical delivery of cash through the Internet. Clients also require instant access to products prices and financial information. The very concept of the end-of-day is nonmeaningful in the world of e-commerce, where customers may be anywhere in the world and demand consistent and instant levels of services (Banker, 2000, p. 6). Banks should promote innovation to become more competitive. The Website must also complement branch services, meaning that products offered via the Internet have to describe how they supplement or replace services available inside the branch. Advantages of e-banking Low costs (particularly fixed costs) Cross-border expansion High right value Strength link with customers Market share growth Financial information potential Simple to access. Disadvantages of e-banking New competitors Complicate services valuation Development costs Low security.Source Salomon Smith