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Introduction
Research Background
Fast growth of information technology and concurrently that of the banking services has triggered a great competition in the market. Electronic banking has been effective in transforming the lives of consumers and changing their expectations (Havasi et al, 2013).
The evolution of e- banking relates closely to the neo-classical economic theories of market functioning. It provides complete transparency of the markets enabling the consumers to compare and analyse the different banks. It helps them in making their choices regarding their banking partners.
Turner (2001) asserts that information technology has been an effective factor in cutting down the cost of the processing information. Internet has influenced the core of the banking industry (cited in Nitsure, 2003).
With the rapid increase of e-finance, completely innovated methods of offering financial services like internet banking and other technologies have fused in the financial systems (Rusu and Sehn, 2012).
Technological developments have widened the modes of communication between the clients and the banks. New services like home banking, internet banking, phone banking etc. are being integrated within the banking system (Chovanova, 2006).
The efficiency of the banking transactions has witnessed remarkable upgrading in terms of accuracy, time saving and reduction in operation cost, enhanced customer contentment, attractive services and innovative products and techniques. The innovative technology works in different forms:
Electronic fund transfer within the bank branches and between the worlds banks; use of internet banking service and application; telephone and mobile banking; ATM services; and cards payment system including debit cards, credit cards, smart cards, point of sale cards, and magnetic cards (Sabri, 2008, pg.68).
These services enhance the performance and competence of banking systems in the global economy; however, their applications are not very popular in the Arab economy, as people tend not rely on internet and ATM services. In case of accessibility, only few customers are inclined towards its use.
The reasons may be many: customers ignorance, unawareness of banking management and lack of support, dearth of infrastructure related to software and hardware and security reasons (Sabri, 2008). Few banks are imitating innovation, but they lack in having a personalized association with the customers. Further, the so-called convenient delivery channels have produced a conflicting and incoherent experience for the customers.
It has become necessary to find ways to understand the customers experience to determine the factors leading to positive outcomes and to realize the complexities that have arisen by these new delivery channels in banking.
The chief challenge before the retail banks today, is to be competent enough to make a distinct ranking in the highly productive and competitive market place. The banks need to focus on the varying requirements of the customers depending on their duration of association with the bank, their nationality and preferences related to products and services ( World Retail Bank Report, 2013).
Furthermore, they need to improve the traditional measures of operating in view of the expectations of the customers and their channel preferences. These attempts would enable them to have positive experiences in the desired areas (Sohrabi et al, 2013).
The global CEI index, 2013 observed in their worldwide survey that delivery channels and specifically the mobile channels play a vital role in making the banks distinguishable and magnetic for the new customers and retain the old ones in the competition.
The survey revealed, The mobile channel is currently perceived as less important than traditional channels, but is rapidly gaining in customer usage, as well as in the importance and satisfaction that customers associate with it.
In order to use channels as differentiators, banks need to focus on building capabilities to deliver the right products through the right channels, and to deliver a consistent multi-channel experience to customers (World Retail Banking Report, 2013, p.5).
According to Prahalad and Ramaswamy (2000), there have been abundant researches on the subject of increasing customer inclination towards e-banking in different contexts at the global level, however, the Middle East markets are lagging behind in this respect. Banking institutions are constantly engaged in applying diverse techniques to offer substantial services to their customers, but making these services widespread over the internet stimulates risk.
Wells Fargo bank set an example in this respect when it had to experience unfavourable consequences after enforcing PC-based services on their customers.
The newly introduced PC- based banking system did not yield much success due to customers dissatisfaction and caused a great loss to the bank (as cited in Kassim and Abdullah, 2006).
Hence, it is essential for the banks to provide diverse environments to their customers to increase their active participation in the e-banking processes (Kassim and Abdullah, 2006).
It is vital to consider the generational differences in the process of planning new products. The primary focus of the present day financial market is GEN-Y that lives a vibrant lifestyle upheld with basic financial products like cards, internet and mobile banking, loans etc. Unlike Generation X, they are not keen on investment or retirement products. Therefore, products should be designed according to their personality, mind-set and standard of living (Are Banks Ready for the Next Generation Customer, 2010).
The competition among financial institutions has led them to rethink about their strategies regarding customers satisfaction (AL-Smadi, 2012). In view of the mounting expenses on appropriate infrastructure and declining product margins, the institutions are compelled to make changes in their ways of operating and measuring success (King, 2010).
Almazari & Siam (2008) mention that electronic banking services are such facilities through which banks are constantly trying to offer easy, open and satisfactory services to their customers and remain at the forefront in the competition (as cited in Hamid, 2012).
Research Problem Statement
The present research is based on the context of e-banking services in Qatar, a small country with abundant natural assets. In spite of adopting different measures to generate value for the customer, banks in Qatar have not been able to get the majority of customers oriented towards e-banking. The electronic services are of no use if the customers do not realize the importance and implication of using those services (Jonsson & Hagg, 2009).
Customers disinclination towards e-banking is chiefly due to security and privacy and trust related issues. Hence, it is mandatory for the banks to implement exclusive services to sustain existing customers and magnetize the new ones (Yousafzai et al., 2005).
Electronic Banking services lag behind in their realization in Qatari banking sector in comparison to other global players. Additionally, companies are still looking at electronic banking services as a short-term strategy. Due to unforeseen technical hitches and blocks in e-commerce network at this time, few banks embrace the long-term benefits of investing in electronic banking services.
The need for greater customer satisfaction in the case study bank necessitates more research into the area of electronic banking services. Therefore, this research is focused on finding the reasons that are responsible for keeping the popularity of electronic banking services at a low pace in Qatar.
It would attempt to find the solution with respect to the technology to organize e-banking services, computerize, and bring the sales into line, improve marketing services and customer services, and provide technical support in the e-banking sector.
Aim of research
The main aim of the research is to increase active customer base for electronic banking services in the case study bank by developing proper technological applications and strategic campaigns in their mobile banking platform. It also concentrates on surveying different methods that the best banking institutions are adopting to improve customer satisfaction.
Further, the study focuses on customers perception about e-banking and the quality of e-banking services offered by the banks and the restrains in achieving customers satisfaction. It will help us to enhance our vision towards improvement in the desired areas.
Research Hypothesis
Customers perception and experience about e-banking services works as a deciding factor in increasing the number of its active users in a bank.
Proper technological application and strategic campaign will provide the case study bank with a framework for sustainable electronic banking services.
Significance of the Research
In Qatar, research on electronic banking services is still in its infancy stage. Among fifteen existing banks in Qatar, seven are under Qatari possession, seven are from foreign origin, and one specialized bank is under the possession of Qatar government. Out of these fifteen, the majority of the banks are operating 24-hour and seven days a week.
These banks provide convenience in managing an account with the help of internet, telephone, or ATMs. Consumers are more interested in finding an extensive range of products and efficient channels that are easy to use. The increasing competition demands that these services are offered at comparatively lower costs (Kassim, n.d.).
On the other hand, banks are yet to learn about the different platforms available to them that offer various electronic banking services. This research will assist the case study bank and other banks in the State of Qatar to implement electronic banking services effectively by preparing a framework for their strategies.
It will be a set of best practices prevalent in the top banking institutions regarding e-banking services. The study will also assist banks to know how they can effectively manage their customers data in order to learn extra information about them.
Limitations of the Research
As mentioned earlier, insufficient information exists concerning the electronic banking services in Qatari banking industry.
The present study will not be a magic bullet in the electronic banking service proposal; however, it will only provide structures that must be combined with the values and goals of a bank for enhancing the utilization of e-banking services. Furthermore, the capabilities and resources available to an institution will determine the success of their initiative.
In view of the slow pace of e-banking services acceptance in Qatar and especially in our bank, I feel the need to introduce adequate innovative and productive strategies to facilitate e banking and attract more customers to my bank.
The Dissertation Is Presented in the Following Parts
Introduction: Introduction part provides an overview of the topic and related developments in the field. It also proposes the need for further research and strategic development in e-banking sector in Qatar and the case study bank in particular.
Literature Review: Literature review offers a more comprehensive insight into the subject of e banking. It presents an overview of different researches and studies done in this field and the prevailing trends related to e-banking in Qatar.
Methodology: This chapter presents the details of the study conducted to discover the innovative strategic approaches for increasing e-banking customer base in the case study bank.
Reflection: This chapter reflects how my research has an impact on the customers as well as employees of the bank and how it has affected me personally.
Recommendations: This chapter provides some suggestions that can be used for the appropriate implementation and development of e banking services in the case study bank.
Conclusion: This part of the dissertation summarizes different aspects related to e-banking discussed in the dissertation.
Defining the Terms
E- Banking
E-banking refers to the banking process in which customers can connect to their banking website using their personal computers or browsers. In this system, banks operate with the help of a web supported central database.
The physical identity of the banks branches is taken away once they are linked through satellite links and lead to limitless entity allowing banking at anytime, everywhere in the world and in several manners. Therefore, e-bank is the electronic bank that provides the financial service for the individual client by means of Internet (Vyas, n. d.,Para 3).
Functions of E- banking
The primary functions of e-banking services are as follow:
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Enquiry about the details of account information including balance in the account, detailed chronological credentials
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card accounts transfer in the same city
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fund transfer between personal bank saving account and personal capital account in the securities company
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dealing of foreign exchange and enquiry about the dealing
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B2C communication regarding the payment feedback
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Services like modification in the login password, particulars of the Credit Card and clients information, closing or remove certain cards
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report of losses like Credit Card or passbook in the local area (Vyas, n. d.).
Benefits of E-Banking
Like the other financial sectors, banks are also adapting to information technology to elevate their efficacy, service excellence and draw new customers. According to Al-Sukkar & Hasan(2005), customers are preferring to use online banking since it is cheaper, does not require paper work and is almost error free ( cited in Havasi et al, 2013). Thronton and White assert that e- banking reduces transaction costs and provides a lucid course of processes.
E-banking has benefitted the consumers by offering 24/7 hours accessibility. Increased availability and accessibility to banking through e- banking has reduced the expenses on branch networking and staffing. Different options for channels of distribution will decrease the number of customers visiting banks and thus reducing the crowd in branches (cited in Havasi et al, 2013).
Qatar, like the other developing countries in the Middle East presents a typical portrayal of a socio-economic system that is predominantly influenced by its culture and religion.
The nation is still in the process of learning the use of E-Commerce as a large number of people and businesses are not proficient in using computers and information technology.
A significant number of banks and utility companies have developed their web sites to introduce extensive range of services to their clients (Qatar Investment and Business Guide, 2012).
Challenges in utilizing E-Banking
United Nations report (Conference on Trade and Development, 2002) has recognized some common challenges that the developing countries come across while utilizing the e-banking services. These challenges may pose a threat in achieving the utmost benefits of e-banking services.
Implementation of global technology to local needs
It is essential for the developing countries to build adequate infrastructure and develop human capacity for the satisfactory implementation of a global technology like e banking. The Society for Worldwide Interbank Financial Telecommunications review on its migration plan to internet revealed that developing countries lack in sufficient infrastructure for e- banking.
Further, insufficient working capital and lack of technical proficiency is a barrier in carrying out their migration plan related to internet in developing countries. Widely used e-payment system also is not successful in many of the developing nations due to lack of trust on the part of the consumers and corporate and inaccessibility to the required infrastructure for dealing out e-payments.
Public Support for e banking
It is important to fortify public support for the advancement of e-commerce in developing countries. Cooperation between the private and public sectors has contributed to successful e-finance initiatives in the developing countries. Public and private sectors and multilateral organization such as World Bank can make collaborative efforts to foster public support for programme related to e-finance.
Regulatory and institutional framework
For impeding the progress of the e-banking services, it is necessary to establish regulatory frameworks, build trust, safety and privacy standards. It is necessary to build high trade barriers, provide customer and investor protection for successful e-banking initiatives.
Enabling SMEs towards e-banking
To motivate the small and medium scale industries towards e-banking, quality data and banking information should be made easily available and accessible for them (Nitsure, 2003).
Influencing Factors for E-Banking
Technology is a significant aspect of economic development that brings innovative amalgamation of labour and capital. Developing countries do not experience widespread technological growth. The use of technology remains concentrated in urban areas of the country.
The effectiveness of substitute delivery channels depends on the availability of options to clients. In case of inconvenience experienced in the bank branches, they may look for alternate delivery channels. The complexity of the financial system also affects the use of complementary delivery conduits.
For instance, clients may look for online banking or mobile banking for basic payment services or simple fund transfer, whereas they may not rely on these for complex services like applying for mortgage or seeking life insurance and go for branch-based services in such cases.
Moreover, demographic features relating to financial and technical literacy also influence the clients approval to e-banking. Customer behaviour related to a particular market function affects product plan, deliverance and consumer support. With e-banking clients may need orientation and a variety of customer service alternatives like call centers, ATM attendants at busy sites and retail agents.
Customer education is a significant pre-requisite for establishing e banking. It is important to adopt special measures like, trained attendants for ATMs and call centres with ample staff, while introducing such novel technologies in the areas where literacy levels are low.
These efforts would assist the clients in learning the procedures, provide encouraging preliminary experience, and instil faith in the innovative approach making them self-sufficient for upcoming transaction.
Apposite national regulations and financial infrastructure is mandatory for the success of e- banking. International experiences may be useful while constituting national regulations. National authorities and private sectors should cautiously implement these regulations.
E- Banking creates many legal and policy related doubts that require easy and quick explanation. E- Banking and e-money easily surpasses the national borders, hence, crucial issues related to international cooperation on standards, security and monitoring require consideration.
Emerging problems like criminal abuse of pre-paid cards, risk of money laundering and terrorist financing also need to be handled (Isren, 2008).
Literature Review
In this section of the study, an examination of the relevant histories, strategies, methods of customer engagement and other related topics will be examined in order to create a better idea regarding what potential strategies have been implemented and how they can be improved upon in order to create a better method of consumer engagement.
It is based on this that various literary sources delving into the differences in the adoption of financial tools and resources by various consumer demographics (i.e. Gen Y, Gen X, Millennial, etc.) will be examined to determine how different types of consumers respond to the assortment of strategies implemented by banks to encourage spending, deposits and electronic methods of transaction.
As such, this section should be able to clarify such concerns and will act as the framework behind understanding how particular types of banking instruments will be adopted by a diverse array of possible consumers.
The early 1990s witnessed significant financial reforms leading to the development of a strong and efficient financial industry. Banks realized that Information technology was an ideal tool to upgrade their customer services. Technology presented various delivery channels to facilitate the consumer with lots of options. To influence the consumer behaviour, banks need to be aware of their customers outlook towards technology in common.
Stranberg et al (2012) asserts that globalization and developments in the realm of information technology have intensified interbank competition (as cited in Mircholi et al, 2013). According to Abdullah et al (2011), banks are forced to offer eminent services to their customers for attaining success and stability in the competitive environment (as cited in Mircholi et al, 2013).
In view of the inevitability of higher customer satisfaction, there has been an urgency to study the correlation between service quality, satisfaction, and behavioural outcomes in past few years (Yavas et al, as cited in Mircholi et al, 2013).
With the increased complexities of market trends and the changed competitive environment, banking institutions need to focus on the customers needs and develop strategies that would provide them simple and convenient, time saving and comprehensive banking procedures.
It is also helpful to refer to the strategies taken up by other industries in the same field and their repercussions (Catalysts for Change: The Implications of Gen Y Consumers for Banks 2008).
Banks have been using mobile banking software for 2-3 generations. Initially, the services were based on the online banking systems of the banks, however, now all banking services are available through mobile such as enrolment in mobile banking through phone or tablet. Mobile banking has emerged as a global business (Groenfeldt, 2014).
Information and communication technology has paved the way for electronic media, internet and mobile phones in almost every aspect of our lives. Mobile phones were thought to be luxurious items, solely utilized by the people of developed and wealthy nations of the world, until a few decades ago.
However, today it is accessible to the people living even in the remote areas of Sub-Saharan Africa, Latin America and Southeast Asia. Moreover, cell phones today are performing multiple tasks beyond phone calls and text messaging.
Along with internet access and social networking uses, mobile phones are being used for banking purposes providing a new dimension to information and communication technology. These are also providing new capabilities to the people with respect to the financial transactions and other services (Graham & Nikolova, 2012).
Expansion of M-Pesa in Africa exemplifies the innovation in this field. In Kenya, the use of M-Pesa has reached up to 70 percent. It is also gaining grounds in many other countries including Tanzania, Egypt, South Africa and Qatar. Mobile apparatus are considered a better option to substitute payment cards.
According to Bloomberg Business week, Chinese savers can easily manage transaction of funds from a bank account to the money market mutual fund using their Smartphone. The Hana Bank in Korea, in this regard, takes another initiative by replacing the paperwork for various loans with Smartphone. Hana Bank claims that it credited $4 billion through mobile banking without making the applicants visit the banks (Groenfeldt, 2014).
According to Philip Lu, (vice president, Knowledge Management Centre of Market Research and Management, Well Fargo) the mobile device will be the basis for raising a banking connection with the Generation Y. Gen Y are most occupied with mobile banking.
Hence, it is important to develop a mobile strategy enabling them to have different options for paying with the smart phone such as making payments by text, through the browser and the mobile app and at the time of sale. For the successful implementation of the mobile device, it is essential that the mobile user experience is modified as per the quality of the mobile device (Smartphone or a tablet).
It is necessary to make these services easily available so as meet the expectations of the Generation Y. Most importantly, banks require incorporating the solutions and products into wallet-based solutions. He says that the Gen Y are concerned about their finance and eager to use the PFM tools. Banks are also required to tap into social media networks to be associated with Gen Y customers (Camhi, 2014).
Gen Y is becoming the focus of several banks, as it is emerging as a prosperous and strong customer segment. According to Javelin Strategy and Research, the group has more than 70 million members, second in population only to the 80 million Baby Boomers, and boasts a collective income of approximately $1.89 trillion (n.g. 2008, pg.3).
Hence, it is important to maintain a positive and long lasting bond with this group. It is essential to review the strategies relative to dimensions of channels, products and marketing while focusing on the demands of this vital segment of customers.
These strategies would require a comprehensive knowledge of the values that influence the requirements and preferences of these consumers (Catalysts for Change: The Implications of Gen Y Consumers for Banks, 2008).
The financial institutions need to utilize a fundamentally innovative strategic approach to meet the distinguishing needs of the Gen Y consumers. The Gen Y is surpassing the older generation in terms of online banking convenience, confrontation with the conventional marketing and environment related considerations. Hence, it is important to visualize their requirements in view of larger market benefits.
One example of a remarkable strategy for the development and marketing of services is set by ING Direct. Simple and practical approach is required while aligning products with Gen Y. These products should be less complicated and easy to practice.
The overall product strategy will catch the attention of the Gen Y, if it exhibits commitment towards the benefits of the broader society. Gen Y is more attracted towards the products that signify social benefit. Banks require having the expertise in making the simpler things more distinctive and stimulating.
Joining the bank products and services in other industries together such as entertainment or retailing would enhance the banking experience of the users. The Robo bank in Netherlands presents an appropriate example of such banking initiative. The bank started the MiniTix scheme, which enabled consumers to pay through their mobiles for online TV content. It enabled the users to pay by SMS or mobile Internet for online and TV content.
It also offered scenario for monetization of the growing retailing prospects through Internet. Such facilities attract the younger generation or Gen Y- Robo bank has worked innovatively in this connection and is incorporating different experiments in various fields for payments such as supermarket, cinema ticketing, and school fee frequently.
This initiative is a fine example of the product development under controlled experimentation and suggests usefulness for Gen Y. Robo bank is the pioneer in combing mobile banking with striking calling charges in Europe that enables the users to have unlimited access to mobile internet for a fixed price.
Robo bank has targeted Gen Y, hoping to differentiate itself from its competitors, with its simple to use, affordable and practical mobile banking services and an operating model that supports the product approach (Catalysts for Change: The Implications of Gen Y Consumers for Banks, 2008, pg.14).
However, the banks strategy for attracting the Gen Y customers also visualizes the increase in the overall number of customers across all generations (Catalysts for Change: The Implications of Gen Y Consumers for Banks, 2008).
According to a research conducted by the Forresters research Gen Y is very prompt in switching the banks. Hence, it is wiser on the part of the banks to offer them personalized services like opening accounts online or on mobile and funds transfer online as they spend so much of time online.
Gen-Y is ready to pay premium for services that are available round the clock, anywhere, easy to access and quick to use (Are Banks Ready for the next generation customers, 2010, p.17). Hence, it is crucial for the banks to adopt and implement the most up-to-date technologies and improve their performance for greater customer satisfaction.
Keeping in mind the status of their consumers as multi channel users, banks should focus on creating integrated experience across channels. Banks need to produce appealing offers to magnetize Gen -Y for making them visit the branch.
The idea of applying for premiums online and distributing in the same manner would provide convenience to the consumers. Moreover, the consumers are enabled to confirm the premium data on their mobiles. These advantages attained t
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