Competitive Advantage In The Banking Industry

Competitive Advantage In The Banking IndustryOnline curseing is a self overhaul technology that is pulmonary tuberculosis by nodes of the bank to carry issue in real time activities much(prenominal) as, payment of bills, check account balance and conduct funds. It is worthwhile to note that online banking target be used to reduce cost for banking institution. For instance Hernandez-Murillo et al (2010) suggest that the cost of a customer doing online banking transaction, in a brick and mortar bank in the United State is more or less whizz percent of the cost of the customer using the traditional banking method.Esser (1999) reported some of the advantages of online banking to the customers. The findings wereCustomers fucking easily manage their accounts as they can access their accounts any time of the day. The customers do not excessively need to visit the bank premise to crave for services such checking loan rates, view their transaction history etc.Customers can set up a standing order to pay bills and can withal schedule new bills or stop payment of bills, when the need arise but this is subject to availability of the lucre.Specialised services such as ordering for checks, changing user profile or address can all be done through the online banking.Messages are sent to customers via encrypted email.It should however be noted that the use of internet by bank is not seen just as an innovation and a convenient way for customers to use banking services, but also as a way to make more profit and to reduce operating cost for the bank (Arnaboldi and Claeys, n.d.).Internet banking services are expanding rapidly in the developed countries mainly due to the availability of computers and easy of access to the internet. Its adoption is developing countries was at a slower pace, until recently when banks in developing countries are offering internet banking against the limitation they face (Jenkins, 2007).Another noteworthy point is that online banking ca n also act as a disadvantage to banks, for instance a troubled bank that has low deposits and could not for borrow from the interbank, when the news of the banks distress leaked out, most the customers withdrew their deposits through the internet without facing the issue of queuing in the banking hall and theory time (Janson, 2009). This could not have been possible without the online banking facility.Customer gaiety is affect by several factors that can hinder or improve the adoption of online banking by the customer. One of these authoritative factors is personalisation, which demands politeness, courtesy, and friendliness from the employees of the bank toward the customer (Simmers et al, 2008). However, the self-service technology has made a remarkable change in the way the bank interacts with its customer (Simmers et al, 2008).Most of the look fores on online banking explore the factors touch on the adoption by banks. The focus of their look fores were on the usage of onlin e banking by banks as a reaction to the adoption decisions of the industrys competitors (Hernandez-Murillo et al 2010).Hernandez-Murillo et al (2010) dissect the factors that determine the adoption of online banking by banks in United States during the period 2003-2006. The Multimarket Contact index was used by these researchers as a change of the strategic force required by banks to adopt online operations as a competitive reaction to the rivals actions. The authors results suggest that strategic consideration plays an important reference in the adoption of online banking by geographically localised market.Tan and Teo (2000) base their study on studying the factors namely, attitudinal, neighborly and behaviour control, that affect customersthe adoption of online banking in Singapore. The theories of planned behaviour and diffusion of innovations were used by the authors to evaluate their hypothesis. The authors argue that the consumers attitude, his subjective norms and his se nsed behavioural control, all contributes towards his adoption of online banking.Amin (2009) examines the factors affecting the acceptance of online banking by people in Malaysia through the use of a technologically accepted model called a linear retroflexion. He propose through the study that the qualities, perceived ease of use, perceived usefulness, perceived credibility and social norm were statistically important while perceived enjoyment was not important.Another factor affecting the adoption of online banking by customers is security of the account accessed through the internet. For customers to feel secure and make use of online banking, the bank must offer online security systems that protect customers assets and breeding (Smith, 2006).The research to examine the intensity of the dissemble of online banking on the financial performance of community banks carried out by Acharya et al (2008), both sampling and statistical procedures were used to build a broad online bankin g index. The basis of their study was on analytical frameworks which used both the structural equation modeling (second-order factor analysis) and multiple regression analysis.Internet banking seems to represent a possible means of allowing new entrants into the banking industry (Arnaboldi and Claeys, n.d.). Smith (2008) uses Porters five force model to probe the competition within sell banking in an increasingly financially troubled environment. In his analysis where used data from 22 banks, Smith suggests that the barriers to entry identified may not keep considerable number of entrants into the banking industry. He also observed that the true competition amongst banks may be found in the differentiation of their internet banking products.The paper is ground on an exploratory research for a sample of nine banks from each country, a web survey is conducted to collect data for each internet bank using an analytical framework based on a three dimensional model.Both the advancemen t in technology and change in social trends, such as the subjoin in customers preference to perceived convenience, have caused a high reorganisation of the financial institution. Banks have to re-examine their marketing strategies and also prompt growth in the adoption of self-service technologies (SSTs) (Loonam and OLoughlin, 2008).Very little research has explored the role of SST in a high concernment service such as that of financial investments.Customer satisfaction with banking services was researched with respect to their interaction with human and technology. It was discovered through the use of multiple regression that consumers overall satisfaction is predicted to be influenced more by human rather than technological encounter (Haytko and Simmers, 2009). While consumers show they are displeased with failure in transaction that involve a bank employee, they tend to accept responsibility for any kind of failure they come across during or after the use of online banking and may keep back its usage (Haytko and Simmers, 2009). It should however be note that the focus group used in the research by Haytko and Simmers were students who already has high proportion for the internet. Liao and Cheung (2008) employ the use of service quality (SERVQUAL), Technology Acceptance Model (TAM) and transaction cost analysis to measure customer behaviour to the use of online banking. In their empirical studies, half dozen elements of SERVQUAL namely, usefulness (USE), ease of use (EOU), reliability (REL), security (SEC), responsiveness (RES) and continuous improvement (IMP) , were used to relate to consumer satisfaction in internet banking services (CSIBS). The study wasLaukkanen et al (2008) provides more insight to barriers erected by bank customers to the adoption of online banking. The researchers split the non-adopters of online banking into three groups namely the postponers, opponents and rejectors. They suggest, through survey papers submitted by some customer s of banks in Finland, that psychological barriers are higher determinant of resistance to adoption than ease of use and its value.Bauer and Hein (2006) carried out another research to gain more knowledge about the consumers point of view in the adoption of online banking. They use micro-economics theory of consumer utility maximisation to model how consumers make decisions on adopting online banking.Simmers et al (2008) relatively examine how the impact of the human services and those provided by technology affect the consumers satisfaction. The authors through two studies both use the six-item and five-point Likert scales conclude that human encounter was initially more important than technology encounter until the convenience of banking online prevailed. The first study was carried out through the survey of some undergraduate students, with most of those that responded between age 19 and 21 years. The second study was carried out with as survey of 153 bank customers at the univ ersity, with most less the 24 years of age.It could be seen from these studies that students who have higher affinity to the internet are used for the two studies. It should also be noted that the research is carried out in US, but will most bank customers in UK score convenience higher than online banking security?Joseph and Stone (2003) investigated the customer perception of the impact of technology onservice delivery in the banking sector. According to the findings of this research . . .high scores on the ability to deliver service via technology appears to be correlatedwith high satisfaction with services deemed most important to customersHence, availability of internet banking services appears to be veryimportant for banks for customer satisfaction and retention. However, availability ofinternet banking services itself is not a sufficient factor to increase customersatisfaction. User friendliness of the internet banking services appears to be animportant factor for customers t o use these servicesResearch has been carried out on performance of the internet as an alternative or complementary channel used in delivering some bank services, like current accounts. For instance Gondat-Larralde and Nier (2004, cited by Arnaboldi and Claeys, 2008) carry out a research on the competitive process in the UK market for personal current accounts between 1996 and 2001. The rate at which the market shares changed with respect to cost differentials between the brick and mortar banks and the direct banks that use the internet and telephone to operate. The results of the research point to the significance of customer switching cost as a strike determinant of the competitive process in banking industry.Mukherjee and Nath (2003) suggest note that the physical separation between the bank operation internet service and the customer recruit an environment of insecurity. The authors develop a structural equation model, called Lisrel, and through empirical test carried out on 510 internet users in India.Nearly all research work refer to the US banking system and research attempts on the performance of online banking are few (Arnaboldi and Claeys, n.d.).IBM (2005) identify three shortfalls of customer satisfaction researches, the first one is that enough attention is not paid to the different behavioural segment customers belong, the research usually take a general view of the customer base. The adjacent one is that most of the researches are not analytical as they fail to show the impact the different elements of the customers experience might have on the grade support and emotional link. Lastly how customer satisfaction is measured is a poor forecaster of to future behaviour of customers.This research differ from other studies in that it will be carried on banks in UK and as there are little research done on the use of online banking as a gumshoe competitive advantage in the banking industry. The author will survey focus groups made up of bank custom ers in UK will be use to analyse the reason for adoption of online banking and finally the evaluation of satisfaction derive by the bank customers. Qualitative data analysis research will be