Abstract
This research paper will compare and contrast the characteristics of the traditional banking and e-banking. Additionally, research will identify the similarities and differences between the virtual and the real-world banking industry customers. Distinguish the difference between the world of e-banking and the real world in terms of customer communications. Determine which traditional customer communications can and cannot be successfully ported to the world of e-banking. Assess what new communications techniques are uniquely available in the world of e-banking. And demonstrate how the use of multimedia technologies creates effective e-banking websites. Discussion of customer communication strategies and real-world examples will be presented.
Chapter 1-Introduction
1.1 Internet Banking in the United Kingdom and Europe
In the United Kingdom, Internet banking services are available and provided by twelve Internet banking services providers. The Egg, for example, is an Internet banking service provider (exclude current account features) that has more than 150,000 customers visited their web site during October 1998 to July 1999. The Internet banking services providers in the U.K. have encountered an increasing demand for cross boarder payment transactions for smaller amount of cash and payment over the Internet. Many banks continue to develop and launch new banking services on the Internet in order to satisfy and meet their Internet-based customer requirements in term of time, ease of use, security 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 western European countries: France, Spain, Portugal, Germany, Switzerland, Holland, Luxembourg, and Scandinavia have become leading nations in providing Internet banking services in Europe.
Germany also has been rated as the nation that has the highest number 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, but it has been rated as the highest quality and functionality at no additional charges to their customers in Europe. However, there are two banks in the U.K. that charge additional fees for Internet banking services, Nat west and NPBS
In Scotland, the Bank of Scotland does not provide 24 hours Internet banking services via the web site. Customers can not access to Bank of Scotland web site between 1:00 a.m. and 5:00 a.m. during weekdays and between midnight and 5:00 a.m. during weekends. During the bank web site is not accessible, a daily back office operations and maintenance is performed to assure accuracy and security according to local restrictions, rules and regulations.
Most of customers in the U.K. and European countries use Internet banking services to inquire about their outstanding balances in saving and checking accounts, and details about their latest or last transactions for their daily reconciliation. The frequency to access the customer's account per day is quite high. Many banks, therefore, have provided many view only features for customers to inquiry and view the information on their accounts as often as they want per day. As a result, the banks have reduced both operating costs and work hours for their staffs at call centers and local branches for frequently asked (FAQ) and repetitive transactions.
1.2 E-banking security provokes fear or indifference for the British public
A recent study by analyst Forrester Research has unearthed conflicting views about the safety or otherwise of online banking. The survey of 11,300 UK net users found that while many online banking consumers are complacent 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 deal with the problem, even though these attacks are thrown against the consumer's PCs rather than a bank's own systems. Ideally users want banks to supply a blanket guarantee against fraud.
Based on responses 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 confused and banks need to step up their efforts to educate customers about online fraud. Measures to restrict the functionality of some accounts (for example controlling how much money can be transferred on any day), stronger internet banking authentication and improved customer profiling are also needed to defend against security threats, it advises.
In addition to people who plan to drop net banking accounts as a result of security fears, another fifth of net users say that security fears will stop them ever banking online.
1.3 UK Consumers shy away from e-banking
Customers still value direct contact with real people in their bank branch. A vast majority of bank customers thinks that an online banking service is not important for their relationship with a bank.
According to a survey one third of customers rate e-banking as an important service, and of those only 22% actually use it.
Even more unwelcome news for many banks will 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 executives. In an earlier Deloitte survey, financial 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 financial services analyst at Deloitte, said customers were certainly not rating the internet or interactive services "as a key factor in measuring their satisfaction with their banking service provider". A "responsive service" and the feeling of "being treated as a valued customer" were much more likely to make 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 pure plays like Virgin and Egg. Julian Badcock's conclusion: "90% of customers at present [are] showing no interest in obtaining financial services from new entrants." Established players, meanwhile, have to worry whether their huge investment in online banking is money 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 will only materialize, if consumers can be persuaded to use the services. A recent survey by consulting firm Cap Gemini Ernst & Young had found that currently just 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 growth 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, Deloitte's analysts say.
Chapter 2-Literature Review
2.1 Executive Summary
How secure is online banking for the regular and not so regular internet user?
The internet is becoming a more globally known form of communication around the world these days and it's used largely in conjunction with personal/business tools to expand the horizons of e-commerce.
As many small to large business 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 extensive 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 paying bills. It has more to that, it include transferring of funds, shopping online etc.
As a proven fact, felonies consisting of fraudulent behavior have attacked national Australian banks and are currently in legal dilemma over the astounding issue. Presently, uncertain of the root of the crime, banks have been forced into an unacceptable situation in regards to customer's bank accounts.
With alarming issues of security' online, there are a few steps that can be taken in order to prevent such matters from arising or basically in order to avoid hackers into your private life.
2.2 The internet and its benefits
As today's busy world is immensely changing in the depth of telecommunications whilst advancing 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 role in how the internet is used in terms of a consumer business, or B2B relationship, but there just isn't enough security online.
2.3 What is online banking about?
