Posted: June 23rd, 2015

Consumer Behavior towards Online Banking in China

Consumer Behavior towards Online Banking in China

Introduction

In the progress of any nation, the financial industry plays an important role. Domestic credit was offered by the banking sector in 2007 in China. In the production of data regarding diversification, mobilization, prospective investment projects, risk management, monitoring investment, trading, pooling of savings and the exchange of services and goods the financial industry plays an important role. All these roles can impact investment decisions and national savings, and therefore to financial development. Usually, economists agree that there is a connection between economic and financial expansion. However, there are several justifications for this association.

Background of the Study

Yang and Kuhn Foundation (2007) asserts that fiscal intermediaries are a crucial factor in encouraging economic development and technological innovation because of the function they play in managing risk, monitoring managers, facilitating transactions, mobilizing savings, and evaluating projects. On the contrary, Jeon and Olivero,(2013) claim that as the economy expands, more products and financial institutes come out to fulfill unexploited demands for such financial products: financial growth follows economic expansion. Barth, Tatom, and Yago, (2009) realize that there is a constructive relationship between expansion in small states and financial growth, with a bi-directional underlying association between the two variables.

In China given the significance of the financial industry, in the general economic activity, it is vital to assess and monitor possible latest progress in the industry. Internet banking is one such development. Internet banking suggests a system in which bank allows clients to receive complete details regarding the services and products of the bank, get into their accounts, and carry out numerous varied banking dealings by making use of the internet. Internet banking has a lot of benefits over the conventional “mortar and bricks” for both the bank and its clients delivery-bank channels (Schlichting, 2008). Some of these benefits are the enhanced for the commercial bank for instance effectiveness of operations, a decrease in operating costs and a better competitive gain. Clients, conversely, gain from the improved easiness and effectiveness of carrying out banking transactions and the option for a quicker, more practical method to perform transactions at any time from any place (Ghosh and Mohamed, 2004).

In current years, mainly in the late 1990s, a lot of regional banks in their online infrastructure have made major investments. In spite of the huge investments made by banks in this phase of service delivery for bank, client use and opinions concerning internet banking keep on to be a less investigated subject in the China (Lu,2008). Necessary data concerning the amount of people who use internet banking and their features is not yet quickly accessible in the state. Realizing the attributes of clients who are likely to use internet banking might result in financial institutes aiming at desired demographic segments and in thereby, improve their income.

Aims

The purpose of this thesis is to practically inspect the aspects that affect retail banking client’s outlook in China towards internet banking services.

Objectives

1. What are the factors that influence retail banking customers’ attitude towards Internet banking services in China?
2. What are the China people’s attitudes and perception of internet banking?

Literature Review

Economics of Internet Banking

The IFIP International Conference on e-Business et al., (2007)offer a broad outline for evaluating how technology is about to influence corporate strategies and market structures. Initially, the authors notice how the flow of services and materials by way of the value-added chain could be carried out by way of hierarchies or markets. Markets harmonize the flow by way of the market system (i.e. forces of demand and supply): market forces influence the price, quantity design, and schedule of delivery for a given service or good. On the contrary, hierarchies match up the flow of services and goods by way of the value-added chain via the management hierarchy. In general new technologies and the internet, lessen the time, expense of conveying data, and hence bring about expense savings. The most important advantage of the internet is the supposed ‘electronic brokerage effect’ in terms of markets: by acting as a broker the internet rises the amount of options which could be well thought-out, improves the quality of such options, and reduces the price of the selection process of the product.

The main benefit of the 6 internet for hierarchies is the supposed ‘electronic incorporation effect’ since the IT is used to incorporate the different phases of the value-added chain. Besides to the ‘electronic integration effect’ and ‘electronic brokerage effect’ there are even expected to be expenditure savings due to a decrease in the cost of the transactions manufacturing a service or good. The Cost of transaction is the expenditure met by making a financial exchange (Jeon&Olivero,2013). It could be disaggregated into cost of the coordination (expense of matching with units manufacturing goods), operations threat (threat that other parties to the transaction might underperform or hold back information) and opportunism threat (the threat linked to the need of bargaining power owing to the working of a business relationship). By decreasing all of these three factors of transactions the cost of internet could bring about an in general drop in the cost of transaction. The cost of transaction at a branch for non-cash payment in relation to the internet could be eleven times as more (Kaufmann, 2015).

Why Do Individuals Use Internet Banking Services?

Earlier studies on clients’ behavior and the implementation of internet banking recognized a number of aspects which affect an individual’s outlook towards the usage of internet banking (Ordóñez and Lytras, 2009). These are socio-economic and demographic features; earlier experience with technology and computers; experiences of personal banking, and; different features of internet banking. Socio-economic and demographic features are traits related to a population. Instances of these consist of, gender, income, marital status, employment, cultural background, educational qualification, and age, and place of residing. In earlier literature, all of these variables have been considered while coping with the use of internet banking. But, income, educational qualification, and age are the variables which have been researched mostly and have given way more noteworthy outcome.

Socio-economic and demographic variables bring about distinctions amongst persons, and these distinctions explain the unstable preferences which are taken by these people. It found that socio-economic and demographic features had a major influence on clients’ behavior and attitudes concerning internet banking. Sheehan, (2011) recommended that previous knowledge about technology, particularly in computers, influences on clients’ attitudes and belief towards computer linked technology and systems. In addition, prior knowledge about technology and computers develops the capability of a person to capably use computers (Gitman and Joehnk, 2005). In their research, Herold and Marolt, (2011) stated that previous knowledge about technology and computers, plus the person’s behavior towards computers affects both their comportment towards the usage of online banking services. Besides, people who were comfier with the use of internet had a more optimistic approach towards the internet banking use. There are numerous other aspects which might cause a client changing to internet banking as their preferred option for banking services. The potential gain which is linked with the usage of services of internet banking is one such aspect. Such gains consist of reliability, time savings, improved service, and cost savings.

A lot of researches revealed that clients recognize the service offered from internet banking as an upgrading over that provided by different means of delivery. For instance, Bak and Stair, (2011) discovered that in the United Kingdom good quality service and low fees were the key aspects of using of household banking services. But in Turkey, bank client’s recognized easy access, immediate response, cost savings and quicker transactions as few of the optimistic characteristics with regard to internet banking. The speed of reaction linked with electronic banking and the fast approach to services were vital traits for persons’ who make use of internet banking (Engardio,2007). Besides to the earlier mentioned factors, internet banking offers clients with a better proper method to carry out banking transactions. In addition, the expediency was a vital factor influencing a customer’s choice of using internet banking. Particularly in young customers, value the expediency of online banking and even observed the need of in person communication as little significant as grown-up people (Fujimori, Nango, & Shinkenchikusha, 2008). The earlier stated thoughts are gains linked with internet banking and might optimistically affect a client’s choice with regard to the usage of services of internet banking. Now the complexity level and apprehensions regarding the security of online banking transaction will be talked about. The related amount of complication or the simplicity of usage this service is an extremely crucial aspect while observing client agreement of any new product or service, for instance, internet banking. Few clients, although they know about the service, in Australia they still don’t use internet banking as it was complicated to use. This issue can be set right via suitable education of the client. However, Turkish bank clients have enough knowledge about computers and computer- connected technology owing to their comparatively higher educational level. As a result, such clients don’t consider services internet banking as tricky to use and by Turkish clients there was a greater use of internet banking. The amount of difficulty linked with transactions of internet banking as a discouraging aspect. Although the amount of complication is difficult for few persons, this variable didn’t play a chief role in the choice of the clients of the Chinese bank to use mobile banking and online services. The subject of assurance or confidentially is one more main aspect influencing in a person’s choice for using internet banking services and it has been talked about in a lot of investigation thesis. These threats linked with security concerns and probable errors are few of the main obstacles to the usage of internet banking. Both users and non-users of internet banking services were extremely worried regarding issues related to the secrecy of services of internet banking and that the guarantee aspect was certainly connected to the usage of internet banking. Respondents were worried regarding the safety of the online system of the bank and the likelihood that other third parties and hackers might be capable of gaining right of entry into their account details. Moreover, a higher rating of significance was connected to other threat aspects, together with the chances of the happening of scam. Security matters are a main restraint to clients of banks while bearing in mind the use of internet banking services. If such matters are not tackled the online banking segment in nations might just undergo average ratios of growth. This aspect was repeated in Australia when O’Connell recognized the slow expansion of internet banking to worries related to the safety of carrying out banking transactions through the internet (Engardio,2007).

Methodology

Research Philosophy

Knowledge is a complex experience influenced and developed by numerous related variables. A research philosophy points out the viewpoint of the investigator on the procedure via which knowledge is made. It is significant that the three research philosophies which lead to the development of knowledge are identified. These are realism, positivism, and interpretive philosophies. All of the three philosophies have a unique suggestion on the method to use in the development of knowledge. It is necessary that the research philosophy leading the research procedure is established clearly. In the fortitude of the methodological framework, this philosophy has a vital role to be used in the research work (Williams& May, 2005).

This study will be led by the interpretive research philosophy. As the development of knowledge is complicated, supporting the research work decision on the interpretive research philosophy was done. The research intends to study the effects aspects which affect customer opinion in China regarding online banking. For several reasons, the interpretive research philosophy is utilized in the research. For example, it will assist in providing qualitative information which will help in meeting the requirements of the research. It is familiar knowledge in which the information is known to be rich in nature and subjective. Acceptance of the interpretive method will assist to introduce the subjective aspect of information in its analysis and collection method. It will make sure that one is completely engaged in the research work. The interpretive method is even accepted as the research will be done in a commercial and natural setting not a controlled or laboratory setting. The interpretive method facilitates in giving consistent conclusions and results from the research work. The philosophy will assist in improving the soundness of the outcome from the research. The use of the interpretive method will assist in the expansion of solid assumptions in the process of research.

Research Methodologies and Design

In this research, the quantitative method will be very much used. Quantitative method will assist in the analysis and collection of statistical information in the process of research. This will include the compilation of statistical information in China on the aspects which impact online banking. The quantitative research is the methodical, practical study of visible phenomena through mathematical, computational, or statistical methods. The aim of the quantitative research is to employ and develop mathematical hypotheses, models, and/or theories with regard to occurrence. The measurement process is vital to quantitative research as it offers the important link between mathematical expression and empirical observation of quantitative links. Any data which is in numerical form for instance percentages, statistics, etc., is Quantitative data. In terms of a layman, this indicates that the quantitative investigator raises a particular, narrow query and gathers an example of numerical data from study participants or observable phenomena to respond the query. With the aid of statistics, the investigator examines the information. The investigator is hopeful that the numbers will produce an impartial result which could be simplified to some bigger population. Then again, qualitative research puts big questions and gathers word information from participants or phenomena. The investigator tries to find for themes and explains the data in patterns and themes especially to that group of participants (Fujimori, Nango, & Shinkenchikusha, 2008).

Quantitative research in social sciences is extensively used in community health, marketing, political science, sociology, psychology, human & health development, gender economics, and less often in history and anthropology. Research in mathematical sciences for example physics by definition is even ‘quantitative’, although this use of the term varies in context. The term is related to empirical ways in the social sciences, starting in both history of statistics and philosophical positivism, which differ with qualitative research techniques. Qualitative ways generate data simply in the specific cases researched, and any more common conclusions are just hypotheses. Quantitative ways could be utilized to prove which of these hypotheses are correct.

Data Collection

Research analysis and data compilation and are vital to efficient resource mobilization and advocacy efforts, program development, implementation of policy and checking of intrusions. The method of data collection which will be utilized in this study is the survey. A survey is an investigation tool which includes a chain of queries and other prompts for the intention of collecting data from participants. Even though often they are intended for statistical investigation of the replies, this is not forever the situation.

Surveys have gains over few other kinds of investigations in that they are economical, do not need a lot of efforts from the questioner as telephone or verbal surveys, and frequently have consistent replies which make it easy to collect information. But, such consistent replies might irritate customers. Surveys are even stridently restricted by the truth that participants should be capable of reading the queries and reply to them. Therefore, for a few demographic teams carrying out a survey by opinion poll might not be real. As a type of survey, opinion polls even have a lot of the similar issues related to wording, questions and construction which exists in other types of surveys.

Data Analysis

Data analysis is the method of locating the accurate information to reply to your query, knowing the procedures lie behind the data, find out the main patterns in the data and then conveying your findings to have the largest probable influence. The collected data by use of opinion polls will be 100. In China the information will be gathered from mostly bank customers from 10 banks. The information will be examined by making use of SPSS version 21.

Research Issues

The prerequisite result to study restraints derived from the resources, time horizons and research methods. One of the major issues which could occur in the carrying out of the process of research is that few participants may not give necessary data or take part in the study. It could even not be likely to get in touch with all people who make up the example and convince them to take part in the study.

Time Frame

Time	Activity
May	Writing of research proposal
Jun	Reviewing of research proposal by the supervisor
July	Collection of data
July-August	Analysis of collected data
August-September	Writing of research report
September	Reviewing of research project by the supervisor

 

 

 

References

Bak, O., & Stair, N. (2011). Impact of e-business technologies on public and private organizations: Industry comparisons and perspectives. Hershey, PA: Business Science Reference.

Barth, J. R., Tatom, J. A., &Yago, G. (2009). China’s emerging financial markets: Challenges and opportunities. New York: Springer.

Engardio, P. (2007). Chindia: How China and India are revolutionizing global business. New York: McGraw-Hill.

Fujimori, T., Nango, Y., & Shinkenchikusha. (2008). Research methodologies. Tokyo: Shinkenchiku-sha.

Ghosh, D. K., & Mohamed, A. (2004). Global financial markets: Issues and strategies. Westport, Conn: Praeger.

Gitman, L. J., &Joehnk, M. D. (2005). Personal financial planning. Mason, Ohio: Thomson/South-Western.

Herold, D. K., &Marolt, P. (2011). Online society in China: Creating, celebrating, and instrumentalising the online carnival. New York: Routledge.

IFIP International Conference on e-Business, e-Services, and e-Society, & Wang, W. (2007). Integration and innovation orient to e-society: Seventh IFIP International Conference on e-Business, e-Services, and e-Society (I3E2007), October 10-12, Wuhan, China. New York: Springer.

Jeon, B. N., &Olivero, M. P. (2013). Global banking, financial markets and crises. Bingley, U.K: Emerald.

Kaufmann, H.R. (2015). Handbook of research on managing and influencing consumer behavior.

Lu, P. X. (2008). Elite China: Luxury consumer behavior in China. Singapore: John Wiley & Sons Asia.

Ordóñez, . P. P., &Lytras, M. D. (2009). The China information technology handbook. New York: Springer.

Schlichting, S. (2008). Internationalising China’s financial markets. Basingstoke England: Palgrave Macmillan.

Sheehan, B. (2011). Marketing management. Lausanne, Switzerland: AVA Pub.

Williams, M., & May, T. (2005). Introduction to the philosophy of social research. New York: Routledge.

Yang, L., Kuhn, R. L., & Kuhn Foundation. (2007). China’s banking & financial markets: The internal research report of the Chinese government. Singapore: John Wiley.