Consumer Awareness and Usage of E-banking

Austin Eccleton and Reece Cooper

Grand Valley State University

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Since the dawn of the 21st century the daily lives of all humans have changed

dramatically with the constant innovation of new and better technology.  Like everything that

happens in life, humans are built to adjust and evolve with changes and with regards to banking

and technology we have done just that.  It is quite astounding how in only a handful of years the

entire way people and businesses handle their most important asset, money, has changed to fit

the completely digital age.  The research question that will be discussed and analyzed in these

following paragraphs is Due to the influx of new banking technology in our society, what have

been the effects of E-banking on people?

Like mentioned earlier, since the dawn of the digital age banking has transformed itself

from traditional bank teller/customer interaction to wireless internet services.  E-banking is the

term that has been coined to describe this form of banking and is defined as customers of a

financial institution conducting fiscal transactions on the website of the said institution’s website.

E-banking received its first splash onto the scene way before the digital age made its way to the

forefront.  It all started in New York during 1981, the four major banks that occupied the large

monetary market of the city, CitiBank, Chase NY, Chemical and Hanover.  These 4 banks started

what was called “home banking,” a way for their clients to analyze and tinker with their bank

accounts via a technology called VideoTex.  VideoTex seemed to be the reason that this banking

never really flourished and by 1982 the idea of home banking was on the back burner for years to

come.  With further development of the internet in the 1990’s the back end of the decade had

banks wanting more opportunities to reach their clients outside of the normal 9-5 monday

through friday business hours.  This brought banks to see the internet as the real tool to get the

strategic advantage that they desired for their customers.  Banks were looking at the internet for

banking for a number of reasons, diminishing transaction costs, integration of services,

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marketing capabilities, and better profit margins to name a few.  During the mid 1998 year there

were a series of large bank mergers which expanded the most powerful banks client base.  Still

for the next few years internet banking was just a thought in the back of innovators minds,

especially with mistrust of the internet before Y2K and we failed to see any real advancements

until the early 2000’s.  Security has always been a huge part of the discussion with online

banking and has always dominated the conversation.  Use of a secure website connection, single

word password protection, PIN codes, and electronic signature generation are a few of the

security protocols that banks have taken via their internet banking services.  in 2008 US Federal

Deposit Insurance Corporation Technology Incident Report ran an analysis of 536 computer

intrusions to show the potential for fraud with online banking.  The average loss of these 536 was

30,000 US dollars and 80% of these incidents were proven to be a result of fraudulent online

banking.  As you can see online banking has made leaps and bounds to get to the forefront of this

countries fiscal operations and isn’t going anywhere anytime soon.

To address the research question of due to the influx of new banking technology in our

society, what have been the effects of E-banking on people?  We chose to focus our potential

research on a survey based methodology of research.  The survey method seems to be the most

efficient way to analyze the effects that E-banking has on people.  One of the first reasons that

surveys will work so well for this is because survey research is very inexpensive when

conducting and the total cost per respondent is generally very low.  Another reason survey

research is so effective is because survey research can be administered to such a large population

which ensures a good list of results.  One other reason that survey research was chosen for this

topic is because survey research is flexible, meaning we can administer this survey to large

groups of people through a variety of different mediums such as email, telephone or via website.

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The final reason we chose survey method research is because it is very reliable and with the

anonymity of the respondents should ensure honesty and accuracy.  

The target group the we decided to focus on is the age group of 20-40 because these are

the people in our country that are most active on technology and the ones who are moving and

using banks the most.  A list of the following Questions make up the 10 survey questions that we

would administer to the target group:

1. What percentage of your everyday banking is done online using electronic banking

services? (0-100%)

2. How long have you been using electronic banking services? (0-15 years)

3. Do you have and use a banking application on your smartphone or tablet? (yes/no)

4. Has the availability of banking apps made you more conscious of your personal fiscal

situation? (yes/no)

5. Do you trust the security measures taken by banks via their internet applications?

(yes/no)

6. Have you ever been a victim of banking fraud? (yes/no)

7. Online banking is a safe and fruitful relationship for both banks and customers. (1-5

disagree strongly-agree strongly)

8. E-Banking has changed my spending habits (1-5 disagree strongly-agree strongly)

9. Accessing my banking information is possible 24/7/365 (1-5 disagree strongly-agree

strongly)

10. If you were switching banks, would you switch to a completely online bank? (1-5

disagree-agree strongly)

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The next thing to discuss in the research project is if social media can or should be used

as a tool for analyzing this research.  We feel that social media could be used completely and

effectively to help guide us researchers to answer this research question.  One of the main

reasons that social media would be effective is because social media and online banking go hand

in hand, they are both part of the internet world so why not use them to help one another.  There

even would be a possibility to use social media as the medium to administer this survey that we

have designed, the only thing that would change is that we would have to eliminate the target

audience.  However this would make everything easier on the respondents and us as the

researchers because we could have people just take this survey anonymously via their favorite

social media.  Social media is also a very cost effective way to administer this survey because it

is relatively without a cost, you would just have to post this survey and in turn you would have a

rush of results to analyze and then decide whether or not e-banking has an effect on people.  

Overall this is would be a long process to administer, analyze and complete the research

because thats the nature of research, its a long painstaking process.  However the way we have

laid out this potential survey and developed the questions we feel we have made a good attempt

at answering our research question.  Obviously survey research needs much analysation and this

would be the longest part after receiving the survey’s but one we have them all I think we would

be able to either come to a conclusion or find a way to further research this topic.  

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Consumer Awareness and Usage of E-Banking Annotated Bibliography

Button, K. (2013, October 7). Wire and Online Banking Fraud Continues to Spike for

Businesses. Retrieved April 7, 2015

This article is a case study about a specific online bank fraud that affected nearly 1.5

million dollars of an Efficient Services Escrow Group’s bank account.  The actual process of

stealing the 1.5 million dollars was a series of 3 wire transfers to undisclosed cities in China and

Russia, the total amount recovered is around 400,000 dollars resulting in the closure of the

company.  The article later goes into explaining that there is a trending spike in online bank fraud

for business’s due to malware technology advancing.  During this time the corporate online fraud

had reached such a large amount that the FBI even enacted a team to research and find the

culprits of these attacks.  The article explains that the fraudsters are using malware that finds

customers credentials through keylogging software and other techniques.  Following the

explanation of the way these criminals are finding the information to fraud and speaks to the

problem with Bank Website Applications and the easiness for the fraudsters to hack these via

personal devices.  

Ezzi, S. (2014). A Theoretical Model for Internet Banking: Beyond Perceived Usefulness and

Ease of Use. Archives of Business Research, 2(2). Retrieved April 8, 2015

This article poses as a theoretical model for internet banking in comparison to other

advancements in banking technology such as ATMs, telephone banking and electronic fund

transfers.  The article cites the advancements in internet banking is due to the increase in E

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commerce worldwide, e commerce is defined as business practices being done over the internet.

After describing the ins and outs of e banking this article proposes the model of IB or internet

banking where entire banks operate via the internet waves via banks like Ally.  It cites that these

models are perfect banks for developing countries and allows people with money to be able to

bank from all surfaces of the globe.  The article concludes with a discussion of the managerial

aspects and technological aspects in the advancements of internet banking.  

Kaiserman, R. (2014). Is electronic banking killing bank branches. Retrieved from MiNTEL.

This article talks about how banks are closing at record rates and need to restructure and redesign

the bank branches if they are going to remain open.  This can negatively affect banks because

they are losing the ability to cross-sell to clients by offering additional financial services to them

while they are in the bank.  By restructuring banks can continue offering the consumer  the

experience they desire by remaining cost efficient.

This is relevant to our topic because it explains how E-banking is adding convenience but at the

same time taking away the banks cross-selling ability and losing the banks money.  

(November 15, 1999 Monday ). Customers yet to embrace e-banking; BANKING. The Age

(Melbourne, Australia), Retrieved from www.lexisnexis.com/hottopics/lnacademic

This article talks about how banks aren’t necessarily pushing all electronic banking services

as well as they should.  They are gaining interest and usage but this is mainly only the cash

aspect such as ATM’s.  

This is relevant because it shows what the consumers are mostly interested in regarding E-

banking.  

ONLINE BANKING; Blueprint for change; Not perfect: Electronic banking may be on the

cutting edge, but expect a few bugs if you decide to plunge in.. The Atlanta Journal and

Constitution, Retrieved from www.lexisnexis.com/hottopics/lnacademic

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This article talks about the how automation is going to be a huge step for the E-banking industry.

People will be able to automatically pay their bills online without having to do anything.  Some

concerns are that your balances aren’t always 100% up to date.

This is relevant because it highlights some of the pro’s and cons of switching over to electronic

banking

Schaechter, A. (2002). Issues in Electronic Banking: An Overview. IMF Policy Discussion

Paper, 02(06), 2-23. Retrieved April 7, 2015, from

https://www.imf.org/external/pubs/ft/pdp/2002/pdp06.pdf

This article gives background of what banking life was like before the internet, since it

was published in 2002 internet banking was not near as popular as it is today in 2015.  This

article gives predictions about the change from traditional 9am-5pm banking services to a form

of online banking we know call E-banking.  The article plays with the benefits of the possible

transformation of the banking industry with chances to penetrate new markets and give

customers more access to their money.  This article brings about major issues that could plague

this possible transformation, one being difficulty banking between other countries over borders

and problems with host (Bank) supervision. So far this article is the one with the most

information that I have come across and supplies sufficient information of the mindset of people

involved in finance before E-banking ever really became a thing.  Another benefit of this article

is it clearly defines what E-banking is; the use of electronic delivery channels for banking

products and services, and is a subset of electronic finance.  

Scott, S. (n.d.). The Effects of Online Banking. Retrieved April 7, 2015

In this article about online banking the author analyzes the effects of Online banking,

specifically looking at the convenience for banking customers.  Scott believes that online

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banking has revolutionized the banking world by allowing customers to access their accounts

from the security and safety of their own homes at any time of the day.  The article outlines the 4

most important factors that play into the success of E-banking, limits teller transactions, 24 hour

access, financial integration and an increase in criminal activity.  

This article offers a basic overview of what online or E-banking really is and the

advantages and disadvantages.  This article is a sufficient way for someone unfamiliar with E-

banking to understand and get a basic understanding for what it truly is.  I think the nicest part of

this source is it is a great starting point for more research to go towards, it gives 4 main points for

someone to look at when looking further for information regarding online banking.  

Shao, G. (2007). The Diffusion of Online Banking: Research Trends from 1998 to 2006. Journal

of Internet Banking and Commerce, 12(2), 2-13. Retrieved April 8, 2015, from

http://www.arraydev.com/commerce/JIBC/2007-08/Shao_final_PDF Ready.pdf

This paper takes a look at the detailed picture of research trends in online banking

research.  This article focuses specifically on using content analysis which gives us as writers of

potential research an in depth look at a efficient way to research online banking.  The findings of

this research shows a correlation between the characteristics of online banking with the

characteristics of its adopters.  The findings of the paper also concluded that more diverse topical

coverage and better methodological are need in future online banking research.  This paper is so

useful for the research that we are doing because it gives us a look at options for future research

and ways that more concise and efficient research in this field can be completed.  

The Medium of Electronic Banking Is a Message of a New Environment. The American Banker,

Retrieved from www.lexisnexis.com/hottopics/lnacademic

In this article it talks about how electronic banking is creating a new world for the

banking industry.  It discusses how the bank is being brought to the customer instead of the

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customer coming to the bank.  Also, the branch as we know it is dying out.  Electronic

banking is replacing many of the bank branches functions, which in turn will cause many of

them to close.  Change is happening quickly, and this can cause shock or fright to those in

charge of the banking industry.

This is relevant to our project because we are trying to find out what effects E-

banking has had on the banking industry and its clients.

(April 25, 2013 Thursday ). Transformation of banking system from brick-and-mortar to click-

and-mortar business. Business Recorder, Retrieved from

www.lexisnexis.com/hottopics/lnacademic

This article discusses the transformation of brick and mortar banks to click and mortar

banks.  Click and mortar banks are one hundred percent online offering all of their services

without the customer ever having to enter a physical bank branch.  It also talks about how

banks are being forced to restructure or redesign in order to stay profitable.

This is relevant to our topic because it shows how E-banking is having a direct cause

on closing down physical bank branches

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