GEO 4041

Geo 4041 Geography Project of Hong Kong

The major reason of Internet Banking Usage is the high Accessibility it offers.

Instructor : Prof. Yee Leung　

Student Name : Leung Chuk Kwan

Student I.D. : 98518901

Date of submission: 19 May, 2001

Table of Content

[ Abstract ] [ Introduction ] [ Literature Review ]

[ Research Design ] [ Result & Implication ] [ Significance ] [ Conclusion ]

[ Reference ] [ Appendices ]

Abstract

This paper is going to discuss about whether the major factor affecting internet banking usage is the high accessibility with timeless and spaciousless feature, in terms of B2C, that is, the mode of “business to customers”.

B2C mode of trading is the “Business to Customer” mode of trading, which aimed at provide highly customized services to individual customers, it becomes more important in Internet Banking. Importance of branches might reduce relatively, as people can use Internet Banking conveniently. Convenience should be a complex of product time utility, consumer tracking technology, information richness… … etc. Among all, the most highlighted feature is the timeless and spaciousless interface, of which Internet Banking can explore a larger market and provides various services.

The research is limited at the B2C mode of trading, and it is going to carry out along with questionnaires, with which the design is based on the Technology Acceptance Model (TAM). The population is all the individual account holders, and the frame is the Internet Banking users and the branch goers who are aged between 16 and 50. The questionnaire has posted on the writer’s personal homepage, sent to the staff of online@hsbc, networkers through email and icq, and conduct a field survey with the branch goers.

It locates the major reason for Internet Banking Usage, and the reason why people are not willing to use Internet Banking despite the global trend, and suggests the futurism of such business. Only when people are confident enough with the security of Internet Banking would be more widely accepted.

Introduction

Internet banking is introduced with the belief that it would progressively attract more customers than traditional banks, because of its convenience and highly personalized interface. According to Mary J, “the primary rationale for banking on the web is the convenience of anytime anywhere access” (Mary J. ed, 1997). Furthermore, it is the much more cost-effective the running a traditional branch. In this paper, it is going to examine whether the major reason of Internet Banking usage is the high accessibility with timeless and spaciousless interface. The research is limited to B2C mode, that is the mode of “Business to Customers”. It is aimed to serve individual customer specifically with a highly customized service. B2B is another term stands for “Business to Business” mode of trading, in the case of bankers, it refers to the business account holders, business loans or other services for business.

Another term I would like to define is the “Internet Banking”. It is not the same as virtual banking or PC banking. The former one is a collective noun including ATM, phone-banking, PC banking and Internet Banking. PC banking requires customers to install a specific banking software application to perform the banking function, (Liao. S, et al, 1999), thus the function is supposed to operate with only one specific computer. However, Internet Banking requires customers to connect through the World Wide Web, with the ubiquitous browser, based access, offered a completely different delivery model for banking, one in which customers could tap into their accounts from home, office, dorm room, hotel, library, or cafe to conduct transactions at any hour. (Kim Humphreys, 2000).

Internet has influenced most of the industries in this informative era, the most advantageous feature of Internet is the timeless and spaciousles platform, in case that all customers register for an online account, they can manage their finance according to their own time schedule. Attraction to customers includes accessibility, privacy, personalization, alliance services, product time utility, convenience, consumer tracking technology, information richness. (Leung Bun, 2000)

Varieties of products are equivalent to those offered in branches. Apart from the viewing account information, customers can make transfer, remittance, buy or sell shares, pay bills and place time deposit orders online, other products like credit cards, loans, insurance, MPF, investment, foreign currencies, their information can easily be access through the internet and they are able to submit online. (張子強, 2001)

If any problem exists during the navigation of the homepage, effective customer services is offered on the Internet by the help content, also a 24-hour hotline is available for inquires. All written inquiries by email would be handled within 24-hour, phone-in inquiries would be answered immediately. Most of the inquiries and problems can be settled no more than two days. (online@HSBC)

Because of the automatic operation of the computer systems, no manual interruption is involve, processing of data and pending time of transaction is ore efficient than before. The quick response is the essence in the trading market.

With the support of most advanced technologies, much faster response is allowed in investment by the AMS/3, identity verification becomes possible by identification technology, which make online banking services more promising. Other related technologies like firewall, security system are also advancing day by day, and would help in development of Internet banking.

The above features are all around-the-clock. Distance constrains is no longer exists as long as customers could have Internet connection, they can manage their account information as well as their own finance online.

This paper would first make a brief description of the recent researches of internet banking and its related topics in Hong Kong, and to review the development of online@hsbc. Secondly, it is going to introduce the research design which is based on a Technology Acceptance Model (TAM), the hypotheses, methodology of data collection, data types and analysis method. A conclusion can be draw with the help from the questionnaire result, other primary resource and secondary resources. Lastly, there is a reference list, and appendices that include the questionnaires, the model structure of TAM and the timetable of this research.

Literature Review

Up to April 1999, there are already 167 licensed banks in HK completing for the market share (Financial service Bureau, 1999). In order to success, banks must find ways to reach customers and deliver the financial service to them in a convenient way. With year end Y2K computer fears now out of the way, banks are free to innovate with new internet product and services and can catch up with latest development. (Anonymous, 13 Apr 2000)

Europe is the earliest one to develop Internet Banking business and now is flourishing, quoted by the American Banker Magazine. The first adopters are beginning to see glimmers of profit ability from their online offerings. The world’s first purely online banking is the Security First Network Bank (SFNB), which is established on18 October 1995. (E世代新樂園 )SFNB, NetB@nk, Eggbank in America has also established their online financial. It is predicted that the growth of online banking in Europe will be enhanced by the use of third generation mobile networks and WAP enabled mobile handsets of which there should be about 300 million in use by 2022, (Power et al, 23 Apr 2000).

Internet Banking is gaining popularity in the Asia-Pacific region, Australia and New Zealand became the leading ones. But in Asia, Singapore was the first to invest in its online financial market, according to VISA International, that many transnational companies have originated their local online business in Singapore as a pilot strategy. There are existing 6 Internet Banks including Standard Chartered Bank and Citibank (Webb, Sara, 12 Apr 2000)

However, in Hong Kong, Internet Banking was just in the infantile age. HSBC group has developed the HSBC.com in 2000 and partnered with IBM in order to produce an Interactive Financial System (IFS), which is the interface for e-commence, and it is able to handle 100 billion transactions every year. The Standard Chartered Bank was the first local provides foreign currencies investment. Citibank as well as other local banks have also provides online channels for the customers. Most of them provides similar functions just like account queries, foreign currencies, securities, and online-submit applications for other products, furthermore, some of them may integrate with shopping site or other functional site, in order to provide a one-stop service. (劉金寶著)

Although there is little research discussing user’s acceptance towards Internet Banking, basing on past researches, a model TAM can be used to study the factors affecting internet banking usage. TAM refers to the Technical Acceptance Model, which is a model consisting of a number of factors, which are hypothesed to have significant relationship with Internet Banking usage. TAM has raised the concept of perceived ease of use (PEOU) and perceived usefulness (PU), both of them consists of a number of attributes that influence people’s acceptance towards certain kind of technology. (Leung Bun et al, 2000) Moreover, some literatures have also provided the ground for hypothesizing the existence of significant relationship between certain variable and PU of Internet banking usage.

Take Online@hsbc as an example, it has taken subscriptions for offerings on both the main and Growth Enterprise Market (GEM) boards, and has extended its service to the public in Hong Kong, Online@hsbc has gained more than 100 000 customers since the initial launch in August 2000. In just over four months, over a third of all the bank’s stock trading volume in Hong Kong now goes through the online channel. It is claimed that the population is potentially rising. (online@hsbc, 12b Sep 2000)

The company has drawn a statistical report posted on its website. The most frequent transaction inquiries are statement inquires investment inquiries and balance inquiries. Customers whose ages between 30to 50 account for 66% of the total number of online users. Working class accounts for 74% in the customer profile. Usage peaks are at lunchtime and just before the HKSE closes, but there still a certain number of customers after 20:00 and during the trough at 03:00 to 07:00. (online@hsbc, 12a Sep 2000)

Research Design

The research is constructed with the help of questionnaire. The population is individual account holders in local banks. The frame would then be the Internet Banking users and the branch goers who aged between 16 and 50. Therefore it is going to invite networkers to finish it via email and icq, also interview with the branch goers will be carry out.

The questionnaire design is based on the variables of PEOU and PU that raised by TAM. Those variables include task ambiguity, information richness, accessibility, privacy, personalization alliance services, would contribute to PU and PEOU, in turn, affects the attitude towards use of technology.

It is going to find out whether accessibility is the major factor affecting Internet Banking usage. The questions and the corresponding attributes are listed below:

The recent satisfaction level. Question 1 and 2 asked about the satisfaction level for the banking services that they normally encountered.
Information Richness. Question 3 to 5 asked about the information it offers.
Accessibility. Question 6 and 8 asked whether Internet banking really creates a timeless and spaciousless platform, and the ease they can access to the web site.
Personalization. Question 9 to 11 asked whether they can customize the interface in terms of content and presentation.
Privacy. Question 12 to 14 asked how secure they feel and the level of protectiveness they were using Internet Banking.
Alliance services. Question 15 to 17 asked whether the web site can direct other services to them and provides one-stop service.
Task ambiguity. Question 18 and 20 asked about the task ambiguity about banking services they normally encountered and using Internet Banking.
Ease of use and usefulness. Question 21 and 24 asked directly whether they feel easy and useful respectively in using Internet Banking.
Task-tech fit. Question 22 and 23 asked about the task ambiguity and information richness in order to determine the task-tech fit.
Perceived satisfactory level. Question 25 asked about the perceived satisfactory level about Internet Banking.

From question 3 to Question 20, 3 questions as a group to test one attribute, with the third one an overall review of the attribute. At the last of the questionnaire, comparison of Internet Banking and other remote banking services is being asked.

This project is going to find out whether the highly accessibility of Internet is the most attractive point for people to use Internet Banking. Thus hypothesis testing is used as below:

H₁: Task ambiguity is the same for using Internet Banking and Branch.

H₂: Information Richness is the same for using Internet Banking and Branch.

H₃: Accessibility is the same for using Internet Banking and Branch.

H₄: Privacy is the same for using Internet Banking and Branch.

H₅: Personalization is the same for using Internet Banking and Branch.

H₆: Alliance Service is the same for using Internet Banking and Branch.

Chi-sq test and K-S test is used in testing the hypothese. However, only the differences from the theoretical frequencies can be shown from the testing result, the tendencies can be drawn from the distribution. Apart from the testing result, personal experiences from the part time job in online@HSBC and being a user of online@HSBC would also be used as primary resource.

Apart from the primary resources, there are a number of secondary resources include newspaper cutting, consultant report and statistical data downloaded from the web sites of some famous banks. Citibank, for it is the first local bank to introduce the idea of Internet Banking. Hong Kong and Shanghai Bank Corporation, for it is the first local bank to introduce the idea of PC banking. Hang Seng Bank, for its Internet Banking service was said to be the best Internet Banking services in Hong Kong by the Next Magazine.

Result & Implications

Questionnaire result has gone through the K-S test, at the significance level 0.1 and 0.05. Only a few questions have differences between the observed frequencies and the expected frequencies. Question 3, 6, 7, 9, 18 rejected H₀ at both 0.1 and 0.05 confidence level, question 8, 13 and 19 rejected H₀ only at 0.1 confidence level.

Question 3 refers to Information Richness, Question 6, 7, 8 refer to Accessibility, Question 9 refers to Personalization, Question 13 refers to Privacy, Question 18, 19 refers to Task Ambiguity. However, the tests can only show whether there is difference but the preferences can be seen from the distribution. The testing result can be refered to the Appendix 2.

For Question 3, 7 strongly disagree, 25 disagree, 34 no comment, 25 disagree and 27 disagree, showing an inverted U-curve, reflecting that most people have no idea about the information richness it can offer.

For Question 6, 7 strongly disagree, 16 disagree, 26 no comment, 38 agree and 28 strongly agree, revealing that most people agreed that there is no limitation about the interface.

For Question 7, 6 strongly disagree, 15 disagree, 41 no comment, 33 agree and 12 strongly agree, showing a sharp increase from disagree to no comment, and a sharp decrease to strongly agree. Though most people have no idea about the using time, the number of people with positive attitude is greater than the number of people who have negative attitude. They generally agree that there is no time limitation using Internet Banking.

For Question 8, 8 strongly disagree, 14 disagree, 30 no comment, 33 agree and 22 strongly agree, showing a gently ascending curve, with more people agree that Internet Banking can be used anywhere.

For Question 9, 17 strongly disagree, 27 disagree, 27 no comment, 24 agree and 12 strongly agree, showing a slight inverted U-curve. It is quite evenly distributed for people do not have a clear preference on the flexibility of the presentation of information.

For Question 13, 8 strongly disagree, 11 disagree, 26 no comment, 37 agree and 25 strongly agree, showing a sharp increase from strongly disagree to agree, and numerous people choose strongly agree. Reflects that people do believe that the bank would monitor their usage of the Internet Banking services.

For Question 18, 6 strongly disagree, 14 disagree, 27 no comment, 38 agree and 22 strongly agree, showing a sharp increase, most people feel it is easy to use Internet Banking service.

For Question 19, 8 strongly disagree, 23 disagree, 26 no comment, 34 agree and 16 strongly agree, most people think that they have good enough knowledge about the Internet Banking service.

There are questions in nominal scales. By applying a Chi Sq. test, it is found that only the satisfaction about interesting is the same as the expected frequency and fail to reject the H₀. Satisfactions about security, convenience, interactiveness obtained significant differences with the expected frequency. From the distribution, 74 out of 87 people felt that security problem do exists with the Internet Banking services. 55 felt that using Internet Banking is convenience than using other remote Banking services. 54 felt that Internet Banking is more interactive than using other remote Banking services. It reflects that most people agree with the convenience the Internet Banking can offer.

The number of people using Internet Banking accounts for 17% of the total population that have using Internet services. (顧壽康撰, 9 Feb 2001) According to a consultancy agent AC Nelson, the major discouraging reasons for Internet Banking usage, are the insufficiency of computer knowledge and equipment (51%), difficulties in learning how to use (26%), and privacy and security (23%). The result counter-proved that the task ambiguity and privacy is not the reason for Internet Banking usage. Therefore, these two variables are not discussed. Overlaying the questionnaire result and the statistic report from AC Nelson, the variables of information richness, accessibility and personalization remain.

An official statistical report released on the web site of HSBC at Feb 2001 (online@HSBC), showed that investment count the largest of daily transaction volume and that the usage peaks are at lunchtime and just before the HKSE closes. It is obvious that people would like to have quick response in making investment decision, as the market changes very quickly.

Therefore, an assumption that the main reason for Internet Banking usage for most people is the accessibility, i.e. the quick response and limitation free interface, it can offers.

In order to prove the assumption, an interview with Miss Hon, one of the respondents of the questionnaire, has been made.

Significance

It is found that not many people would like to use Internet Banking because of the computer knowledge and privacy. And the major reason for Internet Banking usage is the accessibility and convenience. The finding has left different opportunities for further research.

In order to familiarize the public with the industry, and to enlarge the market of Internet Banking, a number of measures can be done. The immaturity is caused by the lack of computer knowledge and sense of security. However, computer knowledge would gradually decrease as the latest generation would get in touch with computer very frequently and their knowledge would be definitely much better than the recent generation. On the other hand, technology is advancing very quickly that security problem would properly overcome within these few years. However, when Internetization gradually becomes mature globally, this no longer a problem. It needs time for improvement.

There are also a number of humanistic factors causing the immaturity. Habitual behavior of going to branches and make transaction, the service attitude of customer service officers is the obvious ones. Ongoing and continuous improving of Internet Banking would attract more customers. In the case, marketing strategies help much but this is not the theme of this research, therefore, this is not going to be discussed and should be left to the Business student for further research.

One the other hand, there are a number of ways to encourage people using Internet Banking, in terms of Geography, construction of optical fibers network and broadband network in planning residential zones would increase the opportunities for people to use computers. Construction of digital port, which is a clustering of severs and is able to process a large volume of data, has been a hit topic in the real estate and property last year when there is a digital rush. It is claimed that digital port would help the economies of Hong Kong. In fact, the determination of the location of the digital port is also a geographical problem.

When the WAP phone is more common, there would be an increasing number of people using it for networking. Therefore establishing terminators of the WAP should also be a geographical problem, whereas the decision of location should meet certain geographical criteria, that the GIS system would help in determining the best location.

There is another issue in economic geography. With the existing bank policies, reducing operation cost by reduce number of branches and staff, encourage people to use other remote banking services such as ATM machines, phone banking as well as Internet Banking. Obviously, they are undergo a transitory stage, take online@HSBC as an example, it would gradually shift their operation interface to the backyard area--Guangzhou. The policy has been discussed on the radio program.

When the number of branch being reduced, the remaining branches and the main building become more important. It should be able to process a large volume of transaction everyday, the environment, facilities and associated infrastructure, which are the criteria for the type A office in the planning guideline.

Conclusion

Despite the global trend, there is still limited number of internet banking user. This might be a combine effect of traditional close-minded thinking, economic recession just after 1997, and the immature computer knowledge level.

However, internetization of banking is the global trend, which would definitely be the way of banking industry in the future. The timeless and spaciousless channel is always been emphasized, thus this paper is going to examine whether internet provides a timeless and spaciousless platform for people in terms of B2C, and whether it is the major reason for people to use internet banking.

Reference

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Appendix 1-Time table

October _ December 2000 Literature Review

January 2001 Pilot Study

Feburary 2001 Data Collection

March - April 2001 Data Analysis and Interpretation

May 2001 Presentation and Written Report

Appendix 2-Figure 1 [back]

Appendix 2-Figure 2 Chi sq Test [back]

Appendix 3-Questionnaire [back]

the attitude toward Internet Banking in Hong Kong　

In the light of the range of banking tasks (e.g. bank account enquiry, bank account transfer, securities trading, purchase of insurance, mortgage

arrangement …) you normally perform:

1.There is a clearly known way to do banking tasks I normally encounter.