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An Evaluation of Internet Banking in New Zealand
Presenter: Winnie Chung
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AgendaThe evolution of Internet banking in NZInternet Banking Figures as at 2000Scope of the studyResearch questionsResearch methodologyHypothesesResultsOverall interpretation and recommendationConclusionFuture research implications
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The evolution of Internet banking
New Zealand has extremely high adoption of ATM and EFTPOS services (Boer, Evans and Howell, 2000)
ATM
EFPTOSTelephone Banking
Internet Banking
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The preparedness of Internet banking
New Zealanders become accustomed to, adopted, and adapted to electronic means of non-cash transactions This familiarity and preparedness would transfer to adoption of other technologies such as Internet banking (Boles de Boer, Evans and Howell, 2000)
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Internet Penetration
New Zealand has already achieved a significant level of Internet penetration and usage, higher than that of Australia and most other OECD countries (Boles de Boer, Evans and Howell, 2000)More than 50% of New Zealanders have access to the Internet and 34% use it on a regular basis (The New Zealand Herald, 2000a).
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Three Stages of Online Development for Banks (Hamlet, 2000)
FundamentalsTypically ten web pages or less in sizeBasic information
DynamicsMore featuresE.g. updated information on product and rates and calculators
Intelligent e-bankingInteractive online banking (e.g. real time services, customers and community forums and suggestion boxes)Allow customers to access account information, transfer funds and other related activities
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Interaction
Gaming
Brand Marketers
Travel
Government
Banking
Survey sites
E-tailing
Media
Information
Sectors in the Infotainment Framework
The Banking Sector
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7 New Zealand online banks
Intelligent e-banking
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Internet Banking Figures in 2000
About 200,000 New Zealanders use the Internet for banking in 2000 (The NZ Herald, 2000e)Survey reported in 2000 indicates that Internet banking is beginning to take off (The NZ Herald, 2000)15% using it26% of those who do not, saying that they may adopt it in the coming year
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Scope of the Study“Retail” Internet banking i.e. personal banking
Everything a branch teller would normally do
Exclude value added services E.g. buy and sell shares, securities trading, insurance purchases
Exclude business and rural based Internet bankingExclude the reasons why people do not use the Internet
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Research QuestionsWhat is the current situation and performance of NZ retail banking websites?What are the reasons that prevent New Zealanders from using retail Internet banking?How to increase the utility of NZ retail Internet Banking services to existing NZ Internet users?How can the current retail Internet banking services be improved?
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Research MethodologyEvaluation of websites
Quantitative data of each bank• Based on Hersey’s model
Survey User perspective User satisfaction Comparison with the components in
the Hersey’s model
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Website evaluationA website evaluation model (Hersey)
Search
Customer
Product
Negotiation
Order
Payment
Delivery
After-sales
Community
Company
Ease of use
Performance
Innovation
Aesthetic
Effect
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Other Important Components for Website Evaluation
Privacy and security concerns are the main barriers that constrain the uptake of Internet banking (Young, 2000 and O’Connell, 1998) Technology interface attributes (Dabholkar, 1995)
Reliability, security, accessibility, ease of use, enjoyment and control
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Tailored Hersey’s model
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SurveyPopulation:
Anyone in New Zealand who has been using the Internet
Judgement sampling designThe exploratory nature of this study infers that judgment sampling is acceptable although generalisibility is not guaranteed
Pilot survey
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Data Analysis MethodWebsite analysis The analysis of the data obtained by the questionnaire will consist of the following:
Descriptive statistics such as mean and frequency are provided with graphsCross tabulationsChi-square testsCorrelations
Compare the website evaluation result against the users perspective
Spearman’s rank correlation
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Hypotheses to be tested
Early adopters (banks) provides better Internet banking services (i.e. functionalities)Difference in quality between large and small banks
Large banks have more resources so they can provide better Internet banking services
Banks that provide better services/functions have better performance from the customers’ perspective
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Hypotheses to be tested
High income groups are more likely to use Internet bankingOlder customers may be less receptive to Internet bankingCustomers with higher education backgrounds are more likely to use Internet bankingRegistration for Internet banking is related to the use of ATM, EFTPOS and phone banking
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Hypotheses to be tested
Satisfaction is related to the length of Internet banking use (i.e. how long one has been using Internet banking)Satisfaction is related to future usageFuture usage is related to the length of Internet banking use
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Website Evaluation Results
1 – Bank Direct (ASB)
2 – ANZ
3 – Fastnet (ASB)
4 – BNZ
5 – National Bank
6 – TSB
7 – WestpacTrust
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The General Banking Patterns
Usage of different banking facilities
0%10%20%30%40%50%60%70%80%90%
100%A
TM
EF
TP
OS
Ph
on
eb
an
kin
g
Inte
rne
tb
an
kin
g
Co
un
ter
serv
ice
s
Dir
ect
de
bit
Au
tom
atic
pa
yme
nt
Dir
ect
cre
dit
Banks
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The Importance of Elements to Internet Banking
N Minimum Maximum Mean
The importance of security 184 1 7 6.65
The importance of providing up to date information 184 1 7 6.33
The importance of providing internet services free from technical problems 184 1 7 6.21
The importance of response time 184 1 7 6.08
The importance of download time 184 1 7 5.83
The importance of ease of use 184 1 7 5.76
The importance of ease of navigation 184 1 7 5.73
The importance of provision of customer information 184 1 7 5.64
The importance of provision of bank information 184 1 7 5.47
The importance of range of banking activities/services 184 1 7 5.47
The importance of provision of product information 183 1 7 5.41
The importance of attractive graphics 184 1 7 4.09
The importance of the use of animations 184 1 7 3.33
This is measured in a 7-point Likert scale with 1 indicating very unimportant and 7 indicating very important
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The Importance of Elements to Internet Banking
The importance of each element
1
2
3
4
5
6
7
Elements
Me
an
of
7-p
oin
t L
ike
rt s
ca
le
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Unregistered Customers (59%)
N Minimum Maximum Mean
Unsure about the security of transactions 109 1 5 3.65
Can do all banking in other ways 109 1 5 3.56
Have not tried it before 109 1 5 3.51
Do not need instant 24 hours access to accounts 109 1 5 3.42
Like to be able to talk to staff in person 109 1 5 3.21
Do not think Internet banking is cheaper 109 1 5 3.17
Internet banking offers a limited range of services 109 1 5 3.14
Too much hassle to register for Internet banking 109 1 5 3.05
Uncertain the benefit of Internet banking 109 1 5 2.99
Not sure how it works 109 1 5 2.76
Internet banking is complicated to use 109 1 5 2.42
Not aware of Internet banking services 109 1 5 1.95
Have no access/limited access to Internet 109 1 4 1.57
Reasons for not registering for Internet banking
This is measured in a 5-point Likert scale with 1 indicating strongly disagree and 5 indicating strongly agree
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Reasons for not Registering for Internet banking
Reasons for not registering for Internet banking
1
2
3
4
5
Reasons
Me
an
of
a 5
-po
int
Lik
ert
sc
ale
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Likelihood to Register for Internet Banking in the Next 12 Months
The likelihood to register for Internet banking
Very likely
Somewhat likely
Somewhat unlikely
Very unlikely
Pe
rce
nt
50
40
30
20
10
0
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Likelihood to Register for Internet Banking
Correlations between the likelihood to register for Internet banking in the next 12 months and the reasons for not registered
Correlations p-value Alpha level Significant
Likelihood to register and Unsure about the security of transactions -0.287 0.003 0.01 Yes
Likelihood to register and Too much hassle to register for Internet banking -0.19 0.048 0.05 Yes
Likelihood to register and Have not tried it before -0.191 0.046 0.05 Yes
Likelihood to register and Like to be able to talk to staff -0.214 0.025 0.05 Yes
Likelihood to register and Complicated to use -0.185 0.054 0.05 No
0.1 Yes
Likelihood to register and Internet banking offers a limited range of services -0.183 0.057 0.05 No
0.1 Yes
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Internet Banking Users
41% registered for Internet banking39% use Internet bankingOf the 41%, some registered Internet banking with more than one bank but none registered with more than three banks
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Registration with BanksRegistration with Banks
Overseas bank
WestpacTrust
Bank Direct
National Bank
BNZ
ASB
ANZ
Fre
quen
cy
50
40
30
20
10
0
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The Usage of Different Banking Activities
The Usage of Different Banking Activities
Comm
unicate with ban
Cheque reconciliatio
Order cheque or depo
Make paym
ent
Download account inf
Purchase banking pro
Check bank statement
Transfer funds betwe
Check account balanc
Fre
qu
en
cy
100
80
60
40
20
0
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Internet Banking Usage FrequencyInternet Banking Usage Frequency
Not used yet
Less than once per m
Once per m
onth
More than once per m
Once per week
More than once per w
Once per day
More than once per d
Pe
rce
nt
40
30
20
10
0
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Banks Performances from the Customer Perspective
Average Score for Each Bank (Customer Perspective)
50.0%55.0%60.0%65.0%70.0%75.0%80.0%85.0%90.0%95.0%
100.0%
AN
Z
AS
B
BN
Z
NB
NZ
BD
WP
T
Ove
rse
as
ba
nks
Banks
Sc
ore
Website Evaluation
1 – Bank Direct (ASB)
2 – ANZ
3 – Fastnet (ASB)
4 – BNZ
5 – National Bank
6 – TSB
7 – WestpacTrust
Survey Results
1 – Bank Direct (ASB)
2 – Fastnet (ASB)
3 – National Bank
4 – WestpacTrust
5 – ANZ
6 – BNZ
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The Overall Performance and Importance of each Element for all NZ banks
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Hypotheses Summary
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Overall Interpretation and Recommendation
It must be noted that getting customers to register for Internet banking does not guarantee that they will use the servicesWhether a customer will register for Internet banking is related to his/her age and education level but not income
Younger customers (less than 20) are less likely to register (within the next 12 months)Higher education customers are more likely to register
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Overall Interpretation and Recommendation
Internet access is not a barrier that prevents customers from registrationMain factors that prevents registration are security concern, the availability of other ways of banking and the complexity of using retail Internet bankingFactors considered very important to retail Internet banking are security, update information, free from technical problems, response time and download timeBanks are not encouraged focus on attractive graphics and animations as these factors are not as important
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Overall Interpretation and Recommendation
NZ banks perform extremely well in providing update information. Maintaining this is necessaryThe security of transaction and ease of use are also revealed in NZ banks’ websites but further improvement on security is requiredImprovement on download time, response time and technical problems needed
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Overall Interpretation and Recommendation
Additional functionalities could be useful but the quality of service is more importantBank Direct is perceived as the best bank that provide retail Internet banking services followed by Fastnet (ASB)Banks are encouraged to focus on factors that are considered important in order to increase customer satisfaction. This enhances the retention of current Internet banking users.
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ConclusionRetail Internet banking has high potential in NZBanks should understand what factors that prevent customers from registering Internet bankingTo improve performance, NZ banks should focus on factors such as security, response time, download time and freedom from technical problemConsideration of all these factors for designing, implementing, maintaining and promoting websites would help to attract new registration and increase retention
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Future Research Implications
More inferential statistics on the topicProbability sampling should be employed to ensure generalisibility of findingsFuture research could study from the banks’ perspectives in addition to customers’ perspectivesLongitudinal study is also advocated
This allows researchers to study how the uptake of Internet banking proceeds