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An Evaluation of Internet Banking in New Zealand. Presenter: Winnie Chung. Agenda. The evolution of Internet banking in NZ Internet Banking Figures as at 2000 Scope of the study Research questions Research methodology Hypotheses Results Overall interpretation and recommendation
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An Evaluation of Internet Banking in New Zealand Presenter: Winnie Chung
Agenda • The evolution of Internet banking in NZ • Internet Banking Figures as at 2000 • Scope of the study • Research questions • Research methodology • Hypotheses • Results • Overall interpretation and recommendation • Conclusion • Future research implications
ATM Telephone Banking EFPTOS Internet Banking The evolution of Internet banking • New Zealand has extremely high adoption of ATM and EFTPOS services(Boer, Evans and Howell, 2000)
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)
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).
Three Stages of Online Development for Banks (Hamlet, 2000) • Fundamentals • Typically ten web pages or less in size • Basic information • Dynamics • More features • E.g. updated information on product and rates and calculators • Intelligent e-banking • Interactive 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
E-tailing Gaming Interaction Survey sites Banking Brand Marketers Information Travel Media Sectors in the Infotainment Framework Government The Banking Sector
7 New Zealand online banks • Intelligent e-banking
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 it • 26% of those who do not, saying that they may adopt it in the coming year
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 banking • Exclude the reasons why people do not use the Internet
Research Questions • What 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?
Research Methodology • Evaluation 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
Search Company Performance Ease of use Aesthetic Effect Innovat ion Customer Product Negotiation Order Payment Delivery After-sales Community Website evaluation • A website evaluation model(Hersey)
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
Survey • Population: • Anyone in New Zealand who has been using the Internet • Judgement sampling design • The exploratory nature of this study infers that judgment sampling is acceptable although generalisibility is not guaranteed • Pilot survey
Data Analysis Method • Website 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 graphs • Cross tabulations • Chi-square tests • Correlations • Compare the website evaluation result against the users perspective • Spearman’s rank correlation
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
Hypotheses to be tested • High income groups are more likely to use Internet banking • Older customers may be less receptive to Internet banking • Customers with higher education backgrounds are more likely to use Internet banking • Registration for Internet banking is related to the use of ATM, EFTPOS and phone banking
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 usage • Future usage is related to the length of Internet banking use
Website Evaluation Results 1 – Bank Direct (ASB) 2 – ANZ 3 – Fastnet (ASB) 4 – BNZ 5 – National Bank 6 – TSB 7 – WestpacTrust
The Importance of Elements to Internet Banking This is measured in a 7-point Likert scale with 1 indicating very unimportant and 7 indicating very important
Unregistered Customers (59%) 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
Likelihood to Register for Internet Banking in the Next 12 Months
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
Internet Banking Users • 41% registered for Internet banking • 39% use Internet banking • Of the 41%, some registered Internet banking with more than one bank but none registered with more than three banks
Banks Performances from the Customer Perspective 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
The Overall Performance and Importance of each Element for all NZ banks
Overall Interpretation and Recommendation • It must be noted that getting customers to register for Internet banking does not guarantee that they will use the services • Whether 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
Overall Interpretation and Recommendation • Internet access is not a barrier that prevents customers from registration • Main factors that prevents registration are security concern, the availability of other ways of banking and the complexity of using retail Internet banking • Factors considered very important to retail Internet banking are security, update information, free from technical problems, response time and download time • Banks are not encouraged focus on attractive graphics and animations as these factors are not as important
Overall Interpretation and Recommendation • NZ banks perform extremely well in providing update information. Maintaining this is necessary • The security of transaction and ease of use are also revealed in NZ banks’ websites but further improvement on security is required • Improvement on download time, response time and technical problems needed
Overall Interpretation and Recommendation • Additional functionalities could be useful but the quality of service is more important • Bank 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.
Conclusion • Retail Internet banking has high potential in NZ • Banks should understand what factors that prevent customers from registering Internet banking • To improve performance, NZ banks should focus on factors such as security, response time, download time and freedom from technical problem • Consideration of all these factors for designing, implementing, maintaining and promoting websites would help to attract new registration and increase retention
Future Research Implications • More inferential statistics on the topic • Probability sampling should be employed to ensure generalisibility of findings • Future research could study from the banks’ perspectives in addition to customers’ perspectives • Longitudinal study is also advocated • This allows researchers to study how the uptake of Internet banking proceeds