Research Proposal for
A study on Internet banking in relation to customer satisfaction for different age group of customers for banking industry in Hong Kong
Introduction
e-commerce has been the key trend of business in the past decade. The importance of e-commerce has also grown to a level that every company is looking at the possibilities, associated cost, and implications.
In the banking industry, customers are characterized by increasingly empowered and financially literate consumers (). Hence relationship marketing has been the key focus in all-banking industries. Bradley Laura mentioned that of the many different factors influencing strategies of banks and there are two main strategic forces, deregulation and information technology, where the information technology affects the bank activities to a level of changing the whole strategic plan of individual banks.
Presently, there are a lot of changes already occurring within the industry such as escalating competition, changing consumer behaviors and needs, globalization, deregulation, and the emergence of new financial services models.
In general, customers are increasingly interacting through remote technological channels, such as the telephone and/or the Internet and how to maintain customer relationships are potentially of key importance for retail banking.
Internet alone has already given rise to some stand alone successful Internet operations such as Smile, SFNB etc. in UK and there is a large number of traditional banks introducing electronic distribution via the Internet (). Future worldwide adoption of Internet banking is expected to be eight out of ten banks by 2011 (). This is therefore indicative of the importance of Internet banking and the expected pace of adoption.
Banks have emphasized the key role of service quality and customer satisfaction in the achievement of organizational objectives; an understanding of the impact Internet banking on consumer perceptions and behavior is therefore essential.
This research has been based on the below modules from Napier MSc Marketing :-
Marketing / Customer Interface – Consumer Behaviour
Direct and e-Marketing
Marketing Communications
Research Problem and Objectives
There has been widespread support for the general proposition that customer satisfaction is a significant variable for evaluation and control in bank marketing management ( 1998).
(2000) suggests that, in addition to outcome, there are three elements of service process:
1. access/convenience
2. human elements (combining both instrumental and expressive qualities)
3. tangibles
affect consumers’ service evaluation.
This study intends to explore the role of Internet banking on customer satisfaction on banking industry in Hong Kong and focus in two age groups :-
Age 25-34
Age 35-44
The focuses include :-
1. Investigate and summarize the availability of Internet banking of all the retailed banks in Hong Kong.
2. Examine customers’ (in different market segments) attitude towards Internet banking. Data will be analyzed according to the different segments of the customers, eg. Gender, age group, type of work.
3. Using Wan, Luk and Chow analysis on psychological factors associated with choosing of banking channel, analyze whether the factors in consideration choices Internet banking will be different with different target customer groups.
4. To further investigate what key considerations of customers’ adaptation of Internet banking using Wan, Luk and Chow analysis on psychological factors associated with choosing of banking channel (Attachment 1) as a general guideline.
5. Summarize on whether the customer are satisfied with the bank through the use of its Internet banking facilities.
Literature Review
1. Why Internet banking
By encouraging clients to use Internet banking, banks will be able to save considerable operating and marketing costs, thus providing banks with economies scale (Levinsohn 1998). Unfortunately, this technology also results in lower switching barriers, makes “cross-selling” more difficult and customer information harder to obtain, therefore, results in more competition.
There are more and more people willing to use Internet banking. On the other side, such trend will no doubt affect the relationship between banks and their customers due to the reduction of the interaction between people.
(2003) suggested two consideration of the increase in use of Internet banking :-
a. the banks’ service quality is compromised by the reduction in the personal employee customer interface and
b. whether the reduced employee personal contact can be “offset” by the capacity of the delivery system, and the client’s ability to customize their own services faster and more efficiently.
Such act of whether a bank should push for more customers using Internet banking requires therefore deep consideration on how this will affect the overall relationship with its customers. It will therefore very important for banks to understand the relationship between Internet banking and customer satisfaction.
2. Perception of the customers
It will be very important that banks will therefore consider how to attract more customers to be their Internet banking customers. How the overall marketing plan be executed that more and more customers would be interested in adopting this new channel of banking.
These include protection of reputation, competition, cost, savings, mass customization, enhancement of marketing and communication activities, and retention and attraction of consumers.
The study is to consider differences of considerations by customers of market segments. This helps the banks to identify the right marketing strategy when they know what exactly is the key considerations of the targeted group.
3. How to attract customers
With the fact that the banking industries are putting more and more emphasis and weight into the Internet banking for its day to day interaction with customers, it would be very important that it will address to updating the web features to what the customers’ are looking for.
The impact of customer attitudes, towards human tellers and automatic banking, on this relationship is considered?
4. How to Measure customer satisfaction in e-banking?
Research Methodology
1. Population and sample size
First session will be all the registered retail banks in Hong Kong and to check whether Internet banking are offered already to their customers.
The intended population is defined as retail banking customers in Hong Kong. Snow-ball sampling method will be used and samples will be randomly chosen to acquire samples from different background until the desired number of feedback will be achieved.
A survey of approximately 100 banking customers who are actively involved in banking facilities will be taken.
2. Survey instrument
Written questionnaire will be used for this survey to collect data.
3. Data Collection
Personal interviews will be used to collect information. Once samples will be identified, an interview will be arranged according to the structured questionnaire.
4. Questionnaire design
There will be 5 sections :-
- Demographic data
- Use of Internet banking – yes/no, frequency,
- Choice of Internet banking – what concerns
- Features of Internet banking – order of importance of various identified features
- Degree of satisfaction
5. Data analysis
Techniques
For
Mean, Standard deviation
Demographic data
Use of Internet banking
Degree of satisfaction
T-test
Test whether use of Internet banking differs between age group, gender
Test whether use of Internet banking has any association with degree of satisfaction
Assumptions and limitations
During the research process, snowball sampling method will be used. Samples will be collected until the desired number of feedback of the two age groups will be achieved, each 50 from the two target age groups. Assumption is made that the sample will be homogeneous. Actually, samples will be from very similar background hence the resrach will be focused in two age groups with the intention to reduce the effect of the limitation of a snowball sampling plan.
To generalize the research result, there is a concern regarding the reliability and validity issues. Because of the fact that there are assumption of a real random sample being made through the snowball sampling method, there are limitation as to whether the result can be generalized as a conclusion for the whole population in Hong Kong.
Proposed research timetable
The research will start June 2007 and with the below proposed schedule :-
May 7, 2007
Submit proposed research proposal
End June 2007
Wait for comments and approval of proposed research proposal
July and August 2007
Format questionnaire, sample target and conduct research on 100 respondents
September 2007
Conduct data analysis
October 2007
Final draft of dissertation
November 2007
Submit final dissertation
Conclusion
This proposed research is to study firstly the Internet banking situation in Hong Kong in the retail banking business. Then, because of the recognize growing importance of Internet banking, to see how this will affect customer satisfaction.
Internet banking provides the best competitive force among retail banks in Hong Kong. It provides a substantial cost reduction but yet reduce the barrier for switching by customers to competitors. It is therefore crucial to understand how Internet banking will affect customer satisfaction in various target groups of customers.
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