Essay About Physical Personal Banking And Online Banking

Investigation of How the Shift from Physical Personal Banking to online Banking Has Affected Consumers
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Investigation of how the Shift from Physical Personal Banking to Online Banking has affected ConsumersName:University:Course:Instructor:Date:TitleInvestigation of how the Shift from Physical Personal Banking to Online Banking has affected ConsumersTerms of ReferenceThe internet has changed the way by which people conduct business transactions by eliminating the inherent need for face-to-face transactions. Personal banking has been one of the affected areas, with online banking becoming more popular with time. Online banking, also known as internet banking, enables users to execute financial transactions through the internet without the need to visit a bank branch physically. One key feature with online banks is their ability to offer services to customers at significantly low fees. Online banks can afford these discounts since they do not incur the traditional costs associated with physical banking such as paying rent (Lai et al. 2014). I have chosen the topic “Investigation of how the Shift from Physical Personal Banking to Online Banking has affected Consumers” because online banking has made it easier to shop by eliminating the need to carry cash everywhere. In the United Kingdom, most people have adopted online banking services. In fact, as Canocchi (2014, para. 1) reveals, ‘As many as three quarters of people in Britain do their shopping online and over half use internet banking, official data showed today’. On the other hand, only about 25% of customers  have retained the conventional banking system. This observation indicates a tremendous shift from physical to online banking in the UK (Hussain & Wong 2015). Conversely, online banking raises issues of cyber security and the safety of customers’ money when transactions are conducted online (Jansen & Leukfeldt 2016). Therefore, the writer wishes to investigate the numerous impacts of online banking because the burgeoning phenomenon may entirely replace traditional banking in the near future, specifically in the UK. The study will be guided by the following research question: How has the shift from traditional banking to online banking impacted consumers? Despite the existence of a wide body of research on the topic of online banking, few studies have captured the specific impacts it has had on customers. This study seeks to examine the various impacts that have been occasioned by this change on customers in the last five years. This goal will be achieved by interrogating the attitudes and views of different customers regarding the change. The aim will be to determine what customers feel regarding the shift from traditional to online banking. The writer appreciates that while most customers may be optimistic about this transformation, others, especially the older generation, may be apprehensive. Millenials are ordinarily believed to be tech savvy. Hence, they are assumed to be more welcoming of technological changes relative to their parents. This research will also be seeking to determine the validity of this assumption by relying on a sample of people from different ages. Review of LiteratureThe early notion of online banking in the UK began around 1983 when the Bank of Scotland introduced Homelink. The bank began availing home banking to its customers. Nevertheless, this early initiative did not pick momentum. Throughout online banking’s history, customers have been reluctant to adopt the new trend, which has caused internet banking to progress at a rather slow pace in the United Kingdom (Turner 2014). It was not until the md-1990s that the initiative was resurrected. The mid-1990s was marked by a robust growth of the internet allowing electronic commerce to advance to new levels. In 1994, Stanford Federal Credit Union rolled out internet banking to all its customers, becoming the first bank to offer Internet banking in the US (Sarreal 2016). This advancement was followed by initiatives by other banks to afford internet banking to their customers. The following year, Presidential Bank provided its customers with online access to their bank accounts. This advancement was almost simultaneously reflected in the UK banks (Turner 2014). In fact, according to Canocchi (2014, para. 3), ‘Since 2006 the number of people accessing the internet everyday has doubled to 38million adults, which equates to 76 per cent of the population in the UK, the ONS said, with a 2million increase only over the last year’.

As the reputable banks began to offer internet banking, it gained legitimacy in the e-commerce world (Chiou & Shen 2012). By 2000, internet banking had become a mainstream practice, with over 80 percent of the country’s banks offering Internet banking services. In the United Kingdom, the rate of uptake of online banking seems to be on the rise, as more customers prefer it to the traditional banking services. The Figure 1 below shows the data on the frequency of banking channels in the UK.[pic 1]Source: (EMarketer 2013)The implication is that the majority of UK citizens are comfortable with online banking, as opposed to visiting branches to get financial services. Comparatively, the Bank of America had acquired over 3 million internet banking customers, being about 20 percent of its clientele (Lee, Lim, & Lim 2013). With internet banking having become widespread, entrepreneurs launched into the culture with internet-only banks. One such institution was the Ally Bank, which joined the internet banking space in 2009 (Sarreal 2016). Internet banking has since continued to evolve and grow to accommodate innovations. For instance, mobile banking apps have been introduced to take advantage of the existing formidable telecommunications chains. Popular mobile apps include MyDeposit and Popmoney.Various studies have since been conducted on the subject of online banking and its impact on consumers in the UK. As EMarketer (2013, para. 1) reveals, ‘80% of UK banking customers surveyed used online banking, compared with 72% who used branches’. The reason for this finding is owed to the convenience of online banking. According to Xue, Hitt, and Chen (2011), personal online banking has led to increased customer satisfaction. Internet banking has further made it possible for customers to purchase products and services in convenience stores using debit cards issued by banks (Lai et al. 2014). Often, banks do not charge their customers for such transactions. Hussain and Wong (2015) assert that millennials (people born between 1980 and 200) have higher expectations on online banking compared to people from their parents’ generation. They expect online banking to be a smooth experience and are less willing to queue in the traditional bank set up. However, this research will not delve into investigating whether this claim holds or not. Rather, it will assume that the expectation of the banking experience could be the driving force behind the increased efficiency as banks strive to satisfy their customers (Xue, Hitt, & Chen 2011).