Background of study
1.1.1 Online banking payment : definition Most of the people are so busy in their daily time. People who already married are busying sending their children go to school or try to earn a lot of caution money for future when need to use them urgently. Pinch pennies are so common to these people on their running expenses. To make this more efficiency, they will do survey about a lot of supermarkets or shops to buy the cheapest and good quality products. Besides, they also try to save more time day-to-day. To save more time, online banking become a new age of banking program. Online banking payment is defined that through internet to transfer funds or money from one account to another account to develop banking activity such as paying loans or bills, shifting funds, inspecting account details and balances. Besides that, users also can pay mortgages and buying futures, warrants, options and others through online banking payments. So that, online banking payments can also be intituled internet banking payment.
1.1.2 Relationship between online browsing and online banking payment In this 21st century, internet has been comprehensive used by many estate of person such as businessman use it to expansion their business to advertise their products and services. In addition, students use it to consort together with their friends either in nation or oversea and mostly already replace from mobile phone. Mostly people use internet to find the information what they want to know and internet will help them to search and settle the problem they face. According to the survey which was done by A.C.Nielsen (2007) stated that more that 627 million of customers in the global have the experience of online purchasing. In addition, online business growing rapidly from year 2007 which is $228 billion to year 2009 which is $288 billion is found from a research by Forrester (2006). Besides, according to a survey done by Narges (2009), US users adopt online purchase increase from 46 percent in year 2004 to 61 percent in year 2010. The researcher ComScore who had found that the advance of usage of online banking over Southeast Asian from 2010 to 2011.
Comparing the total visitors online visitation by market
from January 2010 until January 2011 Country January 2010 January 2011 Percentage Change Malaysia 2,360,000 2,746,000 16% Hong Kong 1,304,000 1,543,000 18% Vietnam 701,000 949,000 35% Singapore 779,000 889,000 14% Indonesia 435,000 749,000 72% Philippines 377,000 525,000 39% Source: http://www.comscore.com/Press_Events/Press_Releases/2011/3/Online_Banking_on_the_Rise_in_Southeast_Asia From the table 1.1, we can know that the online visitation by market is increasing year by year. That also caused the online purchase will grow in rapidly. So that this phenomena can prove that there is a relationship between online browsing and online banking payment.
Top 3 Visitors on online banking institution January 2011
1st Online banker
2nd Online banker
3rd Online banker Malaysia Maybank Cimb PbeBank Hong Kong HSBC Bochk Standard Chartered PLC Vietnam Vietcombank Acb Dongabank Singapore DBS United Overseas Bank Group Citigroup Indonesia Bankmandiri BNI.co.id Citigroup Philippines Bpiexpressonline Citigroup HSBC Source: http://www.comscore.com/Press_Events/Press_Releases/2011/3/Online_Banking_on_the_Rise_in_Southeast_Asia In sum, online banking payment is an outcome show the feasibility to use online adhibition. There has confused that difficult to conclude that online banking payment is bring more convenience to bankers or users. But this is not the important to chew the cud because according to Singhal and Padhmanabhan (2008) stated that the increase of using online banking payments has proved that online banking has make a lot of flexibility to bankers and customers during the operations.
1.1.3 Crime rate and online banking payment Actually most of the country will face the same problem which is the crime rate in adopting ATM cards is become grisliness. The mobsters will glom the ATM cards from someone and make a copy to steal the passwords. After that, they can withdraw the money anytime until the users just aware. Besides, maybe some of harum-scarum people will lost their ATM cards, this will also give a chance to esurient to crime. Cases of rob bags are mostly happening in Malaysia. Robbers always aim to rob the woman who is walking alone on the way to work or car park or home no matter during daytime or night. Due to not lost their money, some of women will revolt with robber. But they fail and maybe lost their life because they slip down on way and be knocked by other vehicles. Besides, cases of smash car's window become the recently popular happened in Malaysia also. Many businessmen withdraw a lot of cash from bank institution to give employee salary or make payment to debtors and so on. But on the way of journey to go to their destination, they maybe will have a rest and park their car at roadside. When they come back, the car window is already been smashed and lost that cash and other valuable things. For an example of case that just happened in our country Malaysia on March 2011, there is a case about a woman in Johor Bahru had been durance by few robbers. She mentioned that the robbers actually just want to rob her bag's things just like handphone and money, but robbers saw that she has a saving account book which stated that has a lot of money. So they durance her and intimidate her to give them password. Luckily, she is safety and lost totally amount of RM9820. From all these kinds of crime cases, online banking payments is the way to solve and reduce them. Users will more likely to adopt online banking system than traditional banking because of trust and security.
1.1.4 Why did I choose this online banking I choose this title to become my study because online banking is already a necessary work in the future start from now and I conduct this study is to find out what and which types of factors will affect the customers to choose online banking payments. Besides, through these factors I want to know which one is the most important towards to customers to choose either online bank payments or go to actual bank make payments. I also need to find out each factors has at which level to separate them. Here come to the primary question. Why I choose this subject area? It is not only because of this subject area is interesting but also because of this subject area is most important for me as a student who studying banking and finance. If the usage of online banking payments are increasing, that means that factors are also in the successful way and being increasingly. Bankers should try to make more factors to have the perfect match for that bank to maintain customers loyalty and satisfaction of using online banking payments. The main cooperative strategic of doing a business is to capture customers, we must first capture his or her heart. So that, we must know the need of customers and help them to achieve. Banker should develop the factors and probe them to customers the benefits of online banking payments.
1.1.5 How would I conduct online banking Here I conduct this study by using primary data which is survey method. I distribute those questionnaires to 200 users who have use online banking payments at now or once to help me to complete this study. Inside the questionnaire, all items are evaluated by respondents on a five point likert scale such as strongly disagree, disagree, neutral, agree and strongly agree. In addition, the result will come out from using Statistical Package for the Social Sciences (SPSS). There are five variables in factors which are trust and security, convenience and flexibility, transaction related benefits, real time information and monthly summary. Each variable has their meaning and has different influence on online banking payments. What method is each variable influence online banking payments? Before study this, I have to know meaning of each variable and separate among them to make this study more easily and clearly.
1.2 Problem Statement Online banking has seen rapid adoption. But why cause online banking is adopted? Is the social environment problem? Recently we can know some news about robbery cases in Malaysia. The robbers always aim the customers who just withdraw cash from banks and will follow them until they get the chance to rob them. The customers not only will lost their cash, they maybe also hurt by robbers. To avoid these types of cases, government encourage customers not withdraw so much cash from bank, and suggest them to use online banking systems or cheques is better.
1.3 Research Question What are the most factor affecting customers to choose online banking payments
1.4 Research Objective
1.4.1 Main Objective The study mainly aimed to determine factors influencing MMU undergraduate students in adopting the online banking payment.
1.4.2 Specific Objective In specific, the study aim : to find out the relationship between all of these independent variables and online banking payments. to determine the difference in using online banking payments based on demographic variables such as gender, age, nationality, ethnicity, and education level whether the respondent is user or non-user. to provide more information to bankers in creating more organized and user-friendly online banking payments features in Malaysia.
1.5 Significance of study
1.5.1 Significance definition Researcher should expressly justify the significance of study to make the study useful and bring benefits to others. In the other words, significance of the study is the segment where the researchers impart others how they could use it and how their study would be available to clear people or segments of the society. In the market, mostly companies have the same purpose which are can make a lot of earning and benefits during operating their business. Other than expand their business, they also need to minimize their cost and maximize their opportunity.
1.5.2 Significance of online banking payment At the beginning, researcher must know that actually not all the users are satisfied to online banking payment. Due to some cases such like there will auto detract funds from their bank account but they did not do so, they will still less and lack of trustfulness in adopting online banking to make any transaction and payment. So that, through this research can find more the reason why users not satisfied and less satisfied to online banking payment. That become a necessary to bank institutions to improve all of these problems. Based on research, management can organize a good strategic and decision. Banks know need to provide what kind of products and services to customers. For an example, bankers know what are the most factor can affect customers in adopting the online banking payments. So they will improve this area of strategic to achieve customers' anticipate such as when customer use online to pay any loan or others, they will be rebated 0.5% to encourage them continues using this service. They can also can find more independent variable based on research. In sum up, research make the bank institutions are able to choose the most efficient, profitable and productive of decision.
1.6 Scope of study Due to this study is about bank, so that I am targeting on the customers of local banks in Malaysia. In this research, I narrowed down my focus on three banks, which are CIMB, Public bank and Maybank. My specific respondents will be students from Multimedia University Melaka Campus (MMU) of any year level and course because all students can use online banking to make payments. The limitation of this research is the respondents are not outside of the campus means they must be MMU students. In other words, only those undergraduate students are allowed to participate in the research. This is based my study more focus and clear in this stage. Actually I narrowed down to these three banks is because these banks have more famous and complete system on online banking payments. On top of that, universities are great environment for students to commence entrepreneurship. Thus, it is not unusual for some students to start doing their business during their studies in universities. They sell some products at their website and the customers also use online banking payments to purchase them. This method help sellers and buyers save more time and bring many convenience to them because they not need go to bank to make or check payments.
1.7 Operational Definition
1.7.1 Online Banking Online banking or is called internet banking empower customers to transact financial institution on a very security website operated by their specific banker from their accounts.
1.7.2 Trust and Security In Supriya Singh and Claudia Slegers study in 1997, they stated that trust actually very hardness to explain due to it is spread all over and nebulous. According to Amir Herzberg in 2003, he mentioned that security is one of the motivation to adopt online banking. The security is overturn.
1.7.3 Convenience and Flexibility According to Amir Herzberg in 2003, he mentioned that convenience is another one of the motivation to adopt online banking also because convenience can bring a lot of benefits such as user can paying for services or buying some products in cars, trains or planes. Flexibility is user can use online banking to payment any time and any place. They not need to go to bank to queue for waiting a long time. They also can transfer fund to urgent family or friends at midnight which is bank is already closed.
1.7.4 Transaction related benefits For transaction through online banking, means that what benefits will the users receive by adopting it such as lower or saving transaction cost, faster transfer, easy to use and so on.
1.7.5 Real time information Real time can be defined what time at that second of moment. So that real time information is the online banking system can provide the users can check for interest rates at that time, the balance amount of users' accounts, promotions given by financial institutions and others. (Sadique et al, 2009)
1.7.6 Monthly Summary Every transaction processed by customers will have a record in their account. So that customers can check their transactions easily and can be a record or note. It is giving safety to them doing their business.
1.8 Organizational of Research The research project consists of five chapters: Chapter One covers the introduction of the topic which is "factors influencing MMU undergraduate students in adopting online banking payment" to provide a thorough understanding for readers. Inside chapter one includes the background of study, problem statement, research question, research objective, significance of study, scope of study, operational definition and organizational of research. Chapter Two covers the literature review which includes the defined of factors and online banking payments. Besides, I will provide the online banking payments research in Malaysia and prior research on the dimensions of each independent variable which are trust and security, convenience and flexibility, transaction related benefits, real time information and monthly summary. Chapter Three will be introduced the research methodology. In this part, I will definite a short what is research methodology. And the difference between conceptual development and hypotheses development will also be appeared in this chapter. What is the data source and questionnaire development I will organize in this chapter. Sampling method and data collection method also important in this chapter. Finally, data analysis techniques for the research are also provided. Chapter Four will explain each the data result or is called data analysis finding and discussion. All these results are used SPSS to find and will show from the questionnaires which I use to survey to research. In this chapter four illuminates respondents' profile, mean analysis of the variable, reliability analysis, correlation analysis and regression analysis. Chapter Five is the last chapter which will be narrated the discussion and conclusion for the research. Furthermore, it will cover contribution to research, contribution to practice, limitation of study and suggestion for future research.
2.1 Introduction Online banking is a transaction of funds and money from one account to another account without limit at places and time through using internet. Home banking can be defined that via the computer and telephone connecting to any bank institution at home. Phone banking is the use of mobile phone which can connect to banker through internet. In sum, there still have many type of banking system in the global which have their main objective and purpose during adopting them. According to Heinonen (2006), the customers of banks nowadays service themselves by using ATMs, internet or mobile phone. That is "technological interfaces that give a chance to consumers manufacture a straight forward services to employees" with these type of self-service technologic. So that in his study, he mentioned that the important actions the banks should do is how to increase their service. But he signaled that not means is a needs to increase services. He suggested bank sectors can concentrate on improve their service quality which the customers really needs and is more efficient than studying service value. Luckily, the expansion of using online banking payment in recently is a good approvement. For one example is there is a linkage between bank sectors and customers to develop their relationship remotely by managing of online banking payment methods. This bring a lot of expedience to financial institutions to link customers details and can help credit management department when examine a customer has the ability to pay the repayment loan or not. As Herzberg (2003) pointed out not only computer just can use online banking, but also mobile devices is become a new uptrend of using online banking. Nowadays, many businessman owns the mobile devices with high technological such as PDA phones, IPAD to connect internet anywhere and anytime. He compared these devices with computer, these devices is more availability for developing payment and transaction of fund. So that from this, I can conclude that process of online banking payment will done by electronic, is called electronic banking. Electronic banking can be defined the use of the technologic which can connect to internet to get back or process any banking data, details of transaction and others directly from link from any financial institutions website.
2.2 Trust and security Why so many customers adopting online banking payment? One of the factors is trust and security. Online banking payment cause them feel is a safety payment. When they want to start to use this service must apply from bank then get a code. After that they login to their personal account, they change the pin or password to login. This means that when the customer want to make payment or check any detail through online, he/she need to type this password just can successful login. When customer want to transfer fund to other customer account, the online banking system will also double confirm to user. So that, customers are very trust this online banking payment system and is very security. As the point of Singhal and Padhmanabhan (2008), there is a survey mentioned security is the most important factors adopting online banking payment rated by member institutions. To save against fraud and customers' privacy, there is a dual demand (Mishra). According to Sarel and Marmorstein (2006), they found that to increase number of bank customers, bank not only must provide a good service, but security is also play a main role to meet the target numbers. For an example is they said that there is a survey (Gartner, 2004) stated that US online banking has a fail due to lack of security provided by their country bank industries. In this study, they also found that UK also frustrated offered security to their customers and cause a lot of social environment problems in year 2005 such as account hijacking and fraud of online business and other abnormal actions. Besides, another is trust by customers is important to bank to expansion their bank's reputation and help the online banking growth. So how must banker to achieve it? Bank should study and survey how to achieve consumer needs and perception management. Based on the research by Singh and Slegers (1997), they mentioned that has a previous study which is lack of space and time can relate trust. Continuing visible of activities is the reason why not need to trust someone anyway and the produce will clarity and trust the online banking system whose tasking were understood and known. According to Aladwani (2001), customers' trust and security has the power to attract and improve the future online banking usage and cause the environment become an online ethos and will also the enhance of usage of online technologic products just like the new products Ipad, Web book, Iphone and so on. In his study has also concern about the percentage frauds of online banking has been affected to advance due to the expansion of usage online banking in the online environment is increasing. Trust and security can become a tool to banker which can make customers have more expectation to banker and surely will increase an improve the relationship between them also.
2.3 Convenience and flexibility In addition, convenience and flexibility is another reason which influencing users in adopting online banking payment. The customers through online can transfer payment and check any detail about their account. In some rural places, it may difficult to people to find or go the bank to process their payment. Besides, it will cost them to go far to bank in or withdraw money to presence to bank themselves because it is very waste their time. And maybe the bank at rural place does not has enough employees or services provide to customers. Customers will also distrust about the system between this rural bank and town bank. All of these will affect the number of customers. How to avoid this problem? Bank institution can try to organize more service provide to customers to use online banking system. For now the services have online payments, transfer funds to other customers, checking account details and so on. I suggest that banker also can let customers to bank in fixed deposits by themselves and auto print out and update the certificate of fixed deposit. All these type of service not only give convenience to banker, but also the customers have the flexibility. Online banking allow customers to transfer fund between account and credit cards also. On the other words, online banking just like having a flow ATM machine anywhere and also have a new-up-to-date flow bank statement also. According to Herzberg (2003), he pointed out a user of devices can increase and improve convenience. He mentioned that a customer can use a single device to do a lot of actions such as payment, transfer fund, investment, retail payment and nowadays also can be monitor to connect to CCTV at home. According to Singhal and Padhmanabhan (2008), they stated that online banking bring convenience to financial institution. In this study include that customers flexibility and convenience is provided more than the traditional bank services at a lower cost by adopting online banking payment (Williamson, 2006). Williamson also has stated that online banking help users easy to use and at a convenience and fastest way to manage their money. Besides, helping customers have better financial management and different type of patterns withdraw of cash and manage of everyday earning and expenses (Beer, 2006). Primary factor of adopting online banking payment that is saving time can be found in Arnett and Liu study. That is why many customers prefer to use online banking payment because the time factor (Beer, 2006). Otherwise, bank can put the spot news or information on their website to let users to know. Users not need direct go the bank to check any promotions and can up-to-date check the interest rates or currency exchange rate through online. So that, this will save the time of users and will less the time of banker's employees (Srivastara, 2006). According to Singhal and Padhmanabhan (2008), they found that the framework perception is the transfer fund is faster. The users just need to login their account and type in the account number which will receive the fund. After the system checking all the details are correct then the transaction is successful. So that, the benefits of online banking is the distract money and information anytime at anywhere just need to use an online device to process it. Furthermore, online business is also become rapidly increase because there is a significant between convenience. Users through online found any information about that products which they may willing to buy. After they done a lot of survey between all the sellers who provide better products or prices, then will contact to them. The seller just need to give consumer the account number and the buyers also just online transfer fund to them. This action not only can increase the business sales, but users also have convenience and flexibility during the buying and selling markets. 2.4 Transaction related benefits