E BANKING, INTRODUCTION OF THE SERVICE AND ITS IMPACT OF THE FUNCTIONING MODEL OF A BANK:HSBC

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Abstract/ Executive Summary We are passing through the era of Information technology. E-commerce and Online Banking is the new dimension of the IT era in Banking Service Sector. Major players in banking sector have developed Online Banking service. HSBC, the local bank of the glob, is the pioneer of this advancement of information technology. Development Online banking in HSBC has a greater impact on its Customer service and overall performance. HSBC Online Banking is not going ahead in very smooth way, but with different change in protocol and security issues. My present dissertation " Online Banking HSBC" has devoted on the current issues aimed to investigate the implications of Online Banking and draw conclusions, which will support the development of a business plan and the proposal for Online Banking. With this vision, I have undertaken a review of the literatures regarding Online Banking and identified clear areas of consideration in this regards. A clear justification has provided Online Banking and devises a logical business case address to the customer and stakeholders. The strategy of Online Banking of HSBC has base upon economic analysis, customer psychological approach, social & emotional impact, cost effectiveness and various IT hypothesis. In this literature the cost of such a banking has scrutinized in the feature of concerned contribution of the effectiveness, cost saving of e-capabilities, customer service improvement, security measures and CRM & SCM issues. The outcomes from this investigation should provide suitable resource allocation to Online Banking costs and progress the competence of future in the United Kingdom *. It has critically appraised knowledge transformation making use of relevant Change theory. It has imitated on my role in service development, reference to leadership and collaborative working. The decision making of the Online Banking management evaluating the organisational and contextual factors are utilising the strategy for stakeholders, service users those are implemented due to reality of change and need to expand existing service for accounting management strategy in organisations. CHAPTER-1: PROBLEM STATEMENT 1-1 Background Modern and conventional financial products and services directly delivered to customers through electronic, interactive communication channels, is called E- Banking or online Banking. E-banking system enables financial institution customers to access accounts, transact business, or obtain information on financial products and services through Internet access. The Customers get access to e-banking services by using intelligent electronic device, such as a PC, PDA, ATM, kiosk, or Touch Tone telephone. Whereas the risks and controls are similar for the different e-banking access channels, this “E Banking, introduction of the service and its impact of the functioning model of a bank: HSBC as case study” focuses specifically on Internet-based Banking services and it’s impact. Accordingly, this dissertation set in motion with a discussion of the two primary types of presentation 1. 1-2 Rationale for the Research Because of the launch of Internet the Glob has become a smaller one. It has provided enormous impacts on business sectors. Remarkable development in ICT has introduced a global revolution in banking sectors. The global trend in business arena set some challenges that cannot be fulfilled with the help of the traditional banking system. The survey of current banking worldwide reveals the fact that it requires rapid modification and adaptation to keep harmony with the world economy business. It becomes more obvious by observing the increased number of customers in some modern banks while others are losing them. In the context of any country of maximum service users and Business people realized that there is no other alternative for us than to join the current trend of E-Banking *. Otherwise it is almost impossible to bring any sort of fruitful achievement for Financial Globalisation. At present, people are very often scared of doing any banking function with most. of the traditional paper-based system. It, then, becomes cumbersome to perform even a simple financial service such as account checking. Therefore, the existing banking system is embarrassed and seriously driven to upgrade Online Banking. It causes some important losses both for the banking authority and traders `. On the other hand Electronic banking opens the new window of Customer service by solving the limitation of Traditional Banking and kept a positive gaining such as increased foreign trade and foreign investment when 2provides high yield of risk. 1-3 Research Question and Objectives This dissertation is designed to answer the following research question. What factors most influence Electronic Banking implementation and productivity among the Financial Managers? The answer to this question will enable the financial managers to organise the Electronic Banking toward greater motivation and increased productive output. Four research objectives are listed below. • How efficient was the level of the integration of the e –banking? • How important the development of new electronic online e-capabilities? • To what degree the customer service efficiency has improved with the implementation of e-banking? • To what extend the security measures have been addressed? • To what degree the implementations of e-banking system support CRM AND SCM operations? 1-4 Scope and Limitations of The Study There are frequent developed in the IT sector. Although E- banking is not yet implemented al over the world, Basic information e-banking/web sites that just disseminate information on banking products and services offered to bank customers and the general public. Simple transactional e-banking/web sites that allow bank customers to submit applications for different services, make queries on their account balances, and submit instructions to the bank, but do no permit any account transfers; Advanced transactional e-banking/web sites that allow bank customers to electronically transfer funds to/from their accounts pay bills, and conduct other banking transaction online. Current development situations 3 E-banking products and services are getting more and more advanced and increasing in variety by providing information at the early stage to providing transactional activities. The amorphous nature of the open-ended survey questions and the resulting free-form responses introduces opportunity for misinterpretation of the answers and creates the possibility of overly broad grouping of the responses into factor categories. The data from the surveys is particularly subject to these problems, Care has taken in analysis of surveys to keep as much of the empirical data as possible for review by anyone interested in replicating this study. The results were aggregated into standard factors as reported in the Findings section ¬. Time was also a limitation for this study. A greater response rate from the supervisory survey would have been desirable, as would a more systematic random sampling plan for the work force surveys. However, from the consistent nature of the results, this researcher doubts that a more refined sampling plan or more comprehensive research design would lead to significantly different conclusions. CHAPTER – 2: RELEVANT LITERATURE REVIEW 2-1 Overview of the Topic This literature review includes writings, research and scholarly opinion concerning the description, measurement and evaluation of Financial Managers, “ E Banking, introduction of the service and its impact of the functioning model of a bank: HSBC as case study”. It provides the background needed for evaluation of what E-banking factors most significantly influence organisational success. The views and opinions of contemporary Financial & Banking writers concerning leadership, motivation, organizational strategies and productivity are discussed. Together, the historical theories and modern approaches form a solid basis upon which to design a research study to further refine the causal relationships affecting workplace productivity ^. 2-2 Scope and Limitations of this Review The writings included in this review reflect authors and researchers interested in the description, measurement and evaluation of Banking Trend and its resultant effects in the organization. The report focuses on studies of the dimensions of E-banking leadership, customers behaviors, how leadership is measured and attributed by others, and the effect of E-banking upon financial organizational effectiveness and productivity. Special emphasis is placed upon the effect of managerial behaviors on productivity and quality initiatives in the organization. Both historic and contemporary writings are reviewed 4. With massive quantities of literature concerning leadership available, this review is limited to the most substantiated theories and accepted principles. It is but a sampling of the mass of E- banking literature. Likewise, the wide range of popular writings related to organizational success, management and productivity necessitated limiting this review to mostly mainstream writings of accepted authors. 2-3 Organization of the Literature Review The discussion portion of this review is organized into four sections. The first section describes historical and contemporary studies of e-banking and the attribution of leadership to persons in management and supervisory positions. It centers on how e-banking actions are classified and how the higher-level e-banking attribute traits with the charge. The second section reviews the thoughts of more contemporary writers on effective E-banking and its impact within organizations. The writers selected represent a cross-section of management gurus, past and present organizational leaders and other mainstream management thinkers. Included in this section is a presentation of the prescriptions of popular organizational writers concerning process actions leading to overall success +. The Third section reviews how E-banking actions have been evaluated and assessed in the past and how those factors are related to organizational performance. It also looks at the role of leaders in attaining productive results within their organizations. Prescriptions for effective E-banking are presented, as are methods used to evaluate the E-banking ’s overall influence on the organization. A connection is made to leader actions and organizational success 5. The Fourth section summarises and ties together the philosophies, concepts, evidence, theories and practices discussed in this review. This section identifies how the existing theories account for causal relationships between Traditional Banking and E-Banking, work place environments, overall productivity and organizational success `. 2-4 Discussion Electronic Banking (e-banking) is an extremely fast growing segment in the banking sector throughout the world. It is an example where information technology is used as an enabler and a facilitator of business activities both inside and amongst the various types of organizations (Applegate et al., 1996). It is estimated by Forrester Research that e-banking transactions will grow in value to $590 billion by 2007. It is with the concurrent reform of banking regulations and technological advances occurring across the world, multiple consumers and businesses are currently able to carry out on-line activities without visiting a store, and companies can carry out transactions and serve clients without the necessity to set up infrastructure in a commercial district. This radical change is a direct consequence of the progress of information technology, particularly through mediums like Electronic Data Interchange, the Internet and the internal network of the organization. Nevertheless, in the majority of the business areas the execution of ecommerce is still recent development; it has the potential to radically change economic activities and the social milieu (Kalakota and Winston, 1996), causing a significant strategic inferences for organizations, especially in the banking sector. This is because, the main business settlement agents and banks are inescapably faced with basic managerial and technological tests created by the advent of e-banking activities #. Areas influenced by E - Banking Solutions Banks, in particular, should reflect on how they can optimally maintain clients who are transacting business by electronic means, as well as to develop themselves in order to discover new opportunities to endorse their services and product portfolio. Consequently, the banking companies in most of the industrial and the developing economies are under overwhelming pressure to provide electronic banking 6services through the Internet. Although e-banking is a comparatively new business procedure and its strategic implications are tricky to predict since the Information Technology revolution is still on-going. However, by examining the current banking scenario, three major interconnected aspects emerge, which previously were a subject to change `: The financial market is now truly globalized with a tremendous rise in the amount of competitors in the banking sector. Banks and financial institutions from across the globe are establishing a presence in the virtual world and may be easily reached on-line for a wide variety of business dealings. • The rise in the number of banks and financial institutions in the global marketplace has lead to an increase in the intensity of rivalry in the sector. The structure of the interest rate has shown more changes after the introduction of e-banking. Most importantly, clients can benefit from the difference in interest rates between two countries. • Banks have started to innovate and create novel products and services, some of which are now being offered are not formerly associated with the banking industry, some of these services include: interactive shopping, discounted insurance etc. An additional impact is that banks are now effortlessly accessible to the customers through multiple mediums like the Internet, mobile phones and the other electronic devices. Development of E - Capability All these transformations imply that the financial businesses must develop new organizational skills concerning e-commerce activities in order to retain themselves in this competitive market. Debatably, at the end of the development of the e-banking solutions, most banks will offer related products and the rivalry will be based predominantly on the margins. When examining the banking sector, it is apparent that the European banks (especially in the UK) are approaching the e - banking procedure with a different outlook of the market. In the United Kingdom three groups can be distinguished (McGee and Thomas, 1986) based on their approach to electronic banking. The first group consists of banks 7 that are considering the Internet as an analogous medium to the old system, which implies that they offer the same products to the similar clients on the Internet as they do in their brick and mortar branches. The second group consists of new banks that maintain a wholly virtual presence. These banks established upon the conventional retail banking institutions and as they maintain a purely virtual presence, they can offer competitively valued products. The third model is based on initiatives like HSBC's British Interactive Broadcasting initiative that concentrates on digital TV shopping. These three kinds of strategies emphasize three different types of suppositions on the main factors that will form the future of electronic banking in particular and the banking industry in general. The internet based e-banking revolution provides a unique opportunity to study the expansion of a new planned electronic capability (E-capability). The beginning of e - banking is expected to bring spectacular changes to the allied sectors and industries, which will drive the banks and financial institutions to assemble new types of electronic capabilities. Undeniably, it is not the marketplace, alone which created the technological revolution. Before the banks started to spend in e-banking activities, the marketplace had not expressed any demand for them. It was the technical potential that pushed the major banks and financial institutions to begin preparing themselves for an upcoming change. There was no obvious market leader to which the banking industry could relate 8. Accordingly, they developed their own e-banking capability. This unparalleled occurrence raises two questions, which are principally important: 1. Why did banks and the financial industry choose to center their efforts on e-banking? And what were the aspects, which shaped their decisions about where to start in the e-commerce era? 2. How was the innovative e-capability developed? HSBC E - Banking Initiative In spite of the new media interest in e-banking activities, there are very few studies which have purposely sought to inspect the new abilities required in the experience of electronic banking. Therefore, the study of the e-banking service as a whole with reference to one particular bank aims to shine some light on the course of generating a new capability in dealing with planned e-banking issues. It studies the manner in which banks and HSBC in particular conducts its on-line marketing strategies and aided on-line dealings in the e-banking scenario, and therefore it aims to disclose contemporary practices and their underlying principles so that these can be benchmarked by other institutions =. The HSBC administration was successful in identifying the challenge of the new era by developing the first remote banking service in the United Kingdom. The success of First Direct banking initiative provided the bank with significant advantages in developing its electronic capability. Although in the present environment in the United Kingdom, which is highly competitive, the challenge for HSBS to preserve its predominance in the virtual marketplace is increasing. Thus, the bank now aims at improving the apparatus that yields the electronic capability. Our study follows the path of Leonard- Barton (1992) by suggesting four types of apparatus that shape the development of the e-capability: infrastructure, info structure, info culture (adapted from Bressand and Distler, 1995; Pan and Scarbrough, 1999). These aspects are reviewed as follows: • Infrastructure: the hardware and the software platform which enables the physical/communicational between system members, including clients. • Info structure: the set of formal rules which manage the barter between the various players in the network like clients, employees etc, which basically provides a set of cognitive resources 9 for the users of the network. • Info culture: the stock of background information which the various take for granted and which is embedded in the social relations surrounding work group processes. This cultural belief defines constraints on knowledge- and information sharing. • Info integration: the dynamic capability (Teece et al., 1997) that enables the transformation of the organization and consequently provides the means for integrating the new capability to the firm. The initial findings of the case study suggest that e-commerce has already created enormous interest in the world of information technology and across many industries. More and more firms are undertaking e-commerce projects to establish and cultivate business relationships, perform business transactions, distribute business knowledge, and implement competitive strategies (Applegate et al., 1996). Firms dealing with transactions and serving their clients electronically have in turn presented unparalleled challenges to banks (Crede, 1999), and this has made business reassess their traditional methods of doing business. In other words, like all businesses, banks must develop new electronic on-line e – capabilities *. Critical Success Factors in e Banking Various factors have been defined as critical in more than a few ways depending on the reason for which they were used. In this paper, Rockart's (1979) explanation will be used. Rockart defines critical factors for success as "the limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization". The critical factors for success approach stands for a conventional top-down method for corporate strategic preparation and while it recognizes few triumph factors, it can emphasize the vital information necessities of the top management (Rockart, 1979). In addition, if the critical success factors are identified, the management can take steps to further develop its potential for accomplishment (Chen, 1999). This method has been extensively used in many businesses and technology related circumstances for over three decades and its use is still widespread 10. One of the issues that this paper aims to analyze involves critical factors of the success theory which are used to identify some sectors that are significant for the success of the e-banking initiative. Some of the main critical success factors of the Internet based services (with precise allusion to e-banking) have been recognized in literature. Form all of the internal aspects the most vital is efficient customer service. Legislation has augmented customers' rights and technology and increasing competition, which in turn have expanded their options for products and service providers. The increasing amounts of information on the Internet and changes in social behavior have reduced the customer loyalty significantly. These alterations will result in increased amounts of users with sophisticated needs (Jayewardene and Foley, 2000). This supposition was also supported by (Orr, 2004). With reference to the above mentioned, succeed in the e-banking field can be reached if companies alter their internal fundamentals as these will result in a higher level of efficiency. The present business designs and managerial models are inadequate to meet the challenges of doing business in the e-commerce era (El Sawy et al., 1999). Therefore, one of the more important issues is re-engineering of the business process as it promotes technological changes (El Sawy et al., 1999). Furthermore Security, which includes the protection of clients' personal data and secure transactions to prevent frauds, is vital for the development of any sort of online trade, including e-banking. This issue has been cited as very critical by Enos, (2001), Turban et al., (2000) and Regan and Macaluso (2000). Security in this context includes safe transactions as well as secure front end and back end systems. Enos (2001) identified several success factors for online banking including: enhancing trust and safety, simplifying and integrating essential services such as banking; insurance, equity and payments, personalization abilities so as to provide each client with distinctive offers. Enos also stated that, in the rigorous battle over customers, providing an exceptional experience is the persuasive element that will maintain their customers. Importance of trust in the accomplishment of e-banking was also highlighted by Yoursfzai et al (2003 ) *. The development of incorporated and personalized financial services is leading to an increased rivalry in the financial sector. Clients do not want to link from website to website to keep track of their money. Web based services have to be more expedient, easy to use and cheaper than the alternative so as to win the faithfulness of consumers (Cronin, 1998). This type of real-time integration of disseminated assets is one of the greatest possible rewards of e-banking. The interactive nature of e-banking creates an opening for gaining a deeper perception of their clients. The information gathered about the client during their with the bank can be analyzed using data mining techniques and this marketing decision support capability will ultimately determine the success of the bank's electronic channel 11. Profitability of E Banking (Activity Based Costing) Activity Based Costing (ABC) is a new measurement of cost analysis that was first offered in a formal way by Robert Kaplan, Robin Cooper and Thomas Johnson in Harvard in 1987 (Agbejule, 2000). It has since been developed in many institutions, primarily in the manufacturing industries. ABC costing addresses the shortcomings in the Traditional Cost Accounting Systems. ABC costing is a cost measurement scheme that determines the price of each product, service or client by examining each activity required to create a product or service for the client. For example, a product that has a short dispensation cycle may use an inconsistent amount of inventory or time on the receiving dock. When indirect costs are billed to products based on the erroneous cost driver, the products will emerge as less or more costly than they really are. ABC is used to recognize all actions, direct and indirect, and thus assigns the costs linked with these activities more accurately (Seward, 1999). As defined in banking, Activity-Based Costing (ABC costing) is a system for the calculation of the cost of products and services, while the cost components arise from the activities related to the development, administration, and sale of the product (Luštšik, 2003). Cost Benefits of e - Banking E-Banking provides cost-savings for banks, the other financial industries and their clients. Normally, online bank payments are 12.5 times cheaper than the conventional dealings made in the branch network. The reduction in transaction expenses is slower than predicted. The cause for this is that the prevalent channels cannot be blocked at the same pace as the introduction of new distribution channels and considerable finances invested in their growth and preservation. As the number of dealings in branches has been progressively declining, the unit operating expense connected to branch transactions will accordingly rise; the branches will become more centered on consulting and problem solving than on regular transaction processing 12. The early investments in e-banking and safety measures were elevated, also IT and product improvement required large investments at the beginning stage. Thus, it can be concluded that the e-banking transactions will almost certainly become more cost-efficient for banks and financial industries in a few years' time. The detailed data given by the ABC costing method can help banks and financial industries to control and decrease some cost centers. Understanding of the IT cost centers of e-banking distribution channels provides an overview of the fixed and floating components of IT operating cost and therefore, can generate the preconditions for cost savings. Security Related Issues in the e-Banking Context E-banking, which is defined as a web-based electronic banking, is a high-risk area with a potential for substantial economic loss, the high risk makes security a prime concern. In 2001, an estimated total of $17 billion was spent on information-security products and services in the United States alone (IDC, 2003). The diversity of e-banking users and the absence of any special training prior to the actual utilization of the service eliminate potential costs for the bank as well as any unnecessary time loss for both parties. The current web-based variant of electronic banking is the latest of several generations of systems: ATMs 13 were the first well-known machines to provide electronic access to customers of retail banks. Next came phone banking where users call their bank's computer system on their ordinary phone and use the phone keypad to perform banking transactions. In time, PC banking superseded phone banking and allowed users to interact with their bank by means of a computer with a dial-up modem connection to the phone network. Phone and PC banking entailed maintenance costs associated with keeping up to date with diverse modems and with avoiding prohibitively complex installation procedures. The e-banking service uses the web browser for the user interface and the Internet for the data transfer and download of software and so has a potential for reducing maintenance costs. For users, e-banking provides current information, 24-hours-a-day access to banking services - in addition to the familiar browser interface. The primary services provided by e-banks are transferring money among one's own accounts, paying bills, checking account balances, loans, brokering, share trading, service bundling and various other financial services which are being added to these primary services (e.g., Dewan & Seidmann, 2001). Since the late 1990s e-banking has developed from virtual insignificance to tens of millions of users worldwide and due to their high penetration, e-banking systems must accommodate a wide range of users. A Tradeoff between Usability and Security Although security has become an aspect of virtually any system, users habitually interact with access-control mechanisms for, among other things, personal computers, email accounts and e-commerce or e-government sites, the security facilities of such systems are often not entirely reliable. Contributions to a better understanding of usable security include the set of characteristics proposed by Whitten and Tygar (1999) of the usability problem for security, including the weakest link property, the unmotivated user property, and the barn door property. With time and advanced modification in technology, property that once was a secret such as a private key has been compromised, then closing the barn door 14. Several studies including Schultz et al. (2001) suggest that security measures that are inconvenient for users may weaken security, for example because of lack of user acceptance or outright resistance. Dourish and Redmiles (2002) propose a distinction between theoretical and effective security. Theoretical security concerns the level of security that is technically possible; for example, digital signatures provide strong authentication under the assumption that various computational problems related to prime numbers will not be solved within a certain time frame. Effective security concerns the level of security achieved in practice and is typically lower than theoretical security, due to weaknesses with respect to, among other things, algorithm implementations, protocol design - and ease of use. Further, a concept of perceived security may be useful to capture the user's subjective perception of the security risks involved in e-banking. Several studies including Jih et al. (2005) indicate that user adoption of e-banking is affected by perceived security. This supports a view of security being crucial to the overall usability of e-banking systems. Whitten and Tygar (1999) suggest the following definition, against which we measure the e-banking systems evaluated in this study: Security-related software is usable if the people who are expected to use it – 1) are reliably made aware of the security tasks they need to perform; 2) are able to figure out how to successfully perform those tasks; 3) don't make dangerous errors; 4) are sufficiently comfortable with the interface to continue using it. This definition addresses the effectiveness (issues 1 and 3), efficiency (issues 1 through 3), and satisfaction (issue 4) of security-related software and so accords with ISO 9241-11 15. There are two ways in which it seems appropriate to re-interpret Whitten and Tygar's notion of a security task for use with our evaluation. Firstly, many security tasks in e-banking are tightly integrated into proper e-banking tasks, e.g. typing a password to confirm a transaction, rather than independent tasks such as in Whitten and Tygar's evaluation of PGP, a tool for secure email. Secondly, it has been stressed that some security tasks in e-banking may be difficult for the system designers to predict in advance, which seems to contradict an underlying assumption of issue 1. Thus, security tasks may be part of other tasks, and may not be predictable in advance. CRM (Customer Relationship Management) and the Supply Chain CRM is an idea containing a huge number of tools that help corporations by providing clients with a service through various processes. One characterisation of CRM is: "iterative processes designed to turn customer data into customer relationships through active use of, and learning from, the information collected" (Brohman et al, 2003). Usually, CRM entails actions which aim to acquire new clientele and then build a relationship with them as well as promoting actions to maintain and deepen the connection with their already existing customers (Moorman et al, 2001). The actual indicator of what the CRM process actually does is measured with three indicators: augmented profit, enhanced customer satisfaction and improved customer loyalty. Due to the disparity between the indicators and the exact objectives of the CRM scheme, three different interpretations of CRM can be recognized (Brohman et al, 2003): • Profit-centric orientation - to focus on collecting and analyzing historic transaction data and to identify patterns of the most profitable customer types. • Customer understanding orientation - to focus on understanding the needs and preferences of each individual customer in order to offer them better service. • Customer relationship orientation - to focus on maintaining individualized customer relationships in order to enhance customer loyalty. In practice, when speaking about CRM, one or many software systems aiming to assist in performing the above mentioned tasks are meant. Furthermore, three different types of software can be identified (Moorman et al 2001): • Operational CRM - Solutions for Sales Force Automation, Marketing Automation and Call Centers; basically management of customer information and data. • Analytical CRM - Solutions 16 to analyze data retrieved from the operational part of CRM. • Collaborative CRM - Solutions to provide a direct interaction between the company and customers such as e-banking. Analytical CRM focuses on the analysis and reporting of all customer data which is being inserted into the other two parts of the total CRM system. Its main aim is to make the marketing efforts for each customers as individual as possible in order to raise the possibility of the marketing effort being successful. Additionally, analytical CRM can be used for (Moorman et al, 2001): • Analysis/forecasting the behavior of existing and potential customers • Segmentation of existing customers • Analysis of customer profitability • Development of marketing strategies and activities • Analysis of the success of the marketing activities Analytical CRM is in many cases dependent on data mining. Through data mining, applications, which manage and analyze the customer's behavior all through the customer lifecycle, can be designed. Data mining methods help companies acquiring new customers by analyzing the profile of their current profitable customers, profiling is used for cross selling purposes and by profiling the customers who have left, precautious measures can be developed in order to retain customers 17. CHAPTER-3: METHODOLOGY 3-1 Research Methodology The main objective of this chapter is to identify how the chosen research methodology will match the main objective of the dissertation question and how it will be achieved. Essentially there are two types of research methodology; they are qualitative and quantitative research. While the quantitative research is carried out through obtaining primary data such as questionnaire, qualitative research is a research that is conducted through interviews and observations. Therefore, the method enables a researcher to explore the details of individual perceptions over phenomena. 3-2 Overview: The topics of our disertation are online banking in the U.S.A. We will conduct qualatative research through interview of HSBC bank's executive. This method is capable to explore authentic information of HSBC bank. 3-3 Research Approach The research approach that develops the methodology explained below is based on descriptive # research theory and inductive reasoning. This is important to develop the foundation by which the research will be designed, conducted and consequently analysed. Firstly, it is important to establish the research approach in order to create a significant qualitative methodology. The research approach undertakes a specific design that is "the overall strategy chosen to obtain the information required answering the research question" (Ghauri and GrØnhaug p 47, 2002). The research approach will review the types of research design and data collection methods. The research approach is built on logical relations and not just beliefs. Descriptive research is used when the research question is understood (Ghauri and GrØnhaug 2002). In the research approach, the data measurements are dependent on the obtainment of required information and the quality of the information. The outcome of the research, therefore, is dependent on the measurement procedures used in the collection of the data, and this in turn is dependent on the types of data collection (Ghauri and GrØnhaug p 47 2002). This is an important concept of qualitative research, where the description is either inductive or deductive. Inductive research begins with a question and seeks to describe it, and deductive research begins with the problem by working backwards to the answers. Therefore, this research uses the inductive approach to build the theory from the data gathered to explore possible conclusions towards E-banking - Modifications in SCM 18 and Security issues such as Phising & Pharming. 3-4 Primary research - Research Strategy The selected research methodology is a descriptive interview with one manager at HSBC Bank in London. To the authors believe the interviewer will obtain all the required information necessary to construct an entire "picture" of the impact that the introduction of e-banking service. This will be a structured interview that focuses on E-banking - Modifications in Supply Chain Management of the Bank 19 and Security issues such as Phising & Pharming. Secondary research is to review published materials such as: articles previous researched etc. that would be analysed to gain a broader perspective of the issue. This brings the question of research strategy. Combining the approach as an inductive, qualitative description with a well-established research strategy will allow for a better data analysis. In relation to research strategy, the field of strategic management is built on several different schools, including perspective and emergent approaches !. The rational planning school defines the objective in advance by determining the current strategic position, and then using a prescriptive approach that exemplifies the strategic analysis, development and implementation (Lynch 2000). This is a strong foundation of the research as the perspective approach is a systematic method that follows in sequence (Lynch 2000). The emergent strategy, on the other hand, would form the strategy from trial and error, experimentation and discussion (Lynch 2000). This is used as a cyclic approach to a series of rationales instead of being sequential, and is most often seen in organisations where environment and strategy are constantly analysed (Lynch 2000). The strategy in this research is the rational perspective, where the data analysis and the final recommendations follow the sequential gathering of information. 3-5 Reliability, Validity Of Interviews Firstly, why an interview with an employee of the HSBC bank has been given a priority among other means of data collection? The main reason an interview with front line managers has been chosen among other probable methods is the author believe, that a discussion which intends to take place with one of the representatives of the organisation, in this case HSBC plc, would be more fruitful than any other possible means since these employees would be at the top awareness of relative to the research issues such as: what are the internal difficulties that the organisation had to overcome, and how do they plan to face future complications. 3-6 The Interviews: Saunders et al (2003) define an interview as "a purposeful discussion between two or more people," and can collect data, which is both reliable and valid. Saunders et al (2003) describe a structured interview as using questionnaires based on predetermined and standard or identical sets of questions; a semi-structured interview as having a list of themes and questions to be covered; and an unstructured interview as informal but used to explore in depth a general area of interest. In this research, a semi-structured interview is used. The semi-structured interview is chosen because it allows for specific data to be discovered based on the manager's perceptions. The semi-structured interview is useful in situations where the respondents' range of replies may be estimated and there is a need to clarify details, opinions or ideas. The interview will developed based on the following decisive criteria: (1) What data should be wants to elicit from the interviewees; (2) Who are going to be interviewed and why; (3) How to explain the aims of the interview; (4) Where the interview will take place; (5) Whether to pilot the interview; (6) How to analyse and follow up 20 the interview. In an interview, questions should be clear and non-threatening; the interviewee should speak more than the interviewer. The interview avoids complex, double-barrelled, dichotomous and leading questions (Cohen and Manion 1994). According to Zikmund (2000), some ethical implications could arise when collecting data during interviews. The interview should not intrude into the sales staff's personal life and assure that the analysis maintains confidentiality and anonymity if required. HSBC managers were selected as participants because preliminary meetings with HSBC representatives established that organisation stakeholders 21 would receive a beneficial description of internal difficulties and accomplishments that have arisen because (or in spite of) the management strategies being utilised in the subjects: E-banking; Supply Chain Management of the Bank; Security. This will lead to recommendations and possible modelling of planning for overcoming future complications. The participants selected are two managers at HSBC Bank of London. One manager interview has been authorised, and the second interview is pending authorisation for middle to late December. The interview data will be collected through scheduled discussions with the managers selected. Managers were selected based on their schedule and willingness to participate. The main issues, which are going to be raised during the interviews, are the following: • Supply Chain Management (SCM). The author takes into account the discussion of SCM since basically the change or employment of e-banking in multinational banks like HSBC is the evidence of SCM implementation. In this discussion, the author take several sources including world trade magazine, CPA Journal, VISA, official website etc as a base to a construction of a relevant questions which are to be addressed to the interviewer. • Information of e-banking implementation in HSBC. In this discussion, the author will take primary resources from the company official website !! and one source taken from one of HSBC's vendor of security system, Vasco. Vasco was awarded a contract from HSBC to provide authentication system for the bank's e-banking. Vasco is well-known producer of authentication products for the financial world, e-business and e-commerce. Consequently, appropriate enquiries will be forwarded to the interviewer to gain an internal perspective of how, to the best knowledge of the interviewer, the company implement the systems and what were the short term and long term changes to which both the employees and the customers of the bank had to adapt. • Security Issues of E-Banking. In this section, the author will take in consideration all the arguments from software developer such as Microsoft, from Government Legislations sources and General Public opinion in other words, all potential users of the service, that have great concerns over the online crime. All the material will be incorporated in order to construct a cohesive argument which would be forwarded to the interviewer. 3-7 Data Analysis During the course of an interview all the data will be collected and before any actual analysis will take place the data will be pre-approved by the interviewer and a senior manager of the same HSBC Branch. Once the approved been gained, all the irrelevant data, which has been collected during the course of the interviews, will be eliminated in order not to create any bias 22. For both the historical document research and the interview, the data analysis turns to ways in which qualitative information can be analysed. This analysis methodology, termed "laddering" (Reynolds and Gutman, 1984), for uncovering means-end hierarchies defined by these key elements and connective relationships. Laddering involves a tailored interviewing format using primarily a series of directed probes with the express goal of determining sets of linkages between the key perceptions across the range of attributes (A), values (V) and consequences (C). The theory of linkages is a foundation for the interview development. Therefore, the categorisation of the interviews follows as previously noted, where each has a phenomenology approach of describing situation and reactions and are categorised by attribute, consequence, and value. Attributes are the description of the environment and occurrences that will be explored using the inductive approach with a goal for a holistic explanation of the changes in management strategy. Values are the empirical evidence of why these changes occurred, such as what organisational goals created the changes in management strategy as related to the subject matter. Consequences are the results. This gives a description of what happened after the environment and occurrences changed because the organisation 23 goals and values changed. By linking these three categories together, this research can give a holistic view of E-banking - Modifications in SCM (Supply Chain Management of the Bank) and Security issues such as Phising & Pharming. 3-8 Contingency plan In the event that the collected data from the interview would not be sufficient enough for analysis and for of a conclusion (or for any other unforeseeable reason). The research method would be changed and as previously mentioned a qualitative method of a data collection for the analysis will take place. A qualitative research methodology, especially non-participant observation methods such as questionnaire, published materials etc. will be adapted. The main reason for that option is the fact that this method will allow the author to carry out the research in shorter time. In addition, the reason of employing observation in this research is because it enables researchers with an understanding about the perceptions about things or people we observe. In order to prevent bias, this king of a research would integrate various acceptable resources mainly such as questionnaire and in addition magazines, journals and books that are written by well-known authors and researchers. 3-9 Primary Research In this section secondary source published materials such as Magazines, books and previously executed researches will be used to gain perspective at the internal and external difficulties that HSBC had to overcome with the introduction of the e-banking service. And trying to answer a question what were the sort-term and the long-term advantages and disadvantages of the choices they made when incorporating e-banking service 24. 3-10 Secondary Research A questionnaire will be constructed and forwarded to the customers of HSBC. This will give a broader insight as to a reaction from the general public; the sample would include younger layer of society, generation between the ages of 18-24. The objective of this questionnaire is to gain an insight to customer reaction and participation in the online banking activities, which would determine their level of trust, and in the security provision of their Bank. The main issued that would be raised are: v Modification in security issues, necessary or not? v The level of trust in the banking security systems. v Future trends and expectations. v Advantages and disadvantages of the services provided. 3-11 Data Analysis Once the data has been collected once more all the irrelevant information and data will be excluded not to encounter a bias. The remaining data will be examined, compared and contrasted with previous research, in order to determine; on the scale of time how customer perspective concerning e-banking activities shapes and what are the future trends of the correlation between the society !!! and their bank (HSBC bank). 4 : Findings 4-1 Rise in Business: HSBC reports 500% rise in online business transactions HSBC is reporting a dramatic surge in the use of Web banking services by its UK business customers, with online transactions rising 500% to 10.6 million over the past year. HSBC says UK businesses are cashing in on the time savings and efficiency of broadband technology to use online services, which is turning the Web from a niche service into a standard banking platform 25 (Tom Young, 2006). Citing research from the Small Business Research Trust, HSBC says almost two-thirds of Internet-connected firms now have a broadband connection. The value of payments made by HSBC's 270,000 Internet registered UK small business clients grew by 290% to nearly £10 billion from 2003 to 2004. The bank is currently processing more than one million Internet payments a month through its online service. Head of business banking at HSBC Bank, says: "UK businesses increasingly find online banking a fast and convenient way to carry out transactions and keep track of their finances, freeing up time to spend running the company. Last year, we processed over 10 million online payments for our business customers, three times the number in 2003." He adds: "Businesses are waking up to the power of the net and seizing the opportunity to free up time and run their business on their terms. We're giving firms the tools to keep a tighter grip on their finances and to bank at their convenience."(Simon Wainwright, 2005) Analysing about two facts and message, we get positive respond to our first Research question. The level of integration was really very high and efficient. Effectiveness of E-banking has grown at a degree of reliability where customers are growing day to day. It has since been developed in most of the financial institutions that they must dive seriously Electronic Banking as an extremely fast growing segment in the banking sector throughout the world. 4-2 Turn Off Paper-Based Statements The move is driven by a combination of meeting customer needs and Westpac’s commitment to drastically reducing its environmental impact. It could reduce the organisation’s consumption of paper by as much as eight million sheets per year, should customer take-up reach maximum levels (Ann Sherry et al 2006). Westpac, an organisation of this size can make a huge difference to our environment by making decisions like offering customers the ability to turn off their paper-based statements, said Westpac CEO Ann Sherry. Westpac Online Banking customers will be able to select the option to suppress their statements online, and use Online Banking as their primary source of information about their accounts. If, at a later date, any customers decide they do need a paper statement, a visit to a branch or with a call centre will enable their statements to be switched back on. Westpac has been rolling out a series of other initiatives to promote its drive to reduce waste. For example, by the end of 2005 all staff at corporate sites 26 will each have individual recycling facilities at their desks. The remaining branches will be upgraded in 2006. Buildings are being converted to low energy consumption facilities, and double sided printers are set to be installed as standard. Chief Executive of the New Zealand Business Council for Sustainable Development, Peter Neilson has welcomed Westpac's initiative as demonstrating how different organisations can tackle the issue of sustainable production and consumption. "This is a simple solution which shows how organisations such as banks can improve their service to customers and reduce their environmental impact at the same time, he said. It’s a win-win solution, which demonstrates how sustainable development is about doing more with less. Sustainable Development is just smart business, good for customers, business and the environment. More than 450,000 customers are registered to use Westpac's Online Banking service, and it consistently rates as the most used Online Banking service in New Zealand. In addition it recently recorded a 97% positive customer satisfaction rating in an independent ACNielsen survey, the highest result of the five main banks. This scenario upgrades us the importance of developing electronic banking. In our second research question we raised this issue. From the Nielsen survey it has show that the electronic banking has gained almost 97% customer satisfaction. At the same time it also played big role in saving our environment. The great savings of paper has a positive impact to saving the forest from the aggression paper mills. In relation to traditional banking it is one of the reasons to emphasis the development of electronic banking. 4-3 Increase In Number Of Online Customers It has mentioned that the number of online banking 27 customers in the U.S. grew to nearly 40 million during the last quarter of 2005, up 27% from the previous year, according to Reston, Va.-based comScore Networks Inc. And during the same period, the use of online payment services at banks grew 36%, comScore said in a statement. “Consumers continue to migrate to online banking, with the nation’s largest banks attracting more than 8.5 million new online banking customers in 2005,” said Serge Matta, vice president for comScore Financial Services Solutions. “At the same time, it is clear that adoption rates are slowing. In Q4 2005, the total number of online banking customers grew by 3.1% over the previous quarter, representing the lowest sequential quarterly growth in three years” (Linda Rosencrance et al, 2006) 27. In response, Matta said, banks are trying to differentiate themselves to stimulate new growth. One such effort involves implementing the high-yield savings marketplace so traditional banks can compete with online companies such as ING Direct or HSBC.com Inc., he said. Bank bill payment, which consists of a payment through a retail bank at which an account is held, continues to grow rapidly and currently accounts for nearly one quarter of all online bill payments, according to the study. Bank of America Corp. leads the industry in bill payment, with 5.1 million bank bill payment customers, and it attracted more than half of that total in the fourth quarter of 2005. And 34% of Bank of America's online banking customers use the institution’s bill payment service, which makes Bank of American second only to Citibank, where 37% of online banking customers do so, comScore said. Asked why they have enrolled in online banking services, 33% of new online banking consumers said it’s because of the free banking products that are offered as an incentive to join, while 23% said that they feel more secure about online banking than they did previously, according to the study. Investigating this evidence we can find a greater respond to our third research question. The degree of customer service has developed in a stage, which is absolutely impossible for the traditional banking. Electronic Banking is the bank at our desktop fingerprint. Electronic Banking not only developed the customer service but also opens a wider window to the innovation of new Financial Instruments. 4-4 Vulnerability in HSBC's online banking security: It has discovered vulnerability in HSBC's online banking security 28. A group of researchers at Cardiff University claim to have discovered a defect in HSBC's online banking system which could leave over three million customers vulnerable to attacks. Customers using the Internet service may have been vulnerable to attack for at least two years. The researchers found that anyone exploiting the flaw could succeed in cracking an account within nine attempts (Tom Young et al, 2006). The Cardiff researchers are planning to publish full details in security journals this year, but decided to go public now. 'There are serious issues here, said Professor Antonia Jones, the scientist leading the research team. 'Banks are in the business of safeguarding your money, and if they tell you that it's safe then you assume that's the case. But as long as this flaw exists, customers are at risk.' The scam requires installing keylogging devices on PC’s, which record keystrokes. These can be in the form of physical devices, as in the attempted 29 Sumitomo Mitsui hack, or viruses which sit on the hard drive. A spokesman for HSBC said: “ The supposed flaw uncovered is not one we have seen criminals use. It is an extremely sophisticated attack that would require a particular and time-consuming focus on one individual victim.” It is therefore not likely to be a profitable way for criminals to behave. 'Online fraud via HSBC's Internet banking system is substantially lower than the market average and we are satisfied our customers are adequately protected.' HSBC has issued devices for two-factor authentication ­ a more secure form of online authentication - to online business customers, but does not yet plan to do so with individual consumers. We have raised the fourth research question on security issues. Running with the risk Hacking & Virus are the electronic banking is developing towards upper stage of two-factor authentication where few additional devices has added. Moreover Electronic Banks are leading ongoing researches on security. 4-5 Top Risk Issue: Viral Danger UK high street bank HSBC has revealed that it is constantly bombarded by virus attacks with the daily rogue e-mail count often running into the tens of thousands. Research by the NHTCU 30 claims UK businesses receive an average of seven viruses a day but, speaking at the NHTCU's eCrime conference in London, HSBC COO Alan Jebson said that the bank often received tens of thousands times that number. Jebson says on its worst day last year, the bank recorded 100,000 virus attacks (Jebson et al 2006). Despite this, HSBC claims phishing scams are a greater threat and are damaging customer confidence in online banking. Jebson says the bank is co-operating with other financial firms such as Citibank to share information on security, and is also considering introducing three factor authentication to its online banking customers, which would include biometric verification. Latest research by the NHTCU estimates that fraud losses from hi-tech crime on UK-based companies with more than 1000 employees hit £2.45 billion last year. 200 companies surveyed, 97% of respondents had experienced virus attacks, while 90% suffered from unauthorised access to company systems and 89% had data or information stolen. A recent survey conducted among 300 US businesses by Icsa Labs found virus encounters increased by nearly 50% from 2003, with a rate of 392 encounters per 1000 machines per month. The amount of actual infections also increased, represented by a rate of 116 infections per month. With all this Risk, Customer Relationship Management (CRM) and Supply Chain Management (SCM) of E-banking maintained with high profile. CRM upgrades operational and viral information for the Customers point to point for any change or possibility of risk. SCM has been developed in such a stage where the resource gathering is only the mater of time. We have drawn our attention on the issue at our research question five. 4-6 Decision We have conducted survey on 100 UK HSBC Bank Manager as per questioner provided in Appendix –2. Responds have summarised in Table –1 and Data processing with Excel/ Stata, we get responds to our five research questions presented in Table-2. Research questions we raised on Effectiveness, E-Capabilities, Degree of Customer Services, Security Measures and CRM & SCM issues has gained degree of measures: 61, 35, 17, 12 & 5 respectively @. 5. Conclusion 5-1 Conclusion The insights to be gained are empirical-behaviours in usage; observational-what strategies work; functional-how strategies work; recommendations based on benefits and limitations. These principles can be used throughout the organisation lifecycle in a continuous and flexible manner with the hope to maintain sustainable, accurate and proactive accounting strategies. The considerations of the methods, benefits and limitations will remove the assumptions in techniques that can lead to inaccurate or inefficient methods. Once the data has been collected by the above procedures, it will be assembled in the final research project to formulate a conclusive recommendation for accounting management strategy 31. This research proposes to create an all-inclusive recommendation towards management strategic methods based on the participants' responses, suggestions and concerns as well as a complete case study through historical document analysis. 5-2 Key Recommendation: 1) Due to enormous risk factors further research should be recommended on involvement of Insurance within the process. Strategic management needs to draw attention to overcome risk factors and to achieve the organizational goals. Thus, we need to provide a recommendation to management and I am leaning towards the vision of twenty first century through further research covered in the policy. 2) Harmonious System for Standardisation is an essential part of globalisation. China Construction Bank (CCB) reported fast development in electronic banking business in the first half of this year, when it completed 312.88 million electronic transactions totaling 2,000 billion Yuan 32. But when a customer would like to transact overcoming his border barrier, CCB fails to interact. So recommendation should be made to the management to go for further research on Harmonious System strategic development. 3) The most important design feature identified in this research was "quick access to information you are looking for" (Table 2). Given the high frequency of users wanting basic account information, it is recommended that account activity and balances should be immediately accessible after login. This recommendation is supported by Gomez (2002), who is recognized by the largest financial institutions in the United States for providing benchmarking information on Internet banking services and I do the same recommendation for further research. 4) Clear and simple terminology was rated as a very important design element for banking sites. Failure to achieve this can dissuade potential banking customers. A usability study of an online banking site by SURL found users to be confused by the term "Payee" (i.e., users wondered "Is that me or the company I am paying?"). As a result, it is recommended to lead further research for the use more meaningful terminology when setting up an individual or company. For example, "Account number for whom you are paying:" may be more meaningful than "Payee account". Other design recommendations for forms include clearly indicating required fields, placing legible err

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