Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Banking on benefits

27.04.2010
People make the decision to use internet banking either because they recognize the benefits or because of peer pressure but rarely because of perceived prestige or celebrity endorsement, a study published in the International Journal of Banking, Accounting and Finance. The research hints at how banks could improve the spread of internet banking simply by improving the services offered.

From a bank's perspective there are many advantages to persuading their customers to adopt internet banking – clicks, as opposed to bricks, and mortar banking, as it were.

Primarily, there is the reduction in staffing, which can reduce overall costs, even if information technology and online security systems must be put in place and the reduction in buildings infrastructure required to service customers. There is also the potential for increased revenue through increased transactions and customer activity facilitated by the ease with which they can carry out different tasks online without having to visit a bank's premises.

Internet banking is being adopted by customers as a viable alternative to managing their money with approximately 55 million US households routinely using online banking. Some banks are already internet only and offer preferential interest rates and terms to their customers. However, there are many people yet to adopt online banking, which represents a significant challenge to banks that would like to see increase their virtual customer base.

Understanding what makes people adopt a particular technology could be crucial to the future success of internet banking, say Weihua Shi and Kenneth Zantow of the College of Business, at the University of Southern Mississippi, Long Beach.

They point out that while there are various research models that have attempted to explain the adoption of new technologies, the majority of these assume that people make a rational choice based on a systematic decision process. In many cases this may be entirely contrary to how people behave and they suggest that it is more likely that people simply follow the herd. If large numbers of people are already using a particular technology, then once a tipping point is passed, peer pressure causes other people to adopt the innovation too.

Imitation, they say, is the best form of flattery, and yet there are very few published research studies that discuss how irrational imitation can influence technology adoption. Shi and Zantow hope to remedy this situation and have looked at three types of imitation: frequency-based, trait-based, and outcome-based that influence adoption. Frequency-based imitation simply implies that people will follow the herd, individuals are more likely to imitate an action if that action has been taken by a large number of other individuals. Trait-based imitation is usually associated with individuals taking a particular action because other specific people whom they hold in high regard have previously taken that action. Outcome-based imitation is a more sophisticated approach to decision making in which individuals assess the impact adoption of the technology has on other people.

The team questioned individuals on their attitudes and their adoption of internet banking and adjust their results to control for gender, age, and income.

Specifically, for frequency-based imitations, respondents were asked to indicate the degree to which they agree that using internet banking was popular, particularly in their peer group. For trait-based imitations, respondents were asked about whether people of high status use internet banking and whether that in itself is a status symbol. For outcome-based imitation, the team asked whether people using internet banking were more efficient and profitable in their banking. A sliding scale of agree-to-disagree was used and the team could then analyze the data statistically.

The results showed that frequency-based and outcome-based decisions were the strongest predictors of whether someone would adopt internet banking. "The results indicate that awareness of the positive outcomes associated with internet banking, or that a large number of customers had made the decision to use internet banking, would influence potential customers to jump on to the bandwagon," the team says.

Moreover, banks could boost adoption if they improve the online banking service as outcome-based decisions were predominant rather than people simply following the herd. Trait-based imitation was not a significant factor. While other products are often associated with celebrities or other successful people through their advertising efforts, the participants in our study indicate this may not be helpful for promoting internet banking," the team says.

"Why use internet banking? An irrational imitation Model," in International Journal of Banking, Accounting and Finance, 2010, 2, 156-175

Weihua Shi | EurekAlert!
Further information:
http://www.usm.edu

More articles from Business and Finance:

nachricht Uncovering decades of questionable investments
18.01.2018 | University of Texas at Austin, Texas Advanced Computing Center

nachricht Corporate coworking as a driver of innovation
22.11.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Scientists decipher key principle behind reaction of metalloenzymes

So-called pre-distorted states accelerate photochemical reactions too

What enables electrons to be transferred swiftly, for example during photosynthesis? An interdisciplinary team of researchers has worked out the details of how...

Im Focus: The first precise measurement of a single molecule's effective charge

For the first time, scientists have precisely measured the effective electrical charge of a single molecule in solution. This fundamental insight of an SNSF Professor could also pave the way for future medical diagnostics.

Electrical charge is one of the key properties that allows molecules to interact. Life itself depends on this phenomenon: many biological processes involve...

Im Focus: Paradigm shift in Paris: Encouraging an holistic view of laser machining

At the JEC World Composite Show in Paris in March 2018, the Fraunhofer Institute for Laser Technology ILT will be focusing on the latest trends and innovations in laser machining of composites. Among other things, researchers at the booth shared with the Aachen Center for Integrative Lightweight Production (AZL) will demonstrate how lasers can be used for joining, structuring, cutting and drilling composite materials.

No other industry has attracted as much public attention to composite materials as the automotive industry, which along with the aerospace industry is a driver...

Im Focus: Room-temperature multiferroic thin films and their properties

Scientists at Tokyo Institute of Technology (Tokyo Tech) and Tohoku University have developed high-quality GFO epitaxial films and systematically investigated their ferroelectric and ferromagnetic properties. They also demonstrated the room-temperature magnetocapacitance effects of these GFO thin films.

Multiferroic materials show magnetically driven ferroelectricity. They are attracting increasing attention because of their fascinating properties such as...

Im Focus: A thermometer for the oceans

Measurement of noble gases in Antarctic ice cores

The oceans are the largest global heat reservoir. As a result of man-made global warming, the temperature in the global climate system increases; around 90% of...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

10th International Symposium: “Advanced Battery Power – Kraftwerk Batterie” Münster, 10-11 April 2018

08.01.2018 | Event News

See, understand and experience the work of the future

11.12.2017 | Event News

Innovative strategies to tackle parasitic worms

08.12.2017 | Event News

 
Latest News

World’s oldest known oxygen oasis discovered

18.01.2018 | Earth Sciences

Uncovering decades of questionable investments

18.01.2018 | Business and Finance

Novel chip-based gene expression tool analyzes RNA quickly and accurately

18.01.2018 | Medical Engineering

VideoLinks
B2B-VideoLinks
More VideoLinks >>>