Determinants of Smes Perceptions Towards Electronic Banking

Determinants of SMEs Perceptions towards Electronic Banking

Dr Ahmad Kaleem
Associate Professor
Department of Business Administration
Lahore School of Economics,
Lahore, Pakistan.
Email: [e-mail]

Abstract

Electronic distribution channels have gained increasing popularity in recent years. It provides alternatives for faster delivery of banking services to a wider scope of customers. This study aims to collect the SMEs owners/executives/managers perceptions towards the potential benefits and the risks associated to electronic banking in Pakistan. Data is collected through primary sources which are examined via frequency analysis and mean score analysis. The results indicate that SMEs use banks mainly for depositing cheques and cash, withdrawing cash and transferring funds. They least use banks for transactions related to foreign exchange and credit. SMEs are well aware about the presence of electronic banking in a country and 62.30% of the respondents regularly use this facility for financial transactions purposes. The study identifies ‘payment of utility bills, complaint handling and daily account report’ as most desired facilities from SMEs. Which also perceive electronic banking as tools for time saving, facilitates quick response and minimizes risk of carrying cash. SMEs further believe that electronic banking increases chances of government access to public data, chances of fraud and chances of data losses.

The study also segregates the data into electronic banking (EB) users and non-users basis to identify discrepancies in their perceptions towards the available financial services or facilities. EB users consider minimizes inconvenience as most desired benefit while EB non-users consider funds transferring and providing up to date information as important benefits of electronic banking. Lastly, EB users think heavy costs for services as an additional risk associated to electronic banking.

References: Aladwani, A.M. (2001), "Online banking: a field study of drivers, development challenges, and expectations", International Journal of Information Management, Vol. 21 No.3, pp.213-25. Barnes, J.G., Howlett, D. M. (1998), "Predictors of equity in relationships between financial services providers and retail customers", International Journal of Bank Marketing, Vol. 16 pp.15-23. Barsky, J. (1994), World-Class Customer Satisfaction, Irwin Professional Publishing, Burr Ridge, IL, . Bhattacherjee, A. (2002), "Individual trust in online firms: scale development and initial test", Journal of Management and Information Systems, Vol. 19 No.1, pp.211-41. Binks, M.R., Ennew, C.T. (1998), "Private businesses and their banks", The Forum of Private Business, . Birch, D., Young, M.A. (1997), "Financial services and the Internet: what does cyberspace mean for the financial services industry?", Internet Research: Electronic Networking Applications and Policy, Vol. 7 No.2, pp.120-8. Black, N.J., Lockett, A., Winklhofer, H., Ennew, C. (2001), "The adoption of Internet financial services: a qualitative study", International Journal of Retail & Distribution Management, Vol. 29 No.8, pp.390-8. Blackwell, D.W., Winters, D.B. (2000), "Local lending markets: what a small business owner/manager needs to know", Quarterly Journal of Business and Economics, Vol. 39 No.2, pp.62-79. Boon, O., H., and Ming, Yu, C., (2003), “Success factors in e-channels: the Malaysian banking scenario”, International Journal of Bank Marketing, Vol. 21, No. 6/7, pp. 369-377. Buerger, J.E., Ulrich, T.A (1986), "What’s important to small businesses in selecting a financial institution?", Journal of Commercial Bank Lending, pp.3-9. Byers, R., Lederer, P.J. (2001), "Retail bank services strategy: a model of traditional, electronic, and mixed distribution choices", Journal of Management Information Systems, Vol. 18 No.2, pp.133-56. Cantrell, C., (1997), "Up close and profitable", Bank Marketing, Vol. 29 No.6, pp.45-6. Carpenter, M., (1998), "Banks and their small business clients: some implications for relationship marketing", Irish Marketing Review, Vol. 10 No.2, pp.33-42. Carroll, P., (1999), "Doing it their way", Banking Strategies, Vol. 75 No.4, pp.46-52. Chaston, I., (1987), "Management of the client relationship", Accountancy, Vol. 100 No.1131 Chaston, I., (1993), "Delivering customer satisfaction within the SME client-banker relationship", Services Industry Journal, Vol Devlin, J.F., (1995), "Technology and innovation in retail banking distribution", International Journal of Bank Marketing, Vol. 13 No.4, pp.19-25. Doney, P.M., Cannon, J.P. (1997), "An examination of the nature of trust in buyer-seller relationship", Journal of Marketing, Vol. 61 No. April, pp.35-51. Dunkelberg, W.C., Scott, J.A, Cox, E.L (1984), "Small business and the value of bank-customer relationships", Journal of Bank Research, pp.248-58. European Central Bank (ECB) (1999), “The Effects of Technology in the EU Banking Systems”, ECB, Frankfurt am Main, July. Gerrard, P. and Cunningham, B. (2000), “Gazetted hotels in Singapore: a banking study”, International Journal of Bank Marketing, Vol.18, No. 3, pp. 135-147 Gerrard, P., Cunningham, J Gerson, V., (1998), "Service with more than a smile’", Bank Marketing, Vol. 30 No.8, pp.32-6. Howcroft, B., Hamilton, R., Hewer, P. (2002), "Consumer attitude and the usage and adoption of home-based banking in the United Kingdom", The International Journal of Bank Marketing, Vol. 20 No.3, pp.111-21. Ibbotson, P., and Moran l., (2003), “E-banking and the SME/bank relationship in Northern Ireland”, International Journal of Bank Marketing, Vol. 21, No. 2. pp. 94-103. James F. N., Chris T., and Rowan M.T., (1998)”Business banking in Australia: a comparison of expectations”, International Journal of Bank Marketing, Vol. 16 No.6, pp. 253-263 Joseph, M., Sekhon, Y., Stone, G Jun, M., Cai, S., (2001), "The key determinants of Internet banking service quality: a content analysis", International Journal of Bank Marketing, Vol. 19 No.7, pp.276-91. Kiang, M.Y., Raghu, T.S., Hueu-Min Shang, K., (2000), "Marketing on the Internet – who can benefit from an online marketing approach?", Decision Support Systems, Vol. 27 No.4, pp.383-93. Kolachi, N., (2006), “Internet banking system in Pakistan: some crucial weaknesses and suggestions for improvement”, Journal of Institute of Bankers Pakistan, Vol. 73, No. 2, pp. 23 – 32. Liao, Z., Cheung, M.T., (2002), "Internet-based e-banking and consumer attitudes: an empirical study", Information & Management, Vol. 39 No.4, pp.283-95. Laforet, S., and Xiaoyan Li., (2005), “Consumers’ attitudes towards online and mobile banking in China”, International Journal of Bank Marketing, Vol. 23, No. 5, pp. 362-380. Lucey, A.J., (1990), "What bank services do small businesses want?", Commercial Lending Review, Vol. 5 No.3, pp.92-4. Madill, J.J., Feeney, L., Riding, A., Haines, G.H., (2002), "Determinants of the SME owners ' satisfaction with their banking relationships: a Canadian study", The International Journal of Bank Marketing, Vol. 20 No.2, pp.86-98. Min, H., Galle, W.P., (1999), "Electronic commerce usage in business-to-business purchasing", International Journal of Operations & Production Management, Vol. 19 No.9, pp.909-21. Mols, N.P., (1999), "The Internet and the banks’ strategic distribution channel decisions", International Journal of Bank Marketing, Vol. 17 No.6, pp.245-300. Moutinho, L., Phillips, P.A., (2002), "The impact of strategic planning on the competitiveness, performance and effectiveness of bank branches: a neural network analysis", International Journal of Bank Marketing, Vol. 20 No.3, pp.102-10. Mukherjee, A., Nath, P., (2003), "A model of trust in online relationship banking", International Journal of Bank Marketing, Vol. 21 No.1, pp.5-15. Nancy B., Lockett, A., Winklhofer, H., and Christine, E., (2001), “The adoption of Internet financial services: a qualitative study”, International Journal of Retail & Distribution Management, Vol. 29, No. 8, pp. 390-398. Nielsen, J.F., Terry, C, Trayler, R.M., (1998), "Business banking in Australia: a comparison of expectations", International Journal of Bank Marketing, Vol. 16 No.6, pp.253-63. Oumlil, A., Williams, A., (2000), "Consumer education programs for mature customers", Journal of Services Marketing, Vol. 14 No.3, pp.232-43.. Patricio, L., Fisk, R., Falcao e Cunha, J., (2003), "Improving satisfaction with bank service offerings: measuring the contribution of each delivery channel", Managing Service Quality, Vol. 13 No.6, pp.471-83. Polatoglu, V.N., Ekin, S., (2001), "An empirical investigation of the Turkish consumers’ acceptance of Internet banking services", International Journal of Bank Marketing, Vol. 19 No.4, pp.156-65. Prince, R.A., Schutz, A., (1990), "Factors that attract small business", Bank Marketing, Vol. 22 No.2, pp.28-30. Robinson, G., (2000), "Bank to the future", Internet Magazine, www.findarticles.com. Rotchanakitumnuai, S. and Speece, M.,(2003), “ Barriers to Internet banking adoption: a qualitative study among corporate customers in Thailand”, International Journal of Bank Marketing, Vol. 21, No 6/7, pp. 312-323. Sathye, M., (1999), "Adoption of Internet banking by Australian consumers: an empirical investigation", International Journal of Bank Marketing, Vol. 17 No.7, pp.324-34. Schlesinger, W.D, Unsal, F., Zaman, M.R., (1987), "Attributes of sound banking as perceived by small businesses: results of a survey", Journal of Small Business Management, pp.76-85.