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The Shift From Physical Personal Banking to Online Banking Proposal

Terms of Reference

The internet has changed the way by which people conduct business transactions by eliminating the inherent need for face-to-face transactions. Personal banking has been one of the affected areas, with online banking becoming more popular with time. Online banking, also known as internet banking, enables users to execute financial transactions through the internet without the need to visit a bank branch physically.

One key feature with online banks is their ability to offer services to customers at significantly low fees. Online banks can afford these discounts since they do not incur the traditional costs associated with physical banking such as paying rent (Lai et al. 2014).

I have chosen the topic “Investigation of how the Shift from Physical Personal Banking to Online Banking has affected Consumers” because online banking has made it easier to shop by eliminating the need to carry cash everywhere. Sarreal (2016) reported that half of the adult population in the United States use internet banking. This number has increased by about 29 million within the last year, showing that internet banking is becoming even more popular.

On the other hand, only about 32% of customers are using traditional banking. This observation indicates a tremendous shift from physical to online banking (Hussain & Wong 2015). Conversely, online banking raises issues of cybersecurity and the safety of customers’ money when transactions are conducted online (Jansen & Leukfeldt 2016). Therefore, the writer wishes to investigate the numerous impacts of online banking because the burgeoning phenomenon may entirely replace traditional banking shortly.

The study will be guided by the following research question: How has the shift from traditional banking to online banking impacted consumers? Despite the existence of a wide body of research on the topic of online banking, few studies have captured the specific impacts it has had on customers.

This study seeks to examine the various impacts that have been occasioned by this change on customers in the last five years. This goal will be achieved by interrogating the attitudes and views of different customers regarding the change. The aim will be to determine what customers feel regarding the shift from traditional to online banking. The writer appreciates that while most customers may be optimistic about this transformation, others, especially the older generation, maybe apprehensive. Millennials are ordinarily believed to be tech-savvy. Hence, they are assumed to be more welcoming of technological changes relative to their parents. This research will also be seeking to determine the validity of this assumption by relying on a sample of people of different ages.

Review of Literature

The early notion of online banking began around 1981 in New York. New York-based banks such as Citibank, Chemical Bank, and Chase Manhattan among others began availing home banking to their customers (Sarreal 2016). Nevertheless, this early initiative did not pick momentum. Throughout online banking’s history, customers have been reluctant to adopt the new trend, which has caused internet banking to progress at a rather slow pace (Sarreal 2016).

It was not until the mid-1990s that the initiative was resurrected. The mid-1990s was marked by a robust growth of the internet allowing electronic commerce to advance to new levels. In 1994, Stanford Federal Credit Union rolled out internet banking to all its customers, becoming the first bank to offer Internet banking in the US (Sarreal 2016). This advancement was followed by initiatives by other banks to afford internet banking to their customers. The following year, Presidential Bank provided its customers with online access to their bank accounts (Sarreal 2016).

As the reputable banks began to offer internet banking, it gained legitimacy in the e-commerce world (Chiou & Shen 2012). By 2000, internet banking had become a mainstream practice, with over 80 percent of the country’s banks offering Internet banking services. The Bank of America had acquired over 3 million internet banking customers, which is about 20 percent of its clientele (Lee, Lim, & Lim 2013). With internet banking having become widespread, entrepreneurs launched into the culture with internet-only banks. One such institution was the Ally Bank, which joined the internet banking space in 2009 (Sarreal 2016).

A 2010 survey by Fiserv indicated that online banking was now expanding faster relative to the growth of the internet itself (Sarreal 2016). Internet banking has since continued to evolve and grow to accommodate innovations. For instance, mobile banking apps have been introduced to take advantage of the existing formidable telecommunications chains. Popular mobile apps include MyDeposit and Popmoney.

Various studies have since been conducted on the subject of online banking and its impact on consumers. According to Xue, Hitt, and Chen (2011), personal online banking has led to increased customer satisfaction. Internet banking has further made it possible for customers to purchase products and services in convenience stores using debit cards issued by banks (Lai et al. 2014). Often, banks do not charge their customers for such transactions.

Hussain and Wong (2015) assert that millennials (people born between 1980 and 200) have higher expectations on online banking compared to people from their parents’ generation. They expect online banking to be a smooth experience and are less willing to queue in the traditional bank set up. However, this research will not delve into investigating whether this claim holds or not. Rather, it will assume that the expectation of the banking experience could be the driving force behind the increased efficiency as banks strive to satisfy their customers (Xue, Hitt, & Chen 2011).

In line with the above assumption, Kim and DeVaney (2016) claim that online banking is preferred to traditional banking by millennials because it is faster and efficient. For this reason, millennials are more likely to embrace internet banking than their parents, who are more accustomed to traditional banking. The finding is consistent with Hussain and Wong’s (2015) observations that online banking facilitates fast dispensation of services, thus reducing the overall time spent banking.

Ordinarily, millennials are viewed as techno-savvy and more educated compared to their parents. This stereotype has been used as the basis for justifying why more millennials are adopting online banking as compared to their older generation. Further, Rodgers’ theory of diffusion and innovation as presented by DeVaney (2016) suggests that the acceptance of technology is influenced by knowledge and experience.

On the other hand, other researchers hold a different opinion regarding the attitudes of customers towards online banking. Hanafizadeh, Keating, and Khedmatgozar (2014) reveal the little adoption of online banking in developing countries. This trend is associated with the inadequate availability of technology, coupled with differences in culture. For instance, Riffai, Grant, and Edgar (2012) found that only 36% of the educated Omani population use internet banking, despite the country constituting mostly middle-class citizens with the means to access the reliable internet (Riffai, Grant, & Edgar 2012).

Therefore, the culture of internet banking in the developing world is not widespread when compared to the developed world. AbuShanab, Pearson, and Setterstrom (2010) argue that most technology adoption theories do not fit well in the developing world because they fail to factor in the aspect of cultural differences. In Oman, the banking culture favors face-to-face banking as opposed to transacting remotely (Riffai, Grant, & Edgar 2012). Therefore, where online banking conflicts with the existing culture, it is seen as a disadvantage.

The issue of cybersecurity also rises prominently regarding online banking. According to Jansen and Leukfeldt (2016), the fear of losing money to cyber hacks prevents people from adopting online banking. As internet banking evolves, so have cyber-attacks (Wei et al. 2013). This situation places great pressure on banks to maintain up-to-date security systems to counter the growing cyber-attacks. Kim and DeVaney (2016) argue that banks fail to provide frequent information about their online banking security systems as a way of ensuring customers’ confidence. This observation undermines consumer trust regarding online banking (Yap et al. 2010).

Research on this subject is important since it reveals why banks have shifted toward online banking: to improve the efficiency of conducting business while also enhancing customer satisfaction (Singh & Malhotra 2015). Therefore, the advantages of online banking are twofold, both to the banks and customers. One advantage of online banking is that it reduces the cost of conducting business.

Riffai, Grant, and Edgar (2012) assert that banks resort to online banking to minimize overhead costs. By cutting on overhead costs, they can extend cheaper services to their customers. Online banking is usually cheaper compared to traditional banking (Martins, Oliveura, & Popovic 2014). Online banking also leads to increased efficiency since the services are conducted in a faster way. Online banking saves time for the customer (Ali 2016).

This project relates to the above literature on the impact of personal banking on consumers. This claim follows the observed customers’ shift from traditional banking to the adoption of various apps that enable them to access services at any time of the day. This conventional banking is riddled with long queues and paper-based transactions, which encourage time wastage. On the other hand, online banking facilitates faster transactions, subject to the availability of fast internet connection (Safeena & Date 2015; Montazemi & Qahri-Saremi 2015).

Whenever clients visit any bank, they expect to spend minimal time conducting the required banking transactions because of other demanding activities in their lives. However, their wishes have been in vain, especially for those that have remained conservative to the conventional banking approaches. The project is motivated by the growing need of customers who wish to receive fast and convenient banking (Safeena & Date 2015).

Online banking has also led to the ‘banking anytime and everywhere’ phenomenon, which eliminates the need to visit a bank physically (Jamaludddin 2015). Additionally, online banking has made it possible for customers to save many funds such as bus fare or physical documents, which they were initially used to authenticate their transactions (Jamaludddin 2015). Online banking embraces cashless shopping. This plan eliminates the need for carrying money to shopping stores and service entities (Montazemi & Qahri-Saremi 2015).


This study will rely on both primary and secondary research. Qualitative and quantitative data will be collected. For the primary research, surveys will be conducted to customers outside bank branches. Survey questionnaires will be used to collect data from the participants. The first part of the questionnaire (Part A) will be designed to gather quantitative data while the second part (Part B) will be meant for collecting qualitative data.

For part A, the researcher will use the mixed-method research design that upholds the use of both qualitative and quantitative data. This design is convenient for this project because it gives the researcher the leeway to apply the said qualitative and quantitative data. Participants will be asked to respond to predetermined questions contained in the questionnaire. Each question will include four multiple choices as a way of guiding the participants’ responses.

The quantitative description is important to researchers when they wish to focus on measurable aspects of data, for instance, magnitude and size (Polit & Beck 2013). Part B of the questionnaire, intended to gather qualitative data, will consist of open-ended questions to collect data on the experiences, attitudes, and opinions of participants regarding personal online banking. A phenomenological design will be used to analyze responses under part B. Polit and Beck (2013) explain how phenomenological research is essential in bringing out the lived experiences of people.

In terms of focus groups, data will be categorized according to the age groups of the participants. Three categories will be included, namely, Baby Boomers, Generation x, and Generation Z. These categories are based on the assumption that the age of participants will determine their attitude toward online banking.

Between 100 and 150 participants will take part in the survey. The participants will be of different age groups based on the assumption that the acceptance of online banking differs between the older and younger generations. Data obtained from the study will be analyzed using SPPS version 194.0. Cross-tabulations will be used to calculate descriptive data. The software will help in indicating percentages between independent and dependent variables.

The presentation of the findings will be done in the form of diagrams that will be made via MS excel. The SPSS will also be instrumental in producing additional graphs, for instance, the means from the different categories of age groups.


Any research is expected to use various resources that range from money, labor, and time. It estimated that the researcher will spend about 3 hours every day in 4 days conducting the survey. The researcher will target customers outside the bank branches. The money used for traveling to conduct the survey is also identified as a resource for this research. It is crucial to point out that the participants will not be in one fixed location. As a result, the researcher will be required to travel, sometimes with a vehicle, to access the respondents. Additional resources for this study will include funds to acquire questionnaires for the survey and software packages. Software packages to be used include SPSS version 14.0.

Ethical Issues

The project will also address the various ethical issues that the researcher needs to consider when gathering data from the participants. As such, the researcher will not include children and people with sensory needs in the study. Additionally, the express authority of participants will be sought beforehand.


AbuShanab, E, Pearson, J & Setterstrom, A 2010, ‘Internet banking and customers’ acceptance in Jordan: The unified model’s perspective’, Communications of the Association for Information Systems, vol. 26, no. 1, pp. 23-24.

Ali, P 2016, ‘Impact of automated teller machine on banking services delivery in Nigeria: A stakeholder analysis’, Cadernos de Educação, Tecnologia e Sociedade, vol. 9, no. 1, pp. 64-72.

Chiou, J & Shen, C 2012, ‘The antecedents of online financial service adoption: the impact of physical banking services on Internet banking acceptance’, Behaviour & Information Technology, vol. 31, no. 9, pp.859-871.

Hanafizadeh, P, Keating, B & Khedmatgozar, H 2014, ‘A systematic review of Internet banking adoption’, Telematics and informatics, vol. 31, no. 3, pp. 492-510.

Hussain, M & Wong, C 2015, The Online Banking Behaviour of Generation Y, International Business and Economy Conference Bangkok, Thailand.

Jamaludddin, D 2014, E-Banking: Challenges and opportunities in India, IBRC, Australia.

Jansen, J & Leukfeldt, R 2016, ‘Phishing and Malware Attacks on Online Banking Customers in the Netherlands: A Qualitative Analysis of Factors Leading to Victimisation’, International Journal of Cyber Criminology, vol. 10, no. 1, pp.79-80.

Kim, H & DeVaney, S 2016, . Web.

Lai, J, Ulhas, K, Lin, C & Ong, C 2014, Factors driving value creation in online B2B banking. Information Resources Management Association USA (Ed), Banking, Finance, and Accounting: Concepts, Methodologies, Tools and Applications, Business Science Reference, Hershey, PA.

Lee, J, Lim, W & Lim, J 2013, ‘A study of the security of Internet banking and financial private information in South Korea’, Mathematical and Computer Modelling, vol. 58, no. 1, pp.117-131.

Martins, C, Oliveira, T & Popovič, A 2014, ‘Understanding the Internet banking adoption: A unified theory of acceptance and use of technology and perceived risk application’, International Journal of Information Management, vol. 34, no. 1, pp.1-13.

Montazemi, A & Qahri-Saremi, H 2015, ‘Factors affecting adoption of online banking: A meta-analytic structural equation modelling study’, Information & Management, vol. 52, no. 2, pp. 210-226.

Polit, D & Beck, C 2013, Essentials of nursing research: Appraising evidence for nursing practice, Lippincott Williams & Wilkins, Philadelphia, PA.

Riffai, M, Grant, K & Edgar, D 2012, ‘Big TAM in Oman: Exploring the promise of on-line banking, its adoption by customers and the challenges of banking in Oman’, International Journal of Information Management, vol. 32, no. 3, pp. 239-250.

Safeena, R & Date, H 2015, ‘Customer perspectives on e-business value: case study on internet banking’, The Journal of Internet Banking and Commerce, vol. 15, no. 1, pp. 1-5.

Sarreal, R 2016, . Web.

Singh, B & Malhotra, P 2015, . Web.

Wei, W, Li, J, Cao, L, Ou, Y & Chen, J 2013, ‘Effective detection of sophisticated online banking fraud on extremely imbalanced data’, World Wide Web, vol. 16, no. 4, pp.449-475.

Xue, M, Hitt, L & Chen, P 2011, ‘Determinants and outcomes of internet banking adoption’, Management Science, vol. 57, no. 2, pp. 291-307.

Yap, K, Wong, D, Loh, C & Bak, R 2010, ‘Offline and online banking-where to draw the line when building trust in e-banking?’, International Journal of Bank Marketing, vol. 28, no. 1, pp. 27-46.

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"The Shift From Physical Personal Banking to Online Banking." IvyPanda, 8 Oct. 2020, ivypanda.com/essays/the-shift-from-physical-personal-banking-to-online-banking/.

1. IvyPanda. "The Shift From Physical Personal Banking to Online Banking." October 8, 2020. https://ivypanda.com/essays/the-shift-from-physical-personal-banking-to-online-banking/.


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IvyPanda. 2020. "The Shift From Physical Personal Banking to Online Banking." October 8, 2020. https://ivypanda.com/essays/the-shift-from-physical-personal-banking-to-online-banking/.


IvyPanda. (2020) 'The Shift From Physical Personal Banking to Online Banking'. 8 October.

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