The impact of internet banking on customer retention in the UK banking industry (GC01495)
Acknowledgment
I would like to dedicate this research work to my honorable parents. Then, I would like to say thanks to my supervisor who has supported me a lot with his valuable guidelines, recommendations and suggestions in conducting my research works. Finally, my cordial love and honors to my friends and family members who have supported me with their supports and times.
Abstract
The aim of this study is to analyze and evaluate the internet banking facilities provided by financial institutions and online banking users’ views on the internet banking facilities provided by the UK banking sector including Lloyds Bank. Then, the study concludes the findings and recommends the banking industry including Lloyds Bank. The objectives of this study are: a) To analyze the internet banking facilities and the views of online banking users on the internet banking facilities provided by the UK banking sector including Lloyds Bank;b)To evaluate the effectiveness of Internet Banking on customer retention in the UK banking sector; and c)To recommend the UK banking sector including Lloyds Bank on how Internet Banking facilities can be improved to increase customer retention level.
This study plays a significant role in the development of both UK banking sector and the researcher himself. The findings of this study guide the UK banking sector on how it can improve its online banking facilities, which will support improving the customer retention level in the UK banking industry including Lloyds Bank. On the other hand, the study improved the researcher’s research and analytical skills along with interpersonal skills, which will help the researcher to gain a good career in the future and succeed in the workplace.
This study has applied different methodologies. As a research approach, the researcher has used deductive research approaches, where both qualitative and quantitative research methods have been used in this study. Then, both primary and secondary data sources have been used in this study. As primary data source survey technique has been used, where a sample of 100 participants was selected to collect data. The secondary data has been collected from several sources including journals, books, websites and company annual reports.
The study found that internet banking has a significant impact on customer retention. The majority number of customers are motivated and influenced by the online banking facilities provided by Lloyds Bank. Because of facilities provided through online baking, customers would like to stay with the banks for long time periods. However, a big number of customers are worried about the security and privacy of online banking. In addition, many customers look for easier to access and user-friendly online platforms such as mobile banking to conduct basic banking activities?
Chapter 1: Introduction
1.0 Introduction
The topic of this research is how internet banking is impacting customer retention in the banking sector of the UK. In this study, Lloyds Bank has been chosen as the case study. In this chapter, the introduction of this research has been outlined. First of all, the research background has been discussed following the research problems and research rationales. Then, the aims and objectives of the research questions have been defined. Following these, the research significance and the structure of the research have been discussed.
1.1 Research background
In the current digital world, people are using more technologies than ever before in their daily lives. According to Benbasat and Kim (2015) notes, people across the world nowadays like to do the buying process of desire products and services seating at home. Huston and Larzelere (2014) stated that the outcome of several research reveals the increasing popularity of internet usages being part of people’s daily lives over the world. Thus, as Licker and Molla (2016) note, internet banking has been playing a significant role in the banking sector mainly in advanced countries including the UK. Most financial organizations are providing internet banking facilities to their clients and customers and to attract potential internet users (Rego, 2015). Additionally, Acharya and Srinivasan (2014) state that internet banking facilities help financial institutions to improve their customer retention level. Katie and Paine (2015) said internet banking is less cost-effective and time-consuming which increases customer retention level. Further, internet banking needs fewer resources to provide better services to the customers and increasing their retention level (Straub, Gefen, and Karahanna, 2015). Internet banking also builds up a stronger relationship between users and banks (Gupton, 2015). In a word, internet banking has been playing a key role in improving customer retention and improved business performance (Margit and Huber, 2016).
On the other hand, improving customer retention levels in the banking sector is a challenging issue. This is because the severe completions and alternative choices by several financial institutions are providing a hard time for the banks to retain and engage their customers for a long time basis. Mullins (2015) stated that it is possible to reduce the business operational and marketing costs by up to 15% by an improved customer retention level. Additionally, Bratton and Gold (2014) disclosed that loyal customers’ positive words of mouth may attract a huge number of potential customers. Therefore, the banking sector is deeply looking for more effective strategies to retain the existing and potential customers for a long time basis through internet banking facilities.
As a result, this study has focused on how internet banking facilities can be used more effectively and efficiently in the UK banking sector to improve the customer retention level. Lloyds Bank has been chosen as the case study. Lloyds Bank is a well-known financial institution in the UK, which is providing both personal and commercial banking facilities to the users. The key activities of this bank are both retail and commercial banking opportunities, personal and business loans, insurance and other facilities (Lloyds Banking Group, 2015).
1.2 Research Problems
According to Licker and Molla (2016), the key aim and objective of the banking sector including Lloyds Bank are to obtain increased customer retention. This is because alternative choices and facilities provided by the competitors are providing a hard time to the financial institutions to retain and engage their customers for long time periods (Straub, Gefen, and Karahanna, 2015). Additionally, the repaid development of easy-to-use technologies in the banking sector is giving more facilities to the customers than ever before, which are impacting customer retention (Gupton, 2015). As a result, the banking sector including Lloyds Banking has been facing great challenges in retaining their customer and engaging them within the business for long time periods. The annual report of Lloyds Bank discloses that it lost 3.1% of its market share in 2015 in comparison with 2014, which decreased it profit by 5.2% in 2015 in comparison with 2014. The key reason that has been identified by Lloyds Bank is the more user-friendly dynamic technologies used by the competitors mainly by the Barclays Bank. In addition, many financial institutions including Lloyds Bank have failed to define the customer changing needs and expectations. Further, many financial institutions including Lloyds Bank have failed to make aware the big number of customers about the usage of modern technologies in banking activities (Lloyds Bank Annual Report, 2015). As a result, it has been a significant issue for the UK banking sector including Lloyds Bank to conduct a study on how internet banking facilities can be used more effectively to gain improved customer retention.
1.3 Rationales
1.3..1 What is the research issue?
The ways of internet banking is rapidly changing because of rapid changes and the development of modern technologies in the banking sector (Bressler and Stacy, 2015). Thus, this rapid technological development is forcing the banking sector including Lloyds Bank to more innovative in their services and facilities offered to the customers(Chaudhuri and Crosby, 2014). A study by Dick and Basu (2014) discloses that when the internet banking facilities launched by the 1980s a limited number were attracted by these services, but now increased to more billion users by 2016 (Hughes2016). This increasing trend of internet banking users has been attracting more banks and financial institutions than ever before and making the industry competitive (Grewal and Krishnan, 2015). Therefore, Lloyds Banking is looking for more effective ways of using its internet banking services as a marketing strategy to gain improved customer retention.
1.3.2 Why is it an issue?
The rapid development of technologies in the internet banking sector is increasing the competition in the banking sector and changing the behavior of banking service users (Hafeezand Hasnu, 2015). A study conducted by McCauley (2013) disclosed that about 40% of internet banking users are not happy with their banks because of alternative better services offered by the other banks. Huston and Larzelere (2014) state that users always look for user-friendly as well as reliable banking facilities and services.
In addition, many customers do not have enough understanding of the technologies used in internet banking. Therefore, Lloyds Bank’s internet banking service should be reliable, unique and user-friendly to attract more consumers and retain them.
1.3.3 Why is it an issue now?
The annual report of Lloyds Bank discloses that it lost 3.1% of its market share in 2015 in comparison with 2014, which decreased its profit by 5.2% in 2015 in comparison with 2014. The key reason that has been identified by Lloyds Bank is the more user-friendly dynamic technologies used by the competitors mainly by Barclays Bank. The competitive marketplace with innovative online services is the key cause of these raised in Lloyds business (Lloyds Banking Group, 2015). Consequently, it has been significant now for Lloyds to assess its online services to sustain and gain competitive advantages with improved customer retention and market share.
1.3.4 What has this research shed light on?
This study has analyzed and evaluated the internet banking facilities provided by financial institutions and funded out the weaknesses. Then, the study has evaluated the internet banking users’ views on the internet banking facilities provided by the UK banking sector including Lloyds Bank. Next, the study has concluded the findings and recommended the banking industry including Lloyds Bank.
1.4 Research Aims and Objectives
1.4.1 Research Aims
The aim of this study is to analyze and evaluate the internet banking facilities provided by financial institutions and online banking users’ views on the internet banking facilities provided by the UK banking sector including Lloyds Bank. Then, the study concludes the findings and recommends the banking industry including Lloyds Bank…………..
Total word: 18685
Full Documents Click Download Button
