ONLINE BANKING BETWEEN THE UK AND THE RUSSIAN FEDERATION
Finance
Comparison of Online Banking between the UK and the Russian Federation
(700 words)
A review of the academic literature which compares online banking in the United Kingdom (UK) and in Russia was done. The object of the review was to learn the similarities and the differences between the UK and Russia in terms of the types of users, the services offered, the advantages and disadvantages of online banking, the future trends, how non-users are impacted and the financial and economic results of online banking. Many searches were carried out in order to find information on these subjects. A few of the more successful search words were “online banking” “e-banking” “TAM” “electronic payments” and “Internet banking.” A few of the most important findings are discussed below.
Literature Review
Hernández-Murillo, Llobet, and Fuentes (2010) learned that banks most often based their decision to offer online banking because it was seen as preferable to opening new bank branches. In a huge country like Russia this strategic decision is very important because the centers of banking, Petersburg and Moscow, leave so many potential customers in the middle of the country. In the UK distances are small in comparison. When competitors start offering online services then banks rush to do the same but a strategic adoption of online banking service are shown to be the most successful. (Hernández-Murillo, Llobet, & Fuentes, 2010) Abessi and Haghighy (2011) used the Hofsted Model to research the influence of culture on internet banking because culture has not been included in most Technology Acceptance Model (TAM). The research showed that Russia presents the following dimensional elements “power distance, low Individualism and a high level of Uncertainty Avoidance Index (UAI).” (Abessi & Haghighy, 2011) On the other hand the UK shows a “low dimension in power distance and high individualism with low level of UAI.” (Abessi & Haghighy, 2011, 3). Two important cultural dimensions that impact a person’s intention to use e-banking are the “perceived ease of use and the perceived behavioral control”. (Abessi & Haghighy, 2011, 10)
Total Internet users in Russia numbered 59,700,000 at the end of 2011 which is about 42.8 percent of the total population; between the years of 2000 and 2010 a 1,825.8 percent increase was reported. (How many, 2010) The number of Internet users reported on December 31, 2011 for the UK totaled 52,731, 209 representing about 83.5 percent of the total population. (Internet Usage, 2012) The increase for UK during the 2000 decade was 234 percent. Thirty percent of the people in the United Kingdom who took part in a survey said they bank online. (Whitney, 2009) The amount of total payments in the Bank of Russia payment system in 2011 was reported to be 1,187,607; out of those total payments 1,186,895.4 were electronic payments compared to 712.2 were paper- based (CRF, 2011, 150)
‘Click and Mortar’ banks offer their customers both online and on-location banking which means the banks have both a virtual location (a website), a physical location for customers who prefer to do their banking in person. Migdadi (2008) reported that the quality of service between online and on-location banking was considered to be almost equal by bank customers. The Internet changes the way that customers choose banking and financial services because now banks have websites so prices and benefits can be compared easily in a customer’s home. Therefore loyalty has become a big concern for banks. Forty three percent of Russian banking customers and 40 percent of UK banking customers say they are unsure about leaving the bank they use and/or are likely to leave. (Capgemini, 2012) )
Conclusion
Unfortunately the original goals set for this literature review were not met as academic researchers have not approached the subject of banking using that particular information in their research. Also very little was found which could be used to directly compare the UK to Russia on the subject of online banking. Although it is clear that the UK has a majority of its population using online banking whereas Russia still has a lot of work ahead to offer online banking to the majority of its population. When online banking is available, consumers have not reported perceptible differences in the quality of service. The avoidance of using online banking is not only based upon technical issues; it also has cultural dimensions so when developing online strategies Russian banks need to incorporate culture into the design of the electronic services they decide to offer).
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