Research Title for Defense Proposal

Student Name:
Student ID

1
 Contents

• Chapter 1: Introduction
• Chapter 2: Literature Review
• Chapter 3: Research Methodology
• Chapter 4: Data Analysis
• Chapter 5: Discussion and Conclusion

2
Chapter 1 : Introduction

3
Background of the Study

• Virtual banking covers the whole spectrum of banking via the use of
internet such as mobile banking, internet banking, desktop banking, phone
banking.

• Technology innovation compels organizations across the world to increase

independence in reinforcing growth (IMF Malaysia, 2014) and have
transformed the way banks reach out to customers (Ramlugun and Issuree,
2014).

• Competition between banks forces global banks not to undermined the

importance of digitization (Limb,2016).

4
Background of the Study

• Virtual banking creates convenience in which banking services is

accessible in a single handset (Asfaw,2015; Pallab and Munish (2015)

• The proliferation of mobile devices and payment systems makes virtual

banking highly accessible even to the unbanked customers (Sharma,
2011;Ghosh and Zapan, 2015)

• Facebook, Google, Amazon, Apple, and Square are going to gain the
customer trust with their mobile payment solution (The Financial Brand,
2015)

5
Current Situation of the Use of Virtual Banking In Malaysia
• Mobile technology evolution has enabled users to convert their handsets to
a sophisticated gadget. But, only a handful of customers appears to be
benefiting from the virtual banking application features (Bojei & Alsheikh, 2013).

Table 1: Internet Banking & Mobile Banking Subscriber in Malaysia

Penetration rate in
Internet Banking
Number of Subscribers Penetration
Mobile Banking
Penetration rate (%)
internet banking and
Number of
Total Individual Corporate
to population
(%)
subscribers To population
To mobile mobile banking in
million 000 subscribers
2005 2.6 2.5 0.1 9.8 2005 127.6 0.5 0.7 Malaysia from the year
2006 3.2 3.2 0.0 12.0 2006 246.7 0.9 1.3
2007
2008
4.6
6.2
4.5
6.1
0.1
0.1
16.9
22.5
2007
2008
367.6
574.6
1.4
2.1
1.6
2.1
2005 to November
2009
2010
8.1
9.8
8.0
9.6
0.2
0.2
28.9
34.4
2009
2010
675.0
898.5
2.4
3.1
2.2
2.6
2016 which shows a
2011
2012
11.9
13.7
11.6
13.4
0.2
0.2
40.9
46.4
2011
2012
1,560.3
2,446.2
5.3
8.2
4.3
5.9
penetration rate of less
2013
2014
15.5
17.6
15.2
17.3
0.3
0.3
51.9
58.2
2013
2014
4,378.8
5,639.2
14.6
18.6
10.2
12.9
than 25% of the total
2015
Nov 16
19.8
23.5
19.2
22.8
0.6
0.7
63.7
74.2
2015
Nov 16
7,278.8
9,187.5
23.5
29.0
16.5
n.a.
mobile or internet
subscriber
• n.a. Not available

• Source: Balance of Payment (Bank Negara Malaysia Report, 2016) 6

Table 2: Summary Payment Indicator

Table 2 summarizes payment

mode via issuance of cheque
has reduced over the 5 year
period while e- payment
increased.

Therefore, the importance of e-payment or virtual banking can no longer be

ignored in Malaysia
Source: Bank Negara and its’
Malaysia: Malaysia’s potential
Payment growth is promising.
Statistics (2016)

7
 Problem Statement
Based on the findings of the literature, preliminary surveys and interviews, the rising issues of
internet crime, personal data infringement, financial cost imposed to perform virtual banking
transactions, huge gap between the successfulness in virtual banking implementation
comparing banks in Malaysia and the United States ( IMF Report, 2014; Ernst & Young Report,
2013), the current study has identified there is an issue with regards to customers’
perception and effectiveness of the virtual banking strategy, which has constituted to low
adoption rate in virtual banking within the Malaysian local banks (Bank Negara Malaysia, March
2015)

Therefore, it is essential to identify how customers’ perceive virtual banking services offered
by the Malaysian local banks. In this study, Reliability (Re), Financial Cost (FC), Trust (Tr),
Security (Se), Privacy (Pr) and Innovation (In) will be tested to identify customers perception
with regards to their satisfaction and loyalty achieved through virtual banking strategy. These
factors were found to influence the adoption of virtual banking in previous studies by Islam
(2014); Daud et.al., (2011); Shanmugam and Savarimuthu (2014); Marsek, Uril & Kahirudin
(2012) and Markal (2015).

9
Main Objective
To determine the achievement and effectiveness of virtual banking strategies by the local
banks in Malaysia in achieving customer satisfaction and loyalty.

Specific objective
1. To identify the factors influencing the achievement in customer satisfaction and loyalty
through virtual banking strategies.

2. To identify customers perception, acceptance and effectiveness with regards to virtual

banking reliability.

3. To study customers perception on financial cost imposed when performing virtual

banking transactions.

4. To study customers perception with regards to their trust, security and privacy in using
virtual banking platform.

5. To study customers’ perception on banks’ virtual blanking innovativeness and

approaches when using virtual banking platforms. 10
 Research Question

1. Are banks’ current strategies to increase customers satisfaction and loyalty through its
virtual banking among local banks in Malaysia effective?

2. What are customers perception, acceptance and effectiveness with regards to

reliability in virtual banking platform and do customers find it reliable?

3. What are customers perception on financial cost imposed by the banks?

4. What are customers perception with regards to trust, security and privacy when
performing virtual banking transactions?

5. What are customers perception and acceptance level with regards to innovation in
virtual banking?

11
 Significance of the Study

• A substantial contribution to the knowledge gap of concept focused on how local banks in
Malaysia can use virtual banking strategies as a tool to increase customer satisfaction and
loyalty.

• By the end of this study, it will summarize customers’ perceptions on reliability, privacy,
security, trust, financial cost imposed and innovation, thus, give a clear guidance on banks’
future strategy to be implemented.

• These findings will assist local banks in Malaysia to understand the effectiveness of their
marketing approaches to achieve customers satisfaction and loyalty through virtual banking
strategy.

12
 Limitations of the study

1. Limitation of self selection and self reporting. Literatures are based on latest study available.
However, with the spawn of the internet and proliferation of mobile phones in this digital era,
this study may not be able to completely covers all spectrum of virtual banking strategy which
may influence the result in this study area.

2. Multi response on questionnaires distributed may not represent the true demographic setting
and situation of the area of research. Distribution of questionnaires were focused in Klang Valley
where all the banks available in Malaysia is found.

3. Limitation on literature study on specific area of research on virtual banking strategy though
various studies been done on what influence virtual banking adoption in achieving customer
satisfaction and loyalty.

13
Chapter 2 : Literature Study

14
Virtual Banking Strategy To achieve CS & CL in VB Factors that will affect VB

Management of Theories Theories:

1. Reliability
1. Competitive Advantage 2. Security
1. Customer
2. Differentiation 3. Financial Cost
Satisfaction Theory
3. Resource Based View 4. Privacy
2. Customer Loyalty
4. Diffusion of Innovation 5. Trust
Theory
6. Innovation

Models used to verify the factors that

will affect VB

Models and Theories Previously Approached.

1. Technology Acceptance Model
2. Theories of Reasoned Action
3. Theories of Planned Behavior
4. Diffusion of Innovation

15
Chapter 3: Research Methodology

16
 Sampling Process
Component Selection
Research Approach Deductive Approach.
Research Padadigm Positivist Paradigm.
Method Survey Method.
1. Relatively less expensive.
2. Survey method is useful in describing the characteristic of a large population.
Justification of Survey Method 3. Can be administered in many mode.
4.The anonymity of surveys allows respondents to answer with more candid and valid
answers.
Type of Data Primary data.
Study Population Internet and Mobile banking users in Malaysia.
Unit of Analysis Individuals using mobile or internet banking.
Sampling Frame Kuala Lumpur region; Klang Valley.
Sampling Technique Random sampling
Justification of Sampling It justifies the rule of thumb suggested by Sekaran and Bougie (2016), as well as Hair et al.
Technique (2012) goodness-of-fit measurement.
Sample Size 384 (Sekaran and Bougie, 2016)
Instrument Development Self-administered close-ended questionnaire.
Pilot study. Testing of Reliability show Cronbach's Alpha of 0.980, thus data reliable. (Sekaran
Pre-test and Item Modification
and Bougie, 2016)
Data Collection 1. Face to face
2. Appointed administrators to distribute and collect questionnaires in a given period of 3
months (Aug 16 to Oct 16)
Data Coding Numeric
Data Analysis Four stages
Statistical Technique of Data
SPSS version 16 and AMOS version 16
Analysis
SPSS is capable of handling large amounts of data and can perform all of the analyses
covered in the text and normally used in Social Sciences and in the business world.
Justification for Statistical
Technique of Data Analysis Amos enables a researcher to specify, estimate, assess and present models to show
hypothesized relationships among variables, build more accurately model and build
attitudinal and behavioral models that reflect complex relationships
17
Conceptual Framework
Independent Variables

Reliabilty H1
Anthony & Mutalemwa (2014)

Financial Cost H2 Mediating Dependent

Makhal, (2015) Variables Variables
Customer
Trust H3
Virtual Banking H7
Satisfaction
Sagib & Zapan, (2015) Strategy and Loyalty
Security
Fathima & Muthumani (2015) H4

Privacy
Makhal, (2015) H5

Innovation
Agarwal &Prasad (2012) H6

18
 Chapter 3: Research Method
Research Hypotheses
Hypothesis 1 . There is a relationship between reliability in virtual banking platform and customer
satisfaction and loyalty.

Hypothesis 2 . There is a relationship between financial cost as a virtual banking strategy in achieving
customer satisfaction and loyalty.

Hypothesis 3. There is a relationship between trust in virtual banking platform and customer satisfaction
loyalty.

Hypothesis 4. There is a relationship between security in virtual banking platform and customer satisfaction
and loyalty.

Hypothesis 5. There is a relationship between privacy in virtual banking platform and customer satisfaction
and loyalty.

Hypothesis 6. There is a relationship between Innovation strategy in virtual banking and customer
satisfaction and loyalty

19
Hypothesis 7. There is a mediation relationship between virtual banking strategy and customers satisfaction
Thank you

20