Relationships Between the Application of Banking Technologies

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Relationships Between the Application of Banking Technologies and the Performance of
Commercial Banks in China
Yuling Fu
Enrolment number: FUY15615651
Supervised by: Christopher Firth
University of Lincoln
Msc Accounting & Finance
Submission date : 25th sep 2017
Word count: 16132

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Relationships Between the Application of Banking Technologies and the Performance of
Commercial Banks in China
Yuling Fu

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Acknowledgments
First of all, I would like to thank my tutor for instructions, MR Christopher Firth . Without
these knowledge and research skills , I would not have finished this research. Without the
patient guidance and modifications, it would be difficult for me to finish this research.
Secondly, I want to thank my friends who have helped me to conduct the two interviews and
questionnaires. I set the study scope in China and some of my friends helped me to collect
primary data. With their help, I could complete my research within limited time and resources.
At last, I want to thank the two interviewees and all the participants who fill in questionnaires.
Without their support, the research could not have conducted.

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Abstract
Financial institutions in developed countries have applied financial innovations and banking
technologies in order to develop innovative products offerings, cut operational costs, increase
revenues, improve organizational performances. It is it is significant to research the relations
between the application of banking technologies and performances of commercial banks in
China.
Research purpose: The purpose of this study is to identify how does the application of credit
cards as well as the e-banking system influence performances of commercial banks in China.
Research method: This study applies the mixed researching method which contains both the
qualitative and the quantitative researching methods. The case study researching strategy is
applied through collecting information and data from both the primary resource and the
secondary sources. The case study focuses on two important commercial banks in China,
including China Merchants Bank as well as the Bank of Communications. This study applies
the abduct method and the SPSS data analysis tool to analyze data collected.
Key findings: There is a significant positive link between the application of credit cards and
e-banking systems and the performance of commercial banks in China. There is not a positive
link between the application of credit cards and e-banking systems and operational risks for
commercial banks in China.
Recommendations: Commercial banks in China is recommended to enhance commercial
banks’ abilities of risk prevention plus risk control, facilitate innovation ability, as well as
value the potential of both existing clients and rural customers.
Limitations: Secondary data used is not accurate and primary data collected is not
comprehensive.
Table of contents

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Abstract.......................................................................................................................................4
Chapter 1: Introduction...............................................................................................................8
1.1 Research background.....................................................................................................8
1.2 Research objectives and research questions...................................................................9
1.3 Research design............................................................................................................10
1.3 Structure outline...........................................................................................................10
Chapter 2: Literature review.....................................................................................................11
2.1 The application of credit card and banks’ performances..............................................11
2.2 The application of e-banking systems and performances of commercial banks..........12
2.2.1 The application of e-banking in America and European countries....................12
2.2.2 The application of e-banking in developing countries.......................................14
2.2.3 The application of e-banking in China...............................................................15
2.3 Research gaps...............................................................................................................18
2.4 Critique of the existing literature relevant to this research..........................................18
2.5 Identification of hypothesis..........................................................................................19
Chapter 3: Research methodology............................................................................................20
3.1 Research method..........................................................................................................20
3.2 Research design............................................................................................................20
3.3 Data collection approaches..........................................................................................21
3.4 Data analysis approach.................................................................................................22
3.5 Conceptual framework of this research........................................................................22
3.6 Limitations of this research..........................................................................................23
Chapter 4: Findings...................................................................................................................24
4.1 Case commercial banks in China.................................................................................24
4.2 Hypothesis analysis......................................................................................................25
4.2.1 Respondents analysis.........................................................................................25
4.2.2 Evaluation of hypothesis....................................................................................26
Chapter 5: Discussion...............................................................................................................41
5.1 Enhance commercial banks’ abilities of risk prevention plus risk control...................41
5.2 Enhance innovation ability...........................................................................................42
5.3 Value the potential of both existing clients and rural customers..................................43
Chapter 6: Conclusion...............................................................................................................45

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6.1 Key findings.................................................................................................................45
6.2 Recommendations........................................................................................................46
6.3 Limitations...................................................................................................................46
References.................................................................................................................................47
Appendixes: Interviews.............................................................................................................53
Appendix 1: The interview of the banking manager from China Merchants Bank...........53
Appendix 2: The interview of the banking manager from Bank of Communications.......55

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List of tables and figures
Page
1. Figure 1: Conceptual framework of this research 23
2. Table 1: Year (Years) work for commercial banks in China 25
3. Table 2: The application of credit cards and the performance
of commercial banks in China. 29
4. Table 3: The regressions model fitness for the application
of credit cards and the performance of commercial banks in China. 29
5. Table 4: The ANOVA result for the application of credit cards and
the performance of commercial banks in China. 30
6. Table 5: The application of credit cards and operational risks of
commercial banks in China. 32
7. Table 6: The regressions model fitness for the application of credit
cards and operational risks of commercial banks in China. 33
8. Table 7: The ANOVA result for the application of credit cards and
operational risks for commercial banks in China. 33
9. Table 8: The application of e-banking systems and the performance
of commercial banks in China. 36
10. Table 9: The regressions model fitness for the application of e-banking
systems and the performance of commercial banks in China. 37
11. Table 10: The ANOVA result for the application of e-banking systems
and the performance of commercial banks in China. 38
12. Table 11: The application of e-banking systems and operational risks
for commercial banks in China. 39
13. Table 12: The regressions model fitness for the application of credit
cards and operational risks for commercial banks in China. 40
14. Table 13: The ANOVA result for the application of credit cards and
operational risks for commercial banks in China. 40

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Chapter 1: Introduction
1.1 Research background
The enhancement of commercial banks that could be important financial institutions is
significant for a huge number of countries to promote their economic growth of China (Atay,
& Apak, 2013). In this case, it is important for commercial banks to provide efforts to
improve their organizational performances as well as increase their operation efficiency. With
the increasing development of the informative technologies and the internet, a major segment
of financial institutions in the world have used financial innovations in introducing innovative
product offerings and expanding scopes of services in order to increase operation efficiency in
the long term (Ma, 2012).
The banking system for a country is significant to move the national investments from their
saving units to their spending units. If the system financial system of a country is efficient, the
system should indicate increment in profitability, including raising funds volumes from savers
to borrowers, as well as providing better quality financial services for customers (Turban et
al., 2012).
The legal and financial systems in China are not well developed (Sok-Gee, 2011). In this case,
the banking system in China may be vulnerable in the aspect of banking survivals in the long
term. Meanwhile, the inefficient banking system and banking sector in China, the sick legal
system as well as sick financial infrastructures influenced the economic development in China
negatively (Sok-Gee, 2011). Hence, it is crucial to research approaches to improve the
efficiency of banking system in China with the purpose of making further contributions to the
economic expansion in China. Technologies are widely applied in banking systems for a great
number of countries in order to improve business growth, increase business profitability as
well as gain competitive advantages (Olaoye, & Olarewaju, 2015). The wide applicability of
information and communication technologies in developing countries has promoted
performances and improved the customer services delivering efficiency in banking industry
(Ongori, & Migiro, 2010). A majority of consumers in China can follow up the banking
services and or banking facilities through their electronic devices including their mobile
phones and computers in their daily lives (Kalathil, 2017). With the rapidly increasing internet
bankers in China and the growing application of the banking systems in Chinese banks, China