University Literature Review: Internet Banking Benefits & Drawbacks

This literature review provides an overview of internet banking, exploring its various facets and implications. It begins by defining internet banking and its functionalities, highlighting how it enables users to conduct financial transactions online. The review then delves into the benefits, such as convenience, 24/7 availability, and efficiency, as well as the drawbacks, including security concerns and the digital divide. The discussion extends to customer loyalty, examining how banks can foster it through online services, and explores diverse applications like bill payments and fund transfers. Furthermore, the review addresses the crucial aspect of security in internet banking, outlining security measures such as encryption and fraud monitoring, as well as threats like Trojans and phishing. The analysis includes insights from various academic sources, providing a comprehensive understanding of the current landscape and future of internet banking.

Running head: LITERATURE REVIEW ON INTERNET BANKING
Literature review on Internet Banking
Name of the Student
Name of the University
Author note

1LITERATURE REVIEW ON INTERNET BANKING
Table of Contents
1. Overview of internet banking..........................................................................................3
2. Benefits of internet banking.............................................................................................4
3. Drawbacks of internet banking........................................................................................5
4. Developing customer loyalty...........................................................................................5
5. Applications of online banking........................................................................................7
6. Security in internet banking.............................................................................................8
7. Summary..........................................................................................................................9
References..........................................................................................................................11

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1. Overview of internet banking
Martins, Oliveira and Popovic (2014) stated that internet banking is one of the electronic
payment systems. It enables the users of other financial institution conducting multiple financial
transactions by website or online applications. The software of internet banking can provide
personal as well as corporate banking service offering various features like viewing balances of
accounts, checking statements of recent transactions as well as making payments. On the other
hand, access is generally through a secured web site using username as well as password.
However, security is the major consideration in internet banking. Therefore, it is required to take
effective steps to secure the process.
Apart from these, banks deliver latest products as well as services over internet. It is
performed with the help of a system that is able to connect the site of banking via internet.
Banking becomes no more limited in going as well as visiting the bank for several purposes such
as depositing as well as withdrawal of money. In addition, requesting statement of account and
stop transaction can be achieve by internet banking (Laukkanen, 2016). The online services are
different from a bank to another. In order to understand about the online services, it is required to
go through the welcome kit during opening an account. The general online services are
transactional activities and non-transactional activities.
2. Benefits of internet banking
Online banking has several benefits such as on-demand access to the internet. There is no
need to switch the banks when it is required to move. Sending a secured by online banking need
more security compared to standard email. There are several applications that will sync with the

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online banking information. It makes the process sticking to the budget easier. Online
applications are managing transactions easier. It is vital to be careful when doing online
transactions. In addition, it is required to ensure that password is strong so that others cannot
crack it easily. Monitoring accounts regularly for the fraudulent charges as well as avoid using
the public Wi-Fi during accessing the accounts is not safe for the users. Internet banking has
various advantages overall conventional channel of banking. It also allows conducting several
transactions using the website of bank as well as offers multiple benefits. The benefits of internet
banking can be listed as followed.
 Online banking is convenient to pay bills online and transfer funds between the
accounts.
 Internet banking is available 24*7 (Hanafizadeh, Keating & Khedmatgozar,
2014).
 Online transactions are fast as well as efficient. The funds are transferred from an
account to another fast. It helps to manage multiple accounts easily.
 It plays a great medium for the banks for endorsing the products as well as
service. It includes loans, options for investment and others.
 Online banking charges lower mortgage as well as loan rates.
 Online banking consists of mobile capabilities. There are new applications that
are created for expanding as well as enhancing the capability on smart phones as
well as different mobile devices (Bratawisnu, Giri & Rinaldi, 2017).
There is several retail banks that provide promotions for the mortgages, credit cards a
well as auto loans to the existing customers. The ability of visiting local bank as well as gaining
financial advice would be helpful for the process. There are several retail banks that offer own

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mobile applications that feature similar financial services. The retail banks offer mobile
applications that feature similar features, which are offered by online banks. After evaluation of
the survey, it has been found that there is a proper distinction between the interest rates at the
online banks. Hence, it is important to focus on the procedures and take effective actions so thay
the users can obtain benefits.
3. Drawbacks of internet banking
Although there are several benefits of internet banking, there are some limitations of
internet banking. The disadvantages of internet banking can be listed as followed.
 Comprehending the use of internet banking is difficult for a person who does not
know the use of internet properly. There might be several sites offer demos on the
process of accessing online accounts (Tarhini et al., 2016). However, it is difficult
to use at the first go where pressing a different option can lead to face issues.
 Security of transactions is one of the major issues. The account information of the
user might be hacked by unauthorized people over internet.
4. Developing customer loyalty
Chaouali, Yahia and Souiden, N. (2016) mentioned that one of the major factors in
internet banking expansion and development is development of customer loyalty through the
process. The organizations and customers acquire several ways of communication that leads to
impact on the banking industry. Improving customer loyalty serves as one of the primary
strategies in order to obtain competitive benefits in the banking. On the other hand, technological
developments specifically in telecommunication along with information technology modernize

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the banking industry. However, reviewing related practices of e-banking practices, the
customers’ loyalty become the major attendants of e-banking practices.
The organizations are striving for achieving customer loyalty as the core consequence in
order to obtain competitive benefits. Hence, loyal customers are the valuable assets of a company
in globalized level (Amin, 2016). They recognize that information technology become a vital
pillar for creating loyalty among the customers. Layout of content and website, privacy, security,
accessibility and influence in loyalty of the customers on the selected commercial banks are
important to evaluate. On the other hand, internet banking allows users in doing banking
transactions after regular banking hour. There is also positive relationship between internet
banking as well as satisfaction of the customers. The factors have an impact on internet banking
services like reliability, security, privacy as well as responsiveness.
On the other hand, the credit institutions did not make any efforts in order to investigate
as well as support the organization (Arenas Gaitán et al., 2015). However, the situations have
been changed significantly for drastic minimization of consumption of the banking products. In
this perspective, it is required to rethink about the promotion strategies as well as paying more
attention to the components that have a great impact on satisfaction of the customers consisting
of digitalization of banking products without additional costs.
5. Applications of online banking
Internet banking allows the customers using the banking services from a system that has
internet access (Phu et al., 2018). In addition, the features of online banking like statements of
bank, loan applications, transferring funds, e-bill payments as well as aggregation of accounts
allow the customers monitoring the accounts in a place. Bill payment is one of the major features

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of internet banking. Users can pay bills through online instantly using the online baking features.
However, lack of physical locations seems to make withdrawal of funds from online banks. The
online banks recognized the issue as well as devised creative methods for the process. The online
banking partners with ATM providers make easy case available. Several online banks restored
to the ATM free reimbursements to the circumvent as the lack of physical locations. On the other
hand, the banks give ways access to cash fast as well as efficiently. Hence, it is important to
focus on the process.
Stoica, Mehdian and Sargu (2015) stated that ttelephone banking is one of the services
provided by banks that provide the customers performing transactions over phone. The telephone
banking system utilizes automated system to answer the keypad response and recognition of
voice. In order to prove identity of the customers, it is required to provide numeric and verbal
password. In most of the times, there will be customer representative to which the consumers
speak. The customers are considered as the representatives who are trained to process the tasks
that are available at the branch such as orders of chequebook, change of address and
replacements of debit card.
SMS banking is one of the services permitting the banks to select the banking services
from the users’ mobile through sms messaging (Takieddine & Sun, 2015). The pull messages are
sent by consumers for some information in order to perform a transaction in the account. The
customers have choice of list or the services that are required to inform. Interactive-TV banking
is one of the services that allow the users interacting TV content as it is viewed. It is named as
iTV. The customer can subscribe to television service for banking facilities.

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In addition, there is 10% people used internet banking services that provided for
usability and security concerns (Boateng et al., 2016). However, 88% of e-banking users visit
banking households using mobile banking by 2020. The issues encountered by the disabled
people as well as ageing population are using the e-banking system. In addition, use of internet
banking service is easy for the users and can be able to interact with the use of internet. It is also
easy to become skilful at the use of internet banking service and use of internet banking service
become easy. Use of internet banking would be helpful to accomplish the task quickly. However,
it is required to have proper security in internet banking so that the customer does not face any
issues in using internet banking. The channels should be secured enough so that sensitive
information can be passed securely.
6. Security in internet banking
According to Hassan, Iqbal & Iqbal (2018), the internet banking system needs to be
protected by several advanced as well as reliable security measures. It is important to keep
comprehensive protection at the time of login process, reminders of password change. In
addition, the single use SMS codes for authorizing the transactions are important. There are
several way in which fraudsters may try deceiving the process of providing personal as well as
security details. Trojan is one of the internet viruses that receives installed in the system during
browsing internet from unsecured websites. After installing Trojan in the system, the malware
can monitor online activities as well as steals confidential information like passwords and
numbers of credit cards. The phishing emails are the fraudulent emails that claim to come from
authorized channel. It involves installation of malware and spyware, which can read sensitive
information that consists of details of users, passwords as well as PINs during the contact on
channel.

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On the other hand, the money mules are recognized as unaware victims (Kazi, 2016). The
fraudsters ask for upfront payment as investment, which will receive stupendous returns in order
to make transactions using the account. The funds transfer can lead into criminal
misdemeanours.
In order to overcome the security issues, it is required to take some steps like always
using the genuine anti-virus software (Amin, 2016). In order to protect the system from phishing,
malware as well as other security threats, genuine anti-virus software can be helpful to detect and
remove spyware, which can steal sensitive information. In addition, the use of public Wi-Fi or
using VPN software may lead to face security issues. Hence, it is essential to avoid those during
the use of internet banking. The users need to check latest updates of the operating systems that
are used for internet banking (Al-Ajam & Md Nor, 2015). Apart from these, change of
passwords can be helpful for securing internet banking.
Online banking needs to take specific precautions to ensure that the experience of users is
safe as possible. The methods utilized for protecting online banking are encryption, fraud
monitoring, two-step authentication, security questions and login alerts. Banks have tendency to
utilize 128-bit encryption in order to protect the information. Fraud monitoring need to enabled
in the process. On the other hand, two step authentication can be better option for security.
7. Summary
Internet banking can allow a user executing financial transactions through internet.
Convenience is one of the major benefits through which several activities like paying bills and
transferring fund can be performed easily. It is fast as well as efficient. However, some security

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issues are generated in internet banking for which specific measure need to take to get the
potential benefits.

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References
Al-Ajam, A. S., & Md Nor, K. (2015). Challenges of adoption of internet banking service in
Yemen. International journal of bank marketing, 33(2), 178-194.
Amin, M. (2016). Internet banking service quality and its implication on e-customer satisfaction
and e-customer loyalty. International journal of bank marketing, 34(3), 280-306.
Arenas Gaitán, J., Peral Peral, B., & Ramón Jerónimo, M. (2015). Elderly and internet banking:
An application of UTAUT2. Journal of Internet Banking and Commerce, 20(1), 1-23.
Boateng, H., Adam, D. R., Okoe, A. F., & Anning-Dorson, T. (2016). Assessing the
determinants of internet banking adoption intentions: A social cognitive theory
perspective. Computers in Human Behavior, 65, 468-478.
Bratawisnu, M. K., Giri, R. R. W., & Rinaldi, R. (2017, May). Association perception customer
feedback with text network analysis in social media (case study on internet banking BRI,
BCA, Mandiri in Indonesia). In Information and Communication Technology (ICoIC7),
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Chaouali, W., Yahia, I. B., & Souiden, N. (2016). The interplay of counter-conformity
motivation, social influence, and trust in customers' intention to adopt Internet banking
services: The case of an emerging country. Journal of Retailing and Consumer
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Hanafizadeh, P., Keating, B. W., & Khedmatgozar, H. R. (2014). A systematic review of Internet
banking adoption. Telematics and informatics, 31(3), 492-510.

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Hassan, M. U., Iqbal, A., & Iqbal, Z. (2018). Factors affecting the adoption of internet banking in
Pakistan: an integration of technology acceptance model and theory of planned
behaviour. International Journal of Business Information Systems, 28(3), 342-370.
Kazi, A. K. (2016). An empirical study of factors influencing adoption of Internet banking
among students of higher education: Evidence from Pakistan. International Journal of
Finance & Banking Studies (2147-4486), 2(2), 87-99.
Laukkanen, T. (2016). Consumer adoption versus rejection decisions in seemingly similar
service innovations: The case of the Internet and mobile banking. Journal of Business
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Martins, C., Oliveira, T., & Popovič, A. (2014). Understanding the Internet banking adoption: A
unified theory of acceptance and use of technology and perceived risk
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Phu, N. H., Van Nhan, H., Yen, H. T. P., & Tam, N. Q. (2018). Technology Acceptance and
Future of Internet Banking in Vietnam. Форсайт, 12(2 (eng)).
Raza, S. A., Jawaid, S. T., & Hassan, A. (2015). Internet banking and customer satisfaction in
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Stoica, O., Mehdian, S., & Sargu, A. (2015). The impact of internet banking on the performance
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Takieddine, S., & Sun, J. (2015). Internet banking diffusion: A country-level analysis. Electronic
Commerce Research and Applications, 14(5), 361-371.

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Tarhini, A., El-Masri, M., Ali, M., & Serrano, A. (2016). Extending the UTAUT model to
understand the customers’ acceptance and use of internet banking in Lebanon: A
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