Customer Satisfaction of HSBC Online Banking Services


1. Proposed Working Title:

“Customer Satisfaction on Online Banking Services of HSBC Bank.”

2. Research Background:

This study is concerned with the pattern of online banking services in HSBC, UK and the customer satisfaction towards these services. This proposed research is to study firstly the online banking situation in HSBC banking business.  Then, because of the recognized growing importance of Internet banking, to see how this will affect customer satisfaction.

Online banking allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society. Online banking solutions have common features and capabilities as well as some unique features which are application specific.

The common features are mainly categorized into

Making financial transaction such as an account to account transfer or apply for a loan, new account, etc.

Electronic bill presentment and payment – EBPP

Funds transfer between accounts

Non-transactional (e.g., online statements, standing instructions, etc.)

Wire transfer

Features unique to Internet banking include

Personal financial management support, such as importing data into personal accounting software. Some online banking platforms allow the customers to monitor all of their accounts in one place whether they are with their main bank or with other institutions.

The main reasons of taking initiative to undertake this study was

Now a day’s online banking has brought about a revolution in the entire world.

The practice of online banking is growing exponentially in UK.

3. Literature Review

The focus of this chapter is to provide a selective review of the past research works related to the present study. A short review of the literature on electronic banking briefly illustrates the major issues that researchers and practitioners have dealt with in recent years.

Among the many challenges facing the online-banking industry, primary challenge is to maintain and improve the functionality and usability of their websites. According to an independent market analyst, emerging primary areas for online banks include web-content management to push tailored, dynamic content for customers, analytical tools to assist in customer profiling, personalization technologies to develop a more targeted service (Datamonitor, 2005). Another challenge is to be compliant with the ever-changing regulatory requirements. This challenge is to guarantee authenticity of transactions and to protect the customers from fraudulent activities. As the internet is a worldwide web of users without any significant governmental regulation and oversight, it has become an open target for unscrupulous elements. Viruses, spam, phishing, identity theft are just a few of the many undesirable side effects of the spread of the internet. Since the internet is the only mode of transactions for pure-play banks, online banks need to be extra vigilant to guarantee a safe and secure transactional environment for its users.(Smith 2008)

“The loyalty of e-banking customers is directly affected by satisfaction and trust in an online bank, which in turn are determined by Web site quality and service quality. Moderating variables such as gender, age, involvement, variety seeking behaviour and technophobia exert a significant influence on some of the proposed relationships” (Floh & Treiblmaier 2006).

At a cursory glance it may appear that the employees play a diminished role in the online retail banks vis-a` -vis traditional banks. But the employees still play a critical role in determining the success of online banks. The expectations of the online customers are key contributor for this. The customers are:

[. . .] far less forgiving online since when the means of communication and delivery are conflated, any problems or delays are associated with the brand name as opposed to cashier or member of staff. The entire bank is held accountable for unsatisfactory experience (Melewar and Bains, 2002).

Another important barrier to electronic transactions is consumer disappointment and frustration at violations of consumer privacy (i.e. privacy risk). Gerrard and Cunningham (2003) found that consumers worry that the bank may share customer profiles with other companies in the banking group and, thus, use the information to try and sell additional products. E-banking users want to control all aspects of their personal data collection (Pikkarainen et al., 2004).

Trust is especially important in online transactions. The influence of trust on the

online consumer depends on the product category considered. High levels of perceived risk are associated with some products, such as financial services. Consequently, the strategic role of consumer trust in online financial services is clearly represented. Indeed, trust is considered to be one of the main reasons why certain

consumers are still reluctant to conduct their financial transactions online

(Flavian et al.,2008).

Ability apprehended by the customer towards bank is particularly necessary for creating trust in online relationships. This is due to the consumer’s uncertainty regarding issues such as payment platforms security or the fulfilment of orders. All this, together with the constant reports of hackers’ attacks on information systems or the large number of companies that have disappeared from the Net in the last three years creates mistrust in the consumer. Consequently, the consumer will only show trust if the company is capable of showing that it has the economic, technical and human resources to tackle and meet the commitments it has taken on. Hence, companies make remarkable investments with the aim of improving their abilities, covering several aspects, such as establishing sophisticated security systems in communications or CRM (Customer Relationship Management) applications which increase the capacity to perceive the customers’ needs. (Flavian et al.,2008).

The Financial Services Authority (FSA) has fined three HSBC firms over £3 million for not having adequate systems and controls in place to protect their customers’ confidential details from being lost or stolen. These failings contributed to customer data being lost in the post on two occasions.HSBC Life UK Limited (HSBC Life) was fined £1,610,000, HSBC Actuaries and Consultants Limited (HSBC Actuaries) was fined £875,000 and HSBC Insurance Brokers Limited (HSBC Insurance Brokers) was fined £700,000. online

During its investigation into the firms’ data security systems and controls, the FSA found that large amounts of unencrypted customer details had been sent via post or courier to third parties. Confidential information about customers was also left on open shelves or in unlocked cabinets and could have been lost or stolen. In addition, staff were not given sufficient training on how to identify and manage risks like identity theft. online

Despite increasing awareness of the need to protect people’s confidential details, all three firms failed to put in place adequate procedures to manage their financial crime risks. In April 2007, HSBC Actuaries lost an unencrypted floppy disk in the post, containing the personal information of 1,917 pension scheme members, including addresses, dates of birth and national insurance numbers. In July 2007, all three firms were warned by HSBC Group Insurance’s compliance team about the need for robust data security controls. However, in February 2008 HSBC Life lost an unencrypted CD containing the details of 180,000 policy holders in the post. The confidential information on both disks could have helped criminals to steal customers’ identities and commit financial crime. online

In spite the technological advances, many customers prefer to do their banking face to face at a brick-and-mortar branch. Banks sometimes overlook the population that does not have access to computers or choose to do their business with an actual person. Nandra (2001) noted a survey where customers were asked the question,

“Compared to five years ago, my life is quite different because of the computer.” Bankers were also surveyed and asked how they thought that their customers would

respond to this inquiry. The bankers responded noting that 80 percent thought that

their customers would agree with this statement while only 7 percent thought that they

would disagree. In actuality, only 33 percent of customers agreed with this statement

while 77 percent disagreed. This is a drastic difference in the banking industries

perception of its customers (Smith 2008).

In general, the online-banking environment is susceptible to numerous fraudulent activities. As a financial services firm, online banks would have to guarantee safe and secure environment to its end-users, failing which would result in significant losses to the customers and could threaten long-term survivability of the bank itself. The onus is on the IT staff of the banks to be vigilant and take proactive steps to protect the bank and its customers. The IT staff would expect to be compensated fairly for being extra vigilant (Smith 2008).

4. Research Questions

The prime question that provoke from this research proposal is Customer satisfaction at HSBC, UK been affected by On-line banking. In addition to the above question some more questions will be thought upon as the research progresses, such as

What are the feature elements of traditional banking?

What is reliability of security system of the online banking?

How online banking service quality can be improved?

5. Research Objectives

The reasons behind conducting this study are clear and motivational towards the achieving of goals. Objective is given special emphasis on the customer satisfaction on online banking services in HSBC, UK. The Internet has allowed applications to be extended to customers of an organization, where interaction can take place through a web site, typically from home or office. The focus of attention with such applications is customer satisfaction

The major objectives of the study are given below-

1. To observe the present scenario of online banking practice in UK.

2. To identify the strength and weakness of online banking services.

3. To know the expectations of customers and reality of online banking services.

4. To make recommendation on the basis of customer’s demand.


Schaffer and Riordan (2003) Explains how to research about any organization, issues, key problems and how to develop methodology. Methodology starts analyzing the issue or research topic, gathering related research work from different source, then structuring order of research work, next step is to check and validate all gathered data, ignoring wrong data which is meaningless and not conclusive.

Exploratory method of research will be used for this study. as there is some data available on the study of current online banking in banks across UK. Exploratory method is a statistical method which works on simple data such as one dimensional data. (Huber, 1985; Jones and Sibson, 1987). For research development Methodology plays important role and directly impact validity of research (MGrath & Brinberg, 1983).

6.A. Population of the Study:

The customer’s of the HSBC bank in London have been considered as the population of the study.

6.B. Sources of Data:

There are two types of data that will be used in research. These are primary data and secondary data.

1. Primary data: In primary data collection, the data will be collected using methods such as interviews and questionnaires. Collecting data directly from the practical field is called primary source of data. The methods that will be used to collect the primary data are as follows:

Discussion with officials of the HSBC bank.

Face to face conversation with the customers of HSBC.

Open-ended & close-ended questionnaire method.

Observation method (in some cases, if required).

2. Secondary data: Secondary data is data that has already been collected by someone else for a different purpose. To clarify different conceptual matters, Internet and different articles published in the journals & Magazines will also be used. The secondary sources are:

Annual Reports of HSBC Bank.

Other published documents of HSBC bank.


Newsletters of HSBC Bank.

Various brochures on the products and services offered by the bank.

7. Data Analysis:

Both way of qualitative and quantitative analysis will be done after understanding implications of data. For quantitative data we propose data matrix analysis. Understand individual variable affecting data and examine relation between variable also use most appropriate tables and diagram. And verify that table, diagram and statistics are correct. For analysis of qualitative data use ‘data display and analysis’ which have three sub processes first is data reduction, second is data display in graphical or pictorial order and last is verifying data and conclusion. Data reduction means summarizing, simplifying data and focus on important part. Display involves reduce selected data into diagrammatical way. Reduction here is deletion of unnecessary data. Miles and Huberman (1994)

8. Resource requirements

Library and internet facilities will form lions share for gathering the details for published or soft copies of Literature review. further interviews with customers of HSBC’s online banking will also be conducted via telecommunications or internet as per their preferences. These interviews along with discussions with HSBC officials will constitute the primary data and the secondary data will be gathered from the research papers, periodicals, encyclopaedias, published researches, database companies.

9. Time scale:


June 10

July 10

August 10

W/k commencing










Read literature



Finalize objectives



Read methodology literature






Devise research

strategy and method



Draft research

strategy and method



Access planning to

Interact with customers of HSBC





Develop schedule of

question for interviews




In-depth interview with HSBC officials




Interviews of customers of HSBC




Gather data



Analyze Data


Draft findings chapter

Update literature read

Complete remaining


Draft to Supervisor

for feedback

Revise draft

Print, bind


10. Ethical Considerations

Ethical issues may interfere and are of great concern for the study. Emphasis will be laid upon following points to avoid all sort of negative impacts,

Privacy of all possible and actual participating members will be ensured and respected.

Participation will be purely voluntary basis.

All gather data will be fairly and lawfully processed.

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