A FRAMEWORK FOR ANALYZING & COMPARING E-BANKING CAPABILITIES

Arwa F. Al Saud and Ali E. Abdallah

Institute for Computing Research London South Bank University 103 Borough Road, London SE1 0AA - U.K.

ABSTRACT E-banking offers crucial services for e-society. Without e-payment most e-commerce and e-business services wouldnt have existed. The state of e-banking greatly varies depending on a number of criteria such as country, brand and culture. The aim of this paper is to introduce a conceptual framework for understanding, analyzing, evaluating and comparing ebanking capabilities. The framework identifies key qualitative factors for analyzing e-banking services targeted at a specific market together with appropriate quantitative methods for providing useful measurements of these factors. Much of the e-banking studies can be seen as specific instances of applying this framework. KEYWORDS

E-banking, e-commerce, e-capabilities, measure, comparison, evaluation methods, mathematical models.

1. INTRODUCTION
The Internet has opened new opportunities in all walks of life, particularly in e-commerce, e-business, elearning and e-banking. In this information age, it has become seamlessly possible to conduct business transactions online without having to physically visit an actual store, bank, or an organization. Indeed, the store, business or organization with which the electronic transaction is performed could be geographically thousands of miles away and possibly in a completely different country. The rate of growth in communications reflects the extent that people, businesses and organizations are relying on the Internet in their daily life. Hence, businesses in many sectors are eager to offer services which exploit current and future e-capabilities to gain a competitive edge in the global market. This is indeed the case in the financial sector: many global players currently provide a range of on-line banking facilities to cater for the requirements of their clients. Several studies aiming at providing a better understanding of e-banking have been made and numerous research papers have been published [1--8]. These papers address different issues of e-banking and can be usefully classified according to their primary objectives: discussion of the impact of information technology on the banking sector [3], assessment of opportunities and threats by emerging organizations devoted to online banking (such as egg.com) [4,5,6], evaluation of e-banking services provided by specific organizations, and country-specific studies of current trends in e-banking.

1.1 Objectives
There is lack of methodologies for understanding, analyzing and evaluating e-capabilities in the banking sector . This problem is the main focus of this paper. The aim of this paper is to introduce a conceptual framework for understanding, analyzing, evaluating and comparing e-banking capabilities. There are several separate objectives of this study:

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to identify factors that affects the evaluation of e-banking services and capabilities to design appropriate measures for each of these factors to provide an overall assessment method which combine the measurements of the individual factors (for example by proposing an appropriate weight for each factor) in order to give a useful overall evaluation of the case under consideration.

As a result of this framework, a general methodology for measuring e-banking capabilities is constructed. The evaluation of specific e-banking case studies can then be seen as systematic (step by step) applications of this methodology. The main benefit of this framework is in its generality. It does not make a specific infrastructural, technological, economical, or cultural assumption. Hence, it will be possible to use it for global comparisons. For example, to compare e-services provided by different bank in a specific country or to compare e-banking facilities provided by a single bank in several different countries. The result of this kind of studies will enable banks to critically assess their services, their competitor services, determine the extent of matching key factors in Internet customer expectations, and identify areas and means for possible improvements.

1.2 Related Work

The main research objective of a number of studies is to assess the threats and the benefits of e-capabilities in the banking sector [3,16]. Other studies focus on specific geographical areas [8, 9] or specific organizations[8]. Because of the financial sensitivity, a significant number of studies are privately commissioned by banks and businesses and not usually publicly available. Some research addressed the services provided by e-banking [5]. The main emphasis is on presenting bundled e-banking services and new products to customer via the medium of the internet. The main objective is to provide customized solutions that carefully match customers profiles[4, 10]. Other area of research addressed e-banking by adapting existing tools, that were created to assist e-commerce applications, to measure some aspects the e-capabilities. One of the tools [11] is extended web assessment method (EWAM), which is based on three criteria: usefulness, ease of use and trust. One particular organization specific case study [8] involves HSBC. It considers four relevant areas: Infrastructure (hardware, software, telecommunication backbone), Info-structure (communication protocols and conventions), Info-culture (user background knowledge), and Info-integration (capabilities for integrating online and offline organization practices). The emphasis of this study is only on the business and marketing aspects of e-banking. A typical country specific case study is exemplified by [9]. It focuses on evaluating the state of the art of e-banking in New Zealand from a customer centered perspective. It concluded that New Zealand banks have a range of desirable transaction facilities and protection measures but they would benefit from improvements in user interfaces and download times.

1.3 Organization
Section 2 introduces high level factors which form the basis of the framework. It also decomposes each factor into a number of primitive elements which influence the factor. A case justifying the inclusion of each element in the consideration is made. Section 3 provides quantitative methods for measuring each element and for evaluating each factor. Section 4 concludes the paper.

2. IDENTIFYING KEY FACTORS

The central aim of this paper is to construct an abstract framework for analyzing and comparing e-banking capabilities. To develop this framework we have to first identify key qualitative factors which affect the overall evaluation of e-banking. To help this process, we outline several high level considerations which influence the choice of these factors.

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The first high level consideration in the development of this framework is to ensure that the chosen factors are cohesive and as logically independent as possible. This property is often referred to as modularity. It will enable the effective incorporation of up to date results of other researchers studying aspects relevant to ebanking (such as infrastructures and interfaces). Therefore, it is greatly beneficial to follow the separation of concerns principle and clearly distinguish generic components in the framework that are common to all eservices/e-society applications from those components which are specific to e-banking. The second high level consideration is to strive for generality. This property will enable the framework to be applicable to a wide range of studies emphasizing geographical, organizational, or cultural aspects. One effective mechanism for achieving generalization is parameterization. This allows specific instances of the framework in which certain parameters are fixed to be used. In these cases the studies will be relative to the fixed values of these parameters. At the highest level, it is useful to classify these factors in the following categories: Provisions (functionality) User E-capability Pre-requisites Usability Effectiveness

A detailed explanation of each of these factors is given in the following subsections.

2.1 Functionality
To understand the factors underlying the provision of e-banking services, we need to identify the key qualitative functionalities being provided. This is done from the service provider (bank) perspective. The incentive for offering a richer set of services is the reward of attracting new customers and maintaining current ones. For example, bank A may offer facilities for checking account balance whereas bank B may provide additional useful facilities such as money transfer to other accounts. Based on existing e-banking services, we propose the following classifications of e-banking transactions: Read only transactions, such as querying account balance and reading account statements, that do not alter the state of the account and the stored information about any relevant account details. Read and Request transactions such as requesting a change of address and ordering a cheque book but again disallow changes in the state of the account. Inter-accounts Modify transactions within the same bank among a set of accounts held by the same person, for example t transferring money between current, saving and mortgage accounts. Intra-bank Modify transactions within the same bank that permit, in addition to the above facilities, the modification of account information such as balance and statement. Typical such operations include withdraw, standing orders and transfer to accounts held at the same bank. Inter-bank Modify transactions that permit transferring money to other account in different banks (nationally or internationally).

2.2 E-capability Pre-Requisites

When developing online banking services, it is often the case that implicit assumptions about the intended customers are made. These assumptions stretch from infrastructure, customer resources and interfaces in the intended market. When analyzing e-banking capabilities. Therefore, it seems important to do the analysis relative to the intended market and to make explicit all the implicit assumptions about the capabilities of the intended customer. Therefore, we propose the following components for understanding this factor : Infrastructure : such as telecommunication networks and IP service providers. Most services assume the availability of this pre-requisite. Without it, almost all e-services would not exist. Customer Resources

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o o

hardware such as computers, mobile phones and digital television, or software such as operating systems (Unix, Windows), communication protocols (http or SSL) and conventions (key encryption).

For example, the customer pre-requisites of an e-banking service provided through digital TV include the availability of a digital television infrastructure, digital television device and appropriate software This abstract view will enable generality in the framework

2.3 Usability
The customers first contact with the e-banking system occurs via the user interface. Because customers come from various backgrounds, this feature is crucial in the comparison. For example, some key user requirements on a web site include: Interfaces for example languages and cultural considerations in the intended market. For example, if Korean is the interface language, the service may be unusable by users who do not understand Korean. Understanding provided features. This is the fundamental component. If the provided features are not understood, the whole service will be obsolete from a users perspective. Locating required information. The ease of navigations to retrieve required information. This involves site design, menus , navigation tools, icons, site map and graphics. Ease of performing transactions This involves the user ability to correctly perform intended operations. It will also take into account provisions to prevent making unintentional mistakes, for example issuing a dialogue box to confirm amount and account number in order to complete an account transfer operation. Many websites use graphics in order to have a fancy interface which results in slow download and significantly affects performance. To keep the interests of customers, the interface has to strike a balance between visual attractiveness using graphics and time performance. A website might have a good design in term of graphics and colours, but makes it difficult to find the required information. Not all customers using e-banking services are multi-lingual. As such, the languages of the site could be chosen in such a way that the majority of the targeted potential customers can understand it. Good interface design recommendations include a clear layout, conservative use of colours, limited use of graphics, inclusion of site map, search and help facilities, interoperability with different browsers and in different resolutions and provisions for multilingual interfaces .

2.4 Effectiveness
The effectiveness of a service involves its efficiency, reliability, and security from the users perspective. These factors underlying effectiveness can be captured by two aspects: performance that covers efficiency and reliability and trust that covers security issues. Bank needs to earn customer confidence and trust in the quality of the service that they are providing. This involves ensuring accuracy (integrity and completeness) of customer information and transactions and ensuring protection against threats. Thus, any e-banking system ought to support mechanisms that ensure confidentiality, integrity, reliability, and efficiency. Performance: aims at ensuring that authorized customers have timely and uninterrupted access to their accounts, and that committed transactions are successfully completed within acceptable times. Access to e-banking databases may be slow (depending on the connection speed) and may result in time out (disconnecting from the server). Banks are often subject to denial of service attacks by hackers who attempt to flood the system with requests until a breaking point is reached. In order to ensure availability, it has become a standard practice to take appropriate precautions to detect this kind of security attacks and recover quickly from disruption! Trust: Money is one of the most valuable customers assets. In order to use e-banking services, the customer must have a high degree of trust in the bank providing the service. Trust is usually earned due to the confidence of customers in the security mechanisms deployed by the bank to protect their assets. There are two major elements of trust

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Confidentiality: deals with preventing unauthorized disclosure of information. For example in year 1999, Egg and Barclays e-banking systems suffered from major breaches of privacy [23]. Customers were able to access the accounts of other customers to which they were not authorized. Customers transmit their account details over un-secure Internet connections. In order to ensure data confidentiality, Secure Socket Layer (SSL) communication protocol is normally used. Integrity: aims at ensuring that only authorized users can modify data. For example only authorized customers can modify their account detail and only bank manager can modify a transactions. The well known secure communication protocols SSL and TSL are often used to provide data integrity over the Internet.

Summary:
The following table summarizes the components of all the high level factors.
Table1. components of the high level factors

Features Functionality

Elements Read operations Read & Request Inter-account Modify Intra-Bank Modify Inter-Bank Modify

E-capability Pre-Requisites

Infrastructure Customer Resources Hardware /Software

Usability

Interface Understanding information Locating information Ease of use

Effectiveness

Performance Trust (Confidentiality, Integrity, Liability)

3. MEASURING KEY FACTORS

In order to classify and compare e-banking services it is important to develop appropriate quantitative methods for measuring the fundamental e-banking factors outlined earlier. In this Section we propose numerical methods for separately evaluating each individual component, then combining the values of the components to produce an appropriate evaluation of each factor. The evaluation of the whole service is then obtained by combining the individual measurements of the four factors.

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3.1 Measuring Functionalities

In e-banking there is a strong correlation between offering certain type of transactions and accepting a certain level of risk usually associated with these transactions. Offering a set of e-banking services is therefore a business decision based on a tradeoff between level of risks and corresponding financial benefits. Therefore, the natural quantitative indicator of the functionality of the service provided is the level of the associated security risk . A service with more functionality has usually a higher level of security risk than services with less functionalities. Here is a summary of the levels: Level0: No transactions, lowest risk level Level1: Read only, there is a risk to information confidentiality but not to its integrity. Level2: Read and Request, additional risks to previous level due to processing requests. Level3: Inter-accounts Modify, risk to information integrity but limit to possible damages because the only beneficiary of the transactions is the same account holder. Level4: Intra-bank Modify higher risk to integrity than previous level because a known third party can be a beneficiary. Level5: Inter-bank Modify highest risk level because of beneficiary can be a third party in a different bank and in a different country.

3.2 Measuring User E-capability Pre-Requisites

In order to use an e-service, the user must have certain e-capabilities. The focus of this section is on how to measure these capabilities. The proposed measure of these e-capability is generally applicable to all ecommerce/e-services and not specific to e-banking. To measure infrastructure, several methods have been proposed which combine the communication bandwidth, frequency of faults, and cost[14]. With regards to the measurement of customer hardware resources, it is useful clearly distinguish two categories: multipurpose resources, such as computer and mobile phones, and special-purpose resources, such as specific hardware boxes or encryption devices. A similar approach can be used to measure software. The more platform dependent the software is, the less likely its availability among users (for example, a program which runs only on Unix machines). The more inter-operability between platforms (Internet browsers, SSL) the software is the more likely its availability. Infrastructure: combination of communication bandwidth, frequency of faults and cost. Customer Resources o hardware generality of the purpose of the hardware and its likely availability among users. o software platform independence, interoperability, and likely availability among user.

For example, an e-banking service that requires Internet Explorer version 7 or above with Macromedia running on Windows NT is less likely to be available among users than a service which just requires any Internet browser

3.3 Measuring Usability

This is a user-centric activity. The common methods for achieving this involve empirical measurements based on user surveys for performing a number of benchmarking tasks such as: locating privacy policy, changing a password, reading an account balance, understanding whether it is possible to transfer money to another account and if so being able to correctly perform this transaction. Here is a summary of benchmarking tasks for each components: Interfaces: Understanding the meaning of specific words, and icons and evaluating the appeal of the design and layout to the user. Understanding provided features. Typical tasks test whether a specific operation is possible and the outcome of a certain scenario is correctly predicted.

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Locating required information. Typical tasks include locating privacy policy, interest rate, bank charges, a past statement and using online help. Ease of performing transactions. Typical tasks include querying account balance and transferring an amount of money to another account.

Each of the above benchmarking task can be associated with a score, say a number in the range 0 to 5, which reflects how successfully the task is performed. Rate 0 indicates complete failure but Rate 5 denotes a total success.

3.4 Measuring Effectiveness

Performance is a topic which has been extensively studied in Computer Science, especially in connection to communication networks and Internet. The most used methods involve empirical measurements of carefully selected benchmarking tasks as outlined in the previous Subsection 3.3. Here is a list of typical benchmarking tasks for each factor: Performance: download time, speed of performing transactions, frequency of time out. Trust: Trust is implicitly measured by the current standing, reputation and possibly size of the bank. Customers often trust a large bank because millions of others do! The record of breaches of ebanking security and the degree of their graveness is important and can swiftly affect customer confidence and trust in the e-banking services. o o Confidentiality: use of encryption, strict authorized reading access control policy, secure communication protocols such as SSL. Integrity: strict writing access control, how rich is the functionality of the service. The risk level analysis described in Subsection 3.1 provides a suitable assessment which can be taken into account when analyzing Integrity.

4. CONCLUSION
Banking sector is continuously making significant advances towards exploiting the opportunities offered through e-capabilities and Internet technology. E-banking is the cornerstone of many services important to esociety. In this paper we have introduce a general framework for analyzing, evaluating and comparing ebanking services and capabilities. The framework generalizes many of the studies conducted by other researchers.

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