How Banks Can Enhance Their International Connectivity with Their Business Customers - Research Proposal Example

HOW CAN BANKS ENHANCE INTERNATIONAL CONNECTIVITY WITH BUSINESS CUSTOMERS: A STUDY OF HSBC. ABSTRACT The current business environment, which is characterised by the advancement of technology and increased globalisation, has changed business communication, integration, transportation and interaction of individuals takes place all over the world. International connectivity has become one of the crucial parts in international business with an aim of increasing interactions between the business and its clients. A general definition of connectivity is the availability of transportation means that assists goods, individuals and even services to reach a certain destination (Oxera, 2010). The purpose of this paper is to conduct a study on how banks operating internationally can enhance their international connectivity with their business customers. The study will focus its research on issues concerning reliability, accessibility, effectiveness, cost and speed of international connectivity in HSBC Bank to interact with its business customers. The study will investigate the current state of HSBC international connectivity and identify ways of enhancing it by studying the customers’ perspective and suggestion. The Study will use quantitative research method that will include the use of semi-structured interviews and online questionnaires to collect data from HSBC international customers in 72 countries and region in which it operates. The study will identify a sample of 1800 respondents. The data will then be analysed using correlation and Chi-squared through the use SPSS 22.0.0.0 statistical software. Table of contents CHAPTER 1: INTRODUCTION 4 1.1Background Information 4 1.3 Objective of the study 7 1.4 Specific Objectives 7 1.5 Research Question 8 1.6 Significance of the Study 8 CHAPTER 2: LITERATURE REVIEW 8 CHAPTER 3: RESEARCH METHODOLOGY 11 Bibliography 13 APPENDICES 15 APPENDIX 1: Online Questionnaire 15 CHAPTER 1: INTRODUCTION 1.1 Background Information International Connectivity in the business context can be defined as the measure of the extent at which business components of a certain network are connected to each other and the speed and ease with which they can communicate or converse. International connectivity is therefore the measure of the extent to which international businesses components of a given network such as banking interact with each other and the ease and speed of making conversations and communicating (Oxford Economics 2013). The banking sector is in the recent days becoming extensively globalised with most banking organisation providing their services internationally. For effective and reliable services to their international customers, there is need for international banking businesses to enhance international connectivity by taking advantage of the latest advancement in technology (Minoiu & Reyes 2011). The banking business especially for those banks with international banking operations, international connectivity is crucial because it enhances the growth of the business and gives the organisation a competitive advantage over their competitors (Fozia 2013). An effective international connectivity requires effective and reliable regional and international infrastructure, which provide an easy connection of a business to the rest of the world. A reliable international connectivity system is also a key to enhancing the interaction between the business and the customers all over the world (World Bank 2013). Customers are one of the major important parts in any business setting. Having a reliable well-managed international business system in relation to serving the customers is one of the most aspects of business management. Customers’ satisfaction determines the growth and profitability of the business, making customers a crucial part of the organisations. Having business customers far apart from the business like in an international setting where physical interactions is impossible, creates challenges for both the business and the international customers. These challenges may be because of the physical, cultural and even social economic differences (Driga & Isac 2014). International connectivity helps overcome these challenges by providing a platform on which both the business and the customers can interact and carry out transitions without them having to interact physically (Oxford economics 2013). Connectivity has several components, which include the availability of a destination and the concept of generalised cost. For connectivity to occur there must be a number of destinations where the goods or services are set to go. The concept of generalised cost helps in determining the strength that a certain connection holds. The elements of generalised cost include time reliability and the transportation or transfer models used in the connectivity. For international connectivity analysis, the key is to decide which of the generalised cost elements are most relevant to practice depending on the type and reasons for connectivity (Oxera 2010). There are several benefits of using international connectivity to connect businesses and their customers. One of the benefits is that it increases the competitive ability of the business. In addition, international connectivity attracts more customers increasing the businesses income, which consequently increases the profitability of the business (Oxera, 2010). This study will base its research on how banks can enhance international connectivity with their business customers. The focus of the study is on the HSBC Bank, which is one of the largest international banking companies in U.K. The bank has its headquarters in London and has an international network of approximately 6100 offices within 72 territories and countries. The bank operates with four structures of services that include commercial banking, private banking, wealth management and retail banking and global banking and markets. All this structures are offered both locally and internationally. The purpose and the role of the company is enabling prosperity for economies and business to thrive. The company also aims at connecting people all over the world to opportunities and assisting individuals in fulfilling their dreams and hopes as well as help them achieve their ambitions. The wide range of international business extensiveness requires that the company have a strong that incorporates technology and business strategy system that allows their customers to easily interact and connect with them. Customer satisfaction, sustainability and a long-term relationship between the bank and the business are some of the things that the company seeks to uphold. This makes it important for the company to come up with an international connectivity that will enhance the interaction between the bank and their customers (HSBC Holdings plc. 2013). The international banking is complex requiring high levels of management and control. The interaction between customers and their banks becomes a challenge is there are no reliable international connectivity which is crucial in communication and transactions (Strandberg, Wahlberg & Ohman 2012). The purpose of this study is to investigate and the different ways that banks, in this case HSBC bank, can enhance international connectivity with their business customers. The study will identify the currents state of international connectivity in the bank, identify any gaps that are present in international connectivity and provide recommendations on ways to enhance the international connectivity between the bank and its customers. This proposal will be presented in the following sections: Problem Statement, Objective of the study, Research Questions, Significance of the Study, Literature Review and the Research Methodology. 1.2 Problem Statement International banking is a complex business faced by several challenges. Some of these challenges are business based while others are customer based. Challenges related to effective and reliable provision of customers service are some of the major challenges that an international banking companies face (Snowden 2012). International banks minimise this challenges through various ways, one of which is international connectivity (Strandberg, Wahlberg & Ohman 2012). However, with the advanced technology companies are increasingly changing and improving their international connectivity systems to suite the current technological trend. The main problem is to identify the best channels and ways to enhance international connectivity to increase interaction between the international banking sector and their international business customers. This research aims at investigate these gaps within international connectivity in HSBC Bank and identify ways of enhancing the international connectivity. 1.3 Objective of the study The general objective of this study is to investigate the current state and the gaps that exits in HSBC Bank international connectivity with its business customers and identify ways and means of enhancing the international connectivity in the bank to increase the effectiveness and reliability of their service provision to international customers. 1.4 Specific Objectives The specific objectives for this study include: To analyse and identify the current state and the gaps that exists in the HSBC Bank International connectivity by undertaking a quantitative research on the banks international connectivity. To analyse the results of the research, identify the gaps and recommend ways to enhance HSBC Bank international connectivity with its business customers 1.5 Research Question What are the gaps existing in HSBC Bank international connectivity and what ways can be implemented to enhance the banks international connectivity with its customers. 1.6 Significance of the Study One of the significance of this study is that it will create a platform for other researches in doing similar research studies. Few researches have been done on the topic of study, which makes this study a good platform on which scholars and researchers can draw insight from. The study is also significant to international banks all over the world because they can draw insight from the results and recommendation provided by the study. Currently, the number of international banks has increased tremendously raising the standards that the international banks have to reach. This has increased the level of competition in the international banking sector leading to most international banks opting to take strategic measures that will keep the existing customers and attract more customers. The knowledge from this study will be significant to international banks since it will provide insight that will help them come up with strategic ways to enhance their international connectivity with their business customers. CHAPTER 2: LITERATURE REVIEW Few studies have been done on the topic of international connectivity in the international banking sector. Some studies are not directly related to international banking but focus on the connectivity of international businesses and their customers. Most of the studies identified focus greatly on E-banking and the use of the internet to connect and transfer services to customers. Internet banking is currently the most used form of international connectivity between international banks and their customers. According to Vyas (2012), E-banking is the electronic banking, which provides services related to finance to transfer funds from an account to another regardless of the location or geographical differences. The functions of e-banking as stated by Vyas (2012) include customers inquiry on information concerning their accounts, card accounts transfers, transfer of bank securities, foreign exchange transaction, provision of customer services, management of accounts and reporting on issues concerning the account. This function makes it easier to provide and transfer services from the banks to their customers regardless of their locations internationally. E banking is a form of international connectivity that assists the interaction between the customers and the bank and is much faster and less costly that other means of international connectivity such as phone calls or having to visit the bank’s branches (Vyas 2012). According to a study done by Gradeyan and Akinyosoye- Gbonda (2011), the current advancement in information and communication has led to massive changes in the banking sector. The study seeks to identify how preferences of customers for banking affects the quality of this service. The study identified that, most customers prefer this form of banking but most were concerned on several issues that concern safety, fraudulent activities and theft that made the service risky. The researchers recommended measures such as proper e-banking maintenance, easy accessibility to the customers, improvement of internet connectivity, use of encrypt software, frequent change of password, tests to ensure that the user is valid, and creating systems that can verify a customer’s identification (Gradeyan & Akinyosoye-Gbonda 2011). Munusamy, Annamalah and Chelliah (2012), did a study to identify the perceptual barriers that prevent the adoption of internet banking among most Malaysian retail banking. According to their research, they identified barriers such as perceived risks in the use of internet banking, operation difficulties, high connectivity fees and the hustle to use internet banking. The research identified that the complexity of innovation has continues to make the use of internet banking much complicated making most customers to opt for traditional ways of making banking transactions. The procedures and systems seemed to much complicated for most customers and some thought that the use of password, usernames and tagging password made that one had to remember made the process more complicated than the traditional way of transaction. At the same time, some banks tend to avoid internet banking since they thought it was a hustle for customers. The recommendation for overcoming this barrier was to create programs, campaigns and systems that sensitise, educate and promote the use of internet banking. This is actually greatly important for banks who intend to operate internationally for a better international connectivity with their customers (Munusamy, Annamalah & Chelliah 2012). Several factors need to be considered by international banks while identifying the best way to enhance their international connectivity with their customers. These factors include the cost, the sustainability, the reliability and the accessibility. The easiest and most reliable way to connect internationally with customers is the use of the internet. However, this might be costly depending on one’s location and the level of internet connectivity that the country or region enjoys. In case of connectivity using the internet, the internet is the vessel of transferring banking services to customers all over different countries. The customers and their; locations are the destination and the service is online or internet banking. Recently, the demand for high capacity, reliable international connectivity through the internet has increased leading to a decrease in the cost of internet connectivity, which is an advantage to the international banks and their customers (Wood 2014). According to Baraghani (2008), several frameworks influence customers’ adaptation of internet banking. The frameworks include the perceived usefulness of the system, perceived ease of use, subjective norm of customers, customers’ attitude, trust as well as intention construct and perceived behavioural control. To enhance the use of internet banking as an international connectivity system, international banks need to know how to influence the behaviour, perception and attitudes of the customers for them to agree to adapt to the changing system of internet banking. Baraghani (2008) provides two recommendations to do this: the push strategy and the pull strategy. The push strategy involves creating awareness to all customers of the internet banking service by providing information on how the service saves time, it convenient, reliable, and less costly and provides information anytime regardless of the location. This can be done by building recognition for customers who use the service, make it easy to access to attract customers, ensure security and offer incentives to customers. The pull strategy involves the bank needs to develop internet diffusion and collaborate with providers of internet services to enhance customers accessibility which increases the adoption of the service. CHAPTER 3: RESEARCH METHODOLOGY The study uses both quantitative research methods to acquire primary data to investigate the current state of international connectivity in HSBC Bank. The quantitative research approach uses the survey technique that uses semi structured interviews, which will be conducted on a sample of respondents all the 72 countries in which HSBC Bank operates (Harris & Brown 2010). The survey will be done on customers to identify their perception on the current international connectivity of the bank and their opinion on what and how it should be enhanced. The semi-structured interviews will have open-ended questions to be able to acquire as much information from the respondents as possible together with questions that will be having a five point Likert scale for easier analysis (Johns 2010). The other approach will use questionnaires that HSBC Bank customers will have to fill online. The questionnaires will first be prepared, after which an online pilot will be conducted to test its reliability and viability (Harris & Brown 2010). The questionnaire will have questions seeking to identify international customers’ perception on the current international connectivity in the bank and their suggestion on how it can be enhanced. The questions just like some of those in the interview will have a five point Likert scale and open- ended questions (Johns, 2010). The target population for this study will be mainly the international customers for HSBC Bank. Cluster sampling method will be used to select participants. For the survey, the target population will first be divided into 72 clusters. The clusters will be formed depending on the 72 countries in which the bank operates. From each cluster, a random sample of 20 respondents will be selected and interviewed either through phone calls or face to face if they are able to avail themselves. Experienced researches will be deployed in each country to carry out the survey. For the questionnaires, all international customers will have an option of filling it once they log into their accounts, they will be requested to complete the questionnaire. The entire completed questionnaires will be gathered and grouped in relation to the customers country, a sample of five questionnaires will then be randomly selected through random sampling. The interviews will total to 1440 participants, while the questionnaire will have a sample of 360 participants creating a sample size of 1800 participants (Nelson 2014). Due to the extensiveness of the study and the amount of research that needs to be carried out, the study will take a period of six months. The data analysis will then be edited, coded and analysed using SPSS 22.0.0.0. The study will use correlation and Chi-Square statistical techniques for analysis. Bibliography Baraghani, S.N 2008, Factors Influencing the Adoption of Internet Banking. Sweden: Lulea University of Technology Driga, I. & Isac, D 2014, E-Banking –Features, Challenges and Benefits. Economics, vol. 14, iss. 1, pp. 49-58. Fozia, M 2013, A comparative Study of Customers Perception towards E-banking Services Provided by Selected Private & Public Sectors Bank in India. International Journal of Scientific Research Publications, vol. 3, iss. 9, pp. 1-5 Gradeyen, R.A 2011, Customers’ Preference for E-Banking Services: A case Study of Selected Banks in Sierra Leone. Australian Journal of Business and Management Research, vol. 1, no. 4, pp. 108-116 Harris, L.R. & Brown, G.T.L 2010, Mixing Interviews and Questionnaires Methods: Practical Problem in Aligning Data. Practical Assessment, Research& Evaluation, vol. 15, no. 1, pp. 1-19 HSBC Holdings plc. 2013, HSBC Holdings plc.: Sustainability Report. London: HSBC Holdings plc. Johns, R 2010, Likert Items and Scales. UK: Survey Question Bank Minoiu, C. & Reyes, A.J 2011, A Network analysis of Global Banking: 1978-2009. International Monetary Fund Munusamy, J., Annamala, S. & Chelliah, S 2012, Perceives Barriers of Innovative Banking among Malaysian Retail Banking Customers. Journal of Internet Banking and Commerce, vol. 17, no.1, pp. 1-15 Nelson, G.A 2014, Cluster Sampling: A Pervasive, Yet Little Recognized Survey Design in Fisheries Research. Transactions of the American Fisheries Society, vol. 143, no.4, p. 926-938 Oxera 2010, Understanding the Theory of International Connectivity. England: Oxera Consulting Ltd Oxford Economics 2013, The Economic Value of International Connectivity. Oxford: Oxford Economics Snowden, P.N 2012, Emerging risks in International Banking: Origins of Financial Vulnerability in the 1980s. (Ed. 31). Oxon: Routledge Stranberg, C., Wahlberg, O. & Ohman, P 2012, Challenges in Serving the Mass Affluent Segment: Bank Customer Perception of Service Quality. Journal of Service Theory and practice, vol. 22, iss. 4, pp. 359-385. Vyas, S 2012, Impacts of E-Banking on Traditional Banking Services. Rajasthan: School of Computer Science and Information Technology, Singhania University Wood, C 2014, Increased connectivity and Rapid Growth in Demand Elevates Africa to New Heights. London: Global Telecoms Business. World Bank 2013, Infrastructure Deployment and Developing Competition: Broadband Network in the Middle East and North Africa. [Online]. [Accessed on 28th October 2015] APPENDICES APPENDIX 1: Online Questionnaire Date Nationality Gender Service Received Retail Banking and Wealth Management Global Banking and Market Commercial Banking Global Private Banking How often do you access HSBC Banking Services? Which international connectivity ways do you use to access banking services? On a scale of 1 to 10, how would you rate HSBC international connectivity? HSBC international connectivity is reliable, efficient, accessible, cheap and fast. Totally disagree Disagree Neither disagree nor disagree Agree Totally agree As an international customer to HSBC Bank, do you have any do you have any complaints of the international connectivity between you and the bank? If yes, give a description of your complaint. What advice and suggestion would you provide to the business management team in regards to the enhancement international connectivity between you and HSBC Bank? Read More