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Milind Sathye: Lecturer, University of Southern Queensland, Toowoomba, Queensland, Australia
Introduction
The Australian financial system is undergoing a period of substantial change, the impact of which is transforming the way financial services are delivered. The changes, among others, include a significant increase in the number of alternative channels available for the delivery of services. The most recent delivery channel introduced for financial services is Internet or online banking. Internet banking involves consumers using the Internet to access their bank and account, to undertake banking transactions. At the basic level, Internet banking can mean the setting up of a Web page by a bank to give information about its product and services. At an advance level, it involves provision of facilities such as accessing accounts, funds transfer, and buying financial products or services online. This is called "transactional" online banking and is the subject-matter of this study. The objective of this paper is to quantify the factors affecting the adoption of Internet banking by Australian consumers. Such a research will help banks to formulate appropriate strategies to ensure rapid migration of customers to online banking and thus bring down their operating costs. The rest of the paper has been organised as follows: the next section gives an account of the Internet banking scenario in Australia, followed by a review of relevant literature, research method and procedure, findings of the study, discussion of results and limitations of the study, implications for management and areas for further research and conclusion.
Internet banking
Transactional Internet banking is growing rapidly. It has been estimated that 60 per cent of retail banking transactions will be online in ten years' time (Barwise, 1997). A study by Booz et al. (1997) on Internet banking shows that "up to 20 per cent of retail and 30 per cent of corporate customers will use some form of Internet banking capability within the next five years". This study further states that Internet and other virtual banking channels have significantly lower cost structure than traditional delivery channels. "Internet banks can operate at an expense ratio of 15-20 per cent compared to 50-60 per cent for the average bank" (Booz, 1997). Thus, by encouraging customers to use the Internet for banking transactions, the banks would save considerable operating...