The United States Federal Deposit Insurance Commission (FDIC) (2005) pointed out that as the use of the Internet continues to expand, more banks and thrifts are using the Web to offer products and services and to enhance communication with consumers. U.S.-based Wells Fargo was a leader in the development of online banking services, beginning in 1990 and creating a trend that was adopted in the United Kingdom in 1997. Today, as noted by the FDIC (2005), Internet banking has become an established industry and there are some banks that provide online services only without traditional bricks and mortar establishments.
While the vast majority of analysts see Internet banking as having revolutionized the financial sector, Perumal (2005) suggests that despite the astronomical growth rate of this sector, there are certain risks attendant upon using the Internet for personal financial transactions. Among these risks are the potential for identity theft, concerns that Internet banking may be depersonalized, and fears that government and private sector actors may gain access to sensitive personal information (Stewart, 2005).
Nevertheless, as Cipparone (2005) has commented, Internet banking offers consumers any number of advantages. Ease of access, transaction speed, customization of services, and 24-hour-a-day availability are among these advantages. For bankers, the Internet offers an opportunity to reach out to a new generation of clients and to expand market penetration beyond physical or geographic barriers. While this is appealing to bankers, there is no doubt that any number of actors in the sector and among consumers are concerned about the risks associated with online banking, including identity theft (Stewart, 2005). It is in this general background that the proposed study is positioned.
What are the risks and benefits associated with online banking? How comfortable are people with banking online? What impact has on...