Introduction

Over thirty-five years have passed since academics began speculating on the

impact that information technology (IT) would have on organizational structure. The

debate is still on-going, and both researchers and managers continue to explore the

relationship between IT and organizational structure. This relationship is becoming

increasingly complicated by both the rapidly changing nature of IT and the increasing

environmental turbulence faced by many organizations. As organizations need to

process more information under these uncertain conditions, IT is one possible way for

organizations to increase their information processing capability. However, other, more

organizational tools are also at their disposal for processing more information. These

include task forces, lateral relationships, self-contained work groups, and slack

resources. Thus, the relationship between IT and organizational structures is not a

simple one (Earl, 1998).

IT has a dramatic effect on both people's personal and professional lives. IT is

also changing the nature of organizations by providing opportunities to make

fundamental changes in the way they do business. Many of the opportunities are

recognized and understood. Yet a tremendous number of issues and consequences are

only vaguely perceived while other questions are just now being raised (Beard, 1996).

The technology is changing rapidly, with computing speeds and the number of transistor

equivalents available in a given area of a microprocessor chip both doubling

approximately every 18 months. Organizations are acquiring more and more technology

systems to assist in everything from manufacturing to the management of information to

computing power is the challenge. New tools and innovative perspectives with which to

examine, interpret, and comprehend these rapidly evolving environments are always

needed and sought (Beard, 1996).

IT is transforming the way that business is conducted. Computers prepare

invoices, issue checks, keep track of the movement of stock, and store personnel and

payroll records. Word processing and personal computers are changing the patterns of

office work, and the spread of information technology is affecting the efficiency and

competitiveness of business, the structure of the work force, and the overall growth of

economic output. This transformation in the way in which information is managed in the

economy constitutes a revolution that may have economic consequences as large as

those brought about by the industrial revolution (Allen & Morton, 1994). Many people

believe that the primary driving force behind this information revolution is progress in

microelectronic technology, particularly in the development of integrated circuits or

chips.

Thus, the reason that computing power that used to fill a room and cost $1

million now stands on a desk and costs $5000 or that pocket calculators that used to

cost $1000 now cost $10 is that society happens to have benefited from a series of

spectacularly successful inventions in the field of electronics. But fewer people

understand why the introduction of information technology occurred when it did or took

the path that it did, why data processing came before word processing or why
computers transformed the office environment before they transformed the factory

environment. Because this technology oriented view of the causes of the information

revolution offers little guidance to the direction that technological developments have

taken thus far, it offers little insight into the direction that they will take in the future

(Allen & Morton, 1994).

Background of the study

Electronic banking is one of the first things that come to mind when one thinks

about the future of banking. It is generally assumed that electronic banking is new and

that it will replace or supplement many channels of delivery of retail banking services.

The term electronic banking as used here refers to any banking activity accessed by

electronic means. It includes automated teller machines (ATMs), automated call

centers, digital cash, Internet banking, screen telephones, and so on. These channels of

delivery can be used for presenting and paying bills, buying and selling securities,

transferring funds, and providing other financial products and services (Gup,

2003).Electronic banking can be used for retail banking and business-to-business (B2B)

transactions, as well as for facilitating large-dollar transfers. Equally important,

electronic banking is a worldwide phenomenon. As the term is used here, it involves

transactions. Some institutions only offer web sites that provide information about

services offered but do not allow for transactions. These would not be covered under

the definition of electronic banking. However, web sites that are transactional are

considered electronic banking. Electronic banking and the Internet in general are forcing
a shift in the way banks and other businesses organize and the way they think of

themselves.

A shift is taking place from vertical integration to virtual integration. Banks and

other financial intermediaries must realize that they are in the financial information

industry. The Internet makes it possible to bring both customers and suppliers together

to share critical business information (Gup, 2003). E-banking helps banks relay and

show to their clients how good their services are and that the services they offer are of

better standards. Through E-banking the company can show the clients that they are

better than competitors and can give them satisfaction guaranteed.

Statement of the problem

The internet and the different things it can do to uplift business procedures,

products and services is a current necessity for business. One of internet's products is

Electronic banking. Electronic banking is a faster way for clients to transact with the

banks personnel. Clients can still transact with banks while on the comfort and safety of

their homes. The main purpose of this proposed research is determine the advantages

and disadvantages of E-banking to Hong Kong banks. This research will try to

determine what are the effects of E-banking to certain kinds of banks.

Objectives of the study

This study intends to find out the advantage and disadvantages of e-banking to

Hong Kong banks like HSBC, Standard Chartered Bank (SCB) and Hang Seng Bank

(HSB). The study also has other objectives it intends to reach that include:
 1. Acquiring data from personnel of the abovementioned banks on how E-

banking affects them.

2. Examining the strengths and weaknesses of the adoption and diffusion

model of e-Banking service based on the based on the six product

characteristics.

3. Analyze the adoption and diffusion model to the knowledge of customer

decision-making process.

4. Define consumers under different adapters categories along the product life

cycle and how they could affect the adoption and diffusion rate of Internet.

Purpose and Significance of the study

The study intends to get the appropriate data needed to give appropriate solution

to the problem. The study also intends get the necessary information needs to create a

good conclusion and recommendation. The study is important to the purpose of the

study, and other researchers. With the establishment of the purpose given, this study

may be of importance to the purpose that have been discussed By fulfilling the aims that

were stated in the previous section, this study will be helpful for other researchers who

may be focusing on the different customer orientated strategies, and innovation being

ultimately destructive to the principles of sustainability or of other areas especially with

regards to the method of gathering the information. Such data will hopefully be helpful

for researchers in establishing their own means of conducting their study. As such, the

notable significance of this study is the possibility that it may be able to use the findings

for the other studies that may wish to analyze the factors for the success or demise of a
particular study. The methods that this study will take must also be credible and help

researchers in knowing how to look for particular information and know how to analyze

them. It is through this that researchers will then be able to find out how they will be able

to focus on their particular investigation and also know the possible methods that they

may choose in the possible time that they may choose to already conduct their study.

Thus, another significance of this study is to serve as a guide for researches that focus

on the analysis of the advantages and disadvantage of E-banking on different banks in

Hong Kong.

Review of related literature

Hong Kong Shanghai Banking Corporation Holdings

HSBC Holdings, a British financial holding company with origins in Hong Kong

and Shanghai, where offices were opened in 1865 under a special charter which

allowed Hong Kong rather than London as a headquarter location. The bank remained

an eastern force until the 1950s, when overexposure to the crown colony and its textile

industry pointed to a need for geographical diversification. A worldwide scan was made

with rather disappointing results. Australia and Canada were protectionistic and so was

the Continent, in addition to being over-regulated and well served by its own talent.

Central West Africa was saturated by British banks and, after independence; the new

countries gave priority to domestic banks. Only the USA was attractive because it

offered dollar assets in a dollar-hungry world (Laulajainen, 2003).But before anything

could be done about it, events elsewhere called attention. HSBC was in intense

competition all over Asia with Chase Manhattan which showed interest in a small bank
in India and Malaysia. HSBC pre-empted by purchasing the bank in 1959. In the same

year another defensive acquisition became necessary, when an investor group tried to

buy the British Bank of the Middle East, strip its assets and sell the branches to HSBC,

which did the bulk of its Middle East business through the bank. For example, Kuwaiti

authorities kept half of their money there. With the purchase came a chain of retail

branches in Cyprus.

A few years later a banking crisis erupted in Hong Kong. HSBC was not seriously

affected but Hang Seng Bank, the colony's second largest, was about to flounder in a

run. Chase offered help but Hang Seng preferred HSBC, because of its local roots, and

sold it a majority stake in 1965. These three deals illuminate the difference between

corporate strategy and the realities of the marketplace (King, 1991).Diversification had

taken a beating although it was only in 2000 when acquisitions in Asia became topical

again, in a small way. Two of them were part of the private banking drive, PCIB Savings

Bank in the Manila area and Taiwan's leading asset manager China Securities

Investment Trust Corp. in 2001, to be followed by an 8 per cent stake in the Bank of

Shanghai. HSBC had returned to its roots. Afterwards many more events unfolded

including the turnover of Hong Kong to china this prompted HSBC to transfer

headquarters to United Kingdom (Laulajainen, 2003).

HSBC sees the Internet as one of several exciting new media, to be incorporated

as an integral part of its working. The bank has concluded that e-commerce will change

the fabric of the financial services sector and sees it as a way of finding new customers
all over the world and improving its services to existing customers. It intends to use e-

commerce to reorganize the business so as to provide higher-quality customer services

more efficiently. HSBC will be able to link its customers to the full range of international

services and manage their processing wherever it chooses, which the bank sees as a

considerable competitive advantage(Tansey, 2002). HSBC has adopted a clicks and

mortar strategy. This requires that customer Internet offerings must meet three criteria:

customer needs and preferences come first; they must fit HSBC's existing distribution

channels; and they must be multinational in scope. Recently the group has been

reorganizing its work for the e-age and putting in place some major components of such

a strategy. In 2000, over US$2 billion was spent on technology, including a significant

proportion on dot.com initiatives. HSBC aspires to be one of the first to provide

customers with facilities through the Internet on a multi-geographical and multi-product,

basis (Tansey, 2002).

Effectiveness of using web sites

Integrated marketing communications (IMC) is the major communications

development of the last decade of the twentieth century Many organizations proclaim

IMC to be a key competitive advantage of marketing. Integration of communications as

with anything else, attempts to combine, integrate, and synergize different elements of

the promotional mix, so to consumers, messages through a variety of different

mechanisms look, sound, and feel alike. In the 1980s the concept of integrated

marketing communications was unrecognized, embryonic, and emergent. Many

practitioners and academic commentators saw each promotional tool as separate and

distinct, managed differently, budgeted differently, certainly not integrated in the sense
that drove into the 1990s. Yet, IMC was there, underlying the surface, but few were

trying to patch the disparate and early reports together (De Pelsmacker & Kitchen,

2004).

Many academic commentators and practitioners started to jump on the IMC

bandwagon. For ad agencies, it justified the move to becoming all singing, all dancing,

integrated agencies. Moreover, clients seemed to want it. Clients themselves were

driven by organizational exigency as previously discussed. IMC became more evident,

but the emphasis was on making it work, not on what it was. A decade later, most firms

are still there. In the 1990s, a wave of studies mainly with ad agencies showed that IMC

Increased communications impact, made creative ideas more effective, provided

greater communication consistency, and would improve client return on communication

investment (De Pelsmacker & Kitchen, 2004).

There are different IMC tool that companies use to have a better understanding

with clients. These range from the use of old and new technology and tried and tested

techniques. One possible IMC tool is Internet Banking or Banking by the use of

websites. Internet banking is effective since it provides different benefits that include

ease for clients, lesser cost of operation, faster transactions, and lesser

miscommunication and errors. Internet banking gives ease to clients. By internet

banking clients don't have to go to banks to transact. They can just do it in the safety

and comfort of their homes. Internet banking cost lesser to operate and maintain. It

does not cost so much for a company to maintain and operate it. Through internet
banking faster transactions can be made, there are lesser waiting time and no more

lining up for clients. Lastly internet banking provides lesser miscommunications between

banks and clients thus they have a better working relationship. Because of the lesser

miscommunications that ensue there can be lesser errors committed by banking

institutions personnel.

Strengths and weaknesses of E-banking service

Relative Advantages

Relative advantage is the degree that the innovation is perceived as better than

the idea or product it supercedes. Typically, this has been thought of as economic

advantage; however, many innovations have appeal on a status dimension. Also, the

relative advantage of an innovation can change over time. For example, a pocket, four-

function calculator bought in 1975 cost about $150. Today, a more complex calculator

can be bought for less than $10, or even come as part of a $15 digital watch. Relative

advantage may be thought of as the rewards and punishments of an innovation. This is

one reason why it is difficult to promote preventive innovations. The benefits are

generally uncertain, and almost by definition, may occur sometime in the future (Winett,

1986). As mentioned earlier E-banking service provides different benefits that include

ease for clients, lesser cost of operation, faster transactions, and lesser

miscommunication and errors. These advantages provide the company with more

reasons to give excellent service to clients; it also gives banks a better image than

competitors.
Compatibility

Compatibility refers to the capacity of products to function in association with

others. VHS cassettes are only compatible with VHS players; computer software may

require a particular operating system, and the like. The process of ensuring product

compatibility and policing aspects of quality has always entailed a mixture of public

sector and private sector initiatives. Yet great variation exists across nations in the

matters that have been left to the market and those that have been subjected to

regulation, and debates continue both in political assemblies and in the academy as to

the appropriate role of government in regulating product characteristics (Sykes, 1995).

E-Banking is compatible with the current trends and current world situation. It relates to

the changes whether it is technological or social that is continuously happening. E-

banking gives a probable solution to these generations needs and the urgency of

making people's lives easier. This kind of banking is a probable solution to

organizational problems and a big help for different organizations to survive in the ever

changing world environment.

Trialability and Observability

Trialability means the ability to experience an innovation on a limited basis.

Numerous free samples received in the mail are an example of attempts to exploit this

dimension. Observability means the results are visible to the adopter and to others. This

can be thought of as a feedback dimension. For example, newer exercise equipment

provides the user with continuous heart rate, caloric expenditure, and other

performance-related information (Winett, 1986). E-Banking services are good for trials
and by undergoing trials this service can be improved and perfected according to the

clients needs. E-banking also shows observability since initial results can be seen

abruptly thus its effects can be known and changes can be made.

Complexity

Complexity means the perceived difficulty to understand or use an innovation

and is negatively related to the rate of adoption. For example, personal computers

(PC's) that appear to require extensive knowledge of computer languages should not

have mass market appeal (Winett, 1986). E-banking in a way shows complexity since

people who will use it must be knowledgeable of computers and the internet.

Perceived Risk

Risks are things companies think that they might encounter or the things they

have to take and ignore to continue with the business undertaking. In E-banking service

perceived risk can be easily identified. In e-banking the probable difficulties and

problems that will be encountered can be predicted thus sparing a banking institution

from having a hard time.

Overview of the Methodology

Type of research

This study will use the descriptive type of research. Descriptive method of

research is to gather information about the present existing condition. The purpose of

employing this method is to describe the nature of a situation, as it exists at the time of
the study and to explore the cause/s of particular phenomena (Creswell, 1994). The

descriptive approach is also quick and more practical financially. Moreover, this method

will allow for a flexible approach, thus, when important new issues and questions arise

during the duration of the study, a further investigation may be allowed. The study opted

to use this kind of research considering the goal of the study to obtain first hand data so

as to formulate rational and sound conclusions and recommendations for the study.

Research Strategy

For this research data will be gathered through collating published studies from

different books, articles from different related journals and studies, and other literary

instruments. Afterwards make a content analysis of the collected documentary and

verbal material. The study will then summarize all the necessary information. The study

will then make a conclusion based on the said information and provide insightful

recommendations on how to solve the said problem.

Sample and Sampling Technique

The respondents of the study came from the different banks mentioned from

Hong Kong. Due to time constraint and also, for the convenience of the researcher, only

thirty (30) respondents were considered for the study. The convenience sampling

technique was imposed in the study to pick up the thirty respondents, mainly because

the availability of the respondents from the different banks was considered. This part of

the study is important because the most important data needed to fulfill the objectives

and aims of this study will only be supplied by the respondents from Hong Kong banks

like HSBC, Standard Chartered Bank (SCB) and Hang Seng Bank (HSB).
Primary and secondary data collection

The primary source of data will come from a survey using questionnaire and

interviews that will be conducted by the researcher. The primary data frequently gives

the detailed definitions of terms and statistical units used in the survey. These are

usually broken down into finer classifications. The secondary source of data will come

from research through the internet; books, journals, related studies and other sources of

information. Acquiring secondary data are more convenient to use because they are

already condensed and organized. Moreover, analysis and interpretation are done more

easily.

Validation of the instrument

For validation purposes, the researcher pre-tested a sample of the set survey

questionnaires. This was done by conducting an initial survey to at least five

respondents from the different banks from Hong Kong. After the respondents answered,

the researchers then asked them to cite the parts of the questionnaire that needs

improvement. The researcher even asked for suggestions and corrections from the

respondents to ensure that the survey-questionnaire is effective. Automatically, these

five respondents were not included as respondents for the study.

Data analysis

Data gathered will be analyzed through frequency distributions. These will give

way to reviewing the data categories and the number of referrals in each category. The
data acquired will be analyzed according to the different categories and importance.

The information that will be gathered and analyzed will be important to achieve the

objectives desired by the study