Current Situation And Pros And Cons Of E-Banking And Traditional Banking Facilities In Oman

Current Situation with E-Banking and Traditional Banking Facilities in Oman

Questions:

1: Discuss the Current Situation with regard to E-Banking as well as traditional Banking Facilities in the Bank.

2: Discuss the Advantages and Disadvantages of Each type of Banking.

3: Identify Issues/Concerns the Bank or its Customers are Facing.

4: Give Recommendations to the bank to resolve these Issues.

The era of information and technology has developed the necessity for online banking solutions.  Online banking has become a norm for carrying out simple banking transaction in recent years. This has created a user friendly atmosphere where customers can easily check their bills, account detail. Gone are those days when customers have to wait outsides the bank. This system has helped in creating an organized finance life[1].  Online banking solution has become the backbone for the modern banking system.  Most of the customers are efficiently using the online banking system to do daily transactions. However there is certain limitation regarding the online system of transactions due to security concern. In recent times there are incidence related to failure in the internet machinery. The report provides an insight into the current online banking mechanism in Oman Whether the system is helpful for the people or not. The report describes the pros and cons of the internet banking system in the recent time[2].

The bank was founded in 1973 was country’s first local bank. Today it is known as one of the largest bank in Oman with a paid up capital of US$ 288 million. There are currently 60 branches working across Oman with 173 ATM and cash depository machinery.  They have an additional of three international branches located in Egypt, Dubai and Abu Dhabi. The bank has recently grown as a major Loan portfolio in UAE by over 134 percent. In recent time Internet banking has become an important component in meeting the banking requirements of the local and international customers.  The National Bank of Oman pioneered the Sultante’s first internet banking service in February 2002. Adoption of the internet facility has been a turning point for the organization growth[3].

The vision of bank is to become choice of every individual citizen. They are committed to meet the requirements of the customers, employees, shareholders and the community assuring efficiency, excellence and accountability.  They have won prestigious awards in the past for providing distinguished services to its customers[4].

The internet is currently transforming the banking and financial industry. The consumers in Oman have significantly adopted the system of internet banking in order to meet their daily banking requirements.  The National Bank of Oman was the first pioneer of the internet banking system.  Other banks followed the pathway and adapt the online banking mechanism in order to meet customers need.  Internet banking has increase e-business in term of electronic transfers directly to the client[5].  Very few banks In Oman provides internet banking facilities as they have restricted their business to personal banking.  They are generally using ATM to do money based transaction.  Oman boast a liquid banking system supported by prudent policy though the arrival of new institution decree has created a competition in the country. This has created an innovation and product diversification.  There are very limited banking organizations that are providing internet banking facility to its customers. Though there is a proportional increase in the recent time in the customer’s involvement[6].

Advantages and Disadvantages of E-Banking and Traditional Banking Facilities

Advantages of Internet banking

Internet banking is a way through which one can retain increasingly sophisticated customers by developing a new customer base. Internet banking has lower operational and transactional cost as compared to the traditional mode of banking. It is a quick and more convenient and easily accessible mode of doing business in recent time. It provides a variety of attractive possibilities for remote account that help in managing the data efficiently[7].

Major challenges

In the recent time the international banking organization are facing problems due to security issue which include leakage of confidential information. The credibility of banking organizations is under question.  Information is being hacked by the unauthorized party. There is a constant failure to deliver marketing promise to the customers due to lack of personal touch. Customer complaint has made it difficult to manage the e-banking and solution to find out the problem to the consistent problems[8].

Since electronic money has become a way used by the customers to transfer money but criminals have discovered a way to conduct theft and robbery. The overall banking system seems distorted due to a divided outlook of the customers.

Advantages of traditional banking system

A personal banking system has more options as compared to the e-banking system. Checking account, trust fund, certificate of deposit etc is only possible through personal banking. Many traditional bank offer wealth management system where the wealth of an individual is been managed by the bank.  They are convenient to use due to nationwide presence. There are currently 60 branches working across Oman with 173 ATM and cash depository machinery. It includes direct facility where a customer directly can interact with the banking authority in order to do business[9].

Disadvantages of traditional banking system

They are providing with a low interest rate and facilities. Internet banking whereas provides various facilities that are not possible in case of the Traditional banking mechanism. The customers have to wait outside the bank for their turn.  In today’s era of information and technology it has become necessary for a customer to utilize an easy way to conduct transactions.

Banks are becoming equally aware about the use of internet banking in the recent time.  The bank in Oman is adopting the system of internet banking in a tough manner.  This is contrary to the reality that the bank is gradually becoming aware about the importance of E-banking in the recent time.  It has developed as a key to attain competitive arena. It is due to lack of adaptation of science and technology that the country resisted in adopting the online banking mechanism.  It is due to high amount of customer’s insecurity, technology investment cost and lack of market readiness that made them realize that the service doesn’t support environment in the country.  The new technology was not in the support of Oman. In Oman the internal organizational factors plays an important role in relating the trends with the banking mechanism.

Current bank scenario

The bank is providing online customer services facilities that enable the consumer to access their account sitting home. . There are currently 60 branches working across Oman with 173 ATM and cash depository machinery. This has enabled the customers to utilize the facility to use their account more efficiently. The mobile app is made in order to use the changes that are one of the efficient ways used by the customers in today’s world of information technology.   All the major services that support customers at the time of internet failure are ensured by the internal mechanism. Security mechanism of the bank entrust the faith of all the customers by ensuring that the customers feel safe transacting with the bank[10]. Various different facilities that are provided by the bank are Cheque, granting loan and insurance to the customers. Various facilities such as Loan, insurance are provided by the bank authority in meeting the needs of the individual staying in Oman. The bank is dealing in both the Transaction (local/international). They have an additional of three international branches located in Egypt, Dubai and Abu Dhabi. The bank has recently grown as a major Loan portfolio in UAE by over 134 percent. The bank is simultaneously providing facilities to both personal and online customers. They have both kind of customers to whom the services are efficiently being provided. The current banking mechanism is mostly dependent on the traditional banking mechanism[11].

Issues/Concerns faced by the Bank and its Customers

The banking system in Oman is different from that of the rest of the world. The current study states that the customers are mostly relying on the personal banking facilities over the internet banking. The most significant issue faced by the bank is the security concern. The economy is still not finding significance in the online banking mechanism that is causing a serious concern for the overall growth. It is seen that recently there is a slight shift in people behavior towards the overall banking system. Secondly there is an accumulated pressure on the branches to meet the requirements of the customers. Although the bank is providing efficient services to the customers but in the recent time the international bank like HSBC which is providing effective customer’s service is replacing the place of the brand. The growing financial crises are affecting the concern of the banking sector as it has affected the rate of savings. This is directly affecting the individual buying needs[12].

It is recommended that the bank need to adopt a system that attract attention from maximum customers. It is seen in the recent time that there are changes in the overall banking environment. It is recommended that the bank need to promote internet banking through its online portal mechanism. They should give attractive discounts to the customers so that they are ready to use more of internet banking facilities instead of traditional. The Oman banking mechanism is more based on traditional system[13]. The current system need to focus on rebuilding the website by providing strong security feature. This is possible if the bank uses a strong secured user interface. The website provides with different ways trough which an individual can attain banking experience[14]. As a first mover in the internet banking sector it is there duty to include more features in the overall system. The primary focus of the company should be based on enhancing the overall experience of the client.  Internet banking should be more users friendly. The banking sector should create awareness regarding the banking sector. This will eventually help in attaining a significant attention from the customers. The internet banking facility should focus more on providing a personal experience to the customers. In the era of globalization and information and technology it is necessary to develop an effective banking system that need to be used in order to manage the banking sector[15].

It is seen that the internet banking can resolve the issues as one can manage their own account effectively. In such a competitive atmosphere it is necessary to find out the most effective way to figure out the most effective way to manage the banking mechanism. The whole banking sector is moving towards transition where the banks are developing competitive techniques so that they can sustain the changes. Both developed and developing economies understand the importance of up gradation to the latest technology. In such a competitive atmosphere National Bank of Oman needs to develop more competitive facilities so that the customers do not switch to other bank[16].

Recommendations to resolve the Issues

Conclusion

The bank was founded in 1973 was country’s first local bank. Today it is known as one of the largest bank in Oman with a paid up capital of US$ 288 million. In the current scenario most of the banks are adopting the online banking system that helps the user to undertake the services in an effective manner. There are various pros and cons associated with the Traditional and e-banking. But with modernization E-Banking has become one of an effective way through which an individual can easily check the variety of service. Oman is still relying on the traditional banking methods and most of the banking facilities are conducted through traditional method.  It is recommended that in today’s business environment it is the duty of all the banks to promote e-banking facility as this will help in broadens the area of facilities provide by the bank. In the coming year internationalization of banking system will however require a coherent internet banking system.

References

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Jonghe, Olivier. "Back to the basics in banking? A micro-analysis of banking system stability."Journal of financial intermediation19, no. 3 (2010): 387-417.

Mohd. "Growth of Banking Sector in the Sultanate of Oman: An Analysis."International Journal of Finance & Policy Analysis3, no. 1 (2011).

H, José, and J. Mazzon. "Adoption of internet banking: proposition and implementation of an integrated methodology approach." International journal of bank marketing 25, no. 2 (2007): 72-88.

Geoffrey, ed.Banks as Multinationals (RLE Banking & Finance). Routledge, 2012.

Syed Ahsan, and K. Khan. "A study of customer satisfaction on select service dimensions with reference to ATMs and CDMs services in Oman."Journal of Business and Retail Management Research10, no. 3 (2016).

Mariam El Hamiani.Monetary Policy in the Presence of Islamic Banking. International Monetary Fund, 2016.

Tommi. "Internet vs mobile banking: comparing customer value perceptions."Business process management journal13, no. 6 (2007): 788-797.

Carolina, T.Oliveira, and A. Popovi?. "Understanding the Internet banking adoption: A unified theory of acceptance and use of technology and perceived risk application."International Journal of Information Management34, no. 1 (2014): 1-13.

Md, and J.Pearson. "The influence of trust on internet banking acceptance."The Journal of Internet Banking and Commerce2007 (2015).

Badreldin F., and M. K. Al Ani. "The Impact of Islamic Banking Challenges and Opportunities on the Market Share: Evidence from Oman."European Journal of Economics, Finance and Administrative Sciences76 (2015).

Mohammad Ali, ed.E-Banking and Emerging Multidisciplinary Processes: Social, Economical and Organizational Models: Social, Economical and Organizational Models. IGI Global, 2010.

S.Imran Azad, and M. Noorudin. "The prospects and user perceptions of m-banking in the Sultanate of Omen." Journal of Internet Banking and Commerce 15, no. 2 (2010): 1-11.

Sadi, A. H. M. S., I. Azad, and M. Fauzan Noorudin. "The prospects and user perceptions of m-banking in the Sultanate of Omen." Journal of Internet Banking and Commerce 15, no. 2 (2010): 1-11.Angelo Islamic banking & finance in South-East Asia: Its development & future. Vol. 6. World Scientific, 2012.

Vision [website], 2017,  https://www.nbo.om/en/Pages/About-Us/About-us.aspx (accessed 27 March 2017).

[M.Hernandez, José, and J. Mazzon. "Adoption of internet banking: proposition and implementation of an integrated methodology approach." International journal of bank marketing 25, no. 2 (2007): 72-88.

L. Tommi. "Internet vs mobile banking: comparing customer value perceptions." Business process management journal 13, no. 6 (2007): 788-797.

About us, [website], 2017,  https://www.nbo.om/en/Pages/About-Us/About-us.aspx (accessed 27 March 2017).

Vision [website], 2017,  https://www.nbo.om/en/Pages/About-Us/About-us.aspx (accessed 27 March 2017).

S. Mohammad Ali, ed. E-Banking and Emerging Multidisciplinary Processes: Social, Economical and Organizational Models: Social, Economical and Organizational Models. IGI Global, 2010.

S.Imran Azad, and M. Noorudin. "The prospects and user perceptions of m-banking in the Sultanate of Omen." Journal of Internet Banking and Commerce 15, no. 2 (2010): 1-11.

N. Md, and J.Pearson. "The influence of trust on internet banking acceptance." The Journal of Internet Banking and Commerce 2007 (2015).

M. Carolina, T.Oliveira, and A. Popovi?. "Understanding the Internet banking adoption: A unified theory of acceptance and use of technology and perceived risk application." International Journal of Information Management 34, no. 1 (2014): 1-13.

D. Jonghe, Olivier. "Back to the basics in banking? A micro-analysis of banking system stability." Journal of financial intermediation 19, no. 3 (2010): 387-417.

Sadi, A. H. M. S., I. Azad, and M. Fauzan Noorudin. "The prospects and user perceptions of m-banking in the Sultanate of Omen." Journal of Internet Banking and Commerce 15, no. 2 (2010): 1-11.

F. Mohd. "Growth of Banking Sector in the Sultanate of Oman: An Analysis." International Journal of Finance & Policy Analysis 3, no. 1 (2011).

S. Badreldin F., and M. K. Al Ani. "The Impact of Islamic Banking Challenges and Opportunities on the Market Share: Evidence from Oman." European Journal of Economics, Finance and Administrative Sciences 76 (2015).

J. Syed Ahsan, and K. Khan. "A study of customer satisfaction on select service dimensions with reference to ATMs and CDMs services in Oman." Journal of Business and Retail Management Research 10, no. 3 (2016).

K. Mariam El Hamiani. Monetary Policy in the Presence of Islamic Banking. International Monetary Fund, 2016.

V. Angelo Islamic banking & finance in South-East Asia: Its development & future. Vol. 6. World Scientific, 2012.

J. Geoffrey, ed. Banks as Multinationals (RLE Banking & Finance). Routledge, 2012.