RELEVANCE OF ONLINE BANKING TO THE DAY-TO-DAY TRANSACTIONS OF
THE STUDENTS OF UEP
Pursuant to the Requirements of this
course on Accounting Information System
In the Department of Accounting
University of Eastern Pangasinan
Binalonan, Pangasinan
Submitted by:
Estrada, Jemuel Antonio
Libao, April Ruth Toledo
Ganaden, Aira Noreen
Ricahuerta, AJ Salvador
Submitted on:
September 6, 2022
BACKGROUND OF THE STUDY
Philippine banking history began as early as 1851 with the establishment of the
Bank of the Philippines Islands, then named El Banco Español Filipino de Isabell II. Many
more financial institutions would be established in the coming century signifying the
expansion and changes of the Philippine government and economy. With the significant
shifts in sociopolitical conditions in the country, the banking industry has sought more
ways and mediums to offer investment and consumer banking services in addition to
traditional commercial banking activities. And as advances in technology have been
significant in the 21st century, the industry has taken advantage and benefited from such
phenomena to be able to serve the whole country.
From traditional banking, the banking industry is rapidly evolving to online services
with the help of the Internet and has gone wireless in the last 10 years. It has become
common for most family members to own bank accounts as a way to maximize the
advantages of banking, whereas it was only common for adults and the employed in the
past. Now, as most industries begin to take advantage of digital spaces, young adults and
adolescents, even children, can be entitled to own their accounts. Evidently, many people
have benefited from electronic banking which can provide way greater benefits for the
day-to-day transactions of college students. Prevalently, this has become the way to pay
for necessary fees for schooling such as tuition, as e-banking makes it so easy to pay
with a one-tap method or through a QR code.
In a survey conducted in the Philippines, about 86 percent of respondents between
the ages of 18 and 24 were Internet users (Statista Research Department, 2019). With
the use of online payment apps such as Gcash, Paymaya, PayPal, and banking apps like
BPI, BDO, and LANDBANK are backed by the Bangko Sentral ng Pilipinas (BSP) to
provide a wide range of online financial services nationwide. When we consider the value
of payment transactions, we can see how essential electronic payments are. Electronic
payments account for roughly 90% of the total transaction value.
Thanks to advanced technology, internet banking has increased significantly over
the years. Banks are able to improve their business processes and conduct a wide range
of banking services electronically, such as conducting daily banking transactions through
electronic banking channels, anytime and anywhere. This has made their transactions
and business with customers much more accessible and easier, at a lower cost. It has
also achieved results in saving time and money (Depusoy and Nartea, 2020 as cited in
Hogart, 2004).
The adoption of electronic banking is crucial because many financial institutions
are shifting their attention away from traditional bank branch offerings and toward
electronic customer interaction. This action not only saves money but also makes it
possible for banks to more effectively reach a wider target audience (Yates, 2020).
Therefore, there is a chance that the number of unbanked people will rise and that big
banks will give way to smaller, service-oriented financial institutions. Carranza, et al.,
(2021) indicated that e-banking provides customers with a variety of services that provide
value and give them a competitive advantage over competitors, such as account
checking, bill payment, transfers, and mobile phone text message notifications.
While online banking is constantly improving, there are some drawbacks for
consumers who rely on immediate and continuous access to their banking services. While
technological establishments pave way for convenience, the security of digital banks
requires a tremendous amount of infrastructure to be maintained while also ensuring that
its services are easily available and accessible to the common majority. This poses a
massive challenge to financial institutions, and the customers desiring to participate in
banking digitally, especially for the likes of entirely digital banks such as GCash,
Paymaya, etc. This concern on perceived security is driven by the increasing
phenomenon of fraud schemes, which aggravated during the COVID-19 pandemic.
In March of 2021, as much as 44 percent of individual Philippine-based consumers
have been targeted by digital fraudsters beginning in January the same year on over
40,000 websites and mobile applications (TransUnion, 2021). Most of these have been
targeted at Gen Z, which are those born between the years 1995 to 2002. Regarding
digital fraud attempts on enterprises, there has been a significant increase of attacks by
31 percent as compared to the pre-pandemic conditions from March 2019 to March 2020
prior to the lockdown. The study indicated that the sectors that are targeted the most by
digital fraudsters are telecommunications, logistics, and financial services.
Evidently, as most of life migrates to the cyber sphere, so has fraudulent activity.
This can also be observed due to the availability of personal information and contacts as
solicited through various means (registering on websites or mobile applications,
answering forms and surveys, social media account profiles and the like) where despite
the consent of the individual to participate, unbeknownst to them the information might be
used by the managing figures for fraudulent means.
The mankind of course is not oblivious to the magnitude of risks internet platforms
pose. And these risks are not only menial they can impact whole livelihoods should
fraudsters succeed. That is why there is great curiosity about how people are still
engaging in these platforms, though it is not to be discouraged. But rather, how can these
factors affect their decisions?
Established banks indeed have sophisticated infrastructure to maintain its security
and prevent any breaches or dangerous activity with regard to client information and the
safekeeping of money. However, since digital banking and mobile wallets are relatively
new and have been around for more or less than 20 years, there is a reasonable question
about its amount of security considering that there are many ways around virtual platforms
such as malware or other risks in the cyberspace.
One of the most popular mobile wallets and branchless banking applications,
GCash in particular, has racked up to 60 million active users as of July 2022 (Statista,
2022). This is despite the various reports and accounts of individual users experiencing
theft or hacking of their accounts on the platform. But regardless, seems to be no stopping
these millions — mobile wallets have proven to be extremely convenient and even
becoming more so as enterprises and businesses begin integrating them into their
financial business models for consumer accessibility. But again, the fears of security
breaches and the possibility of fraud still stand, proving how telecommunications such as
SMS and calls have been used by scammers to contact and solicit information through
phishing or identity theft.
Despite such doubt, this phenomenon proves one thing: that financial services are
a day-to-day need that needs day-to-day management, which makes engagement
inevitable. However, a question persists: how aware are Filipinos of the risk factors that
come with digital financing? And how can this awareness contribute to the decision
drivers of the individual in still participating? But to be even more specific, what are the
very reasons people use digital banking services?
Digital banking has indeed presented itself as a do-for-all mechanism of serving
and delivering financial services with the aim to help individuals and families manage their
expenses. But there are many factors that could depend on whether individuals may
decide to participate. This may depend on the digital banking marketing strategies and of
course the behavior of consumers depending on the social settings and how the need for
financial management arises. Many determining factors are contributory to the
engagement of individuals towards the services such as perceived usefulness, amount
of trust, ease of use, subjective norms, and intention, which are best to determine the
individual drivers (Bhatt, 2021).
In order to measure these factors, a quantitative research is required in order to
measure and determine the dominant ideas of the people in financial technologies that
could contribute to the decision-making process, what factors are the detractors of making
such decisions, and how significant is the need in order for the individual to decide to
engage.
With great interest in the phenomena of digital banking and consumer
engagement, the researchers endeavored to aim this study toward understanding the
engagement and attitudes of the students of the University of East Pangasinan toward
online banking in the context of the ongoing pandemic and economic conditions of the
country. Furthermore, this study will also determine the intentions of students in digital
banking engagement, which will indicate the accessibility of the general student
population, their level of awareness on banking and finances, and their own experiences
with respect to their needs and wants. Furthermore, one of the objectives as well is to
contribute to the knowledge of the banking industry’s security system provided that this
research will make results pertaining to the needs and attitudes of the clientele or
prospective customers/users. And finally, provide the tertiary education institution of the
University of East Pangasinan an insight into how their students value personal
information, security, and the protection of privacy, and give knowledge in the financial
needs and management mechanisms of the student population.
THEORETICAL FRAMEWORK
This study wishes to pursue the behavioral attitudes toward the use of online
banking of UEP students in their day-to-day transactions. Mainly with the ongoing
transition of cashless transactions and the growth of digital payments.
The use of online banking transactions of UEP students is anchored on three
behavioral theories: theory of planned behavior, theory of reasoned action, and
technology acceptance theory. These theories are what conclude consumers' actions or
behaviors toward online banking based on the subject's adaptability and ease of use.
In accordance to Salem et al., (2019) suggest that technological leadership, etrust, e-loyalty, customers' value for online personalization, customers' concern for
privacy, and proclivity for technology adoption all influence the use of online banking
services. This proposes that policymakers create a prioritized hierarchy of actions to
promote the effective use of banks' online services. Moreover, The authors identified four
consumer segments using a power-dependency paradigm within a social and behavioral
theoretical framework and power distance belief of national culture theory: exemplar,
empiric, elevator, and exponent. The authors propose a consumer-focused sales strategy
based on communication, control, consolidation, and collaboration (Liyanaarachchi,
2021).
Ahmed et al., (2020) Included that, as cited in Zeithaml et al. (2002, pp. 362-375)
define electronic service quality as the extent to which a website facilitates efficient and
effective purchasing, shopping, and delivery of services and goods. The definition
provided by Zeithaml (2002, pp. 135-139) has a broad meaning that revolves around the
aspects of the service pertaining to the customers' experience prior to using the website,
experience while using the website, and post-experience after the transaction has been
completed. Numerous researchers have thoroughly examined the quality of Internet or
online banking services. These studies elicit customer feedback on the quality of service
provided by online banks. Furthermore, previous literature developed on the
measurements of online quality of service from the perspective of the online banking
sector (Sohail and Shaikh, 2008 as cited by Ahmed, et al., 2020).
In addition, Albert-Morant, et al., (2022) stated that four fields, namely information
technology, finance, and service management, attempt to study and explain online
banking The adoption of online banking has been primarily explained by social science
theories, with the leading theoretical model used being the technology acceptance theory.
(Hanafizadeh et al., 2014).
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