e-banking in transition economies- the case of romania
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E-banking in transition economies:
The case of RomaniaReceived (in revised form): 13th November, 2001
Ca lin Gura uspecialises in the areas of international marketing, Internet marketing and high technology marketing. He is a Junior Fellow of
the World Academy of Art and Science and a Fellow of the Salzburg Seminar. He has published more than 20 papers in
national and international journals, on international marketing, Internet marketing and Internet strategies and biotechnology
business. Since September 2000 he has been Lecturer in Marketing at the School of Management, Heriot-Watt University,
Edinburgh.
Abstract Internet banking is one of the newest Internet technology applications, which
promises multiple benefits both for the financial institutions and for clients. In the last
five years a large number of banks have launched websites, offering online banking
services. While the implementation and functioning of these digital systems seem to be
relatively smooth in the developed economies, the situation may be different in countries
with economies in transition. The present paper investigates and analyses the specific
conditions of an economy in transition (Romania), and the appropriate strategies for the
implementation and use of e-banking services.
Keywords E-banking, transition economies, Romania
INTRODUCTION
The explosive development of the Internet
is following three main directions:
1 increased penetration of the Internet, in
terms of number of connection lines
and/or users
2 increased richness of the Internet, in
terms of information
3 increased diversification of the Internet,
in terms of applications.
One of the most promising newapplications of Internet technology is
Internet banking. Exploiting the new
communication/transaction channels
offered by the Internet, in the last five
years the number of bank websites has
increased rapidly. At present there are
available online more than 1,500 sites of
banks from all over the world. The
majority of banks with Internet presence
are from the USA, while in Europe thelargest number of banking websites are in
the UK, Germany, Spain, Italy and
France.
Despite the growing interest in the
introduction and development of Internet
banking, there is little research being done
on the implementation of Internet banking
in transition economies. Most of the papers
dealing with this subject only present
general information without attempting to
analyse primary and secondary data in a
systematic way (see www.efinance.ro).These countries, many of them with a
fairly developed financial and technological
infrastructure, experience specific market
conditions in terms of knowledge,
technological abilities, business ethics and
Internet regulations, as well as consumer
cultural and economic differences. Because
of this, the implementation strategy of
Journal of Financial Services Marketing Vol. 6, 4, 362378 # Henry Stewart Publications 1363-0539 (2002)362
Ca lin Gura uLecturer in Marketing, Schoolof Management, Heriot-WattUniversity, Riccarton,Edinburgh, EH14 4AS, UK.Tel: +44 (0)131 451 3587;Fax: +44 (0)131 451 3296;e-mail: [email protected]
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online banking, which is straightforward
in a developed economy, might be
different and more difficult in a developing
country, requiring specific objectives and
additional costs.
This paper attempts to present andanalyse the situation of e-banking in
Romania, using this example to identify
the procedures and criteria which may
influence the introduction of a successful
e-banking system in transition economies.
ECONOMIES IN TRANSITION:
ROMANIA
The end of the 1980s and the beginning of
the 1990s witnessed dramatic changes inthe social, political and economic structure
of Europe.2 The Central and Eastern
European countries have eliminated their
communist regimes and have started their
transition process towards a market
economy and political democracy. During
the last 11 years enormous changes have
been experienced in all the countries of the
former Eastern bloc. At present, in most
countries of Central and Eastern Europe
there are democratically elected
governments which are committed toestablishing market economies based on
pluralist property forms and free
competition. These reforms have been
hindered by high levels of inflation,
unemployment and economic instability
determined by the restructuring of the
national economic systems. As expected,
the pace and the success of reforms is not
similar in all these countries.3
While Romania is often portrayed as a
poor country, this image does not do
justice to its large development potential.
With over 22 million inhabitants,
Romania has the second largest population(after Poland) in Central and Eastern
Europe, and a large stock of skilled
labour.2,3 It also has a generous
endowment of natural resources, notably
including energy and agricultural land.
Economic conditions in some areas are
comparable with those of more advanced
countries in the region. Romania has also
experienced some periods of rapid growth
and economic prosperity in the past.4,5
Romania remained excluded from theeconomic reform debate which
characterised the 1980s in other socialist
countries. The transition shock was,
therefore, particularly great.6 In two years,
the GDP fell by around 20 per cent and
industrial output by more than 50 per
cent.6 In the immediate outset of transition,
Romania not only lost most of its former
COMECON market, but was also affected
by the UN sanctions against other
traditional export markets such as Iraq and
the former Yugoslavia. A gradualistapproach to structural reforms was adopted
by Romanian governments. This strategy
was intended to minimise the social costs of
transformation of the previous economic
and institutional structures. But, the results
of the transition process revealed that this
was not a successful approach to reform in
Romania.6
Table 1 Main macroeconomic indicators7
Indicators 1991 1992 1993 1994 1995 1996 1997 1998 1999
GDP at constant prices(% change) 12.9 8.8 1.5 3.9 7.1 3.9 6.1 5.4 3.2
GDP per capita (US dollars) 1,187 857 1,159 1,324 1,573 1,437 1,521 1,843 1,515Inflation (change in year-endretail / consumer price levelin %)
223 199 296 62 28 57 152 41 55
Exchange rate (lei / USdollar end year) 189 460 1,276 1,767 2,578 4,035 8,023 10,950 18,255
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The country has experienced high levels
of inflation, a slight increase in the GDP
per capita, and a constant devaluation of
the national currency (lei). This had a
negative effect on the internal financial
stability and has reduced substantially the
purchasing power of Romanian citizens.
Foreign direct investments have increased
constantly, however, even if the growth
was less than in other Central European
countries.8
In 2000, the GDP growth rate has again
registered positive figures (1.6 per cent),
after a three-year period of economic
decline (19961999). The growth was
greater in the export-oriented industrial
sectors (the growth rate of industrialproduction was 8.2 per cent and that of
exports 22 per cent). At the same time
the strong currency reserves of the
National Bank have grown by $950m and
those of the others commercial banks by
$290m.9
INTERNET BANKING: ADVANTAGES
AND PROBLEMS
Using the Internet, people can access their
banking accounts and conduct transactions
24 hours a day, seven days a week, with
reduced costs and increased convenience.
On the other hand, due to the explosive
development of the digital environment,
the banks now have the opportunity to
expand their market penetration
internationally. A study completed by
Datamonitor estimates that at the end of
the year 2003, 10 per cent of the world
population (approximately 545 million
people) will have Internet access. Taking
advantage of this favourable situation,
many financial institutions have launched
corporate websites, offering personalised
online services. Customers can view
account balances and previous statements
from their PCs and download data into
personal financial management software
such as Quicken, Money, and Managing
Your Money. The e-banking services also
offer the possibility of opening newaccounts or direct deposits, ordering
cheques, changing addresses, or paying
bills online.10 All these operations are
secured through encryption, firewalls,
filtering routers and personal identification
numbers.11 Table 2 shows five examples of
UK banks offering e-banking services.
Online banking services are not only
implemented by large financial institutions;
starting as recently as in 1997, many small
banks have opened websites (eg State
National Bank of Big Springs, Texas).11
Internet banking offers multiple
advantages to banks, as well as individual
clients and corporate clients (See Table 3).
The role and content of banks websites
0
5
10
15
20
25
1998 2002
Europe
USA
millions
Figure 1 The evolution in the number of Internet banking users (Forrester Research, 2000)1
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Table 2 Examples of UK banks providing e-banking services12
Online bank Pros Cons Verdict Website address
Barclays OnlineBanking
Intuitive processesmake transactionseasier to perform
PC Bank 2.0 canbe confusing
Within thelimitations ofonline banking,
the package isamong the best
www. barclays.co.uk
Co-operativeInternetBanking
Internet-based;immediate access,no initial setup orsoftware charges
Limited facilities;fund transfer andbill paymentsrequire priorsetup
The Internetbanking service isa step in the rightdirection, butlimited functionalityoffers only minortime savings
www.cooperativebank.co.uk
Bank of Scotlandand OfficeBanking Service
Good housekeepingfunctions
Slow modemconnection;unintuitive userinterface; not a24-hour service
Despite areasonable rangeof functions, it ishard to keep trackof transactions onthe user interface
www.bankofscotland.co.uk
Royal Bank of
Scotland DirectBanking by PC
A well-designed
and secure service
Limited
functionality
Good service but it
has few functionscompared with theother onlineservices presentedhere
www.rbs.co.uk
First Direct PCBanking
Excellent interface;no software orservice charges
Becomesoperational only14 days afterregistering; noadditionalfeatures to FirstDirects phonebankingsystem
Intuitive and well-designed softwaremakes using aFirst Direct accountstraightforward
www.firstdirect.com
Table 3 The advantages of Internet banking1
Advantages
The bank Improved market image perceived as leaders in new technologiesimplementationReduced transaction costsBetter and quicker response to the market evolutionIncreased market penetration the online banking service can be accessed allover the worldThe use of the Internet site to advertise/sell new financial products
The individual client Reduced costs in accessing and using the banking servicesIncreased comfort and time-saving transactions can be made 24 hours a day,
without requiring physical interaction with the bankSpeed of transactionBetter administration of funds the history of transaction is registered on digitalsupport and can be analysed before a new transaction is initiated
The institutional client Reduced costs in accessing and using the banking servicesQuick and continuous access to information
Increased comfort and time-saving transactions can be made 24 hours a day,without requiring physical interaction with the bankSpeed of transactionBetter administration of funds the history of transaction is registered on digitalsupport and can be analysed before a new transaction is initiated
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is evolving over time. Most banks start
with a simple web page comprising
general information about the bank and its
services, gradually introducing online
communication facilities with the
customers and then a full range of Internet
banking services (see Figure 2).
The cost of online applications increases
with the complexity of the site (see Figure
3). On the other hand the increased
complexity of online applications permits
better targeting and servicing of customers(implementing customer relationship
management functions), which in turn
increases the competitive advantage of the
bank.
A study conducted by Faulkner & Gray1
has shown that most of the existing bank
websites are informational. Around 20 per
cent of the bank sites offer the possibility
of limited transactions (self-service), and
only 1.58 per cent have implemented a
complex transactional site. Finally, only
0.56 per cent of the surveyed banks offer
highly customised online applications.
On the other hand, analysing thebarriers against the introduction and
development of online banking services,
Type of access
Internet banking services
Online transactions
Offline interactive site
Customised contact with the client;online communication through e-mail
Simple web presenceStatic pages with generalinformation about the bank
Time
Figure 2 The evolution of the banks web presence
1
2000-2005Transformation
1998-2003
Customisation
Transactions
CRM applications
Advanced
1997-2000
Online access to customisation
Interaction
personal accounts
Long-term sstrategy
Online transactions Distributed InternetInteractive Support for other network 1996-1999 communication financial services
Presence Web search engines
Possibilities for Self-service
General information personalised calculus
Cost: $5K - $500K Cost: $500K-$5M Cost: $5M-$50M+ Cost: $50M-$150M+
Figure 3 The relation between cost and web-site complexity in Internet Banking. (Source Gartner Group)
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two main categories can easily be
identified:
factors affecting the suppliers of
banking services
factors affecting the customers.
A study undertaken by KPMG Europe13
on a sample of 357 institutions, has
identified some problems experienced by
the banks (see Figure 4). Security seems to
be the most important problem. This is
understandable considering the number
of security breaks experienced in the last
two years by a number of major
European banks.14 The lack of knowledge
about the benefits of online banking is
increasing fast, as an effect of the
promotion campaign launched in the last
three years by many banks and financial
institutions.
For the clients, the four main reasons to
avoid online banking services are:13
security (25 per cent)
their bank is not offering online
services (20 per cent)
they prefer the personal contact with
the bank (18 per cent)
the benefits of online banking are not
obvious (16 per cent).
According to a survey by Deloitte
Consulting, less than one-third of
customers rate e-banking as an important
service, and of those only 22 per cent
actually use it. A more discouraging fact
for many banks is the fact that more than
30 per cent of customers do not even
know whether their bank provides online
services at all.15
Despite these problems financial
institutions and analysts are optimistic
about the future of online banking. The
solution to more popular online banking
services is the education of the customer,
the improvement of Internet security and
the formulation of a better customer-
oriented offer.15
THE ROMANIAN BANKING SYSTEM
At present, the Romanian banking system
consists of the National Bank of Romania
and 41 commercial banks.16 After anextremely difficult period experienced by
the Romanian banking system between
1998 and 1999 (seven commercial banks
have been removed from the Bank
Register during this period and several
others have experienced serious financial
problems), the situation substantially
improved in 2000 and 2001. This change
0
10
20
30
40
50
60
70
80
90
1998 1999
Security fears
Low skil ls level
Fears over on-linecustomers
Cost implications
Lack of knowledgeof benefits
%
Figure 4 Problems experienced by the suppliers of e-banking services. Source: KPMG European ResearchReport, November 1999
13
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has been determined by the introduction at
the end of 1999 of a complex set of strict
regulations regarding the role of
supervision and control of the National
Bank of Romania upon the activities
developed by the commercial banks. The
risk to the Romanian financial system has
been reduced allowing a quick recovery
and development of the private
commercial banks.9
Nowadays, as a result of a series of
important privatisation initiatives, the
majority of Romanian commercial banks
are private (out of 41 banks, only three are
controlled by the state). Private capital
represents 60.5 per cent of the entire
capital invested in the Romanian bankingsector (of which 35.9 per cent represents
foreign private capital) and 57.9 per cent
of the Romanian banks assets.9
THE ROMANIAN INTERNET
INFRASTRUCTURE
In terms of Internet infrastructure
Romania, with Bulgaria and Croatia, is in
the forefront of Eastern Europe, with
levels approaching those of their Central
European neighbours (Czech Republic,
Hungary, Poland, Slovakia and Slovenia)
in several key factors. These are secure
servers (Romania 21); Internet services
(Romania 25 per cent); information
backbones (direct fibre optic links to major
European backbones; Romania operates
the only Internet exchange in the region,
based in Bucharest); and Internet hosts
(Romania 1,613 per million inhabitants).17
RESEARCH METHODOLOGY
The research presented in this paper was
conducted during July and August, 2001.
The rationale for this research was to:
identify the macroeconomic factors that
influence the success of e-banking
implementation in Romania
define the profile of the e-banking user
in Romania (institutional versus
individual users, age, level of
education, Internet knowledge and
skills).
A number of secondary information
sources were first accessed and consulted in
order to evaluate the general state of the
Romanian economy, the Romanian
banking system, the Internet infrastructure
in Romania, and the banks that have
already introduced an e-banking system.
Following this, the 41 banks operating in
Romania were contacted personally or by
telephone, in order to organise interviews
with bank representatives. As a result ofthis, 14 semi-structured interviews were
conducted with bank managers and other
bank personnel from 11 banks, either
directly or by telephone. The most
important issues highlighted during these
interviews were then discussed further
with a number of randomly selected bank
customers. The sampling procedure
applied was quota sampling (50 per cent
institutional clients and 50 per cent
individual clients). The bank clients were
randomly approached in different banks
buildings in the cities of Oradea and Cluj-
Napoca, and were asked if they would
agree to fill in a short questionnaire. As a
result of this approach, 300 bank clients
answered the questionnaire (150
institutional clients with business bank
accounts and 150 individual clients with
personal bank accounts).
The following hypotheses have been
formulated and verified through this
study:
H1: Success in the introduction and use of
e-banking technology depends on the
characteristics of
banks
Internet infrastructure
users.
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H2: The primary users of e-banking
systems in transition economies are
institutional clients.
H3: The adoption and use of e-banking
systems depends on the personal profile of
the users age, level of education and
knowledge about the Internet technology.
The main limitations of the research
methodology are the limited sample of
bank representatives that agreed to provide
primary information about e-banking
services (26.8 per cent of the banks
functioning in Romania at the time of the
survey), and the concentration of the
respondent bank clients in two majorRomanian cities. It can be considered,
however, that the samples were highly
representative since:
all the banks providing primary
information were offering e-banking
services; the information provided was
based on direct experience
the respondents from the two large
cities are representative of the urban
Romanian population; the rural
population seldom has access to
Internet connection and to e-banking
services.
DATA PRESENTATION AND ANALYSIS
E-banking services offered by the
Romanian commercial banks
The investigation of the web presence/
strategy of the 41 commercial banks
functioning in Romania in August 2001 is
presented in the Appendix. Considering
the definition of the different stages of e-
banking strategy, the situation of
Romanian banking strategies has been
analysed and evaluated.
The interviews with banks
representatives
The main objective of the interviews
conducted with banks representatives was
to identify the main factors responsible for
the successful implementation and
functioning of online banking services in
the Romanian economy. Table 4 shows
the aggregated results of this survey. The
bank representatives have identified
necessary requirements connected with the
population, Internet system, government
and the bank itself. These results confirm
the hypothesis that:
H1: The success in the introduction and use
of e-banking technology depends on the
characteristics of:
Table 4 The main requirements for the successful implementation and functioning of online banking servicesidentified by banks representatives
Elements Main factors
Population Internet knowledge and skills: the capacity to use the Internet effectivelyEthical behaviour: respecting and using fair rules of trade, avoiding opportunistic orharmful behaviour (eg software viruses, hacking, bank frauds)
Internet A developed Internet networkQuick and reliable Internet connections
Government Clear and comprehensive Internet legislation: legislative measures for dataprotection and data transfer, the punishment of online bank fraudsSupport of e-banking initiatives (Romanian National Bank, Ministry of Finance): fasttrack approvals for the implementation of e-banking systems; an effective controlsystem for preventing bank frauds and financial crises
Bank Customer-focused approach: adapting the website to the skills and needs of usersHigh quality/reliability of serviceClear e-business objectives/strategyAppropriate training of bank personnel
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banks
Internet infrastructure
users.
The successful introduction and
functioning of e-banking services proves to
be a complex operation which requires aharmonisation among all the interacting
elements of the economic and financial
system (see Figure 5).
THE QUESTIONNAIRE COMPLETED BY
BANK CLIENTS
The results displayed in Tables 5 and 6
confirm the hypothesis that:
H2: The primary users of e-banking
systems in transition economies areinstitutional clients.
These findings are quite logical taking into
consideration that in the present
Romanian economy:
the institutions representatives (and
especially the business managers/
entrepreneurs) have easier access to an
Internet connection than the rest of the
population
the institutions representatives have a
larger volume of banking transactions
than the rest of the population, the
online banking services offeringadvantages in term of time, place and
funds administration
the institutions representatives (and
especially the business managers/
entrepreneurs) are more dynamic and
entrepreneurial than the rest of the
population, by the nature of their
profession.
The direct consequence of this
phenomenon is the introduction by many
Romanian commercial banks of an onlinebanking service formulated and directed
primarily at institutional clients.
There is a significant statistical
relationship between the level of education
of the respondents and their present use of
e-banking (at a level of p 5 0.0001), and
respectively with their intention to use
e-banking services in the future (at a level
Government
Website
E-banking
Website
E-banking
Bank
Bank
Digital environment
Individual customer
Institutional customer
Institutional customer
Individual customer
Physical environment
Figure 5 The interacting elements of the online banking environment
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of p 5 0.0001) (Tables 7 and 8). The
number of present users among the
respondents is quite low (4.7 per cent), but
from these 85.7 per cent have completed
university or postgraduate studies.
The data from Tables 9 and 10 show
that the propensity of respondents to use
e-banking services at present or in the
future is influenced by their knowledge of
the Internet. The results are statistically
significant, especially for the future use of
e-banking, demonstrate that, for the
present moment, there are also some other
factors that limit the capacity of
respondents to use online banking services
(such as the availability of a personal
Table 5 Crosstabulation between the present use of e-banking services and the type of respondents
Type of respondents/Present
use of e-banking
Present use of
e-banking
N %
No present use of
e-banking
N %
Total
N %
Institutional clients 12 85.7 138 48.3 150 50Individual clients 2 14.3 148 51.7 150 50Total 14 100 286 100 300 100
Chi square = 7.493 p = 0.006
Table 6 Crosstabulation between the future intention to use e-banking services and the type of respondents
Type of respondents/Future use of e-
banking
Future use of e-banking
N %
Do not know if they
will use e-banking in
the future
N %
Total
N %
Institutional clients 96 64.4 43 31.4 139 48.6Individual clients 53 35.6 94 68.6 147 51.4Total 149 100 137 100 286 100
Chi square = 31.195 p < 0.0001
Table 7 Crosstabulation between the present use of e-banking and the level of education of the respondents
Level of education of respondents/
Present use of e-banking
Present use of
e-banking
N %
No present use of
e-banking
N %
Total
N %
High school 2 14.3 216 75.5 218 72.7University 7 50 54 18.9 61 20.3Postgraduate studies 5 35.7 16 5.6 21 7.0Total 14 100 286 100 300 100
Chi square = 30.542 p < 0.0001
Table 8 Crosstabulation between the future use of e-banking and the level of education of the respondents
Level of education of respondents/
Future e-banking
Future use of e-banking
N %
Do not know if they
will use e-banking
in the future
N %
Total
N %
High school 84 56.4 132 96.4 216 75.5University 50 33.6 4 2.9 54 18.9Postgraduate studies 15 10.1 1 0.7 16 5.6Total 149 100 137 100 286 100
Chi square = 61.707 p < 0.0001
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Internet connection, financial resources,
etc).
The availability of a personal Internet
connection is one of the main reasons for
the respondents avoiding the use of e-
banking services even in the future (see
Table 11). Other important reasons are
lack of trust in Internet security, lack of
trust in the bank/banking system,
preference of a direct relationship with the
bank representative and lack of Internet
knowledge.
The results shown in Tables 7, 8, 9 and
10 partially confirm the hypothesis that:
H3: The adoption and use of e-banking
systems depend on the personal profile of the
users: age, level of education, knowledge
about the Internet technology.
The statistical analysis has identified
significant statistical relationships between
the profession, level of education and level
of Internet knowledge of the respondents
and the present or future use of e-banking
services. No statistical relationship has been
found between the age of respondents and
the use of online banking services.
Table 12 shows the importance allocated
by institutional clients (Inst.) and
individual clients (Ind.) to a number of
factors for the successful introduction of e-
Table 9 Crosstabulation between the present use of e-banking and the level of Internet knowledge of therespondents
Level of Internet knowledge/
Present use of e-banking
Present use of
e-banking
N %
No present use of
e-banking
N %
Total
N %
No knowledge 0 0 50 17.5 50 16.7Some knowledge 3 21.4 129 45.1 132 44Medium level of knowledge 10 71.4 93 32.5 103 34.3High level of knowledge 1 7.1 14 4.9 15 5Total 14 100 286 100 300 100
Chi Square = 10.169 p = 0.017
Table 10 Crosstabulation between the future use of e-banking and the level of Internet knowledge of therespondents
Level of Internet knowledge/
Future use of e-banking
Future use of e-banking
N %
Do not know if they
will use e-banking
in the future
N %
Total
N %
No knowledge 10 6.7 40 29.2 50 17.5Some knowledge 61 40.9 69 50.4 130 45.5Medium level of knowledge 64 43 28 20.4 92 32.2High level of knowledge 14 9.4 0 0 14 4.9Total 149 100 137 100 286 100
Chi Square = 46.157 p < 0.0001
Table 11 Reasons given by respondents who do not want to adopt e-banking services
Reasons for not adopting e-banking services Frequency Percentage from 137
Lack of Internet knowledge and skills 46 33.6
Lack of personal Internet connection 114 83.2Lack of trust in Internet security 110 80.3Lack of trust in the bank/banking system 83 60.6Desire a direct relationship with the bank representative 78 56.9Others 11 8.1
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banking services. As can be seen, there are
a number of differences between the
perception of institutional clients and that
of individual clients: institutional clients
allocate more importance to the Internetinfrastructure, Internet security and the
promotion of bank services, while
individual clients consider more important
customers education and the reputation of
the bank. The bank guarantees have
maximum importance for both categories
of respondents.
In comparison with Table 12, the level
of importance allocated by institutional
clients (Inst.) and individual clients (Ind.)
to the factors for the successful use of e-
banking services is different, a long-termperspective. For both categories of
respondents (see Table 13) the bank
guarantees, the reliability of the bank
service and the security are extremely
important. The application of fair rules of
trade and the avoidance of opportunistic
business behaviour (business ethics) as well
as the capacity of the Internet connection
to provide fast and continuous data
transfer (reliability of Internet connection)
are considered to be more important by
institutional clients.
CASE STUDY: BTRNET THE FIRST
INTERNET BANKING SERVICE
INTRODUCED IN ROMANIA18,19
This case study has been compiled using
information obtained from:
the website of the Turkish Romanian
Bank (BTR)19
a telephone interview with two BTR
bank representatives
Efinance.ro online journal.18
Launched on 26th July, 1999 by the
Turkish Romanian Bank, BTRnet was the
first Internet banking service using the
newest technology introduced in the
Romanian banking system. The
implementation of BTRnet required an
investment of $500,000 made over a one-
Table 12 The importance of the factors identified by institutional clients (Inst.) and individual clients (Ind.) forthe successful introduction of e-banking services
Factors for successful introduction of
e-banking / Level of importance
Low
importance
Inst. Ind.
Medium
importance
Inst. Ind.
High
importance
Inst. Ind.
Total
Inst. Ind.
Bank reputation 52 30 98 120 150 150Bank guarantees 150 150 150 150Internet infrastructure 9 92 141 58 150 150Internet security 14 150 136 150 150Users education 31 83 48 67 71 150 150Promotion of e-banking services 42 85 79 40 29 25 150 150
Table 13 The importance of the factors identified by institutional clients (Inst.) and individual clients (Ind.) forthe successful use of e-banking services
Factors for successful use of e-banking /
Level of importance
Low
importance
Inst. Ind.
Medium
importance
Inst. Ind.
High
importance
Inst. Ind.
Total
Inst. Ind.
Bank reputation 12 150 138 150 150Bank guarantees 150 150 150 150Reliability of Internet connection 10 39 140 111 150 150Reliability of bank service 150 150 150 150Security 150 150 150 150Business ethics 36 63 114 87 150 150
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year period. The decision to offer this
service was based on research which
showed that the banks clients frequently
used computers (70 per cent of them had
Internet access) and desired (90 per cent of
them) to use an Internet banking service.
The number of Internet banking
transactions increased from 100 per month
in July 1999 to 17,000 in October 2000,
and the number of clients using this
service exceeded 7,000 (80 per cent of
which were institutional clients) of a total
portfolio of 100,000 clients. During the
period when BTRnet was available, over
113,000 transactions were performed,
requested mainly by institutional
clients.18,19
At present, any BTR client has real time
access to their account 24 hours a day,
seven days a week. They are able to: see
their account balance at any time; obtain
and print out statements of account; send
transaction instructions to the bank such as
to effect payments in Romanian lei to the
state budget or to other beneficiaries;
purchase and sell foreign currency;
perform foreign currency transfers; or
integrate other retail operations such as
credit/debit cards and salary payments. In
the case of lei or foreign currency
transfers, an additional facility allows such
transfers to be ordered up to seven
business days in advance.18,19
The service has two operation modes
online and offline offering the
possibility of reducing communication
costs, which are in fact the only costs of
this service. There are two types of access
levels, generically called Maker and
Authoriser (Maker allows visualisation,printing and editing of transactions, while
Authoriser allows a transaction
authorisation function in addition to the
previous functions).
In order to provide complete safety of
transactions, BTR used the services of the
German company Brokat Infosystems AG,
a top provider of safety applications in
electronic commerce. For its online banking
service, BTR uses the Twister software
platform, offered by Brokat and used by
over 1,600 companies worldwide (including
Deutsche Bank). The BTRnet service meets
all international standards regarding the
safety of Internet transactions, ensured by
the following elements:18,19
128 byte encryption technology, which
ensures the confidentiality and integrity
of messages between clients and the
bank
digital identity certificates issued by
authorised institutions like VeriSign
and RSA Data Security
firewalls that protect the banks internalnetwork from any unauthorised access
an automatic closing of the work
session after three minutes of idle time.
If an unauthorised access of an account has
been attempted, by using false passwords
and PIN codes, the access to that account
would be blocked after three attempts.
BTRnet offers its customers full
mobility, as there is no requirement for
the client to have special software on his
or her PC. The client could perform
banking transactions from any location: in
the country or abroad, at the office or at
home, in a train or car. In terms of costs,
this means that access to BTRnet requires
only the payment of the local
communication tariff between a PC and
the Internet provider.
BTRnet bank do not charge connection
fees or monthly subscriptions; clients only
pay the fees relating to their specific
transactions. As a first in electronicbanking transactions in Romania, BTRnet
is available to both legal entities and to
individuals.
CONCLUSIONS
This study has attempted to identify the
main elements that influence the successful
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introduction and functioning of e-banking
services in a transition economy
(Romania). In order to have a
comprehensive view of this topic, many
secondary sources of data have been
consulted, and primary surveys have been
conducted both with banks representatives
and with bank customers.
In order to understand the specific
conditions of the Romanian market for e-
banking services, a short presentation and
analysis have been made of the Romanian
economy, Romanian banking systems and
the Romanian Internet network. A
complete list of Romanian commercial
banks is provided in the Appendix, with
an indication of their stage ofimplementing online banking services.
Three research hypotheses have been
formulated:
H1: Success in the introduction and use of
e-banking technology depends on the
characteristics of:
banks
Internet infrastructure
users.
H2: The primary users of e-banking
systems in transition economies are
institutional clients.
H3: The adoption and use of e-banking
systems depends on the personal profile of
the users age, level of education and
knowledge about the Internet technology.
The results of the study have totally
confirmed the first two research
hypotheses (H1 and H2), and partiallyconfirmed the third one (H3).
An important objective of the study was
to identify the main factors considered by
the banks representatives and by the
customers to influence the successful
implementation and functioning of e-
banking services. The results have shown
that the process of online banking is
influenced by many inter-related factors
and institutions, including the quality and
security of Internet network, the level of
Internet knowledge and skills of the
population and government support, as
well as the Internet strategy of the bank
and the quality/reliability of online
banking services.
The presentation of a mini case study
The introduction of the first e-banking
service in Romania by the Turkish-
Romanian Bank offered the
opportunity to identify the main stages of
introducing a successful e-banking service
in Romania:
a thorough evaluation of the existingcustomers willingness and capability to
use the new service
the promotion of the new service
support offered to clients
low/no costs for clients
good e-banking security.
In comparison with the introduction of e-
banking services in an economically
developed country, the implementation of
this facility in a transition economy is
limited by a number of additional
problems:
the legislation (especially Internet and
financial regulations) may be unstable,
vague and incomplete
the financial system is characterised by
high levels of risk, the banks
reputation is weak, and the offer of
services is limited to the basic financial
instruments
the Internet connection may be slowand unreliable
the number of people with a personal
Internet connection is small
many people do not know how to use
the Internet facilities
opportunistic bank strategies.
Despite these problems, it can be considered
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that the introduction of e-banking services in
Romania has been successful. The banks
have adapted their online offer to the specific
conditions of the economy (low or no fees,
customer support, online services mainly
targeted to institutional clients) and some of
them are starting to customise the services.
Because the Internet is still used by a
relatively small number of Romanians,
some banks (Demirbank Romania) have
already attempted to introduce mobile
banking (using WAP browsers). Since the
number of mobile phone users is much
larger than the number of Internet users in
Romania, this new technology has the
chance to become a popular service in the
near future.20,21 The future development of
this technology depends mainly, as this
study has shown, on the capacity of the
mobile phone companies to offer secure and
fast Internet connections, on the capability
of banks to provide secure and reliable e-
banking services and on the legislative
support of the Romanian government.
APPENDIX
The list of Romanian commercial banks and the stage of their e-banking
implementation16
Bank Date of coming
into operation
E-banking facilities The stage of e-banking
implementation
Frankfurt Bukarest Bank
AG, Frankfurt am
Main Bucharest
Branch
27.12.1979 No website No Internet presence
MISR Romanian Bank,
Cairo/Giza Bucharest
branch
06.06.1987 No website No Internet presence
Mindbank 10.07.1990 No website No Internet presence
Banque Franco-Roumaine,Paris Bucharest branch
16.07.1990 No Internet connection No Internet connection
The Romanian Bank for
Development
01.12.1990 Online access to bank
services mainly for
corporate clients
Interactive stage
The Romanian
Commercial Bank
01.12.1990 Online access to bank
services
Transactional stage
Banca Agricola 01.12.1990 No website No Internet presence
Ion Tiriac Commercial
Bank
20.03.1991 e-banking facilities,
mainly for corporate
clients
Interactive stage
Eurom Bank 10.04.1991 No website No Internet presence
Banc Post 26.11.1991 Online access to bank
services, for individualand corporate clients
Interactive stage
Eximbank 14.04.1992 Electronic banking
available, lack of
information on the
bank website
Interactive stage
The Romanian Bank 23.07.1992 Website, e-banking
service disabled
Presence stage
Finansbank Romania 10.12.1993 Online banking service
temporarily inactivated
Interactive stage
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Bank Date of coming
into operation
E-banking facilities The stage of e-banking
implementation
Transilvania Bank 28.01.1994 Online access to bank
services
Transactional stage
Romexterra 02.03.1994 E-banking facilities Interactive stageAlpha Bank Romania 02.03.1994 Online access to bank
services
Transactional stage
The Turkish-Romanian
Bank
02.03.1994 Online access to bank
services
Transactional stage
ING Bank N.V.,
Amsterdam Bucharest
Branch
22.06.1994 Online access to bank
services
Direct transfer of
financial electronic data
into the electronic
accounting systems of
customers (firms)
Interaction stage
Piraeus Bank Romania 03.05.1995 E-banking facilities Interaction stage
ABN Amro Bank 26.06.1995 Global corporate site,Romanian web page
disabled
Presence stage
Robank 20.12.1995 Online access to bank
services, mainly for
corporate clients
Transactional stage
National Bank of Greece
Bucharest Branch
06.03.1996 Website, no e-banking
service
Presence stage
Citibank Romania 26.06.1996 Online access to bank
services
Transactional stage
West Bank 26.06.1996 No website No Internet presence
Commercial Bank of Greece
(Romania)
25.07.1996 Online access to bank
services
Interaction stage
Astra 17.09.1996 Website, no e-bankingservice Presence stage
The Italian-Romanian Bank,
Roma - Bucharest Branch
13.11.1996 No website No Internet presence
Unirea Commercial Bank 25.11.1996 No website No Internet presence
Libra Bank 25.11.1996 Online access to bank
services
Transactional stage
Daewoo Bank (Romania) 22.01.1997 No website No Internet presence
Raiffeisenbank Romania 29.04.1997 Electronic banking;
payment system
integrated electronically
with the accounting
system of the firm
Transactional stage
Demirbank Romania 25.06.1997 Online access to bankservices; payment
system integrated with
the accounting system
of the firm; mobile
banking using WAP
technology
Transactional stage
Bank * Austria
Creditanstalt Romania
13.04.1998 Online access to bank
services
Transactional stage
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Bank Date of coming
into operation
E-banking facilities The stage of e-banking
implementation
United Garanti Bank
International N.V.,
Amsterdam BucharestBranch
13.04.1998 Site under construction Site under construction
Romanian International
Bank
13.04.1998 No website No Internet presence
Egnatia Bank (Romania) 17.07.1998 Online service available
for Greek clients; no
specific website for
Romanian clients
Presence stage
Carpatica Commercial Bank 15.07.1999 Website, no e-banking
service
Presence stage
The Romanian Savings
Bank
17.09.1999 Website, no e-banking
service
Presence stage
The Bank of Investment and
Development
31.01.2000 No website No Internet presence
Volksbank Romania 10.04.2000 Site under construction Site under construction
Banca di Roma, Italia
Bucharest branch
07.11.2000 Global corporate site,
no Romanian web page
Presence stage
Gurau