midst of increasing standardization of financial products and services, demand can be expected to react
favorably to innovation designed to anticipate the
changing needs of customers in technologically diverse
market segments (such as online asset trading).
For a quantitative comparison of
efficiency along different strategic directions in market development, we follow [ 1] and
calculate marginal rates of substitution (MRS) from the
empirical results in Table 2.
Assuming that a linear approximation of the consumer satisfaction function is valid,
we can apply the standard formula estimating
MRSij=bj/bi to obtain the data in Table 3, determining
in particular MRSUSE,EOU=bEOU/bUSE=0.138/0.100=
1.380 and MRSUSE,REL=bREL/bUSE=0.146/0.100=
1.460. Should a cost-benefit analysis be required to
establish priorities in market development under the
core framework, these calculations would supply data
for one side of the decision. For example, if the difference between MRSUSE,EOU= 1.380 and the (given)
relative cost of enhancing service quality in the direction of USE and EOU is greater than the difference
between MRSUSE,REL= 1.460 and the (given) relative
cost of enhancing quality in the direction of USE and
REL, it would be more efficient for the bank to incrementally expand online services by exploiting the first
opportunity as against the second. (In economic theory, MRS comparisons of this type can be introduced
independently from output price.)
The potential exists for Internet banking to become
significantly more important in the increasingly tech-nology- and information-basedglobal economy.
Financial institutions must therefore deliver ever-bet-ter service quality in their online operations and products. Given that a large number of service-quality
attributes can potentially affect consumer attitudes
toward Internet banking, the theory of bounded rationality suggests that the high decision cost entailed in
the pursuit of service-quality enhancement in each
and every direction would be reduced if the opportunity set is rationally made smaller. To this end, we
have proposed a framework under which service-quality attributes are reduced to a core subset on the basis
of both analytical and empirical considerations. The
resulting core framework can then be applied to decision-cost-effective and empirically prioritized management in Internet banking, especially with regard to
Significant analytical and statistical grounds exist to
justify the introduction of perceived usefulness, ease
of use, reliability, responsiveness, security, and continuous improvement into the core subset. The idea of
empirically testing bounded-rational model construction can also be extended to evaluate re-specification
of the core subset in response to shifts in the business
and/or technological environment. If bank-user perceptions and preferences are found to change with
regard to certain core attributes, empirical results
obtained in this exercise can be exploited by marketing managers to attract more customers to online
1. Cheung, M. T. and Liao, Z. Supplyside hurdles in Internet B2C e-commerce: An empirical investigation. IEEE Transactions on Engineering
Management 50, 4 (Nov. 2003), 458–469.
2. Cheung, M. T. and Liao, Z. Time-asymmetry in business processes.
Commun. ACM 45, 5 (May 2002), 107– 108.
3. Devaraj, S., Fan, M., and Kohli, R. Antecedents of B2C channel satisfaction and preference: Validating e-commerce metrics. Information
Systems Research 13, 3 (Sept. 2002), 316–333.
4. Liao, Z. and Cheung, M. T. Challenges to Internet e-banking.
Commun. ACM 46, 12 (Dec. 2003), 248–250.
5. Liao, Z. and Cheung, M.T. Internet-based e-banking and consumer
attitudes: An empirical study. Information and Management 39, 4 (Jan.
6. McKinney, V., Yoon, K., and Zahedi, F. The measurement of Web-consumer satisfaction: An expectation and disconfirmation approach.
Information Systems Research 13, 3 (Sept. 2002), 296–315.
7. Parasuraman, A., Zeithaml, V.A., and Berry, L.L. Servqual: A multiple-item scale for measuring consumer perceptions of service quality.
Journal of Retailing 64, 1 (Spring 1988), 12– 40.
8. Parasuraman, A., Zeithaml, V.A., and Berry, L.L. A conceptual model
of service quality and its implications for future research. Journal of
Marketing 49, 4 (Fall 1985), 41– 50.
9. Udo, G.J. Privacy and security concerns as major barriers for e-commerce: A survey study. Information Management & Computer Security 9,
4 (2001), 165–174.
10. Yang, Z., Peterson, R. T., and Hung, L. Taking the pulse of Internet
pharmacies. Marketing Health Services 21, 2 (Summer 2001), 5– 10.
11. Yousafzai, S., Pallister, J., and Foxall, G. A proposed model of e-trust
for electronic banking. Technovation 23, 11 (Nov. 2003), 847–860.
12. Zeithaml, V.A., Parasuraman, A., and Malhotra, A. Service quality
delivery through Web sites: A critical review of extant knowledge.
Journal of the Academy of Marketing Science 30, 4 (Fall 2002), 362–375.
ZIQI LIAO ( firstname.lastname@example.org) is an associate professor in the
Department of Finance and Decision Sciences at Hong Kong Baptist
University, Hong Kong, China.
MICHAEL TOW CHEUNG ( email@example.com) is an associate
professor in the School of Economics and Finance at the University of
Hong Kong, Hong Kong, China.
Permission to make digital or hard copies of all or part of this work for personal or
classroom use is granted without fee provided that copies are not made or distributed
for profit or commercial advantage and that copies bear this notice and the full citation
on the first page. To copy otherwise, to republish, to post on servers or to redistribute
to lists, requires prior specific permission and/or a fee.
© 2008 ACM 0001-0782/08/0400 $5.00