Finance

The impact of Internet technologies cannot be denied.  These technologies present organizations with both opportunities and threats.   Although many business analysts overestimated the impact of these technologies when they were first introduced, we now know that the presence of these technologies has shaped, and will continue to shape, business practices for years to come.  One industry that has witnessed a significant influence of Internet technology is the banking industry.  Banking is a service industry where most services or transactions can be provided electronically.  In addition, the banking industry has invested heavily in information technologies, and these technologies are extensively utilized in their daily operation.
The electronic revolution in Libya banking started in the 1970s (Pang, 1995). However, early applications were limited to internal transactions performed between a banks subsidiaries and competing banks. In 1981, Automated Teller Machines (ATMs) were introduced in Libya. ATMs were considered the most noticeable form of electronic innovation that targeted retail customers. ATMs allowed customers to perform basic banking transactions such as balance inquiry, cash withdrawal and fund transfer.

Lumpkin and Dess (2004) stated that the Internet, together with other technology initiatives, not only creates a faster, cheaper, and smarter banking environment but also brings many new opportunities for banking organizations.  For example, the Internet, as a global open system, has low entry barriers and rich information and provides a more direct connection between customers, bankers, and other financial markets (Lumpkin  Dess1225).  According to Ghosh (1998), the major opportunities brought about by the Internet include a more direct connection with customers and other business partners, shortened value chain, new products and services, and the potential for dominating a certain segment in the electronic media.  Udo and Marquis (Winter20012002) point out that the business drivers behind E-business commerce systems include lower transaction cost, unlimited access to markets all over the world, providing new services and products to customers, and remaining competitive (200210).

Integration of information technology (IT) systems into the organizational structure of a banking organization is an important key to success (Gretzel et al. 2000). In addition, technology has facilitated the relationship building process with customers by providing systems with the capabilities to obtain customer information and translate it into benefits for both the organization and the customer (Zineldin 2000). The information gathered through technology allows banking organizations to customize products and services for the customer (Ahn, Kim,  Han 2003).

Web-based technology applications have helped bankers perform their job more effectively and efficiently by distributing information to customers at their convenience and assisting in information searches.  Some examples of the impact the internet has had on businesses include the opportunity for online advertising to be targeted to an audience and deliver advertisements that are customized to their needs, interest and taste (Gretzel et al. 2000).

In the past decade the Internet has become a powerful marketing tool for banking organizations. Banks have used websites as an information portal, transaction engine, and decision making tool for customers. The development of electronic business and its different functions offers new opportunities for collaboratively banking products (Palmer  McCole 2000).  However, there is now an increase in the use and importance of IT use within the banking organization to support administrative activities like marketing and finance (Yuan et. al. 2006). On the other hand, the business-business aspect of IT use has been limited to general information provision and exchange (Yuan. et al. 2006).

However, the same organizations that have utilized the IT to perform the transactions
mentioned above have failed to exploit the full benefits of creating a relationship with their
customers through web-based marketing strategies such as effectively providing information on
products and services, e-commerce transaction functions, personalizationcustomization
capabilities, and customer loyalty or retention programs (Bauer, Grether,  Leach 2002 Wang
 Fesenmaier 2006).

However, due to the new, dynamic, and uncertain nature of the electronic banking as a business strategy and the corresponding guidance they provide play or will play a more important role than ever and thus need more attention and research.  This dissertation is based on this understanding and focuses on Electronic banking and its role in the development of financial services of banking in Libya.

This research will analyze the role of electronic banking and the dynamics of competition in the financial services industry in Libya. Specifically, the research addressed the following question What is the role of electronic banking in the development of financial services industry in Libya New forces are taking hold in the financial services industry that may change existing competition paradigms.  Increasingly, banks and other financial service providers are starting to launch many of these same innovations in developing countries. Emerging markets are in the position of developing a financial infrastructure that could leapfrog those in established markets to provide a broader range of financial services for clients.

The main objective of this study is to examine the role of electronic banking in the development of financial services in Libya. Furthermore, this study will investigate the impact of banking organizational characteristics on the internet-banking activities implemented by banks. More specifically this study will
Evaluate internet-banking activities used by Libyan banks  from a relationship
marketing perspective.

Measure the effectiveness of internet-banking activities implemented by financial services in Libya.
Identify and determine the role of Electronic banking in the development of financial services and its organizational characteristics have on the implementation of internet-banking activities in Libya.

This study seeks to evaluate the role of electronic banking in the development of financial services in Libya and to examine the impact of different financial organizational characteristics have on the level of implementation of Internet banking activities. Thus the study will utilized the quantitative research design.  It will specifically used a survey to collect data regarding the internet banking strategies of some banks in Libya.
The questionnaire will be developed based on previous literature regarding the impact of
organizational characteristics, organizational technology climate and internet banking strategy.

A survey is the preferred method of data collection for this kind of topic because it allows for the exploration of various areas within the same instrument. In addition, a survey allows data to be collected from large sample groups and allows for the examination of multiple aspects or variables. Data collected through surveys allows for the examination of relationships between variables and allows patterns to emerge and examined on the analysis process.

Secondary data will also be selected for this study to allow for in-depth examination of the data previously collected. The data has been used to examine the relative importance of internet banking organizational components on the internet marketing strategies. However, the data has not been used to examine the internet banking strategies from the relationship marketing perspective.

The proposed study seeks to identify the role of organizational descriptors that have the most impact on the level of internet -based banking functions implemented by a banking organization.  In addition, further examination of the data will allow the investigation of the effectiveness of the internet banking and its role in the development of financial services in Libya. Furthermore, a more in-depth examination of the data will allow for a better understanding of banks and financial services and their internet marketing strategies.

The following discussion will provide an overview of the existing literature on
Electronic banking, technology implementation and organizational characteristics, and web
based banking functions. Finally, the literature review will end with a description of the
variables to be studied and the model developed for this study will be introduced and explained.

Electronic Banking Stages
Sharma (2002) states that a banking organizations internet presence evolves in five stages information, communication, transactions, relationships and e-commerce. The five stages
demonstrate the progress and increased complexity of the internet functions and how they are
used to create value for the customer. Sharma (2002) proposes that as a banking organizations internet functions evolve through the five stages they provide greater value to the customer.

The use of IT has become a major prerequisite in the formation of strategic alliances,
development of innovative distribution methods and communication with consumers and
partners, and satisfaction of consumer demands (Main 2002). A review of the literature on
internet applications and implementation reveals that organizations adopt website functions in
various degrees of sophistication to provide different capabilities to the customer (Doolin,
Burgess  Cooper 2002 Hanson 2000). Websites are used by organizations for the following
purposes 1) to communicate with the customer and provide them with information to assist
information search and decision making process (Doolin et al. 2002 Lexhagen 2005 Sharma 2002 Subramanian, Shaw  Gardner 2000) 2) to sell directly to the customer
(Lexhagen 2005 Doolin et al. 2002 Sharma 2002) and, 3) post- transaction communication or customer servicesupport (Doolin et al. 2002 Lexhagen 2005 Sharma 2002).

Based on the literature on web-based technology implementation and relationship
marketing four stages were proposed as important in the successful implementation of web-based
banking functions. As previously discussed, the stages of web-based relationship marketing for the proposed model relate to Kotler et al.s (2006) levels of customer-bank relationship marketing and Hansons (2000) stages of web-based relationship banking. In the
proposed model the first stage of web-based banking involves the provision of information to
the customer. In this stage, the web-based banking strategy is aimed at providing the customer
with basic information on the product or service but no transaction or interactive process is
involved. This first stage relates to Kotler et al.s (2006) first level of relationship which is the
basic relationship. Also, the first stage of the proposed model relates to Hansons (2000) first
stage of the personalization continuum which is the mass market. An important aspect to consider is the end user or consumer since the utility and effectiveness of the functions are
judged by the end-user.

From the perspective of the consumer the provision of information is the most basic
function of the internet. A website should include productservices information. Information is
still a valuable and most important function a website can provide since it allows customers from
all over the world to search and compare productsservices 24 hours a day, seven days a week.
This gives the customer flexibility and convenience in their search process and does not limit
their search to their geographic region.

Management Support of Electronic banking 
Managements involvement in technology and e-banking adoption and implementation
has been found critical to its success (Gretzel et al. 2000 Yuan et al. 2003). Management
support has been found to be important to the adoption and implementation decision of ecommerce functions (Scupola 2003). Scupola (2003) found that the CEO or project champion
has the most important role in initiating and promoting the e-commerce project. A study by
Gretzel et al. (2000) found that lack of management support is a barrier to technology
implementation within banks. Furthermore, Yuan and Fesenmaier (2000) identified
leaderships understanding of the potential of technology implementations to be one of the main
factors that have an impact on the adoption and implementation behavior of internetintranet
technology.

Furthermore, in regards to website adoption and leadership Wang and Fesenmaier (2006)
found that management support of IT was found to be an important factor to banks
web marketing strategies. More specifically, Yuan et al. (2003) found that management support
is needed to promote the use of Internet technology by banks. A better understanding of the technological environment of the banking organization will provide a better support system and
increased success rate of new technology implementations.

In the Internet age, it is critical for businesses to develop appropriate and timely E-business strategies to stay competitive.  However, Electronic banking strategy constitutes a major challenge to the banking industry management, especially when there is a lack of comprehensive, especially when there is a lack of comprehensive and effective support for the process.