Exploring the Demand and Supply Conditions of
E-Commerce and E-Banking Services in Saudi Arabian
Conventional and Islamic Banks

Abstract

The extensive use of technology by banks and financial institutions aims to respond to customers’ demands by providing efficient, speedy and convenient financial services. After developing the e-banking services, banks have also expanded their online services into e-commerce. Developments of e-banking services and e-commerce have been the case with the majority of banks including Islamic banks in the GCC region.
The main aim of this research is to explore the demand and supply conditions of e-commerce through e-banking services in Saudi Arabian conventional and Islamic banks. In doing so, this research aims to assess the level of customer awareness of e-commerce and to explore customers’ motivation in Saudi Arabian conventional and Islamic banks. In addition, this research further explores and evaluates customers’ use of e-commerce and e-channels banking services, and the obstacles faced including security issues. In an attempt to locate the supply side related issues, the study aims also to explore perceptions of the IT managers in the six banks.
In the study, data were collected through a survey questionnaire to measure the opinions and perceptions of bank customers, and interview surveys were utilised for assessing the supply conditions. To achieve the aims of this research, firstly, this research presents the initial findings with the objective of developing a better understanding of customers’ preferences based on their opinions and perceptions, expressed through a questionnaire survey with a sample of 198 Islamic and conventional bank customers representing six banks in the country; secondly, to further the analysis of this research, an empirical study is presented by using a series of semi-structured interviews with IT managers at three different levels of the sampled banks in Saudi Arabia.
The findings over five empirical chapters demonstrate that the majority of the respondents from both the banks appear to understand and have awareness of the importance of e-commerce especially and e-banking services in particular. The findings also indicate that the majority of the respondents from both banks tend to be equally motivated to deal with e-commerce using banking facilities available for them. In search of motivational factors, this research found that the benefits and the 24/7 availability of e-commerce and e-banking services were the main factors motivating participants to deal with e-commerce and use e-banking services. The findings also indicate that the customers of Islamic banks have a better understanding of using e-commerce and e-banking services. Furthermore, the findings show that customers experienced personal, institutional and macro level obstacles to using e-commerce in both the bank types. Moreover, the customers of Islamic and conventional banks appear to understand the importance of security issues in e-commerce through e-banking services as well as banks. The findings also show that the government of Saudi Arabia has played a key role to improve the environment of e-banking services in Saudi banks. Finally, the interviewees’ analysis indicates the weaknesses in the telecommunication infrastructure.
Based on the findings this study suggests that e-commerce through e-banking services can play an important role in expanding business opportunities in Saudi Arabia, while they facilitate individual engagement with commercial activities. Since the technology is expanding and advancing rapidly, and to address the future challenges in IT especially in the e-banking services, it is essential that the necessary infrastructure should be developed to take advantage of the opportunity.