research report on e banking

ORIGINAL RESEARCH article

E-banking adoption: an opportunity for customer value co-creation.

• 1 Department of Marketing, University of Castilla-La Mancha, Ciudad Real, Spain
• 2 Faculty of Management and Communication, Universidad Internacional de la Rioja, Logroño, Spain

The development of information and communication technologies offers innovative opportunities to establish business strategies focused on customer value co-creation. This situation is especially notable in the banking industry. e-Banking activities can support competitive advantages. However, the adoption of e-banking is not yet well-established among consumers. In this sense, the technology acceptance model (TAM) is considered essential in studying consumer behavior applied to adopt a particular technology. According to the TAM model, this study analyses the factors which influence bank customers to adopt e-banking to facilitate their banking services and support the process of value co-creation. Consequently, the authors examine five main aspects of the technology adoption model to provide a broad understanding of bank customers’ consumption of e-banking. A partial least squares structural equation modeling (PLS-SEM) analysis is conducted to evaluate proposed relationships between factors and customers’ e-banking adoption.

Introduction

The rapid growth and development of information and communication technologies (ICT) have enabled companies to create value in a digital environment ( Schreieck and Wiesche, 2017 ). Currently, the adoption of innovation in the organization’s strategy is an essential requirement to create value. The term value co-creation has a principal role in easing this innovation. O’Hern and Rindfleisch (2010) conceptualize value co-creation as a collaborative activity, in which consumers actively participate and choose components of a different product or service proposition. Thus, in the digital era, value creation has become the co-creation of value between customers and companies ( Hosseini et al., 2020 ).

Internet and technological development have changed how financial services are offered and used ( Malaquias and Hwang, 2019 ). Banks and many financial institutions suggest alternative innovative electronic channels for maintaining a competitive advantage and satisfying customer expectations. Mobile devices and destock have increasingly become tools that customers implement through e-banking to pay for products and services ( Zhang et al., 2018 ). Therefore, e-banking can adapt to clients’ needs, such as performing banking activities, without physically visit an office or an ATM ( Malaquias and Hwang, 2019 ). For this reason, e-banking has considerable value for many financial organizations and customers ( Baabdullah et al., 2019 ).

The introduction and growth of Internet services, which offer better possibilities of interaction with companies, allow consumers to participate in the development and/or improvement of products/services, resulting in value. Consequently, organizations are concerned about attracting customers who want to contribute their ideas to the collaborative process ( Chepurna and Criado, 2018 ). The banking context is particularly interesting in analyzing the transition toward a value co-creation strategy ( Mostafa, 2020 ). The fierce competition in the banking arena has facilitated e-banking as the most cutting-edge electronic-based and self-service distribution channel ( Malaquias and Hwang, 2019 ). e-Banking is conceptualized as a distribution and communication channel which allows customers to interact with a bank to conduct transactions economically and efficiently, mainly through electronic tools, e.g., tablets or smartphones ( Singh and Srivastava, 2020 ). The use of e-banking offers a wide variety of services for customers, which provide them with value and create a competitive advantage over competitors, such as account checking, bill payment, transferences, or mobile phone text message notifications ( Mostafa, 2020 ). As an example of this incremental service innovations, Bankia is modernizing their communication channels to increase the value offered to customers. Bankia has been recognized as the first Spanish bank with an official verified WhatsApp account to communicate with either current customers or prospects. This action is part of its business strategy “Digital Humanism” as a new way of relating to customers based on a closer, agile, and direct actions ( Bankia, 2020 ).

The massive usage of the Internet and electronic gadgets have captured the attention of researchers to e-banking. Previous studies (e.g., Glavee-Geo et al., 2017 ; Singh and Srivastava, 2020 ) show that previous works have studied the factors that encourage the adoption of e-banking ( Mostafa, 2020 ). However, the adoption rate of e-banking is below the expectation and still in the adoption phase, even though e-banking services offer several outstanding services to users ( Shankar et al., 2020 ). Therefore, this study aims to develop an empirical model based on technology adoption, applied in e-banking to understand the behavior of the users. Specifically, some variables included in the technology acceptance model (TAM) will be examined as factors that stimulate the adoption of e-banking and become an opportunity for customer value co-creation.

For this reason, this research provides a series of contributions that can help identify decisive factors in the use of e-banking and encourage customer value co-creation through interaction with electronic services. In this setting, this study focuses on the following questions: What are the factors that affect a consumer’s use of e-banking? What factors are most important in the consumer’s intention to use e-banking? What type of e-banking is most in-demand, and what strategies around the use of e-banking could the banks and financial institutions follow to increase its use? How can the use of e-banking contribute to customer value co-creation? Through partial least squares structural equation modeling (PLS-SEM) approach and the use of the importance-performance map analysis (IPMA), this research field provides insights and recommendations to help the banking industry adopt and use e-services by consumers to support the process of value co-creation.

To achieve the proposed objective, the study is organized as follows. First, the conceptual framework, the proposed model, and its hypotheses are presented. Then, the methods used and the results of the study are described. Finally, the conclusions and limitations of the study are presented.

Conceptual Framework

Co-creation and the banking market.

The banking industry is a leader in providing consumers with opportunities to access products and services through advanced technology ( Malar et al., 2019 ). The development of ICT has allowed banks to have a relationship with customers, shifting away from physical interaction with a bank branch to interactive and virtual environments ( Martovoy and Santos, 2012 ). Some authors, such as Andreu et al. (2010) , specify the consequences of direct interactions between a company and its customers to achieve value co-creation. Other researchers, such as Payne et al. (2008) , highlight that organizations must adopt a customer relationship approach to support value creation. Co-creation requires companies’ ability to connect with customers and market orientation to be closer to them ( Ind and Coates, 2013 ). Consequently, the company-client relationship must be active, providing interactive experiences and activities guided by decisive practices while taking advantage of customers’ unconscious behavior. In this sense, customers are encouraged to participate in the process and meet their own needs.

Following the study of Grönroos (2011) , consumers ought to perceive usefulness or benefit using self-service and involvement in the process to be motivated. In the banking sector, there is a generalized interest in providing easy and fast services, maintaining the quality of products, and services toward the customer. Furthermore, the advent of new technologies, products, and services encourages new needs and demands by customers ( Hosseini et al., 2020 ). Ease access to information and the differentiation of products and services offered by the Internet creates higher expectations among customers. Consequently, an innovation that appears in a specific part of the work may be effortlessly accessed in other parts of the world and desired by any person ( Mainardes et al., 2017 ). Another feature of electronic services is accessibility to consumers. Some studies indicate that banking services are linked to this new and demanding customer profile. Consequently, the new services provided by banks arise from customers’ needs, characterizing the continuous sharing of ideas and value co-creation in the banking sector ( Oliveira and von Hippel, 2011 ; Akter et al., 2020 ).

Based on the study of Medberg and Heinonen (2014) , direct contact with the company and e-services create new ways of relationship and involvement with customers, positively affecting the company’s financial performance (e.g., decreasing of operating costs, increase on investment return). Furthermore, this way of interacting with customers has boost competitiveness in the banking industry, requiring an agile adaptation from each financial organization. It is proven that, when a bank includes a new or enhanced service to customers, competitors follow this innovation through the launch of the same or improved service. Thus, co-creation characterizes the innovation and betterment of services provided by banks. This fact encourages customers’ active participation in the co-creation practice through several benefits: easer credit approval, lower charges, or commitment to the bank ( Mostafa, 2020 ). Hence, value co-creation should drive to reciprocally favorable outcomes for both consumers and businesses.

Adoption of Technology and e-Services Banking

In recent years, the development of Information Technology and the Internet has brought about changes in the performance of traditional services. Thus, e-banking has changed the conventional practices of banks and financial institutions and has captured the attention of both academics and practitioners ( Wang et al., 2017 ). The adoption of e-banking is considered an innovative distribution channel for financial services due to rapid advances in e-banking applications and intense competence ( Sikdar et al., 2015 ; Yaseen and El Qirem, 2018 ). Thus, understanding the adoption and use of e-banking has become a central research field. The literature indicates that the most relevant strength of the TAM, developed by Davis et al. (1989) , is its generalizability and applicability in different contexts ( Yaseen and El Qirem, 2018 ). This model is specifically indicated to study the intention to adopt specific technologies. Thus, the TAM applies models to study the acceptance and intention to use information system tools such as mobile commerce (e.g., Natarajan et al., 2018 ), m-banking (e.g., Mostafa, 2020 ; Shankar et al., 2020 ) and e-banking ( Yoon and Steege, 2013 ; Salimon et al., 2017 ; Yaseen and El Qirem, 2018 ; Ahmad et al., 2019 ), among others. The original TAM considers perceived usefulness and perceived ease of use has a significant role in the technology acceptance process ( Davis et al., 1989 ). On one side, perceived ease of use is defined as the degree to which a person believes that using a particular system is effortless, both physically and mentally. On the other side, perceived utility is described as the degree to which consumers believe that using a system will increase their performance ( Davis et al., 1989 ; Mostafa, 2020 ). Some previous studies in technology acceptance demonstrate that perceived ease of use has a positive effect, mediated by perceived usefulness on the intention to use technology ( Natarajan et al., 2018 ).

In the context of e-banking, it is observed that perceived usefulness represents one of the critical aspects that explain behavior intention to use e-banking ( Malaquias and Hwang, 2019 ). For example, e-banking provides some unique services that are not available in offline banking, such as access to banking services at any time and from anywhere ( Yoon and Steege, 2013 ; Shankar and Jebarajakirthy, 2019 ). Similarly, previous studies show the influence of perceived ease of using e-banking on perceived usefulness and attitude (e.g., Deb and Lomo-David, 2014 ). Internet and mobile technology should improve convenience for customers, and its ease of use is critical in customer usage. Some authors (e.g., Riquelme and Rios, 2010 ) claim that adopting mobile banking is influenced by consumer’s perceived ease of use due to a complex system when it performs financial transactions. In this sense, the authors highlight that if consumers perceive the performance of a financial transaction as easy through mobile devices, they will have a more favorable attitude toward adopting mobile banking ( Zhang et al., 2018 ). Ahmad et al. (2019) argue that a client’s beliefs about the usability of the website or application affect his or her attitude toward the website or application. These authors state that the ease of use of e-banking systems is a critical factor in their adoption and evaluation by clients. Thus, the relationship between consumers’ attitudes toward the use of technology, an excellent example of this is e-banking, and perceived ease of use is studied (e.g., Zhang et al., 2018 ). Moreover, Mostafa (2020) argues that customers may negatively evaluate using e-banking if they believe e-banking technology is challenging to use and learn. Thus, the following hypotheses are proposed:

H1. Perceived ease of use positively influences on perceived usefulness of e-banking.

H2. Perceived ease of use positively influences on attitude toward using e-banking.

Another dimension included in the TAM model is the perceived usefulness. This concept and its role have been examined in e-banking works (e.g., Yoon and Steege, 2013 ; Salimon et al., 2017 ; Malaquias and Hwang, 2019 ). Perceived usefulness can be defined as a person’s belief about if the use of a specific technology will improve their task performance ( Davis et al., 1989 ; Natarajan et al., 2018 ). Authors such as Yoon and Steege (2013) state that perceived utility is a positive and determining element in e-banking usage. Similarly, this term is the principal factor that impacts consumers’ attitudes toward the use of technology ( Deb and Lomo-David, 2014 ). Consequently, customers will evaluate e-banking usage favorably if they perceive that e-banking has a relative advantage over other alternatives ( Mostafa, 2020 ). Recently, authors such as Ahmad et al. (2019) have highlighted the positive relationship of perceived usefulness with both attitudes toward using e-banking and user intention. According to the previous statements, the following hypotheses are formulated:

H3. Perceived usefulness positively influences on attitude toward using e-banking.

H4. Perceived usefulness positively influences on intention to use e-banking.

The concept of attitude toward the behavior reflects the degree to which an individual assesses a specific behavior as useful or not ( Ajzen, 1991 ). Venkatesh et al. (2003) interpret attitudes toward a specific innovation as results of an individual’s own beliefs about an objective and the evaluations associated with those beliefs. In TAM’s scope, positive attitudes toward innovative technologies have confirmed antecedents of intentions to adopt them ( Davis et al., 1989 ; Schierz et al., 2010 ). The association among attitude and intention to use has been broadly examined in the literature, particularly in the banking literature (e.g., Shaikh and Karjaluoto, 2015 ; Zhang et al., 2018 ; Ahmad et al., 2019 ; Mostafa, 2020 ).

Similarly, past research shows that attitude is an essential determinant of behavioral intention and a relevant antecedent of actual behavior. Consequently, the intention to adopt has been analyzed to understand people’s actual behavior ( Davis et al., 1989 ; Zhang et al., 2018 ). Yaseen and El Qirem (2018) conceptualize behavior intention to adopt e-banking services as a measure of the strength of an individual’s intention to perform a specific behavior. Also, authors such as Ahmad et al. (2019) explain behavioral intention to use e-banking as a precedent to the actual use of e-banking. Based on prior studies, the following hypotheses are proposed:

H5. Attitude toward using e-banking positively influences on intention to use e-banking.

H6. Intention to use e-banking positively influences on e-banking usage.

Based on the above, Figure 1 summarizes the hypotheses of the proposed conceptual model.

Figure 1. Model proposed on the e-banking usage with PLS-SEM.

Materials and Methods

Study design.

To test the proposed hypotheses, the authors carried out a study in Southern Europe’s banking industry. Specifically, the research was conducted in Spain due to the recent increase in e-banking in this country. e-Banking has experienced a growing acceptance in Spain in recent years, with more than 50% of digital banking population users. Some figures indicate that the number of Spain’s e-banking users increased to 28% between 2011 and 2019 ( Statista, 2020a ). Santander Group ranked first with more than 36 million digital customers during 2019, followed by BBVA with 31 million ( Statista, 2020b ).

A convenience sampling method was used to collect the data, taking e-banking users’ opinions as reference. A convenience sampling method was used to collect the data, taking e-banking users’ opinions as reference. Data was collected via an online survey from February to April 2020. Potential respondents in Spain were recruited through a national consumer panel. To measure each of the constructs, a self-administered survey has been used to analyze the e-banking usage of a set of well-known banks located in Spain. The application of PLS-SEM requires a minimum sample size. For this purpose, the statistical power is analyzed using G ∗ Power 3.1.9.7 ( Carranza et al., 2020 ). Thus, the statistical power value for this sample considering a medium effect size ( f 2 = 0.15) is 0.989, higher than the established minimum of 0.8 ( Cohen, 1988 ; Hair et al., 2019 ). Of 105 e-banking users (see Table 1 ), 45.7% of the sample collected is composed of men and 54.3% of women. Concerning age, the largest group is integrated by individuals between 24 and 33 years old, representing 32.4% of the sample. In addition, the accumulated percentage of consumers up to 43 years of age is 67.6%. Hence, the sample is predominantly made up of young adults and mid-aged e-banking users. Thus, this study coincides with previous studies in e-banking such as Zhang et al. (2018) , Malaquias and Hwang (2019) , Mostafa (2020) , Singh and Srivastava (2020) , where the samples are mostly composed of young people considered more likely to use digital technologies and media. Moreover, 35.3% of the respondents are employees, 43.8% are singles, and 37.1% are married. Concerning consumption factors, 93.3% of the sample uses e-banking to check their bank account balance, 49.5% make bank transfers through e-baking, and 15.2% manage invoices and taxes.

Table 1. Characteristics of the survey sample.

In order to measure the constructs included in this study and examine the proposed relationships, a structured questionnaire was used. Firstly, questions related to the frequency and habits of the use of electronic banking were included. Then, the variables associated with the attitude and behavior toward using e-banking were exposed. All these constructs were evaluated with multi-item scales confirmed by previous studies, using a Likert scale ranging from 1 to 5, except the construct intended to use, presented on a semantic differential scale (see Table 2 ). Thus, variables for perceived ease of use were based on Davis et al. (1989) and Venkatesh et al. (2003) . The attitude toward using e-banking was measured through a semantic differential scale using six items (five bipolar pairs of adjectives). Several authors, such as Stern and Salb (2015) , define the attitude as a formative construct characterized mainly by affective aspects and instrumental distinctions. According to the scales proposed by Davis et al. (1989) , Venkatesh et al. (2003) , and Carranza et al. (2020) in the area of technology acceptance, the attitude variable was measured using three significant items (unpleasant-attractive, unsatisfactory-satisfactory, boring-fun) and three instrumental items (bad-good, uninteresting-appealing, harmful-beneficial).

Table 2. Measurement of key concepts.

The perceived usefulness was measured using the Agarwal and Karahanna (2000) scale, following Mostafa’s (2020) work. Intention to use was measured using a single-item scale based on previous research, such as Bigné et al. (2008) . Three items adapted from Davis et al. (1989) and Dutot (2015) were used to measure e-banking usage. The last section of the questionnaire aims to collect information on the socio-demographic profile of e-banking users, such as gender, age, or occupation.

Statistical Analysis

The model was estimated using PLS-SEM. PLS-SEM is a technique of structural equation models based on variance. In this study, the use of PLS-SEM is recommended because (1) the study includes a formative construct (attitude toward using e-banking), (2) the model uses composite models ( Hair et al., 2019 ), and (3) PLS-SEM is applied in recent studies of TAM, in the field of e-banking, as well as in other different areas (e.g., Salimon et al., 2017 ; Carranza et al., 2020 ; Zollo et al., 2020 ). To estimate the proposed model, SmartPLS 3.2.9 was used. According to Hair et al. (2019) , a two-stage approach is used to evaluate the proposed model in this e-banking customers’ context. Thus, the measurement model is evaluated distinguishing the variables considered as a composite model in Mode A and Mode B, and then, the structural model is assessed.

Measurement Model

First, the standardized root mean square residual (SRMR) of the proposed model is calculated in order to assess the model fit ( Henseler et al., 2016 ). In this case, the SRMR value is 0.070, indicate an appropriate fit, given the accepted 0.008 cut-off point. To evaluate the measurement model, the reliability of the scales is studied for the construct’s perceived ease of use, perceived usefulness, intention to use, and e-banking usage (Mode A). Thus, the loadings of the indicators are examined, all of which are higher than 0.708. The evaluation of individual reliability is examined through the Dijkstra–Henseler’s rho (ρ A ) and the composite reliability (CR) being higher than 0.7 in all cases ( Hair et al., 2019 ). Therefore, all the variables included in the model reflect high internal consistency (see Table 3 ). Then, the average variance extracted (AVE) is used to evaluate convergent validity. In this case, all values of the AVE are within the established thresholds limits ( Fornell and Larcker, 1981 ). Lastly, all loadings are significant at 99.9% ( Hair et al., 2017 ). Concerning the analysis of the discriminant validity, the results obtained by the Fornell–Larcker criterion show a satisfactory degree of discriminant validity. However, Henseler et al. (2015) suggest construct thresholds below 0.9 for HTMT to establish discriminant validity. In this case, problems of discriminant validity between PEU and PU are detected. For that reason, the items causing the problem are studied and eliminated (see Table 4 ).

Table 3. Measurement model evaluation.

Table 4. Measurement model: discriminant validity.

To evaluate the validity of the attitude toward using e-banking, the variance inflation factor (VIF) is used to assess the lack of collinearity problems by the indicators (VIF < 5) (see Table 5 ). Finally, for the significance value of the weights, ATT4 and ATT6 are not significant. However, according to Hair et al. (2019) , since there are no collinearity problems and the loads are greater than 0.5, these indicators are not deleted.

Table 5. Measurement model: model composite Mode B.

Structural Model

After checking the reliability and validity of the measurement model, the proposed structural model is examined. To do this, the explanatory capacity of the model is evaluated using R 2 ( Hair et al., 2019 ). The R 2 values are 0.657 for perceived usefulness, 0.530 for attitude toward using e-banking, 0.462 for intention to use, and 0.324 for e-banking usage. After performing an analysis of the variance decomposition, the findings confirm that, of the 53% of the explained variance of attitude toward using e-banking, 29.1% is due to perceived ease of use and 23.9% to perceived usefulness. Similarly, of the 46.2% of explained variance of intention to use, 14.4% is due to perceived usefulness, and 31.8% is due to attitude toward using e-banking. Even though these results confirm significant relationships, the influence of consumers’ attitudes toward the intention to use e-banking is greater than the contribution of the perceived usefulness.

On the other hand, the path coefficients and their significance are evaluated to describe the significance of the structural relationships proposed in the model (see Table 6 ). Perceived ease of use appears to be positive and significant, at 99.9% in perceived usefulness. Thus, H1 is supported, being the most solid association of the model (β = 0.811). As proposed in H2 and H3, perceived ease of use and perceived usefulness are positively associated with the attitude toward using e-banking (β = 0.417 and 0.348, respectively). Similarly, perceived usefulness has a significant influence on the intention to use of e-banking, also confirming H4 (β = 0.248). Also, attitude toward using e-banking, in general, has a significant and positive effect on the intention to use e-banking. Thus, H5 is established (β = 0.485). Finally, the intention to use has a significant influence on e-banking usage. Therefore, H6 is also confirmed (β = 0.569) ( Hair et al., 2019 ). Thus, hypotheses H1, H2, H3, H4, H5, and H6 are accepted by the percentile method.

Table 6. Structural model evaluation.

After evaluating and confirming the proposed model, the effect size is evaluated ( Hair et al., 2019 ). Thus, the results show that (see Table 6 ), the perceived ease of use has a large effect size on perceived usefulness ( f 2 = 1.915). Likewise, the intention to use has a significant and large effect size on e-banking usage ( f 2 = 0.479). Finally, the model’s predictive relevance is analyzed. In this case, Stone–Geisser’s Q 2 shows that the scores are higher than naught (see Table 6 ).

To improve these results, the IPMA is used. The IPMA expands the reported PLS-SEM results for path coefficient estimates by adding a dimension to the analysis that considers the mean values of the latent variable scores ( Ringle and Sarstedt, 2016 ). In this case, the IPMA for e-banking users (see Figure 2 ) shows that intention to use is observed to be the most critical factor in determining e-banking usage. An increase of one point in the performance of intention to use by a total effect of 0.786. Attitude toward using e-banking has higher importance on e-banking usage but lower than the intention to use. Similarly, the attitude has a lower performance than the intention to use. The perceived ease of use is the factor with the lowest performance. Finally, perceived usefulness has the lowest importance in determining e-banking usage (see Figure 2 ).

Figure 2. Importance-performance map analysis (IPMA) for e-banking usage.

This study developed a research framework to understand the factors that contribute to e-banking usage and to benefit business strategies based on the co-creation of consumer value. The model provides a comprehensive view of the main factors influencing e-banking intentions and the elements that should be considered to increase usage.

The results obtained concerning the application of TAM in the context of e-banking confirm the presence of significant relationships among perceived ease of use and perceived usefulness by the customer, being the most real relationship of the proposed model. Similarly, the relationships between perceived usefulness and attitude toward using e-banking, perceived ease of use and attitude toward using e-banking are also contrasted. However, the importance that perceived ease of use acquires in the attitude toward using e-banking is slightly higher than the influence that perceived usefulness has on this variable. Similarly, the relationships between perceived usefulness and intention to use, and attitude toward using e-banking and intention to use are also contrasted with previous studies, such as Salimon et al. (2017) , Zhang et al. (2018) , and Malaquias and Hwang (2019) . Nevertheless, the results of the analysis of variance decomposition indicate that attitude toward using e-banking has relatively greater importance in intention to use compared to perceived usefulness. Therefore, an essential contribution of this research is the determination of attitude as a critical element in the determination of e-banking use intention. These results suggest that when e-banking users have a positive attitude toward using e-banking, it translates into a greater intention to use e-banking. Finally, the relationship between intention to use and e-banking usage is also verified, being the second strongest relationship of the model. In this sense, the results obtained by the IPMA analysis indicate that the intention to use is the variable with the highest performance and the greatest importance in determining the adoption of e-banking. However, the perception of ease of use, despite the great importance in determining the use of e-banking, is the variable with the lowest performance in the proposed model.

These findings offer important implications for banks and financial institutions. The techniques and results of this study allow banks to identify possible deficiencies and apply improvements to establish greater interaction with their clients. Also, this study offers bank managers new tools that encourage co-creation through e-banking services, helping to achieve a competitive advantage.

Based on the results obtained, bank managers should pay special attention to the perceived ease of use and perceived usefulness of their e-services, since they contribute significantly to the adoption of e-banking by consumers. Perceived ease of use of e-banking services is one of the most relevant factors in the adoption of e-banking by consumers. However, the IPMA indicates that it is the factor with the lowest performance. As a consequence, banks can improve the usability and simplicity of their e-services and the performance of a banking transaction to facilitate and increase the e-banking usage. Likewise, customer service can be provided to guide and help the efficient use of these applications. Specifically, some authors such as Mostafa (2020) recommend the use of chatbot to facilitate the use of e-banking and co-create. Concurrently, the findings have shown the great importance of attitude in generating intention to use e-banking by consumers. Therefore, banks should encourage this attitude in consumers through the ease of use and usefulness provided by e-services.

By and large, as technology and smartphone advance, consumers will continue to seek out more personalized and utilitarian services for their banking operations. Therefore, e-banking should be secure, and easy to learn and use. For this reason, providing reliable, user-friendly, and useful e-services are a crucial element in the interactions between consumer adoption of e-banking.

Limitations and Further Research

This study has some limitations that need to be addressed. The first limitation is the geographical location of the sample and the size of the sample. Future studies should incorporate a more significant number of online banking users covering a wider geographical area. Similarly, this study can increase the number of respondents between 34 and 53-year-old. Secondly, this study has not considered the moderating role of gender and age as socio-demographic variables. Previous authors, such as Natarajan et al. (2018) , consider age as a great relevance in studies of acceptance of mobile applications. Further research may assess the moderating role of this variable in the proposed model. Thirdly, this model is based exclusively on functional characteristics of technology adoption, such as perceived ease of use and perceived usefulness. In the area of e-banking, authors such as Zhang et al. (2018) highlight other types of more emotional factors for the study of the adoption of e-banking services such as enjoyment or trust. Likewise, Singh and Srivastava (2020) highlight the perceived security in the factors of adoption of e-banking. Thus, a future proposal could include a combination of functional and emotional elements in e-banking environments. Finally, further research could incorporate external variables associated with value co-creation, such as the confidence in the bank. Some studies, such as Mostafa (2020) , suggest that consumer confidence in the bank can intensify the positive effect of the attitude toward e-banking. If customers believe that their bank is honest and professional, their positive attitude toward the use of e-banking will result in a disposition to co-create value with the bank by sharing information or providing feedback.

Data Availability Statement

The raw data supporting the conclusions of this article will be made available by the authors, without undue reservation.

Author Contributions

All authors listed have made a substantial, direct and intellectual contribution to the work, and approved it for publication.

This work was financed by group grants from the University of Castilla–La Mancha and co-financed by the European Union through the European Regional Development Fund (Project reference: 2020-GRIN-28990). Research Group: Research and Modelling in Marketing and Tourism (RMMT).

Conflict of Interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

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Keywords : customer value co-creation, e-banking, e-services, technology acceptance model, PLS-SEM

Citation: Carranza R, Díaz E, Sánchez-Camacho C and Martín-Consuegra D (2021) e-Banking Adoption: An Opportunity for Customer Value Co-creation. Front. Psychol. 11:621248. doi: 10.3389/fpsyg.2020.621248

Received: 25 October 2020; Accepted: 21 December 2020; Published: 14 January 2021.

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Copyright © 2021 Carranza, Díaz, Sánchez-Camacho and Martín-Consuegra. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) . The use, distribution or reproduction in other forums is permitted, provided the original author(s) and the copyright owner(s) are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

*Correspondence: Rocío Carranza, [email protected]

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• Published: 18 June 2021

Financial technology and the future of banking

• Daniel Broby   ORCID: orcid.org/0000-0001-5482-0766 1  

Financial Innovation volume  7 , Article number:  47 ( 2021 ) Cite this article

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This paper presents an analytical framework that describes the business model of banks. It draws on the classical theory of banking and the literature on digital transformation. It provides an explanation for existing trends and, by extending the theory of the banking firm, it illustrates how financial intermediation will be impacted by innovative financial technology applications. It further reviews the options that established banks will have to consider in order to mitigate the threat to their profitability. Deposit taking and lending are considered in the context of the challenge made from shadow banking and the all-digital banks. The paper contributes to an understanding of the future of banking, providing a framework for scholarly empirical investigation. In the discussion, four possible strategies are proposed for market participants, (1) customer retention, (2) customer acquisition, (3) banking as a service and (4) social media payment platforms. It is concluded that, in an increasingly digital world, trust will remain at the core of banking. That said, liquidity transformation will still have an important role to play. The nature of banking and financial services, however, will change dramatically.

Introduction

The bank of the future will have several different manifestations. This paper extends theory to explain the impact of financial technology and the Internet on the nature of banking. It provides an analytical framework for academic investigation, highlighting the trends that are shaping scholarly research into these dynamics. To do this, it re-examines the nature of financial intermediation and transactions. It explains how digital banking will be structurally, as well as physically, different from the banks described in the literature to date. It does this by extending the contribution of Klein ( 1971 ), on the theory of the banking firm. It presents suggested strategies for incumbent, and challenger banks, and how banking as a service and social media payment will reshape the competitive landscape.

The banking industry has been evolving since Banca Monte dei Paschi di Siena opened its doors in 1472. Its leveraged business model has proved very scalable over time, but it is now facing new challenges. Firstly, its book to capital ratios, as documented by Berger et al ( 1995 ), have been consistently falling since 1840. This trend continues as competition has increased. In the past decade, the industry has experienced declines in profitability as measured by return on tangible equity. This is partly the result of falling leverage and fee income and partly due to the net interest margin (connected to traditional lending activity). These trends accelerated following the 2008 financial crisis. At the same time, technology has made banks more competitive. Advances in digital technology are changing the very nature of banking. Banks are now distributing services via mobile technology. A prolonged period of very low interest rates is also having an impact. To sustain their profitability, Brei et al. ( 2020 ) note that many banks have increased their emphasis on fee-generating services.

As Fama ( 1980 ) explains, a bank is an intermediary. The Internet is, however, changing the way financial service providers conduct their role. It is fundamentally changing the nature of the banking. This in turn is changing the nature of banking services, and the way those services are delivered. As a consequence, in order to compete in the changing digital landscape, banks have to adapt. The banks of the future, both incumbents and challengers, need to address liquidity transformation, data, trust, competition, and the digitalization of financial services. Against this backdrop, incumbent banks are focused on reinventing themselves. The challenger banks are, however, starting with a blank canvas. The research questions that these dynamics pose need to be investigated within the context of the theory of banking, hence the need to revise the existing analytical framework.

Banks perform payment and transfer functions for an economy. The Internet can now facilitate and even perform these functions. It is changing the way that transactions are recorded on ledgers and is facilitating both public and private digital currencies. In the past, banks operated in a world of information asymmetry between themselves and their borrowers (clients), but this is changing. This differential gave one bank an advantage over another due to its knowledge about its clients. The digital transformation that financial technology brings reduces this advantage, as this information can be digitally analyzed.

Even the nature of deposits is being transformed. Banks in the future will have to accept deposits and process transactions made in digital form, either Central Bank Digital Currencies (CBDC) or cryptocurrencies. This presents a number of issues: (1) it changes the way financial services will be delivered, (2) it requires a discussion on resilience, security and competition in payments, (3) it provides a building block for better cross border money transfers and (4) it raises the question of private and public issuance of money. Braggion et al ( 2018 ) consider whether these represent a threat to financial stability.

The academic study of banking began with Edgeworth ( 1888 ). He postulated that it is based on probability. In this respect, the nature of the business model depends on the probability that a bank will not be called upon to meet all its liabilities at the same time. This allows banks to lend more than they have in deposits. Because of the resultant mismatch between long term assets and short-term liabilities, a bank’s capital structure is very sensitive to liquidity trade-offs. This is explained by Diamond and Rajan ( 2000 ). They explain that this makes a bank a’relationship lender’. In effect, they suggest a bank is an intermediary that has borrowed from other investors.

Diamond and Rajan ( 2000 ) argue a lender can negotiate repayment obligations and that a bank benefits from its knowledge of the customer. As shall be shown, the new generation of digital challenger banks do not have the same tradeoffs or knowledge of the customer. They operate more like a broker providing a platform for banking services. This suggests that there will be more than one type of bank in the future and several different payment protocols. It also suggests that banks will have to data mine customer information to improve their understanding of a client’s financial needs.

The key focus of Diamond and Rajan ( 2000 ), however, was to position a traditional bank is an intermediary. Gurley and Shaw ( 1956 ) describe how the customer relationship means a bank can borrow funds by way of deposits (liabilities) and subsequently use them to lend or invest (assets). In facilitating this mediation, they provide a service whereby they store money and provide a mechanism to transmit money. With improvements in financial technology, however, money can be stored digitally, lenders and investors can source funds directly over the internet, and money transfer can be done digitally.

A review of financial technology and banking literature is provided by Thakor ( 2020 ). He highlights that financial service companies are now being provided by non-deposit taking contenders. This paper addresses one of the four research questions raised by his review, namely how theories of financial intermediation can be modified to accommodate banks, shadow banks, and non-intermediated solutions.

To be a bank, an entity must be authorized to accept retail deposits. A challenger bank is, therefore, still a bank in the traditional sense. It does not, however, have the costs of a branch network. A peer-to-peer lender, meanwhile, does not have a deposit base and therefore acts more like a broker. This leads to the issue that this paper addresses, namely how the banks of the future will conduct their intermediation.

In order to understand what the bank of the future will look like, it is necessary to understand the nature of the aforementioned intermediation, and the way it is changing. In this respect, there are two key types of intermediation. These are (1) quantitative asset transformation and, (2) brokerage. The latter is a common model adopted by challenger banks. Figure  1 depicts how these two types of financial intermediation match savers with borrowers. To avoid nuanced distinction between these two types of intermediation, it is common to classify banks by the services they perform. These can be grouped as either private, investment, or commercial banking. The service sub-groupings include payments, settlements, fund management, trading, treasury management, brokerage, and other agency services.

How banks act as intermediaries between lenders and borrowers. This function call also be conducted by intermediaries as brokers, for example by shadow banks. Disintermediation occurs over the internet where peer-to-peer lenders match savers to lenders

Financial technology has the ability to disintermediate the banking sector. The competitive pressures this results in will shape the banks of the future. The channels that will facilitate this are shown in Fig.  2 , namely the Internet and/or mobile devices. Challengers can participate in this by, (1) directly matching borrows with savers over the Internet and, (2) distributing white labels products. The later enables banking as a service and avoids the aforementioned liquidity mismatch.

The strategic options banks have to match lenders with borrowers. The traditional and challenger banks are in the same space, competing for business. The distributed banks use the traditional and challenger banks to white label banking services. These banks compete with payment platforms on social media. The Internet heralds an era of banking as a service

There are also physical changes that are being made in the delivery of services. Bricks and mortar branches are in decline. Mobile banking, or m-banking as Liu et al ( 2020 ) describe it, is an increasingly important distribution channel. Robotics are increasingly being used to automate customer interaction. As explained by Vishnu et al ( 2017 ), these improve efficiency and the quality of execution. They allow for increased oversight and can be built on legacy systems as well as from a blank canvas. Application programming interfaces (APIs) are bringing the same type of functionality to m-banking. They can be used to authorize third party use of banking data. How banks evolve over time is important because, according to the OECD, the activity in the financial sector represents between 20 and 30 percent of developed countries Gross Domestic Product.

In summary, financial technology has evolved to a level where online banks and banking as a service are challenging incumbents and the nature of banking mediation. Banking is rapidly transforming because of changes in such technology. At the same time, the solving of the double spending problem, whereby digital money can be cryptographically protected, has led to the possibility that paper money will become redundant at some point in the future. A theoretical framework is required to understand this evolving landscape. This is discussed next.

The theory of the banking firm: a revision

In financial theory, as eloquently explained by Fama ( 1980 ), banking provides an accounting system for transactions and a portfolio system for the storage of assets. That will not change for the banks of the future. Fama ( 1980 ) explains that their activities, in an unregulated state, fulfil the Modigliani–Miller ( 1959 ) theorem of the irrelevance of the financing decision. In practice, traditional banks compete for deposits through the interest rate they offer. This makes the transactional element dependent on the resulting debits and credits that they process, essentially making banks into bookkeeping entities fulfilling the intermediation function. Since this is done in response to competitive forces, the general equilibrium is a passive one. As such, the banking business model is vulnerable to disruption, particularly by innovation in financial technology.

A bank is an idiosyncratic corporate entity due to its ability to generate credit by leveraging its balance sheet. That balance sheet has assets on one side and liabilities on the other, like any corporate entity. The assets consist of cash, lending, financial and fixed assets. On the other side of the balance sheet are its liabilities, deposits, and debt. In this respect, a bank’s equity and its liabilities are its source of funds, and its assets are its use of funds. This is explained by Klein ( 1971 ), who notes that a bank’s equity W , borrowed funds and its deposits B is equal to its total funds F . This is the same for incumbents and challengers. This can be depicted algebraically if we let incumbents be represented by Φ and challengers represented by Γ:

Klein ( 1971 ) further explains that a bank’s equity is therefore made up of its share capital and unimpaired reserves. The latter are held by a bank to protect the bank’s deposit clients. This part is also mandated by regulation, so as to protect customers and indeed the entire banking system from systemic failure. These protective measures include other prudential requirements to hold cash reserves or other liquid assets. As shall be shown, banking services can be performed over the Internet without these protections. Banking as a service, as this phenomenon known, is expected to increase in the future. This will change the nature of the protection available to clients. It will change the way banks transform assets, explained next.

A bank’s deposits are said to be a function of the proportion of total funds obtained through the issuance of the ith deposit type and its total funds F , represented by α i . Where deposits, represented by Bs , are made in the form of Bs (i  =  1 *s n) , they generate a rate of interest. It follows that Si Bs  =  B . As such,

Therefor it can be said that,

The importance of Eq. 3 is that the balance sheet can be leveraged by the issuance of loans. It should be noted, however, that not all loans are returned to the bank in whole or part. Non-performing loans reduce the asset side of a bank’s balance sheet and act as a constraint on capital, and therefore new lending. Clearly, this is not the case with banking as a service. In that model, loans are brokered. That said, with the traditional model, an advantage of financial technology is that it facilitates the data mining of clients’ accounts. Lending can therefore be more targeted to borrowers that are more likely to repay, thereby reducing non-performing loans. Pari passu, the incumbent bank of the future will therefore have a higher risk-adjusted return on capital. In practice, however, banking as a service will bring greater competition from challengers and possible further erosion of margins. Alternatively, some banks will proactively engage in partnerships and acquisitions to maintain their customer base and address the competition.

A bank must have reserves to meet the demand of customers demanding their deposits back. The amount of these reserves is a key function of banking regulation. The Basel Committee on Banking Supervision mandates a requirement to hold various tiers of capital, so that banks have sufficient reserves to protect depositors. The Committee also imposes a framework for mitigating excessive liquidity risk and maturity transformation, through a set Liquidity Coverage Ratio and Net Stable Funding Ratio.

Recent revisions of theory, because of financial technology advances, have altered our understanding of banking intermediation. This will impact the competitive landscape and therefor shape the nature of the bank of the future. In this respect, the threat to incumbent banks comes from peer-to-peer Internet lending platforms. These perform the brokerage function of financial intermediation without the use of the aforementioned banking balance sheet. Unlike regulated deposit takers, such lending platforms do not create assets and do not perform risk and asset transformation. That said, they are reliant on investors who do not always behave in a counter cyclical way.

Financial technology in banking is not new. It has been used to facilitate electronic markets since the 1980’s. Thakor ( 2020 ) refers to three waves of application of financial innovation in banking. The advent of institutional futures markets and the changing nature of financial contracts fundamentally changed the role of banks. In response to this, academics extended the concept of a bank into an entity that either fulfills the aforementioned functions of a broker or a qualitative asset transformer. In this respect, they connect the providers and users of capital without changing the nature of the transformation of the various claims to that capital. This transformation can be in the form risk transfer or the application of leverage. The nature of trading of financial assets, however, is changing. Price discovery can now be done over the Internet and that is moving liquidity from central marketplaces (like the stock exchange) to decentralized ones.

Alongside these trends, in considering what the bank of the future will look like, it is necessary to understand the unregulated lending market that competes with traditional banks. In this part of the lending market, there has been a rise in shadow banks. The literature on these entities is covered by Adrian and Ashcraft ( 2016 ). Shadow banks have taken substantial market share from the traditional banks. They fulfil the brokerage function of banks, but regulators have only partial oversight of their risk transformation or leverage. The rise of shadow banks has been facilitated by financial technology and the originate to distribute model documented by Bord and Santos ( 2012 ). They use alternative trading systems that function as electronic communication networks. These facilitate dark pools of liquidity whereby buyers and sellers of bonds and securities trade off-exchange. Since the credit crisis of 2008, total broker dealer assets have diverged from banking assets. This illustrates the changed lending environment.

In the disintermediated market, banking as a service providers must rely on their equity and what access to funding they can attract from their online network. Without this they are unable to drive lending growth. To explain this, let I represent the online network. Extending Klein ( 1971 ), further let Ψ represent banking as a service and their total funds by F . This state is depicted as,

Theoretically, it can be shown that,

Shadow banks, and those disintermediators who bypass the banking system, have an advantage in a world where technology is ubiquitous. This becomes more apparent when costs are considered. Buchak et al. ( 2018 ) point out that shadow banks finance their originations almost entirely through securitization and what they term the originate to distribute business model. Diversifying risk in this way is good for individual banks, as banking risks can be transferred away from traditional banking balance sheets to institutional balance sheets. That said, the rise of securitization has introduced systemic risk into the banking sector.

Thus, we can see that the nature of banking capital is changing and at the same time technology is replacing labor. Let A denote the number of transactions per account at a period in time, and C denote the total cost per account per time period of providing the services of the payment mechanism. Klein ( 1971 ) points out that, if capital and labor are assumed to be part of the traditional banking model, it can be observed that,

It can therefore be observed that the total service charge per account at a period in time, represented by S, has a linear and proportional relationship to bank account activity. This is another variable that financial technology can impact. According to Klein ( 1971 ) this can be summed up in the following way,

where d is the basic bank decision variable, the service charge per transaction. Once again, in an automated and digital environment, financial technology greatly reduces d for the challenger banks. Swankie and Broby ( 2019 ) examine the impact of Artificial Intelligence on the evaluation of banking risk and conclude that it improves such variables.

Meanwhile, the traditional banking model can be expressed as a product of the number of accounts, M , and the average size of an account, N . This suggests a banks implicit yield is it rate of interest on deposits adjusted by its operating loss in each time period. This yield is generated by payment and loan services. Let R 1 depict this. These can be expressed as a fraction of total demand deposits. This is depicted by Klein ( 1971 ), if one assumes activity per account is constant, as,

As a result, whether a bank is structured with traditional labor overheads or built digitally, is extremely relevant to its profitability. The capital and labor of tradition banks, depicted as Φ i , is greater than online networks, depicted as I i . As such, the later have an advantage. This can be shown as,

What Klein (1972) failed to highlight is that the banking inherently involves leverage. Diamond and Dybving (1983) show that leverage makes bank susceptible to run on their liquidity. The literature divides these between adverse shock events, as explained by Bernanke et al ( 1996 ) or moral hazard events as explained by Demirgu¨¸c-Kunt and Detragiache ( 2002 ). This leverage builds on the balance sheet mismatch of short-term assets with long term liabilities. As such, capital and liquidity are intrinsically linked to viability and solvency.

The way capital and liquidity are managed is through credit and default management. This is done at a bank level and a supervisory level. The Basel Committee on Banking Supervision applies capital and leverage ratios, and central banks manage interest rates and other counter-cyclical measures. The various iterations of the prudential regulation of banks have moved the microeconomic theory of banking from the modeling of risk to the modeling of imperfect information. As mentioned, shadow and disintermediated services do not fall under this form or prudential regulation.

The relationship between leverage and insolvency risk crucially depends on the degree of banks total funds F and their liability structure L . In this respect, the liability structure of traditional banks is also greater than online networks which do not have the same level of available funds, depicted as,

Diamond and Dybvig ( 1983 ) observe that this liability structure is intimately tied to a traditional bank’s assets. In this respect, a bank’s ability to finance its lending at low cost and its ability to achieve repayment are key to its avoidance of insolvency. Online networks and/or brokers do not have to finance their lending, simply source it. Similarly, as brokers they do not face capital loss in the event of a default. This disintermediates the bank through the use of a peer-to-peer environment. These lenders and borrowers are introduced in digital way over the internet. Regulators have taken notice and the digital broker advantage might not last forever. As a result, the future may well see greater cooperation between these competing parties. This also because banks have valuable operational experience compared to new entrants.

It should also be observed that bank lending is either secured or unsecured. Interest on an unsecured loan is typically higher than the interest on a secured loan. In this respect, incumbent banks have an advantage as their closeness to the customer allows them to better understand the security of the assets. Berger et al ( 2005 ) further differentiate lending into transaction lending, relationship lending and credit scoring.

The evolution of the business model in a digital world

As has been demonstrated, the bank of the future in its various manifestations will be a consequence of the evolution of the current banking business model. There has been considerable scholarly investigation into the uniqueness of this business model, but less so on its changing nature. Song and Thakor ( 2010 ) are helpful in this respect and suggest that there are three aspects to this evolution, namely competition, complementary and co-evolution. Although liquidity transformation is evolving, it remains central to a bank’s role.

All the dynamics mentioned are relevant to the economy. There is considerable evidence, as outlined by Levine ( 2001 ), that market liberalization has a causal impact on economic growth. The impact of technology on productivity should prove positive and enhance the functioning of the domestic financial system. Indeed, market liberalization has already reshaped banking by increasing competition. New fee based ancillary financial services have become widespread, as has the proprietorial use of balance sheets. Risk has been securitized and even packaged into trade-able products.

Challenger banks are developing in a complementary way with the incumbents. The latter have an advantage over new entrants because they have information on their customers. The liquidity insurance model, proposed by Diamond and Dybvig ( 1983 ), explains how such banks have informational advantages over exchange markets. That said, financial technology changes these dynamics. It if facilitating the processing of financial data by third parties, explained in greater detail in the section on Open Banking.

At the same time, financial technology is facilitating banking as a service. This is where financial services are delivered by a broker over the Internet without resort to the balance sheet. This includes roboadvisory asset management, peer to peer lending, and crowd funding. Its growth will be facilitated by Open Banking as it becomes more geographically adopted. Figure  3 illustrates how these business models are disintermediating the traditional banking role and matching burrowers and savers.

The traditional view of banks ecosystem between savers and borrowers, atop the Internet which is matching savers and borrowers directly in a peer-to-peer way. The Klein ( 1971 ) theory of the banking firm does not incorporate the mirrored dynamics, and as such needs to be extended to reflect the digital innovation that impacts both borrowers and severs in a peer-to-peer environment

Meanwhile, the banking sector is co-evolving alongside a shadow banking phenomenon. Lenders and borrowers are interacting, but outside of the banking sector. This is a concern for central banks and banking regulators, as the lending is taking place in an unregulated environment. Shadow banking has grown because of financial technology, market liberalization and excess liquidity in the asset management ecosystem. Pozsar and Singh ( 2011 ) detail the non-bank/bank intersection of shadow banking. They point out that shadow banking results in reverse maturity transformation. Incumbent banks have blurred the distinction between their use of traditional (M2) liabilities and market-based shadow banking (non-M2) liabilities. This impacts the inter-generational transfers that enable a bank to achieve interest rate smoothing.

Securitization has transformed the risk in the banking sector, transferring it to asset management institutions. These include structured investment vehicles, securities lenders, asset backed commercial paper investors, credit focused hedge and money market funds. This in turn has led to greater systemic risk, the result of the nature of the non-traded liabilities of securitized pooling arrangements. This increased risk manifested itself in the 2008 credit crisis.

Commercial pressures are also shaping the banking industry. The drive for cost efficiency has made incumbent banks address their personally costs. Bank branches have been closed as technology has evolved. Branches make it easier to withdraw or transfer deposits and challenger banks are not as easily able to attract new deposits. The banking sector is therefore looking for new point of customer contact, such as supermarkets, post offices and social media platforms. These structural issues are occurring at the same time as the retail high street is also evolving. Banks have had an aggressive roll out of automated telling machines and a reduction in branches and headcount. Online digital transactions have now become the norm in most developed countries.

The financing of banks is also evolving. Traditional banks have tended to fund illiquid assets with short term and unstable liquid liabilities. This is one of the key contributors to the rise to the credit crisis of 2008. The provision of liquidity as a last resort is central to the asset transformation process. In this respect, the banking sector experienced a shock in 2008 in what is termed the credit crisis. The aforementioned liquidity mismatch resulted in the system not being able to absorb all the risks associated with subprime lending. Central banks had to resort to quantitative easing as a result of the failure of overnight funding mechanisms. The image of the entire banking sector was tarnished, and the banks of the future will have to address this.

The future must learn from the mistakes of the past. The structural weakness of the banking business model cannot be solved. That said, the latest Basel rules introduce further risk mitigation, improved leverage ratios and increased levels of capital reserve. Another lesson of the credit crisis was that there should be greater emphasis on risk culture, governance, and oversight. The independence and performance of the board, the experience and the skill set of senior management are now a greater focus of regulators. Internal controls and data analysis are increasingly more robust and efficient, with a greater focus on a banks stable funding ratio.

Meanwhile, the very nature of money is changing. A digital wallet for crypto-currencies fulfills much the same storage and transmission functions of a bank; and crypto-currencies are increasing being used for payment. Meanwhile, in Sweden, stores have the right to refuse cash and the majority of transactions are card based. This move to credit and debit cards, and the solving of the double spending problem, whereby digital money can be crypto-graphically protected, has led to the possibility that paper money could be replaced at some point in the future. Whether this might be by replacement by a CBDC, or decentralized digital offering, is of secondary importance to the requirement of banks to adapt. Whether accommodating crytpo-currencies or CBDC’s, Kou et al. ( 2021 ) recommend that banks keep focused on alternative payment and money transferring technologies.

Central banks also have to adapt. To limit disintermediation, they have to ensure that the economic design of their sponsored digital currencies focus on access for banks, interest payment relative to bank policy rate, banking holding limits and convertibility with bank deposits. All these developments have implications for banks, particularly in respect of funding, the secure storage of deposits and how digital currency interacts with traditional fiat money.

Open banking

Against the backdrop of all these trends and changes, a new dynamic is shaping the future of the banking sector. This is termed Open Banking, already briefly mentioned. This new way of handling banking data protocols introduces a secure way to give financial service companies consensual access to a bank’s customer financial information. Figure  4 illustrates how this works. Although a fairly simple concept, the implications are important for the banking industry. Essentially, a bank customer gives a regulated API permission to securely access his/her banking website. That is then used by a banking as a service entity to make direct payments and/or download financial data in order to provide a solution. It heralds an era of customer centric banking.

How Open Banking operates. The customer generates data by using his bank account. A third party provider is authorized to access that data through an API request. The bank confirms digitally that the customer has authorized the exchange of data and then fulfills the request

Open Banking was a response to the documented inertia around individual’s willingness to change bank accounts. Following the Retail Banking Review in the UK, this was addressed by lawmakers through the European Union’s Payment Services Directive II. The legislation was designed to make it easier to change banks by allowing customers to delegate authority to transfer their financial data to other parties. As a result of this, a whole host of data centric applications were conceived. Open banking adds further momentum to reshaping the future of banking.

Open Banking has a number of quite revolutionary implications. It was started so customers could change banks easily, but it resulted in some secondary considerations which are going to change the future of banking itself. It gives a clear view of bank financing. It allows aggregation of finances in one place. It also allows can give access to attractive offerings by allowing price comparisons. Open Banking API’s build a secure online financial marketplace based on data. They also allow access to a larger market in a faster way but the third-party providers for the new entrants. Open Banking allows developers to build single solutions on an API addressing very specific problems, like for example, a cash flow based credit rating.

Romānova et al. ( 2018 ) undertook a questionnaire on the Payment Services Directive II. The results suggest that Open Banking will promote competitiveness, innovation, and new product development. The initiative is associated with low costs and customer satisfaction, but that some concerns about security, privacy and risk are present. These can be mitigated, to some extent, by secure protocols and layered permission access.

Discussion: strategic options

Faced with these disruptive trends, there are four strategic options for market participants to con- sider. There are (1) a defensive customer retention strategy for incumbents, (2) an aggressive customer acquisition strategy for challenger banks (3) a banking as a service strategy for new entrants, and (4) a payments strategy for social media platforms.

Each of these strategies has to be conducted in a competitive marketplace for money demand by potential customers. Figure  5 illustrates where the first three strategies lie on the tradeoff between money demand and interest rates. The payment strategy can’t be modeled based on the supply of money. In the figure, the market settles at a rate L 2 . The incumbent banks have the capacity to meet the largest supply of these loans. The challenger banks have a constrained function but due to a lower cost base can gain excess rent through higher rates of interest. The peer-to-peer bank as a service brokers must settle for the market rate and a constrained supply offering.

The money demand M by lenders on the y axis. Interest rates on the y axis are labeled as r I and r II . The challenger banks are represented by the line labeled Γ. They have a price and technology advantage and so can lend at higher interest rates. The brokers are represented by the line labeled Ω. They are price takers, accepting the interest rate determined by the market. The same is true for the incumbents, represented by the line labeled Φ but they have a greater market share due to their customer relationships. Note that payments strategy for social media platforms is not shown on this figure as it is not affected by interest rates

Figure  5 illustrates that having a niche strategy is not counterproductive. Liu et al ( 2020 ) found that banks performing niche activities exhibit higher profitability and have lower risk. The syndication market now means that a bank making a loan does not have to be the entity that services it. This means banks in the future can better shape their risk profile and manage their lending books accordingly.

An interesting question for central banks is what the future Deposit Supply function will look like. If all three forms: open banking, traditional banking and challenger banks develop together, will the bank of the future have the same Deposit Supply function? The Klein ( 1971 ) general formulation assumes that deposits are increasing functions of implicit and explicit yields. As such, the very nature of central bank directed monetary policy may have to be revisited, as alluded to in the earlier discussion on digital money.

The client retention strategy (incumbents)

The competitive pressures suggest that incumbent banks need to focus on customer retention. Reichheld and Kenny ( 1990 ) found that the best way to do this was to focus on the retention of branch deposit customers. Obviously, another way is to provide a unique digital experience that matches the challengers.

Incumbent banks have a competitive advantage based on the information they have about their customers. Allen ( 1990 ) argues that where risk aversion is observable, information markets are viable. In other words, both bank and customer benefit from this. The strategic issue for them, therefore, becomes the retention of these customers when faced with greater competition.

Open Banking changes the dynamics of the banking information advantage. Borgogno and Colangelo ( 2020 ) suggest that the access to account (XS2A) rule that it introduced will increase competition and reduce information asymmetry. XS2A requires banks to grant access to bank account data to authorized third payment service providers.

The incumbent banks have a high-cost base and legacy IT systems. This makes it harder for them to migrate to a digital world. There are, however, also benefits from financial technology for the incumbents. These include reduced cost and greater efficiency. Financial technology can also now support platforms that allow incumbent banks to sell NPL’s. These platforms do not require the ownership of assets, they act as consolidators. The use of technology to monitor the transactions make the processing cost efficient. The unique selling point of such platforms is their centralized point of contact which results in a reduction in information asymmetry.

Incumbent banks must adapt a number of areas they got to adapt in terms of their liquidity transformation. They have to adapt the way they handle data. They must get customers to trust them in a digital world and the way that they trust them in a bricks and mortar world. It is no coincidence. When you go into a bank branch that is a great big solid building great big facade and so forth that is done deliberately so that you trust that bank with your deposit.

The risk of having rising non-performing loans needs to be managed, so customer retention should be selective. One of the puzzles in banking is why customers are regularly denied credit, rather than simply being charged a higher price for it. This credit rationing is often alleviated by collateral, but finance theory suggests value is based on the discounted sum of future cash flows. As such, it is conceivable that the bank of the future will use financial technology to provide innovative credit allocation solutions. That said, the dual risks of moral hazard and information asymmetries from the adoption of such solutions must be addressed.

Customer retention is especially important as bank competition is intensifying, as is the digitalization of financial services. Customer retention requires innovation, and that innovation has been moving at a very fast rate. Until now, banks have traditionally been hesitant about technology. More recently, mergers and acquisitions have increased quite substantially, initiated by a need to address actual or perceived weaknesses in financial technology.

The client acquisition strategy (challengers)

As intermediaries, the challenger banks are the same as incumbent banks, but designed from the outset to be digital. This gives them a cost and efficiency advantage. Anagnostopoulos ( 2018 ) suggests that the difference between challenger and traditional banks is that the former address its customers problems more directly. The challenge for such banks is customer acquisition.

Open Banking is a major advantage to challenger banks as it facilitates the changing of accounts. There is widespread dissatisfaction with many incumbent banks. Open Banking makes it easier to change accounts and also easier to get a transaction history on the client.

Customer acquisition can be improved by building trust in a brand. Historically, a bank was physically built in a very robust manner, hence the heavy architecture and grand banking halls. This was done deliberately to engender a sense of confidence in the deposit taking institution. Pure internet banks are not able to do this. As such, they must employ different strategies to convey stability. To do this, some communicate their sustainability credentials, whilst others use generational values-based advertising. Customer acquisition in a banking context is traditionally done by offering more attractive rates of interest. This is illustrated in Fig.  5 by the intersect of traditional banks with the market rate of interest, depicted where the line Γ crosses L 2 . As a result of the relationship with banking yield, teaser rates and introductory rates are common. A customer acquisition strategy has risks, as consumers with good credit can game different challenger banks by frequently changing accounts.

Most customer acquisition, however, is done based on superior service offering. The functionality of challenger banking accounts is often superior to incumbents, largely because the latter are built on legacy databases that have inter-operability issues. Having an open platform of services is a popular customer acquisition technique. The unrestricted provision of third-party products is viewed more favorably than a restricted range of products.

The banking as a service strategy (new entrants)

Banking from a customer’s perspective is the provision of a service. Customers don’t care about the maturity transformation of banking balance sheets. Banking as a service can be performed without recourse to these balance sheets. Banking products are brokered, mostly by new entrants, to individuals as services that can be subscribed to or paid on a fee basis.

There are a number banking as a service solutions including pre-paid and credit cards, lending and leasing. The banking as a service brokers are effectively those that are aggregating services from others using open banking to enable banking as a service.

The rise of banking as a service needs to be understood as these compete directly with traditional banks. As explained, some of these do this through peer-to-peer lending over the internet, others by matching borrows and sellers, conducting mediation as a loan broker. Such entities do not transform assets and do not have banking licenses. They do not have a branch network and often don not have access to deposits. This means that they have no insurance protection and can be subject to interest rate controls.

The new genre of financial technology, banking as a service provider, conduct financial services transformation without access to central bank liquidity. In a distributed digital asset world, the assets are stored on a distributed ledger rather than a traditional banking ledger. Financial technology has automated credit evaluation, savings, investments, insurance, trading, banking payments and risk management. These banking as a service offering are only as secure as the technology on which they are built.

The social media payment strategy (disintermediators and disruptors)

An intermediation bank is a conceptual idea, one created solely on a social networking site. Social media has developed a market for online goods and services. Williams ( 2018 ) estimates that there are 2.46 billion social media users. These all make and receive payments of some kind. They demand security and functionality. Importantly, they have often more clients than most banks. As such, a strategy to monetize the payments infrastructure makes sense.

All social media platforms are rich repositories of data. Such platforms are used to buy and sell things and that requires payments. Some platforms are considering evolving their own digital payment, cutting out the banks as middlemen. These include Facebook’s Diem (formerly Libra), a digital currency, and similar developments at some of the biggest technology companies. The risk with social media payment platform is that there is systemic counter-party protection. Regulators need to address this. One way to do this would be to extend payment service insurance to such platforms.

Social media as a platform moves the payment relationship from a transaction to a customer experience. The ability to use consumer desires in combination with financial data has the potential to deliver a number of new revenue opportunities. These will compete directly with the banks of the future. This will have implications for (1) the money supply, (2) the market share of traditional banks and, (3) the services that payment providers offer.

Further research

Several recommendations for research derive from both the impact of disintermediation and the four proposed strategies that will shape banking in the future. The recommendations and suggestions are based on the mentioned papers and the conclusions drawn from them.

As discussed, the nature of intermediation is changing, and this has implications for the pricing of risk. The role of interest rates in banking will have to be further reviewed. In a decentralized world based on crypto currencies the central banks do not have the same control over the money supply, This suggest the quantity theory of money and the liquidity preference theory need to be revisited. As explained, the Internet reduces much of the friction costs of intermediation. Researchers should ask how this will impact maturity transformation. It is also fair to ask whether at some point in the future there will just be one big bank. This question has already been addressed in the literature but the Internet facilities the possibility. Diamond ( 1984 ) and Ramakrishnan and Thakor ( 1984 ) suggested the answer was due to diversification and its impact on reducing monitoring costs.

Attention should be given by academics to the changing nature of banking risk. How should regulators, for example, address the moral hazard posed by challenger banks with weak balance sheets? What about deposit insurance? Should it be priced to include unregulated entities? Also, what criteria do borrowers use to choose non-banking intermediaries? The changing risk environment also poses two interesting practical questions. What will an online bank run look like, and how can it be averted? How can you establish trust in digital services?

There are also research questions related to the nature of competition. What, for example, will be the nature of cross border competition in a decentralized world? Is the credit rationing that generates competition a static or dynamic phenomena online? What is the value of combining consumer utility with banking services?

Financial intermediaries, like banks, thrive in a world of deficits and surpluses supported by information asymmetries and disconnectedness. The connectivity of the internet changes this dynamic. In this respect, the view of Schumpeter ( 1911 ) on the role of financial intermediaries needs revisiting. Lenders and borrows can be connected peer to peer via the internet.

All the dynamics mentioned change the nature of moral hazard. This needs further investigation. There has been much scholarly research on the intrinsic riskiness of the mismatch between banking assets and liabilities. This mismatch not only results in potential insolvency for a single bank but potentially for the whole system. There has, for example, been much debate on the whether a bank can be too big to fail. As a result of the riskiness of the banking model, the banks of the future will be just a liable to fail as the banks of the past.

This paper presented a revision of the theory of banking in a digital world. In this respect, it built on the work of Klein ( 1971 ). It provided an overview of the changing nature of banking intermediation, a result of the Internet and new digital business models. It presented the traditional academic view of banking and how it is evolving. It showed how this is adapted to explain digital driven disintermediation.

It was shown that the banking industry is facing several documented challenges. Risk is being taken of balance sheet, securitized, and brokered. Financial technology is digitalizing service delivery. At the same time, the very nature of intermediation is being changed due to digital currency. It is argued that the bank of the future not only has to face these competitive issues, but that technology will enhance the delivery of banking services and reduce the cost of their delivery.

The paper further presented the importance of the Open Banking revolution and how that facilitates banking as a service. Open Banking is increasing client churn and driving banking as a service. That in turn is changing the way products are delivered.

Four strategies were proposed to navigate the evolving competitive landscape. These are for incumbents to address customer retention; for challengers to peruse a low-cost digital experience; for niche players to provide banking as a service; and for social media platforms to develop payment platforms. In all these scenarios, the banks of the future will have to have digital strategies for both payments and service delivery.

It was shown that both incumbents and challengers are dependent on capital availability and borrowers credit concerns. Nothing has changed in that respect. The risks remain credit and default risk. What is clear, however, is the bank has become intrinsically linked with technology. The Internet is changing the nature of mediation. It is allowing peer to peer matching of borrowers and savers. It is facilitating new payment protocols and digital currencies. Banks need to evolve and adapt to accommodate these. Most of these questions are empirical in nature. The aim of this paper, however, was to demonstrate that an understanding of the banking model is a prerequisite to understanding how to address these and how to develop hypotheses connected with them.

In conclusion, financial technology is changing the future of banking and the way banks intermediate. It is facilitating digital money and the online transmission of financial assets. It is making banks more customer enteric and more competitive. Scholarly investigation into banking has to adapt. That said, whatever the future, trust will remain at the core of banking. Similarly, deposits and lending will continue to attract regulatory oversight.

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This research paper is intended to raise awareness of cybercrime on our daily transaction. In the introduction we will state brief issues that occurs during these threats and how it effects banks and other monetary firms. Lastly, we will give a few briefs on important definitions of Phishing, Malware and other sorts of risky viruses. In the body we will go more into details. Firstly, we will state the ordeals of banking sector during these threats. We will explain the use of online services and how it may have risk services. A detailed methodology will be conducted on the use of artificial intelligence in the banking industry and how it may mitigate internal risks. We will explain these vigilances of Identity Theft and what harm it can cause to an individual use and even and in an industry perspective. We will go more into details in the process of Phishing on how to be aware and to avoid these threats. Case studies will be conducted with the support of the United States Federal State laws. The jury and prosecutions that have happened mentioned in detail below. Lastly in the body we will explain how we can take safety measures in avoiding these threats and how to report when it does occur to act. Lastly a brief summary will be giving a prompt explanation for the goal of this research paper.

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A Research Paper on ' The Impact of E-Banking on commercial Banking Operations; A Study on United Bank for Africa (UBA), Cameroon.

This study on the impact of e-banking on commercial banking operations with the Case study of UBA Bank Cameroon, sought out to examine the relationship between e￾banking services and the profitability of the banking institution and to identify the difference between those who use e-banking Services and Counter Service. Using T￾test model and a simple correlation model we established that there is no relationship between e-banking services and the profitability of the banking institution whilst also establishing the fact that there is significant difference between customers who use e￾banking services and customers who use the counter service. In conducting this research both primary and secondary data were used. Furthermore, quantitative and descriptive methods of analysis were adopted to examine the impact of e-banking services on the profitability of the banking institution. To add, we found out that there is no significant relationship between the electronic banking services and the level of profitability of the banking institution because savings are not much influenced by the level of e banking services available, and the amount of savings does not transform its self into interest unless a decision is taken by the bank to give out loans. Therefore, we recommended that, UBA Bank Cameroon should utilize e-banking service to its fullest advantage in order to improve her operations in terms of delivering retail banking services to her customers which will likely lead to favorable profitability situation.

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ASUE ESELEM Valence

This research study seeks to measure the impact of e-banking on commercial banking operations. With our case study being UBA Bank Cameroon, we will set out to examine the relationship between e-banking services and the profitability of the banking institution and also to identify the difference between those who use E-banking Services and Counter Service. We will use the T-test model and a simple correlation model to establish a relationship between e-banking services and the profitability of the banking institution whilst also establishing the difference between customers who use e-banking services and customers who use the counter service. In conducting this research, we will use both primary and secondary data. Furthermore, quantitative and descriptive methods of analysis will be adopted to examine the impact of e-banking services on the profitability of the banking institution.

Texila International Journal , Nii Kwartei Perry-Quartey

Electronic banking basically refers to performing banking functions or transactions using a smart technologically inclined device or the internet. Information Technology has recently influenced banking operations, transactions and service delivery. It has provided a channel through which banking is done in convenience, thereby, reducing customer queues in banking halls, administrative expenses and the complexities associated with traditional banking. However, the disadvantages of electronic banking are quite significant. They include unauthorized data access, data loss and fraudulent activities. Using the internet, banks display all relevant information regarding their products on their website which is easily accessible to customers. Through modern technology, branches are networked using terrestrial or satellite links such that customers can visit any branch of their bank to transact business and transfer funds both locally and internationally. This paper discusses e-banking, various definitions, examples, advantages and limitations, electronic banking in Ghana and its impact on the profitability of banks in the Ghanaian banking industry. From the study, e-banking adoption was a business strategy the bank used in response to customer needs and the changing marketing trends in the banking industry. Obviously, tremendous benefits such as revenue generation, improved productivity, efficient service delivery and cost savings accrue from e-banking. The lack of a solid technology infrastructure was identified as a major challenge of e-banking adoption in the country.

Journal of Advances in Education and Philosophy

Hailemariam H Mamo

Assoc. Prof. Dr. Rashad Yazdanifard

ABSTRACT The intention of this paper is to gather information that shows the impact of online commerce on banking, which is affecting customer’s satisfaction, customer loyalty, and profitability. Online banking is a new technology which is making a good possibility for banks and customers in terms of cost reduction of operational banking and time saving, and other methods of increasing profitability. The statistical observation indicated that adopting customers to using of online banking is depend on completed and uncomplicated websites, availability of high quality of services, new products, high security and ease of use. So, the empirical analysis indicates that banks providing such services for increasing their profitability. KEYWORDS: Internet Banking, design new products, Service Quality, Loyal Customers, Profitability

ASA University

Benazir Rahman

The letter "E" has made a revolution all over the world at present. Banks are not exceptional. The spread and penetration of internet and electronic media has unwrapped innovative horizons and scenarios for the banking industry. The banks are at present providing their products and services through the electronic medium along with physical facilities which referred as electronic banking or e-banking. E-banking is considered to have a substantial impact on banks' performance. The aim of this paper is to examine the impact of e-banking over the profitability of commercial banks of Bangladesh. As a developing country commercial banks of Bangladesh need to be concerned about the facilities of e-banking as well as the costing in terms of users. The paper is considered as descriptive study and qualitative in nature which determines the impact of e-banking over the performance of banks focusing on the profitability. It has also discussed the effect of customers' literacy on provision of services from the banks' perspective and deliberated the basic motive of banks to adopt e-banking services. A field survey has been used to show the connection between bank profit and e-banking. The survey has been done among the randomly selected employees of commercial banks in Dhaka city. Different statistical tools like mean, standard deviation, t-test, F-test and so on have been used to justify the case. The result shows that offering e-banking services have a positive or upward impact over the profitability of banks. It has supported that the banks will earn profits by providing e-services in spite of facing high maintenance costs in the long run. For banks, the main motive to adopt e-banking is to increase their client age and to retain their customers. The profitability of banks has augmented in transitioning to e-banking medium. The more use of eproducts by the bank clients will increase transactions which ultimately help to increase the profit trend up.

Review of Professional Management- A Journal of New Delhi Institute of Management

Garima Verma

IAEME PUBLICATION

IAEME Publication

Electronic Banking has become the heart of banking sector, while banking industry is the heart of every robust economy. E-banking has revolutionized the lives of all individuals of present times and is considered to be a wave of information revolution after the agricultural and industrial revolution Internet banking, mobile banking, Automated Teller Machine, electronic funds transfer, and smart cards etc. are the services provided by banks under Electronic Banking. Through this research paper, an attempt has been made at examining the impact of electronic banking on the performance of Banks. Electronic Banking has resulted in reduction in transaction costs, increased productivity, increase in volume of deposits, increase in net operation margin and reduction of operational costs of the banks, thereby improving the efficiency in the banking operations. Through this paper, it has been found that Electronic Banking has tremendously improved the performance of banks.

Global Research Journal of Economic and Social Development

Prof. Oyedokun E M M A N U E L Godwin

The study examined the effect of E-banking on performance of deposit money banks in Nigeria, through the use of eight selected deposit money banks categorized with international authorization in Nigeria. Design/Methodology/Approach: This study adopted ex-post facto research design because data were collected from secondary sources through annual reports and statistical bulletin of Central Bank of Nigeria over the period 2011 to 2020. E-banking was measured using mobile banking, online banking, automated teller machine and point of sale, while performance of bank was measured by Return on Assets (ROA). The study applied ordinary least square (OLS) in its analysis to determine the effect of E-Banking on the performance of deposit money banks in Nigeria. The outcomes of the work showed that mobile banking (MB) and point of sales have significant effect on performance of deposit money banks in Nigeria while online banking (OB) and automated teller machine (ATM) did not have significant influence on the performance of deposit money banks in Nigeria. Findings: The study consequently infers that spending money on E-banking may not necessary improve performance of deposit money banks in Nigeria. However, judicious use and management of the banks' resources as well as increase in customer base and retention coupled with excellent service delivery will contribute meaningfully to the banks' performance. Originality/Value Added: Some of the recommendation is that management of deposit money banks should provide service excellence, improve service quality. Government at all levels should provide enabling environment and social infrastructure such as: constant power supply, quality and good telecommunication, cheap and robust internet services. The banks' managements should pursue more campaigns and orientation on their customers to create awareness for them to patronize the facilities provided by the banks especially in the rural areas. The management of the banks need to educate customers from time to time with regard to electronic banking facilities and provision of easy to use and customer interactive features in electronic banking equipment.

Prof. Edwin Agwu

With the proliferation of the internet, coupled with the growing acceptance of the digital lifestyle and the world becoming increasingly addicted to e-business, the trend of cash transactions is now giving way to electronic payment system. Considering the rapid spread in the adoption of electronic banking as a channel for performing various bank transactions among banks in Nigeria, this study investigated the roles e-banking adoption has played in the performance of organizations using a case study of commercial banks in Nigeria. Hence the objective of the study was to determine the role of e-banking on the operational efficiency of commercial banks in Nigeria. In pursuance of this objective, primary data were obtained by administering questionnaires to staff of four purposively selected banks (Ecobank, UBA, GTB and First bank). Pearson correlation was used to analyse the results obtained using the Statistical Package for Social Sciences (SPSS) and it was observed that banks’ operational efficiency in Nigeria since the adoption of electronic banking has improved compared to the era of traditional banking. This improvement was noticed in the strength of banks, revenue and capital bases, as well as in customers’ loyalty. It was concluded that the introduction of new channels into their ebanking operations drastically increased bank performances, since the more active customers are with their electronic transactions the more profitable it is for the banks.

IJMRAP Editor

The study investigated impact of electronic banking on profitability of deposit money banks in Nigeria from 2009 to 2018. Secondary data were obtained from Central Bank of Nigeria statistical bulletin. Data obtained were analysed using Ordinary Least Square estimation technique. E-view software package was used to measure relationship between electronic banking and profitability of deposit money banks in Nigeria. From the result, internet banking has an insignificantly positive impact on profitability. It was also revealed that ATM has a significantly positive impact on profitability. The study recommended that the monetary authorities and deposit money banks in Nigeria should enlighten their customers on the convenience and importance of adopting e-banking channels in completing their transactions. In addition, banks should conduct further research to find new e-banking products to attract and retain their existing customers.

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Cultural Relativity and Acceptance of Embryonic Stem Cell Research

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There is a debate about the ethical implications of using human embryos in stem cell research, which can be influenced by cultural, moral, and social values. This paper argues for an adaptable framework to accommodate diverse cultural and religious perspectives. By using an adaptive ethics model, research protections can reflect various populations and foster growth in stem cell research possibilities.

INTRODUCTION

Stem cell research combines biology, medicine, and technology, promising to alter health care and the understanding of human development. Yet, ethical contention exists because of individuals’ perceptions of using human embryos based on their various cultural, moral, and social values. While these disagreements concerning policy, use, and general acceptance have prompted the development of an international ethics policy, such a uniform approach can overlook the nuanced ethical landscapes between cultures. With diverse viewpoints in public health, a single global policy, especially one reflecting Western ethics or the ethics prevalent in high-income countries, is impractical. This paper argues for a culturally sensitive, adaptable framework for the use of embryonic stem cells. Stem cell policy should accommodate varying ethical viewpoints and promote an effective global dialogue. With an extension of an ethics model that can adapt to various cultures, we recommend localized guidelines that reflect the moral views of the people those guidelines serve.

Stem cells, characterized by their unique ability to differentiate into various cell types, enable the repair or replacement of damaged tissues. Two primary types of stem cells are somatic stem cells (adult stem cells) and embryonic stem cells. Adult stem cells exist in developed tissues and maintain the body’s repair processes. [1] Embryonic stem cells (ESC) are remarkably pluripotent or versatile, making them valuable in research. [2] However, the use of ESCs has sparked ethics debates. Considering the potential of embryonic stem cells, research guidelines are essential. The International Society for Stem Cell Research (ISSCR) provides international stem cell research guidelines. They call for “public conversations touching on the scientific significance as well as the societal and ethical issues raised by ESC research.” [3] The ISSCR also publishes updates about culturing human embryos 14 days post fertilization, suggesting local policies and regulations should continue to evolve as ESC research develops. [4]  Like the ISSCR, which calls for local law and policy to adapt to developing stem cell research given cultural acceptance, this paper highlights the importance of local social factors such as religion and culture.

I.     Global Cultural Perspective of Embryonic Stem Cells

Views on ESCs vary throughout the world. Some countries readily embrace stem cell research and therapies, while others have stricter regulations due to ethical concerns surrounding embryonic stem cells and when an embryo becomes entitled to moral consideration. The philosophical issue of when the “someone” begins to be a human after fertilization, in the morally relevant sense, [5] impacts when an embryo becomes not just worthy of protection but morally entitled to it. The process of creating embryonic stem cell lines involves the destruction of the embryos for research. [6] Consequently, global engagement in ESC research depends on social-cultural acceptability.

a.     US and Rights-Based Cultures

In the United States, attitudes toward stem cell therapies are diverse. The ethics and social approaches, which value individualism, [7] trigger debates regarding the destruction of human embryos, creating a complex regulatory environment. For example, the 1996 Dickey-Wicker Amendment prohibited federal funding for the creation of embryos for research and the destruction of embryos for “more than allowed for research on fetuses in utero.” [8] Following suit, in 2001, the Bush Administration heavily restricted stem cell lines for research. However, the Stem Cell Research Enhancement Act of 2005 was proposed to help develop ESC research but was ultimately vetoed. [9] Under the Obama administration, in 2009, an executive order lifted restrictions allowing for more development in this field. [10] The flux of research capacity and funding parallels the different cultural perceptions of human dignity of the embryo and how it is socially presented within the country’s research culture. [11]

b.     Ubuntu and Collective Cultures

African bioethics differs from Western individualism because of the different traditions and values. African traditions, as described by individuals from South Africa and supported by some studies in other African countries, including Ghana and Kenya, follow the African moral philosophies of Ubuntu or Botho and Ukama , which “advocates for a form of wholeness that comes through one’s relationship and connectedness with other people in the society,” [12] making autonomy a socially collective concept. In this context, for the community to act autonomously, individuals would come together to decide what is best for the collective. Thus, stem cell research would require examining the value of the research to society as a whole and the use of the embryos as a collective societal resource. If society views the source as part of the collective whole, and opposes using stem cells, compromising the cultural values to pursue research may cause social detachment and stunt research growth. [13] Based on local culture and moral philosophy, the permissibility of stem cell research depends on how embryo, stem cell, and cell line therapies relate to the community as a whole . Ubuntu is the expression of humanness, with the person’s identity drawn from the “’I am because we are’” value. [14] The decision in a collectivistic culture becomes one born of cultural context, and individual decisions give deference to others in the society.

Consent differs in cultures where thought and moral philosophy are based on a collective paradigm. So, applying Western bioethical concepts is unrealistic. For one, Africa is a diverse continent with many countries with different belief systems, access to health care, and reliance on traditional or Western medicines. Where traditional medicine is the primary treatment, the “’restrictive focus on biomedically-related bioethics’” [is] problematic in African contexts because it neglects bioethical issues raised by traditional systems.” [15] No single approach applies in all areas or contexts. Rather than evaluating the permissibility of ESC research according to Western concepts such as the four principles approach, different ethics approaches should prevail.

Another consideration is the socio-economic standing of countries. In parts of South Africa, researchers have not focused heavily on contributing to the stem cell discourse, either because it is not considered health care or a health science priority or because resources are unavailable. [16] Each country’s priorities differ given different social, political, and economic factors. In South Africa, for instance, areas such as maternal mortality, non-communicable diseases, telemedicine, and the strength of health systems need improvement and require more focus. [17] Stem cell research could benefit the population, but it also could divert resources from basic medical care. Researchers in South Africa adhere to the National Health Act and Medicines Control Act in South Africa and international guidelines; however, the Act is not strictly enforced, and there is no clear legislation for research conduct or ethical guidelines. [18]

Some parts of Africa condemn stem cell research. For example, 98.2 percent of the Tunisian population is Muslim. [19] Tunisia does not permit stem cell research because of moral conflict with a Fatwa. Religion heavily saturates the regulation and direction of research. [20] Stem cell use became permissible for reproductive purposes only recently, with tight restrictions preventing cells from being used in any research other than procedures concerning ART/IVF.  Their use is conditioned on consent, and available only to married couples. [21] The community's receptiveness to stem cell research depends on including communitarian African ethics.

c.     Asia

Some Asian countries also have a collective model of ethics and decision making. [22] In China, the ethics model promotes a sincere respect for life or human dignity, [23] based on protective medicine. This model, influenced by Traditional Chinese Medicine (TCM), [24] recognizes Qi as the vital energy delivered via the meridians of the body; it connects illness to body systems, the body’s entire constitution, and the universe for a holistic bond of nature, health, and quality of life. [25] Following a protective ethics model, and traditional customs of wholeness, investment in stem cell research is heavily desired for its applications in regenerative therapies, disease modeling, and protective medicines. In a survey of medical students and healthcare practitioners, 30.8 percent considered stem cell research morally unacceptable while 63.5 percent accepted medical research using human embryonic stem cells. Of these individuals, 89.9 percent supported increased funding for stem cell research. [26] The scientific community might not reflect the overall population. From 1997 to 2019, China spent a total of $576 million (USD) on stem cell research at 8,050 stem cell programs, increased published presence from 0.6 percent to 14.01 percent of total global stem cell publications as of 2014, and made significant strides in cell-based therapies for various medical conditions. [27] However, while China has made substantial investments in stem cell research and achieved notable progress in clinical applications, concerns linger regarding ethical oversight and transparency. [28] For example, the China Biosecurity Law, promoted by the National Health Commission and China Hospital Association, attempted to mitigate risks by introducing an institutional review board (IRB) in the regulatory bodies. 5800 IRBs registered with the Chinese Clinical Trial Registry since 2021. [29] However, issues still need to be addressed in implementing effective IRB review and approval procedures.

The substantial government funding and focus on scientific advancement have sometimes overshadowed considerations of regional cultures, ethnic minorities, and individual perspectives, particularly evident during the one-child policy era. As government policy adapts to promote public stability, such as the change from the one-child to the two-child policy, [30] research ethics should also adapt to ensure respect for the values of its represented peoples.

Japan is also relatively supportive of stem cell research and therapies. Japan has a more transparent regulatory framework, allowing for faster approval of regenerative medicine products, which has led to several advanced clinical trials and therapies. [31] South Korea is also actively engaged in stem cell research and has a history of breakthroughs in cloning and embryonic stem cells. [32] However, the field is controversial, and there are issues of scientific integrity. For example, the Korean FDA fast-tracked products for approval, [33] and in another instance, the oocyte source was unclear and possibly violated ethical standards. [34] Trust is important in research, as it builds collaborative foundations between colleagues, trial participant comfort, open-mindedness for complicated and sensitive discussions, and supports regulatory procedures for stakeholders. There is a need to respect the culture’s interest, engagement, and for research and clinical trials to be transparent and have ethical oversight to promote global research discourse and trust.

d.     Middle East

Countries in the Middle East have varying degrees of acceptance of or restrictions to policies related to using embryonic stem cells due to cultural and religious influences. Saudi Arabia has made significant contributions to stem cell research, and conducts research based on international guidelines for ethical conduct and under strict adherence to guidelines in accordance with Islamic principles. Specifically, the Saudi government and people require ESC research to adhere to Sharia law. In addition to umbilical and placental stem cells, [35] Saudi Arabia permits the use of embryonic stem cells as long as they come from miscarriages, therapeutic abortions permissible by Sharia law, or are left over from in vitro fertilization and donated to research. [36] Laws and ethical guidelines for stem cell research allow the development of research institutions such as the King Abdullah International Medical Research Center, which has a cord blood bank and a stem cell registry with nearly 10,000 donors. [37] Such volume and acceptance are due to the ethical ‘permissibility’ of the donor sources, which do not conflict with religious pillars. However, some researchers err on the side of caution, choosing not to use embryos or fetal tissue as they feel it is unethical to do so. [38]

Jordan has a positive research ethics culture. [39] However, there is a significant issue of lack of trust in researchers, with 45.23 percent (38.66 percent agreeing and 6.57 percent strongly agreeing) of Jordanians holding a low level of trust in researchers, compared to 81.34 percent of Jordanians agreeing that they feel safe to participate in a research trial. [40] Safety testifies to the feeling of confidence that adequate measures are in place to protect participants from harm, whereas trust in researchers could represent the confidence in researchers to act in the participants’ best interests, adhere to ethical guidelines, provide accurate information, and respect participants’ rights and dignity. One method to improve trust would be to address communication issues relevant to ESC. Legislation surrounding stem cell research has adopted specific language, especially concerning clarification “between ‘stem cells’ and ‘embryonic stem cells’” in translation. [41] Furthermore, legislation “mandates the creation of a national committee… laying out specific regulations for stem-cell banking in accordance with international standards.” [42] This broad regulation opens the door for future global engagement and maintains transparency. However, these regulations may also constrain the influence of research direction, pace, and accessibility of research outcomes.

e.     Europe

In the European Union (EU), ethics is also principle-based, but the principles of autonomy, dignity, integrity, and vulnerability are interconnected. [43] As such, the opportunity for cohesion and concessions between individuals’ thoughts and ideals allows for a more adaptable ethics model due to the flexible principles that relate to the human experience The EU has put forth a framework in its Convention for the Protection of Human Rights and Dignity of the Human Being allowing member states to take different approaches. Each European state applies these principles to its specific conventions, leading to or reflecting different acceptance levels of stem cell research. [44]

For example, in Germany, Lebenzusammenhang , or the coherence of life, references integrity in the unity of human culture. Namely, the personal sphere “should not be subject to external intervention.” [45]  Stem cell interventions could affect this concept of bodily completeness, leading to heavy restrictions. Under the Grundgesetz, human dignity and the right to life with physical integrity are paramount. [46] The Embryo Protection Act of 1991 made producing cell lines illegal. Cell lines can be imported if approved by the Central Ethics Commission for Stem Cell Research only if they were derived before May 2007. [47] Stem cell research respects the integrity of life for the embryo with heavy specifications and intense oversight. This is vastly different in Finland, where the regulatory bodies find research more permissible in IVF excess, but only up to 14 days after fertilization. [48] Spain’s approach differs still, with a comprehensive regulatory framework. [49] Thus, research regulation can be culture-specific due to variations in applied principles. Diverse cultures call for various approaches to ethical permissibility. [50] Only an adaptive-deliberative model can address the cultural constructions of self and achieve positive, culturally sensitive stem cell research practices. [51]

II.     Religious Perspectives on ESC

Embryonic stem cell sources are the main consideration within religious contexts. While individuals may not regard their own religious texts as authoritative or factual, religion can shape their foundations or perspectives.

The Qur'an states:

“And indeed We created man from a quintessence of clay. Then We placed within him a small quantity of nutfa (sperm to fertilize) in a safe place. Then We have fashioned the nutfa into an ‘alaqa (clinging clot or cell cluster), then We developed the ‘alaqa into mudgha (a lump of flesh), and We made mudgha into bones, and clothed the bones with flesh, then We brought it into being as a new creation. So Blessed is Allah, the Best of Creators.” [52]

Many scholars of Islam estimate the time of soul installment, marked by the angel breathing in the soul to bring the individual into creation, as 120 days from conception. [53] Personhood begins at this point, and the value of life would prohibit research or experimentation that could harm the individual. If the fetus is more than 120 days old, the time ensoulment is interpreted to occur according to Islamic law, abortion is no longer permissible. [54] There are a few opposing opinions about early embryos in Islamic traditions. According to some Islamic theologians, there is no ensoulment of the early embryo, which is the source of stem cells for ESC research. [55]

In Buddhism, the stance on stem cell research is not settled. The main tenets, the prohibition against harming or destroying others (ahimsa) and the pursuit of knowledge (prajña) and compassion (karuna), leave Buddhist scholars and communities divided. [56] Some scholars argue stem cell research is in accordance with the Buddhist tenet of seeking knowledge and ending human suffering. Others feel it violates the principle of not harming others. Finding the balance between these two points relies on the karmic burden of Buddhist morality. In trying to prevent ahimsa towards the embryo, Buddhist scholars suggest that to comply with Buddhist tenets, research cannot be done as the embryo has personhood at the moment of conception and would reincarnate immediately, harming the individual's ability to build their karmic burden. [57] On the other hand, the Bodhisattvas, those considered to be on the path to enlightenment or Nirvana, have given organs and flesh to others to help alleviate grieving and to benefit all. [58] Acceptance varies on applied beliefs and interpretations.

Catholicism does not support embryonic stem cell research, as it entails creation or destruction of human embryos. This destruction conflicts with the belief in the sanctity of life. For example, in the Old Testament, Genesis describes humanity as being created in God’s image and multiplying on the Earth, referencing the sacred rights to human conception and the purpose of development and life. In the Ten Commandments, the tenet that one should not kill has numerous interpretations where killing could mean murder or shedding of the sanctity of life, demonstrating the high value of human personhood. In other books, the theological conception of when life begins is interpreted as in utero, [59] highlighting the inviolability of life and its formation in vivo to make a religious point for accepting such research as relatively limited, if at all. [60] The Vatican has released ethical directives to help apply a theological basis to modern-day conflicts. The Magisterium of the Church states that “unless there is a moral certainty of not causing harm,” experimentation on fetuses, fertilized cells, stem cells, or embryos constitutes a crime. [61] Such procedures would not respect the human person who exists at these stages, according to Catholicism. Damages to the embryo are considered gravely immoral and illicit. [62] Although the Catholic Church officially opposes abortion, surveys demonstrate that many Catholic people hold pro-choice views, whether due to the context of conception, stage of pregnancy, threat to the mother’s life, or for other reasons, demonstrating that practicing members can also accept some but not all tenets. [63]

Some major Jewish denominations, such as the Reform, Conservative, and Reconstructionist movements, are open to supporting ESC use or research as long as it is for saving a life. [64] Within Judaism, the Talmud, or study, gives personhood to the child at birth and emphasizes that life does not begin at conception: [65]

“If she is found pregnant, until the fortieth day it is mere fluid,” [66]

Whereas most religions prioritize the status of human embryos, the Halakah (Jewish religious law) states that to save one life, most other religious laws can be ignored because it is in pursuit of preservation. [67] Stem cell research is accepted due to application of these religious laws.

We recognize that all religions contain subsets and sects. The variety of environmental and cultural differences within religious groups requires further analysis to respect the flexibility of religious thoughts and practices. We make no presumptions that all cultures require notions of autonomy or morality as under the common morality theory , which asserts a set of universal moral norms that all individuals share provides moral reasoning and guides ethical decisions. [68] We only wish to show that the interaction with morality varies between cultures and countries.

III.     A Flexible Ethical Approach

The plurality of different moral approaches described above demonstrates that there can be no universally acceptable uniform law for ESC on a global scale. Instead of developing one standard, flexible ethical applications must be continued. We recommend local guidelines that incorporate important cultural and ethical priorities.

While the Declaration of Helsinki is more relevant to people in clinical trials receiving ESC products, in keeping with the tradition of protections for research subjects, consent of the donor is an ethical requirement for ESC donation in many jurisdictions including the US, Canada, and Europe. [69] The Declaration of Helsinki provides a reference point for regulatory standards and could potentially be used as a universal baseline for obtaining consent prior to gamete or embryo donation.

For instance, in Columbia University’s egg donor program for stem cell research, donors followed standard screening protocols and “underwent counseling sessions that included information as to the purpose of oocyte donation for research, what the oocytes would be used for, the risks and benefits of donation, and process of oocyte stimulation” to ensure transparency for consent. [70] The program helped advance stem cell research and provided clear and safe research methods with paid participants. Though paid participation or covering costs of incidental expenses may not be socially acceptable in every culture or context, [71] and creating embryos for ESC research is illegal in many jurisdictions, Columbia’s program was effective because of the clear and honest communications with donors, IRBs, and related stakeholders.  This example demonstrates that cultural acceptance of scientific research and of the idea that an egg or embryo does not have personhood is likely behind societal acceptance of donating eggs for ESC research. As noted, many countries do not permit the creation of embryos for research.

Proper communication and education regarding the process and purpose of stem cell research may bolster comprehension and garner more acceptance. “Given the sensitive subject material, a complete consent process can support voluntary participation through trust, understanding, and ethical norms from the cultures and morals participants value. This can be hard for researchers entering countries of different socioeconomic stability, with different languages and different societal values. [72]

An adequate moral foundation in medical ethics is derived from the cultural and religious basis that informs knowledge and actions. [73] Understanding local cultural and religious values and their impact on research could help researchers develop humility and promote inclusion.

IV.     Concerns

Some may argue that if researchers all adhere to one ethics standard, protection will be satisfied across all borders, and the global public will trust researchers. However, defining what needs to be protected and how to define such research standards is very specific to the people to which standards are applied. We suggest that applying one uniform guide cannot accurately protect each individual because we all possess our own perceptions and interpretations of social values. [74] Therefore, the issue of not adjusting to the moral pluralism between peoples in applying one standard of ethics can be resolved by building out ethics models that can be adapted to different cultures and religions.

Other concerns include medical tourism, which may promote health inequities. [75] Some countries may develop and approve products derived from ESC research before others, compromising research ethics or drug approval processes. There are also concerns about the sale of unauthorized stem cell treatments, for example, those without FDA approval in the United States. Countries with robust research infrastructures may be tempted to attract medical tourists, and some customers will have false hopes based on aggressive publicity of unproven treatments. [76]

For example, in China, stem cell clinics can market to foreign clients who are not protected under the regulatory regimes. Companies employ a marketing strategy of “ethically friendly” therapies. Specifically, in the case of Beike, China’s leading stem cell tourism company and sprouting network, ethical oversight of administrators or health bureaus at one site has “the unintended consequence of shifting questionable activities to another node in Beike's diffuse network.” [77] In contrast, Jordan is aware of stem cell research’s potential abuse and its own status as a “health-care hub.” Jordan’s expanded regulations include preserving the interests of individuals in clinical trials and banning private companies from ESC research to preserve transparency and the integrity of research practices. [78]

The social priorities of the community are also a concern. The ISSCR explicitly states that guidelines “should be periodically revised to accommodate scientific advances, new challenges, and evolving social priorities.” [79] The adaptable ethics model extends this consideration further by addressing whether research is warranted given the varying degrees of socioeconomic conditions, political stability, and healthcare accessibilities and limitations. An ethical approach would require discussion about resource allocation and appropriate distribution of funds. [80]

While some religions emphasize the sanctity of life from conception, which may lead to public opposition to ESC research, others encourage ESC research due to its potential for healing and alleviating human pain. Many countries have special regulations that balance local views on embryonic personhood, the benefits of research as individual or societal goods, and the protection of human research subjects. To foster understanding and constructive dialogue, global policy frameworks should prioritize the protection of universal human rights, transparency, and informed consent. In addition to these foundational global policies, we recommend tailoring local guidelines to reflect the diverse cultural and religious perspectives of the populations they govern. Ethics models should be adapted to local populations to effectively establish research protections, growth, and possibilities of stem cell research.

For example, in countries with strong beliefs in the moral sanctity of embryos or heavy religious restrictions, an adaptive model can allow for discussion instead of immediate rejection. In countries with limited individual rights and voice in science policy, an adaptive model ensures cultural, moral, and religious views are taken into consideration, thereby building social inclusion. While this ethical consideration by the government may not give a complete voice to every individual, it will help balance policies and maintain the diverse perspectives of those it affects. Embracing an adaptive ethics model of ESC research promotes open-minded dialogue and respect for the importance of human belief and tradition. By actively engaging with cultural and religious values, researchers can better handle disagreements and promote ethical research practices that benefit each society.

This brief exploration of the religious and cultural differences that impact ESC research reveals the nuances of relative ethics and highlights a need for local policymakers to apply a more intense adaptive model.

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[5] Concerning the moral philosophies of stem cell research, our paper does not posit a personal moral stance nor delve into the “when” of human life begins. To read further about the philosophical debate, consider the following sources:

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[7] Socially, at its core, the Western approach to ethics is widely principle-based, autonomy being one of the key factors to ensure a fundamental respect for persons within research. For information regarding autonomy in research, see: Department of Health, Education, and Welfare, & National Commission for the Protection of Human Subjects of Biomedical and Behavioral Research (1978). The Belmont Report. Ethical principles and guidelines for the protection of human subjects of research.; For a more in-depth review of autonomy within the US, see: Beauchamp, T. L., & Childress, J. F. (1994). Principles of Biomedical Ethics . Oxford University Press.

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[9] Stem Cell Research Enhancement Act of 2005, H. R. 810, 109 th Cong. (2001). https://www.govtrack.us/congress/bills/109/hr810/text ; Bush, G. W. (2006, July 19). Message to the House of Representatives . National Archives and Records Administration. https://georgewbush-whitehouse.archives.gov/news/releases/2006/07/20060719-5.html

[10] National Archives and Records Administration. (2009, March 9). Executive order 13505 -- removing barriers to responsible scientific research involving human stem cells . National Archives and Records Administration. https://obamawhitehouse.archives.gov/the-press-office/removing-barriers-responsible-scientific-research-involving-human-stem-cells

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[13] Source for further reading: Tangwa G. B. (2007). Moral status of embryonic stem cells: perspective of an African villager. Bioethics , 21(8), 449–457. https://doi.org/10.1111/j.1467-8519.2007.00582.x , see also Mnisi, F. M. (2020). An African analysis based on ethics of Ubuntu - are human embryonic stem cell patents morally justifiable? African Insight , 49 (4).

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[17] Department of Health Republic of South Africa. (2021). Health Research Priorities (revised) for South Africa 2021-2024 . National Health Research Strategy. https://www.health.gov.za/wp-content/uploads/2022/05/National-Health-Research-Priorities-2021-2024.pdf

[18] Oosthuizen, H. (2013). Legal and Ethical Issues in Stem Cell Research in South Africa. In: Beran, R. (eds) Legal and Forensic Medicine. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-32338-6_80 , see also: Gaobotse G (2018) Stem Cell Research in Africa: Legislation and Challenges. J Regen Med 7:1. doi: 10.4172/2325-9620.1000142

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[21] Kooli, C. Review of assisted reproduction techniques, laws, and regulations in Muslim countries.  Middle East Fertil Soc J   24 , 8 (2020). https://doi.org/10.1186/s43043-019-0011-0 ; Gaobotse, G. (2018) Stem Cell Research in Africa: Legislation and Challenges. J Regen Med 7:1. doi: 10.4172/2325-9620.1000142

[22] Pang M. C. (1999). Protective truthfulness: the Chinese way of safeguarding patients in informed treatment decisions. Journal of medical ethics , 25(3), 247–253. https://doi.org/10.1136/jme.25.3.247

[23] Wang, L., Wang, F., & Zhang, W. (2021). Bioethics in China’s biosecurity law: Forms, effects, and unsettled issues. Journal of law and the biosciences , 8(1).  https://doi.org/10.1093/jlb/lsab019 https://academic.oup.com/jlb/article/8/1/lsab019/6299199

[24] Wang, Y., Xue, Y., & Guo, H. D. (2022). Intervention effects of traditional Chinese medicine on stem cell therapy of myocardial infarction.  Frontiers in pharmacology ,  13 , 1013740. https://doi.org/10.3389/fphar.2022.1013740

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[30] Chen, H., Wei, T., Wang, H.  et al.  Association of China’s two-child policy with changes in number of births and birth defects rate, 2008–2017.  BMC Public Health   22 , 434 (2022). https://doi.org/10.1186/s12889-022-12839-0

[31] Azuma, K. Regulatory Landscape of Regenerative Medicine in Japan.  Curr Stem Cell Rep   1 , 118–128 (2015). https://doi.org/10.1007/s40778-015-0012-6

[32] Harris, R. (2005, May 19). Researchers Report Advance in Stem Cell Production . NPR. https://www.npr.org/2005/05/19/4658967/researchers-report-advance-in-stem-cell-production

[33] Park, S. (2012). South Korea steps up stem-cell work.  Nature . https://doi.org/10.1038/nature.2012.10565

[34] Resnik, D. B., Shamoo, A. E., & Krimsky, S. (2006). Fraudulent human embryonic stem cell research in South Korea: lessons learned.  Accountability in research ,  13 (1), 101–109. https://doi.org/10.1080/08989620600634193 .

[35] Alahmad, G., Aljohani, S., & Najjar, M. F. (2020). Ethical challenges regarding the use of stem cells: interviews with researchers from Saudi Arabia. BMC medical ethics, 21(1), 35. https://doi.org/10.1186/s12910-020-00482-6

[36] Association for the Advancement of Blood and Biotherapies.  https://www.aabb.org/regulatory-and-advocacy/regulatory-affairs/regulatory-for-cellular-therapies/international-competent-authorities/saudi-arabia

[37] Alahmad, G., Aljohani, S., & Najjar, M. F. (2020). Ethical challenges regarding the use of stem cells: Interviews with researchers from Saudi Arabia.  BMC medical ethics ,  21 (1), 35. https://doi.org/10.1186/s12910-020-00482-6

[38] Alahmad, G., Aljohani, S., & Najjar, M. F. (2020). Ethical challenges regarding the use of stem cells: Interviews with researchers from Saudi Arabia. BMC medical ethics , 21(1), 35. https://doi.org/10.1186/s12910-020-00482-6

Culturally, autonomy practices follow a relational autonomy approach based on a paternalistic deontological health care model. The adherence to strict international research policies and religious pillars within the regulatory environment is a great foundation for research ethics. However, there is a need to develop locally targeted ethics approaches for research (as called for in Alahmad, G., Aljohani, S., & Najjar, M. F. (2020). Ethical challenges regarding the use of stem cells: interviews with researchers from Saudi Arabia. BMC medical ethics, 21(1), 35. https://doi.org/10.1186/s12910-020-00482-6), this decision-making approach may help advise a research decision model. For more on the clinical cultural autonomy approaches, see: Alabdullah, Y. Y., Alzaid, E., Alsaad, S., Alamri, T., Alolayan, S. W., Bah, S., & Aljoudi, A. S. (2022). Autonomy and paternalism in Shared decision‐making in a Saudi Arabian tertiary hospital: A cross‐sectional study. Developing World Bioethics , 23 (3), 260–268. https://doi.org/10.1111/dewb.12355 ; Bukhari, A. A. (2017). Universal Principles of Bioethics and Patient Rights in Saudi Arabia (Doctoral dissertation, Duquesne University). https://dsc.duq.edu/etd/124; Ladha, S., Nakshawani, S. A., Alzaidy, A., & Tarab, B. (2023, October 26). Islam and Bioethics: What We All Need to Know . Columbia University School of Professional Studies. https://sps.columbia.edu/events/islam-and-bioethics-what-we-all-need-know

[39] Ababneh, M. A., Al-Azzam, S. I., Alzoubi, K., Rababa’h, A., & Al Demour, S. (2021). Understanding and attitudes of the Jordanian public about clinical research ethics.  Research Ethics ,  17 (2), 228-241.  https://doi.org/10.1177/1747016120966779

[40] Ababneh, M. A., Al-Azzam, S. I., Alzoubi, K., Rababa’h, A., & Al Demour, S. (2021). Understanding and attitudes of the Jordanian public about clinical research ethics.  Research Ethics ,  17 (2), 228-241.  https://doi.org/10.1177/1747016120966779

[41] Dajani, R. (2014). Jordan’s stem-cell law can guide the Middle East.  Nature  510, 189. https://doi.org/10.1038/510189a

[42] Dajani, R. (2014). Jordan’s stem-cell law can guide the Middle East.  Nature  510, 189. https://doi.org/10.1038/510189a

[43] The EU’s definition of autonomy relates to the capacity for creating ideas, moral insight, decisions, and actions without constraint, personal responsibility, and informed consent. However, the EU views autonomy as not completely able to protect individuals and depends on other principles, such as dignity, which “expresses the intrinsic worth and fundamental equality of all human beings.” Rendtorff, J.D., Kemp, P. (2019). Four Ethical Principles in European Bioethics and Biolaw: Autonomy, Dignity, Integrity and Vulnerability. In: Valdés, E., Lecaros, J. (eds) Biolaw and Policy in the Twenty-First Century. International Library of Ethics, Law, and the New Medicine, vol 78. Springer, Cham. https://doi.org/10.1007/978-3-030-05903-3_3

[44] Council of Europe. Convention for the protection of Human Rights and Dignity of the Human Being with regard to the Application of Biology and Medicine: Convention on Human Rights and Biomedicine (ETS No. 164) https://www.coe.int/en/web/conventions/full-list?module=treaty-detail&treatynum=164 (forbidding the creation of embryos for research purposes only, and suggests embryos in vitro have protections.); Also see Drabiak-Syed B. K. (2013). New President, New Human Embryonic Stem Cell Research Policy: Comparative International Perspectives and Embryonic Stem Cell Research Laws in France.  Biotechnology Law Report ,  32 (6), 349–356. https://doi.org/10.1089/blr.2013.9865

[45] Rendtorff, J.D., Kemp, P. (2019). Four Ethical Principles in European Bioethics and Biolaw: Autonomy, Dignity, Integrity and Vulnerability. In: Valdés, E., Lecaros, J. (eds) Biolaw and Policy in the Twenty-First Century. International Library of Ethics, Law, and the New Medicine, vol 78. Springer, Cham. https://doi.org/10.1007/978-3-030-05903-3_3

[46] Tomuschat, C., Currie, D. P., Kommers, D. P., & Kerr, R. (Trans.). (1949, May 23). Basic law for the Federal Republic of Germany. https://www.btg-bestellservice.de/pdf/80201000.pdf

[47] Regulation of Stem Cell Research in Germany . Eurostemcell. (2017, April 26). https://www.eurostemcell.org/regulation-stem-cell-research-germany

[48] Regulation of Stem Cell Research in Finland . Eurostemcell. (2017, April 26). https://www.eurostemcell.org/regulation-stem-cell-research-finland

[49] Regulation of Stem Cell Research in Spain . Eurostemcell. (2017, April 26). https://www.eurostemcell.org/regulation-stem-cell-research-spain

[50] Some sources to consider regarding ethics models or regulatory oversights of other cultures not covered:

Kara MA. Applicability of the principle of respect for autonomy: the perspective of Turkey. J Med Ethics. 2007 Nov;33(11):627-30. doi: 10.1136/jme.2006.017400. PMID: 17971462; PMCID: PMC2598110.

Ugarte, O. N., & Acioly, M. A. (2014). The principle of autonomy in Brazil: one needs to discuss it ...  Revista do Colegio Brasileiro de Cirurgioes ,  41 (5), 374–377. https://doi.org/10.1590/0100-69912014005013

Bharadwaj, A., & Glasner, P. E. (2012). Local cells, global science: The rise of embryonic stem cell research in India . Routledge.

For further research on specific European countries regarding ethical and regulatory framework, we recommend this database: Regulation of Stem Cell Research in Europe . Eurostemcell. (2017, April 26). https://www.eurostemcell.org/regulation-stem-cell-research-europe   

[51] Klitzman, R. (2006). Complications of culture in obtaining informed consent. The American Journal of Bioethics, 6(1), 20–21. https://doi.org/10.1080/15265160500394671 see also: Ekmekci, P. E., & Arda, B. (2017). Interculturalism and Informed Consent: Respecting Cultural Differences without Breaching Human Rights.  Cultura (Iasi, Romania) ,  14 (2), 159–172.; For why trust is important in research, see also: Gray, B., Hilder, J., Macdonald, L., Tester, R., Dowell, A., & Stubbe, M. (2017). Are research ethics guidelines culturally competent?  Research Ethics ,  13 (1), 23-41.  https://doi.org/10.1177/1747016116650235

[52] The Qur'an  (M. Khattab, Trans.). (1965). Al-Mu’minun, 23: 12-14. https://quran.com/23

[53] Lenfest, Y. (2017, December 8). Islam and the beginning of human life . Bill of Health. https://blog.petrieflom.law.harvard.edu/2017/12/08/islam-and-the-beginning-of-human-life/

[54] Aksoy, S. (2005). Making regulations and drawing up legislation in Islamic countries under conditions of uncertainty, with special reference to embryonic stem cell research. Journal of Medical Ethics , 31: 399-403.; see also: Mahmoud, Azza. "Islamic Bioethics: National Regulations and Guidelines of Human Stem Cell Research in the Muslim World." Master's thesis, Chapman University, 2022. https://doi.org/10.36837/ chapman.000386

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[57] Jafari, M., Elahi, F., Ozyurt, S. & Wrigley, T. (2007). 4. Religious Perspectives on Embryonic Stem Cell Research. In K. Monroe, R. Miller & J. Tobis (Ed.),  Fundamentals of the Stem Cell Debate: The Scientific, Religious, Ethical, and Political Issues  (pp. 79-94). Berkeley: University of California Press.  https://escholarship.org/content/qt9rj0k7s3/qt9rj0k7s3_noSplash_f9aca2e02c3777c7fb76ea768ba458f0.pdf https://doi.org/10.1525/9780520940994-005

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[59] There is no explicit religious reference to when life begins or how to conduct research that interacts with the concept of life. However, these are relevant verses pertaining to how the fetus is viewed. (( King James Bible . (1999). Oxford University Press. (original work published 1769))

Jerimiah 1: 5 “Before I formed thee in the belly I knew thee; and before thou camest forth out of the womb I sanctified thee…”

In prophet Jerimiah’s insight, God set him apart as a person known before childbirth, a theme carried within the Psalm of David.

Psalm 139: 13-14 “…Thou hast covered me in my mother's womb. I will praise thee; for I am fearfully and wonderfully made…”

These verses demonstrate David’s respect for God as an entity that would know of all man’s thoughts and doings even before birth.

[60] It should be noted that abortion is not supported as well.

[61] The Vatican. (1987, February 22). Instruction on Respect for Human Life in Its Origin and on the Dignity of Procreation Replies to Certain Questions of the Day . Congregation For the Doctrine of the Faith. https://www.vatican.va/roman_curia/congregations/cfaith/documents/rc_con_cfaith_doc_19870222_respect-for-human-life_en.html

[62] The Vatican. (2000, August 25). Declaration On the Production and the Scientific and Therapeutic Use of Human Embryonic Stem Cells . Pontifical Academy for Life. https://www.vatican.va/roman_curia/pontifical_academies/acdlife/documents/rc_pa_acdlife_doc_20000824_cellule-staminali_en.html ; Ohara, N. (2003). Ethical Consideration of Experimentation Using Living Human Embryos: The Catholic Church’s Position on Human Embryonic Stem Cell Research and Human Cloning. Department of Obstetrics and Gynecology . Retrieved from https://article.imrpress.com/journal/CEOG/30/2-3/pii/2003018/77-81.pdf.

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[79] International Society for Stem Cell Research. (2024). Standards in stem cell research . International Society for Stem Cell Research. https://www.isscr.org/guidelines/5-standards-in-stem-cell-research

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Mifrah Hayath

SM Candidate Harvard Medical School, MS Biotechnology Johns Hopkins University

Olivia Bowers

MS Bioethics Columbia University (Disclosure: affiliated with Voices in Bioethics)

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National Bank of Egypt (S.A.E.) - Ratings Navigator

Mon 20 May, 2024 - 3:51 AM ET

This Ratings Navigator for National Bank of Egypt (S.A.E.) is a visual overview of the key quantitative and qualitative factors we analyse to arrive at an entity’s credit rating, and embodies our commitment to providing clarity to investors. The Navigator is fully aligned with our Rating Criteria, and clearly articulates how rating is constructed.