Bus9036M Project Management-E Banking Systems Assessment Answers

Answer:

The enhancement of commercial banks that could be important financial institutions is significant for a huge number of countries to promote their economic growth of China (Atay, & Apak, 2013). In this case, it is important for commercial banks to provide efforts to improve their organizational performances as well as increase their operation efficiency. With the increasing development of the informative technologies and the internet, a major segment  of financial institutions in the world have used financial innovations in introducing innovative product offerings and expanding scopes of services in order to increase operation efficiency in the long term (Ma, 2012).

The banking system for a country is significant to move the national investments from their saving units to their spending units. If the system financial system of a country is efficient, the system should indicate increment in profitability, including raising funds volumes from savers to borrowers, as well as providing better quality financial services for customers (Turban et al., 2012).

The legal and financial systems in China are not well developed (Sok-Gee, 2011). In this case, the banking system in China may be vulnerable in the aspect of banking survivals in the long term. Meanwhile, the inefficient banking system and banking sector in China, the sick legal system as well as sick financial infrastructures influenced the economic development in China negatively (Sok-Gee, 2011). Hence, it is crucial to research approaches to improve the efficiency of banking system in China with the purpose of making further contributions to the economic expansion in China. Technologies are widely applied in banking systems for a great number of countries in order to improve business growth, increase business profitability as well as gain competitive advantages (Olaoye, & Olarewaju, 2015).

The wide applicability of information and communication technologies in developing countries has promoted performances and improved the customer services delivering efficiency in banking industry (Ongori, & Migiro, 2010). A majority of consumers in China can follow up the banking services and or banking facilities through their electronic devices including their mobile phones and computers in their daily lives (Kalathil, 2017). With the rapidly increasing internet bankers in China and the growing application of the banking systems in Chinese banks, China has a potential to grow its banking industry if the banking technologies are implemented adequately (Atay, & Apak, 2013). In this case, it is significant to research the relations between application of banking technologies and performances of commercial banks in China with the purpose of improving high quality customer services delivery, reducing transaction costs as well as improving performances.

1.2 Research objectives and research questions

The basic objective of this research is to study the relationships and association between banking technologies and performances of commercial banks in China. In order to achieve this objective, this research is guided by two sub issues listed as bellow: 1) assessing influences of credit cards on performances of commercial banks in China; 2). evaluating influences of the e-banking on performances of commercial banks in China.

Based on the research objective, the following research questions are outlined.

• How does the usage of credit cards influence the performances of commercial banks in China?
• How does the usage of e-banking influence the performances of commercial banks in China?
• How does the usage of e-banking influence the operational risk of commercial banks in China?
• How does the usage of application of credit card the operational risk of commercial banks in China?

There are four hypotheses in this research.

Hypothesis 1: There is a positive link between the application of credit cards and the performance of commercial banks in China.

Hypothesis 2: There is a positive link between the application of credit cards and operational risks of commercial banks in China.

Hypothesis 3: There is a positive link between the application of e-banking systems and the performance of commercial banks in China.

Hypothesis 4: There is a positive link between the application of e-banking systems and operational risks of commercial banks in China.

1.3 Research design 

DeYoung, Lang and Nolle (2007) collect data from both the primary and secondary resources. In this case, this study gathered dataset from the primary resources in the forms of interview and questionnaire, as well as secondary resources in the forms of literature review and the annual reports from the two case commercial banks in China. Stoica, Mehdian and Sargu (2015) analyzed data through using the data development analysis method that includes a wide range of mathematical linear programming models, whereas DeYoung, Lang and Nolle (2007) analysed their data by applying the SPSS tool. This study analyzed data collected from questionnaire through using mathematical operations and SPSS tool. 

1.3 Structure outline

This research contains seven sections. The first part is the introduction of this research that outlines the research background, study significance as well as research purpose and questions. The second part is the literature review section that review reliable articles collected from reliable resources relevant to the influences of applying banking technologies on performances of commercial banks in other countries and China. Since there is research gap and few studies researched the relations between the application of banking technologies and performances of commercial banks in China, this section reviews articles researching influences of applying banking technologies on performances of commercial banks in other countries as references.

The third part is the methodology section, which outlines design of this research, researching approaches, the method of collecting data as well as how to analyze collected data. The fourth part is the analysis of data, which includes the details of data analysis and the research results. The fifth part is the discussion and the recommendation part, which provides recommendations for commercial banks in China to enhance their organizational performances.

This chapter reviews book and journal articles relevant to influences of applying banking technologies on performances of commercial banks in other countries and China.

2.1 The application of credit card and banks’ performances

Credit card is a type of electronic payment card that is issued and managed by a specific commercial bank or other types of financial institutions with part or with full functions in “individual consuming payment, credit loan, transfer and settlement of account, cash deposit and withdrawal” (Liu, 2011, p, 371). In this case, consumers can use credit cards in their general payments, such as the settlements of accounts, cash deposits, cash withdrawals, as well as daily payments. As an important non-cash payment tool and a part of the credit service, the application of credit cards provides convenience for consumers in the aspect of banking transactions and the postponement of payments (Matthew, 2009). With the concept of over consuming as well as the increasing of household incomes in China, the usage of credit cards in China has experienced the rapid growth (Yin, Song., & Tang, 2014).

The economy of China has transitioned from the command to the market economy under economic reforms (Worthington, Thompson, & Stewart, 2011). Driven by the market economy, the consumer spending in China is increasing while the consumer saving in banks is decreasing (Peng, 2012). The application of credit card and the idea of debt can promote consumer expenditure and providing opportunities for Chinese people to spend tomorrow's money and borrow from banks (Worthington, Thompson, & Stewart, 2011).

When individuals borrow money from banks and spend more money through credit cards, banks can increase its performances in the short term through collecting interests and increasing the cycle of cash flow. Meanwhile, banks can improve their organizational performances in the long term through meeting consumers’ demands of borrowing money conveniently (Sharpe, Yao, & Liao, 2012). Chinese credit cards holders consider that credit cards are more convenient and much easier than using cash in daily lives, especially when traveling abroad and shopping online (Worthington, Thompson, & Stewart, 2011).

Considering that, there is little literature focus on the influence of application of credit cards system on the performances of commercial banks in China. This study researched the influence of application of credit cards system on the performances of commercial banks in other countries as references. Akers et al., (2005) research the development of the credit card industry and argue that credit card allow card holders to purchase products and or services on the basis of their promises, instead of cashes, since credit cards are payment cards that are issued and promised by specific banks to consumers.

Odhiambo and Memba (2012) study relationships between the application of credit cards and consumer satisfactions of cards holders with the purpose of assessing whether the application and adoption of credit cards can lead to the increasing of bank revenues. Their research results indicate that the adoption of credit cards in commercial banks can increase consumer satisfactions, which can assist commercial banks to increase their returns on assets as well as raise their revenues (Odhiambo, Memba, 2012).  

Though the application of credit cards can lead to the improvement of the performances of commercial banks, it may cause in credit risks. Credit risks are the major risks faced by all financial institutions (Jin, Yu, & Mi, 2012; Wang Gao, & Zhang, 2013). Commercial banks cannot identify the credit information of each credit card holder. Therefore, they cannot control the potential credit risks effectively (Li et al., 2014). When credit card holders cannot repay their debt or meet their liabilities, commercial banks that issue these credit cards have to undertake the costs.

2.2 The application of e-banking systems and performances of commercial banks

2.2.1 The application of e-banking in America and European countries

The e-banking systems, which also referred as the internet banking or the online banking, make full use of the information technologies and the internet with the purpose of delivering banking products and or services to targeted audiences. (Turban et al., 2012). Wells Fargo introduced the first online banking service in 1995 (DeYoung, Lang, & Nolle, 2007). 

Furst, Lang, and Nolle (2002) point that banks tend to operate a transnational internet web site if these banks are large, operated adequately with high level of return on equity as well as low non-interest expenses, located in downtown areas, affiliated with bank holding groups with high branch networking expenses. The significance of the application of electronic based banking products or e-banking systems is increasing. It is understandable that the application of e-banking systems can lead to low cost and high return for banks (Goh, & Kauffman, 2013). There are a great number of researches addressing the influences of the application of e-banking systems on the profitability of banks. These researches can be classified into two groups based on the level of development of countries.

There are studies indicate that the application of advanced technologies, including e-banking systems can increase the overall profitability of banks in America and European countries (Ciciretti,, Hasan, & Zazzara, 2009; DeYoung, 2001; DeYoung, Lang, & Nolle, 2007; Goh, & Kauffman, 2013; Hernando & Nieto, 2007; Pigni, Ravarini., Tagliavini,, & Vitari, 2002; Sullivan, 2000; Weigelt, & Sarkar, 2012).

These researches show that it is crucial for banks to apply e-banking systems and provide e-banking products and services since it has a prominent positive contribution to the performances of banks and the increase of their competition in the banking industry. In this case, the application and the range of the e-banking systems make banks build the orientations of technological innovation up (Ciciretti,, Hasan, & Zazzara, 2009). Ciciretti, Hasan, and Zazzara (2009) argue that the usage of technology based products, especially the e-banking systems can help banks to reduce their operational risks.

DeYoung, Lang, and Nolle (2007) tested influences of internet banking channels on financial performances, production processes as well as the product mixes at small commercial banks in America between 1999 and 2001. Their study results indicate that that the application of internet or e-banking systems in small commercial banks can enhance their profitability mainly through increasing revenues from depositing service changes (DeYoung, Lang, & Nolle, 2007).

The application of e-banking system can associated with all movements of depositing from checking accounts to the market depositing accounts, which can increase the usage of brokered deposits as well as the average salary rates of bank employees (DeYoung, Lang, & Nolle, 2007). Ciciretti, Hasan, and Zazzara, (2009) research the use of internet technology in banks and provide evidences for banks’ application of new internet technologies and relevant innovative banking services and products as they are relevant to performances of these banks. The research results of Ciciretti, Hasan, and Zazzara, (2009) indicate that there is a strong positive correlation between the application of internet technologies and bank returns and there is a negative correlation between the application of internet banking systems and bank risks.

In America, the commercial and retailing banking industry is the most information technology intensive industry for at least forty years (Goh, & Kauffman, 2013). Goh, and Kauffman (2013) research the application the internet technology in banking management and performances of banks in America. Goh, and Kauffman (2013) argue that the application of the internet technology in banks can cut costs and improve profitability of banks in America, but it also relates to operational risks as well as opportunism risks.

Banking business is transaction intensive and an important portion of the banking operational cost involves the handing of information and the process of transactions (Goh, & Kauffman, 2013). The application of information technologies in commercial and retailing banking industry can support a wide range of banking operations, from front office services that are consumer oriented to financial risks management to back office management (Goh, & Kauffman, 2013). The introduction and the application of the internet banking system to support the online transactions can help banks to reduce their transaction costs, research new and younger customers (Berger, 2003).

Hernando and Nieto (2007) research e-banking systems in Spain in order to identify whether the usage of online banking has impact on banking performances. The result of the research indicates that the adoption of online banking has positive impact on the profitability and the overall financial performances of banks in Spain (Hernando, & Nieto, 2007). Meanwhile, these positive impacts tend to be significant in three years after the adoption of the online banking system. In other words, the application of the online banking or internet banking can increase banking profitability but these impacts take time to appear.  

2.2.2 The application of e-banking in developing countries

There are researches show that the application of e-banking systems can enhance the profitability of banks in developing countries, such as Jordan (Khrawish, & Al-Sadi, 2011), Pakistan (Sumra, Manzoor, Sumra, & Abbas, 2011), India (Malhotra, & Singh, 2009), Kenya (Kathuo, Rotich & Anyango, 2015), Ghana (Angko, 2013; Leckson-Leckey, Osei, & Harvey, 2011), Nigeria (Ugwueze & Nwezeaku, 2016) as well as Asian countries (Hosein, 2013).

Angko (2013)argues that the adoption of e-banking can bring benefits for commercial banks in Wa municipality, Ghana. On the basis of his research results, the usage of the internet banking systems makes consumers implement banking activities without limitations of banking work hours as well as do not visit physical banks (Angko, 2013). Meanwhile, the usage of online banking or e-banking can help customers to access banking products and or services flexibly and instantly, which is convenient and effective for customers (Angko, 2013).

In this case, commercial banks can increase their customer satisfaction, which may enhance customer loyalty, increase banking revenues and returns on assets (Angko, 2013). Similar with Angko’s research findings, research results of Ugwueze and Nwezeaku (2016) indicate that the adoption of e-banking can improve banking performances in Nigeria since it can increase consumer satisfaction.

Though the application of the internet banking can provide effectively delivering channels for traditional banks, as the newest delivering channel applied by banks in several developed and developing nations, the use of mobile banking tends to have a significant influence on the performances of these banks (Safeena, Date, Kammani, Hundewale, 2012). The expansion and the spread of the smart phone usage in the market has increased the demands for mobile banking products and services, which promote more banks and micro-finance institutions, e-banking services providers to apply e-banking systems with a wide range of products (Shaikh, 2013).

Kathuo, Rotich and Anyango (2015) researched the impacts of the application of mobile banking system on financial performances of banking institutions in Kenya. On the basis of their research results, there is a positive relations between the adoption of mobile banking and the financial performances of banking institutions in Kenya since it can reduce banking transaction time as well as transaction distances. Leckson, Osei and Harvey (2011) research the influence of adoption and investments in information technologies on banking performances in Ghana. There research results indicate that investments in information communications technologies can help banks to increase their profitability and improve their performances (Leckson, Osei & Harvey, 2011).  

2.2.3 The application of e-banking in China

The application of the e-banking system can enable banking customers to conduct banking transactions and check their banking accounts without going to the brick and mortar institutions (Kurnia, Peng, & Liu, 2010). E-banking system can bring benefits for banks and improve the performances of banks through providing convenience, fast, low cost as well as round-the-clock internet banking services (Ma, 2012). Meanwhile, the application of e-banking system can help commercial banks to improve their productivity gains, reduce relevant transaction costs, improve customer services and provide better flexibility to fulfill the ever-changing demands of customers (Turban et al., 2012). The use of e banking can enable banks to compete with its competitors more effectively in the complicated changing external environment (Turban et al., 2012).

Ma (2012) researches and evaluates the serviceability as well as the reliability of e banking to hamper customer satisfaction in China. The application of the e-banking system can make consumers to take banking transactions whenever, wherever, as well as however (Ma, 2012). With less consumers visit the physical banks in their daily lives, banks can gain benefits from lower banking operation costs through providing online banking services that require less employees and less physical branches (Ma., 2012).

Meanwhile, the application of e-banking system can improve customer satisfaction (Ma, & Zhao, 2012). In other words, the application of online banking system can lead to mutual benefits as well as win-win outcomes for both banks and their customers. On the one hand, the use of e banking can meet the consumers’ needs for fast, convenience and round-the-clock banking services. On the other hand, the application of online banking system can bring financial benefits for banks through enhancing consumers’ satisfaction as well as cut banking operation costs through less physical branches and fewer employees.

Taking consideration of the benefits of applying e-banking system in the banking industry, commercial banks in China attach great importance to expand their internet banking networks, raise funds, improve banking technologies, manage human resources effectively with the purpose of improving their services and performances in the long term (Yuan, & Seok, 2010). With the fast development of the information technologies and banking technologies, e banking has played a significant and central role in the aspect of electrical payment field that offering the online transaction platforms for a wide range of e-commerce and e-business applications (Ma, 2012).

Though the application of the e-banking system can improve performances of banks, there are barriers in the process of adopting e-banking systems in China. E banking which is on the basis of the internet and information technology is not new for Chinese people, but some of them still not known to it because of the digital divides and the different levels of internet experiences and environments in the Chinese context (Atay, & Apak, 2013). In this case, it is crucial for managers and decision makers in the banking industry to understand how Chinese people perceive e-banking system with the purpose of facilitate the growth and prosperity e-banking system (Hua, 2009; Kurnia, Peng, & Liu, 2010).

Laforet, & Li (2005) researched the attitudes of Chinese customers towards e-banking, including internet and mobile banking, in China. Based on their survey, the adoption and the diffusion of the e-banking system is not fast thought it could leap frog the technology development phase through learning from experiences from developed countries. The perceived risks of using e banking were high, which makes consumers not to adopt and use e-banking products (Zhao et al., 2008). Their research indicates that the identified risks are impacted by Chinese culture, which makes Chinese banks cannot follow the pattern of those developed countries.

Kurnia, Peng, & Liu (2010) applied the technology organization environment framework to study the adoption of e banking in Chinese context to detect the barriers for Chinese consumers to use e banking. Because of their research, the application can promote the financial growth of Chinese banks, but there are barriers for consumers to adopt e banking. These barriers include customers’ security concerns, the issue of limited infrastructure, high uncertainties as well as lack of trust.

The development of the online banking system applied by commercial banks in China improves their performances, but the adoption of online banking systems for its competitors, such as internet financial companies in China threaten their business expansions and financial performances (Lv, 2016). The establishment and the development of different types of internet financial platforms and products in China has threatened the performances of Chinese commercial banks, especially the value-added services provided by lipay and the Celestica fund (Bai, 2014; Lv, 2016). On the one hand, the fast development of the internet technology and the online banking system has weakened the financial intermediary role of commercial banks in China (Lv, 2016). The network technologies reduce the costs of banking transactions as well as make it easy for organizations to collect information (Ye, 2014).

In this case, the demands for commercial banks to relevant finance intermediary services are declining (Lv, 2016). In the process of traditional financing and banking transactions, the significant challenge is to communicate information about the supply as well as the demands of funds in the real time (Lei, 2014). Commercial banks, as the major financial intermediaries in daily economic lives, are the distributing centers of relevant commercial activities in the supply and the demand of capital information (Lv, 2016). At the same time, Commercial banks have formed their economies of scale in the practices of management in the long term (Ye, 2014).

However, the capital information transmissions as well as modes of transmissions have changed because of the development of the internet and the online banking system (Lv, 2016). The payment intermediary statuses of commercial banks are based on the non-uniformity of the capital supply and demands in the dimensions of time and space (Lei, 2014). The development and the popularity of the internet and informative technologies breaks the restrictions of space as well as time, which treats the payment processes of the central positions of commercial banks (Lv, 2016). On the other hand, the fast development of internet payment platforms also influences the income sources of commercial banks in China (Lv, 2016). These third party payment platforms in China attracted a great number of consumers, which can reduce the profits space of commercials banks (Lv, 2016; Ye, 2014).

2.3 Research gaps

Because of the literature reviewed, it is noted that there are many researches attach great importance to influences of banking technologies application and improvement on the operation costs and sales volumes of banks in developed countries and many developing countries. These banking technologies include credit card services,and e-banking services. For example, Ciciretti,, Hasan, & Zazzara (2009), DeYoung, (2001), DeYoung, Lang, and Nolle (2007), Goh, & Kauffman (2013), Hernando and Nieto (2007), Pigni, Ravarini., Tagliavini, and Vitari (2002), Sullivan, (2000), Weigelt and Sarkar, (2012) research the application of e-banking systems in banks in America and European countries and argue that e-banking systems can increase the overall profitability of banks.

However, few of these studies focus on the banking technologies application and improvement performances of commercial banks in China. In this case, this study researches the relations between the application of banking technologies and performances of commercial banks in China.

2.4 Critique of the existing literature relevant to this research

Some researches show that the application of banking technologies can have positive influences on the financial performances of banks, especially commercial banks. Nevertheless, some studies demonstrate that the usage of banking technologies can have negative influences on the financial performances of banks. Some studies show that there is no correlation between banking technologies and financial performances of banks. Ray and MacMillan (2005) study the relation between innovations and the financial performances. 

he research results of Ray and MacMillan (2005) show that there is no direct relation between the application of informative technologies and the performances of consumer services. Al-Smadi and Al-wabel (2011) study the influences of online banking services on the performances of the Jordanian bank. The research results of Al-Smadi and Al-wabel (2011) show that the application and improvement of online banking systems in Jordanian banks have negative influences on performances of these banks.

Their research results indicate that most consumers still choosing traditional distribution channels is the most important determinant of the negative connection between the application of e-banking systems and the profitability of banks in Jordan (Al-Smadi & Al-wabel, 2011). Khrawish and Al-Sadi (2011) who researches the influences of e-banking on the profitability of banks in Jordan argue that there is a negative link between the banks’ profitability and the application of e-banking systems.

2.5 Identification of hypothesis

Based on the overall literature review, the application of the credit card and e-banking system has positive influences on the performances of banks in most developed and developing countries. On the one hand, previous researches show that the application of credit cards and e-banking systems can help banks to cut costs and increase profitability. On the other hand, previous researches indicate that the application of credit cards and e-banking systems may lead to operational risks for banks. In this case, the following four hypotheses are detected for this research.

Hypothesis 1: There is a positive link between the application of credit cards and the performance of commercial banks in China.

Hypothesis 2: There is a positive link between the application of credit cards and operational risks of commercial banks in China.

Hypothesis 3: There is a positive link between the application of e-banking systems and the performance of commercial banks in China.

Hypothesis 4: There is a positive link between the application of e-banking systems and operational risks of commercial banks in China.

The purpose of this chapter is to describe how this research is conducted and performed through identifying researching approaches as well as why these approaches are applied. The chapter starts with the explanation of the research method and then reasons for chosen researching strategy. Then this chapter identifies data collection approach as well as the analysis approaches. Next, this chapter discusses the reliability as well as the validity of this research. At last, this chapter identifies the limitations of this research.

3.1 Research method

Johnson and Christensen (2008) who researches the education of researching methods argue that researching methodology includes the qualitative, the quantitative as well as the mixed researching methods. DeYoung, Lang and Nolle (2007) research how the internet affects output and performance at community banks and apply the quantitative research method.

This research aims to answer the questions how the credit cards, the mobile banking as well as the internet banking influence performances of commercial banks in China. Considering the characteristics of qualitative researches and the research questions of this research, the qualitative researching method would be applied to help the researcher to understand relevant descriptive information and data (Jemna, 2016). In this case, this research attaches great importance to classifying and summarizing relevant data and information gathered from different resources in the forms of descriptive language (Johnson & Christensen, 2008).

The quantitative researching method attaches great importance to statistics or quantifiable data as well as seeks reasonable predictions, or facts, or statistics, or generalized data (Jemna, 2016). This research also uses mathematics and statistics to analyze data and information since this study researches performances of commercial banks in China that is relevant to the analysis of relevant data. This study applies the mixed researching method, which contains both the qualitative, and the quantitative researching methods.

3.2 Research design

In the situation of this study, there is little theoretical backgrounds concerning relationships between technological banking and performances of commercial banks in China, it is important to apply descriptive researching design on the basis of the quantitative researching method first with the purpose of evaluating the relationships between credit cards and e-banking and performances of commercial banks in China. Meanwhile, this research applies quantitative data to identify and test these hypotheses based on the descriptive findings.

Since this study focuses on what questions as well as current issues, the case study researching strategy and the experiment strategy are suitable (Yin, 2003). Considering that the experiment strategy focuses on situations that respondents’ behaviors could be maintained and guided systematically, the experiment strategy cannot be applies since this study cannot control respondents’ behaviors directly and systematically. In this case, the case study researching strategy is used with the purpose of identifying relations between credit cards and e banking and performances of commercial banks in China.

3.3 Data collection approaches

DeYoung, Lang and Nolle (2007) collect data from both the primary and secondary resources. They observed the population of all American commercial banks at the year-end of 1999 from the reports of condition and income and relied on the historical data from the Federal Deposit Insurance Corporation. Because of the research questions and the research method, data and information relevant to advantages of credit cards and e banking, as well as relevant the relations between credit cards and e banking and performances should be collected. The primary data is collected through a survey of 100 employees of China Merchants Bank and Bank of Communications Co., Ltd.  

Data collected from primary resources can help the researcher to evaluate the relationships between credit cards and e banking and performances of commercial banks in China as well as raise research hypothesis. It is crucial to evaluate relationships between credit cards and e banking and performances of commercial banks in China first. Then, the secondary information and data is collected through reviewing annual reports of two well-known commercial banks in China, including China Merchants Bank as well as the Bank of Communications Co., Ltd.

In order to keep the consistency of data collected from both the primary and secondary resources, the two interviewees are banking managers from China Merchants Bank as well as the Bank of Communications Co., Ltd. At the same time, this study conducts two interviews through the phone. The populations of interest of the questionnaire are employees who work for the China Merchants Bank or Bank of Communications. 

3.4 Data analysis approach

Generally speaking, data analysis approaches in banking literature can be classified into five categories, including “data envelopment analysis”, “free disposal hull”, “stochastic frontier”, “ thick frontier”, as well as “the distribution free method” (Stoica, Mehdian, Sargu, 2015, p, 613). DeYoung, Lang and Nolle (2007) analysis their data through applying the SPSS tool. Stoica, Mehdian and Sargu (2015) analyze data through using the data envelopment analysis method that involves a wide range of mathematical linear programming models. Considering the data collected from the questionnaire, this study applies the SPSS data analysis tool that involves mathematical models. In the quantitative analysis section, this study applied the regression statistical analysis technique to test hypothesis and identify whether the change of one variable has a specific impact on the other variable.

The research applies the abductive analysis approach with the purpose of constructing the overall research process and analyzing answers for the two research questions. The abductive analyzing method can help the author to combine both the empirical inductive analysis and the rationalist deductive analyzing (Dubois, & Gadde, 2002). This research can combine both the rationalist deductive and the empirical inductive analysis.

3.5 Conceptual framework of this research

This study generalizes the influences of the application of credit cards and the e banking on performances of commercial banks in China through collecting and analyzing data from two commercial banks in China, including China Merchants Bank as well as the Bank of Communications Co., Ltd. This study uses multiple reference resources and provides evidences to test researching hypothesis. Meanwhile, this study explains the chain of relevant evidences (refer to Figure 1).

3.6 Limitations of this research

There are limitations in this research. In the first place, this research applies the secondary data. In this case, the results of this research may not be accurate because secondary data and information is inaccurate. On the one hand, the data collected from previous researches may not be appropriate for the practical situation in the scope of China when considering that there are little theoretical backgrounds concerning relationships between technological banking and performances of commercial banks in China.

On the other hand, the secondary data collected from annual reports of China Merchants Bank as well as the Bank of Communications Co., Ltd. may not be comprehensive and accurate. In the second place, this research collects primary data through two interviews with unstructured questions and questionnaire with structured questions. The results of this research may not be comprehensive. However, the participants of the interview and questionnaire are practitioners of the banking industry and work for commercial banks in China, their viewpoints may not be comprehensive.

This section presents the two case commercial banks in China, including the China Merchants Bank as well as the Bank of Communications Co., Ltd. This chapter starts with the overview of the two case commercial banks in China. Then this section analyses data collected from the primary resources in the form of interview and questionnaire in order to identify evaluate relationships between credit cards and e banking and performances of commercial banks in China as well as raise research hypothesis. At last, this section analyses data collected from the secondary resources in the forms of annual report in order to test the evaluated influences of the applying of credit cards and e banking on performances of commercial banks in China as well as test the raised research hypothesis.

4.1 Case commercial banks in China

Established in Shenzhen city in 1987, China Merchants Bank is one of the important national commercial banks in China with sizeable business scale and competitive strength (China Merchants Bank, 2017). The business of China Merchants Bank focuses on the Chinese market and its distribution network mainly covers the more economically developed areas in China, including the Yangtze river delta region (ibid, p, 6). China Merchants Bank provides a wide range of innovative wholesale and retailing banking products and relevant services for customers, including credit cards, the multifunctional debit card,

all-in-one net, the comprehensive online banking services platform, mobile banking, CMB life App, as well as relevant global cash management services (ibid, p, 6). With the purpose of achieving its organizational objectives and improving its performances, China Merchants Bank makes efforts to promote the transformation of its business model and strives to combine its business experiences with its banking technologies to establish a leading digitized and innovative commercial bank in China (ibid, p, 7). In other words, the application of the banking technologies is a significant approach for China Merchants Bank to manage its daily operations.

Started in 1908 and reorganized in 1987, Bank of Communications is the first nationwide state owned joint stock commercial bank in Chinese market (Bank of Communications, 2017). The development strategy of Bank of Communications is to become “the first class listed comprehensive banking group focusing on international expansion and specializing in wealth management” (ibid, p, 1). Its business covers company banking businesses, personal banking products and services, treasury management businesses as well as other businesses (ibid, p, 1).

One of the core competitiveness of Bank of Communications is its comprehensive trinity network service channel which connects its featured physical outlets, its e-banking system, as well as its relationship managers (ibid, p, 19). Bank of Communications makes full use of innovative banking technologies, especially the e-banking system to deliver a one stop and comprehensive banking and financial services for customers (ibid, p, 19). In order to achieve its organizational purpose and increase business revenues, Bank of Communications attaches great importance to the application of advanced information technologies as well as the construction of its infrastructures (ibid, p, 20). The application and the development of information infrastructures can promote its business expansion and improve its organizational performance.

The four hypothesis are evaluated through data collected from primary resources in both the form of interviews and questionnaires.

4.2.1 Respondents analysis

This data was collected through questionnaires that were distributed to employees and managers of commercial banks in China. The sampling of this research consisted of 102 participants who work for commercial banks in China and were willingly to participate in this questionnaire. However, the sampling size reduced to 100 when removing incomplete surveys. The response rate of this research was 100 per cent, which is acceptable. According to Nulty (2008), it is appropriate for a descriptive research have a response rate that is above 50 per cent. The years of service in commercial banks in China could be analyzed as below.

Hypothesis 1 - There is a positive link between the application of credit cards and the performance of commercial banks in China.

Based on two interviews collected from a business manager of China Merchants Bank in Ningbo and a business manager of Bank of Communications in Ningbo, the application of the credit cards can promote performances of the two commercial banks. The business manager of China Merchants Bank in Ningbo emphasizes on the significant positive link between the application of credit cards and the performance of commercial banks in urban areas.

The application of credit cards can help commercial banks to cut operational costs and enhance financial earnings. Credit cards holders in China do not need to withdraw money through physical banks or ATMs. In this case, commercial banks can save labor costs since less employees are needed to provide relevant withdraw services. Meanwhile, commercial banks can increase revenues from the application of credit cards through identifying their customer segments effectively to provide customized banking service, collecting fees and interests, as well as cooperating with business customer in the long term.

For example, China Merchants Bank collects lower service charges for merchants in retaining industry and higher service changes in hotel and entertainment industries to maintain long-term cooperation with these business clients. With more client base and banking transactions, commercial banks in China can increase their revenue. With higher revenues and lower operational costs, the overall performances of commercial banks in China can be improved. Therefore, the first hypothesis is supported and there is a significant positive link between the application of credit cards and the performance of commercial banks in China.

Based on data collected from the questionnaire, 41 per cent of these respondents consider that the application of credit cards can improve the overall performance of their bank. While 639 per cent of them believe that, their commercial banks have invested heavily in credit cards. A minority of them (20 per cent) regard that most of their business clients use credit cards services while 20 per cent of them consider that their retailing clients use credit cards services. A majority of them (41 per cent) believe that urban customers tend to use credit cards services more frequently.

Meanwhile, most of these respondents consider that the application of credit card is a major revenue stream for commercial banks in China (61 per cent). According to the data collected, most of them believe that credit card can increase retailing clients (51 per cent), increase urban customers (51 per cent), increase bank income (51 per cent), major revenue stream (49 per cent), have minimal operation and maintenance costs (49 per cent). However, less than half of these respondents of human resource cost (44 per cent), reducing printing cost (42 per cent) consider that the application of credit cards can help our bank to reduce human resources costs.

The mean score for the application of credit cards can improve the overall performance of bank indicates that there was more agreement than disagreement. In other words, there is a significantly positive link between the application of credit cards and the performance of commercial banks in China. It is noted that living in urban area has a significantly positive link between the usages of credit cards. Meanwhile, there is significantly positive links between the application of credit cards and the increase of bank incomes, the increase of loans, the cut of operational costs, as well as the reduction of printing costs.

We collected 102 responses of the questionnaire and taken into account of 100 valid responses. As 100 is an exact figure in data mining, we take into account of these data. There is no missing value in case of all 12 factors of the data.

Frequency Tables:-

 table indicates the frequency and percentage distribution of application of credit cards. It is similar agreed (39%) (strongly agree = 6% and agree = 33%) with disagreed (41%) (strongly disagree = 17% and disagree = 24%). The neutral choice is for only 20% of people. Therefore, we observe the mixed reaction of validity to the fact.

Table 3: The application of heavily invested credit cards and the performance of our banks in China.

The table indicates that the application of heavily invested credit cards can improve the overall performance of our bank is less in case of agreed (21%) (strongly agree = 6% and agree = 15%) than disagreed (42%) (strongly disagree = 9% and disagree = 34%). The neutral response is for 36% of people. Therefore, disagreement of more observed that the agreement.

Hypothesis 1 - There is a positive link between the application of credit cards and performance of commercial banks in China.

The regression analysis was employed in order to empirically identify whether the application of credit cards was a statistically important prominent determinant of performance of commercial banks in China. The equation took from Y1=β0 +β1* X1 + µ, where Y 1 refers to performance of commercial banks in China, β0 refers to the constant or the intercept, X1 refers to the application of credit cards,β1 refers to the change of coefficient for the application of credit cards, while µ refers to the error term.

The regression result in table 3 shows the goodness of fit for the regression between the application of credit cards and the performance of commercial banks in China is satisfactory. As the R² of 0.851, it indicates that 85.1 per cent of the variations in the performance of the financial performance of commercial banks in China could be explained by the variations in the application of credit cards when other factors constant. In other words, the the application of credit cards can improve the performance of commercial banks in China.

Table 3: The regressions model fitness for the application of credit cards and the performance of commercial banks in China.

The linear regression model between application of credit cards and performance of commercial banks in china indicates a high linear relationship between the two factors with R-square value = 0.851. The correlation coefficient is 0.923. It shows a strong positive correlation of these two factors. Therefore, there exists a high linear relationship between these two factors. The adjusted R-square value is = 0.83. The value of adjusted R-square measures the goodness of fit. Therefore, the goodness of fit is quite high in this case. The fitting of linear relationship would be good enough.   

Table 4: The ANOVA model for the application of credit cards and the performance of commercial banks in China.

On the basis of the ANOVA statistics (refer to Table 3), there is a significant positive relation between the application of credit cards and the performance of commercial banks in China. This was supported by the F statistic of 41.420 and the p value of 0.000. The reported probability (0.000) was less than the conventional probability of 0.05 (5 per cent) significance level. Therefore, we reject the null hypothesis of significant association between application of credit cards and performance of commercial banks in china.

According to the above analysis, hypothesis 1 is not supported that and there is no association between the application of credit cards and the performance of commercial banks in China.

Hypothesis 2 - There is a positive link between the application of credit cards and operational risks of commercial banks in China.

Based on the two interviewees who are business managers of two large commercial banks in China, there are potential risks in the process of applying credit cards to improve their organizational performances. As stated by a business manager of China Merchants Bank, there are credit risks, fraud risks, and operational risks. Thought there are potential risks, China Merchants Bank conducts effective “Credit risk management system” to reduce these types of risks in issuing and the management of credit cards. Credit risks are risks arising from the failures of borrowers or counter-parties to perform their commitments or obligations under agreed terms. In this case, if credit card holders cannot repay their loans in the long term, there will be credit risks for commercial banks.

The credit risks of China Merchants Bank mainly stem from credit businesses, investment businesses, financing businesses, as well as other businesses (China Merchants Bank, 2017). In order to manage the credit risks effectively, China Merchants Bank (2017) formulate its credit risk management framework that has independent functions, balanced and checked risks, as well as three dedicated defense lines in order to identify, analysis, evaluate, monitor and manage credit risks.

Bank of Communications in China attaches great importance to manage credit risks through the establishment and improvement of risk management tools, econometric models, as well as information systems to identify potential risks comprehensively (Bank of Communications, 2017). There are potential risks for commercial banks to apply credit cards to improve their organizational performances. However, these banks establish and use effective risk management tools and framework to minimize the negative influence of credit cards on their organizational operations. Therefore, the application of credit cards cannot lead to operational risks for commercial banks in China.

According to data collected from the questionnaire, a minority of these participants (32 per cent) consider that the application of credit cards can lead to operational risks for their banks. However, a majority of these participants (43 per cent) regard that the application of credit cards can lead to credit risks for their banks. Meanwhile, 57 per cent of these participants consider that the competition in credit cards is fierce in China.

In this case, hypothesis 2 is not supported that and there is not a positive link between the application of credit cards and operational risks for commercial banks in China.

The regression analysis was used in order to empirically identify whether the application of credit cards was a statistically important prominent determinant of operational risks for commercial banks in China. The equation took from Y2=β0 +β2* X1 + µ, where Y2 represents operational risks for commercial banks in China, β0 represents the constant or the intercept, X1 represents the application of credit cards,β2 represents the change of coefficient for the application of credit cards, while µ represents the error term.

The regression result in table 6 indicate that the goodness of fit for the regression between the application of credit cards and operational risks for commercial banks in China is not satisfactory. As the R² of 0.918, it indicates that 91.8 per cent of the variations in the performance of the operational risks of commercial banks in China could be explained by the variations in the application of credit cards when other factors constant. In other words, the application of credit cards can result in operational risks for commercial banks in China.

Table 6: The regressions model fitness for the application of credit cards and operational risks of commercial banks in China.

The linear regression model between application of credit cards and operational risk of commercial banks in china indicates a high linear relationship between the two factors with R-square value = 0.843. The correlation coefficient is 0.918. It shows a strong positive correlation of these two factors. Therefore, there exists a high linear relationship between these two factors. The adjusted R-square value is = 0.838. The value of adjusted R-square measures the goodness of fit. Therefore, the goodness of fit is quite high in this case. The fitting of linear relationship would be good enough.   

Table 8: The ANOVA model for the application of credit cards and the operational risk of commercial banks in China.

On the basis of the ANOVA statistics (refer to Table 8), there is a significant positive relation between the application of credit cards and the operational risk of commercial banks in China. This was supported by the F statistic of 171.967 and the p value of 0.000. The reported probability (0.000) was less than the conventional probability of 0.05 (5 per cent) significance level. Therefore, we reject the null hypothesis of significant association between application of credit cards and operational risk of commercial banks in china.

Hypothesis 2 is not supported that and there is not a positive link between the application of credit cards and operational risks for commercial banks in China.

Hypothesis 3 - There is a positive link between the application of e-banking systems and the performance of commercial banks in China.

According to the two interviews collected from a business manager of China Merchants Bank and a business manager of Bank of Communications, the application of e-banking systems can enhance the performance of commercial banks in China significantly. The business manager of China Merchants Bank points out that customers in urban areas are more likely to use e-banking products and service in their daily lives but people who live in rural areas may not use e banking because of the underdeveloped networks.

From both the two-business manager of commercial banks, the application of e-banking systems can help banks to cut costs as well as enhance revenues. After applying e-banking systems, commercial banks can save costs through hiring fewer employees to serve customers in physical banking branches as well as printing less paper bills. At the same time, the application of e-banking systems can speed up the mobility capital. With faster capital flows, the idle funds can be used effectively. Therefore, the application of e-banking systems can facilitate the performance of commercial banks in China. In other words, hypothesis 3 is not supported and the application of e-banking systems has positive performance of commercial banks in China.

Based on the questionnaire, 66 per cent of these respondents consider that the application of e-banking systems can improve the overall performance of their bank. While 38 per cent of them believe that, their commercial banks have invested heavily in e-banking systems. A majority of them (66 per cent) regard that their business clients use e-banking products and services while 38 per cent of them consider that their retailing clients use e-banking products and services. A majority of them (66 per cent) believe that urban customers tend to use e-banking products and services much more frequently.

Meanwhile, most of these respondents consider that the application of e-banking systems is a major revenue stream for commercial banks in China. Based on the data collected, most of them believe that e-banking systems can increase credit card in bank incomes (38 per cent), increase credit risk of the bank (32 per cent) and reduced credit costs in fierce (32 per cent). A majority of these respondents (95.16 per cent) consider that the application of e-banking systems can help our bank to reduce labor costs.

 The application of e-banking system can improve the overall performance of commercial banks in China. In this case, hypothesis 3 is not supported and there is not significant positive relation between the application of e-banking systems and the performance of commercial banks in China. analysis was applied in order to empirically identify and evaluate whether the application of e-banking systems was a statistically significant prominent determinant of performance of commercial banks in China. The equation was Y3=β0 +β3* X2 + µ, where Y 3 represents for performance of commercial banks in China, β0 represents for the constant or the intercept, X2 represents for the application of e-banking systems,β3 represents for the change of coefficient for the application of e-banking systems, while µ represents for the error term.

The regression result in table 8 shows the goodness of fit for the regression between the application of e-banking systems and the performance of commercial banks in China is satisfactory. As the R² of 0.810, it indicates that 81 per cent of the variations in the performance of the financial performance of commercial banks in China could be explained by the variations in the application of e-banking systems when other factors were not changed. In other words, the the application of e-banking systems can improve the performance of commercial banks in China. Therefore, hypothesis 3 is supported and there is a significant positive relation between the application of e-banking systems and the performance of commercial banks in China, considering the R² of 0.810.

The regressions model fitness for the application of e-banking systems and the performance of commercial banks in China.

The linear regression model between application of e-banking system and performance of commercial banks in china indicates a high linear relationship between the two factors with R-square value = 0.810. The correlation coefficient is 0.900. It shows a strong positive correlation of these two factors. Therefore, there exists a high linear relationship between these two factors. The adjusted R-square value is = 0.784. The value of adjusted R-square measures the goodness of fit. Therefore, the goodness of fit is high in this case. The fitting of linear relationship would be good enough. The ANOVA result for the application of e-banking systems and the performance of commercial banks in China.

Based on the ANOVA statistics (refer to Table 10), there is a significant positive relation between the application of e-banking and the performance of commercial banks in China. This is supported by the F statistic 30.858 and the p value of 0.000. The reported probability (0.000) was less than the conventional probability of 0.05 (5 per cent) significance level. Therefore, we reject the null hypothesis of significant association between application of e-banking and performance of commercial banks in china.

Based on the above analysis, hypothesis 3 is not supported that and there is a significant positive relation between the application of e-banking systems and the performance of commercial banks in China. In other words, the application of e-banking systems could not improve the performance of commercial banks in China significant through reducing costs and increase revenues.

Hypothesis 4 -There is a positive link between the application of e-banking systems and operational risks of commercial banks in China.

According the two interviews, there are potential risks in the process of applying e-banking systems to improve their organizational performances and the major risk is the leakage of customers’ personal information. However, both of the two banks attach great importance to the management of insider information to avoid the leakage of customers’ personal information as well as the improvement of their security of their e-banking systems (Bank of Communications, 2017; China Merchants Bank, 2017). In this case, safety is the competitive advantage for commercial banks when comparing with emerging online payment platforms in China. Therefore, hypothesis 4 is not supported that and there is not a relation between the application of e-banking systems and operational risks for commercial banks in China.

On the basis of the data collected from the questionnaire, less than one tenth of these participants (38 per cent) consider that the application of e-banking systems can lead to operational risks for their banks. Less than a half of these participants (32 per cent) regard that customers are afraid of using e-banking services because of the fear of hacking of their accounts by web hackers. However, 68 per cent of these participants consider that the competition in e-banking products and services is fierce in China.

Therefore, hypothesis 4 is not supported that and there is no link between the application of e-banking systems and operational risks for commercial banks in China. The application of e-banking systems and overall performance for commercial banks in China.

The regression analysis was applied in this study to empirically identify whether the application of e-banking systems was a statistically prominent determinant of operational risks for commercial banks in China. The equation was: Y4=β0 +β4* X2 + µ, where Y4 represents for operational risks for commercial banks in China, β0 represents for the constant or the intercept, X2 represents for the application of credit cards,β4 represents for the change of coefficient for the application of e-banking systems, while µ represents the error term.

The regression result in table 12 indicates that the goodness of fit for the regression between the application of e-banking systems and operational risks for commercial banks in China is not satisfactory. As the R² of 0.848, it indicates that 84.8 per cent of the variations in the performance of the operational risks of commercial banks in China could be explained by the variations in the application of e-banking systems when other factors constant. Therefore, the the application of e-banking systems can not result in operational risks for commercial banks in China.The regressions model fitness for the application of e-banking system and operational risks for commercial banks in China.

The linear regression model between operational risk of commercial banks and e-banking system of commercial banks in china indicates a high linear relationship between the two factors with R-square value = 0.848. The correlation coefficient is 0.921. It shows a strong positive correlation of these two factors. Therefore, there exists a high linear relationship between these two factors. The adjusted R-square value is = 0.843. The value of adjusted R-square measures the goodness of fit. Therefore, the goodness of fit is high in this case. The fitting of linear relationship would be good enough.  

In order to use the credit card and the e-banking systems effectively, the following recommendations for Chinese commercial banks are given. In the first place, it is crucial for commercial banks in China to enhance their abilities of risk prevention plus risk control through improving their credit card information database as well as the information exchange systems to identify credit risks and ensure the credit limits of credit card holders effectively (Li, 2011; Yin, Song, & Tang, 2014). For example, commercial banks can cooperate with other financing institutions in .

China to perfect the detail of customers’ credit information, including both business and individual client. In the second place, it is vital for the government to enforce relevant law strictly to reduce and eliminate credit card frauds under Chinese criminal law (Li, 2011; Yin, Song, & Tang, 2014). In the third place, it is crucial to apply effective rewards for customers who have great credit as well as punishment measures to prevent credit risks for commercial banks. For example, publicizing the information of customers who can not perform their repayment obligations under contracts.

5.2 Enhance innovation ability

On the basis of the data analysis, 98.39 per cent of these participants consider that the competition in credit cards and the e-banking products and services sectors is fierce in China. There are many online payment platforms in China. As stated by the two interviewees, these online payment platforms provide more favorable terms and more types of e-banking products and services, which threaten the financial performance of commercial banks in China. For example, the net leading products and services can affect the spread incomes of commercial banks since these networking lending products and services provided by third party online payment platforms in China have more extensive coverage (Lv, 2016).

In this case, the effective competition with commercial banks in the areas of individual payment services, small and micro businesses lending. Meanwhile, with the further innovation and application of these network payment products and services, the profits of commercial banks in China may decline with less payment transactions and less customers (Lv, 2016).

In order to create and maintain competitive advantages of commercial banks in China, Lv (2016) argues that it is crucial for commercial banks in China to adhere to the market oriented and customer centered strategy in the process of applying and promoting their credit cards and e-banking products and services. On the one hand, it is vital for commercial banks in China to integrate their existing varieties of credit cards and e-banking products and services, their plan products, as well as eliminate products and services with low profits and high cost (Lv, 2016). In this case, commercial banks in China can assign their limited available resources and ensure their product structures are design effectively and reasonably.

On the other hand, it is crucial for commercial banks in China to increase their intensities of product and development of new products in areas of credit cards and e-banking products and services, especially financial products (Qi, 2014). Lv (2016) points out that it is significant for commercial banks in China to research and develop innovative products and services which are suitable for different demands of customers in the market. It is necessary for commercial banks in China to provide more innovative, comprehensive as well as personalized services in the market to gain competitive advantages (Qi, 2014).

5.3 Value the potential of both existing clients and rural customers

According to the data collected and analyzed, 36 per cent of these participants consider that their business clients use credit cards services while 44 per cent of them consider that their retailing clients use credit cards services. On the contrary, 70 per cent of them regard that their business clients use e-banking products and services while 85.48 per cent of them consider that their retailing clients use e-banking products and services. Considering that there is a significant positive link between the application of credit cards and e-banking systems and the performance of commercial banks in China, it is crucial to promote their credit cards and e-banking systems products and services. With low level of client penetration about their credit cards and e-banking systems,

commercial banks in China is recommended to promote and communicate their advantages in credit cards and e-banking systems with existing business clients, including both business and retail clients. For example, commercial banks in China can actively adjust their marketing concepts to enrich their marketing methods and communicate their advantages to customers with the purpose of facilitating their current clients to adopt their new products (Lv, 2016). If more existing clients can use the innovative credit cards and e-banking products and services, commercial banks in China can enhance their organizational performance future through reducing operational costs and increasing revenues.

Besides the huge potential of existing clients, it is significant for commercial banks in China to value and explore the rural market in China. According to both the interviews and the questionnaire, a majority of these participants (88 per cent) believe that urban customers tend to use credit cards services more frequently and

85.48 per cent of them consider that urban customers tend to use e-banking products and services much more frequently. According to China Internet Network Information Center, the number of Chinese rural netizen reached 201 million by the end of 2016, which accounted for 27.4 per cent of the national total (CNNIC, 2017). With the fast development of the internet and the e-commerce in rural areas in China, the demands for credit cards and e-banking products and services will increase (CNNIC, 2017)

 Conclusion

With the fast development of the technologies, a great number of financial institutions have applied financial innovations in the process of designing and developing innovative product offerings as well as expanding their range of services in order to improve performances. If the banking technologies are implemented adequately, China has a potential to grow its banking industry. In this case, it is significant to research the relations between the application of banking technologies and performances of commercial banks in China. This study researched the relations between the application of banking technologies and performances of commercial banks in China through two aspects, the application of credit cards as well as the application of e-banking systems.

This study applies the mixed researching method which contains both the qualitative and the quantitative researching methods. The case study researching strategy is applied through collecting information and data from both the primary resource and the secondary sources. The case study focuses on two important commercial banks in China, including China Merchants Bank as well as the Bank of Communications. The secondary information and data is collected through reviewing annual reports of the two commercial banks while the primary data is gathered through questionnaire and two interviews and This study applies the abductive method to analysis data collected. The SPSS data analysis tool is applied to evaluate four hypothesis.

Hypothesis 1 is not supported and there is not significant positive link between the application of credit cards and the performance of commercial banks in China. Hypothesis 2 is not supported that and there is not a positive link between the application of credit cards and operational risks for commercial banks in China. Hypothesis 3 is not supported that and there is not significant positive relation between the application of e-banking systems and the performance of commercial banks in China. Hypothesis 4 is not supported that and there is no relation between the application of credit cards and operational risks for commercial banks in China.

In other words, the application of credit cards and e-banking systems in China can enhance the organizational performances of commercial banks in China as well as not lead to operational risks. The application of credit cards can result in credit risks for commercial banks. Commercial banks in China have to face fierce competition in areas of credit cards and e-banking products and services. Most of existing clients of commercial banks in China have not adopted to credit cards and e-banking products and services. Rural customers are considered as customer segment who tend to not use credit cards and e-banking products and services in China.

Considering that the application of credit cards and e-banking systems in China can enhance the organizational performances of commercial banks in China, it is vital to improve the application of these banking technologies. Commercial banks in China is recommended to enhance commercial banks’ abilities of risk prevention plus risk control, facilitate innovation ability, as well as value the potential of both existing clients and rural customers.

6.3 Limitations

In the first place, this study used secondary data, which is not accurate. In the second place, this study applied the case study research method and focused on China Merchants Bank as well as the Bank of Communications. In this case, the research result is not comprehensive.

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