REVIEW OF RELATED LITERATURE

1.)

Fusilier, M., & Schaub, M. (2003) performed a study that seeks to determine what clients

felt were brokers' strengths and weaknesses in attaining client satisfaction based on data
collected using a questionnaire. The results of the survey indicate that clients' perceptions of
brokers' honesty, aptitude, knowledge and service to its customers are main determinants of
client satisfaction. The neutral and negative responses to each of the questionnaire items may
help brokers to determine their weaknesses in keeping clients happy. Also, focusing on the
other survey items, where brokers scored well on average, will assist the brokers in
remembering and improving on what they already do well. The first step in building client trust,
is to be interested in the person, not just the sale. This means that the adviser must be willing to
pass up a sale if he/she is not able to address a clients need (Michaels, 2002).
2-3.)

Investing money may take up various forms. Investor can put the money in stocks

through broker or agent and this person works on behalf of the investor and charges a
commission on every transaction. Broker holds the shares by investing the investment in
diversified portfolios and then buys or sells in order to make a profit for the investor (Khan, M., &
Ali Hassan, A., 2013). Brokers who sustain losses should charge higher fees to long-term clients
for trades where the broker merely receives a commission. This prediction is supported by an
analysis of brokerage rates on the Australian Stock Exchange. By contrast, market makers who
make trading profits charge lower agency fees to large, long-term clients (Aitken, M. J., Garvey,
G. T., & Swan, P. L., 1995).
4.)

Aquino, R. Q. (2006) study examines the efficiency of the Philippine stock market using

stock price movements during the period July 1987 to May 2004. Characterizing stock price
movements as an AR(1) process with Laplace residuals rather that the normal distribution
usually assumed, the statistical evidence supports the hypothesis that the Philippine stock
market is weak-form efficient. An examination of major events that could plausibly affect share
prices and large price movements from an event study perspective indicates fairly rapid
absorption by the market of information, except in cases of extreme stress caused by political
and economic shocks. Furthermore, factors other than information about fundamentals appear
able to cause major share price movements. Given these, the support for the semistrong-form
efficiency of the stock market is mixed.

5.)

According to PR Newswire US, on Aug. 1, 2013 the Bank of the Philippine Islands (BPI)

and IBM (NYSE: IBM) signed a strategic partnership agreement to outsource BPI's existing IT
infrastructure services to IBM. Under the agreement, IBM will take over BPI's IT network and
data center activities. This will allow BPI's Information Systems team to better concentrate on
the bank's strategic initiatives. IBM is an experienced IT service provider with an excellent
reputation for large scale systems integration and systems management within the banking
industry. IBM currently services several major banks in the ASEAN region. This engagement will
help BPI focus on more strategic business areas while IBM manages its day-to-day IT
operations.
6.)

A diverse number of online stock brokers continue to innovate to gather new potential

customers and maintain the existing users. It also mentions that regular innovations in online
brokerage have helped brokers attract more customers and retain their existing users.
Customers assess and evaluate their broker. The assessment will be a vital information to the
potential investors who would be looking for new broker and give the perception on how the
firms was being conveyed by their current clients.

Investors can consider the capability of

each top performing firm to find out whether it would suit their needs or it could pave way into
investment of stocks and other securities. Interactive Brokers such as TradeKing, Vanguard
Brokerage, Scottrade and Merrill Edge ranked highest on some categories, mainly: low cost, as
the primary concern and broker responsiveness. Salomon Sredni, CEO of TradeStation
emphasized that customers wanted a turnkey solution, and it was the best way to monetize the
platform they had. When they first started out, a lot of competitors were already there and it
was hard to establish a new platform since they are just new in the field. TradeStation scored
high in seven categories, including trade reliability, equity trading tools, research tools and
educational resources . Subramaniam pointed out that customers want value and access when
they need it. This was evidenced by the recent data which showed mobile trades at Fidelity rose
46% from a year ago (Subramaniam, as cited in Shreve, 2013).
7.)

Huangs, Pitskers, & Tans (2012) article presents the following:

ranking of online discount

an evaluation and

stock brokerage companies in the U.S. as of

2012,

conducted by the publication. It discusses the evaluation criteria used, which include
the level of fees and other charges, the scope of information and research available to
users, and quality of customer service via phone, e-mail, and online. (pp. 38-41). Huang,
Pitsker, & Tan (2012) found that fees and commissions, range of investment options,

research and tools accessible to client, and banking services are the six broad areas to
be looked into each firm.
It has been proved that the firm was really concentrating on the improvement of their customer
service. According to Huang, Pitsker, & Tan (2012), it helps to be tied to an actual bank, but it's
not required. (pp. 38-41)
8.)

Rahims (2012) study stated the following: The democracy of online trading is the key
factor why the retail investors prefer to transact over the internet to their broker. The
use of online brokerage services automates the process of buying and selling and hence
allows a reduction of commission charges. Also the commodity being traded is
intangible; the ownership of stocks and shares can be recorded electronically so that
there is no requirement for physical delivery. It is inferred that the major problem faced
by online share traders is inadequate availability of technology. Second and third
problems are poor communication network, and more chances of fraud.

Risk of system

failure and lack of transparency are the fourth and fifth problems and the least problem
is lack of professional management and lack of sufficient information. With a view to
increasing the effectiveness of online share trading, particular attention should be paid
to the long term strategy. The following suggestions can be a guided in this regard.
Since the online share trading business depends upon customer service, technological
knowhow, new innovations, and efficient management etc., the following measures in
these areas have to be taken on priority basis to achieve success in online share
trading business. Inadequate technology is the major problem faced by online share
traders. These engines will obviate the need for a broker to develop his own engine and
thus, result in capital investment saving. However, a user can log on to these engines,
use the website of the broker and trade electronically. These developments are,
therefore, expected to give a strong fillip to the electronic brokerage industry in India.
Application of superior technology to clients will be a key determinant of success. New
trading mechanism can be formed to allow the trading of

stocks in the worlds global

companies. Lack of professional management is the second major problem faced

by the investors. The online share trading industries must develop new

strategies for

what the customers pursue. There is an urgent need for firms to place a new
emphasis on customer relationship that combines selling with personal financial
consultations to meet clients specific needs.

9.)

This study implied that banks can achieve a strategic management in using online

trading services, outsourcing and new managerial practices recognized with the lack of specific
competencies by pursuing an appropriate sourcing of online services to decrease expenses and
obtain competitive advantages.
According to Rossignoli, Zardini, & Cantoni (2013) : this article provides an in-depth
analysis of

online trading services offered in the Italian banking system. It represents

a response to understand which are the e-trading services offered by the Italian banks.
Hence, its purpose is to

analyse the state of art of the Italian banks. Developing

adequate information systems to support customers' changing behaviour gives Italian

banks an important opportunity to retain customers and develop their loyalty. In
particular, multichannel strategies can help banks combine in- and outsourcing solutions,
lower their costs, and substantially increase business process excellence and innovation
through collaborative partnerships.
Online stock brokers tied with the banks which offers are said to be an edge because it reduces
costs, raises reliability and guarantees credibility.

10.)

The main intention of this article is to know the connection and probable results of

online trading, the illusion of knowledge and control, information processing cost, trading
intention, and expected performance. Investors trading goals may be further enhanced with the
following factors: low cost, execution speed, usefulness and ease of use. Online platforms
nowadays are important vehicles in presenting background knowledge associated with the
updated stocks relevant information. With the fast paced technology today, online investors are
expecting more advanced platforms that would be easily accessible and would be a greater help
in their decision making. According to Wang (2013), investors should also strengthen their
professional financial knowledge as best as they can, because doing so can enhance their
analytical ability to find the correct online information, decrease the illusion of knowledge and
information processing cost, reduce their decision errors in the decision making process and
helps improve their actual investment performance.
11)
Since an online trading portal is an IT system, some models and theories could be
applied with regards to its usage. According to F. Davis Technology Acceptance Model (TAM),
users decision whether to continue using a system or not is predisposed by a personal
judgment on two factors, namely, usefulness and ease of use. Usefulness relates to the

capability of the system to improve the performance of the user while, ease of use concerns to
minimal efforts required to control the system. Cox and Dale supported this model through a
statistics that validated ease of use as one of the four quality factors of a website. According to
them, a system found to be useful and easy to use, will have a great effect on continuous
patronization among its users.
12)
According to Marifel Dungo, a well-known author; as of 2013, there are10 online brokers
accredited by the Philippine Stock Exchange (PSE). Out of these 10 accredited online brokers,
one of the most popular is the BPI Securities. According to her, choosing an online broker is
important for trading and investing in the stock market. Dungo said that choosing an online
broker is like ones live stock market arena which follows that it is very important wherein one
get comfortable and feel a sense of security in the broker one is transacting with. Dungo also
mentioned that being part of an online trading portal is relatively easy and closely similar to
opening a bank account.
13)
In 2011, the Bank of the Philippine Islands (BPI) has introduced the countrys first fullservice online investment platform which aimed to harness the Internet to broaden participation
of its investors in its managed funds. In line with this, the BPI Securities Corporation, a whollyowned subsidiary of the Bank of the Philippine Islands (BPI), launched the BPI Trade. BPI Trade
is an online stock trading facility where registered investors can buy and sell stocks listed in the
Philippine Stock Exchange (PSE) through the said online portal.
14)
In todays competitive environment quality service is an essential element of success.
The quality of service helps increase the market share of a certain company if perceived quality
of service is up to the mark, or lose it if the perceived quality of service is dire. Customer
satisfaction is only the base line. The aim of a company should be a bit higher and focused on
gaining customer loyalty through enhancing customers perception about quality of service (Hu,
Jay, Thanika, 2009). If the customer is satisfied and enjoys the service experience then he/she
is likely to return to the provider and may bring along friends and colleagues. On contrary
dissatisfied customer will share his/her experience with others and would have a negative effect
on the organization. This is basically the failure of total customer satisfaction which in turn is the
failure of product. In an ever evolving technological environment new and upgraded products
with
value
additions
need
to
be produced to meet the customer needs and growing expectations (Porter, 1985). Therefore,
the ability to provide quality service is very necessary.
15)
In financial markets, many securities have begun providing online trading services for
customers to improve the efficiency of the trading process. This study explores the quality of
securities brokers online trading Web sites and their relationships with the acceptance
intentions of users in mainland China and Taiwan. Based on the Technology Acceptance Model
(TAM), this study selects Web site quality (system, information, and service) as an external
variable and conducts multiple regression models to test the hypotheses. The results
demonstrate that Web site quality (system, information, and service) positively affects perceived
usefulness and perceived ease of use, both of which are key factors in predicting users
attitudes towards usage. These attitudes can significantly affect users behavioral intentions to
utilize broker Web sites in mainland China and Taiwan.

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