DISSERTATION PROJECT REPORT

ON

“A Study of Customer perception towards E-banking services offered in banking sector”

BY

SUNIL KHATRI

MBA (MARKETING & SALES)

ENROLLMENT NO. A0102208030

ROLL NO. 308A32

CLASS OF 2010

Under the guidance of

Dr. S.K Laroiya

IN PARTIAL FULFILLMENT OF AWARD OF MASTER’S DEGREE

IN BUSINESS ADMINISTRATION

TO

AMITY BUSINESS SCHOOL

AMITY UNIVERSITY UTTAR PRADESH

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DECLARATION

I declare this assignment to be the result of my own individual efforts and that it confirms

to Amity Business School, Noida and course regulations regarding cheating and

plagiarism. No material contained within this assignment has been used in any other

submission, by the authors for an academic award.

Date- Sunil Khatri

Place- Noida MBA(Marketing & Sales)

A0102208030

Amity Business School

Amity University

Noida

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CERTIFICATE

This is to certify that Sunil Khatri, a student of MBA (M&S), Batch 2008-2010, Amity

Business School, Amity University, Uttar Pradesh (Enrolment No. A0102208030) has

undertaken the Dissertation Project under my guidance for the Project Title “A Study of

Customer perception towards e-services offered in banking sector”. This project is

prepared in partial fulfillment of MBA to be awarded by Amity University, Uttar

Pradesh. To the best of my knowledge, the piece of work is original.

Date: Dr. S.K Laroiya

HOD(Department of Economics),

Amity Business School

Amity University, Uttar Pradesh

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ACKNOWLEDGEMENT

A project is never a work of one and this report is no exception. Words are

insufficient to express my gratitude to my Faculty Mentor – Dr. S.K Laroiya for his

constant supervision & motivation. I thank him for assigning me with such a worthwhile

title. I also thank him for the extreme pains taken for helping me in my work, without

which it would have been a nightmare.

The constant innovative thoughts from his side helped me in keeping my project

upgraded in certain fields. I would like to dedicate this work to him, as without him I

could not have even started this work.

Next, I would like to thank my Program Leader Ms. Aparna Goyal, whose tremendous

support and motivation for the students of Marketing & Sales acts as a morale booster.

The work is also dedicated to Ma’am as she has always helped me in times of need. Not

only this reason but there are a thousand other reasons to thank Ma’am.

In the end I would like to thank my Parents as well who were always there to stand by

my side. They are the only ones who encouraged & motivated me to join such a

prestigious B – School. Words are insufficient to thank you dear parents.

Last but not the least, special thanks to the Almighty whose blessings made this work a

successful one.

Sunil Khatri

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TABLE OF CONTENTS

Contents Page no.

Declaration 2.

Certificate 3.

Acknowledgement 4.

Table of contents 5.

Executive Summary 6

Introduction 7

Literature Review 26

Research Objective & Methodology

29

Data Analysis & Results 34

Conclusion and Suggestions 57

Bibliography 60

Annexure 62

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Executive Summary

“E-banking” means the execution of financial services via internet, reducing cost and

increase in convenience for the customer to access the transaction. E-banking is an

umbrella term for the process by which a customer may perform banking transactions

electronically without visiting a brick-and-mortar institution. The following terms all

refer to one form or another of electronic banking: personal computer (PC) banking,

Internet banking, virtual banking, online banking, home banking, remote electronic

banking, and phone banking. PC banking and Internet or online banking is the most

frequently used designations. It should be noted, however, that the terms used to describe

the various types of electronic banking are often used interchangeably.

The ever increasing speed of internet enabled phones & PDA’s, made the transformation

of banking application to mobile devices, this creates a new subset of electronic banking

i.e. mobile banking.

This study tries to analyze the differences in risk perceptions between bank customers

using E- Banking and those not using E-Banking and it shows that risk perceptions in

terms of financial, psychological and safety risks among non-users was more meaningful

than those using it. Customers not preferring to use E-banking thought that they would be

swindled when using this service, and therefore, are particularly careful about high risk

expectation during money transfers from and between accounts.

Although many major banks have started offering E-banking services, the slow pace will

continue until the mass awareness is created.

Private and foreign banks are trying to turn more and more customer towards the usage of

internet for the banking transaction. This study is basically to know the relation of

various independent variables on the customer usage of internet for banking.

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Chapter 1

Introduction

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INTRODUCTION

Electronic banking is one of the truly widespread avatars of E-commerce the world over.

Various authors define E-Banking differently but the most definition depicting the

meaning and features of E-Banking are as follows:

1. Banking is a combination of two, Electronic technology and Banking.

2. Electronic Banking is a process by which a customer performs banking

Transactions electronically without visiting a brick-and-mortar institutions.

3. E-Banking denotes the provision of banking and related service through

Extensive use of information technology without direct recourse to the bank by

the customer.

Figure 1: E-banking principle

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Bank

Information technology

Customer

NEED FOR E-BANKING

One has to approach the branch in person, to withdraw cash or deposit a cheque or

request a statement of accounts. In true Internet banking, any inquiry or transaction is

processed online without any reference to the branch (anywhere banking) at any time.

Providing Internet banking is increasingly becoming a "need to have" than a "nice to

have" service. The net banking, thus, now is more of a norm rather than an exception in

many developed countries due to the fact that it is the cheapest way of providing banking

services.

Banks have traditionally been in the forefront of harnessing technology to improve their

products, services and efficiency. They have, over a long time, been using electronic and

telecommunication networks for delivering a wide range of value added products and

services. The delivery channels include direct dial – up connections, private networks,

public networks etc and the devices include telephone, Personal Computers including the

Automated Teller Machines, etc. With the popularity of PCs, easy access to Internet and

World Wide Web (WWW), Internet is increasingly used by banks as a channel for

receiving instructions and delivering their products and services to their customers. This

form of banking is generally referred to as Internet Banking, although the range of

products and services offered by different banks vary widely both in their content and

sophistication.

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Figure 2: Electronic banking & its components

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Traditional banking

Gunpowder

Personalized services, time consuming, limited access

Virtual or E-banking

Nuclear charged

Real time transactions, integrated platform, all time

access

EVOLUTION OF E-BANKING

The story of technology in banking started with the use of punched card machines like

Accounting Machines or Ledger Posting Machines. The use of technology, at that time,

was limited to keeping books of the bank. It further developed with the birth of online

real time system and vast improvement in telecommunications during late 1970’s and

1980’s.it resulted in a revolution in the field of banking with “convenience banking” as a

buzzword. Through Convenience banking, the bank is carried to the doorstep of the

customer.

The 1990’s saw the birth of distributed computing technologies and Relational Data Base

Management System. The banking industry was simply waiting for these technologies.

Now with distribution technologies, one could configure dedicated machines called front-

end machines for customer service and risk control while communication in the batch

mode without hampering the response time on the front-end machine.

Figure 3: Transition from traditional to E-banking

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Intense competition has forced banks to rethink the way they operated their business.

They had to reinvent and improve their products and services to make them more

beneficial and cost effective. Technology in the form of E-banking has made it possible

to find alternate banking practices at lower costs.

More and more people are using electronic banking products and services because large

section of the banks future customer base will be made up of computer literate customer,

the banks must be able to offer these customer products and services that allow them to

do their banking by electronic means. If they fail to do this will, simply, not survive. New

products and services are emerging that are set to change the way we look at money and

the monetary system.

Figure 4: E-Banking transaction mechanism

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E-BANKING PRODUCTS

Automated Teller Machine (ATM):

These are cash dispensing machine, which are frequently seen at banks and other

locations such as shopping centers and building societies. Their main purpose is to allow

customer to draw cash at any time and to provide banking services where it would not

have been viable to open another branch e.g. on university campus.

An automated teller machine or automatic teller machine (ATM) is a computerized

telecommunications device that provides a financial institution’s customers a method of

financial\ transactions in a public space without the need for a human clerk or bank teller.

On most modern ATMs, the customer identifies him or herself by inserting a plastic

ATM card with a magnetic stripe or a plastic smartcard with a chip that contains his or

her card number and some security information, such as an expiration date or CVC

(CVV). Security is provided by the customer entering a personal identification number

(PIN).

Using an ATM, customers can access their bank accounts in order to make cash

withdrawals (or credit card cash advances) and check their account balances. Many

ATMs also allow people to deposit cash or checks, transfer money between their bank

accounts, pay bills, or purchase goods and services.

Some of the advantages of ATM to customers are:-

1. Ability to draw cash after normal banking hours

2. Quicker than normal cashier service

3. Complete security as only the card holder knows the PIN

4. Does not just operate as a medium of obtaining cash.

5. Customer can sometimes use the services of other bank ATM’s.

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Telebanking or Phone Banking:

Telephone banking is relatively new Electronic Banking Product. However it is fastly

becoming one of the most popular products. Customer can perform a number of

transactions from the convenience of their own home or office; in fact from anywhere

they have access to phone. Customers can do following:-

1. Check balances and statement information

2. Transfer funds from one account to another

3. Pay certain bills

4. Order statements or cheque books

5. Demand draft request

This facility is available with the help of Voice Response System (VRS).

This system basically, accepts only TONE dialed input. Like the ATM customer has to

follow particular process, initially account number and telephone PIN are fed for the

process to start. Also the VRS system provides the users within additional facilities such

as changing existing password with the new desired, information about new products,

current interest rates etc.

Mobile Banking:

Mobile banking comes in as a part of the banks initiative to offer multiple channel

banking providing convenience for its customer. A versatile multifunctional, free service

that is accessible and viewable on the monitor of mobile phone. Mobile phones are

playing great role in Indian banking- both directly and indirectly. They are being used

both as banking and other channels.

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Internet Banking:

The advent of the Internet and the popularity of personal computers presented both an

opportunity and a challenge for the banking industry. For years, financial institutions

have used powerful computer networks to automate million of daily transactions; today,

often the only paper record is the customer’s receipt at the point of sale. Now that their

customers are connected to the Internet via personal computers, banks envision similar

advantages by adopting those same internal electronic processes to home use.

Banks view online banking as a powerful “value added” tool to attract and retain new

customers while helping to eliminate costly paper handling and teller interactions in an

increasingly competitive banking environment. In India first one to move into this area

was ICICI Bank. They started web based banking as early as august 1997.

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TYPES OF INTERNET BANKING OR E-BANKING:

Understanding the various types of Internet banking will help examiners assess the risks

involved. Currently, the following three basic kinds of Internet banking are being

employed in the marketplace.

1. Informational- this is the basic level of Internet banking. Typically, the bank has

marketing information about the bank’s products and services on a stand-alone

server. The risk is relatively low, as informational systems typically have no path

between the server and the bank’s internal network. This level of Internet banking

can be provided by the banks or outsourced. While the risk to a bank is relatively

low, the server or web site may be vulnerable to alteration. Appropriate controls

therefore must be in place to prevent unauthorized alterations to the bank’s server

or web site.

2. Communicative- this type of Internet banking systems and the customer. The

interaction between the bank’s system and the customer. The interaction may be

limited to electronic mail, account enquiry, loan applications, or static file updates

(name and address change). Because these servers may have a path to the bank’s

internal networks, the risk is higher with this configuration than with

informational systems. Appropriate controls need to be in the place to prevent,

monitor, and alert management of any unauthorized attempt to access the bank’s

internal networks and computer systems. Virus controls also become much more

critical in this environment.

3. Transactional- this level of Internet banking allows customers to execute

transactions. Since a path typically exists between the server and the bank or

outsourcer’s internal network, this is the highest risk architecture and must have

the strongest controls. Customer transactions can include accessing accounts,

paying bills, transferring funds etc.

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ADVANTAGES OF INTERNET BANKING

Convenience- Unlike your corner bank, online banking sites never close;

they’re available 24 hours a day, seven days a week, and they’re only a mouse

click away.

Ubiquity- If you’re out of state or even out of the country when a money

problem arises, you can log on instantly to your online bank and take care of

business, 24\7.

Transaction speed- Online bank sites generally execute and confirm

transactions at or quicker than ATM processing speeds.

Efficiency-You can access and manage all of your bank accounts, including

IRA’s, CDs, even securities, from one secure site.

Effectiveness- Many online banking sites now offer sophisticated tools,

including account aggregation, stock quotes, rate alert and portfolio managing

program to help you manage all of your assets more effectively.

DISADVANTAGES OF INTERNET BANKING

Start-up may take time-In order to register for your bank’s online program, you

will probably have to provide ID and sign a form at a bank branch. If you and

your spouse wish to view and manage their assets together online, one of you may

have to sign a durable power of attorney before the bank will display all of your

holdings together.

Learning curves- Banking sites can be difficult to navigate at first. Plan to invest

some time and\or read the tutorials in order to become comfortable in your virtual

lobby.

Bank site changes- Even the largest banks periodically upgrade their online

programs, adding new features in unfamiliar places. In some cases, you may have

to re-enter account information.

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E- BANKING SERVICES:

1. Online bill payment service:

Each bank has tie-ups with various utility companies, service providers and insurance

companies, across the country. It facilitates the payment of electricity and telephone bills,

mobile phone, credit card and insurance premium bills.

To pay bills, a simple one-time registration for each biller is to be completed. Standing

instructions can be set, online to pay recurring bills, automatically. One-time standing

instruction will ensure that bill payments do not get delayed due to lack of time. Most

interestingly, the bank does not charge customers for online bill payment.

2. Fund transfer:

Any amount can be transferred from one account to another of the same or any another

bank. Customers can send money anywhere in India. Payee’s account number, his bank

and the branch is needed to be mentioned after logging in the account. The transfer will

take place in a day or so, whereas in a traditional method, it takes about three working

days. ICICI Bank says that online bill payment service and fund transfer facility have

been their most popular online services.

3. Credit card customers:

Credit card users have a lot in store. With Internet banking, customers can not only pay

their credit card bills online but also get a loan on their cards. Not just this, they can also

apply for an additional card, request a credit line increase and God forbid if you lose your

credit card, you can report lost card online.

4. Investing through Internet banking:

Opening a fixed deposit account cannot get easier than this. An FD can be opened online

through funds transfer. Online banking can also be a great friend for lazy investors.

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Now investors with interlinked demat account and bank account can easily trade in the

stock market and the amount will be automatically debited from their respective bank

accounts and the shares will be credited in their demat account.

Moreover, some banks even give the facility to purchase mutual funds directly from the

online banking system.

So it removes the worry about filling those big forms for mutual funds, they will now be

just a few clicks away. Nowadays, most leading banks offer both online banking and

demat account. However if the customer have there demat account with independent

share brokers, then need to sign a special form, which will link your two accounts.

5. Recharging your prepaid phone:

Now there is no need to rush to the vendor to recharge the prepaid phone, every time the

talk time runs out. Just top-up the prepaid mobile cards by logging in to Internet banking.

By just selecting the operator's name, entering the mobile number and the amount for

recharge, the phone is again back in action within few minutes.

6. Shopping at your fingertips:

Leading banks have tie ups with various shopping websites. With a range of all kind of

products, one can shop online and the payment is also made conveniently through the

account. One can also buy railway and air tickets through Internet banking.

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Table 1: List of some banks operating E-Banking in India & their technology vendors

Bank Name Technology Vendor Service offering

ABN AMRO Bank Infosys (Bank Away) NetBanking

Abu Dhabi Commercial Bank Infosys (Bank Away) ADCB NetLink

Bank of India I-flex BOIonline

Citibank Orbitech (now Polaris) Citibank Online

Corporation Bank I-flex CorpNet

Deutsche Bank   db direct

Federal Bank Sanchez FedNet

Global Trust Bank Infosys (BankAway) ibank@gtb

HDFC Bank i-flex/ Satyam NetBanking

HSBC   Online@hsbc

ICICI Bank Infosys, ICICI Infotech Infinity

IDBI Bank Infosys (Bank Away) i-net banking

IndusInd Bank CR2 IndusNet

Punjab National Bank Infosys (Bank Away) Internet Banking 

Standard Chartered Bank In-House Me Standard Chartered Online

State Bank of India Satyam/Broadvision onlinesbi.com

UTI Bank Infosys (Bank Away) I connect

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INTERNET BANKING VERSUS TRADITIONAL BANKING

In spite of so many facilities that Internet banking offers us, we still seem to trust our

traditional method of banking and is reluctant to use online banking. But here are few

cases where Internet banking will turn out to be a better option in terms of saving your

money.

'Stop payment' done through Internet banking will not cost any extra fees but when done

through the branch, the bank may charge you Rs 50 per cheque plus the service tax.

Through Internet banking, you can check your transactions at any time of the day, and as

many times as you want to.

On the other hand, in a traditional method, you get quarterly statements from the bank

and if you request for a statement at your required time, it may turn out to be an

expensive affair. The branch may charge you Rs 25 per page, which includes only 30

transactions. Moreover, the bank branch would take eight days to deliver it at your

doorstep.

If the fund transfer has to be made outstation, where the bank does not have a branch, the

bank would demand outstation charges. Whereas with the help of online banking, it will

be absolutely free for you.

As per the Internet and Mobile Association of India's report on online banking 2006,

"There are many advantages of online banking. It is convenient, it isn't bound by

operational timings, there are no geographical barriers and the services can be offered at a

miniscule cost."

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IMPACT OF E-BANKING ON TRADITIONAL SERVICES

One of the issues currently being addressed is the impact of e-banking on traditional

banking players. After all, if there are risks inherent in going into e-banking there are

other risks in not doing so. It is too early to have a firm view on this yet. Even to

practitioners the future of e-banking and its implications are unclear. It might be

convenient nevertheless to outline briefly two views that are prevalent in the market.The

view that the Internet is a revolution that will sweep away the old order holds much sway.

Arguments in favor are as follows:

E-banking transactions are much cheaper than branch or even phone transactions. This

could turn yesterday’s competitive advantage - a large branch network - into a

comparative disadvantage, allowing e-banks to undercut bricks-and-mortar banks. This is

commonly known as the "beached dinosaur" theory.

E-banks are easy to set up so lots of new entrants will arrive. ‘Old-world’ systems,

cultures and structures will not encumber these new entrants. Instead, they will be

adaptable and responsive. E-banking gives consumers much more choice. Consumers

will be less inclined to remain loyal.

E-banking will lead to an erosion of the ‘endowment effect’ currently enjoyed by the

major UK banks. Deposits will go elsewhere with the consequence that these banks will

have to fight to regain and retain their customer base. This will increase their cost of

funds, possibly making their business less viable. Lost revenue may even result in these

banks taking more risks to breach the gap.

Portal providers are likely to attract the most significant share of banking profits. Indeed

banks could become glorified marriage brokers. They would simply bring two parties

together – eg buyer and seller, payer and payee.

The products will be provided by monolines, experts in their field. Traditional banks may

simply be left with payment and settlement business – even this could be cast into doubt.

Traditional banks will find it difficult to evolve. Not only will they be unable to make

acquisitions for cash as opposed to being able to offer shares, they will be unable to

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obtain additional capital from the stock market. This is in contrast to the situation for

Internet firms for whom it seems relatively easy to attract investment.

There is of course another view which sees e-banking more as an evolution than a

revolution.

E-banking is just banking offered via a new delivery channel. It simply gives consumers

another service (just as ATMs did).

Like ATMs, e-banking will impact on the nature of branches but will not remove their

value.

.Traditional banks are starting to fight back. The start-up costs of an e-bank are high.

Establishing a trusted brand is very costly as it requires significant advertising

expenditure in addition to the purchase of expensive technology (as security and privacy

are key to gaining customer approval).

E-banks have already found that retail banking only becomes profitable once a large

critical mass is achieved. Consequently many e-banks are limiting themselves to

providing a tailored service to the better off.

Nobody really knows which of these versions will triumph. This is something that the

market will determine. However, supervisors will need to pay close attention to the

impact of e-banks on the traditional banks, for example by surveillance of:

1. Strategy

2. Customer levels

3. Earnings and costs

4. Advertising spending

5. Margins

6. Funding costs

7. Merger opportunities and threats.

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THE INDIAN SCENARIO

Drivers of change

Advantages previously held by large financial institutions have shrunk considerably. The

Internet has leveled the playing field and afforded open access to customers in the global

marketplace. Internet banking is a cost-effective delivery channel for financial

institutions. Consumers are embracing the many benefits of Internet banking. Access to

one's accounts at anytime and from any location via the World Wide Web is a

convenience unknown a short time ago. Thus, a bank's Internet presence transforms from

'brouchreware' status to 'Internet banking' status once the bank goes through a technology

integration effort to enable the customer to access information about his or her specific

account relationship. The six primary drivers of Internet banking includes, in order of

primacy are:

1. Improve customer access

2. Facilitate the offering of more services

3. Increase customer loyalty

4. Attract new customers

5. Provide services offered by competitors

6. Reduce customer attrition

From the perspective of banking products and services being offered through Internet,

Internet banking is nothing more than traditional banking services delivered through an

electronic communication backbone, viz, Internet. But, in the process it has thrown open

issues which have ramifications beyond what a new delivery channel would normally

envisage and, hence, has compelled regulators world over to take note of this emerging

channel.

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Some of the distinctive features of E-banking are:

1. It removes the traditional geographical barriers as it could reach out to customers of

different countries / legal jurisdiction. This has raised the question of jurisdiction of law /

supervisory system to which such transactions should be subjected,

2. It has added a new dimension to different kinds of risks traditionally associated with

banking, heightening some of them and throwing new risk control challenges,

3. Security of banking transactions, validity of electronic contract, customers’ privacy,

etc., which have all along been concerns of both bankers and supervisors have assumed

different dimensions given that Internet is a public domain, not subject to control by any

single authority or group of users,

4. It poses a strategic risk of loss of business to those banks who do not respond in time,

to this new technology, being the efficient and cost effective delivery mechanism of

banking services,

5. A new form of competition has emerged both from the existing players and new

players of the market who are not strictly banks.

Figure 5: E-banking in various countries

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Chapter 2

Literature Review

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Literature Review

Product and Technology group, ICICI Bank, in its paper “Corporate banking

using technology in transactions” it was inferred that Information Technology has

revolutionized the services and mode of services offered by the banks to their

corporate clients. The emergence of E-Banking has enabled the banks to offer

real-time transactions and integrate all customers’ related functions. Indian Banks

are utilizing the new technology to provide better technology and convenient

access to its customers and India is thus poised to for a huge growth in the world

of electronic banking.

Chandana R, Unnithan, Paula M.C., Swatman in their research paper titled “E-

Banking Adaptions and Dot.Com viability: A comparison of Australian and

Indian experiences in the Banking sector” a comparative study of Australian and

Indian experiences in eBusiness was done, which seeks to identify the

effectiveness of dot.coms as indicators of eBusiness uptake and success on a

sector-by-sector basis was undertaken. It was concluded that the banking industry

is now a very mature one and banks are being forced to change rapidly as a result

of open-market forces such as the threat of competition, customer demand, and

technological innovations such as the growth of the Internet. E-Banking is a

successful strategic weapon for banks to remain profitable in a volatile, and

competitive market place of today in both Indian and Australian Economies

despite the differences of IT usage.

G. Kannabiran and P.C. Narayan discuss in their article the experiences of a

private-sector bank in deploying Internet banking and eCommerce in India.

Strategic alignment of business and IT strategies, planning and implementation of

e-banking initiatives, and management of benefits have been captured, along with

key contributions to development.

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Huggins points to the fact that traditional boundaries in banking are disappearing.

Using eBusiness methods, major retailers and telecom providers are starting to

offer financial services to their clients. Extending the value chain and offering

versatile services seems to be the key to retaining competitiveness in the sector.

Attitudes are also shifting from direct transactions to savings and investments, as

the baby boomers reach their fortis and fifties, and prepare for retirement.

Mario Martinez Guerreroin his paper titled “Profiling the adoption of Online

banking Services in the European Union” offers an empirical investigation on the

adoption of online banking services among European citizen. The use of e-

banking services is explained on the basis of socio-demographic and Internet –

specific behavioral indicators. The performed analyses provide support for the

influence of country, age, profession and several Internet behaviors on the use of

E-banking.

The Indian Internet Banking Journey In 2001, a Reserve Bank of India survey

revealed that of 46 major banks operating in India, around 50% were either

offering Internet banking services at various levels or planned to in the near

future. According to a research report,( India Research, Kotak Securities, May

2000.) while in 2001, India's Internet user base was an estimated 9 lakh; it was

expected to reach 90 lakh by 2003. Also, while only 1% of these Internet users

utilized the Internet banking services in 1998, the Internet banking user base

increased to 16.7% by mid- 2000.

Customers usually perceive risks in conducting transactions electronically and

particularly if the transactions involve money. Risk perception can be of six

different types: time risk, finacial risk, performance risk, psychological risk and

safety/confidentiality risk. It is generally considered that risk perception could be

higher for electronic banking services. This study aims to understand extent to

which whether this is consideration is valid as well as to determine the levels of

risk perception differences among those using Internet Banking and those not

using it.

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Chapter 3

RESEARCH

OBJECTIVE &

METHODOLOGY

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RESEARCH OBJECTIVE

Each research study has its own specific purpose. This research study has the following

objectives:-

To study the awareness level of people regarding E-Banking.

To find out the factors that influences the adoption of E-Banking services.

To find out the differences in risk perception between those using E-Banking and

those not using E-banking.

To know the causes why customers are not using internet banking.

To find out the main reasons for which people use internet banking.

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RESEARCH METHODOLOGY

TITLE:

“A Study of Customer perception towards E-banking services offered in

banking sector”

TITLE JUSTIFICATION:

This study mainly deals with the analysis of the differences in risk perceptions between

bank customers using Internet Banking and those not using Internet Banking and it

showed that risk perceptions in terms of financial, psychological and safety risks among

customer not using the internet was more meaningful than those using internet banking.

Customers not preferring to use internet banking thought that they would be swindled

when using this service, and therefore, are particularly careful about high risk expectation

during money transfers from and between accounts.

SCOPE OF THE STUDY:

Although many major banks have started offering E-banking services, the slow pace will

continue until the critical mass is achieved for PC, internet connections and telephones.

However, the upsurge of service class with growing demands is pressurizing the

government and bureaucracy in the country to support and develop new initiatives for a

faster spread of E-banking. But then to there is a fear in the mind of customer using

internet as a medium for the banking transaction.

Private and foreign banks are trying to turn more and more customer towards the

usage of internet for the banking transaction. This study is basically to know the relation

of various independent variables on the customer usage of internet for banking.

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RESEARCH DESIGN

RESEARCH TYPE

We use descriptive research and exploratory research design in our studies. Descriptive

research is also called Statistical Research. The main goal of this type of research is to

describe the data and characteristics about what is being studied. Descriptive research is

used to obtain information concerning the current status of the phenomena to describe

"what exists" with respect to variables or conditions in a situation.

Here we also tried to find out the main cause why there is perceptual blocking of the

Indian customers towards internet banking. The methods involved range from the survey

which describes the status quo, the correlation study which investigates the relationship

between variables, to developmental studies which seek to determine changes over time.

DATA COLLECTION

Primary Data: Structured Questionnaire

Secondary Data: Online Database, Journals, Surveys

SAMPLING

We have used convenience sampling technique. It is also called haphazard or accidental sampling. Members of the population are chosen based on their relative ease of access. To sample friends, co-workers, or shoppers at a single mall, are all examples of convenience sampling. Sometimes called grab or opportunity sampling, this is the method of choosing items arbitrarily and in an unstructured manner from the frame. Though almost impossible to treat rigorously, it is the method most commonly employed in many practical situations.

Sample Technique: Convenience sampling

Sample Area: NCR

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Sample Size: 120

LIMITATIONS OF THE STUDY:

The survey was done in the NCR region and may not truly express the opinion of the whole country.

There is lack awareness on the part of people about E-banking.

Most of the people are not techno-savvy. Though internet penetration is growing still it is not at that level.

Sample Size of the research may not be substantial.

There was a lack of time on the part of respondents.

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Chapter 4

DATA ANALYSIS &

RESULTS

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DATA ANALYSIS & INTERPRETATION

1) Age group :

1).18-25__,2). 26-35__, 3).36-45__, 4).46-60__, 5).60 +____Years

Statistics

agegroup

N Valid 120

Missing 0

Mean 2.2083

Median 2.0000

Mode 2.00

Std. Deviation 1.17320

Variance 1.376

agegroup

Frequency Percent Valid Percent

Cumulative

Percent

Valid 18-25 40 33.3 33.3 33.3

26-35 42 35.0 35.0 68.3

36-45 16 13.3 13.3 81.7

46-60 17 14.2 14.2 95.8

60+ 5 4.2 4.2 100.0

Total 120 100.0 100.0

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INTERPRETATION:

From the above graph we can see that the maximum no. of respondents are in the age group of 26-35 with a frequency of 42. The second highest no. of respondents lie in the age group of 18-25.

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2) Gender : 1) Male 2) Female

Statistics

Gender

N Valid 120

Missing 0

Mean 1.3250

Median 1.0000

Mode 1.00

Std. Deviation .47034

Variance .221

Gender

Frequency Percent Valid Percent

Cumulative

Percent

Valid male 81 67.5 67.5 67.5

female 39 32.5 32.5 100.0

Total 120 100.0 100.0

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INTERPRETATION:

The above graph shows another demographic variable of the respondent set i.e gender.

From the above bar chart we can see that the maximum no. of respondents were male

with a frequency of 80% and the rest were females.

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3) Frequency of visiting your bank branch per month?

Case Processing Summary

Cases

Valid Missing Total

N Percent N Percent N Percent

agegroup * Frequency of

visiting your bank branch per

month?

120 100.0% 0 .0% 120 100.0%

agegroup * Frequency of visiting your bank branch per month? Crosstabulation

Count

Frequency of visiting your bank branch per month?

TotalLess than 1 1 to 3 times 3 to 8 times 8 to 12 times over 12 times

agegroup 18-25 15 4 7 0 14 40

26-35 10 10 5 7 10 42

36-45 1 0 4 8 3 16

46-60 0 9 0 2 6 17

60+ 0 4 0 0 1 5

Total 26 27 16 17 34 120

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Pearson Chi-Square 60.143a 16 .000

Likelihood Ratio 67.364 16 .000

Linear-by-Linear Association 1.103 1 .294

N of Valid Cases 120

a. 15 cells (60.0%) have expected count less than 5. The minimum

expected count is .67.

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INTERPRETATION:

Here we have plotted a cross tab between the two variables i.e age group and frequency

of visit to the branch. The cross tab helps us to find that whether there is any association

between the two variables. Pearson Chi-square test statistic value of .000 shows that there

is an association between the two variables. We can see from the chart that maximum no.

of respondents in the age group 18-25 visit less than 1 and maximum no. respondents in

the age group 26-35 visit over 12 times.

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4) Which of the following e-banking facilities do you think should be provided by your

bank?(please choose the single most important one)

1. Internet banking

2. Telephone banking

3. Mobile banking

4. SMS banking

INTERPRETATION:

The above pie chart shows that 40.8% of the respondents thought of Internet Banking as a must to be provided by there bank. The second most important E-banking facility was the M-banking with a percentage of 26.7%.

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5) The main reason that you typically visit your bank branch (please choose the single most important reason)?

1. To make a deposit2. To get advice for investment options3. To inquire about a balance4. To withdraw cash5. Others

Statistics

The main reason that you typically visit your branch for?

N Valid 120

Missing 0

Mean 2.8417

Median 3.0000

Mode 3.00a

Std. Deviation 1.22300

Variance 1.496

a. Multiple modes exist. The smallest value is shown

The main reason that you typically visit your branch for?

Frequency Percent Valid Percent

Cumulative

Percent

Valid To make a deposit 25 20.8 20.8 20.8

To get advice for investment

options18 15.0 15.0 35.8

To inquire about a balance 35 29.2 29.2 65.0

To withdraw cash 35 29.2 29.2 94.2

Others 7 5.8 5.8 100.0

Total 120 100.0 100.0

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INTERPRETATION:

The above pie chart shows the most important reason for which a person visits the bank

branch. As we can see from the graph that 29.2% of the respondents said that they visit

the bank to withdraw cash. Another 29.2% of the respondents visited to inquire about the

balance whereas 20.8% respondents visited bank for making a deposit to there account.

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6) Do you have an internet banking account?

a) Yes

b) No

Statistics

Do you have an internet banking

account?

N Valid 120

Missing 0

Mean 1.2583

Median 1.0000

Mode 1.00

Std. Deviation .43955

Variance .193

Do you have an internet banking account?

Frequency Percent Valid Percent

Cumulative

Percent

Valid yes 89 74.2 74.2 74.2

no 31 25.8 25.8 100.0

Total 120 100.0 100.0

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Case Processing Summary

Cases

Valid Missing Total

N Percent N Percent N Percent

agegroup * Do you have an

internet banking account?120 100.0% 0 .0% 120 100.0%

agegroup * Do you have an internet banking account?

Crosstabulation

Count

Do you have an internet banking

account?

Totalyes no

agegroup 18-25 34 6 40

26-35 39 3 42

36-45 14 2 16

46-60 12 5 17

60+ 1 4 5

Total 100 20 120

Chi-Square Tests

Value df

Asymp. Sig. (2-

sided)

Pearson Chi-Square 19.451a 4 .001

Likelihood Ratio 15.045 4 .005

Linear-by-Linear Association 8.342 1 .004

N of Valid Cases 120

a. 4 cells (40.0%) have expected count less than 5. The minimum

expected count is .83.

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INTERPRETATION:

The above graph shows the association between age group and user- non-user status. The

Pearson chi-square value of .001 shows that there is an association between the two.

As we can see that the most of the respondents in the age group 26-35 have an internet

banking account and very few of the respondents in the age group 60+ have an internet

account.

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7) What banking services do you use which your Internet bank offers? (Please check all those which you are currently using)

1. Seeking product and rate information

2. Calculate loan payment information

3. Download loan applications

4. Download personal bank transaction activity.

5. Check balances on-line

6. Apply for consumer loans or credit cards online

7. Inter-account transfers

8. On-line bill payments

9. Others

Case Summary

Cases

Valid Missing Total

N Percent N Percent N Percent

$var22a 100 83.3% 20 16.7% 120 100.0%

a. Dichotomy group tabulated at value 1.

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$var22 Frequencies

Responses

Percent of CasesN Percent

banking servicesa prodinfo 55 11.9% 55.0%

loaninfo 57 12.3% 57.0%

Down_loanapp 52 11.2% 52.0%

Trans_activity 45 9.7% 45.0%

Chk_balance 57 12.3% 57.0%

Apply_loan 34 7.3% 34.0%

Acc_transfer 72 15.6% 72.0%

Bill_payment 69 14.9% 69.0%

others 22 4.8% 22.0%

Total 463 100.0% 463.0%

a. Dichotomy group tabulated at value 1.

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INTERPRETATION:

The above graph shows the type of services that most internet account holders use. As we can see from the graph that most of the internet bank users use there internet account for making transfer of funds, followed up by payment of bills online with a percentage of 15%.

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8) What was the single most important reason that you choose your current bank as your Internet bank? (please choose one)

1. I have a traditional bank account with the same bank2. The brand name of the bank3. The excellent service offered by this bank4. Other

INTERPRETATION:

The pie chart above shows for what reason the respondents choose there current bank as there internet bank. Most of the respondents had an internet bank account because of the brand name of the bank. 32% had an account in the bank in which they had a traditional account. 28% opened because of the excellent services provided.

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9) In addition to your Internet bank account, do you also have a traditional bank account?

1. Yes2. No

Statistics

Do you also have a traditional bank account in addition to an

internet account?

N Valid 100

Missing 20

Mean 1.0000

Median 1.0000

Mode 1.00

Std. Deviation .00000

Variance .000

Do you also have a traditional bank account in addition to an internet

account?

Frequency Percent Valid Percent

Cumulative

Percent

Valid yes 100 83.3 100.0 100.0

Missing System 20 16.7

Total 120 100.0

INTERPRETATION:

The above table shows that all the respondents who had an internet banking account also

had a traditional baking account.

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10) What are the reasons for which you opened an Internet bank account? (Please

prioritize the following list in the order of importance).

(Rank on a scale of 1-6 where1 being the most important & 6 being the least important)

1. Convenience (24 hours service, anywhere connectivity) ______________2. Curiosity______________3. Safe and secure______________4. Low service charge______________5. Easy to maintain my banking transaction activity______________6. Online shopping ___________________

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INTERPRETATION:

The above graph shows the ranking of the reasons why respondents had opened an internet banking account. We rated the factors on a 6 point rating scale ranging from most important to least important. Most of the respondents gave convenience as rank1. The second most important factor was ease of maintenance.

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11) For your choice of an Internet bank, please indicate how much each of the following factors are/were important to you:(Rate on a scale of 1-6 where 1 being most important & 6 being least important)

1. Better rate and lower service charge______________2. Bank familiarity______________3. Security of Transaction______________4. Convenience (24 hours service from anywhere) ______________5. Quick service (transaction completed in seconds instead of minutes)

______________6. Variety of features and services that are offered(for example; bill payment,

account reconciliation, electronic bill payment) ______________7. Integrated value-added services using other on-line services and resources (for

example; other brokerage account summary) ______________

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INTERPRETATION:

The above graph rates the decisive factors when opening a internet banking account. Most of the gave rank 1 to convenience(24 hour service from anywhere).The second most important factor was security of transaction.The third most important factor was the familiarity with the bank.

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12) The main reasons that you might fear for while opening an Internet bank account ? (check all that apply)

1. Never heard of Internet banking

2. Concerned about security

3. Haven't taken time to open an account

4. Don't see any real value in having this type of account

5. Too new. I would like to see how it works, then I may open an account

6. Not available through my bank

7. Others

Case Summary

Cases

Valid Missing Total

N Percent N Percent N Percent

$var33a 120 100.0% 0 .0% 120 100.0%

a. Dichotomy group tabulated at value 1.

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$var33 Frequencies

Responses Percent of

CasesN Percent

reasons not opening a e-

bank acca

Var_unaware 65 17.3% 54.2%

Var_security 80 21.3% 66.7%

Var_timeconst 38 10.1% 31.7%

Var_novalue 34 9.0% 28.3%

Var_new 83 22.1% 69.2%

Var_unavailable 44 11.7% 36.7%

Var_others 32 8.5% 26.7%

Total 376 100.0% 313.3%

a. Dichotomy group tabulated at value 1.

INTERPRETATION:

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The above graph shows why most of the people are afraid of opening an internet banking account and what are the reasons behind it.

Most of the respondents were concerned about the security of transactions-21%.

The second constraint was that people are still unaware about it-17%.

The third major constraint was that the bank doesn’t have such a service-12%

Chapter 5

CONCLUSIONS & SUGGESTIONS

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CONCLUSIONS

The study tries to figure out what are the factors that affect the usage behavior of the

customers towards E-banking services and what are the reasons for perceptual blocking

towards E-banking.

The conclusions that can be drawn are:

1. Most of the people use E-banking because of the ease and convenience of doing

transactions 24 hours from anywhere.

2. Most of the people in the age group of 18-35 i.e the youth are familiar with the

concept of E-banking and are among the prominent users of this facility.

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3. Most of the people open an internet banking account with a bank because of the

brand name of the bank and also due to the fact that they have a traditional

banking account with the same bank.

4. Most of the people in the age group of 46+ are either unaware or have a

disinterest in the service. They are more satisfied with traditional system of

banking.

5. The reasons for not opening an internet account are mainly due to unawareness or

due to security concerns.

6. Most of the people who do internet banking do so for online transaction of money

and for shopping purposes.

7. The masses are still not using the services thoroughly due to various hurdling

factors like insecurity and fear of hidden costs etc.

SUGGESTIONS

E-banking would drive us into an age of creative destruction due to non-physical

exchange, complete transparency giving rise to perfectly electronic market place and

customer supremacy. We can see the time is changing and with the passage of time

people are accepting technology but there is still a lot of perceptual blocking still to be

removed.

The banks need to increase the penetration of E-banking to the masses. This can be

achieved through increasing the awareness levels of the customers towards E-banking.

Some of the ways to do this are:

1. Give proper training to customers for using E-banking.

2. Create a trust in the mind of customers towards security of there accounts.

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3. Provide a platform from where the customers can access different accounts at

single time without extra charge.

4. Make the site more user friendly.

5. Customers should be motivated to use E-banking facilities more.

Chapter 6

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Bibliography

Bibliography

BOOKS

1. Marketing research by BERRY G.C

2. Marketing Research by Malhotra N.K. , fifth edition

3. E-banking: the global perspective by Gupta Vivek

4. E-Commerce in Indian banking by Bhasin

WEBSITES

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http://www.icmrindia.org/free%20resources/casestudies/banking1.htm#b1

www.banknetindia.com

www.google.com

SOFTWARE’S USED

1. SPSS

2. MS-EXCEL

3. MS-WORD

Chapter 7

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ANNEXURE

ANNEXURE

QUESTIONNAIRE:

I'm Sunil Khatri from Amity Business School. I am conducting a survey for the purpose of my research work and would like to speak to you regarding the same. This interview will take about 5-10 minutes. I would like to state that there are no right or wrong answers and I’m only interested in your opinion.

1. Frequency of visiting your bank branch per month?

1. Less than 12. 1 to 3 times3. 3 to 8 times4. 8 to 12 times5. over 12 times

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2. The main reason that you typically visit your bank branch (please choose the single most important reason)?

a) To make a depositb) To get advice for investment optionsc) To inquire about a balanced) To withdraw cashe) Others

3. Which of the following e-banking facilities do you think should be provided by your

bank?(please choose the single most important one)

a) Internet banking

b) Telephone banking

c) Mobile banking

d) SMS banking

4. Do you have an internet banking account?

a) Yes

b) No

If the answer to the previous Question is Yes, please answer Item no.5 to 9. Otherwise please

skip Item no.5 to 9.

5. What are the reasons for which you opened an Internet bank account? (Please prioritize

the following list in the order of importance).

(Rank on a scale of 1-6 where1 being the most important & 6 being the least important)

a) Convenience (24 hours service, anywhere connectivity) ______________b) Curiosity______________c) Safe and secure______________d) Low service charge______________e) Easy to maintain my banking transaction activity______________f) Online shopping ___________________

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6. What banking services do you use which your Internet bank offers? (Please check all those which you are currently using)

a) Seeking product and rate information

b) Calculate loan payment information

c) Download loan applications

d) Download personal bank transaction activity.

e) Check balances on-line

f) Apply for consumer loans or credit cards online

g) Inter-account transfers

h) On-line bill payments

i) Others

7. What was the single most important reason that you choose your current bank as your Internet bank? (please choose one)

a) I have a traditional bank account with the same bankb) The brand name of the bankc) The excellent service offered by this bankd) Others

8. In addition to your Internet bank account, do you also have a traditional bank account?

a) Yesb) No

9. For your choice of an Internet bank, please indicate how much each of the following factors are/were important to you:(Rate on a scale of 1-6 where 1 being most important & 6 being least important)

1. Better rate and lower service charge______________

2. Bank familiarity______________

3. Security of Transaction______________

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4. Convenience (24 hours service from anywhere) ______________

5. Quick service (transaction completed in seconds instead of minutes) ______________

6. Variety of features and services that are offered(for example; bill payment, account reconciliation, electronic bill payment) ______________

7. Integrated value-added services using other on-line services and resources (for example; other brokerage account summary) ______________

10. The main reasons that you might fear for while opening an Internet bank account ? (check all that apply)

1. Never heard of Internet banking

2. Concerned about security

3. Haven't taken time to open an account

4. Don't see any real value in having this type of account

5. Too new. I would like to see how it works, then I may open an account

6. Not available through my bank

7. Others

Respondent Details:

1) Name : ____________________________________________________

2) Address : ____________________________________________________

3) Mobile & E-Mail : ____________________________________________________

4) Gender : 1) Male 2) Female

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5) Age group : 1).18-25__, 2). 26-35__, 3).36-45__, 4).46-60__, 5).60 +____Years

THANK YOU FOR SPARING YOUR PRECIOUS TIME

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