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Chapter – II
REVIEW OF LITERATURE
After liberalization, globalization and privatization, Indian banking system has
become quite complicated and varied. Banks have evolved into a technology for
delivering a wide range of financial services. IT has become responsible to bring a
paradigm shift in performance of the banks. The perceptions and expectations of the
customers and employees are continuously changing.
During the period of research, various libraries / institutions were visited. The
available related literature in these libraries / institutions was studied which proved to
be very useful in getting an insight into the main objectives of the study and finalizing
the methodology. An attempt is made in this chapter to review the Impact of
Technology on banking operations, under the head – ‘An Impact Study in the
Operations of Public and Private Sector Banks with reference to Andhra Bank and
ICICI Bank – Visakhapatnam City’. However for the sake of convenience, the
studies have been broadly classified into the following areas.
1. Indian banking (changes, trends, challenges)
2. Technology in banking
3. Information technology
4. E- banking
5. Internet banking
6. Online Banking
7. Mobile Banking
8. ATM
40
9. Service quality & SERVIQUAL Dimensions
10. Customer satisfaction and CRM.
11. Pre e-banking to Post e-banking (Traditional banking to E- banking).
12. Public Sector and Private Sector banks.
13. Employee Perceptions.
2.1 Indian Banking:
Indian banking today is witnessing drastic changes. The liberalization of the financial
sector and banking sector reforms have exposed the Indian banks to a new economic
environment that is characterized by increased competition and new regulatory requirements. As
a result, there is a transformation in every sphere of activities of the banks in India, especially in
Governance, nature of business, style of functioning and delivery mechanisms.
Liberalization and de-regulation process from 1991-92 has made a sea change in the
banking system. Globalization would gain greater speed in the coming years particularly on
account of expected opening up of financial services under World Trade Organization. Four
trends change the banking industry the world over, viz. 1) Consolidation of
players through mergers and acquisitions, 2) Globalization of operations, 3) Development of new
technology and 4) Universalisation of banking.
The new generation banks brought the necessary competition into the industry and
spearheaded changes towards higher utilization of technology, improved customer service and
innovative products. In spite of their strong and larger network, public sector banks proved to be
surprisingly quick and flexible to meet the emerging needs of customers. Change is the order of
the day.
41
Kulkarni G.R. (1980)22 examines the nature and. significance of the international
operations of Indian banks in the furtherance of their business strategies.
Malhotra R.N. (1990)23 reveals that, after 20 years of banks nationalization and
tremendous growth witnessed, the commercial banking system has entered a phase of
consolidation. The phase has coincided with considerable diversification of banking
services, a substantial measure of liberalization of the regulatory regime for imparting
flexibility to the financial system.
Kamesam Vepa (2001)24 analysed the future of Indian banking. He describes
some challenges that call for a dynamic, aggressive work culture to meet the demands of
customer relationships co-operate governance, and regulatory prescriptions. Technology
would play a pivotal role by providing solutions in the form of data ware housing and
analysis for decision support consideration of financial sector.
Kapil Sheeba (2004)25 concluded that Indian banking industry has embraced
many new features like Internet banking, ATMs, Phone banking etc. banks are now able
to offer products and services which were difficult or impossible with traditional banking.
But the banks in India still have to go a long way.
22 Kulkarni G.R., “International Dimensions of Indian Banking “, Economic and Political Weekly, Vol. 15, No. 48, Nov. 29, 1980, pp. M127. 2 Malhotra R.N., “On the Occasion of Bank Economists Conference – Banking In 1990s”, Reserve Bank of India Bulletin, January 1990. 24 Kamesam Vepa, “Information Technology Challenges to Banks”, Reserve Bank of India Bulletin. 2001. 25 Kapil Sheeba, “E-Banking: In Nascent Stage in India”, Professional Banker,2004.
42
Venugopal Dharmalingam (2004)26 describes that Post nationalization of
banks, the banking activities have increased by leaps and bounds. To remain
competitive, banks are adopting core banking system, which provides interlinkage
between branches. While formulating a technology policy, banks are taking into account
the vision of five to ten years and technology which is compatible to Basel II norms.
Rao N.V.M, Prakash Singh and Maheshwari Neeru (2005)27 analyses a
comparison of various models using metric method. The different elements of the metric
include revenue generation, value proposition, infrastructure etc. A mathematical model
has been developed to analyse whether investments in e-initiative increased productivity
and profitability in the Indian banking system. The model suggests that the performance
of the banking sector has improved considerably. Profitability, customer satisfaction, and
many other parameters show a market improvement.
Sahoo B. K., Sengupta J. K. and Mandal A. (2007)28 attempts to examine the trends
of the Indian commercial banks for the period: 1997-98 to 2004-05. First, the increasing average
annual trends in TE for all ownership groups indicate an affirmative gesture about the effect of
the reform process on the performance of the Indian banking sector. Second, the higher cost
efficiency accrual of private banks over nationalized banks indicate that nationalized banks,
26 Venugopal Dharmalingam, “Technology in Banks: Some Thoughts for the Future”, Professional Banker, 2004. 27Rao N.V.M, Prakash Singh, and Maheshwari Neeru, “A framework for evaluating e-Business models and Productivity Analysis for Banking Sector in India”, Journal of Internet banking and commerce, Vol. 10, No. 2, Summer 2005. 28 Sahoo, B. K., Sengupta, J. K. and Mandal, A., “Productive Performance Evaluation of the Banking Sector in India Using Data Envelopment Analysis”, International Journal of Operations Research, 4(2), 63-79. , 2007
43
though old, do not reflect their learning experience in their cost minimizing behaviour due to X-
inefficiency factors arising from government ownership.
Daddihal V.S. and Kulakarni P.K. (2008)29 analyses the changes in Virtual
Banking which includes Automated teller machines (ATMs), Shared ATM Net work,
Electronic fund Transfer at Point of Scale( EFTPOS), Smart Card, Phone Banking and
Internet Banking and related services.
Ipshita Bansal and Rinku Sharma (2008)30 sheds light on the Achievement of
Indian banking services - Formulation of customer service committee, Improvement in
the collection and processing of check, settlement of claims of the Deceased Depositors,
Improvement in Grievance Redressal Mechanism, Door step banking, Credit card
facilities, etc.
Uppal R.K. and Rimpi Kaur (2008)31 concluded that at present, government
should introduce third banking sector reforms. The major factors, which are critical for
the success in the complex scenario, are: Commitment to develop strong long lasting
relationship with customers and to provide quality services.
29 Daddihal V.S. and Kulakarni P.K, “Technology in Banks, A case Study of HDFC Bank”, Professional Banker, 70, April 2008. 30 Ipshita Bansal and Rinku Sharama,“Indian Banking Services : Achievements and Challenges”, The ICFAI University, Journal of Services Marketing, Vol VI, No.2, 2008. 31 Uppal R.K. and Rimpi Kaur, “ Banking Sector Reforms: Issues, Policies and Outlook”, Customer Relationship management in Indian Banking industry, New Century Publications, New Delhi, India, First Published 2008.
44
Diwanji Abizer (2010)32 reveals that Indian banks had to clean up their systems
and practices to ensure stability in a recovering economy. Four challenges must be
addressed before success can be achieved.
Moushumi Datta (2010)33 identified the emerging trends in Internet banking,
ATM’s, Credit cards and debit cards, Mobile phone usage, 24 hour banking service,
Unhindered competition amongst banks, privatization of the banking sector, Participation
of Foreign investment, Increased presence and influence of foreign banks.
Subbarao Duvvuri (2010)34 notes that the global financial crisis marked failure
in several parts of the financial system; but the one segment that remained robust amidst
failure all around was the payment and settlement system- the most technology intensive
part of the financial system.
2.1.1 Technology in Banking:
For the banks, technology has emerged as a strategic resource for achieving
higher efficiency, and for customers, it is the realization of their anywhere, anytime,
anyway banking dream. The recent trends show that most brick and mortar banks are
shifting from a product – centric model to a customer – centric model as they develop
their new e-banking capabilities. The delivery channels include direct up connections,
private networks, public networks etc, banks increasingly use internet as a channel for
32 Diwanji Abizer, “Indian Banking Sector 2010 - Opportunities and Challenges”, Chartered Financial Analyst – The Analyst, The Icfai University Press, February 2010. 33 Moushumi Datta, “Emerging Trends Influencing Banking in India”, Readers Shelf, Volume 6, Issue No.6, March, 2010. 34Subbarao Duvvuri, “Harnessing Technology to Bank the Unbanked”, Banking Technology Excellence Awards 2009 at IDRBT Hyderabad , 18th June , 2010.
45
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.
Mathew Joseph, Cindy McClure and Beatriz Joseph (1994)35 analyses the use
of technology in the delivery of banking services. Importance-performance grid, results
indicated that consumers have perceptual problems with some aspects of electronic
banking. Some strategic implications are discussed.
Radha V. and Gulati P. (2004)36 discusses that new technology always brought
some more fraudulent criminal activities developed around these technologies.
Prevention is basically a cycle of monitor, analyze, detect, act and protect. In this study
we discuss about the technology based opportunities that thieves take advantage and its
prevention and how to build future technology based banking services that can limit the
frauds.
James M Curran; Matthew L Meuter (2005)37 have demonstrated in their
research that multiple factors need to be considered when introducing technologies into
the service encounter. The practical application of these findings may guide marketers to
emphasize issues related to certain critical constructs when utilizing SSTs in their service
delivery.
35 Mathew Joseph,“Service quality in the banking sector: the impact of technology on service delivery”, International Journal of Bank Marketing, MCB University Press, 17/4,1999, pp. 182-191. 36 Radha V. and Ved P. Gulati, Journal of International Bank and Commerce, 2004. 37 James M Curran; Matthew L Meuter, “Self-service technology adoption: comparing three technologies” Journal of Services Marketing. Vol 19; No 2, 2005. pp.103-113.
46
Walfried M Lassar; Chris Manolis; Sharon S Lassar (2005)38 distinguishes
between innate consumer innovativeness, a generalized personality trait, and internet-
domain-specific or actualized innovativeness in order to explore consumer characteristics'
impact on adoption. Data are analyzed using logistic regression. Findings - While results
confirm the positive relationship between internets related innovativeness and online
banking them also surprisingly show that general innovativeness is negatively related to
online banking.
George Rigopoulos and Dimitrios Askounis (2007)39 explained that
Technology Acceptance Model (TAM) have been used for measuring users’ attitude
towards adoption of several IT based services. We present the model developed, as well
as initial results from a relevant survey at a Greek bank’s target users group.
Sonja Grabner-Krauter and Rita Faullant (2008)40 confirm the influence of
internet trust on risk perception and consumer attitudes towards internet banking.
Propensity to trust is a determinant not only for interpersonal relationships but also for
trust in technological systems.
38 Walfried M Lassar; Chris Manolis; Sharon S Lassar, “The relationship between consumer innovativeness, personal characteristics, and online banking adoption”, International Journal of Bank Marketing. Vol 23, No 2, 2005. pp. 176-199. 39 George Rigopoulos and Dimitrios Askounis, “A TAM Framework to Evaluate Users’ Perception towards Online Electronic Payments”, Journal of Internet Banking and Commerce, Vol. 12, No.3, December 2007 40 Sonja Grabner-Kra¨uter,and Rita Faullanr, ‘International Journal of Bank Marketing’, Emerald Group Publishing Limited., Vol. 26, No. 7, pp. 483-504, 2008
47
Gbolahan S. Osho (2008)41 indicate that competition among banks in this
attractive industry is a factor of the one offering the most convenient and appealing
technological advances.
Jha B.K., Gupta S.L. and Puneet Yadav (2008)42 analyse that the new
techniques hold the potential in making banks more profitable and the banking
experience more convenient for customers. At present not many customers in India are
using new techniques. But the trend is catching up albeit slowly.
Nagmal Reddy G. (2009)43 discusses that technology would make the customers
desert bank branches and the banks to lose personal touch. But the IT Developments
have only brought the customers closer to the banks.
Sven C. Berger (2009)44 studies the adoption of in-branch self-service
applications for sales purposes and integrates the moderating effects of personality and
relationship. This study aims to explain the adoption of self-service technology with
pro-active sales applications.
41 Gbolahan S. Osho, “How Technology is Breaking Traditional Barriers in the Banking Industry: Evidence from Financial Management Perspective”, 16 European Journal of Economics, Finance And Administrative Sciences - Issue 11,2008. 42 Jha B.K. and Gupta S.L, “Use and Effectiveness of New Technologies in Indian Banking: A Study” Icfai journal of services Marketing, Vol.VI, No.1, March 2008. 43 Nagmal Reddy G., “IT – Based Banking Services, Enhancing Efficiency.” Chartered Financial Analyst, November, The ICFAI University Press, 2009. 44 Sven C. Berger, “Self-service technology for sales purposes in branch banking - The impact of personality and relationship on customer adoption”, International Journal of Bank Marketing, Emerald Group Publishing Limited, Vol. 27 No. 7, 2009 pp. 488-505.
48
2.2 Information Technology:
IT and India have become synonymous. Information Technology shrunk the
world as a result of which, time & distance have become non-entities to large extent.
Technological innovation both extremely and internally brought about changes in
banking sector. The external innovation can be found in product and service offering.
Similarly internal innovation is found in operational functions of bank. This enabled the
banks to offer better quality of services to customers besides ensuring accurate
information at a faster rate on banking transaction.
Thus, the adoption of IT in banking has undergone several changes with the
passage of time, and it has become inseparable segment of banking organization.
Competitive advantage in the service industry is achieved through superior
customer service as emphasized by Beverley Lloyd-Walker and Yen Ping Cheung
(1998).45 The study looks at the ways in which IT is being used to support superior
quality customer service initiatives in the highly competitive Australian banking industry.
The extent to which the need to improve service quality influences IT planning and
purchases, and shifts in the level of influence over recent years, are detailed.
Hogan W.P. (1999)46 examines the prospects for banking. After a brief appraisal
of the knowledge available at the time of the Wallis Inquiry in 1997, attention is directed
to issues associated with asymmetric information and then technology.
45 Beverley Lloyd-Walker and Yen Ping Cheung, “IT to support service quality excellence in the Australian banking industry”, Managing Service Quality, Vol. 8, No 5, 1998. pp. 350-358. 46 Hogan.W.P, “The Future of Banking: A Survey”, Economic Record, Vol. 75, No 4, 1999. pp. 417-427.
49
The analysis by Mark R Nelson (1999)47 is based on historical analysis of the
industry literature, trends and patterns surrounding the interface between the
marketing and information services functions within the industry.
Idowu P.A., Alu A. and Adagunodo E.R. (2002)48 described the impact of IT
on the banking industry in Nigeria.
V.P. Gulati, M.V. Sivakumaran and C.Manogna (2002)49 reveals their views
on IT framework in Indian Banking sector. An attempt is made in this regard to identify
the principal components of a structured IT plan tailored to the needs of the banking
sector in India.
Johannes Liebach Lüneborg and Jørn Flohr Nielsen (2003)50 views on
survey data from 278 retail banks in Denmark, Finland, Norway and Sweden the study
analyzes differences due to size in the use of Internet-banking and customer-relationship
management. The findings mainly indicate that the positive effects of using customer-
focused technology are strongest in small banks.
47 Mark R Nelson, “Bank marketing and information technology: a historical analysis of the post-1970 period”, International Journal of Bank Marketing, Vol. 17, No. 6, 1999, pp. 265-274. 48 Idowu P.A, Alu A, and Adagunodo E.R, “The Effect of Information Technology on the Growth of the Banking Industry in Nigeria”, Electronic Journal of Information Systems in Developing Countries, Vol. 10, 2002. 49 Gulati.V.P, M.V. Sivakumaran and C.Manogna, “IT framework for the Indian banking sector”, ASCI JOURNAL OF MANAGEMENT 31(1&2), Copyright © 2002. 50 Johannes Liebach Lüneborg and Jørn Flohr Nielsen, “Customer-focused Technology and Performance in Small and Large Banks”, European Management Journal, Vol. 21, No. 2, pp. 258-269, 2003.
50
Bodo Land and Mark Colgate (2003)51 Investigates the impact of IT in a
relationship marketing context. This study provides empirical evidence that indicates
that those customers who do not exhibit an “IT gap” have more positive perceptions of
their relationship with their financial service provider.
Vijaysree (2004)52 analyzes that Information Technology (IT) is not merely a
technical function, but a management process which needs to be managed effectively.
Pereira M.J. (2004)53 presents a study of the Portuguese financial sector during
the period 1994-1999. The conclusion from this research indicates a complementary
effect (not substitution effect) between IST and labour, the strategic impact of IST in
several organisation areas, and the need to design new functions, other than the
traditional Cobb-Douglas function, to evaluate the impact of IST on organisations.
Seethalakshmi (2004)54 concludes that in the IT driven system, till everything
goes very perfect, we can get the expected and desirable result. As the degree of
uncertainity is more in banking sector, they have to depend more on building “Customer
relationship” which is permanent asset bringing in regular income rather than mere
hardware which have obsolescence as a critical factor.
51 Bodo Land, and Mark Colgate, “Relationship quality, online banking and the information technology gap”, International Journal of Bank Marketing, , pp. 29-37, 21st ,January,2003. 52 Vijaysree, “Information Technology Risk in Banking _ Management and Measurement”, Professional Banker, 2004. 53 Pereira M.J., “Impacts of information systems and technology on productivity and competitiveness of the Portuguese banking sector: an empirical study”, International Transactions in Operational Research, Vol. 11, No. 1, pp.43-62, 2004. 54 Seethalakshmi, “Customise Compete & Conquer through technology”, IBA Bulletin, March 2004.
51
Shastri R.V. (2004)55 discusses that Many Indian banks are adopting the
information technology not merely as a frill, but as a dire need. These are augmenting
profit pool, operational efficiency, customer management, product innovation,
distribution and reach, and efficient payment and settlement system. For the success of
any IT program, integration of IT and business strategy is crucial factor.
Firdoso and Bhroff T. (2004)56 discusses that the need of hour is banks
upliftment and its survival in the days of stiff competition. All Bankers should come
together and work as a team. They should set a task force to look into this aspect of
making ONLINE VOLUNTEERS, and take full advantage of the power of the NET and
VRS Force, which is available at present.
Uppal R.K. and Rimpi Kaur (2008)57 examines in the emerging competitive
environment and IT era, with little or no distinction in the product offerings.
In the study of Sonja Grabner-Kra¨uter and Rita Faullant (2008)58 presents
the conceptualization of internet trust as a specific form of technology trust, and its
pivotal role in the adoption process of internet banking, together with the extension of the
propensity to trust concept to technological systems. Their results confirm the influence
of internet trust on risk perception and consumer attitudes towards internet banking.
55 Shastri R.V., “Leading Issues in Banking Technology”, Professional Banker,2004. 56 .Firdoso and Bhroff T., “Technology: As Competitive Edge- IT Challenges & Opportunities for Rural Development, IBA Bulletin, March 2004.
57 Uppal R.K. and Rinpi Haur, “Customer Service in Banks: An Empirical Study”, the Icfai Journal of Management Research, April 2008. 58 Sonja Grabner-Kra¨uter, and Rita Faullant, ‘Department of Innovation Management and Entrepreneurship’, International Journal of Bank Marketing ,Emerald Group Publishing Limited,Vol. 26, No. 7, pp. 483-504, 2008.
52
Mohan K., Babu P George and Alexandru Nedelea (2008)59 examines the
gainful effects of the use of information technology and also gives a critical analysis of
the impact of IT on Indian banking performance and customer services.
Sarangapani A. and Mamatha T. (2008)60 described that Information
Technology (IT) has become an integral part of the banking system. The study discusses
the recent developments in the Indian banking industry, various IT initiatives, e-security
aspects, cyber laws and the RBI guidelines to regulate the e-security issues.
Saroj Kumar Datta and Sukanya Kundu (2008)61 focus on the impact of
information technology on Indian PSBs and how this is affecting the level of their
customer satisfaction.
Uppal R.K. and Rimpi Kaur (2008)62 analyzes the impact of IT on the
transformation of banks during the second phase of banking sector reforms. The specific
objective of the study is process and contents of bank transformation in the regime of
post-second banking sector reforms, and to study the challenges and opportunities for the
banking industry particularly to the public sector banks. The study is concerned with the
Indian banking industry. Total nine top banks have been selected on the basis of their
market share in business in 2003-04.
59 Mohan K., Babu P George and Alexandru Nedelea, www.seap.usv.ro/annals/ojs/index.php/annals/view
Article/6, 2008. 60 Sarangapani A, and Mamatha T., “IT Initiatives in E-banking and its Security Aspects” Professional Banker, 2008. 61 Saroj Kumar Datta and Sukanya Kundu, “A causal relationship between Information Technology and customer satisfaction – a case study on Indian public sector banks”, 2008
62 Uppal R.K.,and Rimpi Kaur, “ Indian Banks: Transformation through E- delivery Channels”, Banking With Technology, New Century Publications, New Delhi, India, First Published 2008.
53
Srinivas Vissapragada (2009)63 discusses the innovations in information
technology being used in the Indian banking system.
Sohani A.K. (2009)64 explains that The State Bank of India is facing
challenges from different players in the banking industry. With the help of numerous
technological initiatives, it is working to bring about organizational improvements in
order to withstand the competition.
Khushboo Khanbelwal M.S and Shwetha Choudhary M.S. (2010)65 have tried
to identify the impact of information technology. The research work is based on
secondary data comprising of case analysis. And their findings are Information
technology has greatly impacted the entire banking system of our country and its
application in banking has a very prospective future in India.
In this study Arti Chandini and Neeraja B. (2010)66 explained how service
sector has changed in the view of the globalization. It is emphatically stated that things
have changed drastically with the advent of information technology.
2.3 Electronic Banking:
Banks are using the electronic technology to meet the ever-increasing competition
in banking which has converted the traditional brick and mortar banking into Electronic
63 Srinivas Vissapragada, “Leveraging IT for better Banking Services”, Professional Banker, 2009. 64 Sohani A.K., “Technology Initiatives by State Bank of India”, Professional Banker, 2009. 65 Khushboo Khanbelwal M.S. and Shwetha Choudhary M.S., “Impact of information Technology on Customer Satisfaction in Banking System”, Readers Shelf, Volume No.6, Issue No.6, March 2010.
66 Arti Chandani and Neeraja B., “Emerging Trends in the Service Sector: Banking Sector”, Readers Shelf, International Business, Vol.6. Issue No.6, March 2010.
54
banking (E-banking). E-banking as far as information technology is concerned may be
identified with three channels viz., ATM, Internet Banking and Tele Banking. E-banking
is an innovative tool for banks that is fast becoming a necessity. It is a successful
strategic weapon for banks to remain profitable in a volatile and competitive market place
of today.
Balachandher Krishnan Guru, Santha Vaithilingam, Norhazlin Ismail and
Rajendra Prasad (2000)67 examine the evolution of electronic banking in Malaysia,
Developments in information technology and telecommunications have set in motion an
electronic revolution in the Malaysian banking sector. This in turn has resulted in new
delivery channels for banking products and services such as the automated teller
machines (ATM’s), telebanking and PC-banking. They analyze the various electronic
delivery channels utilized by local banks and to assess the consumers’ reactions to these
delivery channels.
Nikhil Agarwal, Ruchi Agarwal, Prasoon Sharma and Sherry A.M. (2003)68
prepares a background for discussion for e-banking and e-democracy. Their study will
look for such avenues where banking can play significant role in e-democracy. Farmer
Service Centre (FSCs) is concept is originated from usage of smart card technology for
67 Balachandher Krishnan Guru, Santha Vaithilingam, Norhazlin Ismail and Rajendra Prasad, “Electronic Banking in Malaysia: A Note on Evolution of Services and Consumer Reactions”, Journal of Internet Banking and Commerce, Vol 5, No 1, 2000.
68 Nikhil Agarwal, Ruchi Agarwal, Prasoon Sharma and Sherry A.M, “E-banking for comprehensive E- Democracy: An Indian Discernment”, Journal of internet banking and commerce, , Vol. 8, No. 1, June 2003.
55
village farmers. E-seva is a community billing service helping citizen of Andhra Pradesh
to access governmental services online.
Kaisa Snellman and Tiina Vihtkari (2003)69 compare complaining behavior in
traditional and technology-based service encounters. Drawing on 160 negative critical
incidents within Finnish retail banking, shows that, contradictory to common predictions,
there are no significant differences in the complaining rates between the two types of
service encounters. Attributes this finding to the high reliance of traditional
complaining methods in both types of service encounters.
Bhasir T.M. (2004)70 examines the concept of electronic governance indicates the
application of Information Technology to the computing processes to bring about simple,
moral, accountable, responsive and Transparent Governance. The application of IT in the
banking processes goes beyond mere computerization of standalone back – office
operations.
E-banking has the potential to transform the banking business as it significantly
lowers transaction and delivery costs as stated by Rupa Rege Nitsure (2004).71 Major
concerns such as the 'digital divide' between the rich and poor, the different operational
environments for public and private sector banks, problems of security and
69 Kaisa Snellman and Tiina Vihtkari, “Customer complaining behaviour in technology-based service encounters”, International Journal of Service Industry Management, MCB UP Limited, Vol. 14, No. 2, 2003, pp. 217-231, 70 Bhasir T.M, “ E- Governance of Indian Financial Sector”, IBA Bulletin, March 2004. 71 Rupa Rege Nitsure, “E-Banking: Challenges and Opportunities”, Economic and Political Weekly, Vol. 38, No. 51/52 (Dec. 27, 2003 - Jan. 2, 2004).
56
authentication, management and regulation, and inadequate financing of small and
medium scale enterprises (SMEs) are highlighted.
Agboola A.A. (2006)72 examined electronic payment systems and tele-banking
services in Nigeria. Thirty six out of the 89 banks in Nigeria as at the end of 2005 were
selected for the study. Findings of the study revealed that there has been a very modest
move away from cash. Connectivity via the use of Local Area Network (LAN) and wide
area network has facilitated electronic transfer of funds.
Chai Lee Goi, (2006)73 revealed that there are several underlying forces coming
together have caused the E-banking development in Malaysia. The development mainly
because of new marketing strategy especially to create E-Customer Relationship
Management (E-CRM) and to improve banking activities. The other reasons are
development of technology, applications and tools, as well as supported by the
government.
Jarunee Wonglimpiyarat’s (2007)74 studied with the business strategy in
managing payment innovations. Particularly, the study looks at the smart card - electronic
cash (e-cash) innovation in the financial service industry. The smart card e-cash has yet
to overcome obstacles to its diffusion.
72 Agboola A. A.,“Electronic Payment Systems and Tele banking Services in Nigeria”, Journal of Internet Banking and Commerce, Vol. 11, No.3, December 2006. 73 Chai Lee Goi, “Factors Influence Development of E-Banking in Malaysia, Journal of Internet Banking and Commerce, Vol. 11, No.2, August 2006. 74 Jarunee Wonglimpiyarat, “E-Payment Strategies of Bank Card Innovations”, Journal of Internet Banking and Commerce, Vol. 12, No.3, December 2007.
57
Rashi Sawhney (2008)75 assesses the current status of developments in electronic
banking (e-banking) and explores how it differs from conventional banking. He
identifies emerging trends and risk management issues related to rapid developments in
the area of e-banking that raise challenges for both banks and bank supervisors.
Dhekra Azouzi (2009)76 aims to check if the current and prompt technological
revolution altering the whole world has crucial impacts on the Tunisian banking sector.
Sadia Samar Ali and Bharadwaj R.K. (2010)77 analyses that Globalisation has
been regarded as the standard process for success. Financial institutions are providing
better service to have competitive advantage.
2.4 Internet Banking:
Internet banking is the latest and the cheapest technology introduced in the
banking. At the basic level, interknit banking can mean the setting up of a web-page by a
bank to give information about its products and services. At an advanced level, it
involves provision of facilities such as accessing of accounts, fund transfer, and buying
financial products or services online. This is called “Transactional Online Banking”. In
general Internet Banking refers to the use of internet as a delivery channel for the banking
services, including traditional services, such as opening an account or transferring funds,
as well as electronic bill presentation and payment, which allows the customers to pay
75 Rashi Sawhney, “Electronic Banking Risk Management Issues”, Banking With Technology, New Century Publications, New Delhi, India, First Published 2008. 76 Dhekra Azouzi, “The Adoption of Electronic Banking in Tunisia: An Exploratory Study”, Journal of Internet Banking and Commerce, Vol. 14, No.3, December 2009. 77 Sadia Samar Ali and Bharadwaj R.K.,“Factor analysis approach of decision making in Indian e-banking: a value adding consumer's perspective”, International Journal of Business Innovation and Research, Issue: Volume 4, Number 4, Pages 298 – 320, 2010.
58
and receive the bills on bank’s website. There are two ways to offers Internet Banking.
First, an existing bank with physical offices can establish a web-site and offer internet
banking in addition to its traditional delivery channel. Second, a bank may be established
as a “branchless”, “Internet only”, or “Virtual Bank”.
Marius Dannenberg and Dorothée Kellner (1998)78 shows that the appropriate
application of today's cutting-edge technology can lead to a momentous competitive
advantage for banks. This is illustrated by a scenario focusing on the potentials of
"Advising via Internet".
Margaret Tan and Thompson S. H. Teo’s (2000)79 research framework based
on the theory of planned behavior (Ajzen 1985) and the diffusion of innovations theory
(Rogers 1983) was used to identify the attitudinal, social and perceived behavioral
control factors that would influence the adoption of Internet banking. The results
revealed that attitudinal and perceived behavioral control factors, rather than social
influence, play a significant role in influencing the intention to adopt Internet banking.
Jorn Flohr Nielsen (2002)80 traces important antecedents of internet banking
adoption and analyses its impact on relationship – marketing performance. Based on
structural equation modeling, the findings offer some support for the view that the more
78 Marius Dannenberg and Dorothée Kellner, “The bank of tomorrow with today's technology”, International Journal of Bank Marketing, Vol. 16, No. 2, 1998. 79 Margaret Tan and Thompson S. H. Teo, “Factors Influencing the Adoption of Internet Banking”,Journal of the Association for Information System, Volume. 1, Article. 5, July 2000. 80 Jorn Flohr Nielsen, “Internet technology and customer linking in Nordoc banking”, International journal of service, Industry Management, Vol.13, No.5, pp. 475-495, 2002.
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advanced Internet applications adopted and the more attractive the Web site, the more the
banks are able to keep profitable customers.
Joris Claessens; Valentin Dem, Danny De Cock, Bart Preneel and Joos
Vandewalle (2002)81 discusses the security of today's electronic banking systems. They
focus on Internet and mobile banking and present an overview and evaluation of the
techniques that are used in the current systems.
Siriluck, Rotchanakitumnuai and Mark Speece (2003)82 analyzed that Many
Thai banks are currently implementing Internet banking. Banks that offer service via
this channel claim that it reduces costs and makes them more competitive; however,
many corporate customers are not highly enthusiastic about internet banking. An
understanding of why corporate customers do not accept internet banking can assist
banks to implement this self- service technology more efficiently.
Balwinder Singh and Pooja Malhotra (2004)83 try to help fill significant gaps
in knowledge about the Internet banking landscape in India. The study presents data,
drawn from a survey of commercial banks websites. It was also found that the
profitability and offering of Internet banking does not have any significant correlation.
81Joris Claessens; Valentin Dem, Danny De Cock, Bart Preneel and Joos Vandewalle, “On the Security of Today's Online Electronic Banking Systems”, Computers & Security, Vol. 21, No. 3, 2002, pp. 253-265. 82 Siriluck Rotchanakitumnuai and Mark Speece, “Barriers to Internet banking adoption: a qualitative study among corporate customers in Thailand”, International Journal of Bank Marketing, pp.312-323, 21st, July,2003. 83 Balwinder Singh and Pooja Malhotra, “Adoption of Internet Banking: An Empirical Investigation of Indian Banking Sector”, Journal of Internet Banking and Commerce, Vol. 9, No. 2, 2004.
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Gupta Ankur (2006)84 attempted to highlight the importance of data protection
in internet banking and dwell upon possible legal recourses which may adopted keeping
in mind the current legal framework in India with regards regulation of Information
Technology.
Murali Raman (2008)85 analyzed that Internet banking is one of the most popular
services utilized by the Malaysian retail banking customers in recent years.
Pekka Laukkanen, Suvi Sinkkonen and Tommi Laukkanen (2008)86
identified three groups of internet banking non-adopters, namely postpones, opponents
and rejecters. The data were collected by conducting an extensive postal survey among
the retail banking customers in Finland who had not adopted internet banking.
Nisha Gupta, Deepak Garg and Anita Rani (2008)87 Concluded that the
adoption of Internet banking in India will have its own advantages to both the banks and
the ultimate customers.
Gupta P.K. and Jamia Millia Islamia (2008)88 in their study identified the
weaknesses of conventional banking and explores the consumer awareness, use patterns,
84 Ankur Gupta, “Data Protection in Consumer E-Banking”, Journal of Internet Banking and Commerce, Vol. 11, No. 1, 2006. 85 Murali Raman, “Information Technology in Malaysia: E-service quality and Uptake of Internet banking”, Journal of Internet Banking and Commerce, Vol. 13, No.2, August 2008. 86 Pekka Laukkanen, Suvi Sinkkonen and Tommi Laukkanen, “Consumer resistance to internet banking: post poners, opponents and rejecters”, The International Journal of Bank Marketing, Emerald Group Publishing Limited, Vol. 26, No. 6, pp. 440-455, 2008.
87 Nisha Gupta, Deepak Garg and Anita Rani, “Internet Banking in India”, Banking with technology, New Century Publications, New Delhi,India, First Published 2008. 88 Gupta P.K. and Jamia Millia Islamia, “Internet Banking In India – Consumer Concerns And Bank Strategies”, Global Journal Of Business Research, Volume 2, Number 1, 2008.
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satisfaction and preferences for Internet banking vis-à-vis conventional form of banking
and also highlights the factors that may affect the bank’s strategy to adopt Internet
banking. It also addresses the regulatory and supervisory concerns of Internet banking.
Ganesan R and Vivekanandan K (2009)89 analyses that Internet banking has
made it easy to carry out the personal or business financial transaction without going to
bank and at any suitable time. This facility enables to transfer money to other accounts
and checking current balance alongside the status of any financial transaction made in the
account.
Rohaya Shaari and Hafizi Muhamad Ali (2009)90 analysed the question as to
how bank managers perceive the strategic and operational issues of Internet banking.
Sofri Yahya, Harashid and Thakur Rajendar Singh (2009)91 discussed the
factors that are affecting the acceptance of this form of banking in the Indian market.
It is believed that, in the future, Internet banking will recede in importance as a
strategic application to become a competitive necessity that must be adopted by most of
the government departments. Users of e- banking can perform common banking tasks
such as writing checks, paying bills, transferring funds, printing statements & balance
89 Ganesan R, and Vivekanandan K, “A Secured Hybrid Architecture Model for Internet Banking (e-Banking)” Journal of Internet Banking and Commerce, Vol. 14, No.1, April 2009. 90 Rohaya Shaari and Hafizi Muhamad Ali, “Demographic Influences on Internet Banking in Malaysia”, ICFAI Journal of Bank Management, 2009. 91 Sofri Yahya, Harashid, and Thakur Rajendar Singh, “Internet Banking in Hyderabad: Issues and Prospects”, Professional Banker, 2009.
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inquiry etc. Karthikeyan (2010)92 concluded that Internet banking has evolved into ‘one
stop service and information unit’ that promises great benefits to all i.e. banks, unit’ that
promises great benefits to all i.e. banks, consumers, citizens, employees and government.
The purpose of the Vasista T.G.K and Suneela M. (2010)93 paper is to discuss
the Reserve bank of India’s one of the focus points such as facilitating and protecting the
customer. So proposal aspects of Internet banking with the adoption of systems
perspective and exploration of recent technological trends are done as a part of research
prospects to the above mentioned point by Reserve bank of India but not to differ the
efforts of Reserve bank of India if it has already put.
Rahmath, Safeena and Hema (2010)94 determined the consumer’s perspective
on internet banking adoption. Information technology is considered as the key driver for
the changes taking place around the world.
2.6 On line Banking:
The Online Banking service allows customers to manage their money from any
type of browser device including mobile phones, internet enabled T.V and even small
hand electronic organizers. Using a PC to access the account, transfer funds, pay creditor
and check if payment has been made etc is called online banking. It allows customer to
have constant access to accounts at any time of day or night. Online banking reduces
92 Karthikeya.P, “ Role and Benefits of E- Banking In India”, Readers Shelf, Volume No.6, Issue No.4, January 2010. 93 Vasista T.G.K, and .Suneela M., “Electronic Customer Relationship Management in E- Banking Services Sector”, Readers Shelf, Volume 6, Issue No.6, March, 2010. 94 Rahmath Safeena and Hema , “Customer Perspectives on E-business Value: Case Study on Internet Banking”, Journal of Internet Banking and Commerce, Vol. 15, No.1, April 2010.
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paper cost and the risk of security. Service link brings the up-to-date information about
your online bank accounts directly to your desktop. The projected cleared balances for
the current day are also shown. Online banking ensured these services: Checking the
position of account, Moving the spare cash into and interest bearing account, making
high value payments without risk.
Caalin Guraau (2002)95 investigates and analyses the present situation of online
banking in Romania, and the appropriate strategies for the successful implementation and
development of online banking services in the Romanian context. Internet banking is
one of the newest Internet technology applications, which promises multiple benefits both
for the financial institutions and for clients. In the last five years a large number of banks
have launched Web sites, offering online banking services. While the implementation and
the functioning of these digital systems seem to be relatively smooth in the developed
economies, the situation may be different in countries with economies in transition.
Guosong Shao (2007)96 provides a detailed picture of research trends and
rigorousness in online banking research. The findings also show an obvious unbalance in
publication sources, research perspective, research methods, and sampling techniques in
online banking research. It is thus concluded that more diversified topical coverage and
better methodological rigors are needed in future online banking studies.
95 Caălin Guraău, “Online banking in transition economies: the implementation and development of online banking systems in Romania”, International Journal of Bank Marketing, Vol. 20, No. 6, pp. 285-296, 2002. 96 Guosong Shao, “The Diffusion of Online Banking: Research Trends from 1998 to 2006”, Journal of Internet Banking and Commerce, Vol. 12, No.2, August 2007.
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Tahir Masood Qureshi (2008)97 This era can safely be attributed as technology
revolution. The quick expansion of information technology has imbibed into the lives of
millions of people. Rapid technology advancements have introduced major changes in the
worldwide economic and business atmosphere. Online banking is also one of the
technologies which are fastest growing banking practices nowadays. It is vital to extend
this new banking feature to clients for maximizing the advantages for both clients and
service providers.
Madhurima Deb and Kavita Chavali (2009)98 investigate the significance of E-
Trust and E- loyalty in the context of online banking. The work done is original in the
sense that the study depicted several dimension of E- loyalty to have lucid understanding
of the impact of E- Trust on each of these dimensions. The study would benefit Mangers
and Academicians who would develop an in-depth knowledge about factors affecting E-
Trust and E-loyalty in the context of online banking.
Alain Yee-Loong Chong, Keng-Boon Ooi, Binshan Lin, and Boon-In Tan
(2010)99 examine the factors that affect the adoption of online banking in Vietnam.
Perceived usefulness, perceived ease of use, trust and government support were examined
to determine if these factors are affecting online banking adoption. Data was analyzed by
employing correlation and multiple regression analysis. The results showed that 97 Tahir Masood Qureshi, “Customer Acceptance of Online Banking in Developing Economies, Journal of Internet Banking and Commerce, Vol. 13, No.1, April 2008. 98 Madhurima Deb and Kavita Chavali, “A Study on the Significance of E- Trust and E-Loyalty in Online banking”, AIMS International Journal of Management, Volume 3, Number 3, , pp.241-257, September 2009. 99 Alain Yee-Loong Chong, Keng-Boon Ooi, Binshan Lin, Boon-In Tan, “Online banking adoption: an empirical analysis” International Journal of Bank Marketing, Emerald Group Publishing Limited,Vol. 28, No. 4, pp. 267-287, 2010.
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perceived usefulness, trust and government support all positively associated with the
intention to use online banking in Vietnam. Contrary to the technology acceptance model,
perceived ease of use was found to be not significant in this study.
2.7 Mobile Banking:
Mobile banking facility is an extension of internet banking. The bank in
association with the cellular service providers offers this service are now be able to give
their approval for the clearance of Cheque with the help of two-way communication
technology development. The two-way text messaging system technology allows
customers to submit request and get answers from the bank on their mobiles phones. The
HDFC Bank, ICICI Bank and CITI Bank are offering Mobile banking in India in
association with cellular Service Provider such as Orange Tel, Air Tel, sky Cell and BPL
Mobile. Through this access is available only through SMS technologies, all of them are
graduating to WAP-enabled mobile companies. These facilities are available even to
those customers with only credit card accounts with the bank.
The aim of the Sylvie Laforet and Xiaoyan Li (2005)100 study is to investigate
the market status for online/mobile banking in China. With the recent and forecasted high
growth of Chinese electronic banking, it has the potential to develop into a world-scale
internet economy and requires examination. Their studies offers an insight into
online/mobile banking in China, which has not previously been investigated. Distinct
100Sylvie Laforet and Xiaoyan Li, “Consumers’ attitudes towards online and mobile banking in China” International Journal of Bank, Marketing, Emerald Group Publishing Limited, Vol. 23, No. 5, pp. 362-380, 2005.
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differences and common trends between Chinese and other countries were observed with
clear indication of marketing strategy to be deployed by the service providers.
Hundal B.S. and Abhay Jain (2006)101 examines mobile banking in India only.
The research perspective is focused only on consumers and on certain limited number of
adopter’s characteristics. The research presented also has practical implications for
managers and policymakers who have to make strategies and decision in order to cater to
this hitherto unexplored new technology - based service market.
Jacobs Tom (2008)102 highlights the Mobile Banking limitations such as
security, lack of standard technology platform, communication protocol etc., Mobile
banking will pave the way to a cashless society. Very soon, we will expect the fruit stand
on the corner to accept payment through mobile phone. In order to position themselves
for the mobile banking revolution, banks should seek out solutions that have been
designed to support multiple channels across the entire customer life cycle. Banks need
platforms that have a vision and architecture for the future.
Consumers would prefer those financial institutions that offer easy and secured
ways of performing financial transactions. Thus, M-banking is all set to grow in the
future. The researcher Gauri S Parab (2010)103 highlights these advantages and focuses
on the challenges and opportunities that M-banking has in today’s Tec world. In his
101 Hundal B.S. and Abhay Jain, “Adoption of Mobile Banking Services in India”, Vol..IV, No.2, May 2006. 102 Tom Jacobs, “Multi Channel Banking” , Icfain University, 07M-2008-05-09-01. 103 Gauri S Parab, “Mobile Banking – Bringing Banking to Your Fingertips, , IUP publications, Advertising Express, July 2010.
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study she argues that the banking industry should effectively use Mobile Banking
channel and should educate the consumers about the huge scope of this new channel.
2.8 ATM (Automated Teller Machine):
ATM is an electronic machine, which is operated by the customer himself to
make deposits, withdrawals and other financial transactions. ATM facility is available to
the customer 24 hours a day. The customer is issued an ATM card. This is a plastic card,
which bears the customer’s name. This card is magnetically coded and can be read by
this machine. Each cardholder is provided with a secret personal Identification Number
(PIN). When the customer wants to use the card, he has to insert his plastic card in the
slot of the machine. After the card is a recognized by the machine, the customer enters
his personal identification number. After establishing the authentication of the
customers, the ATM allows the customer to enter the amount to enter the amount to be
withdrawn by him. After processing that transaction and finding sufficient balances in
his account, the output slot of ATM give the required cash to him. When the transaction
is completed, the ATM ejects the customer’s card.
Robert Rugimbana and Philip Iversen (1994)104 explored ATM usage entirely
from the viewpoint of consumers' demographics. Examines ATM usage patterns on the
basis of consumers' perceptions. The results based on a survey of 630 retail banking
consumers from two separate Australian banking institutions - a bank and a credit union -
suggest that ATM users from both institutions differed quite significantly from non-users
in their perceptions of at least three ATM attributes; convenience, reliability, and 104 Robert Rugimbana and Philip Iversen, “Perceived Attributes of ATMs and Their Marketing Implications”, International Journal of Bank Marketing, Vol. 12, No. 2, pp. 30-35, 1994.
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suitability. Furthermore, the results indicate that most users perceive ATMs as mere cash
dispensers.
Simon S.M. Ho and Victor T.F. Ng (1994)105 present the Comparisons between
traditional forms of payment and electronic systems with their inherent perceived risks by
customers are detailed. The objective of their study is to gain more insight into the
reasons why ATM cardholders accept or reject EFTPoS and how they view the risk of
EFTPoS when compared to credit cards and cash. They also examine whether the amount
of purchase has an effect on the level of perceived risk of alternative payment methods
and whether users of EFTPoS perceive the risk of EFTPoS differently from non-users.
Md. Rafiqul Islam, Samir Kumar and Sheel Pallab Kumar Biswas (2005)106
investigated the satisfaction levels of HSBC ATM cardholders (both staff and nonstaff)
with respect to various aspects (promptness of card delivery, the performance of HSBC
ATM, the service quality of ATM personnel etc.) of using HSBC ATM and their
opinions on various other related issues.
The objective of the Mete Feridun and Orhan Korhan (2005)107 study was to
design a simple human machine system, which would both incorporate these elements
and enable humans to use their full capacities while not over demanding or overloading.
105 Simon S.M. and Victor T.F., “Customers’ Risk Perceptions of Electronic Payment Systems” International Journal of Bank Marketing, MCB University Press Limited, Vol. 12 No. 8, pp. 26-38, 1994. 106 Md. Rafiqul Islam, and Samir Kumar Sheel, “Customer Satisfaction of ATM Service: A Case Study of HSBC ATM”, 2005. 107 Mete Feridun and Orhan Korhan, “Banking and Technology: Information Flow between the Human and the Machine through Automated Teller Machines”, Information Technology Journal, Vol. 4, No. 1, pp. 75-77, 2005.
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The design eliminates the information loss (equivocation) and gains (noise) and augments
the process in terms of accuracy, integrity and speed.
Sultan Singh and Komal (2009)108 present the impact of ATM on customer
satisfaction. This is a comparative study of three major banks i.e. State Bank of India,
ICICI bank and HDFC bank. This paper has been divided into two sections. A sample of
360 respondents equally representing each bank has been taken through questionnaire.
Data has also been collected through interview also.
2.9 Service quality & SERVIQUAL Dimensions:
Service quality is a measure of how well the delivered level of service matches
customer expectations. Pioneering work by Parasuraman et al. (1985) the SERVQUAL
instrument consists of five underlying dimensions, with two sets of 22 item statements for
the ‘expectation’ and ‘perception’ sections of the questionnaire. The five dimensions of
service quality were noticed by Parasuraman et al. (1991). These are reliability,
responsiveness, assurance, empathy and tangibles.
The most common definition of service quality is the discrepancy between
consumer’s expectations and perceptions of the service received. Accordingly, service
quality is defined as how well a delivered service level matches customer’s expectation.
Since the SERVQUAL was developed in 1988, various researchers have
recognized that both the instrument itself and the conceptualization of service quality
may benefit from further refinement (for example, Finn and Lamb 1991, Lee and Hing 108 Sultan Singh and Komal, “ Impact Of ATM On Customer Satisfaction: A Comparative Study of SBI, ICICI & HDFC bank”, Business Intelligence Journal, Vol. 2, No. 2, August 2009.
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1995). They have argued that the SERVQUAL instrument needs to be customized to the
specific service area.
Parasuraman.A, Leonard Berry and Valarie A. Zeithmal (1993)109,
responded to Brown, Churchill, and Peter’s (1993) critique of SERVIQUAL’s difference
– score conceptualization. The authors demonstrated that the claimed psychometric
superiority of the alternative non difference score concpetualisation is debatable. The
authors also argued that the SERVIQUAL conceptualization offers richer diagnostics.
Parasurman .A , valarie A. Zeithmal, and Leonard Berry(1994)110 , respond
to concerns raised by cronin and Taylor (1992) and Teas (1993) about the SERVIQUAL
instrument and the perceptions – minus – expectations specification invoked by it to
operationalise service quality. They offer a set of research directions for addressing
unresolved issues and adding to the understanding of service quality assessment.
Based on a wide survey of over 1,500 Italian customers, Umberto Filotto, Paola
Musile Tanzi, and Francesco Saita (1997)111 analyzed both payment services and sales
and private banking areas. In the former, human contact attributes of service prove to be
overemphasized when customer satisfaction is observed. In the latter, technology seems
extremely important in helping bank branch officers decide which new services to offer
109 Parasuraman and Leonard Berry , valarie A. Zeithmal , “ More on Improving Service Quality Measurement”, Volume 69, Number 1, Spring 1993. 110
Parasurman , valarie A. Zeithmal, and Leonard Berry , Reassessment of expectations as a comparison standard in measuring service quality, Journal of Marketing;; 58, 1,ABI/INFORM Global pg. 111, Jan 1994. 111 Umberto Filotto, and Paola Musile Tanzi, “Customer needs and front-office technology adoption” , International Journal of Bank Marketing, © MCB University Press, 15/1,13–21, 1997.
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to which customers. In both sections customers’ clusters are identified according to the
importance of different service attributes.
Faye X Zhu, Walter Wymer, and Injazz Chen’s (2002)112 paper explores the
impact of information technology (IT) on service quality in the consumer-banking sector.
It proposes a service quality model that links customer perceived IT-based service
options to traditional service dimensions as measured by SERVQUAL in the context of
customer perceived service quality and customer satisfaction. The analysis also show that
customers' evaluations of IT-based services are affected by their preference towards
traditional services, experiences in using IT-based services, and perceived IT policies.
Mathew Joseph and George Stone (2003)113 investigates some of the various
roles technology in general impacts the delivery of banking service. He developed a grid
that might prove useful to bank managers when making decisions convening the priority
of implementation of service – oriented technology. Key strategic implications are
discussed to include ways banks can improve the level of technology.
Sang-Lin Han, Seung Baek and Hanyang (2004)114 investigate the usefulness
and applicability of SERVQUAL in measuring online service quality and its relationships
to customer satisfaction and customer retention. It is an interesting finding that service
quality does not directly influence the level of customer retention. This study suggested a 112 Faye X Zhu, Walter Wymer and Injazz Chen, “IT-based services and service quality in consumer are banking”, Journal of Service Management, Vol. 13, No. 1, pp. 69-90, 2002. 113 Mathew Joseph and George Stone,“An Empirical Evaluation of US bank customer perceptions of the impact of technology on service delivery in the banking sector”, International Journal of Retail & Distribution Management, Volume 31, November 4, pp.190-202, 2003. 114 Sang-Lin Han and Seung Baek, “Antecedents and Consequences of Service Quality in Online Banking: An Application of the SERVQUAL Instrument”, Advances in Consumer Research, Volume 31, 2004.
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four-factor model of SERVQUAL including Tangibles, Reliability, Responsiveness, and
Empathy. Furthermore, we explored the relationships among customer satisfaction,
customer retention, and service quality. This study reveals that SERVQUAL is an
appropriate instrument for measuring the quality of online banking services.
The aim of the Mohammed Al-Hawari, Nicole Hartley and Tony Ward’s
(2005)115 study was to establish the critical determinants of automated service quality by
including those attributes of each main banking delivery channel that were currently
assessed by existing service quality instruments and those attributes that were currently
overlooked in the automated service quality literature. The proposed comprehensive
model was empirically validated by perceptual data collected from customers of banks,
building societies, and credit unions in Queensland, Australia.
Sanjay J Bhavani (2006)116 concludes that the competition among banks is
tough and the consumer benefits from it. As a result, Indian customers enjoy better
service quality, innovative products, and better bargains. Growth has been tremendous,
particularly in the retail segment including housing loans, vehicle loans and credit cards.
The coming fiscal will prove to be a transition phase for Indian banks, as they will have
to align their strategic focus to increasing interest rates.
115 Mohammed Al-Hawari, Hartley, and Tony Ward, “Measuring Banks’ Automated Service Quality: A Confirmatory Factor Analysis Approach”, Marketing Bulletin, 2005.
116 Sanjay J Bhayani, “Performance of New Indian Private Sector Banks: A Comparative Study”, The Icfai Journal of Management Research, Vol. V, No.11, November 2006.
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Amudha R. and Vijaya Banu C. (2007)117 in their study on “ Service Quality in
Banking with special reference to ICICI Bank Ltd., Tiruchirapalli District, the outcome
of their study shows that organizations can assess five dimensions of service quality to
determine the level of services provided and to decide which dimension need
improvement. In order to develop service quality, it is necessary to contact employees
frequency and evaluate their service experiences. By identifying strengths and weakness
pertaining to the dimensions of service quality, organizations can better allocate resources
to provide enhanced service.
Sunayna Khurana (2009)118 aims to identify customer preferences towards
online banking and to find out various service quality dimensions that affect customer
satisfaction. The five factors that influence the satisfaction level of customers are
responsiveness, reliability, efficiency, privacy of information and easiness to use. The
researcher is of the opinion that the present study can make its contribution in two ways.
First, it describes the customer preferences towards internet banking. Secondly, it
explains the various service quality dimensions that effect customer’s satisfaction and
importance of each factor. Responsiveness and reliability on the banks website are most
important factors that affect customer’s satisfaction. Various banks have to take
important steps to make their website more reliable and more responsive to give more
value and satisfaction to customers.
117 Amudha R. and C. vijaya Banu, Asia – Pacific Business Review, Volume III, Number – 2, , pp. 18-26, July – December 2007. 118 Sunayna Khurana, “ Managing Service Quality: An Empirical Study in Internet Banking”, The Icfai University Journal of marketing management, Vol.VIII, No. 3&4, August & November 2009.
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In the present banking scenario, service quality is an indispensable competitive
strategy to retain customer base. Banks are trying to win customer satisfaction and
loyalty by providing better quality services. In this study Sandip Ghosh Hazra and
Kailash B L Srivastava (2009)119examines the relationship of service quality with
customer loyalty, commitment and trust form the customers perspective in the Indian
banking sector. Data was collected from 300 customers of public and private sector
banks using structured interview schedules. The results show that dimensions of service
quality such as assurance – empathy, reliability and tangibles significantly predict
customer trust and commitment. The results also indicate that service quality is
positively associated with customer loyalty. Private bank customers are more committed
and loyal as they receive better quality of service. The study implies that public sector
banks should also come forward and try their best to provide better quality service to win
back their customers’ loyalty and commitment.
Padhy.P K and Swar B.N (2009)120 investigated the role of technology in
banking and its impact on perceived SQ (Service Quality) in public, private and foreign
banks in Orissa. Foreign bank was found to be very close to the expectations of
customers followed by ICICI and AXIS Bank private sector whereas the SQ of public
sector banks was found to be very low as SBI was ranked lowest on tangibility and
responsiveness and PNB was ranked lowest on assurance and empathy.
119 Sandip Ghosh Hazra, and Kailash BL Srivastava, “Impact of Service Quality on customer Loyalty Commitment and Trust in the Indian Banking Sector”, The Icfai University Journal of Marketing Management, Vol.VIII, No. 3&4, August & November 2009. 120 Padhy.P K and Swar B.N, “ A study on Customer Satisfaction and Service Gaps in Selected Private, Public and Foreign Banks”, 3rd IIMA Conference, Marketing Paradigms for Emerging Economics, Indian Institute of Management, 2009.
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Satisfaction of the customer depends on the quality of service, therefore,
measuring customer satisfaction helps the banks to understand the customer’s needs, and
change the strategies of the bank accordingly. Bharathi Kamath G. (2010)121 in her
study on “Measuring Service Quality (SERVIQUAL) in Banks”, she measured the
service quality of a public sector bank in Mangalore city by using the SERVQUAL
method. The data is collected from 243 bank customers in Mangalore city. The
SERQUAL is measured on five different dimensions of tangibility, reliability,
responsiveness, assurance and empathy. The analysis of data shows that expectations
are greater than performance; this indicates that perceived quality is less than
satisfactory and a service quality gap materializes.
2.10 Customer Satisfaction / CRM:
Customer Satisfaction: Customer satisfaction is equivalent to making sure that product
and service performance meets customer expectations. It is the perception of the
customer that the outcome of a business transaction is equal to or greater than his/her
expectation. Customer satisfaction occurs when the acquisition of products and /or
services provides a minimum negative departure from expectations when compared with
other acquisitions and when the marginal utility of a transaction is equal to or greater than
preceding acquisitions. Customer satisfaction occurs when the perception of the reward
from the purchase of goods or services by the customer meets or exceeds his/her
perceived sacrifice.
121 Bharathi Kamath G.,“Measuring Service Quality (SERVIQUAL) in Banks”, Prajnan Journal of Social and Management Sciences, National Institute of Bank Management, Vol.XXXIX No. 1, 2010.
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CRM : or Customer Relationship Management, is the business strategies designed to
optimize profitability, revenue, retention, and customer satisfaction. When used to
describe software, rather than business processes, CRM applications are those that focus
on relationships, rather than transactions.” Edward.D.John
“CRM aligns business process with customer strategies to build customer loyalty
an to increase profits overtime.” Rigby Reichheld & Schefter
There is nothing permanent except change. No Business organization shall stand
as an exception to this phrase. Customer needs keep changing day by day. Therefore it is
absolutely essential for any business to adopt the changes in the market. To adopt those
changes, the business must first track the changes in the customer wants and then respond
to it.
The purpose of the Mathew Joseph, Yasmin Sekhon, George Stone and Julie
Tinson (2005)122 study is to discover the underlying areas of dissatisfaction associated
with the banking experience in the UK, particularly as it relates to the implementation of
new service delivery technology in the banking industry. The researchers of the study
utilized three samples of banking customers residing in the southern part of the UK. It
involved distributing 300 surveys to a convenience sample of electronic banking
customers from the sampling area of interest in the UK. In order to qualify, respondents
122 Mathew Joseph, George Stone, and Julie Tinson, “An exploratory study on the use of banking technology in the UK, A ranking of importance of selected technology on consumer perception of service delivery performance”, International Journal of Bank Marketing, Emerald Group Publishing Limited, Vol. 23, No. 5, pp. 397-413, 2005.
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had to have used one of the available electronic banking services offered by the bank at
least once during the previous month. This analysis explored the ranking of importance
of selected technology on consumer perception of service delivery performance.
Richard Boateng and Alemayehu Molla (2006)123 explore some of the issues
that affected the key decisions that the bank made. These decisions relate to entering e-
banking, e-banking channel choice, e-banking development, enticing customers, and
managing channel conflict. The findings indicate that operational constraints related to
customer location, the need to maintain customer satisfaction and the capabilities of the
Bank's main software
Khandare D.M and Mohan S.Rode (2008)124 discusses that ‘a bank exists
because of its customers’ has become more pronounced and relevant in the present
context. Banks have to devise suitable systems and mechanisms to satisfy the needs and
expectations of various segments of customers for their survival. When competition is
tough, the best way for survival is to be in constant touch with the customers and letting
them know what bank can do for them.
The main objective of the Mohan and Rode S. (2010)125 study is to examine the
changing scenario of bank in the policy formation related to its customers. The study is
based on primary & secondary data. They collected the primary data from persons
123 Richard Boateng, and Alemayehu Molla, “Developing E-banking Capabilities in a Ghanaian Bank: Preliminary Lessons”, Journal of Internet Banking and Commerce, Vol. 11, No.2, August 2006. 124 Khandare.D.M, and Mohan S. Rode, “ Customer Satisfaction led Growth In Banking Sector”, The Journal of Business Studies, Vol.5, No.10, July 2008. 125 Mohan and Rode S., “Changing Current Trends in Banking Sector: A fight for Survival”, Bift’s Journal of International Management and Research, Volume – II, No-2, January – March, 2010.
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having their savings account in different banks (including private & nationalized banks in
Nanded City) by filling up well – structured questionnaire ad through personal meeting
with customers. They examine the customer suggestion instead of adopting banking
policies relating to customer services.
Madhu Jasola and Shivani Kapoor (2008)126 find the differences in an
organization’s services employing CRM vis a vis others, as perceived by the customer. It
is a discipline which enables the companies to identify and target their most profitable
customers. CRM involves new and advance marketing strategies which not only retain
the existing customers but also acquire new customers.
John Mylonakis (2009)127 aims to presents the Customer Relationship
Management (CRM) functions, as applied in the banking sector, examined from a bank
marketing point of view. The study was carried out in 2007 on a convenience sample of
300 respondents through the distribution of structured questionnaires to bank customers
within the area of Athens, Greece. The Greek banking market has adopted CRM
solutions in recent years, as banks have realized the need to maintain their customer base
and to better use their resources in order to promote their products and services. In
general, there is a positive attitude towards CRM.
126 Madhu Jasola and Shivani Kapoor , “CRM: A Competitive Tool for Indian Banking Sector”, Communications of the IBIMA , Volume 5, 2008. 127 John Mylonakis, “Customer Relationship Management Functions: A Survey of Greek Bank Customer Satisfaction Perceptions”, ICFAI Journal of Bank Management. 2009.
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2.11 Traditional Banking to E- banking(Pre e-banking to Post e-banking):
Banking is in a period in which we are seeing a decrease in the number of
traditional competitors due to industry consolidation. At the same time, we are seeing an
increase in the number of competitors for each customer and relationship. Technology-
enabled improvements and a desire to improve earnings stability have led many banks to
enter new markets (global and national). Local competition includes remote banks and
nonbank competitors. This, combined with a growing appetite for customization and
personalization, is driving the need to constantly transform applications and offerings to
meet new competition and changing customer preferences, expectations, and needs.
However, technology is always changing and improving, and banks typically and
desperately adapt in order to keep their customer base. Therefore, to take full advantage
of these ever changing solutions, the bank must act to make sure it has full access to
information between each solution. While ever-changing technology can pose
difficulties, it is still an essential tool to ensure an institution’s standing in the highly
competitive financial services market .
The e-banking delivery channel also has implications for other traditional banking
risks such as credit risk, liquidity risk, interest rate risk, and market risks. The impact
of the introduction of e-banking does not necessarily result in an increase or decrease in
the risk profile of the institution, but risks can be shifted, sometimes in complex ways.
Padamasai (2000)128 studied that productivity and profitability of five big banks
increased throughout the post-reforms period in terms of selected ratios of each
128 Padamsai, T. Profitability, Efficiency and Productivity of the Big Five Public Sector Banks in India, Dissertation, Dept. of Commerce, Delhi School of Economics, Uni. of Delhi, Delhi, 2000.
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parameter, but on account of efficiency, the performance of the top five banks is very
dismissal as inefficiency has increased during the study period. He suggested that if the
government sells its share in the profit making banks, it would be able to bail out the
weak banks.
Shapiro, (2002)129 studied the affects of cyberspace on efficiency and
productivity of banks. He also analyzed the nature of bank transformation.
Lorin M. Hitt and Frances X. Frei (2002)130 systematic study has been made
for whether and how characteristics or behaviors might differ between customers who use
electronic delivery systems and those who use traditional channels. Case studies and
detailed customer data from four institutions suggest that PC banking customers are
apparently more profitable, principally due to unobservable characteristics extant before
the adoption of PC banking.
Arora,K.(2003)131 highlighted the significance of bank transformation.
Technology has a definitive role in facilitating transactions in the banking sector and the
impact of technology implementation has resulted in the introduction of new products
and services by various banks in India.
129
Shapiro, C ,‘Will E- Commerce Erode Liberty’, Harvard Business Review, May- June, 2000 130 Lorin M. Hitt and Frances X. Frei, “Do Better Customers Utilize Electronic Distribution Channels? The Case of PC Banking”, Source: Management Science, Vol. 48, No. 6, pp. 732-748. June 2002 131 Arora, Kalpana , ‘Indian Banking: Managing Transformation Through IT’, IBA Bulletin, Vol. XXV, No. 3,, pp. 134-138, March 2003.
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Kaisa Snellman and Tiina Vihtkari (2003)132 compare complaining behavior in
traditional and technology-based service encounters. Drawing on 160 negative critical
incidents within Finnish retail banking, shows that, contradictory to common predictions,
there are no significant differences in the complaining rates between the two types of
service encounters.
Uppal, R.K. (2008)133 analysed banking in the post-LPG (Liberalization,
Privatization and Globalization) era and Information Technology (IT) era, On the basis
of five-point likert-type scale, this paper empirically analyzes the quality of e-banking
services in the changing environment. With different statistical tools such as weighted
average method and ranking, the paper concludes that most of the customers of e-banks
are satisfied with the different e-channels and their services.
David H. Wong, Nexhmi Rexha and Ian Phau (2008)134 aims to re-examine
the role of traditional service quality in an e-banking environment by providing a review
of how traditional service quality perceptions have evolved through the current and
continuing stream of change in banking technology and the corresponding changes in the
nature of how banks interact with their customers. And their Findings – While the
importance ranking of the five SERVQUAL dimensions has not changed dramatically
132 Kaisa Snellman and Tiina Vihtkari, “Customer complaining behavior in technology-based service encounters”, International Journal of Service Industry Management, MCB UP Limited, Vol. 14 No. 2, pp. 217-231, 2003.
133 Uppal, R.K., “Customer Perception of E-Banking Services of Indian Banks: Some Survey Evidence”, IUP Journal of Bank Management, 1 (February), VII (2008) 134 David H. Wong, Nexhmi Rexha and Ian Phau, “Re-examining traditional service quality in an e-banking era”, International Journal of Bank Marketing, Emerald Group Publishing Limited, Vol. 26 No. 7, 2008 pp. 526-545.
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over the years, large discrepancies were found between customer expectations and their
perceived performance of traditional banking services.
Uppal.R.K.(2008)135 describes that excellent mapping for the banks is a need of
the hour. The author concludes that average productivity & profitability is the highest in
case of New Private Sector Banks and Foreign Banks in post- ebanking period. During
this period, PSBs has made tremendous and remarkable improvement in many parameters
of productivity. But still they are lagging behind in performance when they compare them
with Foreign Banks and New Private Sector Banks.
Dhekra Azouzi (2009)136 aims to check if the current and prompt technological
revolution altering the whole world has crucial impacts on the Tunisian banking sector.
For instance; age, gender and educational qualifications seem to be important and they
split up the group into electronic banking adopters and traditional banking defenders and
so, they have significant influence on the customers’ adoption of e-banking.
Filomina P George, Mercia Selva Malar S. and Sudheendran M (2009)137
state the Advancement in computer technology and Internet has shown its effect on
traditional banking business in India. As Internet became more easily accessible, banks
capture new business opportunities.
135 Uppal, R.K., “Indian Banking Industry:Agenda for FutureAnalysis of Pre & Post e- Banking Period”, Journal of commerce and trade, Bi-annual Publication of Society For Advanced Management Studies , Vol. 3 No. 1 / April 2008. 136 Dhekra Azouzi, “The Adoption of Electronic Banking in Tunisia: An Exploratory Study”, Journal of Internet Banking and Commerce, Vol. 14, No.3, December 2009. 137 Filomina P George, S Mercia Selva Malar and Sudheendran M, “No more Traditional banking only Virtual,” Professional Banker. 2009.
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Dr. Dhiraj Sharma & Dr. R.K Uppal (2010)138 on their paper they attempts to
link banking technology with the financial productivity of Indian commercial banks. Till
date, it is a matter of debate whether Technology leads to better financial returns. There is
no conclusive evidence that IT induction improves financial performance of an
organization. The scholars call it “IT Productivity Paradox”. However, for Indian
banking industry, the correlation between Technology induction and financial
productivity is negative though statistically insignificant and low.
R. K. Uppal(2011)139 analyzes the performance of major banks in terms of
productivity and profitability in the pre and post e-banking period. The paper concludes
that performance of all the banks under study is much better in post-e-banking period and
further foreign banks are at the top position, whereas the performance of the public sector
banks is comparatively very poor. The paper suggests some measures to tackle the
challenges faced by the banks particularly public sector banks. At the end, paper suggests
how public sector banks can convert the emerging challenges into opportunities.
2.12 Public Sector and Private Sector Banks:
Kangis and Voukaltos (1997)140 compares the customers expectations and perceptions
of SQ in public and private sector banks in their study. The study reveals that customers
of private sector banks were found to have lower level of difference between
perceptions and banks. Convenient location, opening hours, friendliness and courtesy of
138 Dr. Dhiraj Sharma & Dr. R.K Uppal, “IT-Productivity Paradox in Banks – A study of India Banks in Hyper IT Era,” IJBEMR Volume 1, Issue 1,2010. 139 R. K. Uppal, “E-Age Technology–New Face of Indian Banking Industry: Emerging Challenges and New Potentials”, Journal of Social and Development Sciences Vol. 1, No. 3, pp. 115-129, Apr 2011. 140 Kangis and Voukaltos, “Private and Public Banks: A comparison of Customer Expectations and Perceptions”, Internation Journal of Bank Marketing, Vol. 15, No. 7, pp.279-287, 1997.
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employees were not considered as important factors by the customers of both sector
banks.
In their paper, Ram Mohan. T and Subhash C. Ray (2001)141 attempt a
comparison between PSBs and their private sector counterparts based on measures of
efficiency and productivity that use quantities of outputs and inputs. Both measures are
relevant in attempting a comparison between the private and public sectors.
In the study of A M Rawani and M P Gupta (2002)142 makes an attempt to
explore empirically the difference in the role of Information Systems (IS) in the banking
industry. The study indicates that IS plays a supportive role in public sector banks and a
strategic role in private and foreign sector banks. The study also indicates that the future
impact of IS does not vary significantly with the banking groups.
Meenakshi Rishi and Sweta C. Saxena (2004)143 highlight the role of labour
unions in public sector banks and their initial opposition to technological adoption. This
study charts out the path of technological innovation in the Indian banking industry post-
economic liberalization (1991-2) and identifies initial conditions in terms of competitive
environment and regulatory pressures that have contributed to the diffusion of these
innovations.
141 Ram Mohan. T and Subhash C. Ray, “Productivity and efficiency at public and private sector banks in India”, Document ,490.7004358, 14thJunbe, 2007. 142 Rawani.A.M and M P Gupta, “Role of Information Systems in Banks: An Empirical Study in the Indian Context” Vikalpa , Vol. 27, No. 4, October-December 2000. 143 Meenakshi Rishi and Sweta C. Saxena, “Technological Innovations in the Indian Banking Industry: The Late Bloomer”, Accounting Business and Financial History. Vol.14, No.3,. pp. 339-353, 2004.
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T T Ram Mohan and Subhash C Ray (2004)144 attempts a comparison of
performance among three category of banks – public, private and foreign – using
physical quantities of inputs and outputs , and comparing the revenue maximization
efficiency of banks duri9ng 1992 -2000. The findings show that PSBs performed
significantly better than private sector banks.
Sunil Kumar (2008)145 examines the objective of his analysis is to explore the
relationship between technical efficiency and profitability in India PSBs using the
‘efficiency – profitability matrix’. The study is confined to cross - sectional data for the
year 2005. A non – parametric technique named DEA was applied for computing TE
scores for 27 PSBs. The overall level of technical inefficiency in the Indian public sector
banking industry has been found to be around 11.5 percent. Also, banks affiliated with
the SBI group outperformed the banks in the NB group in terms of operating efficiency.
Sunil Kumar and Rachita Gulati (2008)146 examine the issue of convergence of
efficiency levels among Indian public sector banks (PSBs) during the post-reforms period
spanning from 1992/1993 to 2005/2006. That is, the banks with low level of efficiency at
the beginning of the period are growing more rapidly than the highly efficient banks. In
sum, the study confirms a presence of convergence phenomenon in the Indian public
sector banking industry.
144 Ram Mohan T.T,and Subhash C Ray, “ Comparing performance of public and private sector banks, A Revenue Maximisation Efficiency Approach, Economic and Political Weekly, March, 2004. 145 Sunil Kumar, “An analysis of Efficiency – Profitability in Indian Public Sector Banks”, Global Business Review, Vol. 9, No.1, Jan –June 2008. 146 Sunil Kumar and Rachita Gulati, “Did efficiency of Indian public sector banks converge with banking reforms?”, Published online: 15 November 2008 _ Springer-Verlag 2008.
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R.K.Uppal (2009)147 analyses the responses of 768 customers of public sector
bank, Indian private sector bank & Foreign Bank (each one from these groups) operating
in Amrithsar district of Punjab. It may be inferred that there is significant difference
among three bank groups with regard to the time customers have to spend to transact a
business. The e-banks are more efficient in regard to time factor.
Kajal Chaudhary and Monika Sharma (2011)148 discussed that the economic
reforms in India started in early nineties, but their outcome is visible now. Increased
competition, new information technologies and thereby declining processing costs, the
erosion of product and geographic boundaries, and less restrictive governmental
regulations have all played a major role for Public Sector Banks in India to forcefully
compete with Private and Foreign Banks.
2.13 Employee Perceptions
Kirsty Vaughan and Anna MacVicar (2004)149 investigates the implementation
of e-learning by UK culture and technology infrastructure company, including the pre-
implementation attitudes and perceptions of employees. The findings are discussed
together with the implications for research and practice in their study. In their study, the
practice of a blended approach adopted by an anonymised large multinational banking
organisation is presented as a case study.
147 R.K.Uppal, “ Customer Service in Indian Commercial Banks”, Asia Pacific Journal of Social Sciences, Vol-1(1), Jan-June, pp-127-141, 2009. 148 Kajal Chaudhary and Monika Sharma, “Performance of Indian Public Sector Banks and Private Sector Banks: A Comparative Study”, International Journal of Innovation, Management and Technology, Vol. 2, No. 3, June 2011. 149 Kirsty Vaughan and Anna MacVicar, “Employees’ pre-implementation attitudes and perceptions to e-learning A banking case study analysis”, Journal of European Industrial Training Vol. 28 No. 5, pp. 400-413, 2004.
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Constantine Lymperopoulos and Ioannis E. Chaniotakis (2004)150 aim to
identify the potential effects of e-banking through literature and surveys the Greek branch
employees’ perceptions in their paper. A questionnaire was designed and completed by
527 branch employees. Data factor analysis revealed the existence of four distinct factors
which were named banks’ “hard advantages”, “soft advantages”, “market effects”, and
“risk”, whereas further analysis provided evidence of the relationship that exists among
the perceptions, the personal characteristics of the respondents and the organisational
characteristics of their banks.
Thorsten Hennig-Thurau (2005)151 states that with the performance of service
personnel often constituting a major element of a service per se, the customer orientation
of service personnel is often regarded as a main determinant of service firms’ success.
The model is then empirically tested against a sample of 989 consumers for two service
contexts (i.e. book/CD/DVD retailers and travel agencies), with the results providing
support for most hypotheses. Implications of the findings for services and retail
management are discussed.
Masud Ibn Rahman, Hemanta Bahadur Gurung and Sampa Saha(2005)
152
investigates the level of job satisfaction of bank employees in Dhaka City identifying
150 Constantine Lymperopoulos and Ioannis E. Chaniotakis, “Branch employees’ perceptions towards implications of e-banking in Greece” International Journal of Retail & Distribution Management Volume 32 · Number 6, pp. 302-311, Emerald Group Publishing Limited · ISSN 0959-0552, 2004. 151 Thorsten Hennig-Thurau, “Customer orientation of service employees -Its impact on customer satisfaction, commitment, and retention”, International Journal of Service Industry Management, Vol. 15 No. 5, 2004 pp. 460-478, Emerald Group Publishing Limited, 0956-4233, 2005. 152 Masud Ibn Rahman, Hemanta Bahadur Gurung and
Sampa Saha, “Where the Job Satisfaction of Bank
Employees Lies: An Analysis of the Satisfaction Factors in Dhaka City”, Electronic copy available at: http://ssrn.com/abstract=1349453, 2005.
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the important job satisfaction factors that are associated with the overall satisfaction of
bank employees. Factors including payment, healthy relationship with colleagues, sense
of personal accomplishment, adequate information available to do job, ability to
implement new ideas and overall job satisfaction are found important for improving job
satisfaction of bank employees in Dhaka City. These factors are significantly related to
the overall satisfaction of the employees. The higher level of these factors is involved, the
higher overall satisfaction is likely to be. The factors that are influential have been
identified following overall job satisfaction through some statistical techniques.
Andreas-Nikolaos Papandreou (2006)153 concluded that the potential for on-line
banking is present for all banks to utilize. His thesis has shown that the Internet is a
unique opportunity and a major channel for distributing banking services in Greece. The
banks that stand to gain full advantage of this are the ones who have done their marketing
and demographic research and who are able to attract their targeted group by devising
interesting and memorable homepages to benefit from the increase in e-banking services.
Uppal R.K. and Rimpi Kaur (2007)154 in their study on “Quality of services in
E- Banks and Traditional Banks” examine the employee’s perceptions in India. The
study is based on a survey, it is concluded that although there are some drawbacks in
E-Banks like complaints regarding the usage of ATMs, high service charges and more
working hours leading to frustration among the employees. Accurate record 153 Andreas-Nikolaos Papandreou, “INTERNET BANKING IN GREECE: DEVELOPMENT, EVALUATION AND PERSPECTIVES”, Blekinge Institute of Technology School of Management Masters in Business Administration 2006. 154 Uppal R.K., and Rimpi Kaur, “Quality of services in E- Banks and Traditional Banks : An Empirical Study of Employees Perceptions in India”, The Icfai Journal of Management Research, Vol VI, No.2, February 2007.
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maintenance, attractive facilities and salaries to employees are other factors which make
these banks more preferable. This is due to advanced technology, disciplined
management, learning culture, having more satisfied customers and employees.
Ahmad Kaleem and Saima Ahmad (2008)155 reveal that Electronic distribution
channels provide alternatives for faster delivery of banking services to a wider range of
customers. This paper aims to collect bank employees’ perceptions of the potential
benefits and risks associated with electronic banking in Pakistan. The outcomes may help
the management of banks develop effective strategic planning for the future of electronic
banking in developing countries like Pakistan.
RK Uppal (2009)156 attempts to study the perceptions of bankers for internet
based e-banking services related with important issues like collaborative culture, training
& development, knowledge management. The perceptions of employees experienced in
e-banking system are surveyed where the study covers 60 employees of e-banks located
in selected districts of Punjab during the first half of July 2007. The study concludes that
there exists collaborative culture and employees are satisfied with the working of
e-channels. The employees experienced some frustration and a major problem of lack of
knowledge of e-channels and their operating ways while dealing with these channels, are
the most prevalent ones.
155 Ahmad Kaleem and Saima Ahmad, “Bankers’ Perceptions of Electronic Banking in Pakistan” Journal of Internet Banking and Commerce,, vol. 13, no.1April 2008. 156 RK Uppal, “Internet Based e-banking Services and Bankers’ Perspective in the Emerging Globalized Era - An Empirical Study”, Invertis Journal of Management Vol. 1, No. 1, pp 1-11, 2009.
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Dr. Muhammad Zafarullah, Dr. Hayat, and M. Awan (2010)157 conceptualizes
and measures key determinants of internal organizational orientation of service quality
from the employees’ perspective in this paper. The data collected from a sample of 150
employees of pure Islamic banks and conventional banks with IBBs (Islamic Banking
Branches or windows. Findings of this study guide the management of islamic banks to
indirectly influence customer perceptions through effective employees’ recruitment and
selection criteria, complemented by training to improve service oriented skills and
knowledge development about Sharia principles related with the products/ services
offered by Islamic banks in Pakistan.
Haitham Hmoud Al Shibly and Ibrahim H.Tadros (2010)158 designed their
research to theoretically address and empirically examine research issues related to the
question of what factors impact electronic government acceptance by Jordanian
employees. Two hundred questionnaires were distributed to employees at a municipality
in Jordan. Multiple regressions were used to analyze the data. The results of this study
show that System Quality, Information Quality, and Perceived Ease of Use, all have
significant effect on electronic government acceptance. Practical implications are
discussed.
157 Dr. Muhammad Zafarullah, Dr. Hayat, and M. Awan “Employees’ Perspective of Organizational Service Quality Orientation: Evidence from Islamic Banking Industry”, Journal of Brand Management (Under Review), BM10-132OA, 2010. 158
Haitham Hmoud Al Shibly and Ibrahim H.Tadros, “Employee’s Perceptions towards Electronic Government in Jordan”, European Journal of Scientific Research ISSN 1450-216X Vol.48 No.2, pp.169-176, 2010.
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Salman Khalid and Muhammad Zohaib Irshad (2010)159 have examined the
job satisfaction level of bank employees in Punjab Province. The result of their study
reveals that employees of private banks were more satisfied with pay, recognition, and
working hours as compared to public sector bank employees. Whereas, the employees of
public sector were satisfied with job security as compared to private sector bank
employees.
Conclusion
A review of the literature on the subject indicates that the introduction of IT,
Liberlisation and globalization is very vital for the present banking system. A
comprehensive review of the literature reveals, in the era of Liberlisation and
globalization, a paradigm shift is taking place in ownership, co-operate governance,
business, IT and performance of various bank groups. There is a paradigm shift in the
performance. Hence, there is a need to examine the impact of information technology
on the performance of bank on one hand and on the other hand, it is equally important to
assess the satisfaction levels of the customers in the banks, and that of the bank
employees. Therefore this study is concerned with mainly with the impact of
technology on banking operations, the performance of banks in pre e-banking and post
e-banking period, the perceptions of customers and employees on technological services
of banking.
159 Salman Khalid and Muhammad Zohaib Irshad, “Job Satisfaction Among Bank Employees in Punjab, Pakistan: A Comparative Study”, European Journal of Social Sciences – Volume 17, Number 4, 2010.