Customers Perception towards E- Banking Services

A Project Report Submitted

During Digital Marketing Course

Of

Post Graduate Diploma in Management

(Approved by AICTE, Govt. of India)

(2012 – 2014)

Submitted To Submitted By

Dr Anagha Shukre Nitya (097)

Marketing Chairperson

IMS, Ghaziabad

1

DECLARATION

I hereby declare that the work entitled “Customers Perception towards E- Banking Services” is carried out by us under the guidance of our honorable Faculty Dr. Anagha Shukre (Marketing Chairperson).

The work is done by us, best of our knowledge and belief; it contains no

material previously published or written by another neither person nor material

which has accepted for the award of any other degree or diploma of the

university or other Institute of higher learning.

Nitya (097)

2

ACKNOWLEDGEMENT

I express our sincere gratitude to our honorable Faculty Dr. Anagha Shukre ( Marketing Chairperson) for her guidance, continuous support and cooperation throughout our project, without which the Project report would not have been possible.

Nitya (097)

3

S.No. Table of Content Page No.

1. Declaration 02

2. Acknowledgement 03

3. Objective of the study 05

4. Introduction & Evolution of E- Banking 06

5. Need for E- Banking & E- Banking Products 07

6. Types of E- Banking 08

7. Advantages of E- Banking 09

8. Disadvantages of E- Banking 10

9. How E- Banking Can ease your Life 11

10. Internet Banking in India 12

11. Emerging Challenges 13

12. Research Methodology 13

13. Data Collection & SPSS Analysis 14

14. Recommendation 18

15. Conclusion 19

16. Annexure 20

4

Objective of the Study

The Objective of the study is to know about E- Banking and its services. How many people actually aware and using this service in their lives. The actual need of the E- Banking services in today’s scenario. The recent challenges in E- Banking Services. Is E- Banking service making the life easy or not?

5

Introduction

Internet Banking (E-Banking) means any user with a personal computer and a browser can get connected to his bank’s website to perform any of the virtual banking function. In other words it is said that it is updated “online, real time”. The system is updated immediately after every transaction automatically. Online banking (E-banking) allows customers of a financial institution to conduct financial transactions on a secure website operated by the institution, which can be a virtual bank. To access a financial institution's online banking facility, a customer having personal Internet access must register with the institution for the service, and set up password for customer verification. E-Banking is a result of the growing expectations of bank’s customers. E-banking or Online banking is a generic term for the delivery of banking services and products through the electronic channels such as the telephone, the internet, the cell phone etc. The concept and scope of e-banking is still evolving. Several initiatives have been taken by the Government of India as well as the RBI (Reserve Bank of India); have facilitated the development of e-banking in India. The government of India enacted the IT Act, 2000, which provides legal recognition to electronic transactions and other means of electronic commerce.

Evolution of E- Banking

The story of technology in banking started with the use of punched card machines like Accounting Machines. The use of technology, at that time, was limited to keeping books of the bank. It further developed with the birth of online real time system and vast improvement in telecommunications during late1970’s and 1980’s. It resulted in a revolution in the field of banking with “convenience banking”. Through Convenience banking, the bank is carried to the doorstep of the customer. The 1990’s saw the birth of distributed computing technologies and Relational Data Base Management System. Intense competition has forced banks to rethink the way they operated their business. They had to reinvent and improve their products and services to make them more beneficial and cost effective. Technology in the form of E-banking has made it possible to find alternate banking practices at lower costs.  More and more people are using electronic banking products and services because large section of the banks future customer base will be made up of computer literate

6

customer, the banks must be able to offer these customer products and services that allow them to do their banking by electronic means.

NEED FOR E-BANKING

One has to approach the branch in person, to withdraw cash or deposit a cheque or request a statement of accounts. In true Internet banking, any inquiry or transaction is processed online without any reference to the branch (anywhere banking) at any time. Providing Internet banking is increasingly becoming a "need to have" than a "nice to have" service. The net banking, thus, now is more of a norm rather than an exception in many developed countries due to the fact that it is the cheapest way of providing banking services. With the popularity of PCs, easy access to Internet and World Wide Web (WWW), Internet is increasingly used by banks as a channel for receiving instructions and delivering their products and services to their customers. This form of banking is generally referred to as Internet Banking.

E-Banking Products

Automated Teller Machine (ATM) Tele banking or Phone Banking Internet Banking Mobile Banking

Automated Teller Machine: These are cash dispensing machine, which are frequently seen at banks and other locations such as shopping centres and building societies. Their main purpose is to allow customer to draw cash at any time and to provide banking services where it would not have been viable to open another branch. Using an ATM, customers can access their bank accounts in order to make cash withdrawals (or credit card cash advances) and check their account balances. Many ATMs also allow people to deposit cash or checks, transfer money between their bank accounts, pay bills, or purchase goods and services.

The advantages of ATM to customers are:

Ability to draw cash after normal banking hours

Quicker than normal cashier service

7

Tele banking or Phone Banking: It is fastly becoming one of the most popular products. Customer can perform a number of transactions from the convenience of their own home or office; in fact from anywhere they have access to phone. Customers can do following:-

Check balances and statement information

Transfer funds from one account to another

Pay certain bills

Mobile Banking: A versatile multifunctional, free service that is accessible and viewable on the monitor of mobile phone.

 Internet Banking: The advent of the Internet and the popularity of personal computers presented both an opportunity and a challenge for the banking industry. For years, financial institutions have used powerful computer networks to automate millions of daily transactions; today, often the only paper record is the customer’s receipt at the point of sale. Now that their customers are connected to the Internet via personal computers, banks envision similar advantages by adopting those same internal electronic processes to home use. Banks view online banking as a powerful “value added” tool to attract and retain new customers while helping to eliminate costly paper handling and teller interactions in an increasingly competitive banking environment. In India first one to move into this area was ICICI Bank. They started web based banking as early as august 1997.

TYPES OF E-BANKING

1. Informational

2. Communicative

3. Transactional

Informational: This is the basic level of Internet banking. Typically, the bank has marketing information about the bank’s products and services on a stand-alone server. The risk is relatively low, as informational systems typically have no path between the server and the bank’s internal network.

Communicative: The interaction between the bank’s system and the customer. The interaction maybe limited to electronic mail, account enquiry, loan applications, or static file updates. Because these servers may have a path to the

8

bank’s internal networks, the risk is higher with this configuration than with informational systems. Appropriate controls need to be in the place to prevent, monitor, and alert management of any unauthorized attempt to access the bank’s internal networks and computer systems. Virus controls also become much more critical in this environment.

Transactional: This level of Internet banking allows customers to execute

transactions. Since a path typically exists between the server and the bank or outsourcer’s internal network, this is the highest risk architecture and must have the strongest controls. Customer transactions can include accessing accounts, paying bills, transferring funds etc.

ADVANTAGES OF E-BANKING:

Convenience

Transaction speed

Ubiquity

Efficiency

Effectiveness

Cheaper alternative

From snob value to necessity

Convenience: E-BANKING available 24 hours a day, seven days a week, and they’re only a mouse click away.

Ubiquity: If you’re out of state or even out of the country when a money problem arises, you can log on instantly to your online bank and take care of business, 24*7.

Transaction speed: Online bank sites generally execute and confirm transactions at or quicker than ATM processing speeds.

9

Efficiency: You can access and manage all of your bank accounts, from one secure site.

Effectiveness: Many online banking sites now offer sophisticated tools, including account aggregation, stock quotes, rate alert and portfolio managing program to help you manage all of your assets more effectively. Most are also compatible with money managing programs such as quicken and Microsoft money.

Cheaper alternative: With increasing competition, it seems to be the cost factor that is driving banks to offer the facility. The Internet is still a very cheap alternative to opening a physical branch. The costs of a banking service through the Internet form a fraction of costs through conventional methods.

From snob value to necessity: A couple of years ago, there was a belief even among bankers that customers opening new accounts wanted the online banking facility, just to "feel good" and very few of them actually used the services. Today, bankers believe that the trend from `nice to have' is changing to `need to have'. The "snob value" of banking with an organisation that could offer service on the Internet has given way to a genuine necessity, he feels. "It all depends on how busy a person is."

DISADVANTAGES Start-up may take time Learning curves Bank site changes

Start-up may take time: In order to register for your bank’s online program, you will probably have to provide ID and sign a form at a bank branch. If you and your spouse wish to view and manage their assets together online, one of you may have to sign a durable power of attorney before the bank will display all of your holdings together.

Learning curves: Banking sites can be difficult to navigate at first. Plan to invest some time and\or read the tutorials in order to become comfortable in your virtual lobby.

Bank site changes: Even the largest banks periodically upgrade their online programs, adding new features in unfamiliar places. In some cases, you may have to re-enter account information

10

HOW E-BANKING CAN EASE YOUR LIFE

Fund transfer

Bill payment service

Railway pass

Investing through Internet banking

Recharging your prepaid phone

Shopping at your fingertips

Fund transfer:  Any amount can be transferred from one account to another of the same or any another bank. Customers can send money anywhere in India. Payee’s account number, his bank and the branch is needed to be mentioned after logging in the account. The transfer will take place in a day or so, whereas in a traditional method, it takes about three working days.

Invest through Internet banking: FD can be opened online through funds transfer. Now investors with interlinked demat account and bank account can easily trade in the stock market and the amount will be automatically debited from their respective bank accounts and the shares will be credited in their demat account. Moreover, some banks even give the facility to purchase mutual funds directly from the online banking system. Nowadays, most leading banks offer both online banking and demat account.

Recharging your prepaid phone: Just top-up the prepaid mobile cards by logging in to Internet banking. By just selecting the operator's name, entering the mobile number and the amount for recharge, the phone is again back inaction within few minutes.

Shopping at your fingertips: Leading banks have tie ups with various shopping websites. With a range of all kind of products, one can shop online and the payment is also made conveniently through the account. One can also buy railway and air tickets through Internet banking.

11

INTERNET BANKING IN INDIA

Internet banking products in India into 3 types based on the levels of access granted. They are:

Information Only System

Electronic Information Transfer System

Fully Electronic Transactional System

Information Only System: General purpose information like interest rates, branch location, bank products and their features, loan and deposit calculations are provided in the banks website. There exist facilities for downloading various types of application forms. The communication is normally done through e-mail. There is no interaction between the customer and bank's application system. No identification of the customer is done.

Electronic Information Transfer System: The system provides customer-specific information in the form of account balances, transaction details, and statement of accounts. The information is still largely of the 'read only' format. Identification and authentication of the customer is through password. The information is fetched from the bank's application system either in batch mode or off-line. The application systems cannot directly access through the internet.

Fully Electronic Transactional System: Transactions can be submitted by the customer for online update. This system requires high degree of security and control. In this environment, web server and application systems are linked over secure infrastructure. It comprises technology covering computerization, networking and security, inter -bank payment gateway and legal infrastructure. It includes the followings:

ATM DEBIT CARDS SMART CARDS MOBILE BANKING

12

 EMERGING CHALLENGES

Demand side pressure due to increasing access to low cost electronic services.

Global players in the fray Growing customer awareness and need of transparency Manage multiple distribution channels

Research Methodology

Research Design: A research design is a framework for conducting the marketing research project. It specifies the details of the procedures necessary for obtaining the information needed to structure and solve marketing research problem.

Step of Design:-

Target of population: IMS students and some working professionals

Size of sample: 55

Sampling Method:

>Non-probability sampling method

- Convenience sampling

>Probability/random sampling method

- Stratified sampling.

-Area sampling

For this project we have selected as per the convenience (Convenience Sampling) IMS students and some working professionals of our contacts. Stratified means particular area, we have selected Dasna as a particular area.

13

DATA COLLECTION

There are two types of data collection:-

Primary data Secondary data

*For the completion of this project we have taken only the help of the primary data as well as secondary data.

Primary Data: We have collected Primary data regarding the perception towards e-banking services by filling the questionnaire in the IMS, Dasna locality of Ghaziabad. And also questionnaire filled by some working professionals who worked in Delhi & NCR.

Secondary Data: To know more about E-Banking, its introduction, evolution, challenges etc. through important websites.

SPSS Analysis

Q. Is there any training required for using banking transaction activity easily?

Solution:

Correlation

Descriptive Statistics

Mean Std. Deviation N

requires training to use E

banking 3.02 1.269 55

easy banking 3.80 1.078 55

14

Correlations

requires training

to use E banking easy banking

requires training to use E

banking

Pearson Correlation 1 .138

Sig. (2-tailed) .315

N 55 55

easy banking Pearson Correlation .138 1

Sig. (2-tailed) .315

N 55 55

Interpretation:

H0: No relationship exists between training required and ease using banking transaction activity

H1: Relationship exists

Sample size = 55

X‾+ 1σ = 3.02+1.269 (require training to use e-banking) = 67%

X‾+ 1σ = 3.80+1.078 (easy banking activity) = 67%

P value = 0.315

Greater than 0.05

Therefore,

H0 is accepted

Thus, no relationship exists between training required and easily using banking transaction activity.

15

Q. Is safety and security of transacting over the net, the most important factor for the use of E- Banking services in daily life?

Solution:

Regression

Model Summary

Model R R Square

Adjusted R

Square

Std. Error of the

Estimate

1 .173a .030 .012 1.161

a. Predictors: (Constant), safety & security transaction

ANOVAb

Model Sum of Squares df Mean Square F Sig.

1 Regression 2.204 1 2.204 1.636 .207a

Residual 71.432 53 1.348

Total 73.636 54

a. Predictors: (Constant), safety & security transaction

b. Dependent Variable: E banking part of life

16

Variables Entered/ Removed

Model

Variables

Entered

Variables

Removed Method

1 safety & security

transaction a. Enter

a. All requested variables entered.

b. Dependent Variable: E banking part of life

Coefficients

Model

Unstandardized Coefficients

Standardized

Coefficients

t Sig.B Std. Error Beta

1 (Constant) 2.962 .482 6.139 .000

safety & security transaction .174 .136 .173 1.279 .207

a. Dependent Variable: E banking part of life

R²= 0.030 represents coefficient of determination i.e. 3% of the variation in E-Banking services as a part of daily life is explained by safety & security transacting over the internet.

Standard Error of Estimates (SEE) estimates the deviation around Regression Line.

Regression = a+bx

Regression Line = 2.962(a) + 0.174(b)*safety & security

As b is positive, relationship exists between day to day life transaction and safety and security over the net.

Test the significance of the relationship between E- Banking services as a part of day to day life and safety & security of transaction over the internet.

For this we use t- test

H0: b= 0

H1: b≠ 0

t value = 1.27 a (safety and security of transacting over the net)

P value = 0.207

Greater than 0.05

Therefore, H0 is accepted

No relationship exists between safety & security over the internet and E- Banking service part of daily life in general.

17

Regression Model

F test is used to determine the validity of Regression Model whether the relationship exists or not

F = 1.636

P value = 0.207

Which is greater than 0.05

So, Accept H0

No Valid Regression Model.

Recommendation:

1. Those people who open there new a/c in the bank, the bank has the responsibility to impose their clients to start using E- Banking services as they impose their schemes.

2. If training is required for those who are not comfortable in using E- banking services e.g. Old age person, the bank has to take the responsibility to provide them training for 2-3 days. Due to this practice, the crowd will be less in the physical bank and also fewer employees are required for the same job.

18

Conclusion

E- Banking Service is still in a growing phase in India. And face many challenges also. As we have quoted a question that is security, an important aspect for using E- Banking services. The result comes NO relationship that shows many other aspects are responsible for using this service. And another question we have quoted that is any training required for increasing the use of E- Banking Service. The SPSS answer is NO relationship that shows only little bit information is enough for using E- Banking services. E- Banking service makes the life much easier.

19

Annexure

Gender- Male Female

Age- 20-30 30-40 40-50 50& above

Occupation- Service Business Man Teacher Student

Other (Rate-Strongly Disagree: 1 to Strongly Agree: 5)

S.No.

Particulars Strongly Agree Agree Neutral Disagree

Strongly Disagree

1) I use e banking service for awareness of the services & benefits

2) It is easy to make my banking transaction activity

3) There is safety & security of transacting over the internet

4) It is affordable service via internet(i.e. bank charges)

5) I will use this service for online payment/shopping

6) Online Service used for seeking product & rate information

7) There is no error while using this service

8) Using E banking service is more prestigious than queuing at the bank hall

9) It requires training to use E banking services

10) E banking services are part of my daily life

20