Dissertation Final Saurabh

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DISSERTATION On "E-banking vs Conventional Banking in India" By Saurabh Chawla Enroll. No. - A0101910209 MBA Class of 2012 Under the Supervision of Mr. Vaibhav Gupta Professor Department of Finance

In Partial Fulfilment of Award of Master of Business Administration

AMITY BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH SECTOR 125, NOIDA - 201303, UTTAR PRADESH, INDIA

AMITY BUSINESS SCHOOL

DECLARATIONTitle of Project Report - E-banking vs Conventional banking in India I declare (a)That the work presented for assessment in this dissertation Report is my own, that it has not previously been presented for another assessment and that my debts (for words, data, arguments and ideas) have been appropriately acknowledged. (b)That the work conforms to the guidelines for presentation and style set out in the relevant documentation.

Date: 20th March, 2012.

Saurabh Chawla A0101910209 MBA - Class of 2012.

AMITY UNIVERSITY UTTAR PRADESHAMITY BUSINESS SCHOOL

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CERTIFICATEI Mr. Vaibhav Gupta hereby certify that Saurabh Chawla student of Masters of Business Administration at Amity Business School, Amity University Uttar Pradesh is doing the Project Report on E-banking vs Conventional banking in India" under my guidance.

Mr. Vaibhav Gupta Professor Department of Finance

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ACKNOWLEDGEMENTI owe a great many thanks to a great many people who helped and supported me during the making of this project report. I would like to thank Mr Vaibhav Gupta, faculty, Amity Business School, for her guidance throughout the project. I would also like to thank my Industry mentor Mr. Samik Dasgupta ( Sr. AVP, IFCI Ltd), who inspired me greatly to work on this project. I would like to thank him for guiding me with some examples that are related to the topic of the project, for suggesting alternative solutions & sharing his valuable experience & knowledge with me, and also for facilitating me in gaining practical knowledge.

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TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION .................................................................................... 1 CHAPTER 2 :LITERATURE REVIEW ..................................................................... 28 CHAPTER 3: RESEARCH OBJECTIVE ................................................................... 32 CHAPTER 4: DATA ANALYSIS & INTERPRETATION ....................................... 35 CHAPTER 5: RECOMMENDATIONS AND CONCLUSIONS ............................... 55 REFERENCES ................................................................................................................ 57 ANNEXURE .................................................................................................................... 59

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LIST OF FIGURESFIGURE I: E-BANKING PRINCIPLE .......................................................................... 2 FIGURE II: ELECTRONIC BANKING & ITS COMPONENTS .............................. 3 FIGURE III: TRANSITION FROM TRADITIONAL TO E-BANKING .................. 4 FIGURE IV: E-BANKING TRANSACTION MECHANISM ..................................... 5 FIGURE V: E-BANKING IN VARIOUS COUNTRIES ............................................ 27 FIGURE VI: BAR CHART ON AGE GROUP ........................................................... 36 FIGURE VII: BAR CHART ON GENDER DISTRIBUTION .................................. 37 FIGURE VIII: BAR CHART ON BANK VISITS PER MONTH ............................. 39 FIGURE IX: PIE CHART ON E-BANKING FACILITIES BANK SHOULD PROVIDE ........................................................................................................................ 40 FIGURE X: PIE CHART ON REASON FOR VISITING BRANCH ....................... 42 FIGURE XI: BAR CHART ON EXISTENCE OF INTERNET BANKING ACCOUNT ...................................................................................................................... 45 FIGURE XII: PIE CHART ON USAGE OF E-BANKING SERVICES USED BY CONSUMERS ................................................................................................................. 47 FIGURE XIII: PIE CHART ON CHOICE OF BANK............................................... 48 FIGURE XIV: BAR CHART ON REASONS FOR OPENING INTERNET BANK ACCOUNT ...................................................................................................................... 50 FIGURE XV: BAR CHART ON IMPORTANCE OF FACTORS RELATING TO E-BANKING ................................................................................................................... 52 FIGURE XVI: PIE CHART ON REASONS FOR NOT OPENING AN EBANKING ACCOUNT .................................................................................................. 53

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LIST OF TABLESTABLE I: LIST OF SOME BANKS OPERATING E-BANKING IN INDIA & THEIR TECHNOLOGY VENDORS ....................................................................................... 13

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EXECUTIVE SUMMARYE-banking means the execution of financial services via internet, reducing cost and increase in convenience for the customer to access the transaction. E-banking is an umbrella term for the process by which a customer may perform banking transactions electronically without visiting a brick-and-mortar institution. The following terms all refer to one form or another of electronic banking: personal computer (PC) banking, Internet banking, virtual banking, online banking, home banking, remote electronic banking, and phone banking. PC banking and Internet or online banking is the most frequently used designations. It should be noted, however, that the terms used to describe the various types of electronic banking are often used interchangeably.

The ever increasing speed of internet enabled phones & PDAs, made the transformation of banking application to mobile devices, this creates a new subset of electronic banking i.e. mobile banking. This study tries to analyze the differences in risk perceptions between bank customers using EBanking and those not using E-Banking and it shows that risk perceptions in terms of financial, psychological and safety risks among non-users was more meaningful than those using it. Customers not preferring to use E-banking thought that they would be swindled when using this service, and therefore, are particularly careful about high risk expectation during money transfers from and between accounts. Although many major banks have started offering E-banking services, the slow pace will continue until the mass awareness is created. Private and foreign banks are trying to turn more and more customer towards the usage of internet for the banking transaction. This study is basically to know the relation of various independent variables on the customer usage of internet for banking.

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CHAPTER 1: INTRODUCTIONElectronic banking is one of the truly widespread avatars of E-commerce the world over. Various authors define E-Banking differently but the most definition depicting the meaning and features of E-Banking are as follows: 1. 2. Banking is a combination of two, Electronic technology and Banking. Electronic Banking is a process by which a customer performs banking

Transactions electronically without visiting a brick-and-mortar institutions. 3. E-Banking denotes the provision of banking and related service through

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

Bank Information technology

Customer

FIGURE I: E-BANKING PRINCIPLE

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NEED FOR E-BANKING

One has to approach the branch in person, to withdraw cash or deposit a cheque or request a statement of accounts. In true Internet banking, any inquiry or transaction is processed online without any reference to the branch (anywhere banking) at any time. Providing Internet banking is increasingly becoming a "need to have" than a "nice to have" service. The net banking, thus, now is more of a norm rather than an exception in many developed countries due to the fact that it is the cheapest way of providing banking services. Banks have traditionally been in the forefront of harnessing technology to improve their products, services and efficiency. They have, over a long time, been using electronic and telecommunication networks for delivering a wide range of value added products and services. The delivery channels include direct dial up connections, private networks, public networks etc and the devices include telephone, Personal Computers including the Automated Teller Machines, etc. With the popularity of PCs, easy access to Internet and World Wide Web (WWW), Internet is increasingly used by banks as a channel for receiving instructions and delivering their products and services to their customers. This form of banking is generally referred to as Internet Banking, although the range of products and services offered by different banks vary widely both in their content and sophistication.

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FIGURE II: ELECTRONIC BANKING & ITS COMPONENTS

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EVOLUTION OF E-BANKINGThe story of technology in banking started with the use of punched card machines like Accounting Machines or Ledger Posting Machines. The use of technology, at that time, was limited to keeping books of the bank. It further developed with the birth of online real time system and vast improvement in telecommunications during late 1970s and 1980s.it resulted in a revolution in the field of banking with convenience banking as a buzzword. Through Convenience banking, the bank is carried to the doorstep of the customer. The 1990s saw the birth of distributed computing technologies and Relational Data Base Management System. The banking industry was simply waiting for these technologies. Now with distribution technologies, one could configure dedicated machines calle