INTERNET BANKING & CUSTOMER RETENTION-A STUDY ON...
Transcript of INTERNET BANKING & CUSTOMER RETENTION-A STUDY ON...
GALAXY International Interdisciplinary Research Journal_______________________ ISSN 2347-6915 GIIRJ, Vol.2 (2), FEBRUARY (2014)
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INTERNET BANKING & CUSTOMER RETENTION-A STUDY ON THE
IMPACT OF INTERNET BANKING ON CUSTOMER RETENTION OF
HDFC BANK
GAURANG TRIVEDI*; RICHARD REMEDIOS**
*SENIOR LECTURER
S.V.E.T COMMERCE & BBA COLLEGE
JAMNAGAR
**PRINCIPAL
S.V.E.T COMMERCE & BBA COLLEGE
JAMNAGAR
ABSTRACT
The key purpose of the study is to find out the impact of internet banking to retain customers in
the context of HDFC Bank LTD, Joggers Park branch, Jamnagar. There are some key factors that
have an important impact on customer retention in the internet banking. The main findings of the
study will indicate that the factors, which are Service Quality, Responsiveness, Security and
Privacy, Assurance, and Reliability, have impacts on customer retention in terms of Internet
Banking of HDFC Bank LTD, Joggers Park branch, Jamnagar. In the study, the factors are being
treated as the Independent variables and Customer Retention as the Dependent variable. It will
be a causal study aimed to measure that, the existence of or a change in Independent variables
causes or leads to a change in the Dependent variable. This study is based on the primary data to
understand the level of Service Quality, Responsiveness, Security & Privacy, Assurance, and
Reliability and their impact on the retention of customers in the context of internet banking of
HDFC Bank LTD, Joggers Park branch, Jamnagar. The information for this research have been
gathered by a questionnaire survey among the customers of HDFC Bank LTD, Joggers Park
branch, Jamnagar. We have distributed 30 questionnaires among 30 respondents, who are the
clients of HDFC Bank LTD, Joggers Park branch, Jamnagar and use their internet banking
service. A random sampling technique was adopted to do the survey. After analysis, we got
significant results of both the dependent and independent variables. From this, now we can get a
clear idea that how internet banking impacts on customer retention.
KEYWORDS: Internet, Banking, Responsiveness, Retention, Questionnaire, Independent.
1.1 Introduction of the study:
For last few years, internet banking is a very common service that is provided by most of
the commercial banks in India. HDFC Bank Ltd. is one of them. Now internet banking is a very
popular form of transaction among peoples. In this research study the researcher conducted a
research on “A causal study on the influence of Internet Banking in Customer retention in the
context of HDFC Bank LTD, Joggers Park branch, Jamnagar.”. The main objective of this
research is to identify the key factors that influence the internet banking and helps to retain
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customers of HDFC Bank LTD, Joggers Park branch, Jamnagar. By this research we will able to
know that which factors and how they influence internet banking of HDFC Bank LTD, Joggers
Park branch, Jamnagar to retain customer.
1.2 Statement of the Problem:
By this study, researchers will investigate the impact of Internet Banking on customer
retention. HDC Bank Ltd. is a well-established Bank over the last few years, but due to rise in
customer complaints and customers preferring- banking services of other banks, it has come to
the light that their Internet banking service quality is not one of the best compared to their other
banking services. So, in this research we shall find the factors (that they need to look at or do
further research) of Internet Banking that can help them to improve service quality and retain
customers.
1.3 Purpose of the Study:
The purpose of this study is to find out the factors of internet banking that can impact to
retaining customer in the context of HDFC Bank Ltd. It will help the researchers to look into the
overall condition of internet banking service of HDFC Bank Ltd.
1.4 Objective of the study:
To understand the internet banking system of Mutual Trust Bank Ltd
To identify the problems of internet banking system of Mutual Trust Bank Ltd.
To find out the problem of client and employees to changes in internet banking of HDFC
Bank Ltd.
To identify the problem in operation of internet banking in the banks website.
To know the terms, rules and condition of internet banking given by HDFC Bank Ltd. to
their clients.
To provide suggestions for the improvement of the internet banking system of the bank.
1.5 Methodology of the study:
We have got all the relevant information from my working experience in HDFC Bank,
their Annual report, various brochures, HDFC Bank web site. There are two sources from which
we have collected data, primary source and secondary source.
Primary Data:
1. The information, which is gathered from MTBL while I worked with them.
2. Personal observation.
3. Face to face conversation with the officers.
4. Face to face conversation with the clients.
5. Working at different desks of the bank.
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Secondary data:
Data gathered within the organization itself.
Data gathered from Texts
Internet sources.
General reports.
Annual reports.
Official documents
1.6 Limitations of the study: There were some limitations of doing the study:
Due to the time constraint, the data has only been collected from the clients of HDFC
Bank Ltd. Jamnagar branch only, which may fail to represent the factual scenario of the
relationship between measurable variables.
We faced some limitations to collect some information about internet banking of
HDFC Bank as these were not so available for the general peoples.
Respondents were too busy to read the questions properly and tick the answer just for
the sake of completing the survey quickly. So there is no guarantee that the data
collected is 100% correct and hence while analyzing the researcher has considered
level of significance.
Time constraint was also one of the factors that curtailed the scope of the study.
1.7 Conceptual Frame Work:
Dependent variable
Independent variable
Service Quality
Responsiveness
Privacy and Security
Assurance
Reliability
Customer Retention
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1.8 Research Questions:
1. Does Service Quality affect Customer retention in context of HDFC Bank?
2. Does Responsiveness affect Customer retention in context of HDFC Bank?
3. Does security and Privacy affect Customer retention in context of HDFC Bank?
4. Does Assurance affect Customer retention in context of HDFC Bank?
5. Does Reliability affect Customer retention in context of HDFC Bank?
1.9 Hypothesis:
1. Service Quality affects Customer retention in context of HDFC Bank.
2. Responsiveness affects Customer retention in context of HDFC Bank.
3. Privacy and Security affects Customer retention in context of HDFC Bank.
4. Assurance affects Customer retention in context of HDFC bank.
5. Reliability affects Customer retention in context of HDFC bank.
1.10 Research Design:
As shown in the diagram of the conceptual framework of the research there are five
independent variables and one dependent variable. The conceptual framework also shows that
there is a direct relationship between the Independent variables and the dependent variable. It is
very important to explore the type & intensity of this relationship so that the earlier mentioned
purpose of the study can be met. The study will enable the bank to understand the factors of
internet banking which actually helps to improve the Customer retention. Thus they can plan for
their future plan of action or strategies and try to provide a good internet banking service to
retain more customers.
1.11 Sampling Method:
The sampling methods that have been adopted for the research is as follows:
Sampling Technique: A systematic random sampling method has been used where
every 3rd customer arriving in the branch will be contacted. Among those whoever
fall under the criteria of holding an account and use internet banking for more than a
year & visiting the branch at least once every two weeks will be interviewed.
Sample Size: 30 clients were interviewed who are using internet banking of HDFC
Bank. So the sample size is 30.
1.12 Data Analysis:
For data analysis purpose, SPSS software have used as it provides in-depth investigation
in data analysis and visualization. Reliability analysis, regression analysis and co-relation
analysis have used to analysis of the data. Stepwise regression analysis can be carried out to
test hypotheses to find which independent variable(s) individually and collectively provide a
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meaningful contribution towards the explanation of the dependent variable noted that if an
investigator wishes to determine whether some conceptually newer measures add anything to
the depending variable. MS Excel has also used to carry out calculations in some cases. The
researchers have investigated Internet banking Factors impact in Customer retention of
HDFC Bank, Joggers Park, Jamnagar.
Frequency Table:
The sample size of the research consists of 20 male and 10 female respondents. 66.7%
of male and 33.3% of female customers participates in this survey which is shown at
below.
Among the responding 10 customers age was between 15-25 years, 11 customers age
was between 26-35 years, 6 customers age was between 36-45 years and 3 customers
age was between 46 and above which is shown below.
There are three occupation ranges in the survey. There were 19 respondents, who are
service holders which is 63.3%, 4 are businessman which is 13.3% and 7 who are
student with 23.3%.
Statistics
Age
Gender
Occupation
Valid
missing
30
0
30
0
30
0
Age
Frequency Percent Valid Percent Cumulative
Percent
valid 15-25
26-35
36-45
46 to
above
Total
10
11
6
3
30
33.3
36.7
20.0
10.0
100.0
33.3
36.7
20.0
10.0
100.0
33.3
70.0
90.0
100.0
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Gender
Frequency Percent Valid Percent Cumulative
Percent
Valid Male
Female
Total
20
10
30
66.7
33.3
100.0
66.7
33.3
100.0
66.7
100.0
Occupation
Frequency Percent Valid Percent
Cumulative
Percent
Valid Service
Business
Student
Total
19
4
7
30
63.3
13.3
23.3
100.0
63.3
13.3
23.3
100.0
63.3
76.7
100.0
Reliability Analysis: Scale: All Variable
Case Processing summary
N %
Case valid
Excuded
Total
30
0
30
100
0
100
Service Quality and Customer Retention:
Reliablity Statistic
Cronbach’s
Alpha
N of Item
.896 2
Interpretation: Here the alpha value is 0.896, which is more then 0.5. So, the question is clear to
the audience.
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Responsiveness and Customer Retention:
Cronbach’s
Alpha
N of Item
.883 2
Interpretation: Here the alpha value is 0.883, which is more then 0.5. So, the question is clear to
the audience.
Security & Privacy and Customer Retention:
Cronbach’s
Alpha
N of Item
.839 2
Interpretation: Here the alpha value is 0.839, which is more then 0.5. So, the question is clear to
the audience.
Assurance and Customer Retention:
Cronbach’s
Alpha
N of Item
.825 2
Interpretation: Here the alpha value is 0.825, which is more then 0.5. So, the question is clear to
the audience.
Reliability and Customer Retention:
Cronbach’s
Alpha
N of Item
.825 2
Interpretation: Here the alpha value is 0.825, which is more then 0.5. So, the question is clear to
the audience.
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Regression Analysis:
Service Quality and Customer Retention:
Variables Entered/Removed
Model
Variables Entered
Variable
Removed
Method
1 Service
Qualitya
. Enter
a. All requested variables entered.
b. Dependent Variable:Customer Retention
Model Summary
Model
R
R Square
Adjusted
R Square
Std.Error
of the
estimate
1 .826a
.682 .671 .23345
a. Predictors:(Constants).Service Quality
ANOVAb
Model
Sum of
Squares
df
Mean
Square
F Sig.
1 Regression
Residual
Total
3.272
1.526
4.798
1
28
29
3.272
.054
60.045 .000a
a. Predictors:(Constants).Service Quality
b. Dependent Variable:Customer Retention
Coefficientsa
Model
Unstandardized
Coefficents
Standardized
Coefficents
t Sig.
B Std.Error Beta
1 (Constant)
Service Quality
1.294
.683
.358
.088
.826 3.613
7.749
.001
.000
a. Dependent Variable:Customer Retention
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Interpretation: Here the value of 2 is .682 means 68.2%. That mean the effect of
service quality on customer retention is 68.2%.
Responsiveness and Customer Retention:
Variables Entered/Removedb
Model
Variables Entered
Variable
Removed
Method
1 Reponsivenessa . Enter
a. All requested variables entered.
b. Dependent Variable: Customer Retention
Model Summary
Model
R
R Square
Adjusted
R Square
Std.Error
of the
estimate
1 .821a
.675 .663 .23617
a. Predictors:(Constants).Responsiveness
ANOVAb
Model
Sum of
Squares
df
Mean
Square
F Sig.
1 Regression
Residual
Total
3.236
1.562
4.798
1
28
29
3.236
.056
58.024 .000a
a. Predictors:(Constants). Responsiveness
b. Dependent Variable: Customer Retention
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Coefficientsa
Model
Unstandardized
Coefficents
Standardized
Coefficents
t Sig.
B Std.Error Beta
1 (Constant)
Responsiveness
1.521
.622
.335
.002
.021 4.544
7.617
.000
.000
a. Dependent Variable:Customer Retention
Interpretation: Here the effect of responsiveness on customer retention is 67.5%.
Security & Privacy and Customer Retention:
Variables Entered/Removedb
Model
Variables Entered
Variable
Removed
Method
1 Privacy and
Securitya
. Enter
a. All requested variables entered.
b. Dependent Variable:Customer Retention
Model Summary
Model
R
R Square
Adjusted
R Square
Std.Error
of the
estimate
1 .749a
.560 .545 .27445
a.Predictors:(Constants).Privacy and Security
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ANOVAb
Model
Sum of
Squares
df
Mean
Square
F Sig.
1 Regression
Residual
Total
2.689
2.109
4.798
1
28
29
2.689
.075
35.701 .000a
a. Predictors:(Constants). Privacy and Security
b. Dependent Variable:Customer Retention
Coefficientsa
Model
Unstandardized
Coefficents
Standardized
Coefficents
t Sig.
B Std.Error Beta
1 (Constant)
Privacy and
Security
1.583
.575
.416
.096
.749 3.806
5.975
.001
.000
a. Dependent Variable: Customer Retention
Interpretation: Here the value of 2 is .560. That‟s mean the effect of privacy and security on customer retention is 56%.
Assurance and Customer Retention:
Variables Entered/Removedb
Model
Variables Entered
Variable
Removed
Method
1 Assurancea . Enter
a. All requested variables entered.
b. Dependent Variable:Customer Retention
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Model Summary
Model
R
R Square
Adjusted
R Square
Std.Error
of the
estimate
1 .707a
.500 .483 .29261
a. Predictors:(Constants). Assurance
ANOVAb
Model
Sum of
Squares
df
Mean
Square
F Sig.
1 Regression
Residual
Total
2.401
2.397
4.798
1
28
29
2.401
.086
28.040 .000a
a. Predictors:(Constants). Assurance
b. Dependent Variable:Customer Retention
Coefficientsa
Model
Unstandardized
Coefficents
Standardized
Coefficents
t Sig.
B Std.Error Beta
1 (Constant)
Assurance
1.582
.630
.469
.119
.707 3.370
5.295
.002
.000
a. Dependent Variable:Customer Retention
Interpretation: Here the value of 2 is .500. That means the effect of assurance on customer
retention is 50%.
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Reliability and Customer Retention:
Variables Entered/Removedb
Model
Variables Entered
Variable
Removed
Method
1 Reliability a . Enter
a. All requested variables entered.
b. Dependent Variable:Customer Retention
Model Summary
Model
R
R Square
Adjusted
R Square
Std.Error
of the
estimate
1 .762a
.581 .566 .26805
a. Predictors: (Constants). Reliability
ANOVAb
Model
Sum of
Squares
df
Mean
Square
F Sig.
1 Regression
Residual
Total
2.786
2.012
4.798
1
28
29
2.786
.072
38.778 .000a
a. Predictors: (Constants). Reliability
b.Dependent Variable: Customer Retention
Coefficientsa
Model
Unstandardized
Coefficents
Standardized
Coefficents
T Sig.
B Std.Error Beta
1 (Constant)
Reliability
2.057
.505
.324
.081
.762 6.351
6.227
.000
.000
a.Dependent Variable:Customer Retention
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Interpretation: The effect of reliability on customer retention is 58.1%.
Correlation analysis:
Correlation analysis was conducted on all variables to explore the relationship between
variables. The bivariate correlation procedure was subject to a two tailed of statistical
significance at two different levels highly significant (p<.01) and significant (p<.05).
0.0 to 0.2 Very weak,negligible
0.2 to 0.4 Weak,low
0.4 to 0.7 Moderate
0.7 to 0.9 Strong,high,marked
0.9 to 1.0 Very strong, very high
Hypothesis testing: Ho: null hypothesis = no relationship Ha: alternative hypothesis =
relationship
Relationship between Service Quality and Customer Retention:
Correlations
Customer
Retention
Service Quality
Customer Retention Pearson Corelation
Sig.(2/tailed)
N
1
30
.826**
.000
30
Service Quality Pearson Corelation
Sig.(2/tailed)
N
.826**
.000
30
1
30
**. Correlation is significant at the 0.01 level (2-tailed).
Interpretation: At 5% level of significance we cannot accept the null hypothesis as T value don„t
falls in (-2.021 to +2.021) and accept alternative hypothesis. So, according to the Pearson
correlation test there is a relationship between service quality and customer retention, which is
moderately significant.
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Relationship between Responsiveness and Customer Retention:
Correlations
Customer
Retention
Responsiveness
Customer Retention Pearson Corelation
Sig.(2/tailed)
N
1
30
.821**
.000
30
Responsiveness Pearson Corelation
Sig.(2/tailed)
N
.821**
.000
30
1
30
**. Correlation is significant at the 0.01 level (2-tailed)
Interpretation: There is a moderately significant relationship between responsiveness and
customer retention.
Relationship between Security & Privacy with Customer Retention:
Correlations
Customer
Retention
Privacy and Security
Customer Retention Pearson Corelation
Sig.(2/tailed)
N
1
30
.749**
.000
30
Privacy and Security Pearson Corelation
Sig.(2/tailed)
N
.749**
.000
30
1
30
**. Correlation is significant at the 0.01 level (2-tailed)
Interpretation: According to the Pearson correlation test there is a relationship between security
& privacy with customer retention, which is moderately significant.
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Relationship between Assurance and Customer Retention:
Correlations
Customer
Retention
Assurance
Customer Retention Pearson Corelation
Sig.(2/tailed)
N
1
30
.707**
.000
30
Assurance Pearson Corelation
Sig.(2/tailed)
N
.707**
.000
30
1
30
**. Correlation is significant at the 0.01 level (2-tailed)
Interpretation: At 5% level of significance we cannot accept the null hypothesis as T value don„t
falls in (-2.021 to +2.021) and accept alternative hypothesis. So, there is a relationship between
assurance and customer retention.
Relationship between Reliability and Customer Retention:
Correlations
Customer
Retention
Reliability
Customer Retention Pearson Corelation
Sig.(2/tailed)
N
1
30
.762**
.000
30
Reliability Pearson Corelation
Sig.(2/tailed)
N
.762**
.000
30
1
30
**. Correlation is significant at the 0.01 level (2-tailed)
Interpretation: According to the test there is a moderately significant relationship between
reliability and customer retention as the T value don„t falls in (-2.021 to +2.021) and accept
alternative hypothesis.
1.13 Conclusion:
The research clearly indicates that internet banking features of HDFC Bank Ltd. Helps to retain
customers. If the bank plans to expand the customer base of internet banking they should focus
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more on service quality, responsiveness, privacy & security, assurance and reliability factors of
internet banking. Proper web-hosting is required for this. Customers should also be made aware
of unethical practices like sniffing, spoofing, phishing and other malicious software which can be
used by hackers. Attention should also be given in the encryption of the information which is
exchanged between the users and the bank. More ever the bank should be more aware to make
their internet banking service more quality full for their customers.
1.14 REFERENCES
[1] Guangying Hua, (April 2009), “Internet Banking and Commerce”, Journal of internet
banking, vol. 14, no.1
[2] Asli Yuksel Mermod, (April 2011), “Internet Banking and Commerce”, Journal of
internet banking, vol. 16, no.1
[3] Chun Wang and Zheng Wang, (2006:07), “The Impact of Internet on Service Quality in
the Banking Sector”
[4] Pandachi K, Seetanah B „and‟ Appadu A, “A STUDY ON THE USE OF INTERNET
BANKING AMONG SMEs IN MAURITIUS”
[5] Anesh Maniraj Singh, (2004), “Trends in South African Internet Banking”, Aslib
Proceedings, Vol.56, Iss: 3 pp. 187-196.
[6] Blanca Hernández-Ortega, (December 2007), “Internet Banking and Commerce”, Journal
of internet banking, vol. 12, no.3
[7] http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1761937/
[8] Annual Report 2012 of HDFC Bank Ltd.
[9] HDFC Bank Ltd. website
[10] http://www.ukessays.com/essays/information-systems/the-literature-review.php