Internet Banking Report

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2011

Ruby Manchanda

Roll No. 2326 / 1447, MBA 4th Sem, 2009 -

2011, HPUBS, HP University, Shimla

6/3/2011

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CONSUMER ATTITUDE

TOWARDS INTERNETBANKING

SUBMITTED TO:

Professor (Dr.) Pawan

GargaMarketing

MBA, M.Phil, Ph. D.

HPUBS, HP University

Shimla



DECLARATION

It is hereby declared that all the work presented in this project report

“Consumer Attitude towards Internet Banking”, to be submitted in

fulfilment of the requirements of the award of the degree of MBA in IT and

HR by Ruby Manchanda, Roll No. 2326 / 1447, is an authentic record of

her own work carried out under the guidance of Professor (Dr.) Pawan

Garga, Marketing, HPUBS, HP University, Shimla.

6/3/2011 Ruby

Manchanda

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CERTIFICATE

This is to certify that project report entitled “Consumer Attitude

towards Internet Banking”, which is submitted by Ruby Manchanda,

Roll No. 2326 / 1447, MBA (IT and HR), HPUBS, HP University, Shimla, is an

authentic record of the candidate’s work carried out by her under our

guidance.

This project report or any part thereof has not been submitted to any

university or institution for the award of any other degree or diploma.

Dr. Pawan Garga

Professor,

Project Guide,

Marketing,

HPUBS, HP University,

Shimla

6/3/2011

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ACKNOWLEDGEMENT

I take the great pleasure to recall with gratitude the people who have

been instrumental for the successful completion of this project work.

I would like to express deep sense of gratitude to my project guide, Dr.

Pawan Garga, Professor, Marketing, HPUBS, HP University, Shimla for his

valuable guidance without which the project would not have been

accomplished. The project has provided me with an opportunity to

understand the fundamentals of research and to understand the attitude

of people toward internet banking, how they perceive the emergence of this new style and how it is changing the environment of banking sector.

I am also indebted to all the teachers of HPUBS, HP University, Shimla who

have helped me directly or indirectly in accomplishing this task.

I would also like to record my deep sense of gratitude to my entire family

and friends, ex-colleagues, without whose blessings and encouragement

the project would not have seen the daylight.

I would also like to thank all my respondents heartily for giving me theirvaluable time and providing me with the information needed to carry out

the research successfully. Anand, Rajpal, Rattan, Amandeep and Aman Pal

deserve a special mention for helping me find interested respondents.

May God bless them all in all their endeavours.

6/3/2011 Ruby

Manchanda

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CONTENTS

ContentsDECLARATION........................................................................................................2

CERTIFICATE..........................................................................................................3

ACKNOWLEDGEMENT............................................................................................4

CONTENTS.............................................................................................................5

TABLE OF FIGURES................................................................................................7

EXECUTIVE SUMMARY............................................................................................8INTRODUCTION....................................................................................................10

TYPES OF INTERNET BANKING..........................................................................15

CHOOSING AN INTERNET ACCOUNT.................................................................16

BUSINESS CONSIDERATIONS IN INTERNET BANKING........................................17

CLIENT FOCUS...............................................................................................18

COST REDUCTION..........................................................................................18

MARKET EXPANSION......................................................................................18

ADVANTAGES OF INTERNET BANKING..............................................................19

ADVANTAGES TO THE CUSTOMER.................................................................19

ADVANTAGES TO THE BANK..........................................................................21

DISADVANTAGES OF INTERNET BANKING.........................................................22

RISKS ASSOCIATED WITH INTERNET BANKING.................................................24

PRECAUTIONS FOR INTERNET BANKING...........................................................28

SWOT ANALYSIS OF INTERNET BANKING..........................................................30

INTERNET BANKING IN INDIA............................................................................32PRODUCTS AND SERVICES OFFERED.............................................................32

THE FUTURE SCENARIO OF INTERNET BANKING IN INDIA..............................33

CUSTOMER ATTITUDE TOWARDS INTERNET BANKING......................................35

LITERATURE SURVEY...........................................................................................39

OBJECTIVE............................................................................................................43

RESEARCH METHODOLOGY.................................................................................44

DATA COLLECTION METHOD.............................................................................44

SAMPLING.........................................................................................................45

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SAMPLING DESIGN.........................................................................................45

SAMPLING FRAME..........................................................................................45

DATA COLLECTION AND ANALYSIS......................................................................46

RESULTS AND CONCLUSIONS..............................................................................66

LIMITATIONS........................................................................................................68

BIBLIOGRAPHY.....................................................................................................69

ANNEXURE...........................................................................................................70

ANNEXURE

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TABLE OF FIGURES

Figure 1 TYPES OF INTERNET BANKING...............................................................15

Figure 2 BUSINESS CONSIDERATIONS IN INTERNET BANKING.............................17

Figure 3 RISKS ASSOCIATED WITH INTERNET BANKING.......................................26

Figure 4 FACTORS CONTRIBUTING TOWARDS ADOPTION OF INTERNET BANKING

............................................................................................................................37

Figure 5 ATTITUDE TOWARDS INTERNET BANKING..............................................38

Figure 6 GENDER WISE DISTRIBUTION OF SAMPLE POPULATION.........................46

Figure 7 AGE WISE DISTRIBUTION.......................................................................47

Figure 8 EDUCATION WISE DISTRIBUTION...........................................................47Figure 9 OCCUPATIONAL DISTRIBUTION OF POPULATION....................................48

Figure 10 VISIT TO BANK BRANCH.......................................................................49

Figure 11 REASONS TO VISIT BANKS...................................................................50

Figure 12 e-BANKING FACILITIES AVAILABLE.......................................................50

Figure 13 COMPARISON OF AVAILABLE AND AVAILED FACILITIES........................51

Figure 14 e-BANKING FACILITIES AVAILED BY INDIVIDUALS................................52

Figure 15 ADOPTION OF INTERNET BANKING IN NEAR FUTURE...........................52

Figure 16 FACTORS PREVENTING USE OF INTERNET BANKING............................53

Figure 17 REASON TO ADOPT INTERNET BANKING..............................................55

Figure 18 USAGE FREQUENCY.............................................................................56Figure 19 FAVOURED ONLINE BANKING FACILITIES.............................................56

Figure 20 ASPECTS OF INTERNET BANKING SERVICES.........................................57

Figure 21 PREFFERED BANKS..............................................................................58

Figure 22 SOURCE OF INFLUENCE.......................................................................58

Figure 23 SATISFACTION OF USERS WITH INTERNET BANKING...........................59

Figure 24 PREFERRED PLACE OF ACCESS FOR INTERNET BANKING....................59

Figure 25 ISSUES ENCOUNTERED IN INTERNET BANKING....................................60

Figure 26 FACTORS AFFECTING POPULARTIY OF INTERNET BANKING.................61

Figure 27 AVAILABILITY OF MOBILE PHONES AND WEB BROWSING FACILITIES ON

MOBILE PHONES WITH USERS.............................................................................62Figure 28 PERCENTAGE OF RESPONDENTS AVAILING MOBILE BANKING SERVICES

............................................................................................................................62

Figure 29 FREQUENCY OF USAGE OF MOBILE BANKING......................................63

Figure 30 PREFERENCE TOWARDS MOBILE BANKING..........................................63

Figure 31 REASONS TO OPT FOR MOBILE BANKING.............................................64

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Figure 31 REASONS TO OPT FOR MOBILE BANKING

EXECUTIVE SUMMARY

Banking has always has been a highly information intensive activity that

relies heavily on information technology (IT) to acquire, process, and

deliver the information to all relevant users. Not only is IT critical in the

processing of information, it provides a way for the banks to differentiate

their products and services. Banks find that they have to constantly

innovate and update to retain their demanding and discerning customers

and to provide convenient, reliable, and expedient services. Driven by

challenge to expand and capture a larger share of the banking market,some banks invest in more bricks and mortar to enlarge their

geographical and market coverage. Others have considered a more

revolutionary approach to deliver their banking services via a new

medium: the Internet.

With the rapid diffusion of the Internet, banking in cyberspace is fast

becoming an alternative channel to provide banking services and

products. The Internet is now being considered as a strategic weapon and

will revolutionize the way banks operate, deliver and compete against one

another, especially when competitive advantages of traditional branchnetworks are eroding rapidly.

Indeed, the emergence of Internet banking has prompted many banks to

rethink their IT strategies in order to stay competitive. Customers today

are demanding much more from banking services. They want new levels

of convenience and flexibility on top of powerful and easy to use financial

tools and products and services that traditional retail banking could not

offer. Internet banking has allowed banks and financial institutions to

provide these services by exploiting an extensive public network

infrastructure.

Online banking was, therefore, introduced as a channel where bank’scustomers could perform their financial transactions electronically viatheir bank’s Web sites. An online banking user is expected to perform atleast one of the following transactions online:

➢ Checking account balance and transaction history

➢ Paying bills

➢ Transferring funds between accounts

➢ Requesting credit card advances

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➢ Ordering checks

➢ Managing investments and stocks trading

Using the Internet is more efficient than using other distribution mediums

because banks are looking for an increased customer base. Internet alsooffers the delivery of customized services to suit the needs and the likesof each user. It reduces cost and allows for spending time effectively onbusiness. It also provides for a convenient and effective way to managefinances that is easily accessible 24 hours a day, seven days a week. Inaddition, information is up to date.

Despite the many potential benefits, many teething problems need to beaddressed before Internet banking can become widely adopted. Theseinclude problems like teaching staff and customer how to work with

technology, set-up costs, legal issues, and lack of personal contact withcustomers. And from customer’s stand point, there are security andprivacy issues.

Through this research, an attempt has been made to find out the attitude

of the customers towards Internet banking. An analysis of the perception

of the customers towards Internet banking revealed the various

considerations that are prime factors in determining the adoption and

acceptance of this new system of banking.

The report is initiated with the understanding of the Internet banking,

followed by the literature survey, and detailed analysis of the data

collected and interpretation of the results of analysis.

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INTRODUCTION

A big revolution in the financial market, rapid revolutions incommunication market, evolution of Internet and allied technologies, andall the recent modern, sophisticated state-of-the-art technology basedservices have led to the banks adopting modern systems. Traditionalpaper-based banking had started becoming inefficient, dissatisfying forcustomers and restricting global presence. For many consumers,electronic banking means 24-hour access to cash through an automatedteller machine (ATM) or Direct Deposit of pay-cheques into checking orsavings accounts.

Electronic banking, also known as electronic fund transfer (EFT), usescomputer and electronic technology as a substitute for cheques and otherpaper transactions. EFTs is initiated through devices like cards or codesthat let you, or those you authorize, access your account. Many financialinstitutions use ATM or debit cards and Personal Identification Numbers(PINs) for this purpose. Some use other forms of debit cards such as thosethat require, at the most, your signature or a scan.

EFT is defined as any transfer of funds initiated through an electronic

terminal, telephonic instrument, or computer or magnetic tape or so as toorder, instruct, or authorize a financial institution to debit or credit anaccount. It utilizes computer and telecommunication components both tosupply and to transfer money or financial assets.

The trends in electronic banking system can be divided into categories:

➢ Technology oriented trends➢ Customer’s trends in adoption of electronic banking

Work on EFT can be segmented into three broad categories:

➢ Banking and Financial systems –a Large scale or wholesale payments (bank to bank

transfer)

b Small scale or retail payments (automated teller

machines and cash dispensers)

c Home banking (bill payment)

➢ Retailing payments –

a Credit cards (VISA or MasterCard)

b Private label credit / debit cards (J.C. Penney Card)

c Charge cards (American Express)

➢ On-line electronic commerce payments

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a Token – based payment systems

i Electronic cash (DigiCash)

ii Electronic cheques (NetCheque)

iii Smart cards or debit cardsb Credit – card based payment systems

i Encrypted credit cards (World Wide Web form –

based ecryption)

ii Third – party authorization numbers (First Virtual)

Thus, EFT offers several services that consumers may find practical. A fewdistribution channels for electronic banking are discussed as follows:

➢ Automated Teller Machines or 24-hour Tellers (ATMs) are electronic

terminals that let a person bank almost any time. To withdraw cash,make deposits, or transfer funds between accounts, one has togenerally insert an ATM card and enter the PIN. Some financialinstitutions and ATM owners charge a fee, particularly to consumerswho don’t have accounts with them or on transactions at remotelocations.

➢ Direct Deposit lets one authorize specific deposits, such as pay-cheques and Social Security cheques, to his / her account on aregular basis. One also may pre-authorize direct withdrawals so thatrecurring bills, such as insurance premiums, mortgages, and utility

bills, are paid automatically.

➢ Pay-by-Phone Systems allow a person to call a financial institutionwith instructions to pay certain bills or to transfer funds betweenaccounts. One must have an agreement with the institution to makesuch transfers.

➢ Personal Computer Banking allows handling many bankingtransactions via a personal computer. For instance, one can use hiscomputer to view the account balance, request transfers betweenaccounts, and pay bills electronically.

➢ The credit cards are the electronic cards used to obtain credit at thetime of purchasing articles or services. It is widely believed by thecustomers that the interest rates on credit cards are very high andas a result their use by general public is limited.

➢ Debit Card Purchase Transactions are carried out by makingpurchases with a debit card, which also may be an ATM card. Thiscould occur at a store or business, on the Internet or online, or byphone. The process is similar to using a credit card, with someimportant exceptions. While the process is fast and easy, a debitcard purchase transfer’s money - fairly quickly - from the bankaccount to the company’s account. So it’s important to have funds

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in one’s account to cover the purchase. This requires the keeping of accurate records of the dates and amounts of the debit cardpurchases and ATM withdrawals in addition to any cheques onewrites. The debit card information should be accessed or used only

at safe known stores, to avoid the possible loss of funds throughfraud. The ATM cum debit card service is the prime facility beingavailed by many customers.

➢ Electronic Cheque Conversion converts a paper cheque into anelectronic payment in a store or when a company receives a chequein the mail. In a store, when customer gives his cheque to a cashier,the cheque is run through an electronic system that captures thebanking information and the amount. The customer is asked to signa receipt and get a copy for his records. When the cheque has beenhanded back, it should be voided or marked by the merchant so that

it can’t be used again. The merchant electronically sendsinformation from the cheque (but not the cheque itself) to the bankor other financial institution, and the funds are transferred into themerchant’s account. When the customer mails-in a cheque forpayment to a merchant or other company, they may electronicallysend information from the cheque (but not the cheque itself)through the system, and the funds are transferred into theiraccount. For a mailed cheque, a customer should still receiveadvance notice from a company that expects to send the chequeinformation through the system electronically. The merchant orother company might include the notice on monthly statements orunder its terms and conditions. The notice also should state if themerchant or company will electronically collect a fee from theaccount — like a “bounced cheque” fee — if the funds areinsufficient to cover the transaction.

➢ The Internet Banking Service is also emerging as one of the mostpopular channel. This medium provides the banking servicesthrough the medium of Internet. Sometimes, the services areprovided through a web-page, sometimes by installing the softwareon the customers’ system and sometimes by accessing the servicesthrough mobile phones.

Thus, banks have traditionally been in the forefront of harnessingtechnology to improve the products, services and efficiency. They have,over a long time, been using electronic and telecommunication networksfor delivering a wide range of value added products and services. Thedelivery channels include direct dial – up connections, private networks,public networks etc and the devices include telephone, PersonalComputers including the Automated Teller Machines, etc. With thepopularity of PCs, easy access to Internet and World Wide Web (WWW),Internet is increasingly used by banks as a channel for receivinginstructions and delivering their products and services to their customers. This form of banking is generally referred to as Internet Banking, although

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the range of products and services offered by different banks vary widelyboth in their content and sophistication.

Broadly, the levels of banking services offered through Internet can becategorized in to three types:

➢ The Basic Level Service is the banks’ websites which disseminateinformation on different products and services offered tocustomers and members of public in general. It may receive andreply to customers’ queries through e-mail.

➢ In the next level are Simple Transactional Websites which allowcustomers to submit their instructions, applications for differentservices, queries on their account balances, etc, but do notpermit any fund-based transactions on their accounts.

➢ The third level of Internet banking services are offered by Fully Transactional Websites which allow the customers to operate ontheir accounts for transfer of funds, payment of different bills,subscribing to other products of the bank and to transactpurchase and sale of securities, etc.

The above forms of Internet banking services are offered by traditionalbanks, as an additional method of serving the customer or by new banks,who deliver banking services primarily through Internet or other electronicdelivery channels as the value added services. Some of these banks are

known as ‘virtual’ banks or ‘Internet only’ banks and may not have anyphysical presence in a country despite offering different banking services.

Thus, Internet banking means that the banking services such as servicesintroduction, loan application, account balance enquiry, fund transfer andso forth are provided by a bank through the Internet. Internet banking hasevolved into a “one step service and information unit” that promises greatbenefits to both banks and consumers.

According to Michael Karlin, the President and Chief Operation Officer of the world’s first virtual bank, Security First Network Bank, the idea of Internet Banking is as follows –

➢ One does not have to purchase any software, store any dataon computer or back up any information, since all thetransactions occur on the bank server over the infrastructureof the Internet.

➢ One can conduct the banking services anywhere one likes butneeds to have a computer and a modem.

➢ The banking facilities will be available 24 hours a day, 7 days

a week, and 365 days a year. One does not have to reconcilebank statements or track manually the ATM or paper cheques.

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From the perspective of banking products and services being offeredthrough Internet, Internet banking is nothing more than traditionalbanking services delivered through an electronic communication

backbone, viz, Internet. But, in the process it has thrown open issueswhich have ramifications beyond what a new delivery channel wouldnormally envisage and, hence, has compelled regulators world over totake note of this emerging channel. Some of the distinctive features of internet banking are:

➢ It removes the traditional geographical barriers as it couldreach out to customers of different countries / legal jurisdiction. This has raised the question of jurisdiction of law /supervisory system to which such transactions should be

subjected.➢ It has added a new dimension to different kinds of riskstraditionally associated with banking, heightening some of them and throwing new risk control challenges.

➢ Security of banking transactions, validity of electroniccontract, customers’ privacy, etc., which have all along beenconcerns of both bankers and supervisors have assumeddifferent dimensions given that Internet is a public domain,not subject to control by any single authority or group of users.

➢ It poses a strategic risk of loss of business to those banks who

do not respond in time, to this new technology, being theefficient and cost effective delivery mechanism of bankingservices.

➢ A new form of competition has emerged both from theexisting players and new players of the market who are notstrictly banks.

Internet Banking is a product of e-commerce in the field of banking andfinancial services. In what can be described as B2C domain for bankingindustry, Internet Banking offers different online services like balanceenquiry, requests for cheque books, recording stop-payment instructions,balance transfer instructions, account opening and other forms of traditional banking services. Mostly, these are traditional services offeredthrough Internet as a new delivery channel. Banks are also offeringpayment services on behalf of their customers who shop in different e-shops, e-malls etc. The transfer of customers’ funds inter-branch, intra-branch, inter-bank level forms the core and life of Internet banking. Thecustomisation in Internet banking allows the changes in formats of dates,currency, colour schemes etc. Further, different banks have differentlevels of such services offered, starting from level-1 where onlyinformation is disseminated through Internet to level-3 where online

transactions are put through.

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There are factors like availability of electronic and internet bankingservices, convenience, prompt banking services, location, and widernetwork are the prime factors that would help in selection of Internetbanking services.

Internet banking is still in nascent and infantile stage and is being availedby relatively few customers. Various studies and researches haverevealed that majority of customers are IT savvy and usually well –educated. The customers’ have to be encouraged to use this cost-effective, user-friendly delivery channel. All categories of customers desireconvenient, prompt and user-friendly modern banking services.

The more advanced electronic and Internet based banking services likecore banking solutions, real time gross settlement system allow on-

demand availability of computerised banking services; user-friendliness of bank’s website; promptness in issue of passbooks, chequebooks; updatingof passbook; quickness in issue of demand drafts; clearance of outstationcheques; generation of financial statements; availability of information;transfer of funds from one account to another; time taken to respondcustomers’ queries; transaction completion time; availability of alerts tousers; adoption of security measures. This also helps to ascertain thesatisfaction level of a customer. Internet security measures are veryessential for secure transactions between customer and main bankservices. These cover both the access level and application level securityand include passwords, digital signatures, socket layers, management of

session times. This is essential to boost the confidence level of customersand needs proactive support from financial as well as government ends tobridge the digital gap.

Credibility (trustworthy source, author’s credentials, evidence of qualitycontrol, respected authority, organizational support), accuracy (up todate, factual, detailed, exact, comprehensive, completeness, accuracy),reasonableness (fair, balanced, objective, no conflict of interest, absenceof fallacy,), support (listed sources, contact information, availablecorroboration, claims supported, documentation supplied), challenge (whosays so, why should I believe, who are the target audience), adapt (findrobust evidence before adapting to the information), file (file informationand gain knowledge), evaluate (as circumstances change) are the checkpoints for any internet banking system. The goal of this checklist is toprovide a quality internet banking facility to customers.

TYPES OF INTERNET BANKING

According to Aladwani (2001) different forms of online banking are web-

based banking where a customer can access his or her account(s) whenhe or she uses the Internet; second form of online banking is where a

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bank customer uses a modem to dial-up to a bank’s server to access his

or her bank account(s). The later type of online banking is known as dial-

up banking. A special type of dial-up banking is called an Extranet, a

private network between a bank and its corporate customers. Thulani et al (2009), Yibin (2003) and Diniz (1998) identify three functional

level/kinds of internet banking that are currently employed in the market

place and these are: Informational, Communicative and Transactional.

Figure 1 TYPES OF INTERNET BANKING

➢ Informational (Websites) - This has been identified as the first

level of internet banking. Typically the bank has the marketing

information about the bank’s products and services on a standalone

server. The risk is very low as informational systems typically have

no path between the server and the bank’s internal network.

Informational Internet banking simply means the bank provides

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basic information about its products and services, much like a

brochure. This is meant for marketing purposes only, and there is no

connection to the bank's main computer systems. This level of

Internet banking can be offered by the bank or outsourced. Whilethe risk to a bank is rather low, the server or Web site may be

susceptible to adjustment. To prevent unauthorized alterations to

the bank's server or web site, appropriate controls therefore must

be in place.

➢ Communicative/Simple transactional (Websites) - This type of

internet banking allows some interaction between the bank’s

systems and the customer. The interaction is limited to e-mail,

account inquiry, loan application or static file updates (name and

address). It does not permit any funds transfers. Communicativeonline banking allows for some communication between the patron

and bank. However, this is typically limited to fundamental

interactions such as account inquiries, new account updates, loan or

mortgage applications, contact information updates and balances.

Communicative online banking may connect with the bank's main

computer systems. The risk is higher with this configuration than

with informational systems since these servers may have a path to

the bank's internal networks. To prevent, monitor, and alert

management of any illegal attempt to access the bank's internalnetworks and computer systems, appropriate controls required to be

in place. In this environment, virus controls also become much more

critical.

➢ Advanced Transactional (Websites) - This level of internet

banking allows bank customers to electronically transfer funds

to/from their accounts, pay bills and conduct other banking

transaction online. The most popular online banking type,

transactional Internet banking offers all of the benefits of a

traditional brick-and-mortar institution. This includes full controlover your accounts - deposits, withdrawals, transfers, updates and

online payments. Increased security measures now make Internet

banking safe, secure and convenient, especially in the case of

mobile online banking. This is the highest risk architecture and must

have the strongest controls, since a path normally exists between

the server and the bank's or outsourcer's internal network.

CHOOSING AN INTERNET ACCOUNT

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Security is an important issue for internet accounts. Internet banking canbe highly secure but you need to be aware of safety precautions to take.Always take the time to read the small print too – it takes a few minutes,but it should help you understand the service.

Types of internet bank accounts and services include:

➢ Current Accounts – All the conveniences of a regular currentaccount, including credit and debit cards, cheque books andregular statements

➢ Current Accounts – with specific benefits (for instance,roadside recovery) and a small monthly fee to pay

➢ All in one and off-set accounts➢ Student accounts➢ Loan approval➢ Savings Accounts – Favourable interest rates because the

overheads are reduced.➢ Savings Accounts – Including those with tiered rates

depending on the savings amount➢ ISAs and mini-ISAs➢ Mortgages➢ Share Trading➢ Ethical Investments➢ Insurance Services➢ Business Bank Accounts

BUSINESS CONSIDERATIONS IN INTERNET BANKING

Internet banking can open a Pandora’s Box of opportunities for financialinstitutions. As soon as one bank begins Internet banking, other banksface the following quandary, “You are either on the Web, or you arerisking being on the Way”. Business considerations in Internet bankingcan be divided into three important factors: Client focus, cost reductionand market expansion.

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Figure 2 BUSINESS CONSIDERATIONS IN INTERNET BANKING

CLIENT FOCUS

Increase Customer Satisfaction

Internet banking allows customers to access banking services 24 hours a

day, 7 days a week. Like ATMs, Internet banking empowers customers to

choose when and where they conduct their banking. A Dynamic net report

came to the conclusion that, “the more delivery channels a bank offers

and the more functions available on an Internet site, the more convenient

it becomes for customers to conduct business and the higher the rate of

customer acquisition that a bank is likely to experience”.

Increase Customer Retention

One of the important advantages of Internet banking is its ability to

increase customer retention. Online branches have been shown to

dramatically reduce the loss of customers due to relocation needs.

COST REDUCTION

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A study by Booz Allen & Hamilton, analyzed the transaction cost

reductions that U.S. Internet banks gain. According to this study, the cost

per bank transaction for the customer varies from $1.07 for full service

branch transactions, to $0.54 for telephone transactions, and $0.01 fortransaction via the Internet. Lowered transaction costs are primarily due

to two factors: widespread Internet access and its low cost in the U.S.

which minimizes transaction processing costs, and the reduction of the

number of brick and mortars branches required to service an equivalent

number of customers, which dramatically lowers overhead costs.

MARKET EXPANSION

Internet banking will allow credit institutions to make further inroads into

new fields. Indeed by co-operating for example with IPS, telecom or

software, Internet banks can take advantages of cross-selling effects, to

offer personalized services to their customers and potentially win new

customers. In this context, the financial supermarket concept has arisen,

by which Internet banks, have horizontally integrated with other financial

services to provide their services on its platform and sometimes expanded

horizontally to include non-financial services such as online shopping.

ADVANTAGES OF INTERNET BANKING

In recent time internet banking has spread rapidly all over the globe. All

Banks are making greater use of internet banking facilities to provide

better service and to excel in competition. The spread of internet banking

has also greatly benefited the ordinary customer in general and corporate

world in particular. The following points summarize benefits of Internet based e-banking.

ADVANTAGES TO THE CUSTOMER

Internet banking does offer many benefits for both banks and their

customers. So the banks are doing what they can to encourage

customers to try it.

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http://bankingtopia.com/issues-in-e-banking/

http://bankingtopia.com/issues-in-e-banking/



I. An internet banking account is simple to open and use , just by

entering a few answers to the questions in a form while sitting

comfortably in home or office. To access the account, various

security measures are established such as usernames andpasswords. To complete the set up of the account, one just prints,

signs and sends in the form.

II. Internet banking costs less. Because there are fewer buildings to

maintain, and less involvement by salaried employees, there is a

much lower overhead with online banks. These savings allow them

to offer higher interest rates on savings accounts and lower lending

rates and service charges. Even traditional brick and mortar banks

offer better deals such as free bill paying services to encourage

their customers to do their banking online.

III. Comparing internet banks to get the best deal is easy. In a short

time, one can visit several online banks to compare what they

offer, savings and checking account deals as well as their interest

rates. Other things one can easily research are what credit cards are

available, credit card interest rates, loan terms and the banks own

rating with the FDIC.

IV. Bouncing a cheque (accidentally) should be a thing of the past

because one can monitor the account online any time, day or

night. One can track the balance daily, see what cheques have

cleared and when and know when automatic deposits and paymentsare made. This is all possible by simply going online to the banks

website and logging into one’s account.

V. One can keep his/her account balanced using personal computer

and monthly statement. The bank account information can be

downloaded into software programs; making is easy to reconcile the

account with just a few mouse clicks. The convenience of the data

capture online makes it much easier to budget and track where the

money goes. The internet bank account even allows one to view

copies of the cheques one has written each month.VI. With the ability to view the account at anytime, it is easier to catch

fraudulent activity in the account before much damage is done. As

soon as one logs into the account, one will quickly see whether

there is anything amiss when one checks on the deposits and

debits. If anyone writes a cheque or withdraws funds from the

account, one will see it right away. This lets one to get started on

correcting the problem immediately rather than having to wait to

receive a clue that it is happening as would be the case with a

traditional bank.

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VII.Internet banking offers a great deal more convenience than one

could get from a conventional bank. One is not bound by 'banker's

hours' and physical presence is not required. Time is not wasted

when one has work to do because one can do the banking withoutleaving the office. No matter where one is or what time it is, one can

easily manage the money. It reduces the pressure to stand in long

queues and is very time saving.

VIII.Convenience. Unlike any normal physical bank, online banking sites

never close. They're available 24 hours a day, seven days a week,

365 days a year and they're only just a mouse click away.

IX. Ubiquity. If one is out of station or even out of the country on a tour

or on an official trip, and suddenly a money problem arises, all one

has to do is log on to the internet and transfer funds from one

account to another and take care of personal needs and business 24

/7.

X. Transaction speed. Online banking initiates speedy transactions and

they are very cost effective and are generally quicker than the

transactions conducted at the ATM’s or at the bank.

XI. Efficiency. Free to access, manage and control all the bank

accounts, including Individual Retirement Accounts, CDs, even

securities, from one secure site, the individuals can efficiently

manage their money.

XII.Effectiveness. Managing the money, investment, bank accountswithout even going to the bank, getting email and wireless alerts on

various transactions, getting the statements online, making bill

payments on-line and transferring funds, all for free, has made the

banking highly effective.

General consumers have been significantly affected in a positive manner

by internet banking. Many of the ordinary tasks have now been fully

automated resulting in greater ease and comfort.

➢ Customer’s account is extremely accessible with an online account.➢ Customer can withdraw can at any time through ATMs that are now

widely available throughout the country.

➢ Besides withdrawing cash customers can also have mini banks

statements, balance inquiry at these ATMs.

➢ Through Internet Banking, customer can operate his account while

sitting in his office or home. There is no need to go to the bank in

person for such matter.

➢ Internet banking has also greatly helped in payment of utility bill.

Now there is no need to stand in long queues outside banks for thispurpose.

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➢ All services that are usually available from the local bank can be

found on a single website.

➢ The growth of credit card usage also owes greatly to internet

banking. Now a customer can shop worldwide without any need of carrying paper money with him.

➢ Banks are available 24 hours a day, seven days a week and they are

only a mouse click away.

ADVANTAGES TO THE BANK

Banking industry has also received numerous benefits due to growth of

internet banking infrastructure. There are highlighted below:

➢ The growth of internet banking has greatly helped the banks in

controlling their overheads and operating cost.

➢ Many repetitive and tedious tasks have now been fully automated

resulting in greater efficiency, better time usage and enhanced

control.

➢ The rise of internet banking has made banks more competitive. It

has also led to expansion of the banking industry, opening of new

avenues for banking operations.

➢ Internet banking has greatly helped the banking industry to reduce

paper work, thus helping them to move the paper less environment.

➢ Internet banking has also helped bank in proper documentation of

their records and transactions.

➢ The reach and delivery capabilities of computer networks, such as

the Internet, are far better than any branch network.

Banks have quickly leveraged the capabilities of the Internet and Web 2.0technologies and adopted the online banking model. Every mainstream

bank now offers a host of banking services and products to an everincreasing base of customers. Through online banking, banks have beenable to reach out to millions of customers not in their geographical area of operations and offer more products and a relatively better, convenientand flexible banking experience than that prevalent in traditional, fixed-location branches. The benefits can be studied in the following broadcategories:

➢ More Customers - Through online banking, better service levelsand strategic marketing initiatives, banks are able to reach out tomore customers than possible through traditional banking through

physical location branches.

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➢ Online Only Products and Services - Leveragability andamenability of new technologies, tools and widespread broadbandInternet acceptance, has made it possible for banks to offer a wholehost of online only products and services to customers, such as CDs,

e-bank statements, financial calculators, and personal finance newsfeeds.

➢ Broader Customer Base - Banking online has afforded customersuser-friendly features of Websites, robust security technologies,privacy protection measures, and mainstream Internet acceptance.Banks can reach out to a broader customer base beyond thegeographical confines of their locations or base operations.

➢ Attractive Rates and Incentives - Better management practices,consolidated operations and streamlined savings from managingand delivering online banking services allow banks to offer

attractive rates and other incentives to customers.➢ Cost Savings - Banks save a significant amount of operationalcapital from not having to open brick and mortar branches in newlocations and far-flung areas. These savings are passed onto theconsumer in the form of reduced or no fees for inter-bank and evenintra-bank money transfers, no fees for online payment of utilities'bills, and cash-back options on frequent use of online-applied bankcredit cards.

There are sound reasons why internet banking is growing. The economic

advantages have encouraged banks to provide an increasing range of easy to use services via the internet. Customers have found doing

business online simple and speedy and have become very comfortable

with the arrangement. Internet banking gives people more control over

their money in a very convenient way that they find enjoyable and

reassuring.

DISADVANTAGES OF INTERNET BANKING

Internet banking services provide a number of benefits to consumers. But

while it has its advantages, customers wishing to join the trend need to

know its disadvantages as well. Despite the growing popularity of internet

banking, it cannot be denied that some people still remain hesitant doing

transactions online especially where money is concerned. Amidst the

aggressive marketing made by the numerous financial institutions that

have gone online, some sectors of society are still doubtful about this type

of banking notably on the aspect of security.

Major disadvantages can be listed as follows:

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➢ Identity Confirmation - Federal regulations require that financial

institutions confirm each customer's identity. This may present a

logistical issue, as copying and faxing documents is sometimes

necessary.➢ Security Concerns - With hacking and identity theft on the rise,

Internet banking customers have to place a certain amount of trust

in the bank that their account information and personal information

are safe.

➢ Customer Service - If you bank at a traditional bank, you can go to

the bank and speak to someone face to face about your problem

but, with an Internet bank, you will likely spend a lot of time on the

phone being passed around and placed on hold.

➢ Accessibility - If the Internet goes down in your area or the area of

the banking office, you will be unable to access your accounts. This

includes being unable to withdraw money from ATMs or to use your

debit card.

➢ Fees - Many Internet banks don't have ATMs, which means you will

have to pay ATM fees. This can cost you more money than paying

the regular monthly fees at a brick and mortar bank.

➢ Technical problems - Some people avoid using Internet banking

services because they find it difficult to understand how it works.

Also, the fact that a wrong click can cause monetary losses may be

a deterrent.➢ Proxy websites - A few cases of forgery have been reported in

online banking. There are some fraudulent or proxy websites, which

can hack information (user name and password) entered by a

person for some transaction, and later misuse it. In such cases,

people lose their money without knowing and by the time, they get

the bill, huge losses may have been incurred.

➢ Impersonal - Doing transactions on the internet can be very

impersonal. In other words, you only do business with the use of a

computer. No individual to receive and check your money or correctsome wrong information that you might have written on a certain

form. And so for people comfortable dealing with real people who

provide personalized services and using paper and money, internet

banking is not ideal.

➢ Lack of trust - Many people still don't trust the internet. For the

new users who have performed financial transactions for only a few

times, they may still have this doubt whether or not they did the

right thing such as clicked the right button and so on. They can only

be comfortable once they print the transaction receipt and thetransaction appeared on the bank statement.

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➢ Difficult for first timers - For a first time user, navigating through

a website of an internet bank may be hard and may take some time.

Opening an account could also take time as some sites ask for

numerous personal details including a photo identification which cancause inconvenience to the potential customer. Because of this

complexity, they may be discouraged to use this internet banking

service.

➢ Bank site changes - Most banks upgrade their online programs on

a periodic basis sometimes adding new features and products.

When this happens, the bank may ask customers to re-enter

account information which can be a cause of worry.

RISKS ASSOCIATED WITH INTERNET BANKING

Since its debut nearly two decades ago, online banking has become one of the fastest-growing Internet activities. But that growing popularity hasalso brought increasing anxiety over whether something as private andpersonal as a bank account can be fully protected in the relativelyunregulated and un-policed world of the Internet. Without doubt, usinginternet banking is usually an excellent decision but as with any type of service, it would be important to understand any potential risks associated

with internet banking.

The greatest potential when banking online has to do with identitytheft. For your identity to be stolen, hackers use a variety of differentploys such as pharming, phishing, hacking, viruses, fraudulenttransactions, and unauthorized access. What happens is that once youhave been targeted, not only your personal information would be stolenbut also your financial information. From there, these thieves can doserious damage by emptying your bank accounts, making purchases oncredit under your name, etc. Unfortunately, trying to find the responsible

parties is extremely difficult and once identity has been stolen, it takesmany years to recover. Therefore, when choosing internet banking, thegreatest risk is theft and most important decision has to do with onlinesecurity.

Although all ploys are used, phishing is the most common, especiallywhen it comes to internet banking. Typically, you would receive an emailthat looks like an official notice coming from your bank. The bank’sletterhead might be used, actual names of bank executives, etc. Withinthe email, you would be notified of some reason that you mustimmediately provide confidential details or connect to a provided link. For

instance, the message may state that someone was trying to access youraccount and to protect your assets, immediate action is required.

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Unsuspecting people will gladly provide the information being requestedor follow the link where they are required to complete a form that alsogives the crooks sensitive information.

At home, you have virus protection and a secured hosting servicebut when public computers are used, they go through open or publicrouters, which means anyone could gain access to that same connectionand start capturing information, often through keystroke software. In notime, these criminals would know where you bank, your account number,logon ID, PIN, etc.

Finally, pharming is also very dangerous when it comes to internetbanking. In this case, crooks will compromise a non-secure onlinefinancial institution so when a customer logs in to manage finances, they

are quickly and without knowing redirected to a bogus site that looksidentical to the real bank. Of course, as information is entered and moneytransactions completed, all the information is collected.

Keystroke logging is another common method of perpetrating onlinebanking theft. This literally involves the user’s keystrokes being recorded,in a number of ways, and then using this information to access accountswithout authorisation and make fraudulent transactions. To do this, thefraudsters may use software, hardware, keyboard sniffers, keyboardoverlays or even optical surveillance like video cameras.

The information, revealed in the above specified manners, is thencaptured by the fraudsters and used to make unauthorisedtransactions on an account. Banks and service providers requireguarding against various types of online attacks. The purpose of an attackmay vary. In operating systems of particular kind, attackers may try toexploit known vulnerabilities. During a short time frame, they also may tryto make an unauthorized entry into a Web site repeatedly thus denyingservice to other customers. Types of attacks may include:

➢ Sniffers - Also familiar as network monitors, this software is used to

capture keystrokes from a specific PC. Logon Ids and passwords

may be captured with this software.➢ Guessing Passwords - We can test all possible combinations to

enter into a network using this software.

➢ Brute Force - A technique to capture encrypted messages then

using software to break the code and gain access to messages, user

ID's, and passwords.

➢ Random Dialling - To dial every number on a known bank

telephone exchange, this technique is used. The purpose is to find a

modem connected to the network. This could then be used as a

point of attack.

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➢ Social Engineering - To gain information about the system along

with changing password, an attacker calls the bank's help desk

impersonating an authorized user.

➢

Trojan horse - A programmer can insert code into a system thatwill let the programmer or another person illegal entrance into the

system or network.

➢ Hijacking - Attempting to deduce information from them there by

intercepting transmissions. Internet traffic is particularly susceptible

to this threat.

While these threats are real and pose a serious risk to users of internetbanking, it cannot be denied that online banking has benefits thatoutweigh the issues. As long as users are aware of potential problems thatmay compromise their accounts, and take security seriously, these threats

can be avoided and users can enjoy the convenience of online bankingwithout falling victim to frauds.

Because of rapid changes in information technology, there is no finalityeither in the types of risks or their control measures. Both evolvecontinuously. The thrust of regulatory action in risk control has been toidentify risks in broad terms and to ensure that banks have minimumsystems in place to address the same and that such systems are reviewedon a continuous basis in keeping with changes in technology. In thefollowing paragraphs a generic set of risks are discussed:

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Figure 3 RISKS ASSOCIATED WITH INTERNET BANKING

➢ Operational risk - Operational risk, also referred to astransactional risk is the most common form of risk associated withInternet banking. It takes the form of inaccurate processing of transactions, non enforceability of contracts, compromises in dataintegrity, data privacy and confidentiality, unauthorized access /intrusion to bank’s systems and transactions etc. Such risks canarise out of weaknesses in design, implementation and monitoringof banks’ information system. Besides inadequacies in technology,human factors like negligence by customers and employees,

fraudulent activity of employees and crackers / hackers etc. canbecome potential source of operational risk. Often there is thin lineof difference between operational risk and security risk and bothterminologies are used interchangeably.

➢ Security risk - Security risk arises on account of unauthorizedaccess to a bank’s critical information stores like accounting system,risk management system, portfolio management system, etc. Abreach of security could result in direct financial loss to the bank.For example, hackers operating via the Internet could access,retrieve and use confidential customer information and also canimplant virus. This may result in loss of data, theft of or tampering

with customer information, disabling of a significant portion of bank’s internal computer system thus denying service, cost of

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repairing these etc. In addition to external attacks banks areexposed to security risk from internal sources e.g. employee fraud.Employees being familiar with different systems and theirweaknesses become potential security threats in a loosely

controlled environment. They can manage to acquire theauthentication data in order to access the customer accountscausing losses to the bank.

➢ System architecture and design - Choice of appropriatetechnology is a potential risk banks face. Technology which isoutdated, not scalable or not proven could land the bank ininvestment loss, a vulnerable system and inefficient service withattendant operational and security risks and also risk of loss of business.

➢ Reputational risk - Reputational risk is the risk of getting

significant negative public opinion, which may result in a critical lossof funding or customers. Such risks arise from actions which causemajor loss of the public confidence in the banks' ability to performcritical functions or impair bank-customer relationship. It may bedue to banks’ own action or due to third party action. The mainreasons for this risk may be system or product not working to theexpectations of the customers, significant system deficiencies,significant security breach (both due to internal and externalattack), inadequate information to customers about product use andproblem resolution procedures, significant problems withcommunication networks that impair customers’ access to their

funds or account information especially if there are no alternativemeans of account access. Such situation may cause customer-discontinuing use of product or the service. Directly affectedcustomers may leave the bank and others may follow if the problemis publicized.

➢ Legal risk - Legal risk arises from violation of, or non-conformancewith laws, rules, regulations, or prescribed practices, or when thelegal rights and obligations of parties to a transaction are not wellestablished. Given the relatively new nature of Internet banking,rights and obligations in some cases are uncertain and applicabilityof laws and rules is uncertain or ambiguous, thus causing legal risk.

➢ Money laundering risk - Application of money laundering rulesmay also be inappropriate for some forms of electronic payments. Thus banks expose themselves to the money laundering risk. Thismay result in legal sanctions for non-compliance with “know yourcustomer” laws.

➢ Cross border risk - It includes legal and regulatory risks, as theremay be uncertainty about legal requirements in some countries and jurisdiction ambiguities with respect to the responsibilities of different national authorities. Such considerations may exposebanks to legal risks associated with non-compliance of different

national laws and regulations, including consumer protection laws,

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record-keeping and reporting requirements, privacy rules andmoney laundering laws.

➢ Outsourcing risk - The outsourcing of banking services /operations contains certain elements of operational risks. The

dependence on third parties for business operations also increasesoperational risks. The operational risks also tend to increase whenbanks choose different IT partners.

➢ Strategic risk - This risk is associated with the introduction of a

new product or service. Degree of this risk depends upon how well

the institution has addressed the various issues related to

development of a business plan, availability of sufficient resources

to support this plan, credibility of the vendor (if outsourced) and

level of the technology used in comparison to the available

technology etc.

➢ Network risk - Network security is related to the securing of

infrastructure used for storage and transmission of information. It

depends on the type of the data being transmitted. Personal data is

considered extremely critical and companies expect adequate

security measures to protect this. So proper documentation, design

and implementation of the network, firewalls, password protection,

antivirus on all the network, measures to prevent unauthorized

access, secure connections, adequate encryption techniques, in-

built security mechanisms in operating systems and locked rooms

for servers etc. are part of network security measures. There is useof hardware and software, certain policies on control and

authentication.

➢ Physical security - It involves securing of building, work areas,

devices and data in the form of documents through multiple-level

access control systems, security guards, clear disk and clear screen

policies, file suppression systems, temperature sensors, smoke-

detectors, dedicated and isolated work areas, visitor’s policy,

random bag checks, closed circuit television cameras (CCTV) etc.

➢ Personnel security - It is the arrangement made to address thepotential threat arising from the employees of offshore vendors.

Maintaining confidentiality and non-disclosure of agreements, terms

and conditions of employment, policies regarding use of mobile

phones, pens, papers etc., background screening, training of

information security, defined user access rights, policies and

procedures, e-mail and internet access controls, extensive log

monitoring form a part of personnel security measures.

➢ Other risks - Traditional banking risks such as credit risk, liquidity

risk, interest rate risk and market risk are also present in Internetbanking. These risks get intensified due to the very nature of

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Internet banking on account of use of electronic channels as well as

absence of geographical limits. Credit risk is the risk that a counter

party will not settle an obligation for full value, either when due or at

any time thereafter. Banks may not be able to properly evaluate thecredit worthiness of the customer while extending credit through

remote banking procedures, which could enhance the credit risk.

Another facility of Internet banking is electronic money. It brings

various types of risks associated with it. Liquidity Risk arises out of

a bank’s inability to meet its obligations when they become due

without incurring unacceptable losses, even though the bank may

ultimately be able to meet its obligations. Similarly banks dealing in

electronic money face interest rate risk because of adverse

movements in interest rates causing decrease in the value of assets

relative to outstanding electronic money liabilities. Banks also face

market risk because of losses in on-and-off balance sheet positions

arising out of movements in market prices including foreign

exchange rates. Risk of unfair competition is also there. The

open nature of Internet may induce a few banks to use unfair

practices to take advantage over rivals. Any leaks at network

connection or operating system etc., may allow them to interfere in

a rival bank’s system.

PRECAUTIONS FOR INTERNET BANKING

Customers should never share personal information like PIN numbers,passwords etc with anyone, including employees of the bank. PIN orpassword mailers should not be stored, the PIN and/or passwords shouldbe changed immediately and memorised before destroying the mailers.

Change your password regularly. Keep your password a combination of alphabets, special characters and numbers.

It is important that documents that contain confidential information aresafeguarded.

Customers are advised not to provide sensitive account-relatedinformation over unsecured e-mails or over the phone.

Take simple precautions like changing the ATM PIN and online login andtransaction passwords on a regular basis.

Also ensure that the logged in session is properly signed out.

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Customers should never access their Internet banking accounts throughhyperlinks embedded in e-mails, suspicious pop-up windows, or Internetsearch engines. They should instead access their bank accounts by typingthe website addresses at the address bar of the browser, or by

bookmarking the genuine website and using that function to access theiraccounts.

Log on to banks only from a secure computer. Never log on from a publiccomputer in a hotel or cafe, and be careful when logging on to unknownnetworks with a laptop.

A more secure URL will begin with "https://" and be followed by the bankname. Make sure the bank's padlock is displayed in a corner of the sitebefore you log on.

Icons for security companies would be visible on the home page. Whilethere are many, the most popular and effective is VeriSign. An icon,statement, or the actual company name would be clearly visible.

Customers should be wary of opening unexpected e-mails withattachments, and should think twice before visiting suspicious websites.

Customers should install personal firewall software and anti-virus software, andshould regularly download the latest updates available. This software will helpward off attempts by fraudsters to plant harmful viruses or worms in personalcomputers. Keep anti-virus and anti-spyware software up to date.

Given that passwords are commonly used as the basic factor of

authentication, we recommend that banks adopt a second factor, whichcannot be easily stolen by fraudsters, for customer authentication.

Examples of second-factor authentication include digital certificates, one-

time passwords generated by a security device and SMS-based one-time

passwords. In addition, high-risk retail Internet banking transactions

should at least include unregistered third-party fund transfers and

payments, and change requests concerning customers' sensitive

information (for example a correspondence address).

Use “keypad” for logging when you are not using your own PC. There

might be a risk of capturing your key stokes.

Don't click on website links/attachments in un-known/ suspicious emails. These links may take you to replica of bank's website and ask for keyingin your user-id & password(s).

If you get a warning e-mail, call your bank -- don't click on any providedlinks.

If your computer is acting strangely -- for instance, reacting slowly or

getting pop-ups -- avoid using it for online banking until you can get itchecked out.

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Be leery of fly-by-night, Internet-only banks with high interest rates on

savings or checking accounts. Make sure the bank is certified and is

insured.

And, most importantly, use a different user name and password for eachfinancial account.

Educate yourself about the various ways in which information is captured.Being aware and recognizing a ploy puts you in control.

It is necessary to check your internet banking account at regular intervals. The intervals can be every two or three days or at the most one or twoweeks. If you do not check your account for a long time, you may notcome to know of what is happening to it. If you find any discrepancy,

inform the bank authorities at once.

Many banks send their account holders SMSs regarding any activity takingplace at their account. SMS alerts are also an important tool sinceany transaction carried out on account is reported to the account holderthrough as SMS.

Put password on your computer as well and also the screen saverpassword.

SWOT ANALYSIS OF INTERNET BANKING

Strengths of Internet banking lie in the following areas

➢ Larger network area for banks

➢ Private data communication for internal use of banks

➢ Greater reach to customers

➢ On-demand service for the customers

➢ Time saving access to bank services

➢ Uniform, cost-effective services

➢ Standardization of working procedures

➢ Enables to receive feedback

➢ Provides competitive edge in the banking world

➢ Brings out transparency in the system

➢ Increased customer satisfaction (24 hours, 7 days convenience)

➢ Increased customer acquisition

➢ Increased customer retention (less loss of customers due to

relocation needs)

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➢ Cost reduction (reduced transaction costs, lower transaction

processing costs, reduction in number of branches, lower overhead

costs)

➢

Helps in market expansion➢ Customization or personalization of services for customers

➢ Quicker time to market

➢ Ability to introduce new products and services quickly and

successfully

➢ Ability to understand its customers’ needs

➢ Access to information easily across any location

➢ Easy online application for all accounts, personal loans, mortgages

Weaknesses in this system

➢ Missing personal human touch

➢ Requirement of huge investments for implementation

➢ Need of expert staff

➢ Rapid advancements in technology render existing systems

obsolete easily

➢ High risk vulnerability

➢ Availability of low potential customers

➢ Low awareness among customers

➢ Obsolescence of technology in terms of security on Internet

➢ Lack of knowledge

➢ Implementation of newer technology is little complicated

Opportunities available in this field

➢ Providing value added, user-friendly and convenient banking system

➢ Core competency can be developed

➢ Concentration and integration of various service delivery channels

➢ Gain of efficiency and profitability

➢ Standardising services

➢ Faster flow and access of information

➢ Develop data warehouses and customer support services

➢ Provisions for feedback

➢ Multi channel Internet banking to increase cost efficiency in

transaction costs

➢ Lower entry barriers

➢ Leapfrogging low PC penetration

➢ Development of mobile internet banking solutions

➢ Disintermediation and commoditisation

➢ Evolving customer efficient frontier➢ Integrating emerging technologies

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➢ Greater customer loyalty

➢ Three T strategy – talent, technology, traffic

➢ Quality customer service with personal attention

Threats and challenges to the system

➢ Maintaining business edge over competitors in the context of

sameness in IT infrastructure

➢ Multiple vendor support

➢ Maintaining alternative in case of failure of system

➢ Shorter life of technology

➢ Lack of technical expertise

➢ Outsourcing, organisational, reputational, supervisory, location,

operational, information security, systematic systemic and legalrisks

➢ Digital divide

➢ Decreased volume of some products because of commoditisation

➢ Diverse, conflicting national regulations

➢ Maintaining secured IT infrastructure for business operations

➢ Promotion and advertisement

INTERNET BANKING IN INDIA

Internet banking, which has gained wide acceptance internationally, bothas a medium of delivery of banking services and as a strategic tool forbusiness development, is fast catching up in India with more and morebanks entering the fray. India can be said to be on the threshold of amajor banking revolution with net banking having already been unveiled.Out of the 46 banks surveyed by RBI, 11 banks are providing Internetbanking services at different levels, 22 banks proposed to offer Internetbanking in near future while the remaining 13 banks have no immediateplans to offer such facility. The number of Internet users is growing everyyear exponentially. The growth potential is, therefore, immense. Furtherincentives provided by banks would dissuade customers from visitingphysical branches. The facility of accessing their accounts from anywherein the world by using a home computer with Internet connection, isparticularly fascinating to Non-Resident Indians and high net worthIndividuals having multiple bank accounts. Costs of banking servicethrough the Internet form a fraction of costs through conventionalmethods. The cost-conscious banks in the country have therefore activelyconsidered use of the Internet as a channel for providing services. Fullycomputerized banks, with better management of their customer base are

in a stronger position to cross-sell their products through this channel.

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PRODUCTS AND SERVICES OFFERED

Banks in India are at different stages of the web-enabled banking cycle.

With the adoption of information technology, the banks put up a web-sitethat provides a general information on the banks, its location, services

available e.g. loan and deposits products, application forms for

downloading and e-mail option for enquiries and feedback, request for

opening of accounts, requisition for cheque books, stop payment of

cheques, viewing and printing statement of accounts, movement of funds

between accounts within the same bank, querying on status of requests,

instructions for opening of Letters of Credit and Bank Guarantees etc.,

facility of review, receipt and payment of bills on-line, transactional

facilities, online real time shopping etc. Some banks have tied up withcomputer training companies, computer manufacturers, Internet service

providers and portals for expanding their Net banking services, and

widening their customer base. Setting up of Internet kiosks and

permeation through the cable television route to widen customer base are

other priority areas in the agendas of the more aggressive players.

Banks providing Internet banking services have been entering into

agreements with their customers setting out the terms and conditions of

the services. The terms and conditions include information on the access

through user-id and secret password, minimum balance and charges,authority to the bank for carrying out transactions performed through the

service, liability of the user and the bank, disclosure of personal

information for statistical analysis and credit scoring also, non-

transferability of the facility, notices and termination etc.

Leading banks have announced the launch of mobile banking services.

Under Mobile Banking services, customers can scan their accounts to seek

balance and payments status or instruct banks to issue cheques, pay bills

or deliver statements of accounts. Gradually, the cellular phones willbecome the premier Internet access device. Mobile banking will further

minimise the need to visit a bank branch.

THE FUTURE SCENARIO OF INTERNET BANKING IN INDIA

Indian banks offering online services still have a long way to go. For onlinebanking to reach a critical mass, there has to be sufficient number of

users and the sufficient infrastructure in place. Various security optionslike line encryption, branch connection encryption, firewalls, digital

37



certificates, automatic signoffs, random pop-ups and disaster recoverysites are in place or are being looked at. There is as yet no CertificationAuthority in India offering Public Key Infrastructure which is absolutelynecessary for online banking. The customer can only be assured of a

secured conduit for its online activities if an authority certifying digitalsignatures is in place. The communication bandwidth available today inIndia is also not enough to meet the needs of high priority services likeonline banking and trading. Banks offering online facilities need to havean effective disaster recovery plan along with comprehensive riskmanagement measures. Banks offering online facilities also need tocalculate their downtime losses, because even a few minutes of downtimein a week could mean substantial losses. Some banks even today do nothave uninterrupted power supply unit or systems to take care of prolonged power breakdown. Proper encryption of data and effective use

of passwords are also matters that leave a lot to be desired. Systems andprocesses have to be put in place to ensure that errors do not take place.

The contract details are often one-sided, with the bank having theabsolute discretion to amend or supplement any of the terms at any time.For these reasons domestic customers for whom other access points suchas ATMs, telebanking, personal contact, etc. are available, are oftenhesitant to use the Internet banking services offered by Indian banks.

The Internet is in the public domain whereby geographical boundaries areeliminated. Cyber crimes are therefore difficult to be identified and

controlled. In order to promote Internet banking services, it is necessarythat the proper legal infrastructure is in place.

Notwithstanding the above drawbacks, certain developments taking placeat present, and expected to take place in the near future, would create anenvironment conducive for online banking to flourish. For example,Internet usage is expected to grow with cheaper bandwidth cost. TheDepartment of Telecommunications (DoT) is moving fast to makeavailable additional bandwidth, with the result that Internet access willbecome much faster in the future. This is expected to give a fillip toInternet banking in India.

Collecting and sharing credit information on borrowers of lendinginstitutions online would give a fillip to electronic banking. Banks aremoving in for technological up gradation on a large scale. Internet bankingis expected to get a boost from such developments.

Reserve Bank of India has taken the initiative for facilitating real timefunds transfer through the Real Time Gross Settlement (RTGS) System.Under the RTGS system, transmission, processing and settlements of theinstructions will be done on a continuous basis. Gross settlement in a real

time mode eliminates credit and liquidity risks. Any member of the systemwill be able to access it through only one specified gateway in order to

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ensure rigorous access control measures at the user level. The system willhave various levels of security, viz., Access security, 128 bit cryptography,firewall, certification etc. Further, Generic Architecture, both domestic andcross border, aimed at providing inter-connectivity across banks has been

accepted for implementation by RBI. Banks have been advised to developdomestic generic model in their computerization plans to ensure seamlessintegration. The above mentioned efforts would enable online banking tobecome more secure and efficient.

With the process of dematerialisation of shares having gainedconsiderable ground in recent years, banks have assumed the role of depository participants. In addition to customers’ deposit accounts, theyalso maintain demat accounts of their clients. Online trading in equities isbeing allowed by SEBI. This is another area which banks are keen to get

into. Transfer of funds can be made through credit/debit/ smart cards andcheques, with the central payment switch enabling the transactions.Banks are showing interest in this new concept, which will facilitate inter-bank funds transfers and other e-commerce transactions, thushighlighting the role of banks in e-commerce as intermediaries betweenbuyers and sellers in the whole payment process.

WAP (Wireless Application Protocol) telephony is the merger of mobiletelephony with the Internet. It offers two-way connectivity, unlike Mobile

Banking where the customer communicates to a mailbox answeringmachine. Users may surf their accounts, download items and transact awider range of options through the cell phone screen. WAP may providethe infrastructure for P2P (person to person) or P2M (person to merchant)payments. It would be ideal for transactions that do not need any cashbackup, such as online investments. Use of this cutting edge technologycould well determine which bank obtains the largest market share inelectronic banking.

Keeping in view all the above developments, Internet banking is likely togrow at a rapid pace and most banks will enter into this area soon. Rapidstrides are already being made in banking technology in India and Internetbanking is a manifestation of this. Every day sees new tie-ups, innovationsand strategies being announced by banks. A sea change in bankingservices is on the cards. It would, however, be essential to have in place aproper regulatory, supervisory and legal framework, particularly asregards security of transactions over the Net, for regulators andcustomers alike to be comfortable with this form of banking.

CUSTOMER ATTITUDE TOWARDS INTERNET BANKING

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Research on consumer attitude and adoption of internet banking showed

there are several factors predetermining the consumer’s attitude towards

online banking such as person’s demography, motivation and behaviour

towards different banking technologies and individual acceptance of newtechnology. It has been found that consumer’s attitudes toward online

banking are influenced by the prior experience of computer and new

technology. The adoption of electronic banking forces consumers to

consider concerns about password integrity, privacy, data encryption,

hacking, and the protection of personal information. Electronic banking

requires perhaps the most consumer involvement, as it requires the

consumer to maintain and regularly interact with additional technology (a

computer and an Internet connection). Consumers who use e-banking use

it on an ongoing basis and need to acquire a certain comfort level with the

technology to keep using it.

Several studies have investigated why individuals choose a specific bank.

Important consumer selection factors include convenience, service

facilities, reputation and interest rates. Customers have less time to spend

on activities such as visiting a bank and therefore want a higher degree of

convenience and accessibility. The service-quality attributes that the

Internet banks must offer to induce consumers to switch to online

transactions and keep using them are perceived usefulness, ease of use,

reliability, responsiveness, security, and continuous improvement. Theindividual expectations regarding accuracy, security, network speed, user-

friendliness, and user involvement and convenience were the most

important quality attributes in the perceived usefulness of Internet-based

e-retail banking. The crucial factors that affect an individual’s decision to

use or not to use online services the individual’s age, the difficulties of

using the Internet, the fear of changes in the banking sector due to

technological development and the lack of information concerning

products and services provided to customers through electronic delivery

channels. Factors such as the speed of transactions or the cost of usingthe Internet have little impact on an individual’s final decision.

The six composite dimensions of electronic service quality, including the

provision of convenient/accurate electronic banking operations; the

accessibility and reliability of service provision; good queue management;

service personalization; the provision of friendly and responsive customer

service; and the provision of targeted customer service are important in

revealing customer attitude towards Internet banking. Perceived

usefulness, security and privacy (i.e. perceived credibility), perceived easeof use and computer self-efficacy are the main perusing factors to accept

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online banking system. Perceived usefulness is the extent to which a

person believes that using a particular system will enhance his or her

performance, while perceived ease of use is the extent to which a person

believes that using a particular system will be free of effort.Adoption is the acceptance and continued use of a product, service or

idea. The consumers go through “a process of knowledge, persuasion,

decision and confirmation” before they are ready to adopt a product or

service. The adoption or rejection of an innovation begins when “the

consumer becomes aware of the product”.

For adoption of Internet banking, it is necessary that the banks offering

this service make the consumers aware about the availability of such a

product and explain how it adds value relative to other products of its own

or that of the competitors. Consumers must become aware of the new

brand or technology. The amount of information consumers have about

online banking has been identified as a major factor impacting the

adoption. The use of online banking services is fairly new experience to

many people and low awareness of online banking is a major factor in

causing people not to adopt online banking.

Figure 4 FACTORS CONTRIBUTING TOWARDS ADOPTION OFINTERNET BANKING

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Perceived Risk reflects an individual’s subjective belief about the possiblenegative consequences of some type of planned action or behaviour, due

to inherent uncertainty. The Perceived Risk associated with onlinetransactions may reduce perceptions of behavioural and environmentalcontrol, and this lack of control is likely to negatively influence internetbanking intentions. Owing to the open Internet technology infrastructureand lack of sufficient laws concerning internet banking activities, the trustand trust related-concepts (that is, perceived risk, credibility, image andreputation) have been integrated with the adoption models to explain theadoption behaviour.

Web quality attributes for measuring perception towards Internet banking,

falls into four broad categories: information quality, transaction speed,user-friendliness, and security. Four web quality attributes were

introduced to improve the understanding of consumer attitudes and

adoption intentions.

Figure 5 ATTITUDE TOWARDS INTERNET BANKING

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43



LITERATURE SURVEY

Rahmath Safeena, Abdullah and Hema Date (2010) believe that the

evolution of e-banking started from the use of ATMs (automatic teller

machines) and telephone banking (tele-banking), direct bill payment,

electronic fund transfers etc. They conducted a study to determine the

consumer’s perspective on adopting Internet banking. Their study

revealed that perceived usefulness, perceived ease of use; consumer

awareness and perceived risk are the important determinants of online

banking adoption. They also concluded that majority of customers are

accepting online banking because of many favourable factors. However,

since the sample size is limited, the results cannot be generalized and

might vary according to location and demography of the people.

Joseph et al. (1999) investigated the influence of internet on the

delivery of banking services. They found six underlying dimensions of e-

banking service quality such as convenience and accuracy, feedback and

complaint management, efficiency, queue management, accessibility and

customization. Jun and Cai (2001) identified 17 service quality

dimensions of internet banking service quality. These are reliability,responsiveness, competence, courtesy, credibility, access,

communication, understanding the customer, collaboration, continuous

improvement, content, accuracy, ease of use, timeliness, aesthetics,

security and divers features. They also suggested that some dimensions

such as responsiveness, reliability and access are critical for both

traditional and internet banks. Jayawardhena (2004) transforms the

original SERVQUAL scale to the internet context and develops a battery of

21 items to assess service quality in e-banking. By means of an

Exploratory Factor Analysis (EFA) and a Confirmatory Factor Analysis(CFA), these 21 items are condensed to five quality dimensions: access,

website interface, trust, attention and credibility. From the provider

perspective, there are target quality and delivered quality. The focus of

process or supply-led quality definition is rather internal than external,

and it is defined as conformance to requirements. It lays emphasis on the

importance of the management and the supply-side quality, and there is

an important role of the process in determining the quality of outcome

(Ghobadian, 1994). Achieving the quality of conformance between the

planned (target) quality level and the real quality delivered to customersdepends on the service quality management system in an organization.

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Members of Department of Information Technology, Members of

Department of Banking Supervision, Members of Legal

Department, Members of Department of Banking Operations andDevelopment of Reserve Bank of India consider Internet Banking as

another way of delivering traditional banking services through an

electronic communication backbone. They have also provided certain

distinctive features attributed to internet banking.

➢ It removes the traditional geographical barriers as it could reach outto customers of different countries / legal jurisdiction. This hasraised the question of jurisdiction of law / supervisory system towhich such transactions should be subjected.

➢ It has added a new dimension to different kinds of risks traditionallyassociated with banking, heightening some of them and throwingnew risk control challenges.

➢ Security of banking transactions, validity of electronic contract,customers’ privacy, etc., which have all along been concerns of bothbankers and supervisors have assumed different dimensions giventhat Internet is a public domain, not subject to control by any singleauthority or group of users.

➢ It poses a strategic risk of loss of business to those banks who donot respond in time, to this new technology, being the efficient and

cost effective delivery mechanism of banking services.➢ A new form of competition has emerged both from the existingplayers and new players of the market who are not strictly banks.

The report also covers legal and regulatory issues, security and

technology issues and supervisory and operational issues. Legal issues

are related to jurisdiction of laws, validity of electronic contracts etc.

Security issues include questions of adopting the technology standards for

access control, encryption / decryption, firewalls, digital signatures, public

key infrastructures etc. The supervisory and operational issues includerisk control measures, advance warning system, information technology

audit and re-engineering of operational procedures etc.

The report states that the cost of delivery of banking services through this

medium is several times less than that incurred through traditional

methods and that is why more and more banks are adopting the medium

of Internet to deliver their services. The report also mentions the risk of

survival the banks face if they do not adopt this medium. The report also

discusses the scenario of Internet banking in India.

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Justin Robinson and Winston Moore carried out a study to see the

attitudes and preferences in relation to the Internet Banking in the

Caribbean. Their study revealed that only a relatively modest population

of Caribbean still preferred to use the Internet banking and that toomainly for checking balances and making bill payments. Their study

revealed that there is still a lot of insecurity regarding this medium in the

minds of people. Their study also brought forth the finding that debit /

ATM card users are 20% more likely to adopt the Internet Banking.

The study of customer attitude towards Internet Banking was also carried

out by Ya-Yueh Shih in the ChungHua University, Taiwan. This study is

based on the Theory of Planned Behaviour. The research has mainly

focussed on the adoption of Internet banking in relation to the individual

beliefs, individual attitudes, subjective norms, and perceived behaviouralcontrols. The theory of planned behaviour states that the behavioural

intention is a function of attitude and subjective norms. Bandura (1977)

applied this concept to Internet Banking where this refers to the

knowledge of being able to perform banking through the medium of

Internet, knowledge about resource constraints like time, money etc.

Ajzen (1991) discovered that these factors reflect the perceived ease

and difficulty with which the behaviour is affected. The extended theory of

TPB has brought forward four broad categories of attributes that help to

understand the customer attitude and adoption intentions about Internetbanking, shopping and services: information quality, transaction speed,

user-friendliness and security. Their study concluded that information

quality (complete, correct, and rapidly updated), transaction speed,

security concerns positively influence the customer attitude towards

Internet banking. User-friendliness (clear and easy to-follow instructions,

HELP menus, simple operating procedures) does not influence the attitude

towards Internet banking positively. It was also concluded that attitudinal

belief has significant impact on the attitude, normative belief has a

significant impact on the subjective norms, control belief on perceivedbehavioural control, subjective norms and perceived behavioural control

on behavioural intentions and finally the behavioural intentions have a

significant impact on the actual usage.

Daniel (1999) and Karjaluoto (2003) have identified the following

delivery platforms for electronic banking:

Type of Service Description

PC banking (private dial up) Proprietary software, distributed by

the bank, is installed by thecustomer on their PC. Access to

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bank via a modem linked directly to

the bank.

Internet banking Access their bank via Internet.

Managed network The bank makes use of an online

service provided by another party.

TV based

The use of satellite or cable to

deliver account information to the

TV screens of customers (Also

Internet based)

Telephone banking

Customers access their bank via

telephone (Own personal ID andpassword required)

Mobile phone banking (SMS, WAP,

3rd generation)

Access with text messages (SMS),

Internet connection (WAP), or high

speed 3rd generation mobile

connection (also Internet based)

According to Rogers and Shoemaker (1971), consumers go through “a

process of knowledge, persuasion, decision and confirmation” before theyare ready to adopt a product or service. According to Sara Naimi

Baraghani (2007), the technological innovations pass through the

following stages:

➢ Knowledge

➢ Persuasion

➢ Decision

➢ Implementation

➢

Confirmation Trust as defined by Mayer (1995) is the willingness of a party to be

vulnerable to the actions of another party based on the expectation that

the other will perform a particular action important to the trustor,

irrespective of the ability to monitor or control that other party. According

to Sara Naimi (2007), making a banking transaction on the Internet is a

form of trusting behaviour, since a consumer makes him/her vulnerable to

the actions to the Internet. She further added that the customer willingly

becomes dependent on the Internet and expect the Internet to perform

whatever the consumer wants it too. Her study revealed that bothtechnological and trust-based issues are important to influence a

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customer’s behavioural intention to use Internet banking and that to

attract the customers to use Internet banking, the Internet banking sites

have to be designed according to both the aspects. She also explained

that the new users base their attitude more on perceived ease of use andusefulness, privacy protection, accuracy to declaration and unauthorized

access etc. Tan and Teo identified social indicators, understanding,

communality, and personal experience as important factors that help to

develop trust in Internet banking. She has also discussed the early

adoption stage strategies of internet banking, usually the push strategy

where the internet banking service providers use all forms of media

advertising to provide knowledge about these services to wider audiences.

The information should include reference to time saving, convenience, low

costs, and information availability etc. The customer should not be made

to undergo drastic changes in behaviour and the information and

instructions should be made available to him in the languages he is

comfortable with. The basic steps involved in push strategy are outlined

as follows:

➢ Build customer’s recognition of internet banking

➢ Attract customers to the web site

➢ Attract customers by ease of access

➢ Build customer’s confidence

➢ Offer incentives

The other strategy available is pull strategy where the diffusion is

increased amongst the internet users and effective co-operation between

various channels has to be arrived at. Support from industry regulators

and the government should be increased to make the growth more

effective. So the pull strategies can be easily summed up as: increasing

service value by collaboration with internet service providers, free internet

access, expanding banking services and increasing linkages; being

proactive, educating people about internet banking, supporting the

government, working with industrial regulators.

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OBJECTIVE

With cyber-cafes and kiosks springing up in different cities access to theNet is going to be easy. Internet banking (also referred as e-banking) isthe latest in this series of technological wonders in the recent pastinvolving use of Internet for delivery of banking products & services. Eventhe Morgan Stanley Dean Witter Internet research emphasised that Web ismore important for retail financial services than for many other industries.

Internet banking is changing the banking industry and is having the majoreffects on banking relationships. Banking is now no longer confined to thebranches were one has to approach the branch in person, to withdrawcash or deposit a cheque or request a statement of accounts. In trueInternet banking, any inquiry or transaction is processed online withoutany reference to the branch (anywhere banking) at any time. ProvidingInternet banking is increasingly becoming a "need to have" than a "nice tohave" service. The net banking, thus, now is more of a norm rather thanan exception in many developed countries due to the fact that it is thecheapest way of providing banking services.

Hence, the objective that was sought to be accomplished through this

research was to:➢ Determine attitude of people towards Internet banking➢ Which customers are using Internet banking and which are not using➢ Why the customers are not using Internet banking➢ What other e-banking facilities are more popular?

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RESEARCH METHODOLOGY

Any systematic research begins with the problem formulation or defining

of the problem of research. The term problem means any question or

issue to be examined. Here the issue to be examined has been defined as

determining the “Consumer Attitude towards Internet Banking”.

The next step involved is the literature review. Literature review is defined

as the documentation of the comprehensive review of the published and

unpublished work from secondary sources of data in the areas specific

interest to the researcher.

The next step entails designing of a descriptive and exploratory research

in order to understand the problem and carry out the research in a lucid

manner.

Descriptive research is also called Statistical Research. The main goal of this type of research is to describe the data and characteristics aboutwhat is being studied. The idea behind this type of research is to studyfrequencies, averages, and other statistical calculations. Although this

research is highly accurate, it does not gather the causes behind asituation. Exploratory research is used to obtain information concerningthe current status of the phenomena to describe "what exists" withrespect to variables or conditions in a situation. Here it was attempted tofind out the main factors affecting the attitude customers towards Internetbanking.

DATA COLLECTION METHOD

The primary research was carried out through questionnaire method. Thequestionnaire was structured in such a manner to avoid ambiguous

responses and to aid analysis of the collected data. The questionnaire was

then circulated among the chosen population in two manners:

➢ Mail - enabled questionnaire – This questionnaire was circulated via

mail among the respondents who filled in the answers and then

mailed it back to us.

➢ Web - enabled questionnaire – This questionnaire was administered

to the respondents by hosting the questionnaire at a website

http://www.eSurveysPro.com/Survey.aspx?id=2adad196-8ec8-45cc-

bc85-3d787e14fade . The chosen population was taken randomly

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http://www.esurveyspro.com/Survey.aspx?id=2adad196-8ec8-45cc-bc85-3d787e14fade






from across the net users and allowed the sample population to be

fairly even.

The questionnaire administered to respondents is available for reference

at ANNEXURE.

The secondary data collection was carried out by studying online

database, journals and surveys.

The data collected is then organized, compiled, analyzed and interpreted.

SAMPLING

The sampling technique followed is convenience sampling.

The sample size chosen is 100.

The sample area is not limited to any particular geographical location. The

sample unit is Internet users of various areas.

SAMPLING DESIGN

The targeted population was chosen in an unstructured manner onconvenience basis on “as is, when is” available manner. The convenience

method allows using members on relative ease. This method is difficult to

be treated by statistical techniques but is most commonly employed in

practical purposes. Co-workers, friends, internet users, members of

various forums all form a part of the population in this technique.

SAMPLING FRAME

In the person assisted convenience random sampling, every person has

an equal chance of being selected. The responses were collected from the

people who were willing to participate in the survey. To some extent,

judgement sampling was applied when the mails or links were sent out.

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DATA COLLECTION AND ANALYSIS

The primary research was conducted from 7th May, 2011 to 16th May,

2011. The survey targeted a total of 100 individuals but in all 128 people

participated in the survey.

The data was obtained through the use of structured questionnaires and

convenience sampling. In relation to background information on gender,

age etc., the first block deals with awareness regarding internet banking.

The second block covers the attitude for the non-Internet banking

customers. The third block covers the attitude of the customers who useInternet banking. The fourth and final block is for all the customers to get

the feedback on internet banking services and mobile banking services.

The first section provides the background details of the population and

sets the environment for the rest of the survey.

The analysis of the responses of the first section revealed the following

characteristics of the population –

A total of 128 participants responded to the survey. Out of these 83 weremales and 45 females. So the gender wise distribution can be studied as

Figure 6 GENDER WISE DISTRIBUTION OF SAMPLE POPULATION

Most of the respondents were in the age group 20 – 30 years but anoverall distribution can be shown as follows:

Figure 7 AGE WISE DISTRIBUTION

This diagram indicates that maximum respondents are young people in

the age group 20 – 30 years followed by less than 20 years. This is

because the convenience sampling was carried out and the most easilyavailable sample was student and young working population. If we see the

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educational qualifications of this population, the highest category is that

of graduates forming a 57% chunk followed by post graduates at a decent

36%.

Figure 8 EDUCATION WISE DISTRIBUTION

This shows that population is educated enough to understand the

intricacies involved with Internet banking and can be an active participant

in this field. Also the population is intelligent enough to understand the

questions being posed to them and respond correctly. So, judgemental

analysis will be used rarely only.

The next analysis of the sample population will be done on the basis of

the occupation or their area of work. This lets us decide which target

population finds it more convenient to use Internet banking.

Figure 9 OCCUPATIONAL DISTRIBUTION OF POPULATION

As is obvious from the above diagram, most of the population consists of

working professionals who form a mighty 55% of the sample. This is

because the survey was carried out by online circulation and this

population has easy access to Internet at workplace as well as homes. The

homemakers were not able to participate in this survey due to lack of

reach. However, students have shown a fairly decent participation in the

survey and that is mostly because all institutes have internet facilities and

various students are linked to one another either through their online

student associations or through social media.

So, the above analysis reveals that mainly male graduate working

professionals in the age group 20 – 30 years participated in the survey.

Having discussed the demographical distribution, the banking

requirements and availability can be discussed.

Nearly 59 – 60 % of people visit the bank branch only once in a fewmonths and the main reason for visiting the bank is to make deposits and

53



discuss loans and investments – some things that are not so easily done

over any other medium. With the coming of ATMs and Internet banking

most of the transactions take place outside the four walls of a bank

branch. However, 19% people still visit the bank once a month and this isclosely followed by a 1 – 5 times visit made by 15% people. Rarely does a

person feel the need of making a visit > 10 times a month to his bank

branch now-a-days.

Figure 10 VISIT TO BANK BRANCH

The surveyed population was also asked about the main reason thatnecessitated this visit to the branch. And for nearly 47% people, the need

was accentuated by the requirement of making deposits. However, 26%

people favoured reasons other than making deposits or withdrawals,

inquiring balances or discussing investment options. These reasons

primarily figured:

➢ To update the passbook

➢ To open fixed deposits

➢ To make general inquiries

➢ Loan related discussions➢ To redress the discrepancies

➢ Things that have to be done manually like closing an account,

requesting branch change, opening a new account, requesting for a

locker etc.

➢ To get foreign exchange

➢ To discuss queries, complaints and problems

➢ If the net banking is not working due to some reasons

➢ ATM related queries

➢ To reset passwords or to generate passwords➢ To take care of ad-hoc things like submitting documents

➢ To cash cheques and to request chequebooks

➢ For matters concerning PF and PPF

Figure 11 REASONS TO VISIT BANKS

14% people still visit bank branches to withdraw cash, 9% to get firsthand

advice. Merely 4% people visit for mundane purpose like inquiring

balances.

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The following figure discusses the e-Banking facilities provided by banks:

Figure 12 e-BANKING FACILITIES AVAILABLE

The ATM and Internet banking services follow each other at heels standing

at 27% and 26% respectively. Together, for 53% of the surveyed

population these e-Banking services are available. The relatively new

entrants in the field of e-banking like Telephone banking, Mobile banking

and SMS banking are also being widely distributed to the customers. But it

is observed that the mobile banking services have greater penetration

than telephone banking and nearly 18% people can avail these services.

Similarly, 15% people can avail SMS banking whereas only 14% people

can avail the telephone banking. This shows that the banks are tryingtheir level best to make the various e-banking facilities popular and these

figures are bound to rise drastically in near future.

Figure 13 COMPARISON OF AVAILABLE AND AVAILED FACILITIES

It can be seen that all those people for whom the ATM facility is available

avail it. But that is not the case with Internet banking. And also, though,

telephone banking, mobile banking and SMS banking are available to awider section, only a handful of these people avail these services. Clearly,

ATM is still a leader when it comes to e-banking but Internet banking is

trying to bridge the gap rapidly.

If we see the facilities availed chart individually, we will find that there is a

constant decrease in the users of the e-banking services with the crest

being observed for ATM services and the trough for telephone banking

services. The curve starts rising slightly again for mobile and SMS

banking. The facilities availed are plotted against the percentage of the

users of the respective service. While 45% people use ATM services, only33% of the surveyed population uses Internet banking. SMS banking is

used by 8% of people, followed by mobile banking that attracts 7% people

and last of all comes Telephone banking with 6.96% users. This can help

the bank to identify the area where it needs to push its business. There is

still a lot of potential untapped in Internet banking and mobile banking

and the banks can benefit from this, if they seize the opportunity timely.

The individual usage chart is shown as follows:

Figure 14 e-BANKING FACILITIES AVAILED BY INDIVIDUALS

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The section 2 of the questionnaire was meant for only those customers of

the bank who did not use Internet banking. This section helps us to find

out the reasons why people do not prefer to use Internet banking and

whether they have any intention of using Internet banking facility infuture.

Nearly 68% of the users, who are currently not using Internet banking, are

planning to use this facility in near future. Another 14% are inclined

towards Internet banking usage and nearly 8% of the population is not

likely to use this facility. 4% of the population is still undecided whether it

should take up Internet banking or not. Thus, we can safely infer that the

idea of Internet banking is fast catching up and people are very likely to

use it for future banking transactions. In big cities, Internet banking has

already made great forays into the lives of the people.

Figure 15 ADOPTION OF INTERNET BANKING IN NEAR FUTURE

The main factor that prevented the people from using Internet banking

was the concern about security. 51% of the population stated this

intention unequivocally. So clearly, if this aspect of Internet banking is

addressed, the usage will increase greatly. Banks can strengthen thesecurity provided for online transactions, adopt new technologies, and

educate their customers thereby building their confidence in these

services.

People are always resistant to change and this reflects in adoption of

Internet banking also. 33% of the respondents feel comfortable with the

traditional banking and hence, do not find any motivation in adopting

Internet banking. Change will come slowly and steadily. The Internet

banking will have to be eulogized and people made aware of the benefitsthat can be derived from these services. Once people realize that all their

banking services are available at just the click of the mouse, they might

change their mindset but this attitudinal change cannot be done

overnight.

Few sporadic incidences of under age, never heard of internet banking,

service charges on visiting bank branch, not being much involved with

banking services and less support for online services were also mentioned

by surveys but these were individually spread out reasons.

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So, it can be safely determined that it is mainly the security concern that

prevents the bank customers from adopting Internet banking. The

diagrammatic representation of this is as follows:

Figure 16 FACTORS PREVENTING USE OF INTERNET BANKING

This completes the analysis of the section 2 which reveals that the users

are willing to take up internet banking in future, if the banks improve upon

the security services provided for the Internet banking and addresses the

concerns of people in this regards.

The next section of the questionnaire was meant for those customers of

the bank who used Internet banking. This section deals with aspect whatfacilities people prefer to avail online, frequency of usage, possible factors

and preferred services that favour the use of Internet banking, relied

banks, satisfaction derived by the customers, issues faced while using

these services, and factors contributing towards the encouragement and

popularity of Internet banking.

The prime reason for taking up Internet banking is attributed to the

convenience derived by the user i.e. the 24 hours service 365 days a year,

anywhere connectivity and hassle free transactions. The benefits derived

in terms of convenience are the major reason as to why nearly 76%people opened an Internet account. The second position here is bagged

by quick service delivered to the customer as the wait period is eliminated

and one does not have to stand in long queues and wait for his turn. 55%

people quoted this as the major reason to open an Internet banking

account. Easy to maintain banking transaction activity prompted 53%

people to use Internet banking. All the database handling is done online

and all the information is catalogued systematically. Though curiosity

about this emerging field also led 39% people to start using Internet

banking but this reason is of least importance as compared to otherfactors. 35% people felt strongly about the geographical constraints as

being a major factor for adopting Internet banking services and for 33%

people online shopping was the driving factor. The other factors that led

to the adoption of the Internet banking can be listed as follows –

➢ Safe and secure – A compelling motive for 32.5% people and has an overall

moderate priority

➢ Integrated value added services – Availability of various services along

with banking facility is also a strong motivator as felt by 31% people.

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➢ Better rate and lower service charges – This has strong potential for high

banking activity areas. 28% population stated this as an important

consideration while adopting Internet banking.

➢ Variety of features and services offered – This is favoured by 26.5%

people as being of prime importance when opening an Internet bankingaccount.

The priority wise distribution of the reasons is shown in the stacked

columnar chart where the reasons have been plotted against the

percentage of response received in each section of priority. This will help

us to see clearly what importance is imparted to what reason by the

customers.

Figure 17 REASON TO ADOPT INTERNET BANKING

Even though the Internet banking has been decently adopted, still the

frequency of usage is restricted to only 1 – 5 times a month. From

amongst the surveyed population, 37% people use this facility for 1 – 5

times a month. 24% people use this facility 5 – 10 times a month and

since the use is ever increasing, it comes as no surprise that 21% people

prefer to use it for more than 15 times a month. 18% people prefer

accessing their internet bank accounts 10 – 15 times in a month.

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Figure 18 USAGE FREQUENCY

The next question analyzed the most popular facilities that are usedonline. And in response to this, it was observed that account inquiry was

clearly the most favoured facility among the respondents. This was closely

followed by online bill payments and transfer of funds between accounts.

While the former was favoured by 23.2%, the latter two were favoured by

22.57% and 22.26% respectively, the difference being marginal only. 19%

people use internet banking for retrieving bank statements. Only handful

of people use this facility for processing payrolls, loan payments, applying

for consumer loans and credit cards, booking movie and flight tickets,

online shopping, retrieving credit card statements, opening deposits etc.

The total number of respondents for these uses put together account for

13% of the total surveyed population.

Figure 19 FAVOURED ONLINE BANKING FACILITIES

The respondents were asked to rate various aspects of Internet bank

services provided by the bank. This will provide an idea about how to

improve the internet banking facilities, what the customers look for and

various other clues as to how the bank should go about designing itsInternet banking programme.

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Figure 20 ASPECTS OF INTERNET BANKING SERVICES

From the above diagram, it is clear that when users think of Internet

banking, convenience rules their minds, hearts, thoughts and actions. A

staggering 56% people think that convenience is the first aspect that

should be addressed by the banks. Account security is also important

considering that Internet can make banking vulnerable to many risks and

as a result a solid 51% people feel that it is a crucial for the Internet

banking facility. 48% people also feel that the bank services go a long way

in deciding which Internet services are to be preferred. Accessibility anduser friendliness rank next with a 44% population feeling that this aspect

determines the success of Internet banking. The banks cannot overlook

the efforts to make Internet or rather e-banking popular, providing

encouragement to use these facilities as nearly 34% people are influenced

by these initiatives alone. And lastly, customer bases his decision on the

customer care facilities.

It was also noted that all these aspects are of equal and very high

importance as far as the consumers are concerned and this makes the

designing and provision of Internet banking services slightly tricky andcomplicated.

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Based on the research survey, it was observed that State banks were

most favoured with respect to Internet banking followed by ICICI and

HDFC. Citibank stood fourth in terms of attracting customers. Customers

also use the Internet banking services provided by PNB, Axis and Yesbanks. The reason of preferring a particular bank is beyond the scope of

this research.

Figure 21 PREFFERED BANKS

The survey also tried to figure out the source of encouragement that led

the respondents to use Internet banking. Mainly the media and friends

suggested the option to respondents. In some cases, the family was

influencing factor.

Figure 22 SOURCE OF INFLUENCE

Nearly all the users were satisfied by the Internet services provided to

them and rarely a non-satisfied respondent was encountered. The

satisfaction level runs really high amounting to a staggering 96% with

only 4% of the users being dissatisfied. Further research has shown that

this dissatisfaction may be caused due to issues in Internet connectivityetc.

Figure 23 SATISFACTION OF USERS WITH INTERNET BANKING

And also while considering the Internet banking, the place of access is

also of prime importance because this goes a long way in determining the

physical, operational and security risks to the customer’s account. But it

was observed that users were conscientious enough to use these services

in the protected environment of their homes and work places. Some usersavailed the internet facilities even at their mobiles thereby becoming

mobile banking customers. Rarely did people use public cyber café for

operating their Internet banking accounts.

Figure 24 PREFERRED PLACE OF ACCESS FOR INTERNET BANKING

The satisfaction derived from the Internet banking has already been

discussed in preceding pages. In continuation with the same, respondentswere asked if they had faced any issues while using Internet banking.

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Most of the users have been able to perform hassle free transactions but

some users did encounter certain problems while operating their Internet

bank accounts. Some of the issues that were faced can be discussed as:

➢ Sometimes due to server maintenance or slow network, the internetbanking facility is not available.

➢ Slow speed may affect the quality of transaction.

➢ Money transfer issues like sometimes the amount gets debited from

the account, but is not credited to the merchant account. Such

issues are also faced in ticket bookings and reservations.

➢ Only limited features are available and for other purposes, a bank

visit is necessitated.

➢ The transactions in countries not registered with the bank are a little

problematic to carry out.

But these are few and far spread incidences and it can still be inferred

that people are by and large satisfied by their Internet banking facilities.

Figure 25 ISSUES ENCOUNTERED IN INTERNET BANKING

The respondents were then asked to identify the factors contributing the

most to the popularity of the Internet banking on a 5 point scale.

Convenience is of utmost importance in this regards getting the highestpriority (62%) from amongst all the factors. The next factor promoting

Internet banking is user friendliness of the banking site with 44%

respondents giving it the highest ranking. For 38% users, transaction

speed goes a long way to make the Internet banking popular and another

34% set of respondents feel that it is the security features taken up by the

bank to make transactions secure that contribute towards the popularity

of Internet banking. The information quality (timely access to correct,

complete, updated information) comes at last place with 33.6% users in

its favour. Again, as it was observed earlier also, the users consider allthese factors to be equally important. This makes it a little difficult to

understand the psychology behind the Internet banking.

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Figure 26 FACTORS AFFECTING POPULARTIY OF INTERNETBANKING

The last section deals with a general outlook on Mobile banking. Since

Mobile banking is closely related with the Internet banking, it was thought

appropriate to gather the views of people regarding this new mode of

banking.

With rare exceptions, nearly all the respondents use mobile phones. Also,

for 72% of the respondents, we browsing and Internet surfing support is

available on their mobile phones itself. These general pointers indicate

that, if channelized properly, there is a lot of potential for mobile banking.

The following charts show the statistics for the availability of mobile

phones and web browsing support on mobile phones available with the

respondents respectively.

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Figure 27 AVAILABILITY OF MOBILE PHONES AND WEB BROWSINGFACILITIES ON MOBILE PHONES WITH USERS

Despite the widespread availability of mobile phones and web browsing

facilities, it was observed that very few people preferred to use mobile

banking services. Of all the respondents, a mere 29% of the respondents

carried out banking through mobile phones. Rest all either preferredtraditional or some other mode of banking.

Figure 28 PERCENTAGE OF RESPONDENTS AVAILING MOBILEBANKING SERVICES

And again the frequency of usage of these services stands at 1 – 5 times a

month. There are some users who prefer to use it 10 – 15 times and rarely

does a respondent use this facility for more than 15 times a month.

Figure 29 FREQUENCY OF USAGE OF MOBILE BANKING

Despite all the inhibitions in the minds of the respondents regarding the

mobile or e-banking in general, a fairly considerable number (71%) of

people believe that they would prefer mobile banking over traditional

banking.

Figure 30 PREFERENCE TOWARDS MOBILE BANKING

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Finally, the respondents were asked to choose reasons that make them

opt mobile banking and ease of access was the prime reason for choosing

this facility. It was favoured by 32% of people. The time saving aspect also

gained favour among 24% of the respondents. Since, the users arefamiliar with the functioning of the mobile phones, so ease of use is in

good books of 21% respondents. The safety and risk free use and service

quality are at the tail ends of the list with 12% and 11% votes.

Figure 31 REASONS TO OPT FOR MOBILE BANKING

In the end, the users were asked to provide some suggestions that will

help us to promote the use of Internet Banking. The following suggestions

were received from the users:

➢ To give proper information about it to the customers➢ By telling the benefits to the friends / good word of mouth➢ By concentrating on making it more secure and convincing people

about its security➢ Advertisements on popular TV channels, bank branches, ATMs,

popular Internet sites and social media➢ Through encouragement drives initiated by bank➢ In person demos for people that still visit the bank in order to show

how easy it is and how to operate it on phone / demo kiosks in thebranch

➢ Direct marketing to the customers not availing themselves of theservice / door to door marketing

➢ While opening the bank account, the service provider must give fulland accurate information regarding the service and provided withthe credentials required for Internet Banking

➢ Promotion by bank staff ➢ User friendly sites / improving GUI to make it more friendly and

quick➢ Convenience and comfort of the user

➢ By giving the information in ATM receipts and passbooks➢ Educating the customers➢ Internet safety seminars, e-learning➢ Incentives for using Internet Banking services➢ Internet Banking awareness canopies at various prime locations➢ Providing local language support for the convenience of the

customer➢ Service improvement in field of Internet Banking

Some of these suggestions might already be in practice and some of these can be incorporated in order to promote the Internet Banking. These

will help increase the awareness regarding the Internet banking and willhelp promote this new channel of banking.

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Internet banking has revolutionized the lives of people as well as methodof banking. People have developed a positive attitude towards InternetBanking and believe that it has taken away the pressure from lives. It has

reduced the need to stand in long queues and is quite time saving. This isthe prime reason why people these days prefer to use Internet banking.However, positive and negative go hand in hand. There are people whobelieve that Internet banking can be availed only by Internet addicts andthat mobile banking is better proposition than Internet bankingconsidering the wider reach of mobiles than Internet. And in order topromote mobile and SMS banking, the service charges should be lowered. Those who favour mobile banking feel that provision of faster net accesson mobiles will promote this facility further. Yet another group believesthat Internet is an integral part of our economy now and banking

integration with Internet should be definitely encouraged. And if someefforts are made to make it more users friendly and secure, people willdefinitely prefer this medium. They strongly advocate the idea thatInternet banking is the need of hour.

However, security with regards to Internet banking is of major concern.Also, there should be provision to customize the Internet banking facilitiesaccording to the individual requirements of the users. This will allow themto use the facility without any hesitation. Also various advanced bankingfeatures should also be handled in future.

The users also feel that the complaint resolution is not efficient in case of net banking and this aspect should be improved by the banks. Timelyresolution of transaction related problems will further promote Internetbanking.

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RESULTS AND CONCLUSIONS

The use Internet in banking represents the leveraging of an incrediblyefficient medium to provide a very cost and time efficient distributionchannel. This is not to discount the large, nascent opportunity for growthin this industry. As commerce continues to increase, and increasingamounts of people embrace wireless financial service products, there isfertile ground that can be reaped for great profits, by banks that maintaina presence on the Internet.

In the preceding sections, we analyzed the attempts to understand the

customer attitude towards Internet Banking.

The results from the survey suggest that nearly 33% of individualsindicated that they utilize Internet banking services. The highestutilization rates were amongst the young working professionals. In termsof frequency of use, most people (37%) indicated that they tend to accessonline banking services 1 – 5 times every month.

The result of this study also shows that account inquiry and on-line billpayment are two most favoured Internet banking activities. The study alsoreveals that convenience and security are two most crucial aspects to

determine how efficient any Internet banking activity is, though, otheraspects like overall bank services, accessibility, user friendliness,encouragement to use e-banking and customer care cannot be ruled out. The satisfaction level among the users from these services runs very high.Most users were conscientious enough to use these services in theprotected environments of their homes and work places so as to mitigatesome of the risks observed in Internet banking. Customer convenience,user friendliness and transaction speed are some factors that go a longway in determining the popularity of a given Internet banking service.

The survey analysis has revealed that people have positive but cautious

attitude towards Internet banking. They have started accepting it and aremainly satisfied but as they say a burnt child dreads the fire. People arewary in making the use of this new medium. It is the young population in20s – 35s that have accepted this medium with least resistance but othersare fast catching up. It was also aimed to find out the main reason whycustomers are not using Internet banking. The major reason is theconcern about security, the various risks associated with the Internetwhich do not let the ties of trust be knit between the bank and customer.It was observed that ATMs are the most popular e-banking facilities,followed by Internet banking. The next preference is given to mobilebanking. SMS banking is also picking up but telephone based banking isthe least preferred of all.

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As far as user attitude towards Mobile banking is concerned, it can be saidthat ease of access and time saving facility will help it to grow by leapsand bounds. But this field is still in budding stages and is still too early todraw any conclusions. But people, by and large have a positive attitude

towards this new medium and that might just turn the table in its favour.

The relatively small size of population and concentration of the survey toa particular environment does not guarantee standard results. Similarstudies can be conducted elsewhere and the results compared.

But despite these limitations, it can be stated fairly confidently that thefield of Internet banking is no longer considered a taboo and is creepinginto the society silently and slowly. It is revolutionizing the way weperceive the banking around us. People have welcomed Internet bankingwith open arms and are adventuring into the fields of SMS and mobile

banking also. The study has found answers to most of the objectives andhas opened some areas where more research can definitely be taken up.

We can see that the times are changing and with the passage of time,people have started accepting Internet banking for all the potential that itholds. However, there are still some perceptual blockings that have to beaddressed carefully by the banks by giving proper training about Internetbanking, by making it more secure, safe and risk free, by promoting thismedium of banking and providing convenient, user friendly services.

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LIMITATIONS

The study was conducted to see how the customers’ perceive the Internet

banking. There is still room for further investigation into the adoption of

this mode of banking.

There are certain limitations with the research carried out. The

participants comprised a small sample, only 100 and assumed to be

homogeneous and enough to carry out the research. Most of the

respondents are either students or working professionals. So, the results

cannot be generalized in the wake of this limitation. The underlyingassumption is that the survey conducted in limited area represents the

general psyche of the users.

The analysis also takes some judgemental nature.

The concept of internet banking is still in budding stages.

The expertise of the questionnaire design is limited.

More research would be useful in understanding the role of trust, security

measures in the adoption of Internet banking and also in enhancing the

use of internet banking.

More researches can be carried out in terms of distinction of public and

private sector banks, individual customers and corporate customers etc in

terms of the factors influencing their adoption decisions, the criterion for

selecting online banking services, the products and services perceived to

be useful.

The research has been carried out with time and budgetary constraints.

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BIBLIOGRAPHY

1. Internet Banking: Disruptive or Sustaining Technology, Professor Lynda

Aplegate, Paul Hazell, Ziad Raphael, 7th May, 2001

2. Attitudes and Preferences in Relation to Internet Banking in the Caribbean,

Justin Robinson and Winston Moore

3. Customer Perspectives on E-business Value: Case Study on Internet

Banking, Journal of Internet Banking and Commerce, April 2010, Vol. 15,

No. 1, Rahmath Safeena, Abdullah, Hema Date

4. Report on Internet Banking, Reserve Bank of India

5. Factors Influencing the Adoption of Internet Banking, Sara Naimi

Baraghani, Supervised by Dr. Seyed Hessameddin Zegordi and Dr.

Mohammed Khalifa, January, 2007

6. The study of customer attitude towards Internet Banking based on the

Theory of Planned Behaviour, Ya-Yueh Shih, 2007

7. Customer perception towards Internet Banking w.r.f. to private and foreign

banks in India (use of MDS), Siddharth Agarwal, 2009

8. Progress, Trends, and Management in e-Banking – A Case Study of Banks

in Himachal Pradesh, Vikas Sharma, 2008

9. http://www.banknetindia.com/banking/ibkgintro.htm

10.http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre14.shtm

11.http://correctbanking.com/

12.http://webinternetbanking.com/disadvantagesinternetbanking.html 13.http://www.buzzle.com/articles/disadvantages-of-internet-banking.html

14.http://www.ehow.com/facts_4743500_disadvantages-internet-

banking.html

15.http://articles.moneycentral.msn.com/Investing/StockInvestingTrading/how

-dangerous-is-online-banking.aspx#pageTopAchor

16.http://corvuswire.com/banking/potential-risks-associated-with-internet-

banking/

17.http://www.itnewsafrica.com/2009/11/internet-banking-know-the-risks/

18.http://e-bankingservise.blogspot.com/2008/09/security-precautions.html

19.http://www.info.gov.hk/hkma/eng/viewpt/20040715e.htm20.https://netbanking.netpnb.com/bayimgs/pnbibs/helpfile/safeguard.htm

70

http://www.banknetindia.com/banking/ibkgintro.htm

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre14.shtm

http://correctbanking.com/

http://webinternetbanking.com/disadvantagesinternetbanking.html


http://www.buzzle.com/articles/disadvantages-of-internet-banking.html


http://www.ehow.com/facts_4743500_disadvantages-internet-banking.html


http://corvuswire.com/banking/potential-risks-associated-with-internet-banking/


http://www.itnewsafrica.com/2009/11/internet-banking-know-the-risks/

http://e-bankingservise.blogspot.com/2008/09/security-precautions.html


http://www.info.gov.hk/hkma/eng/viewpt/20040715e.htm

https://netbanking.netpnb.com/bayimgs/pnbibs/helpfile/safeguard.htm

http://www.banknetindia.com/banking/ibkgintro.htm

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre14.shtm

http://correctbanking.com/







http://www.itnewsafrica.com/2009/11/internet-banking-know-the-risks/


http://www.info.gov.hk/hkma/eng/viewpt/20040715e.htm

https://netbanking.netpnb.com/bayimgs/pnbibs/helpfile/safeguard.htm



21.http://www.articlesbase.com/online-business-articles/precautions-about-

net-banking-820608.html#ixzz1K2HHkzt1

22.http://finance778.com/Online-Banking/20080122/329.html

23.http://www.banking-guide.org.uk/internet-banking.html

71

http://finance778.com/Online-Banking/20080122/329.html


http://www.banking-guide.org.uk/internet-banking.html






24.http://www.ehow.com/list_6949866_types-internet-banking.html

ANNEXURE

Questionnaire – Customer Attitude towards Internet Banking

ACADEMIC PROJECT _ HPUBS, HP University, Shimla

This survey is a part of the academic project. The information provided here will

be treated completely confidential and not be misused.

1. Name ______________________________________________________________

2. Gender

Male Female

3. Age

Less than 20 years 20 - 30 years

30 - 40 years 40 - 50 years

>50 years

4. Education

Secondary Senior Secondary

Graduation Post Graduation or more

5. Occupation

Student Homemaker

Working Professional Business

Service Other

If other, please specify,

________________________________________________________

6. How often do you visit the bank branch in a month?

Once a month 1 - 5 times a month

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http://www.ehow.com/list_6949866_types-internet-banking.html





5 - 10 times a month >10 times a month

Once in a few months

7. The main reason to visit the bank branch is …. (please choose a single

most important reason)

To make deposits To withdraw cash

To get advice for investment options To inquire balance

Other


______________________________

8. What are the e-banking facilities provided by your bank? (Mark all that

apply)

ATM Internet banking

Telephone banking Mobile banking

SMS banking

9. Which of the e-banking services provided by your bank are used by you?

(Mark all that apply)

ATM Internet banking

Telephone banking Mobile banking

SMS banking

For the users who do not use Internet banking

10.Do you plan to use the internet banking in near future?

Very Unlikely Somewhat Unlikely

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Neither likely nor unlikely Somewhat likely

Very likely

11.What are the main reasons that you have not preferred Internet banking?

(Mark all that apply)

Under age Never heard of Internet banking

Concerned about security Little knowledge about internet

Comfortable with traditional banking Others

If others, please specify,

__________________________________________________________

For the users who use Internet banking

12.What is the most important reason you opened an Internet account?

(Prioritize according to the order of importance 1 being least important

and 5 being most important)a. Convenience (24hrs. service, anywhere connectivity) _____

b. Curiosity about Internet banking _____

c. Safe and secure _____

d. Easy to maintain banking transaction activity _____

e. Online shopping _____

f. Better rate and Lower service charges _____

g. Geographical constraints _____

h. Quick service _____

i. Variety of features and services offered _____

j. Integrated value added services _____ 13.How many times a month do you use Internet banking facility?

1 - 5 times a month 5 - 10 times a month

10 - 15 times a month Over 15 times

14.What are the various banking facilities that you use online?

On-line Bill payment Account Inquiry

Transfer funds between accounts Retrieving bank statements

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Applying for consumer loans and credit cards Process payrolls

Loan payments and loan applications Other


________________________________________________________

15.Rate the following aspects of internet services provided by your bank on

the scale from 1 to 5 (1 being the lowest and 5 being the highest degree)

Bank service_____ Account security _____

Convenience_____ User friendliness _____

Accessibility _____ Customer care _____

Encouragement to use e-banking _____

16.Would you like to disclose the name of the bank with which you have

Internet account?

___________________________________________________________________________

17.Who suggested the option of Internet banking to you?

Friends Media Family

18.Are you satisfied by your Internet banking services?

Yes No

19.Where do you access the Internet banking facility?

At home At office / workplace

Public place Through mobile phone

If any other, please

specify,_____________________________________________________

20.Did you encounter any issues while using Internet banking?

Yes No

If yes, please specify,

__________________________________________________________

For all the customers

21.Rank the following according to the perceived contribution in making

Internet banking popular? (1 being the lowest and 5 being the highest

value)

a. The information quality (providing correct, complete and updated

information timely) _____ b. The transaction speed _____

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c. User friendliness _____

d. Security _____

e. Convenience _____

22.Do you have a mobile phone?

Yes No

23.Does your mobile phone have web browsing or internet facility?

Yes No

24.Do you avail mobile banking services?

Yes No

25.If the answer to above question is yes, how often do you use such services

in a month?

1 - 5 times 5 - 10 times

10 - 15 times >15 times

26.Would you prefer mobile banking services over traditional banking

method?

Yes No

27.What are the reasons to opt for mobile banking? If you do not use mobile

banking, please answer on the basis of your expectations. (Mark all that

apply)

Highly time saving

Ease of access

Safe and risk free

Service quality

Ease of use

28.How do you think the awareness about the internet banking can be

increased?

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

29.Any other comments?

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___________________________________________________________________________

___________________________________________________________________________

Thanking you for sparing some time for this survey. Have a great day ahead

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Internet Banking Report

Documents

Transcript of Internet Banking Report