To study the impact of technology on selected private and public banks

Submitted By Chitresh Menon University Roll No. 100372244478 Submitted

To Prof. Navdeep Kaur

G.N.D.E.C. Ludhiana

CONTENT
CHAPTER 1- INTRODUCTION TO TOPIC Banking system Technological Revolution and banking Technological channels use by banks Introduction to the organization CHAPTER 2- REVIEW OF LITERATURE CHAPTER 3- RESEARCH METHODOLOGY Objectives of study Scope of the study Research plan Data Collection Methods Sampling Plan Tools of analysis Limitations of study CHAPTER 4- DATA ANALYSIS AND INTERPRETATION On the view point of customers

CHAPTER5- FINDINGS AND SUGGESSTIONS

CHAPTER 1 INTRODUCTION TO TOPIC BANKING SYSTEM A banker or bank is a financial institution that acts as a payment agent for customers, and borrows and lends money. In some countries such as Germany and Japan banks are the primary owners of industrial corporations while in other countries such as the United States banks are prohibited from owning non-financial companies. The first modern bank was founded in Italy in Genoa in 1406, its name was Banco di San Giorgio (Bank of St. George).Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customers' current accounts. Banks also enable customer payments via other payment methods such as telegraphic transfer, EFTPOS, and ATM. Banks borrow money by accepting funds deposited on current account, accepting term deposits and by issuing debt securities such as banknotes and bonds. Banks lend money by making advances to customers on current account, by making instalment loans, and by investing in marketable debt securities and other forms of lending. Banks provide almost all payment services, and a bank account is considered indispensable by most businesses, individuals and governments. Non-banks that provide payment services such as remittance companies are not normally considered an adequate substitute for having a bank account. Banks borrow most funds borrowed from households and non-financial businesses, and lend most funds lent to households and non-financial businesses, but non-bank lenders provide a significant and in many cases adequate substitute for bank loans, and money market funds, cash management trusts and other non-bank financial institutions in many cases provide an adequate substitute to banks for lending savings to.

DEFINATION OF BANKING:- "Banking Business" means the business of either or both of the following: 1. receiving from the general public money on current, deposit, savings or other similar account repayable on demand or within less than [3 months] ... or with a period of call or notice of less than that period; 2. paying or collecting cheques drawn by or paid in by customers. History Of Banking In India Without a sound and effective banking system in India it cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. For the past three decades India's banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reason of India's growth process.The government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalisation of 14 major private banks of India The first bank in India, though conservative, was established in 1786. From 1786 till today, the journey of Indian Banking System can be segregated into three distinct phases. They are as mentioned below:

Early phase from 1786 to 1969 of Indian Banks Nationalisation of Indian Banks and up to 1991 prior to Indian banking sector Reforms. New phase of Indian Banking System with the advent of Indian Financial & Banking Sector Reforms after 1991.

Phase I The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was established which started as private shareholders banks, mostly Europeans shareholders. In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935. During the first phase the growth was very slow and banks also experienced periodic failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the functioning and activities of commercial banks, the Government of India came up with The Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive powers for the supervision of banking in india as the Central Banking Authority. Phase II Government took major steps in this Indian Banking Sector Reform after independence. In 1955, it nationalised Imperial Bank of India with extensive banking facilities on a large scale specially in rural and semi-urban areas. It formed State Bank of india to act as the principal agent of RBI and to handle banking transactions of the Union and State Governments all over the country. Seven banks forming subsidiary of State Bank of India was nationalised in 1960 on 19th July, 1969, major process of nationalisation was carried out. It was the effort of the then

Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country was nationalised. Second phase of nationalisation Indian Banking Sector Reform was carried out in 1980 with seven more banks. This step brought 80% of the banking segment in India under Government ownership. The following are the steps taken by the Government of India to Regulate Banking Institutions in the Country:

1949 : Enactment of Banking Regulation Act. 1955 : Nationalisation of State Bank of India. 1959 : Nationalisation of SBI subsidiaries. 1961 : Insurance cover extended to deposits. 1969 : Nationalisation of 14 major banks. 1971 : Creation of credit guarantee corporation. 1975 : Creation of regional rural banks. 1980 : Nationalisation of seven banks with deposits over 200 crore.

After the nationalisation of banks, the branches of the public sector bank India rose to approximately 800% in deposits and advances took a huge jump by 11,000%. Banking in the sunshine of Government ownership gave the public implicit faith and immense confidence about the sustainability of these institutions. Phase III This phase has introduced many more products and facilities in the banking sector in its reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was set up by his name which worked for the liberalisation of banking practices The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a satisfactory service to customers. Phone banking and net banking is introduced. The entire system became more convenient and swift. Time is given more importance than money.

Current situation Currently (2008), banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some timeespecially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected to be strong. One may also expect M&As, takeovers, and asset sales. In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor has been allowed to hold more than 5% in a private sector bank since the RBI announced norms in 2005 that any stake exceeding 5% in the private sector banks would need to be vetted by them.

The Reserve Bank of India act as a centralized body monitoring any discrepancies and shortcoming in the system. It is the foremost monitoring body in the Indian financial sector. Currently, India has 88 scheduled commercial banks (SCBs) - 28 public sector banks (that is with the Government of India holding a stake), 29 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 31 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs.

TECHNOLOGICAL REVOLUTION AND BANKING We have been witnessing since early 1980s the phenomenon of widespread use of computers and communication technology in the industrial, as well as emerging market economies. This has resulted in faster funds movement across nations and borders. Globalisations of economies and financial liberalisation within the economies have opened new opportunities of growth for techno-savvy institutions, while for the others these have resulted in shrinkage of revenues. The use of IT in the banking industry in India has however been somewhat limited and has, as a result, restricted our presence in international operations. Even in critical spheres such as those involving funds transfer, and MIS based decision-making, there has been little evidence of proactive movement towards wholesale computerisation up to the middle of the 1990s. However, Indian Banks have come to start this process after a decade or so. It is only with the growing recognition of the need for having in place financial reforms, has the interest in IT application in the banking sector in India increased. But though the process started late, computerising the vast network of branches of several banks is planned and being executed methodically and the benefit is expected to be fully perceived by the year 2010. EVOLUTION OF TECHNOLOGY IN BANKS:- The Rangarajan Committee report in early 1980s was the first step towards computerization of banks. Banks started exploring the idea of 'Total Bank Automation (TBA)'. Although titled 'Total Bank Automation,' TBA was in most cases confined to branch automation. It was only in the early 1990s that banks started thinking about tying-up disparate branches together to facilitate information sharing. At the same time, private banks entered the banking arena with radically different strategies. Given the huge IT budgets at their disposal and with almost no legacy IT equipment to worry about; private banks hastened the adoption of technology. The philosophy for private banks was very clear: to provide a whole new range of financial products and services at minimal costs. And technology made this possible.

Says K.N.C. Nair, Head (IT), Federal Bank,"The new generation banks showed the way and others had no option but to follow the tech infusion to retain and attract profitable customers." The improved connectivity and falling costs offered by leased lines and VSATs provided a booster to inter-branch automation. Confirms Naresh Wadhwa, Vice President-West, Cisco Systems (India), "With the improved services and lowered costs of service providers such as DoT and VSNL, it became more feasible for banks to network their branches. This gave banks an impetus to network all the branches and set up centralized databases. With these developments it became possible for operations such as MIS to be truly automated and centralized." Core matters After the turn of consolidated databases and networks come core banking applications. Core banking applications help provide complete front and backend automation of banks. These applications also help banks achieve centralized processing and provide 24-hour customer service. "Core banking applications provide anywhere, anytime 24 by 7 nonstop services, which is not possible with traditional localized branch automation systems that are available only between 10 am to 2 pm," says V. Chandrasekhar. Core banking applications help integrate the enterprise to existing in-house applications to offer a single customer view. These applications provide automation across multiple delivery channels. A happy customer Managing customers is one of the main issues that banks face in today's hypercompetitive environment. If the service levels are not up to customer expectations, in all likelihood the customer might take his business elsewhere. This is where Customer Relationship Management (CRM) practices (most important) and software (on the technology side)

play an important role. Before banks go for a CRM solution, they need to ask themselves one question: How well do they know their customer? For that matter how many customers have moved in the past? Or how existing customers use various services that the bank provides. "In banking, being the first to market alone is not enough since products can be copied very fast. It is the customer service levels which matter," says Neeraj Bhai, CTO, IDBI Bank. This is where CRM techniques and tools come into place. While a foremost part of CRM strategy is all about treating your customer right, technology does make a major difference. "CRM is a tool that allows you to emote and relate with your customers. Increasingly, all banks will require it as they get centralized," says P. K. Vohra. CRM Tools CRM tools can be broadly classified into two categories: Operational and Analytical. Operational CRM provides the software support for businesses that require customer contact. These tools are largely workflow based to provide information to employees and document customer interactions. This includes collaborative CRM type of tools used to provide enterprise/customer interaction across all contact channels such as face-to-face, telephonic, electronic, and wireless. Operational CRM types are the major CRM tools being used nowadays for customer support in India. For example, say a premium customer dials your call center from his home. Operational CRM can alert the call center executive of his account status and other details by his home telephone. This will help the employee in extending him the kind of service extended to a premium customer. Analytical CRM helps you make sense of the information. It helps you target customers and utilize their potential to the maximum. For example, say an account holder withdraws Rs 10,000 every month from his account and deposits it in another bank as EMI for a loan. Analytical CRM tools can help you track this activity. Techniques such as data

warehousing and data mining are prominent tools used for this. Your bank could offer a loan to the customer at a lower rate than what the other bank offers. This will keep the customer happy since he knows that you are giving him better service. This translates to gains for your bank as well. . Mining for intelligence Another important issue banks face is in proper analysis of financial data to identify business potential. This helps a bank identify cross- sell and up-sell potentials. Technologies such as data warehousing/mining come into play here. Indian banking industry, today is in the midst of an IT revolution. A combination of regulatory and competitive reasons have led to increasing importance of total banking automation in the Indian Banking Industry. The core issues faced by banks today are on the fronts of customer's service expectations, cutting operational costs, and managing competition. Technology can help banks in meeting these objectives Information Technology has basically been used under two different avenues in Banking. One is Communication and Connectivity and other is Business Process Reengineering. Information technology enables sophisticated product development, better market infrastructure, implementation of reliable techniques for control of risks and helps the financial intermediaries to reach geographically distant and diversified markets. In view of this, technology has changed the contours of three major functions performed by banks, i.e., access to liquidity, transformation of assets and monitoring of risks. Further, Information technology and the communication networking systems have a crucial bearing on the efficiency of money, capital and foreign exchange markets.

Payment and Settlement Systems As part of restructuring of the banking sector, special emphasis has been accorded to improvements in payment and settlement systems. Prominent among the measures initiated in these areas include introduction of Electronic Funds Transfer (EFT), Real Time Gross Settlement System (RTGS), Centralised Funds Management System (CFMS), the NDS and the Structured Financial Messaging Solution (SFMS). The SFMS would be the backbone for all message-based communication over the Indian Financial Network (INFINET). Electronic Funds Transfer (EFT) The EFT scheme enables transfer of funds within and across cities and between branches of a bank and across banks. The scheme, which is operated by the Reserve Bank, is available for funds transfer across thirteen major cities in the country, as on September 30, 2001. The facility is being extended to two more centres. The scheme was originally intended for small value transactions. However, with effect from October 1, 2001, even large value transactions (as high as Rs. 2 crore) have also been permitted.

Real Time Gross Settlement System (RTGS) The work on operationalisation of RTGS system continued during the year. The major project components completed during the year included the finalisation of the design for RTGS system, issue of the tender for the development of the software, evaluation of the technical components of the bids received, site visits and evaluation of the commercial proposals. The implementation of RTGS is targeted to be accomplished within 12 to 15 months of award of the contract for software development and implementation.

Centralised Funds Management System (CFMS) The CFMS would enable the funds and treasury managers of commercial banks to obtain the consolidated account-wise, centre-wise position of their balances with all the 17 Deposit Accounts Departments (DAD) of the Reserve Bank. The system has been tested prior to installation and phase-wise implementation commenced from November 2001. The CFMS would enable better funds management by constituent current account holders of the Reserve Bank. Mechanised Cheque Processing System using MICR Technology The term "MICR" stands for Magnetic Ink Character Recognition, and is used to describe the line of numbers and special characters that appear at the bottom of every check. Since the 1940s, banks have speeded check processing with special devices that " read" the MICR encoding and translate the characters into the account number and other pertinent information. The Magnetic Ink Character Recognition (MICR) technology based cheque processing was first introduced in Mumbai and Chennai in 1987 by the Reserve Bank of India and gradually extended to Delhi in 1988 followed by Kolkata in 1989. Electronic Data Interchange (EDI) The Ministry of Commerce, Government of India has identified 114 centers as major export / import intensive centers in the country. The Ministry desired that, at all these centers, the bank branches should be fully computerised, inter-connected and networked and there should be inter-bank connectivity so that on-line banking facility could be made available to the exporter-importer customers. The Department of Commerce in the Ministry of Commerce & Industry, Government of India, New Delhi is the nodal agency for overseeing implementation of Electronic Commerce (EC)/ Electronic Data Interchange (EDI) in the various organisations in the country.

Imaging of Instruments A process of capturing the images of the instruments as they are being processed was introduced during the year at the four metropolitan National Clearing Cells managed by the Reserve Bank. Imaging facilitates in quicker balancing during the cheque-processing cycle and also in reducing clearing reconciliation differences. Electronic Clearing Services Emphasis on widespread usage of Electronic Clearing Service (ECS) is being prescribed by the Reserve Bank to encourage non-paper based funds movement. The prime thrust areas forming part of this vital activity include the extension of ECS to more centres, inclusion of more customers under the ambit of the scheme and provision of a centralised facility for affording payments. Computerisation in Public Sector Banks The progress in implementation of the directive of the Central Vigilance Commission (CVC) on the need to computerise 70 per cent of the banking business by public sector banks before January 1, 2001 revealed that as on December 31, 2000, 13 banks had achieved the desired level. Figures as at end of March 2001, indicated that 23 banks have achieved the target, while two banks have computerisation levels ranging between 60 per cent and 70 per cent and two others were at a level below 60 per cent. Cheque Clearing Magnetic Ink Character Recognition (MICR) based cheque-clearing accounts for about 65 per cent of the value of cheques processed in the country. In addition, Magnetic Media Based Clearing Systems account for about 10 per cent of the remaining value while claim-based processes cover the rest of clearing. It may be pertinent to note that growth in cheque volumes has decelerated to 10 per cent in 2000-01 from 12 per cent during the previous year. This is reflective of general trends the world over, indicating the migration towards electronic funds transfer mechanisms.

Computerisation of Banks India - Issues & Events In the Eighteenth and Nineteenth Centuries the Industrial revolution brought profound changes in the life style of man. Many activities that were hitherto performed by man employing his hands and his finger skill came to be carried at great speed and efficiency by machines. Man continued to carry out only those functions that needed his thinking process to be involved. The Industrial Revolution on account of mass production of goods and services brought large commercial and business organizations, transcending national boundaries that employed several thousands of persons for performing routine, repetitive clerical tasks, relating to record keeping, maintaining accounts, attending/answering correspondence, preparing vouchers, invoices, bills and multiple of such other functions. This created white-collar employment for educated persons by leaps and bounds. Clerical task is defined as a routine and repetitive performance involving, adding, subtracting, multiplying, dividing numbers, and duplicating data/information from one source to another. The tools employed are "a pen, ink and paper", the knowledge of arithmetic tables, the basic knowledge of a language and minimum acquaintance with rules & procedures of the organisation that are followed day in day out and relevant to the job of the particular employee. Two plus two is four. It is always four. Should we need an educated worker to compute this task again and again? A business needed human agents to attend to production, marketing, finance etc. depicting high-level tasks. But more and more people were employed for performing low-level tasks. The advent of mechanical calculating devices and later electronic computing in the West heralded a new age, that dispensed with this white collar and white-elephant employment progressively. This evolved in the west three decades before, but the advent of this evolution in India is only now taking place. The per employee turnover for ICICI bank is Rs.2.3 Crores, that for SBI is Rs.1.56 Lakhs. The gap accounts for the difference between manual operations and high-tech banking.

Computerisation brings transparency, improves customer care and customer-service tremendously and reduces substantially scope for corruption or extending undue favour to particular constituents and uneven service to others. Challenges Faced in Computerisation Computerisation is expensive and needs huge investment in hardware and software and subsequent maintenance. The National Stock Exchange, India's No.1 user in computerised service has spent Rs.180 Crores to enable investors and brokers across the country to trade securities online. The rate of obsolescence in respect of both hardware and software is considerable. New and better products are emerging in the market, whose use would enable a rival organization to throw a challenge. Computer crimes are committed widely in the West. India is no less potentially exposed to this risk, when turnover under Internet banking increases. It is easier to enforce security of information and accountability of performers in a manual system. But it needs elaborate steps to incorporate these features in the electronic system. Role of RBI in Computerisation of Banks in India Computerisation became popular in the western countries right from the Sixties. Main Frames were extensively used both by the Public Institutions and Major Private Organizations. In the Seventies Mini Computer became popular and Personal Computers in early Eighties, followed by introduction of several software products in high level language and simultaneous advancement in networking technology. This enabled the use of personal computers extensively in offices & commercial organisations for processing different kinds of data. However in India organised Trade Unions were against introduction of computers in Public Offices. Computerisation was restricted to major scientific research organizations and Technical Institutes and defence organizations. Indian Railways first accepted computerisation for operational efficiency.

The Electronics Corporation of India Ltd. was set up in 1967 with the objective of research & development in the fields of Electronic Communication, Control, instrumentation, automation and Information Technology. CMC Ltd (Computer Maintenance Corporation of India Ltd.) was established in 1976 to look after maintenance operations of Main Frame Computers installed in several organisations in India, to serve the gap, when IBM left India, due to the directive of the then Central Government. In the Private Sector the first major venture was TCS (Tata Consultancy Services) which started functioning from 1968. In the year 1980 a few batch-mates of IIT Delhi pioneered the effort to start a major education centre in India to impart training in Information Technology and their efforts resulted in the setting up of NIIT in 1981. Aptech Computer Education was established in 1986 following the experiment of NIIT. Before large scale computerisation, computer education became popular in India and coveted by bright students, when several Engineering Colleges and Technical Institutes introducing Post Graduate Degree courses in Computer Engineering. The booming hardware and software industry in the West attracted Indian students and many of them migrated for better opportunities to the U.S.A. and settled there. We have today the paradox of India being one of the major powers possessing diverse talents in fields of software development, but at the same time, we are still a decade back to the using computerised service extensively in the country and bringing the facility to the realms of the common man. Rapid development of business and industry brought manual operations of data, a saturation point. This acted as a overload on the growing banking operations. Government owned banks in general found the "house-keeping" unmanageable. Several heads of accounts in particular inter-bank clearing and inter-branch reconciliation of accounts went totally out of control. In the year 1993, the Employees' Unions of Banks signed an agreement with Bank Managements under the auspices of Indian Banks' Association (IBA). This agreement

was a major break through in the introduction of computerised applications and development of communication networks in Banks. The first initiatives in the area of bank computerisation, however, stemmed out of the landmark report of the two committees headed by the former Governor of the Reserve Bank of India and currently Governor of Andhra Pradesh, His Excellency, Dr. C. Rangarajan. Both the reports had strongly recommended computerisation of banking operations at various levels and suggested appropriate architecture. Internet Banking in India - Guidelines Issued by RBI Reserve Bank of India had set up a 'Working Group on Internet Banking' to examine different aspects of Internet Banking (I-banking). The Group had focussed on three major areas of I-banking, i.e, i. ii. iii. technology and security issues, legal issues and regulatory and supervisory issues.

RBI has accepted the recommendations of the Group to be implemented in a phased manner. Accordingly, the following guidelines are issued for implementation by banks. Banks are also advised that they may be guided by the original report, for a detailed guidance on different issues. Technology and Security Standards a. Banks should designate a network and database administrator with clearly defined roles as indicated in the Group's report b. Banks should have a security policy duly approved by the Board of Directors. There should be a segregation of duty of Security Officer / Group dealing exclusively with information systems security and Information Technology Division which actually implements the computer systems. Further, Information Systems Auditor will audit the information systems.

c. Banks should introduce logical access controls to data, systems, application software, utilities, telecommunication lines, libraries, system software, etc. Logical access control techniques may include user-ids, passwords, smart cards or other biometric technologies. d. At the minimum, banks should use the proxy server type of firewall so that there is no direct connection between the Internet and the bank's system. It facilitates a high level of control and in-depth monitoring using logging and auditing tools. For sensitive systems, a stateful inspection firewall is recommended which thoroughly inspects all packets of information, and past and present transactions are compared. These generally include a real time security alert. e. All the systems supporting dial up services through modem on the same LAN as the application server should be isolated to prevent intrusions into the network as this may bypass the proxy server. f. . The application server should be isolated from the e-mail server. Legal Issues a. Considering the legal position prevalent, there is an obligation on the part of banks not only to establish the identity but also to make enquiries about integrity and reputation of the prospective customer. Therefore even though request for opening account can be accepted over Internet,accounts should be opened only after proper introduction and physical verification of the identity of the customer. b. From a legal perspective, security procedure adopted by banks for authenticating users needs to be recognized by law as a substitute for signature. In India, the Information Technology Act, 2000, in Section 3(2) provides for a particular technology (viz., the asymmetric crypto system and hash function) as a means of authenticating electronic record. Any other method used by banks for authentication should be recognized as a source of legal risk.

c. Under the present regime there is an obligation on banks to maintain secrecy and confidentiality of customers' accounts. In the Internet banking scenario, the risk of banks not meeting the above obligation is high on account of several factors. Despite all reasonable precautions, banks may be exposed to enhanced risk of liability to customers on account of breach of secrecy, denial of service etc., because of hacking/ other technological failures. The banks should, therefore, institute adequate risk control measures to manage such risks. d. In Internet banking scenario there is very little scope for the banks to act on stoppayment instructions from the customers. Hence, banks should clearly notify to the customers the timeframe and the circumstances in which any stop-payment instructions could be accepted. All banks offering Internet banking are advised to make a review of their systems in the light of this circular and report to Reserve Bank the types of services offered, extent of their compliance with the recommendations, deviations and their proposal indicating a time frame for compliance. The first such report must reach us within one month from the date of this circular. Banks not offering any kind of I-banking may submit a 'nil' report. TECHNOLOGICAL CHANNELS USED BY BANKS Banking Industry has revolutionized the transaction and financial services system worldwide. Through the development in technology banking services has been availed to the customers at all times, even after the normal banking hours, on a 24x7 basis. Banking Industry services is nothing but the access of most of the banking related services (such as verification of account details, going with the transactions, etc.). In todays world, progress of online services is available to all customers of the concerned bank and can be accessed at any point of time and from anywhere provided the place is equipped with the Internet facility. Now-a-days, almost all the banks all over the world, especially the multinational ones, provide their customers with Online Banking facility. From the staid over-the-counter delivery mode to ATMs, tele banking, Net banking, and now mobile bankingthe number of delivery channels deployed by banks has increased

by leaps and bounds. Srikanth R P & Chitra Padmanabhan look at the evolution and impact of various delivery channels in the Indian banking scenario and forecast which delivery channel could be the next killer app for banking players While today each and every bank touts The customer is King mantra, it was a quite a different story not so long ago. Customers patronising PSU banks were greeted with the typical babu culture, where getting even a cheque encashed used to take ages. Customers had to adjust their schedule to the bank and very rarely was it the other way around. A person in a city like Bombay usually had to wait for a weekend to deposit a cheque, because by the time he reached home, the bank would have closed. Today, while the timings of banks have not changed drasticallybanks have become more customerfriendly. Now, power has shifted into the hands of the customer. Indian banks are investing heavily in the technologies such as telebanking, mobile banking,net banking, automated teller machine (ATMs), credit cards, debit cards, smart cards, call centers,CRM, data warehousing etc. 1. Automated teller machine (ATM) :-An automated teller machine (ATM) is a computerized telecommunications device that provides the customers of a financial institution with access to financial transactions in a public space without the need for a human clerk or bank teller. On most modern ATMs, the customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smartcard with a chip, that contains a unique card number and some security information, such as an expiration date or CVC (CVV). Security is provided by the customer entering a personal identification number (PIN). Using an ATM, customers can access their bank accounts in order to make cash withdrawals (or credit card cash advances) and check their account balances. ATMs are known by various casual terms including automated banking machine, money machine, bank machine, cash machine, hole-in-the-wall, cashpoint or Bancomat (in Europe and Russia). An ATM is typically made up of the following devices:

CPU (to control the user interface and transaction devices) Magnetic and/or Chip card reader (to identify the customer) PIN Pad (similar in layout to a Touch tone or Calculator keypad), often manufactured as part of a secure enclosure. Secure cryptoprocessor, generally within a secure enclosure. Display (used by the customer for performing the transaction) Function key buttons (usually close to the display) or a Touchscreen (used to select the various aspects of the transaction) Record Printer (to provide the customer with a record of their transaction) Vault (to store the parts of the machinery requiring restricted access) Housing (for aesthetics and to attach signage to)

Alternative uses Although ATMs were originally developed as just cash dispensers, they have evolved to include many other bank-related functions. In some countries, especially those which benefit from a fully integrated cross-bank ATM network (e.g.: Multibanco in Portugal), ATMs include many functions which are not directly related to the management of one's own bank account, such as:

Deposit currency recognition, acceptance, and recycling Paying routine bills, fees, and taxes (utilities, phone bills, social security, legal fees, taxes, etc.) Printing bank statements Updating passbooks Loading monetary value into stored value cards Purchasing
o o o o o

postage stamps. lottery tickets train tickets concert tickets shopping mall gift certificates.

Games and promotional features[47]

Donating to charities[48] Cheque Processing Module.

2. Debit card A debit card is very similar to a cash card, but it allows you to do a lot more than use an ATM machine.A debit card is like an electronic cheque that you can use to pay for goods and services. There are different types of debit card and not all outlets will accept them as payment. The main types of debit card are Visa delta, Solo, and Switch. Many people prefer debit cards over checks for two reasons:

You don't have to carry your checkbook and present identification, but are still able to make purchases directly from your checking account. You pay your bills immediately, unlike when you use a credit card and get the bill later. Although you have to be aged at least 11 before you are allowed to own a debit card, most types of debit card are not available to under 18s.

When you use a debit card to pay for something, the money will normally be taken from your account within three working days. As the money is automatically taken from your account, it means that you can only spend the amount thats available in your account at the time.Like the cheque guarantee card, there is a limit to how much you can spend on your debit card, and this will differ depending on who you bank with and the type of card you hold. Like a cash card, a debit card can be used at an ATM machine. You will be issued with a Personal Identification Number (PIN number) shortly after you receive your card. This is normally a four-digit number, which you will need to key in to the ATM machine every time you wish to use your card. You should always keep your PIN number safe. It is best to memorise it,and destroy the paper on which is sent to you on. If someone else knows what your PIN number is, and they can get access to your card, they can also get access to your

money. By keeping your PIN number memorised, you can prevent anyone else finding out what it is, and therefore, prevent someone from stealing your cash. 3. Telephone banking Telephone banking is a service provided by a financial institution which allows its customers to perform transactions over the telephone.Most telephone banking use an automated phone answering system with phone keypad response or voice recognition capability. To guarantee security, the customer must first authenticate through a numeric or verbal password or through security questions asked by a live representative (see below). With the obvious exception of cash withdrawals and deposits, it offers virtually all the features of an automated teller machine: account balance information and list of latest transactions, electronic bill payments, funds transfers between a customer's accounts, etc. Usually, customers can also speak to a live representative located in a call centre or a branch, although this feature is not guaranteed to be offered 24/7. In addition to the selfservice transactions listed earlier, telephone banking representatives are usually trained to do what was traditionally available only at the branch: loan applications, investment purchases and redemptions, chequebook orders, debit card replacements, change of address, etc. The Benefits of Telephone Banking :

Check the balance of your accounts Review withdrawals and deposits Transfer funds between your accounts Order statements Pay selected bills

4. Smart Card A smart card, chip card, or integrated circuit card (ICC), is defined as any pocketsized card with embedded integrated circuits which can process information. This implies

that it can receive input which is processed - by way of the ICC applications - and delivered as an output. There are two broad categories of ICCs. Memory cards contain only non-volatile memory storage components, and perhaps some specific security logic. Microprocessor cards contain volatile memory and microprocessor components. The card is made of plastic, generally PVC, but sometimes ABS. The card may embed a hologram to avoid counterfeiting. Overview A "smart card" is also characterized as follows:

Dimensions are normally credit card size. The ID-1 of ISO/IEC 7810 standard defines them as 85.60 53.98 mm. Another popular size is ID-000 which is 25 x 15 mm. Both are .76 mm thick.

Contains a security system - tamper-resistant properties (e.g. a secure cryptoprocessor, secure file system, human-readable features) and is capable of providing security services (e.g. confidentiality of information in the memory).

Asset managed by way of a central administration system which interchanges information and configuration settings with the card through the security system. The latter includes card hotlisting, updates for application data.

Card data is transferred to the central administration system through card reading devices, such as ticket readers, ATMs etc.

5. Online banking Online banking (or Internet banking) Online banking (or Internet banking) is a term used for performing transactions, payments etc. over the Internet through a bank, credit union or building society's secure website. This allows customers to do their banking outside of bank hours and from anywhere where Internet access is available. Online banking solutions have many features and capabilities in common, but traditionally also have some that are application specific. The common features fall broadly into several categories

Transactional (e.g., performing a financial transaction such as an account to account transfer, paying a bill, wire transfer... and applications... apply for a loan, new account, etc.)
o o

Electronic bill presentment and payment - EBPP Funds transfer between a customer's own checking and savings accounts, or to another customer's account Investment purchase or sale Loan applications and transactions, such as repayments

o o

Non-transactional (e.g., online statements, check links, cobrowsing, chat)

o

Bank statements

Financial Institution Administration - features allowing the financial institution to manage the online experience of their end users ASP/Hosting Administration - features allowing the hosting company to administer the solution across financial institutions

Features commonly unique to business banking include

Support of multiple users having varying levels of authority Transaction approval process Wire transfer

Features commonly unique to Internet banking include

Personal financial management support, such as importing data into a personal finance program such as Quicken, Microsoft Money or TurboTax. Some online banking platforms support account aggregation to allow the customers to monitor all of their accounts in one place whether they are with their main bank or with other institutions.

6. Credit Card:-A credit card is a system of payment named after the small plastic card issued to users of the system. A credit card is different from a debit card in that it does not remove money from the user's account after every transaction. In the case of credit cards, the issuer lends money to the consumer (or the user) to be paid to the

merchant. It is different from a charge card (although this name is sometimes used to describe credit cards), which requires the balance to be paid in full each month. In contrast, a credit card allows the consumer to 'revolve' their balance, at the cost of having interest charged. Most credit cards are the same shape and size, as specified by the ISO 7810 standard. The most common credit card size, known as ID-1, is 85.60 53.98 mm. Types of Credit Cards

Secured Credit Cards Travel Credit Cards Rewards Credit Cards Bad Credit Credit Cards Airline Credit Cards Business Credit Cards Cash Back Credit Cards Instant Approval Credit Cards Low Interest Credit Cards Student Credit Cards

7. Mobile banking :-Mobile banking (also known as M-Banking, mbanking, SMS Banking etc.) is a term used for performing balance checks, account transactions, payments etc. via a mobile device such as a mobile phone. Mobile banking today (2007) is most often performed via SMS or the Mobile Internet but can also use special programs downloaded to the mobile device. Mobile Banking Services Mobile banking can offer services such as the following:

Account Information

1. Mini-statements and checking of account history 2. Alerts on account activity or passing of set thresholds 3. Monitoring of term deposits

4. Access to loan statements 5. Access to card statements 6. Mutual funds / equity statements 7. Insurance policy management 8. Pension plan management 9. Status on cheque, stop payment on cheque

Payments & Transfers

1. Domestic and international fund transfers 2. Micro-payment handling 3. Mobile recharging 4. Commercial payment processing 5. Bill payment processing 6. Peer to Peer payments

Investments

1. Portfolio management services 2. Real-time stock quotes 3. Personalized alerts and notifications on security prices

Support

1. Status of requests for credit, including mortgage approval, and insurance coverage 2. Check (cheque) book and card requests 3. Exchange of data messages and email, including complaint submission and tracking 4. ATM Location

Content Services

1. General information such as weather updates, news 2. Loyalty-related offers 3. Location-based services Based on a survey conducted by Forrester, mobile banking will be attractive mainly to the younger, more "tech-savvy" customer segment. A third of mobile phone users

say that they may consider performing some kind of financial transaction through their mobile phone. But most of the users are interested in performing basic transactions such as querying for account balance and making bill payment

INTRODUCTION TO THE ORGANISATION ICICI BANK Overview

ICICI Bank is India's second-largest bank with total assets of Rs. 3,744.10 billion (US$ 77 billion) at December 31, 2008 and profit after tax Rs. 30.14 billion for the nine months ended December 31, 2008. The Bank has a network of 1,416 branches and about 4,644 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). History ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries

and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI group's universal banking strategy. The merger would enhance value for ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payments system and provide transactionbanking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to ICICI's strong corporate relationships built up over five decades, entry into new business segments, higher market share in various business segments, particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002

HDFC BANK The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a

bank in the private sector, as part of the RBI's liberalisation of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. HDFC Bank has an nationwide network of 1412 branches and 2890 ATMs IN 528 indian towns and cities. Consolidated list of services Personal banking Accounts & Deposits Savings Accounts Regular Savings Account Savings Plus Account SavingsMax Account Senior Citizens Account No Frills Account Institutional Savings Account Payroll Salary Account Classic Salary Account Regular Salary Account Premium Salary Account Kid's Advantage Account Family Savings Group Pension Savings Account Plan Current Account

 Trade Current Account Demat Account Cards Credit Card Debit Card ForexPlus Card GiftPlus Card Loans Personal Loan (PL) Gold Loan (Term Loan) Two Wheelers Loans Express Loans New Car Loans Forex Services Trade Services Forex Limits Investments & Insurance Investment Services Account (Online MF a/c)

PUNJAB NATIONAL BANK Profile

With over 37 million satisfied customers and over 4589 offices, PNB has continued to retain its leadership position among the nationalized banks. The bank enjoys strong fundamentals, large franchise value and good brand image. Besides being ranked as one of India's top service brands, PNB has remained fully committed to its guiding principles of sound and prudent banking. Apart from offering banking products, the bank has also entered the credit card & debit card business; bullion business; insurance business; Gold coins & asset management business, etc. Since its humble beginning in 1895 with the distinction of being the first Indian bank to have been started with Indian capital, PNB has achieved significant growth in business which at the end of March 2008 amounted to Rs 2,85959 crore. Today, with assets of more than Rs 1,99,000 crore, PNB is ranked as the 3rd largest bank in the country (after SBI and ICICI Bank) and has the 2nd largest network of branches (4589 including 322 extension counters).During the FY 2007-08, with 43% share of low cost deposits, the bank achieved a net profit of Rs 2,049 crore, maintaining its number ONE position amongst its peers. The banks Return on Assets at 1.15% was also the highest. During the FY 2007-08,its ratio of priority sector credit to net bank credit at 44.11% & agriculture credit to net bank credit at 18.94% was also higher than the respective national goals of 40% & 18%. PNB has always looked at technology as a key facilitator to provide better customer service and ensured that its IT strategy follows the Business strategy so as to arrive at Best Fit. The bank has made rapid strides in this direction and achieved 100% branch computerisation. A pioneering effort of the bank in the use of IT is the implementation of Core Banking Solution (CBS) which facilitates any time, any where banking. PNB has implemented CBS in 3503 service outlets at around centers to facilitate "anytime, anywhere" banking to its clients. The bank has also been offering Internet banking services to the customers of CBS branches like booking of tickets, payment of bills of utilities, purchase of airline tickets etc. Towards developing a cost effective alternative channels of delivery, the bank has installed more than 1516 ATMs and entered into ATM sharing arrangement with other

banks & IDRBT, making available a pool of additional 21,500 ATMs throughout the country to its customers. Backed by strong domestic performance, the bank is planning to realize its global aspirations. In order to increase its international presence, the bank has already set up representative offices at Almaty (Kazakhstan), Dubai (UAE) & Shanghai (China) ; a branch at Kabul (Afghanistan) and a subsidiary at London (UK) and a branch at Hongkong. Work on assessing potential at other international centers is progressing. The bank also has a joint venture with Everest Bank Ltd. (EBL), Nepal, with 20 per cent equity participation. With PNBs management, EBL has become one of the leading banks in Nepal. As a tribute to its consistent business growth, improved assets & attractive returns to shareholders in the joint venture, PNB has won Bank of the Year Award in Nepal (2006) by The Banker, a publication of the London based Financial Times. Amongst Top 1000 Banks in the World, The Banker listed PNB at 255th place. Further the leading international Credit Rating index provider, Standard & Poors (2006) listed PNB, amongst the 300 World companies & 7 Indian companies, which are expected to emerge as challengers to the worlds leading blue chip companies. Heritage Established in 1895 at Lahore, undivided India, Punjab National Bank (PNB) has the distinction of being the first Indian bank to have been started solely with Indian capital.The bank was nationalised in July 1969 along with 13 other banks. From its modest beginning, the bank has grown in size and stature to become a front-line banking institution in India at present. A professionally managed bank with a successful track record of over 110 years Largest branch network in India - 4525 Offices including 432 Extension Counters spread throughout the country. Strategic business area covers the large Indo-Gangetic belt and the metropolitan centres

Ranked as 248th biggest bank in the world by Bankers Almanac , London. Strong correspondent banking relationships with more than 217 international banks of the world. More than 50 renowned international banks maintain their Rupee Accounts with PNB. Well equipped dealing rooms; 20 different foreign currency accounts are maintained at major centres all over the globe. Rupee drawing arrangements with M/s UAE Exchange Centre, UAE, M/s Al Fardan Exchange Co. Doha, Qatar,M/s Bahrain Exchange Co, Kuwait, M/s Bahrain Finance Co, Bahrain,M/s Thomas Cook Al Rostamani Exchange Co. Dubai,UAE, and M/s Musandam Exchange, Ruwi, Sultanate of Oman.

STATE BANK OF INDIA Evolution

The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later the bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of British India sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921. Primarily Anglo-Indian creations, the three presidency banks came into existence either as a result of the compulsions of imperial finance or by the felt needs of local European commerce and were not imposed from outside in an arbitrary manner to modernise India's economy. Their evolution was, however, shaped by ideas culled from similar developments in Europe and England, and was influenced by changes occurring in the structure of both the local trading environment and those in the relations of the Indian economy to the economy of Europe and the global economic framework. Establishment The establishment of the Bank of Bengal marked the advent of limited liability, jointstock banking in India. So was the associated innovation in banking, viz. the decision to allow the Bank of Bengal to issue notes, which would be accepted for payment of public revenues within a restricted geographical area. This right of note issue was very valuable not only for the Bank of Bengal but also its two siblings, the Banks of Bombay and Madras. It meant an accretion to the capital of the banks, a capital on which the proprietors did not have to pay any interest. The concept of deposit banking was also an innovation because the practice of accepting money for safekeeping (and in some cases, even investment on behalf of the clients) by the indigenous bankers had not spread as a general habit in most parts of India. But, for a long time, and especially upto the time that the three presidency banks had a right of note issue, bank notes and government balances made up the bulk of the investible resources of the banks.

The three banks were governed by royal charters, which were revised from time to time. Each charter provided for a share capital, four-fifth of which were privately subscribed and the rest owned by the provincial government. The members of the board of directors, which managed the affairs of each bank, were mostly proprietary directors representing the large European managing agency houses in India. The rest were government nominees, invariably civil servants, one of whom was elected as the president of the board. SBI is Indias largest commercial bank. SBI has a vast domestic network of over 9000 branches and commands one- fifth of deposits and loans of all scheduled commercial banks in india

CHAPTER 2 REVIEW OF LITERATURE

1. Sullivan A. Charlene & Worden Dercnik Debra Debra.(1995) The value of the option to default on unsecured credit contracts is estimated and found to be significantly impacted by state and federal laws governing creditors' collection practices and bankruptcy. The data suggest that the expected value of the option to default influences debtors' choices in default and is correlated with their use of their credit cards before default. Cardholders who use their lines of credit very intensely before default are significantly more likely to make choices in default which allow them to realize a greater benefit from default. Furthermore, these results offer a possible explanation for consumers' seeming insensitivity to interest rates charged on revolving lines of credit. 2. Rogers A Wendy, Gilbert Kristen D., Cabrera Fraser Elizabeth.(1997)said that It is often assumed that automatic teller machines (ATMs) are inherently easy to use and require no training. However, there is evidence to suggest that ATM users do experience difficulty when learning to use the system. The purpose of the present study was to conduct an in-depth analysis of ATM usage by older adults. Our approach consisted of telephone interviews followed by structured individual interviews. The goals were to understand the problems encountered by ATM users, to determine how ATMs might be better designed and to assess the training needs of older individuals. The phone interview data provide information about the relationships between age, sex and ATM usage within the adult sample, as well as information about why some people choose not to use ATMs. The structured interview data provide a more in-depth view of the concerns of both users and non-users, and information about training needs. The training and design implications of the results are discussed. 3. Coley Kimberly, Wright Samantha,Park Eui, Ntuen Celestine.(1997) discussed that This research provides relevant information for the redesign of automated teller machines (ATMs) to better accommodate older adults, with hopes of aiding financial institutions in their trend toward a tellerless bank.

Forty subjects, ranging from 18 to 65 years of age, interacted with three different ATM simulations. The level of detail was little, high and little with on screen help available. The font color was varied: red, green, or white with each participant. Font color and level of detail were investigated to determine preferences of younger and older adults. The preferred level of detail was found to vary by sex and age. A majority of the subjects, approximately 53%, favored the simulation with the optional help button which accommodated both first time and frequent ATM users. There were no significant interactions between age, sex, and color. 4. Carow A Kenneth , Staten E Michael.(1999) said that We analyzed the consumers payment option to use debit, general purpose credit cards, gasoline credit cards, or cash. Based on the results from a nested multinomial logit model, we found consumers are more likely to use cash when they have less education, lower incomes, are middle-aged, and own fewer credit cards. Debit and credit card users are younger, more educated, and hold more credit cards. Respondents who use their debit card are less likely to use their gasoline credit card. The results suggest that greater debit card usage will place the greatest competitive pressure on the gasoline credit card program. 5. Aladwani M.Adel.(2001)presented that Online banking is the newest and least understood delivery channel for retail banking services. Yet, few, if any, studies were reported quantifying the issues relevant to this cutting-edge technology. This paper reports the results of a quantitative study of the perceptions of banks executive and IT managers and potential customers with regard to the drivers, development challenges, and expectations of online banking. The findings will be useful for both researchers and practitioners who seek to understand the issues relevant to online banking. 6. Spivack Joseph, CFA.(2001) examined that In theory, pure play Internet banking offers advantages both for the banks and their customers, but whether

these benefits can be realized in practice is unclear. The author systematically analyzes the financial performance of pure Internet banks. He finds that, as with nonfinancial dot-coms, Internet banks grow rapidly but produce little or no profits. Regulators have recognized this problem by requiring new Internet banks to have more initial equity capital than traditional banks.

CHAPTER 3

RESEARCH

METHODOLOGY

OBJECTIVES OF THE STUDY

The present study will be undertaken in respect of banking sector with view of four banks ICICI, HDFC, PNB, and SBI Banks. The main motive of the study is to analyze the impact of technology on Indian banks, based on this main motive the objectives of study are as follows: To explore the technological advancement in Indian banking sector. To analyze the customer perceptions regarding the use of technology in banks. To analyze the bank employees perception regarding the use of technology in banks

SCOPE OF THE STUDY The scope of the study entitled Impact of technology on Indian banks with view of ICICI, HDFC, PNB, SBI Banks is limited to Ludhiana region only. Only those customers are taken for the study who resides in Ludhiana. NEED OF THE STUDY The study on impact of technology on banking can help organizations better understand the real impact of their IT investments. This study will also be helpful to know that at what extent banks are providing technological services to their customer and how customers perceive the usage of technology in banks. And also it includes bank employees perception regarding the use of technology. At some extent this study also provides data in the form of problems faced by customers and employees while using banking technology, which can become the area for improvement for banks.

Research Plan The research study is exploratory and descriptive in nature. The establish objectives were kept in mind during the study, however no hypothesis was formed as the study was more in the form of descriptive design attempting to analyze the attitude of respondents

towards the project which is new in the region can be considered at the fledging level as far as the awareness among the respondents is concerned. Data collection The data, which is collected for the purpose of study, is divided into 2 bases: Primary source: The primary data comprises information survey of Impact of technology on Indian banks with view of ICICI, HDFC, PNB, and SBI Banks. The data has been collected directly from respondents with the help of structured questionnaires. Secondary Source: The secondary data has been collected from internet, references from the banks .The information brochures of certain banks, informal links with the concerned person in this line have also been consulted as a secondary source of information.

Sampling Plan Universe: The respondents are those who have bank accounts in those particular banks as well as employees were also contacted for the completion of project. Area of study: Area of Study will be limited to Ludhiana City only. Sampling Procedure: In this study, the respondents were chosen through convenience sampling. Sample Size: About 50 customers for the study of project. Contact Method: The respondents were contacted personally and a structured questionnaire was get filled and also interviews of some respondents were conducted. Technique of Analysis: Bar graphs. Pie charts, Percentage method.

LIMITATIONS OF THE STUDY

In attempt to make this project authentic and reliable, every possible aspect of the topic was kept in mind. Neverthless, despite of fact constraints were at play during the formulation of this project. The main limitations are as follows: Some respondents did not have serious attitude towards the questionnaire and hence their responses may not reflect the real picture. Some of the respondents were not ready enough to reveal all the required information. They might have given inflated or wrong data. Because of the diversity of nature of the respondents the findings of the survey could not be generalized. Also some personal bias might have crept into the information provided by the respondents in scope of this study. The method of data collection was slow procedure as an considerable amount of the time was lost in filling up the questionnaire. Some of the respondents hide the real information as they think a particular Bank has status symbol, which also have effect on the result of the study.

CHAPTER 4

DATA ANALYSIS AND INTERPRETATION

ON THE VIEW POINT OF CUSTOMERS 1) Which of the following technological channels do you prefer? Please rank as your preference TECHNOLOGICAL CHANNELS ATM ONLINE BANKING CREDIT CARDS SMART CARDS DEBIT CARDS TELE BANKING MOBILE BANKING RANKING 1st 2nd 4th 7th 3rd 6th 5th

RANKING FOR TECHNOLOGICAL CHANNELS

8 7 6 5 4 3 2 1 0
N G AR D S AT M BA N KI C AR D S N G D S BA N KI BA N KI C AR N G

RANKS

RANKING

ED IT

AR T

N LI N E

D EB IT

C R

SM

TE LE

TECHNOLOGICAL CHANNELS Interpretation:From the above it is concluded that ATM is ranked first as per customers preferences followed by online banking and least preference is given to smart cards Note:-rank 1 is given for highly preferred channel and 7 for least preferred. 2. Which of the following problems do you usually face while using technological channels of a bank? Please rank as per your experience

BI LE

PROBLEMS Lack of knowledge and know-how on your part Credit/Debit/Smart Card not working Banks web site not working Unsuitable location of ATMs Banks computers not working No problem at all Less number of ATMs Time delays ATM not working Connectivity problem System failure

RANKING 1 9 6 3 11 8 2 5 4 7 10

RANKING OF PROBLEMS FACED BY CUSTOMERS

12 10 RANKING 8 6 4 2 0 Lack of 1 Credit/Debit/Smart Banks computers No problem at all ATM not working Less number of Banks web site System failure Connectivity Time delays Unsuitable 6 5 4 3 2 9 8 7 11 10

Interpretation:The above analysis shows that the lack of knowledge and know how is the major problem faced by customers while system failure and Banks computer not working are rarely faced by customers. Note: - Rank 1 is given for major problem and 11 for rarely faced problem. 3. How much the IT channels have improved the quality of customer services in banks?

PARTICULARS STRONGLY AGREE AGREE NEUTRAL DISAGREE STRONGLY DISAGREE

PERCENTAGE OF RESPONDENTS 70% 20% 6% 4% 0

TECHNOLOGICAL CHANNELS IMPROVE THE QUALITY OF SERVICES

4% 6% 20% 0% STRONGLY AGREE AGREE NEUTRAL 70% DISAGREE STRONGLY DISAGREE

Interpretation:The above analysis shows that 70% respondents are strongly agree and 20% are agree that technological channels have improved the quality of customer services and very less percent people has said no regarding this question

4. How much the technology has reduced the risk of theft and frauds in banks? PARTICULARS STRONGLY AGREE PERCENTAGE OF RESPONDENTS 26%

AGREE NEUTRAL DISAGREE STRONGLY DISAGREE

38% 7% 25% 4%

REDUCTION IN RISK OF THEFTS AND FRAUDS BY THE USE OF TECHNOLOGY

STRONGLY DISAGREE, 4% DISAGREE, 25% NEUTRAL, 7%

STRONGLY AGREE, 26%

AGREE, 38%

Interpretation:From the graph and table, it is clear that maximum people(38%) are agree that technology has reduced the risk of fraud and theft, but 25% customer are having view that it has not reduced such type of risk,7% people are having neutral views.

5. How much the customer services by automated banks is faster as compared to non IT banks? PARTICULARS STRONGLY AGREE AGREE PERCENTAGE OF RESPONDENTS 22% 32%

NEUTRAL DISAGREE STRONGLY DISAGREE

40% 6% 0%

CUSTOMER SERVICES BY AUTOMATED BANKS IS FASTER AS COMPARED TO NON IT BANKS

40% 30% %AGE OF RESPONDENT 20% S 10% 0% 22% 6% 1 VIEWS STRONGLY AGREE DISAGREE AGREE STRONGLY DISAGREE NEUTRAL 0% 40% 32%

Interpretation:The above analysis shows that 22% respondents are strongly agree and 32% are agree that customer services by automated banks is faster as compared to non IT banks while 6% are disagree ,maximum customers are having neutral response.

6. Are the staff members of automated banks fully skilled and trained? PARTICULARS STRONGLY AGREE AGREE NEUTRAL DISAGREE STRONGLY DISAGREE PERCENTAGE OF RESPONDENTS 5% 25% 12% 46% 12%

STAFF MEMBERS ARE FULLY SKILLED AND TRAINED

STRONGLY DISAGREE 12% STRONGLY AGREE 5%

AGREE 25%

DISAGREE 46%

NEUTRAL 12%

STRONGLY AGREE

AGREE

NEUTRAL

DISAGREE

STRONGLY DISAGREE

Interpretation:The analysis shows that 46% people are disagree to this fact that staff members of automated banks are fully skilled and trained ,25% are agree while 12% are strongly disagree with this statement.

7. Has the technology made working with banks easy and comfortable? PARTICULARS STRONGLY AGREE AGREE NEUTRAL PERCENTAGE OF RESPONDENTS 70% 20% 6%

DISAGREE STRONGLY DISAGREE

4% 0

TECHNOLOGY HAS MADE WORKING WITH BANKS EASY AND COMFORTABLE 70% 70% 60% 50% 40% PERCENTAGE 30% 20% 10% 0%

20% 6% 4% 0

STRONGLY AGREE

AGREE

NEUTRAL

DISAGREE STRONGLY DISA GREE

RESPONSE

Interpretation:From the above analysis it is clear that 70% people are strongly agree to this fact that technology based system has made working with banks easy and comfortable, 20% are agree while 6% customers have no ideas regarding this they are having neutral views, no one among the customers is that who give negative response or said strongly disagree,only 4% respondents are disagree from above statement.

8. Is the transparency in banks is more as compared to non IT banks? PARTICULARS STRONGLY AGREE AGREE NEUTRAL PERCENTAGE OF RESPONDENTS 67% 19% 10%

DISAGREE STRONGLY DISAGREE

2% 2%

TRANSPARENCY IN BANKS IS MORE AS COMPARED TO NON IT BANKS

10% 19%

2%2%

STRONGLY AGREE AGREE NEUTRAL 67% DISAGREE STRONGLY DISAGREE

Interpretation: From the above analysis, it is concluded that almost 67% customers strongly agree,19% agree to the above that transparency in banks is more as compared to non IT banks while 10% are neutral to the above.

9. How customers foresee the future of technology in Indian banks?

PARTICULARS VERY BRIGHT AVERAGE UNDECIDED POOR

PERCENTAGE 90% 10% 0% 0%

VERY POOR

0%

FUTURE OF TECHNOLOGY
VERY POOR POOR UNDECIDED AVERAGE VERY BRIGHT PERCENTAGE 0% 0% 0% 10% 90%

Interpretation:From the above analysis, it is concluded that maximum respondents The graph represents the views of customers regarding the future of technology in Indian banks,90% respondents foresee the future of technology very bright.

CHAPTER 5 FINDINGS AND SUGGESTIONS

FINDINGS CUSTOMERS Most of the respondents (70%) feel that the use of technology has improved the quality customer services in banks.

RESPONSE

Almost 60% respondents feel that technology has reduced the risk of thefts and frauds in banks. Most of the respondents (more than 70%) feel that technology has made working with banks easy and comfortable. Customers which are included in survey are more from the age group of 30-40 and the less number of customers are from the age group of below 20. In the present survey males are 63%, and females are 37% ATM is ranked 1st as per customers preference followed by online banking but mobile banking and smart cards are least preferred. Lack of knowledge is the major problem faced by customers while system failure is rarely faced by customers. Only few respondents strongly feel, 25% respondents agree with the statement that staff of the banks are skilled and trained. 22% respondents strongly feel,32% respondents agree that customer services by automated banks is faster as compared to non IT banks Almost 70% feel that transparency is more banks as compared to non IT banks.. Mostly customers feel that future of technology in banks is very bright.

EMPLOYEES Most of the employees fall in the category of 30-40 age groups. ATM is the most preferred facility while Smart card is the least preferred facility by customers. Most of the employees of ICICI bank use technology a lot. Most of the employees of HDFC bank use technology a lot.

Only 40% employees feels that technology is used approximately 40-60% which is of major concern for the Punjab national bank. 70% respondents use 60-80% technology in routine. Lack of knowledge and training are the major problems faced by employees while system failure is rarely faced by employee. Employees efficiency and productivity has been increased by the use of technology. Employees foresees the future of technology as very bright Bank customer relationship has improved due to introduction of technology. Overall workload and job burden has reduced due to the introduction of technology.

SUGGESTIONS
FOR CUSTOMERS All banks should be interconnected so that any customer can use bank facility in any bank at any time.

Proper knowledge regarding the use of technology should be imparted to the customers. Core banking should be introduced in banks so that it makes easy for the customers to make transactions.

FOR EMPLOYEES There should be interconnection between banks to make the work more flexible. Bank should have versatile enough to make the bank more competitive. All banks should provide sufficient training to staff members then they will be capable to deal with computer system as well as consumer problem. All public sector banks should have fully computerized system.

BIBLIOGRAPHY BOOKS BANKING AND FOREIGN TRADE R.K.SHARMA

SHASHI K. GUPTA JAGWANT SINGH

WEBSITES www.google.com www.pnbindia.com www.hdfcbank.com www.icicibank.com

1. Sullivan A. Charlene & Worden Dercnik Debra.(1995), Credit cards and the option to default Financial Services Review,Volume 4, Issue 2, Pages 123- 136. 2. Rogers A Wendy, Gilbert Kristen D., Cabrera Fraser Elizabeth.(1997), An analysis of automatic teller machine usage by older adults: A structured interview approach, Applied Ergonomics, Volume 28, Issue3,Pages173,June. 3. Coley Kimberly, Wright Samantha,Park Eui, Ntuen Celestine.(1997), Optimizing the usability of automated teller machines for older adults, Computers & Industrial Engineering, Volume 33, Issues 1-2, Pages 209-212.October. 4 Carow AKenneth , Staten E Michael.(1999), Debit, credit, Or cash: survey evidence on gasoline purchases, Journal of Economics and Business, Issue 5, Page-409,September. 5. Aladwani M.Adel.(2001), International Journal of Information, Management, Volume 21, Issue 3, Pages 213-225 ,June. 6 . Spivack Joseph, CFA.(2001), The Financial Performance of Pure Play Volume 51,

Internet Banks, CFA Digest, Vol. 31, No. 4:14-16, November . 7. Croft W.Elizabeth and Spencer J. Barbara J.(2003) Fees and Surcharging in automatic teller machine networks: Non-bank ATM providers versus large banks ,Working Paper,NBER, No. W9883, August. 8. LEE Tsan Dongo.(2004),Re-examining the security issues of ATM systems, Volume 2004, Issue 2,Page-13,February. 9. Graveline Jeremy and Kokalari Michael.(2006) , Research Foundation Literature Reviews, Credit Risk, 1-22,November. 10.Chakravorti Sujit.(2007) A theory of credit cards, Volume 25, Issue 3,Page- 583,June. 11 Kamleitner B.and Kirchler E. K.(2007), Consumer credit use: a process model and literature review European Review of Applied Psychology, Volume 57, Issue 4,Page-267,December. 12 Scholnick Barry,Valverde-Carbo Santiago,Femandez -Rodriguez Francisco.

(2008), Journal of Banking & Finance, Volume 32, Issue 8, Page-1468, August.

QUESTIONNAIRE
FOR BANK CUSTOMERS

PERSONEL PROFILE Name: Age: Gender: ___________________________________________ ____________________________________ ____________________________________

What is your Annual Income?Please tick the appropriate box below: Less than Rs 1 Lakh [ ] Rs1-3 Lakhs [ ] Rs3-5 Lakhs [ ] Above Rs 5 Lakhs [ ]

Please indicate the highest level of Education completed. Matric [ ] Under graduate [ ] Graduate [ ] Post graduate [ ] Other [ ]

Please indicate your occupation Service Class [ ] Business Class [ ] Professional [ ] Agriculturist [ ] Other [ ]

Please mention the name(s) of banks in which you hold an account. Since when do you have an account in this bank? For the last year [ ] 2-3 years [ ] More than 3 years [ ]

1) Which of the following technological channels do you prefer? Please give your preference in numbers , for example 1 for highly preferred then 2,3 and so on.

Technological Channels ATM Online Banking Credit Cards Smart Cards Debit Cards Tele Banking Mobile Banking

Ranking

2) Which of the following problems do you usually face while using technological channels of a bank? Please rank as pr your experience, for example,1 for major problem then 2,3 and so on. Problems Lack of knowledge and know-how on your part Credit/Debit/Smart Card not working Banks web site not working Unsuitable location of ATMs Banks computers not working No problem at all Less number of ATMs Time delays ATM not working Connectivity problem System failure Ranking

3) How much that IT channels have improved the quality of customer services in banks? Strongly Agree Disagree Agree Strongly Disagree Neutral

4.) How much the technology has reduced the risk of thefts and frauds in banks? Strongly Agree Agree Neutral

 Disagree

Strongly Disagree

5.) How much the customer services by automated banks is faster as compared to non IT banks? Strongly Agree Disagree Agree Strongly Disagree Neutral

6.) Are the staff members of automated banks skilled and trained? Strongly Agree Disagree Agree Strongly Disagree Neutral

7.) Has the technology made working with banks easy and comfortable? Strongly Agree Disagree Agree Strongly Disagree Neutral

8.) Is the transparency in banks is more as compared to non IT banks? Strongly Agree Disagree Agree Strongly Disagree Neutral

9.) How you forsee the future of technology in indian banks? Very Bright Average Undecided Poor Very Poor