DISSERTATION PROJECT REPORT

ON

A Study of Customer perception towards E-banking services offered in banking sector BY

SUNIL KHATRI MBA (MARKETING & SALES) ENROLLMENT NO. A0102208030 ROLL NO. 308A32 CLASS OF 2010 Under the guidance of Dr. S.K Laroiya

IN PARTIAL FULFILLMENT OF AWARD OF MASTERS DEGREE IN BUSINESS ADMINISTRATION

TO

AMITY BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH

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DECLARATION

I declare this assignment to be the result of my own individual efforts and that it confirms to Amity Business School, Noida and course regulations regarding cheating and plagiarism. No material contained within this assignment has been used in any other submission, by the authors for an academic award.

DatePlace- Noida

Sunil Khatri MBA(Marketing & Sales) A0102208030 Amity Business School Amity University Noida

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CERTIFICATE

This is to certify that Sunil Khatri, a student of MBA (M&S), Batch 2008-2010, Amity Business School, Amity University, Uttar Pradesh (Enrolment No. A0102208030) has undertaken the Dissertation Project under my guidance for the Project Title A Study of Customer perception towards e-services offered in banking sector. This project is prepared in partial fulfillment of MBA to be awarded by Amity University, Uttar Pradesh. To the best of my knowledge, the piece of work is original.

Date:

Dr. S.K Laroiya HOD(Department of Economics),

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Amity Business School Amity University, Uttar Pradesh

ACKNOWLEDGEMENT

A project is never a work of one and this report is no exception. Words are insufficient to express my gratitude to my Faculty Mentor Dr. S.K Laroiya for his constant supervision & motivation. I thank him for assigning me with such a worthwhile title. I also thank him for the extreme pains taken for helping me in my work, without which it would have been a nightmare. The constant innovative thoughts from his side helped me in keeping my project upgraded in certain fields. I would like to dedicate this work to him, as without him I could not have even started this work. Next, I would like to thank my Program Leader Ms. Aparna Goyal, whose tremendous support and motivation for the students of Marketing & Sales acts as a morale booster. The work is also dedicated to Maam as she has always helped me in times of need. Not only this reason but there are a thousand other reasons to thank Maam. In the end I would like to thank my Parents as well who were always there to stand by my side. They are the only ones who encouraged & motivated me to join such a prestigious B School. Words are insufficient to thank you dear parents. Last but not the least, special thanks to the Almighty whose blessings made this work a successful one.

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Sunil Khatri

TABLE OF CONTENTS

Contents
Declaration Certificate Acknowledgement Table of contents Executive Summary Introduction Literature Review Research Objective & Methodology Data Analysis & Results Conclusion and Suggestions Bibliography Annexure

Page no.
2. 3. 4. 5. 6 7 26 29

34 57 60 62

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

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

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Private and foreign banks are trying to turn more and more customer towards the usage of internet for the banking transaction. This study is basically to know the relation of various independent variables on the customer usage of internet for banking.

Chapter 1
Introduction

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INTRODUCTION

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

Transactions electronically without visiting a brick-and-mortar institutions. 3. E-Banking denotes the provision of banking and related service through Extensive use of information technology without direct recourse to the bank by the customer.

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Information Bank technology

Customer

Figure 1: E-banking principle

NEED FOR E-BANKING

One has to approach the branch in person, to withdraw cash or deposit a cheque or request a statement of accounts. In true Internet banking, any inquiry or transaction is processed online without any reference to the branch (anywhere banking) at any time. Providing Internet banking is increasingly becoming a "need to have" than a "nice to have" service. The net banking, thus, now is more of a norm rather than an exception in many developed countries due to the fact that it is the cheapest way of providing banking services. Banks have traditionally been in the forefront of harnessing technology to improve their products, services and efficiency. They have, over a long time, been using electronic and

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telecommunication networks for delivering a wide range of value added products and services. The delivery channels include direct dial up connections, private networks, public networks etc and the devices include telephone, Personal Computers including the Automated Teller Machines, etc. With the popularity of PCs, easy access to Internet and World Wide Web (WWW), Internet is increasingly used by banks as a channel for receiving instructions and delivering their products and services to their customers. This form of banking is generally referred to as Internet Banking, although the range of products and services offered by different banks vary widely both in their content and sophistication.

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Figure 2: Electronic banking & its components

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EVOLUTION OF E-BANKING

The story of technology in banking started with the use of punched card machines like Accounting Machines or Ledger Posting Machines. The use of technology, at that time, was limited to keeping books of the bank. It further developed with the birth of online real time system and vast improvement in telecommunications during late 1970s and 1980s.it resulted in a revolution in the field of banking with convenience banking as a buzzword. Through Convenience banking, the bank is carried to the doorstep of the customer. The 1990s saw the birth of distributed computing technologies and Relational Data Base Management System. The banking industry was simply waiting for these technologies. Now with distribution technologies, one could configure dedicated machines called frontend machines for customer service and risk control while communication in the batch mode without hampering the response time on the front-end machine.

Traditional banking Gunpowder

Virtual or E-banking Nuclear charged

Personalized services, time consuming, limited access

Real time transactions, integrated platform, all time access

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Figure 3: Transition from traditional to E-banking Intense competition has forced banks to rethink the way they operated their business. They had to reinvent and improve their products and services to make them more beneficial and cost effective. Technology in the form of E-banking has made it possible to find alternate banking practices at lower costs.

More and more people are using electronic banking products and services because large section of the banks future customer base will be made up of computer literate customer, the banks must be able to offer these customer products and services that allow them to do their banking by electronic means. If they fail to do this will, simply, not survive. New products and services are emerging that are set to change the way we look at money and the monetary system.

Figure 4: E-Banking transaction mechanism

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E-BANKING PRODUCTS

Automated Teller Machine (ATM): These are cash dispensing machine, which are frequently seen at banks and other locations such as shopping centers and building societies. Their main purpose is to allow customer to draw cash at any time and to provide banking services where it would not have been viable to open another branch e.g. on university campus. An automated teller machine or automatic teller machine (ATM) is a computerized telecommunications device that provides a financial institutions customers a method of financial\ transactions in a public space without the need for a human clerk or bank teller. On most modern ATMs, the customer identifies him or herself by inserting a plastic ATM card with a magnetic stripe or a plastic smartcard with a chip that contains his or her 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. Many ATMs also allow people to deposit cash or checks, transfer money between their bank accounts, pay bills, or purchase goods and services. Some of the advantages of ATM to customers are:1. Ability to draw cash after normal banking hours 2. Quicker than normal cashier service 3. Complete security as only the card holder knows the PIN 4. Does not just operate as a medium of obtaining cash.

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5. Customer can sometimes use the services of other bank ATMs. Telebanking or Phone Banking: Telephone banking is relatively new Electronic Banking Product. However it is fastly becoming one of the most popular products. Customer can perform a number of transactions from the convenience of their own home or office; in fact from anywhere they have access to phone. Customers can do following:1. Check balances and statement information 2. Transfer funds from one account to another 3. Pay certain bills 4. Order statements or cheque books 5. Demand draft request This facility is available with the help of Voice Response System (VRS). This system basically, accepts only TONE dialed input. Like the ATM customer has to follow particular process, initially account number and telephone PIN are fed for the process to start. Also the VRS system provides the users within additional facilities such as changing existing password with the new desired, information about new products, current interest rates etc.

Mobile Banking: Mobile banking comes in as a part of the banks initiative to offer multiple channel banking providing convenience for its customer. A versatile multifunctional, free service that is accessible and viewable on the monitor of mobile phone. Mobile phones are playing great role in Indian banking- both directly and indirectly. They are being used both as banking and other channels.

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Internet Banking: The advent of the Internet and the popularity of personal computers presented both an opportunity and a challenge for the banking industry. For years, financial institutions have used powerful computer networks to automate million of daily transactions; today, often the only paper record is the customers receipt at the point of sale. Now that their customers are connected to the Internet via personal computers, banks envision similar advantages by adopting those same internal electronic processes to home use.

Banks view online banking as a powerful value added tool to attract and retain new customers while helping to eliminate costly paper handling and teller interactions in an increasingly competitive banking environment. In India first one to move into this area was ICICI Bank. They started web based banking as early as august 1997.

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TYPES OF INTERNET BANKING OR E-BANKING:

Understanding the various types of Internet banking will help examiners assess the risks involved. Currently, the following three basic kinds of Internet banking are being employed in the marketplace.

1. Informational- this is the basic level of Internet banking. Typically, the bank has

marketing information about the banks products and services on a stand-alone server. The risk is relatively low, as informational systems typically have no path between the server and the banks internal network. This level of Internet banking can be provided by the banks or outsourced. While the risk to a bank is relatively low, the server or web site may be vulnerable to alteration. Appropriate controls therefore must be in place to prevent unauthorized alterations to the banks server or web site.
2. Communicative- this type of Internet banking systems and the customer. The

interaction between the banks system and the customer. The interaction may be limited to electronic mail, account enquiry, loan applications, or static file updates (name and address change). Because these servers may have a path to the banks internal networks, the risk is higher with this configuration than with informational systems. Appropriate controls need to be in the place to prevent, monitor, and alert management of any unauthorized attempt to access the banks internal networks and computer systems. Virus controls also become much more critical in this environment.

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3. Transactional- this level of Internet banking allows customers to execute

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

Convenience- Unlike your corner bank, online banking sites never close; theyre available 24 hours a day, seven days a week, and theyre only a mouse click away.

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

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

Efficiency-You can access and manage all of your bank accounts, including IRAs, CDs, even securities, from one secure site.

Effectiveness- Many online banking sites now offer sophisticated tools, including account aggregation, stock quotes, rate alert and portfolio managing program to help you manage all of your assets more effectively. DISADVANTAGES OF INTERNET BANKING

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

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

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

E- BANKING SERVICES:

1. Online bill payment service:

Each bank has tie-ups with various utility companies, service providers and insurance companies, across the country. It facilitates the payment of electricity and telephone bills, mobile phone, credit card and insurance premium bills. To pay bills, a simple one-time registration for each biller is to be completed. Standing instructions can be set, online to pay recurring bills, automatically. One-time standing instruction will ensure that bill payments do not get delayed due to lack of time. Most interestingly, the bank does not charge customers for online bill payment.
2. Fund transfer:

Any amount can be transferred from one account to another of the same or any another bank. Customers can send money anywhere in India. Payees account number, his bank and the branch is needed to be mentioned after logging in the account. The transfer will take place in a day or so, whereas in a traditional method, it takes about three working days. ICICI Bank says that online bill payment service and fund transfer facility have been their most popular online services.
3. Credit card customers:

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Credit card users have a lot in store. With Internet banking, customers can not only pay their credit card bills online but also get a loan on their cards. Not just this, they can also apply for an additional card, request a credit line increase and God forbid if you lose your credit card, you can report lost card online.
4. Investing through Internet banking:

Opening a fixed deposit account cannot get easier than this. An FD can be opened online through funds transfer. Online banking can also be a great friend for lazy investors. Now investors with interlinked demat account and bank account can easily trade in the stock market and the amount will be automatically debited from their respective bank accounts and the shares will be credited in their demat account. Moreover, some banks even give the facility to purchase mutual funds directly from the online banking system. So it removes the worry about filling those big forms for mutual funds, they will now be just a few clicks away. Nowadays, most leading banks offer both online banking and demat account. However if the customer have there demat account with independent share brokers, then need to sign a special form, which will link your two accounts.
5. Recharging your prepaid phone:

Now there is no need to rush to the vendor to recharge the prepaid phone, every time the talk time runs out. Just top-up the prepaid mobile cards by logging in to Internet banking. By just selecting the operator's name, entering the mobile number and the amount for recharge, the phone is again back in action within few minutes.
6. Shopping at your fingertips:

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

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Table 1: List of some banks operating E-Banking in India & their technology vendors Bank Name ABN AMRO Bank Technology Vendor Infosys (Bank Away) Service offering NetBanking ADCB NetLink BOIonline Citibank Online CorpNet db direct Sanchez Infosys (BankAway) i-flex/ Satyam FedNet ibank@gtb NetBanking Online@hsbc Infosys, ICICI Infotech Infosys (Bank Away) CR2 Infinity i-net banking IndusNet

Abu Dhabi Commercial Bank Infosys (Bank Away) Bank of India Citibank Corporation Bank Deutsche Bank Federal Bank Global Trust Bank HDFC Bank HSBC ICICI Bank IDBI Bank IndusInd Bank I-flex Orbitech (now Polaris) I-flex

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Punjab National Bank Standard Chartered Bank State Bank of India UTI Bank

Infosys (Bank Away) In-House Satyam/Broadvision Infosys (Bank Away)

Internet Banking Me Standard Chartered Online onlinesbi.com I connect

INTERNET BANKING VERSUS TRADITIONAL BANKING

In spite of so many facilities that Internet banking offers us, we still seem to trust our traditional method of banking and is reluctant to use online banking. But here are few cases where Internet banking will turn out to be a better option in terms of saving your money. 'Stop payment' done through Internet banking will not cost any extra fees but when done through the branch, the bank may charge you Rs 50 per cheque plus the service tax. Through Internet banking, you can check your transactions at any time of the day, and as many times as you want to. On the other hand, in a traditional method, you get quarterly statements from the bank and if you request for a statement at your required time, it may turn out to be an expensive affair. The branch may charge you Rs 25 per page, which includes only 30 transactions. Moreover, the bank branch would take eight days to deliver it at your doorstep. If the fund transfer has to be made outstation, where the bank does not have a branch, the bank would demand outstation charges. Whereas with the help of online banking, it will be absolutely free for you. As per the Internet and Mobile Association of India's report on online banking 2006, "There are many advantages of online banking. It is convenient, it isn't bound by

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operational timings, there are no geographical barriers and the services can be offered at a miniscule cost."

IMPACT OF E-BANKING ON TRADITIONAL SERVICES One of the issues currently being addressed is the impact of e-banking on traditional banking players. After all, if there are risks inherent in going into e-banking there are other risks in not doing so. It is too early to have a firm view on this yet. Even to practitioners the future of e-banking and its implications are unclear. It might be convenient nevertheless to outline briefly two views that are prevalent in the market.The view that the Internet is a revolution that will sweep away the old order holds much sway. Arguments in favor are as follows: E-banking transactions are much cheaper than branch or even phone transactions. This could turn yesterdays competitive advantage - a large branch network - into a comparative disadvantage, allowing e-banks to undercut bricks-and-mortar banks. This is commonly known as the "beached dinosaur" theory. E-banks are easy to set up so lots of new entrants will arrive. Old-world systems, cultures and structures will not encumber these new entrants. Instead, they will be adaptable and responsive. E-banking gives consumers much more choice. Consumers will be less inclined to remain loyal. E-banking will lead to an erosion of the endowment effect currently enjoyed by the major UK banks. Deposits will go elsewhere with the consequence that these banks will have to fight to regain and retain their customer base. This will increase their cost of

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funds, possibly making their business less viable. Lost revenue may even result in these banks taking more risks to breach the gap. Portal providers are likely to attract the most significant share of banking profits. Indeed banks could become glorified marriage brokers. They would simply bring two parties together eg buyer and seller, payer and payee. The products will be provided by monolines, experts in their field. Traditional banks may simply be left with payment and settlement business even this could be cast into doubt. Traditional banks will find it difficult to evolve. Not only will they be unable to make acquisitions for cash as opposed to being able to offer shares, they will be unable to obtain additional capital from the stock market. This is in contrast to the situation for Internet firms for whom it seems relatively easy to attract investment. There is of course another view which sees e-banking more as an evolution than a revolution. E-banking is just banking offered via a new delivery channel. It simply gives consumers another service (just as ATMs did). Like ATMs, e-banking will impact on the nature of branches but will not remove their value. .Traditional banks are starting to fight back. The start-up costs of an e-bank are high. Establishing a trusted brand is very costly as it requires significant advertising expenditure in addition to the purchase of expensive technology (as security and privacy are key to gaining customer approval). E-banks have already found that retail banking only becomes profitable once a large critical mass is achieved. Consequently many e-banks are limiting themselves to providing a tailored service to the better off.

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Nobody really knows which of these versions will triumph. This is something that the market will determine. However, supervisors will need to pay close attention to the impact of e-banks on the traditional banks, for example by surveillance of:
1. Strategy 2. Customer levels 3. Earnings and costs 4. Advertising spending 5. Margins 6. Funding costs

7. Merger opportunities and threats.

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THE INDIAN SCENARIO

Drivers of change Advantages previously held by large financial institutions have shrunk considerably. The Internet has leveled the playing field and afforded open access to customers in the global marketplace. Internet banking is a cost-effective delivery channel for financial institutions. Consumers are embracing the many benefits of Internet banking. Access to one's accounts at anytime and from any location via the World Wide Web is a convenience unknown a short time ago. Thus, a bank's Internet presence transforms from 'brouchreware' status to 'Internet banking' status once the bank goes through a technology integration effort to enable the customer to access information about his or her specific account relationship. The six primary drivers of Internet banking includes, in order of primacy are: 1. Improve customer access 2. Facilitate the offering of more services 3. Increase customer loyalty 4. Attract new customers 5. Provide services offered by competitors 6. Reduce customer attrition

From the perspective of banking products and services being offered through Internet, Internet banking is nothing more than traditional banking services delivered through an electronic communication backbone, viz, Internet. But, in the process it has thrown open issues which have ramifications beyond what a new delivery channel would normally envisage and, hence, has compelled regulators world over to take note of this emerging channel.

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Some of the distinctive features of E-banking are: 1. It removes the traditional geographical barriers as it could reach 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, 2. It has added a new dimension to different kinds of risks traditionally associated with banking, heightening some of them and throwing new risk control challenges, 3. Security of banking transactions, validity of electronic contract, customers privacy, etc., which have all along been concerns of both bankers and supervisors have assumed different dimensions given that Internet is a public domain, not subject to control by any single authority or group of users, 4. It poses a strategic risk of loss of business to those banks who do not respond in time, to this new technology, being the efficient and cost effective delivery mechanism of banking services, 5. A new form of competition has emerged both from the existing players and new players of the market who are not strictly banks. Figure 5: E-banking in various countries

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Chapter 2
Literature Review

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Literature Review

Product and Technology group, ICICI Bank, in its paper Corporate banking using technology in transactions it was inferred that Information Technology has revolutionized the services and mode of services offered by the banks to their corporate clients. The emergence of E-Banking has enabled the banks to offer real-time transactions and integrate all customers related functions. Indian Banks are utilizing the new technology to provide better technology and convenient access to its customers and India is thus poised to for a huge growth in the world of electronic banking.

Chandana R, Unnithan, Paula M.C., Swatman in their research paper titled EBanking Adaptions and Dot.Com viability: A comparison of Australian and Indian experiences in the Banking sector a comparative study of Australian and Indian experiences in eBusiness was done, which seeks to identify the effectiveness of dot.coms as indicators of eBusiness uptake and success on a

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sector-by-sector basis was undertaken. It was concluded that the banking industry is now a very mature one and banks are being forced to change rapidly as a result of open-market forces such as the threat of competition, customer demand, and technological innovations such as the growth of the Internet. E-Banking is a successful strategic weapon for banks to remain profitable in a volatile, and competitive market place of today in both Indian and Australian Economies despite the differences of IT usage. G. Kannabiran and P.C. Narayan discuss in their article the experiences of a private-sector bank in deploying Internet banking and eCommerce in India. Strategic alignment of business and IT strategies, planning and implementation of e-banking initiatives, and management of benefits have been captured, along with key contributions to development. Huggins points to the fact that traditional boundaries in banking are disappearing. Using eBusiness methods, major retailers and telecom providers are starting to offer financial services to their clients. Extending the value chain and offering versatile services seems to be the key to retaining competitiveness in the sector. Attitudes are also shifting from direct transactions to savings and investments, as the baby boomers reach their fortis and fifties, and prepare for retirement. Mario Martinez Guerreroin his paper titled Profiling the adoption of Online banking Services in the European Union offers an empirical investigation on the adoption of online banking services among European citizen. The use of ebanking services is explained on the basis of socio-demographic and Internet specific behavioral indicators. The performed analyses provide support for the influence of country, age, profession and several Internet behaviors on the use of E-banking. The Indian Internet Banking Journey In 2001, a Reserve Bank of India survey revealed that of 46 major banks operating in India, around 50% were either

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offering Internet banking services at various levels or planned to in the near future. According to a research report,( India Research, Kotak Securities, May 2000.) while in 2001, India's Internet user base was an estimated 9 lakh; it was expected to reach 90 lakh by 2003. Also, while only 1% of these Internet users utilized the Internet banking services in 1998, the Internet banking user base increased to 16.7% by mid- 2000. Customers usually perceive risks in conducting transactions electronically and particularly if the transactions involve money. Risk perception can be of six different types: time risk, finacial risk, performance risk, psychological risk and safety/confidentiality risk. It is generally considered that risk perception could be higher for electronic banking services. This study aims to understand extent to which whether this is consideration is valid as well as to determine the levels of risk perception differences among those using Internet Banking and those not using it.

Chapter 3

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RESEARCH OBJECTIVE & METHODOLOGY

RESEARCH OBJECTIVE

Each research study has its own specific purpose. This research study has the following objectives:-

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To study the awareness level of people regarding E-Banking. To find out the factors that influences the adoption of E-Banking services. To find out the differences in risk perception between those using E-Banking and those not using E-banking.

To know the causes why customers are not using internet banking. To find out the main reasons for which people use internet banking.

RESEARCH METHODOLOGY

TITLE: A Study of Customer perception towards E-banking services offered in banking sector

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TITLE JUSTIFICATION:
This study mainly deals with the analysis of the differences in risk perceptions between bank customers using Internet Banking and those not using Internet Banking and it showed that risk perceptions in terms of financial, psychological and safety risks among customer not using the internet was more meaningful than those using internet banking. Customers not preferring to use internet banking thought that they would be swindled when using this service, and therefore, are particularly careful about high risk expectation during money transfers from and between accounts.

SCOPE OF THE STUDY:

Although many major banks have started offering E-banking services, the slow pace will continue until the critical mass is achieved for PC, internet connections and telephones. However, the upsurge of service class with growing demands is pressurizing the government and bureaucracy in the country to support and develop new initiatives for a faster spread of E-banking. But then to there is a fear in the mind of customer using internet as a medium for the banking transaction. Private and foreign banks are trying to turn more and more customer towards the usage of internet for the banking transaction. This study is basically to know the relation of various independent variables on the customer usage of internet for banking.

RESEARCH DESIGN

RESEARCH TYPE We use descriptive research and exploratory research design in our studies. Descriptive research is also called Statistical Research. The main goal of this type of research is to

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describe the data and characteristics about what is being studied. Descriptive research is used to obtain information concerning the current status of the phenomena to describe "what exists" with respect to variables or conditions in a situation. Here we also tried to find out the main cause why there is perceptual blocking of the Indian customers towards internet banking. The methods involved range from the survey which describes the status quo, the correlation study which investigates the relationship between variables, to developmental studies which seek to determine changes over time.

DATA COLLECTION Primary Data: Structured Questionnaire Secondary Data: Online Database, Journals, Surveys

SAMPLING We have used convenience sampling technique. It is also called haphazard or accidental sampling. Members of the population are chosen based on their relative ease of access. To sample friends, co-workers, or shoppers at a single mall, are all examples of convenience sampling. Sometimes called grab or opportunity sampling, this is the method of choosing items arbitrarily and in an unstructured manner from the frame. Though almost impossible to treat rigorously, it is the method most commonly employed in many practical situations.

Sample Technique: Convenience sampling Sample Area: NCR Sample Size: 120

LIMITATIONS OF THE STUDY:

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The survey was done in the NCR region and may not truly express the opinion of the whole country. There is lack awareness on the part of people about E-banking. Most of the people are not techno-savvy. Though internet penetration is growing still it is not at that level. Sample Size of the research may not be substantial. There was a lack of time on the part of respondents.

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Chapter 4
DATA ANALYSIS & RESULTS

DATA ANALYSIS & INTERPRETATION

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1) Age group 1).18-25__, 2). 26-35__, 3).36-45__, 4).46-60__, 5).60 +____Years

Statistics agegroup N Valid Missing Mean Median Mode Std. Deviation Variance 120 0 2.2083 2.0000 2.00 1.17320 1.376

agegroup Cumulative Frequency Valid 18-25 26-35 36-45 46-60 60+ Total 40 42 16 17 5 120 Percent 33.3 35.0 13.3 14.2 4.2 100.0 Valid Percent 33.3 35.0 13.3 14.2 4.2 100.0 Percent 33.3 68.3 81.7 95.8 100.0

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INTERPRETATION: From the above graph we can see that the maximum no. of respondents are in the age group of 26-35 with a frequency of 42. The second highest no. of respondents lie in the age group of 18-25.

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2) Gender

: 1) Male 2) Female

Statistics Gender N Valid Missing Mean Median Mode Std. Deviation Variance 120 0 1.3250 1.0000 1.00 .47034 .221

Gender Cumulative Frequency Valid male female Total 81 39 120 Percent 67.5 32.5 100.0 Valid Percent 67.5 32.5 100.0 Percent 67.5 100.0

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INTERPRETATION: The above graph shows another demographic variable of the respondent set i.e gender. From the above bar chart we can see that the maximum no. of respondents were male with a frequency of 80% and the rest were females.

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3) Frequency of visiting your bank branch per month?

Case Processing Summary Cases Valid N agegroup * Frequency of visiting your bank branch per month? 120 100.0% 0 .0% 120 100.0% Percent N Missing Percent N Total Percent

agegroup * Frequency of visiting your bank branch per month? Crosstabulation Count Frequency of visiting your bank branch per month? Less than 1 agegroup 18-25 26-35 36-45 46-60 60+ Total 15 10 1 0 0 26 1 to 3 times 4 10 0 9 4 27 3 to 8 times 7 5 4 0 0 16 8 to 12 times 0 7 8 2 0 17 over 12 times 14 10 3 6 1 34 Total 40 42 16 17 5 120

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 60.143a 67.364 1.103 120 df 16 16 1 sided) .000 .000 .294

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Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association 60.143a 67.364 1.103 df 16 16 1 sided) .000 .000 .294

a. 15 cells (60.0%) have expected count less than 5. The minimum expected count is .67.

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INTERPRETATION: Here we have plotted a cross tab between the two variables i.e age group and frequency of visit to the branch. The cross tab helps us to find that whether there is any association between the two variables. Pearson Chi-square test statistic value of .000 shows that there is an association between the two variables. We can see from the chart that maximum no. of respondents in the age group 18-25 visit less than 1 and maximum no. respondents in the age group 26-35 visit over 12 times.

4) Which of the following e-banking facilities do you think should be provided by your bank?(please choose the single most important one)

1. Internet banking 2. Telephone banking 3. Mobile banking 4. SMS banking

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INTERPRETATION: The above pie chart shows that 40.8% of the respondents thought of Internet Banking as a must to be provided by there bank. The second most important E-banking facility was the M-banking with a percentage of 26.7%.
5) The main reason that you typically visit your bank branch (please choose the single most important reason)? 1. 2. 3. 4. 5. To make a deposit To get advice for investment options To inquire about a balance To withdraw cash Others

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Statistics The main reason that you typically visit your branch for? N Valid Missing Mean Median Mode Std. Deviation Variance a. Multiple modes exist. The smallest value is shown 120 0 2.8417 3.0000 3.00a 1.22300 1.496

The main reason that you typically visit your branch for? Cumulative Frequency Valid To make a deposit To get advice for investment options To inquire about a balance To withdraw cash Others Total 25 18 35 35 7 120 Percent 20.8 15.0 29.2 29.2 5.8 100.0 Valid Percent 20.8 15.0 29.2 29.2 5.8 100.0 Percent 20.8 35.8 65.0 94.2 100.0

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INTERPRETATION: The above pie chart shows the most important reason for which a person visits the bank branch. As we can see from the graph that 29.2% of the respondents said that they visit the bank to withdraw cash. Another 29.2% of the respondents visited to inquire about the balance whereas 20.8% respondents visited bank for making a deposit to there account.

6) Do you have an internet banking account?

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a) Yes b) No

Statistics Do you have an internet banking account? N Valid Missing Mean Median Mode Std. Deviation Variance 120 0 1.2583 1.0000 1.00 .43955 .193

Do you have an internet banking account? Cumulative Frequency Valid yes no Total 89 31 120 Percent 74.2 25.8 100.0 Valid Percent 74.2 25.8 100.0 Percent 74.2 100.0

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Case Processing Summary Cases Valid N agegroup * Do you have an internet banking account? 120 Percent 100.0% N 0 Missing Percent .0% N 120 Total Percent 100.0%

agegroup * Do you have an internet banking account? Crosstabulation Count Do you have an internet banking account? yes agegroup 18-25 26-35 36-45 46-60 60+ Total 34 39 14 12 1 100 no 6 3 2 5 4 20 Total 40 42 16 17 5 120

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 19.451a 15.045 8.342 120 df 4 4 1 sided) .001 .005 .004

a. 4 cells (40.0%) have expected count less than 5. The minimum expected count is .83.

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INTERPRETATION: The above graph shows the association between age group and user- non-user status. The Pearson chi-square value of .001 shows that there is an association between the two. As we can see that the most of the respondents in the age group 26-35 have an internet banking account and very few of the respondents in the age group 60+ have an internet account.

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7) What banking services do you use which your Internet bank offers? (Please check all those which you are currently using) 1. 2. 3. 4. 5. 6. 7. 8. 9. Seeking product and rate information Calculate loan payment information Download loan applications Download personal bank transaction activity. Check balances on-line Apply for consumer loans or credit cards online Inter-account transfers On-line bill payments Others

Case Summary Cases Valid N $var22a 100 Percent 83.3% N 20 Missing Percent 16.7% N 120 Total Percent 100.0%

a. Dichotomy group tabulated at value 1.

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$var22 Frequencies Responses N banking servicesa prodinfo loaninfo Down_loanapp Trans_activity Chk_balance Apply_loan Acc_transfer Bill_payment others Total a. Dichotomy group tabulated at value 1. 55 57 52 45 57 34 72 69 22 463 Percent 11.9% 12.3% 11.2% 9.7% 12.3% 7.3% 15.6% 14.9% 4.8% 100.0% Percent of Cases 55.0% 57.0% 52.0% 45.0% 57.0% 34.0% 72.0% 69.0% 22.0% 463.0%

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INTERPRETATION: The above graph shows the type of services that most internet account holders use. As we can see from the graph that most of the internet bank users use there internet account for making transfer of funds, followed up by payment of bills online with a percentage of 15%.

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8) What was the single most important reason that you choose your current bank as your Internet bank? (please choose one) 1. 2. 3. 4. I have a traditional bank account with the same bank The brand name of the bank The excellent service offered by this bank Other

INTERPRETATION: The pie chart above shows for what reason the respondents choose there current bank as there internet bank. Most of the respondents had an internet bank account because of the brand name of the bank. 32% had an account in the bank in which they had a traditional account. 28% opened because of the excellent services provided.

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9) In addition to your Internet bank account, do you also have a traditional bank account? 1. Yes 2. No

Statistics

Do you also have a traditional bank account in addition to an internet account? N Valid Missing Mean Median Mode Std. Deviation Variance 100 20 1.0000 1.0000 1.00 .00000 .000

Do you also have a traditional bank account in addition to an internet account? Cumulative Frequency Valid Missing Total yes System 100 20 120 Percent 83.3 16.7 100.0 Valid Percent 100.0 Percent 100.0

INTERPRETATION: The above table shows that all the respondents who had an internet banking account also had a traditional baking account.

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10)

What are the reasons for which you opened an Internet

bank account? (Please prioritize the following list in the order of importance).

(Rank on a scale of 1-6 where1 being the most important & 6 being the least important) 1. 2. 3. 4. 5. 6. Convenience (24 hours service, anywhere connectivity) ______________ Curiosity______________ Safe and secure______________ Low service charge______________ Easy to maintain my banking transaction activity______________ Online shopping ___________________

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INTERPRETATION: The above graph shows the ranking of the reasons why respondents had opened an internet banking account. We rated the factors on a 6 point rating scale ranging from most important to least important. Most of the respondents gave convenience as rank1. The second most important factor was ease of maintenance.

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11) For your choice of an Internet bank, please indicate how much each of the following factors are/were important to you: (Rate on a scale of 1-6 where 1 being most important & 6 being least important) 1. 2. 3. 4. 5. Better rate and lower service charge______________ Bank familiarity______________ Security of Transaction______________ Convenience (24 hours service from anywhere) ______________ Quick service (transaction completed in seconds instead of minutes) ______________ 6. Variety of features and services that are offered(for example; bill payment, account reconciliation, electronic bill payment) ______________ 7. Integrated value-added services using other on-line services and resources (for example; other brokerage account summary) ______________

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INTERPRETATION: The above graph rates the decisive factors when opening a internet banking account. Most of the gave rank 1 to convenience(24 hour service from anywhere). The second most important factor was security of transaction. The third most important factor was the familiarity with the bank.

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12) The main reasons that you might fear for while opening an Internet bank account ? (check all that apply) 1. Never heard of Internet banking 2. Concerned about security 3. Haven't taken time to open an account 4. Don't see any real value in having this type of account 5. Too new. I would like to see how it works, then I may open an account

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6. Not available through my bank 7. Others

Case Summary Cases Valid N $var33a 120 Percent 100.0% N 0 Missing Percent .0% N 120 Total Percent 100.0%

a. Dichotomy group tabulated at value 1.

$var33 Frequencies Responses N reasons not opening a ebank acc

a

Percent 65 80 38 34 83 44 32 376 17.3% 21.3% 10.1% 9.0% 22.1% 11.7% 8.5% 100.0%

Percent of Cases 54.2% 66.7% 31.7% 28.3% 69.2% 36.7% 26.7% 313.3%

Var_unaware Var_security Var_timeconst Var_novalue Var_new Var_unavailable Var_others

Total a. Dichotomy group tabulated at value 1.

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INTERPRETATION: The above graph shows why most of the people are afraid of opening an internet banking account and what are the reasons behind it. Most of the respondents were concerned about the security of transactions-21%. The second constraint was that people are still unaware about it-17%. The third major constraint was that the bank doesnt have such a service-12%

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Chapter 5
CONCLUSIONS & SUGGESTIONS

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CONCLUSIONS

The study tries to figure out what are the factors that affect the usage behavior of the customers towards E-banking services and what are the reasons for perceptual blocking towards E-banking.

The conclusions that can be drawn are: 1. Most of the people use E-banking because of the ease and convenience of doing transactions 24 hours from anywhere. 2. Most of the people in the age group of 18-35 i.e the youth are familiar with the concept of E-banking and are among the prominent users of this facility.
3. Most of the people open an internet banking account with a bank because of the

brand name of the bank and also due to the fact that they have a traditional banking account with the same bank. 4. Most of the people in the age group of 46+ are either unaware or have a disinterest in the service. They are more satisfied with traditional system of banking. 5. The reasons for not opening an internet account are mainly due to unawareness or due to security concerns. 6. Most of the people who do internet banking do so for online transaction of money and for shopping purposes.
7. The masses are still not using the services thoroughly due to various hurdling

factors like insecurity and fear of hidden costs etc.

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SUGGESTIONS
E-banking would drive us into an age of creative destruction due to non-physical exchange, complete transparency giving rise to perfectly electronic market place and customer supremacy. We can see the time is changing and with the passage of time people are accepting technology but there is still a lot of perceptual blocking still to be removed. The banks need to increase the penetration of E-banking to the masses. This can be achieved through increasing the awareness levels of the customers towards E-banking. Some of the ways to do this are:
1. Give proper training to customers for using E-banking. 2. Create a trust in the mind of customers towards security of there accounts.

3. Provide a platform from where the customers can access different accounts at single time without extra charge.
4. Make the site more user friendly. 5. Customers should be motivated to use E-banking facilities more.

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Chapter 6
Bibliography

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Bibliography

BOOKS 1. Marketing research by BERRY G.C 2. Marketing Research by Malhotra N.K. , fifth edition 3. E-banking: the global perspective by Gupta Vivek 4. E-Commerce in Indian banking by Bhasin

WEBSITES http://www.icmrindia.org/free%20resources/casestudies/banking1.htm#b1 www.banknetindia.com www.google.com

SOFTWARES USED 1. SPSS 2. MS-EXCEL

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3. MS-WORD

Chapter 7
ANNEXURE

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ANNEXURE
QUESTIONNAIRE: I'm Sunil Khatri from Amity Business School. I am conducting a survey for the purpose of my research work and would like to speak to you regarding the same. This interview will take about 5-10 minutes. I would like to state that there are no right or wrong answers and Im only interested in your opinion. 1. Frequency of visiting your bank branch per month? 1. 2. 3. 4. 5. Less than 1 1 to 3 times 3 to 8 times 8 to 12 times over 12 times

2. The main reason that you typically visit your bank branch (please choose the single most important reason)? a) b) c) d) e) To make a deposit To get advice for investment options To inquire about a balance To withdraw cash Others

3. Which of the following e-banking facilities do you think should be provided by your bank?(please choose the single most important one)

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a) Internet banking b) Telephone banking c) Mobile banking d) SMS banking

4. Do you have an internet banking account? a) Yes b) No If the answer to the previous Question is Yes, please answer Item no.5 to 9. Otherwise please skip Item no.5 to 9. 5. What are the reasons for which you opened an Internet bank account? (Please prioritize the following list in the order of importance).

(Rank on a scale of 1-6 where1 being the most important & 6 being the least important) a) Convenience (24 hours service, anywhere connectivity) ______________ b) Curiosity______________ c) Safe and secure______________ d) Low service charge______________ e) Easy to maintain my banking transaction activity______________ f) Online shopping ___________________

6. What banking services do you use which your Internet bank offers? (Please check all those which you are currently using) a) b) c) d) e) f) g) h) i) Seeking product and rate information Calculate loan payment information Download loan applications Download personal bank transaction activity. Check balances on-line Apply for consumer loans or credit cards online Inter-account transfers On-line bill payments Others

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7. What was the single most important reason that you choose your current bank as your Internet bank? (please choose one) a) b) c) d) I have a traditional bank account with the same bank The brand name of the bank The excellent service offered by this bank Others

8. In addition to your Internet bank account, do you also have a traditional bank account? a) Yes b) No 9. For your choice of an Internet bank, please indicate how much each of the following factors are/were important to you: (Rate on a scale of 1-6 where 1 being most important & 6 being least important)

1. Better rate and lower service charge______________ 2. Bank familiarity______________ 3. Security of Transaction______________ 4. Convenience (24 hours service from anywhere) ______________ 5. Quick service (transaction completed in seconds instead of minutes) ______________ 6. Variety of features and services that are offered(for example; bill payment, account reconciliation, electronic bill payment) ______________ 7. Integrated value-added services using other on-line services and resources (for example; other brokerage account summary) ______________

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10.The main reasons that you might fear for while opening an Internet bank account ? (check all that apply) 1. Never heard of Internet banking 2. Concerned about security 3. Haven't taken time to open an account 4. Don't see any real value in having this type of account 5. Too new. I would like to see how it works, then I may open an account 6. Not available through my bank 7. Others

Respondent Details:

1) Name 2) Address

: ____________________________________________________ : ____________________________________________________

3) Mobile & E-Mail : ____________________________________________________

4) Gender 5) Age group +____Years

: 1) Male

2) Female

: 1).18-25__, 2). 26-35__, 3).36-45__, 4).46-60__, 5).60

THANK YOU FOR SPARING YOUR PRECIOUS TIME

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