A project report on

“A study of Consumer Perception towards E-Banking services in

India”

A Project Submitted to
University of Mumbai for partial completion of the degree of
Master in Commerce
Under the Faculty of Commerce

By
Miss. Mayuri Mangesh Chougule
Roll No:- 17

Under the Guidance of

Dr. Lipi Mukherjee

RSET’s
Ghanshyamdas Saraf College of Arts and Commerce
Affiliated to University of Mumbai
Reaccredited by NAAC with ‘A’ Grade
R.S.Campus, S.V. Road
Malad (W), Mumbai-400 064

November 2022
 RSET’s
Ghanshyamdas Saraf College of Arts and Commerce
Affiliated to University of Mumbai
Reaccredited by NAAC with ‘A’ Grade
R.S.Campus, S.V. Road
Malad (W), Mumbai-400 064
November 2022

CERTIFICATE
This is to certify that Ms. Mayuri Mangesh Chougule has worked and duly completed her
Project Work for the degree of Master in Commerce under the Faculty of Commerce in the
subject of Accounting and Finance and her project is entitled, “A study of consumer
perception towards E-Banking services in India” under my supervision.
I further certify that the entire work has been done by the learner under my guidance and that
no part of it has been submitted previously for any Degree or Diploma of any University.
It is her own work and facts reported by her personal findings and investigations.

Project Guide: Principal

Date

External Examiner:
Date:

Seal of
The college
 DECLARATION

I the undersigned Miss. Mayuri Mangesh Chougule here by, declare that the work embodied
in this project work titled “A study of Consumer Perception towards E-Banking services
in India”, forms my own contribution to the research work carried out under the guidance of
Dr. Lipi Mukherjee is a result of my own research work and has not been previously submitted
to any other University for any other Degree/ Diploma to this or any other University.
Wherever reference has been made to previous works of others, it has been clearly indicated as
such and included in the bibliography.
I, here by further declare that all information of this document has been obtained and presented
in accordance with academic rules and ethical conduct.

Miss Mayuri M. Chougule

Certified by
Dr. Lipi Mukherjee
 ACKNOWLEDGMENT

To list who all have helped me is difficult because they are so numerous and the depth is so
enormous.
I would like to acknowledge the following as being idealistic channels and fresh dimensions in
the completion of this project.
I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.
I would like to thank my Principal, CA Dr.Ashwat Desai for providing the necessary facilities
required for completion of this project.
I take this opportunity to thank our Coordinator, Dr.Lipi Mukherjee for her moral support and
guidance
I would also like to express my sincere gratitude towards my project guide Dr. Lipi Mukherjee
whose guidance and care made the project successful.
I would like to thank my College Library, for having provided various reference books and
magazines related to my project.
Lastly, I would like to thank each and every person who directly or indirectly helped me in the
completion of the project especially my Parents and Peers who supported me throughout my
project.
 EXECUTIVE SUMMARY

“E-Banking” means 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 back-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 designation. 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 and PDA’s made the transformation of
banking application to mobile devices, this creates new subset of electronic banking i.e. mobile
banking.
This study tries to analyze the differences risk perceptions between bank customers using E-
banking and those not using E-banking 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 services, and therefore, are particularly careful about high risk expectation during money
transfers from and between accounts.
Although many banks have started offering E-banking services, the slow pace will continue
until the mass awareness created.
Private and foreign banks are trying to turn more and more customer towards usage of internet
for the banking transactions. This study basically to know the relation of various independent
variables on the customer usage of internet for banking.
 INDEX

Chapter Table of contents Page No.

No.
Chpt.no.1 1.1 Introduction

1.2. Need for the study

1.3. Statement of the problem

1.4. Scope of the study

1.5. Objectives of the study

1.6. Limitation of the study

1.7. Research methodology

1.8. Research design

1.9. Sampling method

1.10Tools and techniques of data 1-4

Chpt.no.2 Literature review 5-12

Chpt.no.3 E-Banking and the progress of E-Banking 13-41
Chpt.no.4 Conceptual framework of consumer 42-48
perception
Chpt.no.5 Data analysis and Interpretation 49-68
Chpt.no.6 Conclusion, findings and suggestions 69-71
Bibliography

Annexure
CHAPTER-1
1.1. Introduction

Now a days information technology plays a vital role in banking sector. Day by day increasing
change in technology world, it leads to improve E-Banking services of various banks. In
banking industry in the past, large queues could be observed for payment utility bills or for
cash withdrawals/deposits. The banks are succeeded to reduce this queue through uses of latest
technology, but still busy common people are demanding less time methods for banking
transactions. In this regard, banks are going utilize internet facility for customers transactions.
This method will reduce paper work, and will give quick response to customer while they
remain in their office or at home. It provides various advantages to customers of various banks.
Now a days people are educated more than older days, today human lives becomes machine
oriented and they don’t have enough time to visit bank branch than even before. E-Banking
means providing banking products and services through electronic delivery channels like
ATM, internet banking, telephone banking and other electronic delivery channels. Internet
banking highly useful to the customer one who have computer with internet connection, they
need not visit bank branch for their business transactions. Simply they can transact anywhere,
anytime if they have internet connection.by dialling the telebanking number customer can get
various facilities like cheque book request, balance enquiry etc…E-Banking includes the
system that enables the financial institution customers, individual or business, to access
accounts, transact business, or obtain information on financial products and services through a
public or private network, including the internet. Customers access E-Banking services using
an intelligent electronic device, such as personal computer (PC), automated teller machine
(ATM), kiosk or mobile phone.
Technology in Indian banking has evolved substantially from the days of back office
automation to today's online, centralized and integrated solutions. Banking is now no longer
confined to the branches where one has to approach the branch in person, to withdraw cash or
deposit a cheque or request a statement of accounts. With the expansion of internet usage, e-
banking has become one of the most revolutionized components of today’s economic growth.
E-banking is powerful value added tool to attract new customers and retain the existing ones.
With the proliferation of internet and computer usage, the electronic delivery of e-banking
service has become ideal for banks to meet customer expectations. Besides it helps in
eliminating costly paper handling and teller interaction in the increasingly competitive banking
environment. The potential competitive advantage of e-banking lies in the areas of cost
reduction and satisfaction of consumer needs. As per the international report the banking
transactions on a brick and mortar banking costs around Rs.50, while through ATM it costs
around Rs.14 to Rs.15. On the other hand internet transaction costs less than a rupee. Providing
banking is increasingly becoming a ’need to have’ than a ‘nice to have’ service. The e-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.
E-banking can be offered in to many ways. First, an existing back with physical offices can be
also establish an online site and offer e-banking services to its customers in addition to the
regular channel. For example, Citibank a leader in e-banking, offering walk-in, face-to-face

1
banking at its branches throughout many parts of the world as well as e-banking services
through the World Wide Web. Citibank customers can access their bank accounts through the
internet and in addition to the core e-banking services such as accounts balance inquiry, fund
transfer, and electronic bill payment, Citibank also provides premium services including
financial calculators, online stock quotes, brokerage services, and insurance.

1.2. NEED FOR THE STUDY

The e-banking activities are indispensable in today’s modern business and the individual
activities. All the marketing, banking, trade and other entertainment entity of the people are
done through e-banking system. The people are giving significance to do their operations of
said fields through electronic mode. They are much interested in carrying out without
travelling, taking risk, going here and there and avoiding unpleasant atmosphere in all means,
the e-banking operations. Particularly in banking, the people are involved in e-banking
transactions for their personal use of financial nature. It is also known considerably as e-
banking services that are indispensable in any means by the present day customers in all the
banking operations. In order to satisfy the customers, all the banks are competing with very
many facilities in online banking system through electronic mode. The growth of e-banking
with the increase in the range of interface options available to access online , banking solution
has resulted in a steady increase in the number of customers interacting through remote
channels, to a greater extent than before. In a climate of increasing online competition banks
that have chosen to retain extensive branch networks are re-aligning the roles of staff in these
branches and moving towards a relationship driven sales culture.

1.3.STATEMENT OF THE PROBLEM

With the changing environment, banks implemented various E-Banking facilities to the
consumers one after the other. It includes internet banking, mobile banking, SMS banking and
telebanking etc. According to consumers interest and convenience they can use the – Banking
transactions through online 24 hour services without hassle. Due to rapid change in technology
and the delivery channels have been introduced. Despite these possibilities, there are various
psychological and behavioural issues such as reluctance to change trust in one’s bank, security
concerns, preference of human interference and like impede the growth of E-Banking. . It is
very important from the point of view of the banks to have a study about the opinion and
satisfaction of the customers. So, the purpose of the research is to study the views of the
customers in using the e-banking services. Based on this context, the research study is entitled,
“Consumer Perception towards E-banking Services in India’’.

2
1.4. SCOPE OF THE STUDY
The research is based on the customers’ perception regarding e-banking services. The research
discusses the opinion of the customers regarding the e-banking services provided by the banks
and the qualities of the e-banking services in the area of reliability, responsiveness, security,
easy use, accessibility and efficiency. Also the research analyses the problems faced by the
customers while using the e-banking services. The research evaluates the relationship between
the activities undertaken through e-banking services by the customers, the qualities of e-
banking services and the problems of e-banking services. A detailed analysis of the important
factors that impact the perceptions of the customers in their online banking applications and
the available advancements is considered to be analysed in the present study.

1.5. OBJECTIVES OF THE STUDY

1. To expose the problems of the customers from their opinion in connection with the e-
banking services.
2. To identify the role of customers’ satisfaction in the improvement of e-banking
services.
3. To find the benefit of e-banking service to customers
4. To know the perception towards E-Banking services.
5. To obtain suggestions for the improvement of E-Banking services.

1.6. LIMITATIONS OF THE STUDY

The study is restricted to the customers’ perspectives. Therefore it does not cover any
performance appraisal or opinion on e-banking services from bankers’ perspective. The present
study has the following limitations:
1. The main objective of the study is to examine the perceptions of the customers on their
levels of perceptive in online banking operations. Hence, this study did not concentrate
on bankers’ perspectives.
2. Accuracy of data depends upon the information provided by respondents.
3. There are many services that influence the perception, but the study is confined to
selected services only.

1.7. RESEARCH METHODOLOGY

The methodology of the research and the nature of the study is the combination of comparative
and exploratory study. This reveals the opinion of the respondents clearly and concisely to
understand the prevailing situations in the modern banking industry.

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1.8. RESEARCH DESIGN
The research design consists of the methodology, the sample selection, the sample size, the
pilot study, the statistical tools used for analysis, the limitations and the chapter scheme.

1.9.SAMPLING METHOD
Due to the time and research I have used simple random sampling method.

Sample size
It indicates the number of people to be surveyed. Though large sample give more reliable
results than small samples but due to the constraint of time the sample size was restricted to
100 respondents.

1.10.TOOLS AND TECHNIQUES OF ANALYSIS

The data collected will be analysed through the application of statistical techniques such as Bar
Graph, Pie charts etc.

Source of data
➢ Primary data:-
Questionnaire was used to collect primary data from respondents. The questionnaire was
structured type and contained questions related to the consumer awareness towards e-
banking services.

➢ Secondary data:-
Besides the primary data, the secondary data was also collected for study. Websites, books
were referred for this purpose to facilitate proper understanding of study.

4
CHAPTER-2

LITERATURE REVIEW
The literature survey is the basis of the present analysis that forms the platform for the
execution of the study. In this regard, the researcher has collected several work results of
previous studies of the researchers and the concepts in connection with the online banking
transactions. The reviews are presented significantly in an order of the services that are
considered for analysis with the conceptual background.

Avinandan Mukherjee, Prithwiraj Nath, (2003), the role of trust encompasses the exchanges
and interactions of a retail bank with its customers on various dimensions of online banking.
Specifically lays stress on the bank-to customer exchanges taking place through the
technological interface. Hypothesizes share value, communication and opportunistic behaviour
as antecedents to trust. Trust and commitment also have a causal relationship. It was observed
that shared value is most critical to developing trust as well as relationship commitment.
Communication has a moderate influence on trust, while opportunistic behaviour has
significant negative effect. Also finds higher perceived trust to enhance significantly
customers’ commitment in online banking transaction. An important contribution concerns
how trust is developed and sustained over different levels of customer relationship in online
banking. The future commitment of the customers to online banking depends on perceived
trust.

Agarwal.N. Agarwal. R., Sharma, P. and Sherry, A. M. (2003)2explored the role of e-

banking in e-democracy. With the development of asynchronous technologies and secured
electronic transaction technologies, more banks and departments were using Internet for
transactional and information medium. Initiatives such as E-SEVA and FSC’s are the
milestones towards achieving comprehensive e-governance.

Ebling, (2001) this paper describes an empirical study of investigating recent trend and
development of the application of e-banking (banking though internet) in a typical developing
country – Bangladesh, and its economic impact on local financial institutions. Currently,
Bangladesh is far behind in terms of e-banking development and applications. More
specifically, while it is a fact that currently many banks in Bangladesh have implemented e-
banking services, however, comparing with most developed countries, the e-banking
application in Bangladesh is only in its infancy stage and there is a huge gap to be fulfilled with
new research and development effort. As such, addressing the current issues and challenges in
the development of e-banking in Bangladesh is the primary motivation of this research. In
addition, customer’s transaction and communication abilities have been improved by the
developments of information technology. Information technology enabled electronic channels
to perform many banking functions that would traditionally be carried out over the counter.

5
 Furst, K; Lang, W., William and Nolle, E., Daniel (2000) presented data on the number of
national banks in U.S. offering Internet banking and the products and services being offered.
Only 20 percent of national banks offered Internet banking in the third quarter of 1999.
However, as a group, these ‘‘Internet banks’’ accounted for almost 90 percent of national
banking. Banks in all size system of assets and 84 percent of small deposit accounts categories
offering Internet banking tend to rely less on interest-yielding activities and core deposits than
do non-Internet banks. Also, Institutions with Internet banking outperformed non- Internet
banks in terms of profitability.

Nour-Mohammad Yaghoubi and Ebrahim Bahmani 2010 Online banking has emerged as
one of the most profitable e-commerce applications over the last decade. This study
investigates which factors affect the adoption of online banking in Isfahan Province of Iran.
The results indicated that the intention to use online banking is positively affected mainly by
perceived behavioural control and perceived usefulness.

Shetty, V.P. (2000), technology is dramatically altering the ways in which financial services
are delivered to consumers and continue to do so in future too. Electronic banking or the use
of computers and electronic technology as a substitute for traditional paper based transactions,
is here to stay.

Tan and Teo (2000) suggest that banks that fail to respond to Internet banking are likely to
lose customers and that the cost of offering Internet banking services is often less than the cost
of keeping branch banking.

Unnithan and Swatman (2001) studied the drivers for change in the evolution of the banking
sector, and the move towards electronic banking by focusing on two economies, Australia and
India. The study found that Australia is a country with internet-ready infrastructure as far as
Tele communication, secure protocols, PC penetration and consumers’ literacy are concerned.
India, by comparison, is overwhelmed by weak infrastructure, low PC penetration, developing
security protocols and consumer reluctance in rural sector. Although many major banks have
started offering i-banking services, the slow pace will continue until the critical mass is
achieved for PC, internet connections and telephones. However, the upsurge of IT professionals
with growing demands is pressuring the government and bureaucracy in the country to support
and develop new initiatives for a faster spread of e-banking.

Adelowo Solomon Adepoju Mohammed Enagi Alhassan (2010) over time, consumers have
come to depend on and trust the Automatic Teller Machine (ATM) to conveniently meet their
banking needs. But in recent times there have been a proliferation of ATM frauds in the country
even and across the globe. Managing the risk associated with ATM fraud as well as diminishing
its impact is an important issue that face financial institutions as fraud techniques have become
6
more advanced with increased occurrences. The ATM is only one of many Electronic Funds
Transfer (EFT) devices that are vulnerable to fraud attacks. This paper carried out an empirical
research to analyse the cases of ATM usage and fraud occurrences within some banks in Minna.
The research identifies the common ATM fraud, how, where and when these frauds are
perpetuated and then proffer security recommendation that should be adhered to by both the
banks as financial institutions and the ATM users in order to eliminate or reduce it to the barest
minimum.

Akinyele .S.T. and K.Olorunleke (2010) technology based self service has greatly changed
the way that service firms and customers interact and are raising a host of research and practice
issues relating to the delivery of e-service which has become increasingly important not only
in determining the success or failure of electronic commerce but also in providing customers
with superior experience with respect to the interactive flow of information. The purpose of
the research study was to establish the relationship between technology and service quality in
the banking industry in Nigeria. The finding has revealed that secure services as the most
important dimension, followed by convenient location of ATM, efficiency.

Burrett (2008) states online marketing is about “carefully targeting users and getting them to
interact with you while they’re engaged with the most personal, intimate medium ever
invented”. Unlike a traditional media audience, internet users have control of their medium.
They decide where they want to navigate, what they want to do and which links they want to
click.

Divya Singhal and V. Padhmanabhan (2008) Internet banking is becoming is increasingly

becoming popular because of convenience and flexibility. The present paper explores the major
factors responsible for internet banking based on respondents’ perception on various internet
applications. It also provides a framework of the factors which are taken to assess the internet
banking perception.

Donell (2003) viewed electronic banking as banking services that consumers can access, by
using Network system or an Internet connection to a bank’s computer centre, in order to
perform banking tasks, receive and pay bills, and so forth. Many other financial services can
be accessed via the Internet. To most people, electronic banking means 24-hour access to cash
through an ATM or pay checks deposited directly into checking or savings accounts.

Hanudin Amin Ricardo Baba Mohd Zulkifli Muhammad (2005)Today, the advancement
of mobile technologies has provided an opportunity for financial innovations introduced by
financial providers is mobile banking. This study adopts a technology acceptance model
(TAM) to investigate factors that providers in introducing new financial innovations. One of
the emerging financial determines an individual’s intention to use mobile banking among bank
customers in Labuan and Kota Kinabalu. The TAM includes perceived credibility, perceived

7
self-efficacy and normative pressure. Our results support the extended TAM in predicting bank
customers’ behavioural intention to use mobile banking. Determinants are perceived
usefulness, perceived ease of use, perceived credibility and perceived self-efficacy. Normative
pressure was found to be a weak determinant in explaining bank customers’ intention to use
mobile banking. The study also demonstrates the significant effect of perceived ease of use on
behavioural intention through perceived usefulness.

Shastri (2001) analysed the effect and challenges of new technology for banks. Technology
has brought a sea change in the functioning of banks. The earlier manual system of preparation
of vouchers is slowly being automated thereby saving a lot of time and effort. The use of
automated teller machines (ATMs) and introduction of IT are more than in the past.

Sourabh Sharma & K S Thakur, (2010)this paper is a survey of public and private sector
bank customers' responses toward computerization of banking services. The objective of this
paper is to measure the customers' awareness, perception, and the level of satisfaction with
regard to Virtual Banking Services offered by the Indian public and private sector banks in the
city of Jaipur. This survey declares that in comparison, private sector bank customers are
satisfied with regard to ATM, I-Banking and IVRS services. However, the study also reveals
that public sector banks are preparing to take on private sector banks in this regard.

Pooja Malhotra, Balwinder Singh, (2010) , This exploratory study is an attempt to present
the present status of telephone banking in India and the extent of telephone banking services
offered by the banks. In addition, it seeks to examine the factors affecting the extent of
telephone banking services. The purpose of the study is to help fill significant gaps in
knowledge about the telephone banking landscape in India. This paper contributes to the
empirical literature on diffusion of financial innovations, particularly telephone banking, in a
developing country, i.e., India.

Damien Hutchinson, Matthew Warren, (2003) in their article stated that as a continually
growing financial service of electronic commerce, Telephone banking requires the
development and implementation of a sound security procedure. This involves designing
effective methods via which users can be authenticated in a remote environment. Specifically
for Telephone banking there is a real need for a way uniquely to identify and authenticate users
without the possibility of their authenticity being cloned. Some technologies in use have been
presented for meeting the security requirements for national, regional and global Telephone
banking assurance. Concentrates on presenting a security framework for Telephone banking
based on discovering and defining these pathways in terms of adequate authentication
mechanisms. They propose a framework concerning how to identify security requirements for
Internet banking such that the transactions being conducted are secured within their respective
environments.

8
Chellappa (2002) argue that not all but most transactions are conducted through Web browsers
that connect to merchant sites. According to them, consumer perceptions of security are
developed through visibly sufficient mechanisms that are carried out through the processes of
encryption, protection, verification and authentication. The mechanisms of encryption, digital
authentication, protection, and verification of on-line identity influence the Internet customers’
perception on information security and increase the likelihood of consumer confidence and
trust. How that confidence is supported by the banks for the mobile banking activities and
mobile transactions. This is a particular development from the banking traditions.

Hasan (2002) found that online mobile banking has emerged as a significant strategy for banks
to attract customers. Almost 75 percent of the Italian banks have adopted some form of mobile
banking during the period 1993-2000. It also found that the higher likelihood of adopting active
mobile banking activities is by larger banks, banks with higher involvement in off-balance
sheet activities, past performance and higher branching network.

Hernan E. Riquelme, Rosa E. Rios, (2010) this paper seeks to test the factors that can
influence adoption of mobile banking among current users of internet banking in Singapore
and gender as a moderating variable. Usefulness, social norms and social risk, in this order, are
the factors that influence the intention to adopt mobile banking services the most. Ease of use
has a stronger influence on female respondents than male, whereas relative advantage has a
stronger effect on perception of usefulness on male respondents. Social norms (or the
importance of others in the decision), also influence adoption more strongly among female
respondents than male.

Jamie Anderson,(2010], e-banking is one of the newest approaches to the provision of

financial services through information communication technology (ICT), made possible by the
widespread adoption of mobile phones even in low income countries. Emerging mobile
banking (m-banking platforms) in developing markets enable two sided markets, bringing
together mobile handset users with other mobile users and commercial partners. It is the
argument of this paper that the emergence of m-banking platforms has the potential for spill-
over effects, and that these spill-over effects will require regulatory authorities to develop
appropriate policy responses.

B.Janki (2002)analysed that how technology is affecting the employees’ productivity through
debit cards. There is no doubt, in India particularly public sector banks will need to use
technology to improve operating efficiency and customer services. The focus on technology
will increase like never before to add value to customer services, develop new products,
strengthen risk management etc. the study concludes that technology is the only tool to achieve
their goals. Such technology is how supporting the Debit Card services of banks in the present
day customer needs. How it is operated by the traditional employees with technological
advancements is also studied.

9
Dr. Saroj Upadhyay, Deblina Ganguly (2009) have said that in today’s competitive
environment, the banks are making efforts to acquire new customers and also trying to retain
the existing ones. With increased number of banks, products and services and with practically
zero switching costs, customers are easily switching banks, if they are not satisfied with the
services offered by their existing banks. Banks are finding it difficult to attract new customers,
and more importantly retain existing customers. This article is aiming at bring in to light the
advancement of debit card uses and the prospects for the cardholders.

Sultan Singh, Ms. Komal, 2009 This paper presents the impact of Debit card on customer
satisfaction. This is a comparative study of three major banks i.e. State Bank of India, ICICI
bank and HDFC bank. This paper has been divided into two sections. First section presents the
introduction of Debit card, brief history of three Banks compiled through the literature
available in the field. It also includes the review of the various services provided by the three
banks under study. Second section presents the result obtained on the basis of the data collected
for the three banks.

Malhotra,, P & Singh, B, (2009)the financial products and services have become available
over the Internet and technology, which has thus become an important distribution channel for
a number of banks. Banks boost technology investment spending strongly to address revenue,
cost and competitiveness concerns. The purpose of present study is to analyse such effects of
IB and its’ impact on the credit cards in India, where no rigorous attempts have been undertaken
to understand this aspect of the banking business.

Ratnasingam (2002) argued that the impact of technology trust in Web services implies the
use of security services such as digital signatures, encryption mechanisms, and authorization
mechanisms. This paper relates to the condition of the consumers’ perceptions on security
issues in E-banking and the particular usage of credit cards. The use of credit cards and the
perception of the customers towards the credit cards are signified. Mainly consumers'
perceptions are derived from the set of technologies that are customarily visible to them over
the credit cards services.

K. Saikrishna (2009) this article discusses the innovations in information technology being
used in the Indian banking system. The advent of technology in banking has widened the scope
for entry in the new markets and has helped the banks to develop innovative products, services
and effective delivery channels. This article is also portraying the advanced use of credit cards
for the financial transactions of the individual. Because, the use of this credit card is an
innovative Information technology that is being used in Indian Banking System.

As Karjaluoto et al. (2002) argued that ‘banking is no longer bound to time and geography.
Customers over the world have relatively easy access to their accounts, 24 hours per day, and
10
seven days a week’. The author further argued that, with internet banking services, the
customers who felt that branch banking took too much time and effort are now able to make
transactions at the click of their fingers.

Liao and Cheung (2002) found that Singaporeans expectations regarding accuracy, security,
transaction speed, user-friendliness, user involvement, and convenience were the most
important quality attributes in the perceived usefulness of internet-based e-banking.

Ratnasingam (2002) argued that the impact of technology trust in Web services implies the
use of security services such as digital signatures, encryption mechanisms, and authorization
mechanisms. This paper relates to the condition of the consumers’ perceptions on security
issues in E-banking. Mainly consumers' perceptions are derived from the set of technologies
that are customarily visible to them over the Web.

Gerrard and Cunningham (2003) found a positive correlation between convenience and
online banking and remarked that a primary benefit for the bank is cost saving and for the
consumers a primary benefit is convenience.

Jalan, B. (2003), IT revolution has brought about a fundamental transformation in banking

Perhaps no other sector has been affected by advances in technology as much as banking &
finance. It has the most important factor for dealing with the intensifying competition & the
rapid proliferation of financial innovations.

Phan.D, (2003), In the study by IAMAI, it was found that the people are not doing financial
transactions on the banks’ Internet sites in India because of reasons such as security concerns
(43%), preference for face-to-face transactions (39%), lack of knowledge about transferring
online (22%), lack of user friendliness (10%), or lack of the facility in the current bank (2%).

Rao and Prathima (2003) provided a theoretical analysis of e-banking in India, and found that
as compared to the banks abroad, Indian banks offering online services still have a long way to
go. For online banking to reach a critical mass, there has to be sufficient number of users and
the sufficient infrastructure in place.

Santos (2003) emphasizes that e-channels enable consumers to compare offers online, and
hence online consumers would expect the same or even higher levels of service quality

Zeithaml (2002)argues that organizations should focus on all the encounters that occur prior
to, during and after internet transactions. He further argues that organizations should focus on

11
all the encounters that occur prior to, during and after internet transactions. If organizations
focus on developing efficient internet services, it can become a prevailing factor to increase the
overall service offerings It may contribute to maintaining and enhancing the image and
reputation of the firm which will in turn lead to acquire the trust of customers.

Gerrard and Cunningham (2003) found a positive correlation between convenience and
online banking and remarked that a primary benefit for the bank is cost saving and for the
consumers a primary benefit is convenience.

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CHAPTER-3
E-BANKING AND
THE PROGRESS OF E-BANKING SERVICES

Meaning Of E-Banking
E-banking is conducting one’s banking or bank account online through a computer and an
internet connection. “Electronic banking is the use of a computer to retrieve and process
banking data (statements, transaction details, etc.) And to initiate transactions (payments,
transfers, requests for services, etc.) directly with a bank or other financial services provider
remotely via a telecommunications network”.
Electronic banking is a new industry which allows people to interact with their banking
accounts via the Internet from virtually anywhere in the world. The electronic banking system
allows consumers to access their banking accounts, review most recent transactions, request a
current statement, transfer of funds, view current bank rates and product information and
reorder checks. The electronic banking system can be seen as an “extension of existing banks.”

13
History Of E-Banking
The origin of the modern online banking services was the distance banking services over
electronic media from the early 1980s. The term „online‟ became popular in the late 1980s and
referred to the use of a terminal, keyboard and TV (or monitor) to access the banking system
using a phone line. Online services started in New York in 1981 when four of the cities major
banks (Citibank, Chase Manhattan, Chemical and Manufacturers Hanover) offered home
banking services using the videotext system. Because of the commercial failure of these
banking services never became popular except in France where the use of videotext (Minitel)
was subsidized by the telecom provider and the UK, where the Prestel system was used. The
UK‟s first home online banking service was known as Home link and it was set up by Bank of
Scotland for customers of the Nottingham Building Society (NBS) in 1983. The system used
was based on the UK‟s Prestel view link system and used a computer, such as the BBC Micro,
or keyboard (Tandata Td1400) connected to the telephone system and television set. The
system allowed on-line viewing of statements, bank transfers and bill payments. In order to
make bank transfers and bill payments, a written instruction giving details of the intended
recipient had to be sent to the NBS who set the details up on the Home link system. Typical
recipients were gas, electricity and telephone companies and accounts with other banks. Details
of payments to be made were input into the NBS system by the account holder via Prestel.
BACS was later used to transfer the payment directly. Stanford Federal Credit Union was the
first financial institution to offer online internet banking services to all of its members in
October 1994. Today, many banks are internet only banks. They typically differentiate
themselves by offering better interest rates and more extensive online banking features. In
India, the ICICI was the first bank introduced online banking facility and which was in 1996.

Facets Of E-BANKING
As e-banking is a conduct of banking electronically it eliminates paper-based transactions and
radically change the banking operations. E-banking can operate through internet, extranet or
intranet with at least one of the following dimensions (Gordon & Natarajan, 2010):

Customer-to-Bank E-banking:
E-banking is based on Internet, therefore various banking products and services like credit card,
deposit, etc and other banking related information can readily be made available to consumers
with the help of Internet. There are several network oriented innovations for e-banking such as
Smart cards, Electronic Data Interchange etc.

Bank-to-Bank E-Banking:
Bank to bank e banking is based on extranet and it mainly includes transaction between banks
such as money-at-call. This type of banking has to be much secured and there is no
unauthorised access considering its nature.

14
Electronic Central Banking:
In case of e-central banking all banks are under the supervision and inspection of a Central
Bank and they are interconnected through extranet to facilitate management of cash reserves,
discounting of bills, clearing of cheques etc. eventually, the central bank has to be connected
with Government treasury system on extranet to perform its function as an agent of
government. These central banks from different countries can be interlinked with World Bank
or other international financial institution also through extranet.

Intranet Procurement:
Intranet procurement deals with internal transactions in a bank or between the bank and its
branches and authorised subsidiaries. Whereas extranet allow the bank to have full dominance
over the user of Intranet and the information transmitted through it. For the development of
financial sector extensive networking and integration of internal and external communication
of banking related information are required.

Models Of E-Banking:
Following models have been suggested to effectively implement e-banking (Gordon &
Natarajan, 2010).

Complete Centralised Solution

E-banking can be performed and operated uniformly and effectively through this ideal branch
network model. In this model, bank has to facilitate itself with web server and required software
which connects them to the main server. After hardware and software are set up, a customer
can access the web server for any basic banking operations using standard browser from any
location. Bank branches are provided with online nodes to receive request for customers, LG
smart remote branches are connected to make satellite link effective. Another advantage of
complete centralised solution is that skilled manpower is required only at the centralised
location.

Cluster Approach
In case of cluster model or approach computerized branches of each city are connected with
regional processor located at the city which is further connected through reliable media to a
centralised cluster of high end server. Most of the branches are computerized in an accumulated

15
way to network which is UNIX server. It is very important that an integrated computerization
is available at all branches to enable the connectivity between the branches being established
through regional clusters.

High tech bank within bank

Complete computerization of all the branches is prohibited under this model. Therefore, within
each bank two different types of banks operate concurrently i.e. traditional bank offering
traditional services through other branches and hi-tech bank providing e-banking facilities
through confined and selected branches. This is a balanced approach where bank can offer state
of the various services to demanding consumers in big cities and continue to offer traditional
personalised services to large-number customers.

ADVANTAGES OF E-BANKING
The benefit s of electronic banking can be considered from two prospective, customer
prospective and bank prospective. Advantages of e-banking from the perspective of the
customers can be known as: saving in costs, saving in time and convenience in banking
operations. From bank perspective, the advantages can be named as the featured such as
creation and increase the reputation in delivering innovation, customer retention despite
changes in place by banks and their branches, expand the geographical area of activity and the
emergence of high level of competition and creating an opportunity to search new customers

16
in determined target market. Electronic banking enables the customer access to various banking
services without physically presence through secure communication channels. On other hand
e-banking can deliver the new and traditional banking services to customers through available
and designed electronic channels directly. The use of e-banking in the world have lowered
down the banking costs and based on this the banks charges also will also fall. As any other
financial institutions the revenue of banks depends on the customer satisfaction. Recently
electronic banking has increased. The customer satisfaction with development of information
technology and data provided to them has been able to offer new services to its customers.
Today with developing of electronic banking services, customer interest in using these services
is fairly improving day by day. One of the main challenges in electronic banking is customer
trust. With signifying role of electronic commerce and according to electronic businesses in
the world and need to transfer funds to banking operations, electronic banking has become a
major role player in e-commerce. Today electronic banking is a vital part of modern banking
industry. Therefore, the banks which lose such services in the public services, they will face
the risk of losing lots of its customers and market share. Conversely, those banks which give
special attention to promote electronic banking services will have the higher chance to attract
more customers and can cover considerable geographic area and will also be able to increase
credibility. There are several advantages of e-banking which are enlisted below (Gordon &
Natarajan, 2010).

• No- time limit banking

Customers can perform basic e-banking round the clock globally 24/7 and 365 and there
are no restricted office hours.

• Banking with Convenience

E-banking has increased customer convenience as no personal appearance is required
at the bank and customer can carry out basic branch transactions by simply sitting at
his home or office with the help of laptop or personal computer.

• Reduced cost banking

The transaction cost using Internet banking is much less than any other traditional
approach. Now brick and mortar structure of banking is simply replaced by click and
portal. Now banks can serve great number of potential customers without any physical
branch and there is considerable savings on the cost of infrastructure and staff.

• Profitable banking
High speed, response and customer satisfaction of e-banking leads to higher profits in
spite of handling a large number of customers. Banks can also offer many cash
management services to existing customers without adding any cost.

17
 • Quality banking
Large range of products and services can be delivered efficiently. Economically and at
high quality to the customers.

• Speed banking
Large number of customers and transaction can be handled with the help of e-banking.
This has leaded to increase in speed of response to customer requirements and as a
result to greater customer satisfaction.

• Service banking
E-banking creates strong and reliable infrastructure for the bank and it can venture in
new fields like e-commerce, EDI. Therefore, it adds convenience and comfort to the
entire banking services apart from enhancing the range of services.

Disadvantages of the Internet Banking

Disadvantages of Internet Banking from Bank Point of View

The results of Gartner analyst showed that 10 % of total information budget by the financial
firms have been spent in risk management products and services. The analysts consider that in
2006, the risk management will continue to situate itself in the top of the priority lists of the
companies from the financial sector. And as this subject becomes more important, the
responsibility to build some risk management strategies is attributed to a higher level of the
organizations management. The strategic responsibility is shifted from the individual
departments level to the corporations level. Although for the financial companies the risk is
becoming an element that needs to be kept under control under any circumstances, in the case
of implementation of some information technology projects, risk management becomes a key
to success. The risk may come from the direction of businesses, people or information
technology elements. While certain risk elements are obvious, others are more difficult to
identify (Octavian and Daniela, 2006). Some disadvantages of internet banking can be listed
as below as stated by Zakaria Jado Zakario (2004).
▪ Transaction Risk:
Transaction risk is the current and prospective risk to earnings and capital arising from
fraud, error, and the inability to deliver products or services, maintain a competitive
position, and manage information. A high level of transaction risk may exist with
Internet banking products, particularly if those lines of business are not adequately
planned, implemented and monitored.

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▪ Reputation Risk:
Reputation risk is the current and prospective impact on earnings and capital arising
from negative public opinion. A bank’s reputation can be damaged by internet banking
services that are poorly executed or otherwise alienate customers and the public. Well
designed marketing, including disclosures, is one way to educate potential customers
and help limit reputation risk.

▪ Strategic Risk:
Strategic risk is the current and prospective impact on earnings or capital arising from
adverse business decisions, improper implementation of decisions, or lack of
responsiveness to industry changes. Management must understand the risks associated
with Internet banking before they make a decision to develop a particular class of
business.

▪ Credit Risk:
Credit risk is the risk to earnings or capital arising from an obligors failure to meet the
terms of any contract with the bank. Internet Banking provides the opportunity for
banks to expand their geographic range. In dealing with customers over the internet, it
is difficult to understand the willingness of the customer to pay the debt when there is
an absent of any personal contact.

▪ Liquidity Risk:
Liquidity risk is the risk to earnings or capital arising from a bank’s inability to meet
its obligations when they come due without incurring 20 unacceptable losses. Liquidity
risk includes the inability to manage unplanned changes in funding sources. Internet
banking can increase deposit volatility from customers. Increased monitoring of
liquidity and changes in deposits and loans may be warranted depending on the volume
of Internet account activities.

▪ Foreign Exchange Risk:

Foreign exchange risk is present when a loan or portfolio of loans is denominated in
foreign currency or is funded by borrowings in another currency. Banks may be
exposed to foreign exchange risk if they accept deposits from non-U.S. residents or
create accounts denominated in currencies other than U.S. dollars. Appropriate systems
should be developed if banks engage in these activities.

▪ Price Risk:
Price risk is the risk to earnings or capital arising from changes in the value of traded
portfolios of financial instruments. Banks may be exposed to price risk if they create or
expand deposit brokering, loan sales or securitization programs as a result of Internet
banking activities. Appropriate management systems should be maintained to monitor,
measure and manage price risk if assets are actively traded.

▪ Interest Rate Risk:

It is the risk to earnings and capital arised from the fluctuating interest rates. Internet
banking can attract deposits, loans and other relationships from a larger pool of

19
 customers. Greater access to customers forces managers to maintain appropriate asset
liability management systems, including the ability to react quickly to changing market
conditions.

Disadvantages of Internet Banking from Customer Point of View

As there are many advantages of internet banking for customers, there are disadvantages as
well. Customer must have some extra requirements for the purpose of using the internet
banking services. There are personal computer with a browser, login name and password,
electronic personal account, credit slip special software and network connection. Moreover,
users should know how to use computer and internet banking services also know how to protect
their accounts. In addition, there is no opportunity for direct communication between users and
bank staffs.
Another disadvantage is customers should have reliable computer network system because if
there is any mistake at connection, users can not access their accounts and their process may
not be valid at bank system. Furthermore, banks upgrade their websites periodically, adding
new features at websites or changing external appearance of the website and the menu
properties. Thus, some clients are having difficulties in adapting to the new version of bank
website.
Probably the greatest challenge faced by customers from internet services is the issue of
customer safety and security. The internet environment is open to fraud and identify theft in
which sensitive private information about businesses and individuals is stolen by unauthorized
persons and used to run up large credit card bills or to ravage the reputation of victims.
Tighter risk control procedures are likely to be more costly to internet service providers than
what it is in common use today and may provide a significant advantage for the largest financial
firms, which can afford to install and maintain more complex customer ID procedures. Clearly,
customer privacy and account security are major issues that will shape the future expansion of
internet provided financial services.

CONSTRAINTS IN E-BANKING
There are varieties of obvious benefits of e-banking however there are certain elements which
impede smooth implementation of e-banking. These factors are discussed below (Gordon &
Natarajan, 2010)

• Start-up cost
For venturing into e-banking initial start-up costs are considerably high. These costs
may include, connection cost towards mode of communication or Internet. For e-

20
 banking network should be robust, highly efficient, scalable and with high security with
inbuilt redundancy. Second is cost of hardware, software and various other components
that may include modem routers bridges or network management systems etc. Third is
the maintenance cost of website, equipment, employees etc. and in the end, the cost of
organisational set up activities to implement e-banking operations.

• Training and maintenance

Providing 24 hour customer support, quality service to end users and other business
partners, bank requires robust group of skilled experts to meet external and internal
promises. To fulfil this demand, banks, spend lot of money on training and development
of their experts. At times bank has to outsource certain functions to maintain
consistency as well as standard service. Therefore, proper training and retention of
experts is major concern.

• Lack of skilled personnel

To route of banking transactions through Internet there is huge amount of scarcity of
web design developers, knowledgeable experts and content providers. The
obsolescence of technology is very rapid nowadays in ever changing technological
scenario; therefore there is shortage of right kind of skilled manpower.

• Security
There are many security related issues in existing paperless banking transactions.
Documents such as cheques, passbook etc. can be modified without leaving any
tangible trace, similarly destruction of data is also quite possible. To help with
providing of security, technology like encryption, firewalls, digital signatures etc. are
available but they need major initial as well as initial investment. Even after
implementation of security tools possibility of establishment of secured breach cannot
be ruled out.

• Legal issues
For authentication of e-banking transaction legal framework is still being put in place.
As the Internet is growing rapidly one still does not know what possible legal issues
may raise in future banking. Legal aspects such as wrongful communication,
unauthorised access of data etc. should be considered. To avoid computer related crime,
banking legislation of the country needs to revise in consultation with legal and
technical sources of expertise.

• Restricted clientele and technical problems

Any banking customer requires a personal computer or laptop and access to Internet
to log on to the banks website. Secondly, a person having less computer knowledge
may find it difficult to login or navigate through the bank's website.

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 • Restricted business
Even considering the adventure of electronic banking there are certain transactions
which cannot be operated electronically and customer has to visit personally or use
postal service for deposition or withdrawal of cash. All banks have automated their
major processes, but still majority of them maintain the backend processes manually.
For example, customers can check their statement online but paper statements are also
sent by post so far.

• Destruction of pricing mechanism

Internet is destroying the model of basic business pricing and is creating perfect market
conditions where customer can get more access to information and compare rates of
products. Due to low cost, competitors can undercut the prices and provide stiff
competition to the existing banks.

PROGRESS OF E-BANKING
Online banking is an electronic payment system that enables customers of a financial
institution to conduct financial transactions on a website operated by the institution, such as a
retail bank, virtual bank, credit union or building society. Online banking is also referred as
Internet banking, e-banking, virtual banking and by other terms. To access a financial
institution's online banking facility, a customer with Internet access would need to register with
the institution for the service, and set up some password (under various names) for customer
verification. The password for online banking is normally not the same as for telephone
banking. Financial institutions now routinely allocate customers numbers (also under various
names), whether or not customers have indicated an intention to access their online banking
facility. Customers' numbers are normally not the same as account numbers, because a number
of customer accounts can be linked to the one customer number. The customer can link to the
customer number any account which the customer controls, which may be cheque, savings,
loan, credit card and other accounts. Customer numbers will also not be the same as any debit
or credit card issued by the financial institution to the customer. To access online banking, a
customer would go to the financial institution's secured website, and enter the online banking
facility using the customer number and password previously setup. Some financial institutions
have set up additional security steps for access to online banking, but there is no consistency
to the approach adopted.

22
World Wide Growth in Internet Banking
The evolution of new technology has created new ways of doing business. Specially internet is
one of the biggest service for the banking sector. Those innovations provide chance to do
transactions easily, saving time and cost to customers while doing their banking transactions.
Internet banking has been emerged as an efficient tool in order to improve the efficiency of the
banking transactions and an additional channel to distribute the banks services to the customers
who benefit from the convenience offered by the amalgamation of technology and effective
service provision. (Jose, 2010)
The growth of online banking consumers is 63% across South Korea, Hong Kong, Singapore,
China and Taiwan in the second half of 2001. The total internet banking population for this
region has increased by 4 million in one year (Sarlak and Hastiani, 2011).
Global Industry Analysts announced the global reports on internet banking market. Customer
base for internet banking service is projected to reach 657.2 million by the year 2015 in the
world. The adoption of internet banking services consumers is affected by factors such as
quality and convenience of service, income and awareness levels of consumers. Internet
Banking customers in the United States and the United 11 Kingdom constitute the largest users
of internet banking services across the world. The internet banking customers based in India is
expected to witness a rapid growth to reach 31.5 million by 2012. (Global Strategic Business
Report, 2010)
Recently, as the usage of computers and internet are increasing, the number of internet banking
users are increasing as well. Specially, as the banks provide lower costs for online transactions,
the number of online banking transactions are growing rapidly. Moreover, this trends continue
with the usage of mobile banking applications, new web interfaces, use of internet banking in
social media websites and safeguards at online banking transactions.

EVOLUTION OF E-BANKING IN INDIA

Indian banking sector has been considerably impacted by IT revolution. Growth of online
banking in India has been accelerated by use of computers. This growth was considerably
visible after economic liberalisation in 1991, when countries banking sector became open to
World market. Without the use of information technology Indian banks were finding it very
difficult to compete with international competitors in terms of customer service. To address
this issue RBI setup number of committees to define and coordinate banking technology, which
are mentioned below (RBI, 1988; Wikipedia, 2016).

In 1984, a committee on Mechanisation in the Banking Industry was formed headed by Dr.C
Rangarajan, Deputy Governor, Reserve Bank of India. The committee suggested introducing
MICR technology to all the banks in Metropolitan cities in India. This recommendation
induced the use of standardised cheque forms and encoders.

In 1988, Committee on Computerisation in Banks was established by RBI headed by Dr. C

Rangarajan. The committee suggested that clearing houses of RBI in Bhubaneshwar,

23
Guwahati, Jaipur, Patna and Thiruvananthapuram must be facilitated with the technological
changes. The committee also recommended operationalization of MICR and National Clearing
of inter-city cheques at Kolkata, Mumbai, Delhi, and Chennai. It was suggested to give rise to
connectivity among branches and computerization was advised to. Modalities for
implementing on-line banking were also suggested. After submission of reports in 1989,
computerization began from 1993 along with the settlement between IBA and bank employees'
associations.

In 1994, under Chairmanship of W S Saraf Committee on Technology Issues relating to

Payment systems, Cheque Clearing and Securities Settlement in the Banking Industry was
established. This committee was mainly focusing on Electronic Funds Transfer (EFT) system
through BANKNET communications channel network. Committee suggested establishment of
MICR clearing in all branches of all those banks having more than 100 branches.

In 1995, EFT system was emphasised by the Committee for suggesting Legislation on
Electronic Funds Transfer and other types of Electronic Payments.

IMPORTANCE OF E-BANKING IN PRESENT INDIA

E -banking is information technology based banking. Under this system, the banking services
are delivered by a computer-controlled system. In India, E-banking is of fairly recent origin. In
this fast moving technological world, every human activity is transforming to technology
based, and the human life style also changed with this a lot of. So, a speed and convenient
system is necessary in the banking sector also. Here comes the use and effectiveness of e-
banking with the present world’s requirements. E -banking ensures 24 hours of service to its
customers. The cost of transactions and effort for the access is negligibly small compared to
the traditional banking system. The Indian government has put a reasonable care to this system
and announced various programs and schemes like Digital India, Jan dhan yojana, Aadhar
linking with bank accounts, cashless economy initiatives etc. It is hopeful that Indian banking
sector is fairly mature and also they are trying to make innovations in this sector. The shops
keepers are very willing to install the POS swiping facility to simplify the money transactions
with customers and dealers.

FEATURES OF E-BANKING SERVICES

Online banking facilities offered by various financial institutions have many features and
capabilities in common, but also have some that are application specific.
The common features fall broadly into several categories:
➢ A bank customer can perform non-transactional tasks through online banking, including –
• viewing account balances

24
 • viewing recent transactions
• Downloading bank statements, for example in PDF format
• viewing images of paid cheques
• ordering cheque books
• Download periodic account statements
• Downloading applications for M-banking, E-banking etc.

➢ Bank customers can transact banking tasks through online banking, including-
• Funds transfers between the customer's linked accounts
• Paying third parties, including bill payments ( e.g., BPAY) and third party fund
transfers ( e.g., FAST)
• Investment purchase or sale
• Loan applications and transactions, such as repayments of enrolments.
• Credit card applications
• Register utility billers and make bill payments
•

➢ Financial institution administration

➢ Management of multiple users having varying levels of authority
➢ Transaction approval process
➢ the process of banking has become much faster

Some financial institutions offer unique Internet banking services, for example:
Personal financial management support, such as importing data into personal
accounting software. 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.

THE REASONS OF E-BANKING DEVELOPMENT

The properties of the Internet make it an ideal medium for delivery of banking products and
services. Both financial entities and customers of financial products and services are benefiting
from the spread of online banking services. Some banks also allow services such as stock
market transactions, and the submission of standardized accounting payment files for bank
transfers to third parties. The number of E-banking services to customers continues to grow
and the Internet offers enormous opportunities for banks, and other financial services to
fundamentally reshape their organizations (US web corporation, 2001). Banks can generate
revenue through increased account, access fees and benefit from promotional opportunity to
cross-sell products such as credit cards and loans. As we saw, E-banking offers many benefits
to banks as well as to customers. One of the main reasons for the growth of E-banking is that,
if handled correctly, it can significantly lower the cost of delivering products and services.
Costs of transactions in E-banking can be as low as a tenth of the cost of banking through
conventional means. So, we can find two fundamental reasons underlying E-banking
development and diffusion. First, banks get notable cost savings by offering E-banking
services. Second, banks have reduced their branch networks and downsized the number of

25
service staff, which has paved the way to self-service channels as quite many customers felt
that branch banking took too much time and effort . Therefore, time and cost savings and
freedom from place and staff have been found the main reasons underlying E-banking
acceptance.

EXPECTATION OF BANK CUSTOMERS TOWARDS E-

BANKING
The introduction of electronic banking services also creates new tasks to be forced, such as the
optimization of distribution channels and the security of data transfer. The customer will not
purchase a service that fails to meet his requirements or a service that does not guarantee the
required privacy and security. E-banking is a fast spreading service that allows customers to
use computer to access account specific information and possibly conduct transactions from a
remote location - such as at home or at the workplace. ATM cards, credit cards ,debit cards,
smart cards ,all these have eased human life up to such a extent that today life without these
seems to be hard, full of misery.
Internet made e-banking trustworthy and useful. Real time banking, 24x7 days banking,
banking from anywhere, safe and secure banking, high performance and flexibility. E-Banking
is using everyday advancements in technology, which makes it smart and banking system of
today and tomorrow. Bank customers across the world are now more willing to bank online as
they are more comfortable with internet. They also want to avoid teller lines and telephone
queues. As a consequence of the popularity of the Internet, hundreds of thousands of Internet
users are trying electronic banking. Internet continues to expand the convenience associated
with electronic banking will attract more customers. One expectation of electronic banking is
that it will replace the need for writing cheques. In today’s market, “According to preliminary
data from the latest Federal Reserve survey of patterns of consumer spending, almost four-
fifths of consumer expenditures are handled by cheques directly or indirectly.” This means that
electronic banking has a very large potential for use since many people expect that electronic
cheques will substitute paper cheques. Moreover, for consumers, electronic money (electronic
cash and electronic cheques) means greater efficiency than using coins, paper bills, and
traditional banks. The electronic banking system brings the convenience of 24-hours, seven
days a week, banking by offering home PCs tied directly to a bank’s computers. In addition,
electronic money also offers greater security than a paper-and-coin system. Users are able to
make a backup copy of their funds and if the electronic money is stolen, the users can invalidate
the serial number just as they now stop payment on a paper check.

CONSUMER BEHAVIOUR IN E-BANKING SYSTEM

According to the advancement of the international economy towards organizational
development, electronic banking is growing very fast and information technology is the most
important factor in this development. Banking sector in India understood the importance of this
force from the perspective of competitive advantage. Banking sector and India concentrated in

26
advanced technology in innovation of services and products of electronic banking includes
ATMs, phone banking, electronic funds transfer, debit cards, credit cards. According to the
innovation in banking industry evaluation of the customer behaviour is the main factor and this
study is focused on consumer behaviour towards electronic banking services in Pune city.
Investigation of consumer behaviour after using electronic banking services will explore the
issues of why some banking consumers accept innovations made over banking sector and why
some not ready to accept it yet? Consumers over the world have respectively easy access to
their accounts, 24 hours per day and seven days a week. In India this is not yet common place,
even at urban area like Pune city. The customers who felt that branch banking took too much
time and effort are now able to make transactions at the click of their fingers.
The banking industry has been significantly affected by evaluation of technology. The growing
application of computerized network to banking has reduced the cost of transaction and
increased the speed of service accordingly. The speed and quality of service is improved as
customers do not have to travel physically to a branch. The nature of financial intermediaries
has forced banks to improve their production technology by emphasising on distribution of
products. Despite the adoption of electronic banking, banks in India seem to be aware of the
opportunities provided by internet In fact; they are moving modern internet services to
consumers at a higher 22 level. The consumer behaviour has been affected due to e-banking
services which are provided by the banks.
The change in consumer behaviour in turn, has affected the volume and the nature of electronic
banking transactions. Consumer behaviour is considered as an important topic. It is now vital
for bankers to understand as much as possible about consumer behaviour since all are living in
such a competitive economic environment and the growth and success of banks mainly
depended on knowledge about their customers. Consumer behaviour examines people (what
they demand and how), marketing (the design of service and products), and customer are not
aware of how to use the services yet. For banking sector, an understanding of consumer
behaviour is considered as a key element in their success

BENEFITS OF E- BANKING

Benefits for customers.

➢ Convenient banking.
➢ Customized products and services.
➢ Easy access.
➢ Round the clock availability.
➢ Elimination of waiting time.
➢ Avoid travelling to and from a bank.
➢ Low cost and save time.
➢ Privacy.
➢ Ease of shopping around for best price.
➢ Information gateway.

27
 ➢ Offers new value to customers.

Benefits for Banks:-

➢ Lower cost per transaction.
➢ Increase customer relationship.
➢ Create customer loyalty.
➢ Reduce errors, time consumed and overhead charges.
➢ Ability to customize products and services as per customers requirements.
➢ Ability to access a large market.
➢ Reach new segments of the population.
➢ Minimum physical infrastructure requirement.
➢ Increase customer knowledge.
➢ Eliminate the waste paper.
➢ Increase in flexibility and the opportunities for improved service.

DRAWBACKS OF E-BANKING
➢ The complex encryption software is used to protect the account information. Even
though, there are no perfect systems. So, the accounts are prone to the hacking
attacks, the phishing, the malware and the illegal activities.
➢ The online banking is generally secure. But, it is not always secure. Even the banks do
not have confidence in their security system.
➢ Personal relationship with bank and staffs cannot be utilized for special benefits,
acquiring loans and financial advices.
➢ The customer service can be below the expected quality.
➢ Lack of implementing advanced technologies and services like developed countries.
➢ If any problem occurred to internet or system, the customer must wait until its back up
for accessing account.
➢ Much type of online transactions take up to 3 to 4 days to settle, especially when you
make deposit by mailing cheques.
➢ When online link goes down, you cannot resort to any alternative system to get your
transactions processed.
➢ Increasing number of fraudulent websites.

28
CHALLENGES IN E-BANKING
E-banking is in its emerging stage of development in India. Most of them are basic services
only the deregulation of the e-banking industry coupled with the emergence of new banking
technology is enabling new competitors to enter the financial services markets quickly and
efficiently. However, it needs to be recognized that perception norms and an improvement in
the functioning of e-banking services.
▪ Security Risk:
The problem related to security has become one of the major concerns for banks. A
large group of customers refuses to opt for e-banking facilities due to uncertainty and
security concerns. According to the IAMAI Report (2006), 43% of internet users are
not using internet banking in India because of security concerns. So it is a big challenge
for marketers and makes consumers satisfied regarding their security concerns, which
may further increase online banking use.

▪ The Trust Factor:

Trust is the biggest hurdle to online banking for most customers. Conventional banking
is preferred by the customers because of a lack of trust in online security. They have a
perception that online transaction is risky due to which frauds can take place. While
using e-banking facilities lot of questions arises in the mind of customers such as: Did
the transaction go through? Did I push the transfer button once or twice? Trust is among
the significant factors which influence the customers‟ willingness to engage in a
transaction with web merchants.

▪ Customer Awareness:
Awareness among consumers about the e-banking facilities and procedures is still on
the lower side in the Indian scenario. Banks are not able to disseminate proper
information about the use, benefits, and facility of internet banking. Less awareness of
new technologies and their benefits is among one of the most ranked barriers in the
development of e-banking.

▪ Privacy risk:
The risk of disclosing private information & fear of identity theft is one of the major
factors that inhibit consumers while opting for internet banking services. Most
consumers believe that using online banking services makes them vulnerable to identity
theft. According to the study consumers‟ worry about their privacy and feel that bank
may invade their privacy by utilizing their information for marketing and other
secondary purposes without the consent of consumers.

▪ Strengthening the public support:

In developing countries, in the past, most e-finance initiatives have been the result of
joint efforts between the private and public sectors. If the public sector does not have
the necessary resources to implement the projects it is important that joint efforts
between public and private sectors along with the multilateral agencies like the World
Bank, be developed to enable public support for e-finance related initiative

29
▪ Availability of Personnel services:

In present times, banks are to provide several services like social banking with financial
possibilities, selective up gradation, computerization and innovative mechanization,
better customer services, effective managerial culture, internal supervision and control,
adequate profitability, strong organization culture etc. Therefore, banks must be able to
provide complete personnel service to the customers who come with expectations.

▪ Implementation of global technology:

There is a need to have an adequate level of infrastructure and human capacity building
before developing countries can adopt global technology for their local requirements.
In developing countries, many consumers either do not trust or do not have access to
the necessary infrastructure to be able to process e-payments.

▪ Non- Performing Assets (NPA):

Nonperforming assets are another challenge to the banking sector. Vehicle loans and
unsecured loans increase N.P.A. which terms 50% of banks retail portfolio was also
hit due to upward movement in interest rates, restrictions on collection practices, and
soaring real estate prices. So that every bank has to take care of regular repayment of
loans.

▪ Competition:
The nationalized banks and commercial banks have competition from foreign and new
private sector banks. Competition in the banking sector brings various challenges
before the banks such as product positioning, innovative ideas, and channels, new
market trends, cross-selling ad at managerial and organizational part this system needs
to be managed, assets and contain risk. Banks are restricting their administrative folio
by converting manpower into machine power i.e. banks are decreasing manual powers
and getting maximum work done through machine power. Skilled and specialized
manpower is to be utilized and result-oriented targeted staff will be appointed.

▪ Handling Technology:
Developing or acquiring the right technology, deploying it optimally, and then
leveraging it to the maximum extent is essential to achieve and maintain high service
and efficiency standards while remaining cost-effective and delivering sustainable
returns to shareholders. Early adopters of technology acquire significant competitive
advances Managing technology is, therefore, a key challenge for the Indian banking
sector.

▪ Legal Risk:
Legal risk arising from e-banking activities represents another area of increased
concerned currently, supervisors in every jurisdiction are examining how existing legal
and regulatory frameworks originally designed to addressed issue affecting the physical
world of banking interact with the developing e-banking delivery channels as well as
examining potentials ambiguities.

30
 ▪ System Availability Risk:
In addition to ensuring a secure internal network for their e-banking activities, effective
capacity planning is critical to ensuring the ongoing availability of e banking products
and services. Also, competitive pressers and increased reliance on having available 24
x 7 have raised costumer’s expectation considerably and in turn reduced the tolerance
for error.

OPPORTUNITIES IN E-BANKING
Despite various challenges that are prevailing in context with e-banking in India, the following
opportunities are motivating the marketers for implementing e-banking:

Untapped Rural Markets:

Contributing to 70% of the total population in India is a largely untapped market for the banking
sector. In all urban areas banking services entered but only a few big villages have the banks
entered. So that the banks must reach in remaining all villages because the majority of Indians
still living in rural areas.

Multiple Channels:
Banks can offer so many channels to access their banking and other services such as ATM,
Local branches, Telephone/mobile banking, video banking, etc. to increase the banking
business.

Competitive Advantage:
The benefit of adopting e-banking provides a competitive advantage to the banks over other
players. The implementation of e-banking is beneficial for banks in many ways as it reduces
costs to banks, improves customer relations, increases the geographical reach of the bank, etc.
The benefits of e-banking have become opportunities for the banks to manage their banking
business in a better way.

Increasing Internet Users & Computer Literacy:

To use internet banking it is a very important or initial requirement that people should have
knowledge about internet technology so that they can easily adapt the internet banking services.
The fast increasing internet users in India can be a very big opportunity and the banking
industry should encash this opportunity to attract more internet users to adopt internet banking
services. The table shows evidence of an increasing number of internet users in India.

31
Worthy Customer Service:
Worthy customer services are the best brand ambassador for any bank for growing its
business. Every engagement with customers is an opportunity to develop a customer's faith in
the bank. While increasing competition customer services have become the backbone for
judging the performance of banks.

Internet Banking:
It is clear that online finance will pick up and there will be increasing convergence in terms of
product offerings banking services, share trading, insurance, loans, based on data warehousing
and data mining technologies. Anytime anywhere banking will become common and will have
to upscale, such up scaling could include banks launching separate internet banking services
apart from traditional banking services.

Retail Lending:
Recently banks have adopted customer segmentation which has helped in customizing their
product folios well. Thus retail lending has become a focus area particularly in respect of the
financing of consumer durables, housing, automobiles, etc., Retail lending has also helped in
risks dispersal and in enhancing the earnings of banks with better recovery rates.

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COMPARISON BETWEEN E-BANKING AND TRADITIONAL
BANKING
The differences between traditional banking and electronic banking on the basis of presence,
time, accessibility, security, finance control, expensive, cost, customer service and contact are
differentiated as follows.

Basis of Difference Traditional Banking Electronic Banking

Presence Banks exist physically for Electronic banks do not have
serving the customers. physical presence as services
are provided online
Time It consumes a lot of time as It does not consume time as
customers have to visit banks customers do not have to
to carry out bank transactions visit banks to check bank
like-checking bank balances, balances or to transfer money
transferring money from one from one account to another.
account to another. Customers can access their
account readily from
anywhere with a computer
and internet access.
Accessibility People have to visit banks Electronic banking is
only during the working available at any time and it
hours. provides 24 hours access.
Security Traditional banking does not Electronic banking is the
encounter e-security threats. tempting target for hackers.
Security is one of the
problems faced by customers
in accessing accounts
through internet.
Finance Control Customers who often travel Customers who often travel
abroad cannot pay close abroad can have greater
attention and control of their control over their finances.
finances.
Expensive Customers have to spend Customers do not have to
money for visiting banks. spend money for visiting
banks. They can avoid bank
charges that may be charged
for certain teller transactions
or when they pay bills
electronically-directly from
their account to the
merchant. It helps to save
money on postal charges.
Cost The cost incurred by Such costs are eliminated as
traditional banks includes a the banks do not have
physical presence.

33
 lot of operating and fixed
costs.
Customer Service In traditional banks, the In Electronic banking, the
employees and clerical staff customers do not have to
of the bank can attend only stand in queues to carry out
few customers at a time. certain bank transactions
Contact Customers can have face to Customers can have only
face contact in traditional electronic contacts.
banking.

34
TOOLS, PRODUCTS AND SERVICES OF E-BANKING

THE POPULAR SERVICES UNDER E-BANKING IN INDIA

ATM Card Service:-

An ATM card (also known as a bank card, client card, key card, or cash card) is
any payment card issued by a financial institution to its customers which enables a
customer to access an automated teller machine (ATM) for transactions such as
deposits, cash withdrawals, obtaining account information, and other types of banking
transactions. The payment card may be any card which has that feature enabled, and
may be a debit, credit, a limited-use ATM or other card. Interbank networks allow the
use of ATM cards at ATMs of financial institutions other than those of the issuing
institution.
ATM cards can also be used on improvised ATMs, such as merchants' card terminals
that deliver ATM features without any cash drawer (commonly referred to as mini
ATMs). These terminals can also be used as Cashless scrip ATMs by cashing the fund
transfer receipt at the merchant's Cashier. The first ATM cards were issued by Barclays
in London, in 1967, and by Chemical Bank in Long Island, New York, in 1969. The
following are the reviews of related literature in connection with the ATM Services.

TELEBANKING SERVICES:-
Tele banking is the process of handling bank accounts over the phone. It is also
referred to as telephone banking. This service is commonly offered by banks, credit
unions and credit card companies. There are often fees associated with using this
service. Using a telephone to check a bank account balance, transfer money or review
account history is considered to be safe and convenient by some patrons. The provision
of Tele banking allows customers to carry out all of these transactions without accessing
a mobile application, finding a computer or visiting a branch location. Telephone
banking therefore appeals to people who want immediate, spoken feedback on their
bank accounts and who are concerned about the security associated with other remote
banking options. Telephone banking makes customer service and bank account
information available to a patron 24 hours a day, 7 days a week with no interruptions
due to holidays or weekends. This is a useful asset when traveling overseas or working
hours that make traditional banking access difficult. This service often has nominal fees
attached to it, especially as more financial institutions move toward self-service
solutions that include mobile applications, paperless account maintenance and online
banking opportunities. Fees and service options related to Tele banking vary from one
financial institution to the next and are not regulated by the FDIC. Telephone banking
is a service provided by a bank or other financial institution, that enables customers to

35
perform financial transactions over the telephone, without the need to visit a bank
branch or automated teller machine. Telephone banking times can be longer than branch
opening times, and some financial institutions offer the service on a 24 hour basis. From
the bank's point of view, telephone banking reduces the cost of handling transactions
by reducing the need for customers to visit a bank branch for non-cash withdrawal and
deposit transactions. To use a financial institution's telephone banking facility, a
customer must first register with the institution for the service, and set up some
password (under various names) for customer verification. To access telephone
banking, the customer would call the special phone number set up by the financial
institution. The service can be provided using an automated system, using speech
recognition and DTMF technology or by live customer service representatives. The
types of financial transactions which a customer may transact through telephone
banking include obtaining account balances and list of latest transactions, electronic bill
payments, and funds transfers between a customer's or another's accounts. Cash
withdrawals and deposits require the customer to visit an automated teller machine or
bank branch. The following are the main reviews related to the Tele-banking and
telephone banking services of the modern banks.

MOBILE BANKING SERVICES:-

Mobile banking is a system that allows customers of a financial institution to
conduct a number of financial transactions through a mobile device such as a mobile
phone or tablet. Mobile banking differs from mobile payments, which involve the use
of a mobile device to pay for goods or services either at the point of sale or
remotely, analogously to the use of a debit or credit card to effect an EFTPOS payment.
The earliest mobile banking services were offered over SMS, a service known as SMS
banking.
With the introduction of smart phones with WAP support enabling the use of the
mobile web in 1999, the first European banks started to offer mobile banking on this
platform to their customers. Mobile banking has until recently (2010) most often been
performed via SMS or the mobile web. Apple's initial success with iPhone and the rapid
growth of phones based on Google's Android (operating system) have led to increasing
use of special client programs, called apps, downloaded to the mobile device. With that
said advancements in web technologies such as HTML5, CSS3 and JavaScript have
seen more banks launching mobile web based services to complement native
applications.
A recent study (May 2012) by Mapa Research suggests that over a third of banks
have mobile device detection upon visiting the banks' main website. A number of things
can happen on mobile detection such as redirecting to an app store, redirection to a
mobile banking specific website or providing a menu of mobile banking options for the
user to choose from. The following are the main reviews of related previous studies in
connection with the Mobile banking services of the today’s modern banking world.

36
DEBIT CARD SERVICES:-
A debit card (also known as a bank card or check card) is a plastic payment card that
provides the cardholder electronic access to his or her bank account(s) at a financial
institution. Some cards may bear a stored value with which a payment is made, while
most relay a message to the cardholder's bank to withdraw funds from a payer's
designated bank account. The card, where accepted, can be used instead of cash when
making purchases.
In some cases, the primary account number is assigned exclusively for use on the
Internet and there is no physical card. In many countries, the use of debit cards has
become so widespread that their volume has overtaken or entirely replaced cheques and
in some instances, cash transactions. The development of debit cards, unlike credit
cards and charge cards, has generally been country specific resulting in a number of
different systems around the world, which were often incompatible. Since the mid-
2000s, a number of initiatives have allowed debit cards issued in one country to be used
in other countries and allowed their use for internet and phone purchases. Unlike credit
and charge cards, payments using a debit card are immediately transferred from the
cardholder's designated bank account, instead of them paying the money back at a later
date.
Debit cards usually also allow for instant withdrawal of cash, acting as the ATM
card for withdrawing cash. Merchants may also offer cash back facilities to customers,
where a customer can withdraw cash along with their purchase.

CREDIT CARD SERVICES:-

A credit card is a payment card issued to users as a system of payment. It allows the
cardholder to pay for goods and services based on the holder's promise to pay for them.
The issuer of the card creates a revolving account and grants a line of credit to the
consumer (or the user) from which the user can borrow money for payment to a
merchant or as a cash advance to the user.
A credit card is different from a charge card: a charge card requires the balance to be
paid in full each month. In contrast, credit cards allow the consumers a continuing
balance of debt, subject to interest being charged. A credit card also differs from a cash
card, which can be used like currency by the owner of the card. A credit card differs
from a charge card also in that a credit card typically involves a third party entity that
pays the seller and is reimbursed by the buyer, whereas a charge card simply defers
payment by the buyer until a later date.
The size of most credit cards is 3 3 8 × 2 1 8 in (85.60 × 53.98 mm), conforming to
the ISO/IEC 7810 ID-1 standard. Credit cards have a printed or embossed bank card
number complying with the ISO/IEC 7812 numbering standard. Both of these standards
are maintained and further developed by ISO/IEC JTC 1/SC 17/WG 1. Before magnetic
stripe readers came into widespread use, plastic credit cards issued by many department
stores were produced on stock ("Princess" or "CR-50") slightly longer and narrower
than 7810. The following are the literature reviews related to the credit card services of
the modern banks studied by several researchers.

37
Kiosk machine:-
A kiosk is a small, free structure that displays information or provides a service. Kiosks
can be manned or unmanned , and unmanned kiosks can be digital or non- digital. In
business, kiosks are often used in locations with high foot traffic. In shopping mall ,for
example an unmanned ,non –digital kiosk can be placed near entrances to provide
people passing by with directions or promotional messaging .manned kiosks
temporarily set up can provide businesses that have seasonal sales cycles with a cost
effective way to display wares, and digital kiosks placed near movie theatres can
provide online banking or ticket sales services.

Online Bill Payment Service

Each bank has tie - ups with various utility companies, service providers and insurance
companies, across the country. You can facilitate payment of electricity and telephone
bills, mobile phone and insurance premium bills . To pay your bills, all you need to do
is complete a simple one-time registration for each biller. You can also set up standing
instructions online to pay your recurring bills, automatically. Generally, the bank does
not charge customers for online bill payment.

ELECTRONIC FUNDS TRANSFER (EFT)

An electronic funds transfer (EFT), involves the movement of money from one bank
account to another digitally. Also known as direct deposit, these transfers take place
independently without any involvement of bank employees.
The digital transaction does not require heaps of documentation. Owing to its
simplicity, EFT has now become a predominant method of transfer of funds. It is also
the most easily accessible and direct method of payment. The rise in usage of EFT is
leading to the drop in usage of paper checks. They are quickly becoming obsolete due
to involved expenses, slower expedition, and overall effort.

NATIONAL ELECTRONIC FUNDS TRANSFER(NEFT)

National Electronic Funds Transfer or NEFT is the most popular online payment option
to transfer money. You can easily transfer money from one bank account to the other
through this method. Companies use it mostly for salary transfers.
The funds transferred are settled on a deferred settlement basis. It means the money is
transferred in batches and settled in 3 business days (T+3). There is generally no
maximum limit for NEFT but this depends on the bank as well. For instance, SBI allows
retail banking ETFs up to Rs. 10 lakhs only.

REAL TIME GROSS SETTLEMENT (RTGS)

RTGS or Real Time Gross Settlement is useful for transferring money from one bank
to another in real-time. This form of EFT is allowed only on transfers for a minimum

38
amount of Rs. 2 lakhs. However, there is no upper limit for the transaction amount.
These transactions process during the RTGS business hours. Usually, the amount is
transferred to the recipient’s account within 30-minutes
Both the sender and receiver should hold accounts in RTGS enabled banks. The list of
RTGS authorized banks is available on the RBI Website.

UPI Money Transfer

UPI Money Transfer is also enabled by EFT. You can use apps on any smartphone
having a VPA (Virtual Payment Address) to complete your transaction. UPI Money
Transfer involves fewer steps in comparison to other modes of EFT.
In this method, smartphone apps enable users to quickly transfer money to a beneficiary
account. Both sender and receiver may not share personal details like credit/debit card
number or bank account.
Moreover, UPI Money Transfer works round the clock and all transactions are done on
a real-time basis.
UPI Money Transfer does not involve any charges, so neither the sender nor receiver
have to pay for using the UPI platform.

Fund Transfer
You can transfer any amount from one account to another of the same or any another
bank. Customers can send money anywhere in India. Once you login to your account,
you need to mention the payee’s account number, his bank and the branch. The transfer
will take place in a day or so, whereas in a traditional method, it takes about three
working days.

39
 THE FUTURE SCENARIO OF E-BANKING SERVICES IN
INDIA

Compared to banks abroad, Indian banks offering online services still have a long way to go.
For online banking to reach a critical mass, there has to be sufficient number of users and the
sufficient infrastructure in place. The 'Infinity' product of ICICI Bank Ltd. gets only about
30,000 hits per month, with around 3,000 transactions taking place on the Net per month
through this service. Though various security options like line encryption, branch connection
encryption, firewalls, digital certificates, automatic signoffs, random pop-ups and disaster
recovery sites are in place or are being looked at, there is as yet no Certification Authority in
India offering Public Key Infrastructure which is absolutely necessary for online banking. The
customer can only be assured of a secured conduit for its online activities if an authority
certifying digital signatures is in place. Users of Internet Banking Services are required to fill
up the application forms online and send a copy of the same by mail or fax to the bank. A
contractual agreement is entered into by the customer with the bank for using the Internet
banking services. In this way, personal data in the applications forms is being held by the bank
providing the service. The contract details are often one-sided, with the bank having the
absolute discretion to amend or supplement any of the terms at any time. For these reasons
domestic customers for whom other access points such as ATMs, telebanking, personal contact,
etc. are available, are often hesitant to use the Internet
banking services offered by Indian banks. Internet Banking, as an additional delivery channel
,may, therefore, be attractive / appealing as a value added service to domestic customers. Non-
resident Indians for whom it is expensive and time consuming to access their bank accounts
maintained in India find net banking very convenient and useful. The Internet is in the public
domain whereby geographical boundaries are eliminated. Cyber crimes are therefore difficult
to be identified and controlled. In order to promote Internet banking services, it is necessary
that the proper legal infrastructure is in place. Government has introduced the Information
Technology Bill, which has already been notified in October 2000.Section 72 of the
Information Technology Act, 2000 casts an obligation of confidentiality against disclosure of
any electronic record, register, correspondence and information, except for
certain purposes and violation of this provision is a criminal offence. The Department ofTelec
ommunications (DoT) is moving fast to make available additional bandwidth, with the result
that Internet access will become much faster in the future. This is expected to give a fil into
Internet banking in India. The proposed setting up of a Credit Information Bureau for collecting
and sharing credit information on borrowers of lending institutions online would give a fillip
to electronic banking. The recommendations of the Vasudevan Committee on Technological
Upgradation of Banks in India have also been circulated to banks for implementation. In this
background, banks are moving in for technological upgradation on a large scale. Internet
banking is expected to get a boost from such developments. Reserve Bank of India has taken
the initiative for facilitating real time funds transfer through the Real Time Gross Settlement
(RTGS)System. Under the RTGS system,
transmission, processing and settlements of the instructions will be done on a continuous basi
s. Grosssettlement in a real time mode eliminates credit and liquidity risks. Any member of the
system will be able to access it through only one specified gateway in order to ensure rigorous
access control measures at the user level. Generic Architecture both domestic and cross border,

40
aimed
at providing interconnectivity across banks has been accepted for implementation by RBI.Fol
lowing a reference made this year, in the Monetary and Credit Policy statement of the
Governor, banks have been advised to develop domestic generic model in their
computerization plans to
ensure seamless integration. The abovementioned efforts would enable online bankingto
become more secure and efficient. With the process of dematerialization of shares having
gained considerable ground in recent years, banks have assumed the role of depository
participants. In addition to customers deposit accounts, they also maintain de-mat accounts of
their clients. Online trading in equities is being allowed by SEBI. This is another area which
banks are keen to get into. HDFC Bank Ltd., has tied up with about 25 equity brokerages for
enabling third party transfer of funds and securities through its business-to-business (B2B)
portal, 'e- Net'. De-mat account holders with
the bank can receive securities directly from the brokers' accounts. The bank has extended its
webinterface to the software vendors of National Stock Exchange through a tie-up with
NSE.IT the InfoTech arm of the exchange. The bank functions as the payment bank for
enabling funds transfer.

41
CHAPTER-4

CONCEPTUAL FRAMEWORK OF CONSUMER

PERCEPTION

In general psychological terms, perception is our ability to make some kind of sense of reality
from the external sensory stimuli to which we are exposed. Several factors can influence our
perception, causing it to change in certain ways. For example, repeated exposure to one kind
of stimuli can either make us oversensitive or desensitized to it. Additionally, the amount of
attention we focus on something can cause a change in our perception of it. Peoples perception
of something can vary greatly from person to person, with each one forming an individual
opinion about the stimuli (agents, action or conditions that elicit a response) being received.
Individuals are continually receiving “messages” through the five senses: touch, taste, smell,
sight and sound. Successful marketers use those senses to stimulate consumers to examine a
product. Perception is one of the key psychological factors that influence consumer behaviour.
The consequence for companies is that they have to adapt their ways of competing for
customers. Traditionally, companies have focused their efforts of customer relationship
management of issue like customer satisfaction and targeted marketing activities like event
marketing, direct marketing, or advertising. Although doubtless necessary and beneficial, these
activities are not longer enough. They narrow the relationship between company and customer
down to a particular set of contacts in which the company invests its efforts. Most likely this
will produce not more than a satisfied customer who is well aware of the companies offerings
and has a positive attitude towards them. However, a satisfied customer is not necessarily a
loyal one. In the result, customers have a wider choice of often less distinguishable products
and they are much better informed. For many offerings the balance of power shifts towards the
customer. Customers are widely aware of their grater power, which raises their expectations
on how companies should care for them. Bringing it all together, it becomes ever more difficult
to differentiate a product or service by traditional categories like price, quality, and
functionality etc. In this situation the development of a strong relationship between customers
and a company could likely prove to be a significant opportunity for competitive advantage.
This relationship is not longer based on feature like price and quality alone. Today it is more
the perceived experience a customer makes in his various interactions with a company (e.g.
how fast, easy, efficient and reliable the process is) that can make or break the relationship.
Problems during a single transaction can damage a so far favourable customer attitude.

42
MEANING OF CONSUMER PERCEPTION
Consumer perception theory is any attempt to understand how a consumers perception of a
product or service influences their behaviour. Those who study consumer perception try to
understand why consumers make the decisions they do, and how to influence these decisions.
Usually, consumer perception theory is used by marketers when designing a campaign for a
product or brand. However, some people study consumer perception in order to understand
psychology in a much more general sense.

DEFINITION OF CONSUMER PERCEPTION

Customer perception can be defined as the way customers usually view or feel about certain
services and products. It can also be related to customer satisfaction which is the expectation
of the customers towards the products.

HOW TO MEASURE CONSUMER PERCEPTION

Customers that are satisfied with a product or business have an overall good perception of that
product or business. When consumers' perceptions are good, they will continue purchasing
goods from this company. These customers also will avoid spreading disappointing
experiences to others. Consumer perceptions are based on feelings. A customer perception
measurement is an important tool used by companies that expresses how well the companies
are satisfying customers.

INSTRUCTIONS
• Perform market research on your company's products. When measuring customer
perceptions, the first step a company should take is to identify what customers are
actually buying and why.
• Create a survey to give customers. The only way to measure and increase customer's
positive perceptions of your company is to ask customer's how they feel about your
company. By creating a survey, you are able to get information directly from the
customer. In order for the survey to be successful, it should contain several key
elements. The survey must be relatively simple and short. The survey must also be
created in a way that would allow actionable reports to be generated from the
information it contains.
• Analyse survey results. After surveys are distributed and re-collected, the company
should analyse the results. When analysing results, you must remember that customer
perception is subjective. It varies immensely from person to person and one particular
measurement may not be appropriate for the entire sample taken.
• Measure the results. After the results are analysed, the information should be measured.
This is accomplished by answering several key questions including: are we

43
understanding and meeting the expectations of customers? The results of the survey can
be compared to results of previous surveys. Each time a survey is conducted the results
should become better.

44
FACTORS AFFECTING CONSUMER PERCEPTION

Price
Price has a complex effect on consumer perception. On the one hand, consumers appreciate a
bargain and are often likely to favour an economically-priced item. On the other, consumers
often perceive very inexpensive items as cheap and discernable, ultimately damaging a
consumer's view of a product even if the product remains the same and the consumer is
benefited from a price reduction. Especially sophisticated or sceptical consumers are even
prone to distrust a product that is considerably cheaper than the alternatives. As a result, price
should be part of a comprehensive marketing plan, where even inexpensive products are
depicted as favourable alternatives with similar levels of quality to the competition, with a price
that is somewhat lower but still comparable with other possibilities.

Quality
Of course, the actual quality of a product is a vital part of a consumer's perception of a good or
service. Quality can describe any attribute in a set of characteristics that satisfy or disappoint a
consumer, including usability, reliability and durability. Marketing can influence a consumer's
perception of quality, but, in the end, and particularly with non-durable goods, a consumer's
actual experience with a product will determine his perception of quality. Outside the realm of
mass communication, word of mouth regarding quality also travels very quickly.

Service Quality
Even in the case of goods that exhibit numerous flaws, excellent service quality can often
overshadow a negative experience with the product itself. If a consumer feels that he receives
exceptional attention when encountering a problem with a product, that consumer is somewhat
more likely to trust the brand or product knowing that the manufacturer or retailer provides a
prompt and effective response to problems. Humans are social animals and their consumer
behaviour is often determined by the social relationships that surround a product, including
interactions with customer service representatives.

Packaging and Branding

Packaging and branding have a huge effect on consumer perceptions, particularly at the point
of purchase. Especially when a consumer is purchasing a type of product for the first time, the
way the product is presented can wholly determine their perception of the item. Packaging and
branding, of course, cover everything from the attractiveness and display quality of an item to
the attributes of a product the manufacturer chooses to highlight. Depending on the type of
product and market, different branding messages from tough and reliable to fine and luxurious
can be appropriate and effective.

45
Reputation
A product's reputation is built up over time and is usually a combination of actual experience
with the product, word-of-mouth recommendations and marketing campaigns that attempt to
establish a status or shared view of the product or brand. A consumer's perception of a product's
reputation, moreover, is not only determined by the product's brand identity and manufacturer
but by the whole chain of distribution. Even if a consumer trusts a product's manufacturer, for
example, that consumer may change his mind about the product upon seeing it available in a
retailer he associates with cheap, defective products.

SIGNIFICANCE OF CONSUMER PERCEPTION

The significant role played by perception can be exemplified when two identical products are
marketed in completely different ways, thus creating distinct perceptions of each product.
Depending on consumers‟ perception, each product can be received quite differently:
favourably, less favourably or not at all. Marketers must distinguish their message from their
competitors‟ to grab consumers‟ attention. People are often willing to pay for a more expensive
product over its less-expensive but identical counterpart just because they perceive it to be a
“better” product.

IMPORTANCE OF CONSUMER PERCEPTION

The success of a business depends upon its ability to attract and retain customers that are
willing to purchase goods and services at prices that are profitable to the company. Consumer
perception describes how customers and potential customers view a company and its
products and services. Consumer perception is important to businesses since it can influence
consumer behaviour, which ultimately affects the profitability of a business. Many businesses
spend large amounts of resources to influence consumer perceptions.

ROLE OF PERCEPTION IN CUSTOMER BEHAVIOUR

By studying consumers, businesses can gain a better understanding of the role of perception in
consumer behaviour. Companies can greatly improve their marketing strategies when they
have a firm grasp on the psychology of how consumers feel, think and reason their way to a
buying decision. Knowing how consumers are influenced by their environment, their
information-processing abilities and their perception of a product can help companies to more
effectively reach consumers.

46
FUNCTION OF CUSTOMER PERCEPTION
In marketing, the role of perception in consumer behaviour is all about recognizing how
consumers view a company’s product or service. A consumer's motivation for buying a
particular product or service often comes down to image. People wish to be perceived as having
the ability to make the “right” choices and pick the “right” products. Marketers use perception
to target people’s need to fit in and be part of a larger group of discerning consumers.

CONSUMER PERCEPTION BASICS

Consumer perceptions can determine the success or failure of a business. For example, if a
certain restaurant has a reputation as being the best pizza place in town, the general consumer
perception in the town might be that you should to go the restaurant if you want a good pizza.
This sentiment could strongly influence the pizza shop's ability to make profit. On the other
hand, if consumers have negative views about company it could seriously hamper revenue
success. For instance, if a hardware store becomes known for cheap, shoddy products,
consumers might avoid purchasing its goods unless they cannot afford higher quality goods.

Marketing
Marketing describes how a company chooses what types of products and services to offer and
how it distributes, prices and promotes those products and services. Consumer perceptions
often determine the types of products and services companies offer. For example, if consumers
expect to be able to eat for $5 at a fast food restaurant, restaurants might be compelled to offer
products that are profitable at a price of $5 or less. Businesses create advertisements to make
consumers aware of their products and services and influence how consumers perceive those
products and services.

Branding
A trademark is a name, phrase, symbol or combination of words and symbols that a company
uses to distinguish its identity or brand or its products from others. Businesses spend large
amounts of resources to build up brand name recognition and to get consumers to 19 associate
certain positive qualities with their brands. Consumers may be more trusting of more
recognizable brands, which can influence buying behaviour.

Considerations
Businesses often conduct market research to gain insight into consumer perceptions and
preferences. Understanding how and why consumers make the choices they do are integral to

47
providing products and services that will be in demand and promoting those products and
services effectively.

CONSUMER PERCEPTION & ATTITUDES:

Research Methods The marketing research process seeks to identify consumer perceptions and
attitudes in order to create successful products and promotional campaigns. Several research
methods, such as the Likert scale, measure consumer attitudes in a quantitative fashion. Other
methods, such as shadowing and behaviour mapping, use qualitative observational data in order
to interpret consumer perceptions. Regardless of the research methods that are used, the process
of uncovering consumer perceptions and attitudes involves defining the problem, developing a
research plan, collecting the information, analysing the information, and making a strategic
decision.

48
CHAPTER -5
DATA ANALYSIS AND
INTERPRETATION

The following pages of this chapter encompasses the systematic analysis of the data collected
from the selected respondents to determine their perception towards the e-Banking services.
These are the data collected from the selected respondents in a significant manner and tabulated
systematically. The inferences are drawn and presented then there with clean emphasis. The
data analysis in simple for the understanding of the perception, satisfaction and problems of
the e-banking services of the selected customers. This would help to obtain the accurate results
for analytical purpose as well as important findings.

The following pages would depict the tabulated data collected from the respondents and
inferences drawn from the analysis:

The gender of the respondents is the important variable in determining their attitudes and
perception towards their general activities and in specific the e-banking services . In this regard,
the below table classified the selected respondents on the basis of their gender.

49
 Table no.4.1
(gender wise classification)
Gender Number of respondents Percentage

Male 58 58%
Female 42 42%
Total 100 100%

gender

female
42% male

male female
58%

Interpretation:
From the above table it shows gender wise classification of respondents, out of 100
respondents there are 58% males and 42% females.

50
 Table no.4.2
(Age of respondents)
Age of respondents No. of respondents Percentage
Below 20 18 18%
20-30 31 31%
30-40 30 30%
Above 40 21 21%
Total 100 100%

age
above 40 below 20
19% 18%

30-40 20-30
31% 32%

below 20 20-30 30-40 above 40

Interpretation:
Out of 100 respondents 18% were below 20 years of age, 32% were between 20-30 years of
age, 31% were between 30-40 years of age and 19% were above 40 years of age. Hence most
of respondents under the study are between 20-30 years of age.

51
 Table No.4.3
(education qualification of respondents)
Education qualification No. of respondents Percentage
SSC 20 20%
HSC 27 27%
Graduation 30 30%
Post Graduation 23 23%
Total 100 100%

educational qualification

post graduation SSC

21% 20%

HSC
graduation 28%
31%

SSC HSC graduation post graduation

Interpretation:
Out of 100 respondents 20% were studied upto SSC, 28% were studied upto HSC, 31%
respondents are studied upto graduation and 21% were studied upto post graduation. Hence
most of respondents are graduated.

52
 Table no.4.4
( Occupation of respondents)
Occupation No .of respondents Percentage
Private employee 58 58%
Government employee 20 20%
Businessman 12 12%
Students 10 10%
Total 100 100%

occupation
student
10%

businessman
12%

private employee
58%
govt.employee
20%

private employee govt.employee businessman student

Interpretation:
From the above frequency distribution table it is seen that out of 100 respondents 20% were
students, 24% were businessman, 20% respondents were government employees and 58% were
private employees. Hence most of the respondents in the study are private employees.

53
 Table No.4.5
( Annual income)
Annual income No. of respondents Percentage
Below 1 lakh 25 25%
1-2 lakhs 52 52%
2-3 lakhs 13 13%
Above 3 lakhs 10 10%
Total 100 100%

annual income
above 3 lakhs
10%
below 1 lakh
25%
2-3 lakh
13%

1-2 lakh
52%
below 1 lakh 1-2 lakh 2-3 lakh above 3 lakhs

Interpretation:
In the income distribution chart there are 25% respondents have income below 1 lakh,52 %
respondents have income between 1-2 lakhs,13% respondents have income between 2-3 lakhs
and only 10% respondents have income above 3 lakhs. Hence most of the respondents in the
study have income between 1-2 lakhs.

54
 Table No.4.6
( Type of Bank Account)
Type of bank account No. of respondents Total
Saving account 73 73%
Fixed deposits account 12 12%
Current account 15 15%
Total 100 100%

types of bank account

CURRENT A/C 15

FIXED DEPOSITS A/C 12

SAVING A/C 73

0 10 20 30 40 50 60 70 80

types of bank account

Interpretation:
From the above that is clear that (73%) most of respondents have savings account in the bank.
Savings accounts are mainly opened for increasing saving habits of the people. 12 per cent
have fixed deposits. 15 per cent have current account.

55
 Table No.4.7
(Duration of using banking services)
Period No. of respondents Percentage
Less than 1 year 13 13%
1-3 years 17 17%
3-5 years 23 23%
More than five years 47 47%
Total 100 100%

duration of using banking services

less than one year
13%

1-3 years
more than 5 years 17%
47%

3-5 years
23%

less than one year 1-3 years 3-5 years more than 5 years

Interpretation:
The analysis reveal that 47% of respondents using banking services from more than 5 yrs. 23%
of respondents using banking services from 3-5 yrs.17% respondents using services from 1-3
yrs. 13% respondents using banking services less than 1 year.

56
 Table no.4.8
(Awareness about e-banking services)
Response No. of respondents
Yes 86
No 14
Total 100

awareness of e-banking
no
14%

yes
86%

yes no

Interpretation:
Most of the customers are aware about E-banking services. At the same time there are 14%
customers are not aware of E-Banking services. They are aware about ATM only. Mainly
educated respondents are aware about E-Banking services provided by the bank.

57
 Table no.4.9
(Usage of E-banking services)

Use No. of respondents Percentage

Regularly 63 63%
Occasionally 19 19%
Rarely 10 10%
Sometimes 8 8%
Total 100 100%

usage of e-banking services

70

60

50

40

30

20

10

0
regularly occasionally rarely sometimes
usage of e-banking services 63 19 10 8

usage of e-banking services

Interpretation:
It is clear that 63% of respondents using e-banking services regularly. 19% of the respondents
using e-banking services occasionally and 10% using it rarely.

58
 Table no.4.10
(Source of knowing e-banking services)

Source No. of respondents

Bank officials 48
Advertisements 24
Family members 12
Friends 16
Others 10

sources of knowing e-banking service

60

50 48

40

30
24

20
16
12
10
10

0
bank officials advertisements family members friends others

sources of knowing e-banking service

Interpretation:
The above chart showing sources of knowing e-banking services.48% of respondents to get
know about e-banking services from bank officials. 24% respondents get information from
advertisements.12% of respondents get information from family members.16% get information
from friends. 10% respondents get information from other sources.

59
 Table no.4.11
(Most familiar fund transfer)

Category No. of respondents Percentage

EFT 35 35%
RTGS 15 15%
UPI 36 36%
NEFT 14 14%
Total 100 100%

most familiar fund transfers

NEFT 14

UPI 36

RTGS 15

EFT 35

0 5 10 15 20 25 30 35 40
EFT RTGS UPI NEFT
most familiar fund transfers 35 15 36 14

most familiar fund transfers

Interpretation:
Among the total respondents 35% of respondents are more familiar with EFT (Electronic fund
transfer),15% respondents are familiar with RTGS (Real time gross settlement),36%
respondents are familiar with UPI (United payment scheme), remaining respondents (14%) are
familiar with NEFT (National electronic fund transfer). Most of the respondents familiar with
the UPI.

60
 Table no.4.12
(E-Banking services personally adopted)
E-Banking services No. of respondents that are personally
adopted
ATM/debit cards 100
Mobile banking 85
Internet banking 76
Cash deposit machine 56
Credit card 24
Tele banking 15

e-banking services personally adopted

100
90
80
70
60
50
40
30
20
10
0

cash
mobile internet
ATM deposit credit card tele banking
banking banking
machine
e-banking services personally adopted 100 85 76 56 24 15

61
Interpretation:
From the above table it is clear that all respondents have ATM card. 85 respondents using
mobile banking .76 respondents using internet banking.
56 respondents using cash deposit machine, 24 respondents using credit card.15 respondents
using tele banking.

62
 Table No.4.13
(Influencing factors to prefer e-banking services)

Factors Strongly Agree Neutral Disagree Strongly

agree disagree
Easy 78 15 7 0 0
Accessibility
Time saving & 55 24 11 7 3
money saving
Innovative and 48 24 25 3 0
efficient
services
Ensure 31 20 15 20 14
security
Relevance 45 25 15 10 5
after
demonetization

influencing factors to prefer E-Banking

80

70

60

50

40

30

20

10

0
easy accessibility time saving and innovative and ensure security relevance after
money saving efficient services demonetisation

strongly agree agree neutra disagree strongly disagree

63
Interpretation:
As per the opinion 75 respondents strongly agree on easy accessibility factor and 15
respondents agree and 7 neutral about this factor. The next factor is time saving and money
saving factor in that 55 respondents strongly agree with services and 24 respondents agree with
it and 11 respondents giving neutral response to this services and 7 respondents disagree on
this influencing factor. The next factor is innovative and efficient services in this influencing
factor 48 respondents are strongly agree, and 25 respondents are neutral with this influencing
factor. Security is the main factor in e-banking services.14 respondents are strongly disagree
with this influencing factor.

64
 Table No.4.14
(Limiting factors faced by customers while opening e-banking)
Factors Percentage
Security risk 37%
Technical problem 58%
Password threats 42%
Transaction issues 38%
Lack of knowledge 25%

limiting factors faced by customers while

opening e-banking
58%
60%

50%
42%
37% 38%
40%

30% 25%

20%

10%

0%
security risk technical password threats transaction lack of
problem issues knowledge

limiting factors faced by customers while opening e-banking

Interpretation:
In the above chart 37% respondent faced security risk while opening E-banking services.58%
respondent faced technical problem while using e-banking services. 42% of respondents faced
password threats while opening e-banking services.38% of respondents faced transaction
issues and 25% have lack of knowledge about e-banking services.

65
 Table no.4.15
Transactions prefer to do E-Banking
Transactions Percentage
Money Transfer 28.1%
Checking of your current balance 21.9%
Create fixed deposit online 9.40%
Pay bills 31.3%
Request a demand draft 9.40%

transactions prefer to do E-banking

9.40%
28.10%

31.30%

21.90%
9.40%

money transfer checking of your current balance create fixed deposit online
pay bills request a demand draft

Interpretation:
The above chart showing transactions prefer to do e-banking by customers. 31.30% of
respondents prefer e-banking services for paying bills through internet. 28.10% of respondents
prefer e-banking services for money transfer and 21.90% prefer e-banking for checking of
current balance.9.40% of respondents prefer e-banking services for create fixed deposit online
and same percentage of consumer prefer for request a demand draft through internet.

66
 Table No.4.16
Opinion about various factors regarding e-banking services
Factors Very low Low Average High Very high
Overall trust 8 9 29 38 16
Trust in 0 10 12 36 42
technology
Ease of use 6 15 19 28 32
Security 22 26 15 19 18
form
Fraud 10 12 18 21 39
24 hour 0 13 20 25 42
service

opinion about factors regarding e-banking

services
45
42 42

40 39
36
35
32

30 29
28 28
26
25
25
22
21
20
20 19 19
18 18
16
15 15
15 13
12 12
10 10
10 9
8
6
5
0
0
overall trust trust in technology ease of use security form fraud 24 hour service

very low low average high very high

Interpretation:
In the above chart respondents, gives opinion on various factors regarding e-banking service.
In that chart the factors are overall trust, trust in technology, ease of use, security form, fraud,
24 hour services etc. 29% of consumer having a very high trust toward e-banking services, only
8% respondents have very low trust on e-banking service. The next factor is trust in technology,

67
42% of respondents have very high trust in technology and only 10% of respondents don’t trust
in technology. Another factor is ease of use of e-banking service. 32% of respondents finds
ease of use while opening e-banking services and 6% of respondents having difficulty in using
e-banking services. 39% of respondents finds high difficulties in fraud in e-banking services.

68
CHAPTER -6
FINDINGS, SUGGESTIONS AND CONCLUSION

FINDINGS :
• It is found that out of 100 respondents male respondents are 58% and female
respondents are 42%. This shows the maximum of male respondents included in the
study.
• It is noted that, most of the respondents (32%) are in the age between 20-30.
• In the research most of respondents (58%) working as private employee, and 20% of
respondents are government employee and 10% students also included in that study.
• Annual income wise most of respondents belongs to income between 1-2 lakh. Only
10% of respondents belongs in the income above 3 lakh.
• In the research study 73% of respondents having saving account in the bank and 27%
of respondents having fixed and current account.
• According to the study 47% of the respondents using banking services more than 5 yrs.
This is because most of the people are using at least ATM facility provided by the bank..
Only 13% of respondents using e-banking services less than 1 yr.
• Most of the bank customers are aware about e-banking services. Only few people are
not aware about e-banking services cause of lack of knowledge, security risk and fraud.
• Among the respondents, 63% of the respondents are using e-banking services regularly
on daily basis.29% of respondents are using e-banking services occasionally and
sometimes.
• According to research ,48% of respondents knowing e-banking services from bank
officials. And remaining knowing e-banking services from advertisements, family
members, friends and other sources.
• Most of the respondents are familiar with the EFT and UPI transactions.
• All of the respondents having their own ATM card, and 85% of respondents used to
mobile banking.
• The main influencing factors are easy accessibility, time saving and money saving and
relevance after demonetisation.
• Most of the respondents faced technical problem, password threats, transactions issues
etc. while using e-banking services.
• Among the respondents, 31.30% of respondents prefer e-banking services for paying
bills through internet.28.10% respondent prefer e-banking services for money transfer,
and remaining prefer for checking current balance, create fixed deposits ,request for
demand draft etc.
• The opinion about E-Banking services by the respondents is 24 hours service, and trust
in technology.
• The educational qualification and level of awareness of E-Banking services are
dependent. Because they can know more about E-Banking services.

69
SUGGESTIONS:
The following suggestions are recommended for enhancing the e-banking services of the banks
to the customers to make the services worthwhile. The e-banking services are inevitable in
nature in this modern age of fast financial growth. Hence, the banks have to adopt the strategies
to admire more no. of customers for their progress. In this regard the following are suggested
after a critical analysis of the perception of the customers towards the e-banking. The
researcher has carefully scrutinized all the data analysed and found the results in different
dimension to predict the trend through the following recommendations.

❖ E-banking service should be according to the customer expectation and satisfaction.

The bank should arrange the demonstration programs for the clients to enjoy the
services properly.
❖ The banks should build customer awareness and informing the customer on uses of e-
banking services.
❖ The study was carried out to determine the opinions and problems of customers with
perception. This will enable the banks to understand at which point the customers cease
to be satisfied and agree with service they are receiving.
❖ The e-banking system should be enhanced to make the online enquiry and online
payment much easier to the customers.
❖ To achieve this sound financial and banking service is essential and therefore Indian
bankers should take resolutions to implement the policy of “e-inclusion” in all the
branches, which enable its customers to enhance the knowledge of e-banking and avail
all form of banking services.
❖ It is suggested that technical problems that occur while withdrawing cash from ATM
shall be solved immediately.
❖ The banks should pay special attention to convenience by providing the customers with
electronic banking service at points which can easily be accessible.
❖ Improved Internet connectivity is very essential for the success of e-banking. The
banking industry therefore, needs to ensure regular internet connections with sustained
power supply for increasing customer satisfaction.
❖ The banks could encourage customers to use these services more frequently through
rewarding customers for conducting transactions through these electronic channels with
incentives such as reduced service charges.
❖ The bank customers have perceived the risk of getting wrong information from e-
banking services. These illusions should be removed from the minds of the customers
by bank people as these factors are the barriers for most of the customers for not
adopting these services.
❖ Though e-banking is convenient and easy to use, customers are afraid of adopting these
services because they think that using these “services are difficult and complicated”.
So, on-site training can be provided to the bank customers who intend to use e-banking
services.
❖ Banks should take reasonable steps, for example, advertising campaign, seminars etc
in order to get aware the society from the uses and benefits of e-banking services.
❖ Government should also play its role in the development of IB. Government / Banks
should reduce service charges on the transactions.

70
 ❖ The analysis of work with different aspects of e-banking services shows the satisfaction
level of the customers which can be used by banks as guide line for necessary actions
leading to improvements of the quality of the e-banking services they offer.
❖ The study revealed that the design of the e-banking medium is not user-friendly.
Therefore, the banks should redesign the design, content of e-banking medium, to make
the e-banking services more user-friendly.
❖ Customers need to be given more sustained public education and awareness concerning
the use of e–banking services such as proper maintenance of ATM cards, how to make
various online transactions without giving room for Internet fraudsters, and ensuring
more security for their online transactions.
❖ The banks must make the systems for payment of electricity bill, payment of telephone
bill, payment of tax, etc., very simple that an ordinary man can find it easy to handle e-
banking services. Like ATM/Debit card service other nature of e-banking services must
be made simple and available to customers, so that the customers may feel free of fear
of fraud and with approachable techniques.

CONCLUSION:
In general, E–Banking has changed the traditional patterns of bank operations. These changes
in technology, competition and lifestyles all have an impact on how banks operate today.
Actually the customer had to physically visit the bank office in order to carry out banking
operations. With the introduction of e-banking customers are saving money and time since they
don’t have to physically visit the bank office. Every bank realizes that they must provide some
kind of e-banking to their customers in order to survive. Through e-banking, banks can better
maintain the relationship with customers because with e-banking customers tend to interact
more with provided services. It also increases the revenues of banks and can easily gain
competitive advantage through differentiation of banking services and thereby an image
improvement. Electronic banking has become a necessary survival weapon and is
fundamentally changing the banking industry worldwide.
It also finds that customers enjoying electronic banking services are still not satisfied with
quality and efficiency of the services. Customers perception of and reactions to the
developments of e-banking services are issues of concern to both government and banking
industry. A lot need to be done to create confidence in the minds of customers about the benefits
and security of the e-banking services. There is a need for total satisfaction with regard to all
the qualities of nature of e-banking services and different modes of services. A special
emphasis must be given for the security which would promote customers in using e-banking
services to the largest extent.

71
 BIBLIOGRAPHY

A.T.Mohammed. (2012). E-Service quality strategy: Achieving customer Satisfaction in

online Banking. Journal of Theorotical and Applied Information Technology, 38 (1), 6-24.
Al-Zubi, A. E. (2011). E-banking functionality and outcomes of customers satisfaction: An
empirical Investigation. International Journal of Marketing Studies , 3 (1), 50-67.
Ankit, S. (2011). Factors Influencing Online Banking Customer Satisfaction and Their
Importance in Improving overall Retention Levels: An Indian Banking Perspective.
Information and Knowledge Management, 1 (1), 45-55.
Cai, M. J. (2001, January 19). The key Determinants of Internet Banking Service Quality: A
content analysis. International Journal of Bank management, 276-291.
Hamadi, C. (2010). The impact of quality of Online Banking on Customer Commitment.
IBIMA, 2, 8.
Kumbhar, V. M. (2011). Factors affecting the customer satisfaction in e-banking: some
evidence from Indian Banks. Management Research and Practice ,1-12.
Lin, G. G. (2005). Customer Perception of E-service quality in Online Shopping.
International Journal of Retail and Distribution Management.
Nishikant, J. (2008). Banking Sector and Information Technology. In R. K. Uppal, Banking
Services and Information Technology (pp. 41-63). New Delhi: New Century Publications
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Webliography:
• www.researchgate.com
• www.scribd.com
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72
 Annexure

A study of consumer perception towards E-Banking services in India

1.Name:

2.Gender: a) male b) female

3.Age: a) below 20 b)20-30 c)30-40 d) above 40

4.Qualification:
a) SSC/HSC b) Graduation c) Post graduation
5.Occupation:
a) private employee b) government employee
c)businessman d) student
6.Annual income:
a) below 1 lakh b) 1-2 lakh
c) 2-3 lakh d) above 3 lakhs
7.Type of bank account:
a) savings account b) current account c) fixed deposits a/c
8. In which bank you have an account?
a) State Bank of India b) Union Bank of India c) HDFC Bank
d) ICICI Bank e) other
9.How long you have using banking services?
a) less than 1 year b) 1-3 years c) 3-5 years d) more than 5yrs
10. Are you aware about E-Banking services?
a) yes b) no

73
11. If yes, how did you come to know about E-Banking?
a) from bank officials b) from advertisements
c) from family members d) from friends e) other sources
12. How often do you use E-Banking services?
a) regularly b) occasionally c) sometimes d) rarely
13. Among this which fund transfer are more familiar to you?
a) EFT (Electronic Fund Transfer)
b) RTGS (Real Time Gross Settlement)
c) UPI (Unified Payment Scheme Transfer)
d) NEFT (National Electronic Fund Transfer)
14.The E-Banking services that you have personally adopted.
a) Internet Banking b) Mobile banking c) ATM
d) cash deposit machine e) tele banking f) credit card
15. Which are influencing factors encourages you to prefer E-Banking
services?

Strongly agree Neutral disagree Strongly

agree disagree
Easy
accessibility
Time saving
Innovative
Relevant after
demonetisation
Ensure
security

16. The main reason that you might fear for while opening internet bank
account?
a) security risk b) technical problems c) password threats
d) transaction issues e) lack of knowledge

74
17. Rate your opinion on various factors regarding E-Banking services.
Very low Low Average Very high high
Overall
trust
Trust in
technology
Ease of use
Security
form
Fraud
24 hour
service

18. What are your main transactions you would prefer to do by internet?
a) money transfer b) checking of your current balance
c) create fixed deposits d) pay bills e) request a demand draft
19. Your suggestion for improvement of E-Banking service.

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