A RESEARCH PROPOSAL ON THE IMPACT OF INTERNET BANKING ON CUSTOMER RETENTION

by

Umme Sauda Bente Morad ID: 0920284

An Internship Report Presented In Partial Fulfillment Of The Requirements of the Degree Bachelor of Business Administration

INDEPENDENT UNIVERSITY, BANGLADESH May 2013

Internship

A RESEARCH PROPOSAL ON THE IMPACT OF INTERNET BANKING ON CUSTOMER RETENTION

by

Umme Sauda Bente Morad ID: 0920284

has been approved May 2013

______________________________
Mr. Saquib Shahriar Lecturer School of Business Independent University, Bangladesh

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LETTER OF TRANSMITTAL
13th May 2013 To Mr. Saquib Shahriar Lecturer School of business Independent University, Bangladesh. Dear Sir, Submitting the internship report titled The impact of internet banking on customer retention of Mutual Trust Bank LTD. to you, is a great pleasure. The internship program provides the scope and gives the opportunity of learn different trends and aspects of a reputed organization. I have already acquired knowledge regarding corporative culture and I have tried to explain the knowledge by working in Mutual Trust Bank LTD. I have also picked up valuable experience in the last three months; I would like to thank you for assisting me a throughout and Independent University, Bangladesh for giving the opportunity to do my internship. I believe that you will have a positive view point on me as my analysis is genuine and honest. I shall be thankful if you kindly approve my effort. Sincerely yours, Umme Sauda Bente Morad ID: 0920284 School of Business Independent University, Bangladesh

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ACKNOWLEDGEMENT
At the very beginning I would like to express my deepest gratitude to almighty ALLAH for giving me the strength and the composure to finish this task within the scheduled time. In conducting this report, I have received generous help from many persons, which I like to put on record here with deep gratitude and great pleasure. First and foremost, I am highly indebted to my internship supervisor Mr. Saquib Shahriar Lecturer, School of business, Independent University, Bangladesh. He allowed me her precious time freely right from the very beginning of this internship work till the completion. His experienced guidance, affectionate encouragement and critical suggestions provided me necessary help for the report and make the way for the meaningful ending of this report work in a short duration. I have no hesitation to say that, without his constant supervision and valuable advices and suggestions from time-to-time, I would be failed to complete the whole thing. I am also grateful to the employees of Mutual Trust Bank LTD. Bashundhara branch for spending their valuable time and share enough information with me. Specially, more delightfully I would like to thank Mr. D.A.N.M. Mustafizur Rahman, Vice President & Manager and Mrs. Badrunnessa Chowdhury, FAVP & Deputy Manager. I would also like to thanks Ms. Sharmeen Rahman (Assistant Officer), Mr. Khandakar Abdul Mukim (Assistant Officer), Mrs. Rumana Hossain(Assistant Officer) and Mr. Jamiul Islam (JAVP). Moreover I would also like to thanks all those who contributed through their comments and suggestions to prepare this paper in a comprehensive manner.

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ABSTRACT
The key purpose of the study is to find out the impact of internet banking to retain customers in the context of Mutual Trust Bank LTD, Bashundhara branch, Dhaka. There are some key factors that have an important impact on customer retention in the internet banking. The main findings of the study will indicate that the factors, which are Service Quality, Responsiveness, Security and Privacy, Assurance, and Reliability, have impacts on customer retention in terms of Internet Banking of MTBL, Bashundhara branch. In the report, the factors are being treated as the Independent variables and Customer Retention as the Dependent variable. It will be a causal study aimed to measure that, the existence of or a change in Independent variables causes or leads to a change in the Dependent variable. This study is based on the primary data to understand the level of Service Quality, Responsiveness, Security & Privacy, Assurance, and Reliability and their impact on the retention of customers in the context of internet banking of MTBL. The informations of the research have gathered by a questionnaire survey among the customers of MTBL, Bashundhara branch. I have distributed 30 questionnaires among 30 respondents, who are the clients of MTBL, Bashundhara branch and use their internet banking service. A random sampling technique was adopted to do the survey. I have collect data from the survey and then analyzed it. After analysis, I got significant results of both the dependent and independent variables. From this, now we can get a clear idea that how internet banking impacts on customer retention.

TABLE OF CONTENTS
Page List of Diagram List of Figure List of Table CHAPTER EXECUTIVE SUMMAR Y 1. INTRODUCTION 1.1 Introduction of the study 1.2 Statement of the Problem 1.3 Purpose of the Study 1.4 Objective of the study 1.5 Methodology of the study 1.6 Limitations of the study 2. COMPANY PROFILE 2.1 Introduction 2.2 Historical Background of MTBL 2.3 Legal Form 2.4 Mission and Vision of MTBL 2.5 Products and Services 2.6 MTBL Packages 2.7 MTBL Branches 2.8 MTB Board of Directors 2.9 Company Organogram 2.10 Management Hierarchy 2.11 Branch Employee Hierarchy (Bashundhara Branch) 2.12 Internet Banking of MTBL 2.13 My Work At MTBL 3. REVIEW OF THE LITERATURE 3.1 Literature Review 3.2 Conceptual Frame Work 3.3 Research Questions
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viii ix x

1 2 2 2 2 2 3 3 5 5 5 5 6 6 7 8 8 9 9 10 10 12 13 13 16 17

3.4 Hypothesis 4. RESEARCH METHODOLOGY 4.1 Research Design 4.2 Research Type 4.3 Sampling Method 4.4 Instrument 4.5 Data Collection 4.6 Data Collection Method 4.7 Data Analysis 4.8 Findings 4.9 Discussion 5. CONCLUSION AND RECOMMENDATION 5.1 Conclusion 5.2 Recommendation REFERENCES APPENDIX A A.1 Questionnaire

17 18 18 18 18 18 19 19 19 28 29 30 30 30 31 32 32

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LIST OF DIAGRAM

TABLE 2.1 Functional Organ gram 2.2 Management Hierarchy 2.3 Branch Employee Hierarchy 3.1 Conceptual Frame Work

Page 9 9 10 16

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LIST OF FIGURE

FIGURE 2.1 MTBL Branches

Page 8

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LIST OF TABLE

Table 2.1 Packages of Mutual Trust Bank Ltd.

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EXECUTIVE SUMMARY
This report has prepared as a partial requirement of the internship course of the BBA program in Independent University, Bangladesh (IUB).The topic covering The Impact of Internet Banking in Customer Retention in the Context of Mutual Trust Bank Ltd attempts to evaluate the overall internet banking condition and its impact on the customers of Mutual Trust Bank LTD. It focuses on the necessity, variables and gaps of the Internet Banking process of MTBL in the internal context of its Bashundhara branch. The report is aiming the influence of internet banking on the customers and their different opinions toward it. Mainly it is focusing the impact of internet banking on the customers of MTBL, Bashundhara branch. It will also show the analytical sense developed by analyzing the output processed on the surveys in that branch. There are five chapter of the report. First chapter is consisting of the Introduction of the whole report. Second chapter of the report is consisting of the company profile. In the third chapter there is the review of literature and the conceptual frame work of the study which indicate the research question and hypothesis. The forth chapter of the report is consist of the research methodology. The fifth chapter is consisting of conclusion and recommendation about the study.

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CHAPTER 1
INTRODUCTION
1.1 Introduction of the study:
In general sense we mean Bank as a financial institution that deals with money. Now -a days banking sector is modernizing and expanding its hand in different financial events every day. At the same time the banking process is becoming faster, easier and is becoming wider. In order to survive in the competitive field of the banking sector all organizations are looking for better service opportunities to provide their fellow clients. For last few years, internet banking is a very common service that is provided by most of the commercial banks in Bangladesh. Mutual Trust Bank Ltd. is one of them. Now internet banking is a very popular form of transaction among peoples. Because by this they can do their various banking activities without going to the bank and in a very short time. In this research study the researcher conducted a research on A causal study on the influence of Internet Banking in Customer retention in the context of Mutual Trust Bank Ltd. The main objective of this research is to identify the key factors that influence the internet banking and Helps to retain customers of the Mutual Trust Bank Ltd. By this research we will able to know that which factors and how they influence internet banking of Mutual Trust Bank to retain customer.

1.2 Statement of the Problem:

By this study, researchers will investigate the impact of Internet Banking on customer retention. Mutual Trust Bank Ltd. is a well-established Bank over the last few years, but due to rise in customer complaints and customers preferring- banking services of other banks, it has come to the light that their Internet banking service quality is not one of the best compared to their other banking services. Thats why MTBL is threatened to lose their customer. This has enticed them to conduct a survey to find alternative solutions to improve service quality of their Internet Banking. I was assigned to find the factors (that they need to look at or do further research) of Internet Banking that can help them to improve service quality and retain customers.

1.3 Purpose of the Study:

The purpose of this study is to find out the factors of internet banking that can impact to retaining customer in the context of Mutual Trust Bank Ltd. It will help the researchers to look into the overall condition of internet banking service of Mutual Trust Bank Ltd.

1.4 Objective of the study:

Broad objective: Prepare the report on The impact of internet banking on customer retention in the context of Mutual Trust Bank Ltd. to complete my internship program of undergraduate.

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Specific Objectives: To understand the internet banking system of Mutual Trust Bank Ltd. To identify the problems of internet banking system of Mutual Trust Bank Ltd. To find out the problem of client and employees to changes in internet banking of Mutual Trust Bank Ltd. To identify the problem in operation of internet banking in the banks website. To know the terms, rules and condition of internet banking given by Mutual Trust Bank Ltd. to their clients. To provide suggestions for the improvement of the internet banking system of the Bank.

1.5 Methodology of the study:

I have got all the relevant information from my working experience in MTBL, their Annual report, various brochures, MTBL web site and such. Some information is taken from some of my friends. There are two sources from which I have collected data, Primary source and Secondary source. Primary Data: 1. The information, which is gathered from MTBL while I worked with them. 2. Personal observation. 3. Face to face conversation with the officers. 4. Face to face conversation with the clients. 5. Working at different desks of the bank. Secondary data: The secondary data of this report are collected from MTBL Annual report, and some reports from which I got idea about the way of writing a report. Secondary Sources: Secondary data are collected in the following ways: Data gathered within the organization itself. Data gathered from Texts Internet sources. General reports. Annual reports. Official documents

1.6 Limitations of the study:

There were some limitations of doing the study: We have completed our internship within 3 months only. This is not enough time to complete a fruitful research study. The Bashundhara branch of MTBL is not so large. For this, the sample size (population) is limited in terms of its size and composition.

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Due to the time constraint, the data has only been collected from the clients of Mutual Trust Bank Ltd. Bashundhara Branch only, which may fail to represent the factual scenario of the relationship between measurable variables. I had to face some limitations to collect some informations about internet banking of MTBL as these were not so available for the general peoples. Respondents were too busy to read the questions properly and tick the answer just for the sake of completing the survey quickly. So there is no guarantee that the data collected is 100% correct and hence while analyzing the researcher has considered level of significance. Unavailability to required published documents. Lack of my experience and efficiency to prepare the standard report. Time constraint was also one of the factors that curtailed the scope of the study.

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CHAPTER 2
COMPANY PROFILE
2.1 Introduction:
Mutual Trust Bank Ltd. is a third generation private bank in Bangladesh. This is one of the leading commercial banks which has ingenuous objective of bringing about qualitative changes. It has achieved immense success in all areas of ultimate objective in improving the socio-economic development of the country. MTBL started its operation in October 1999 in Bangladesh. The company operates various financial activities through its head office and 77 branches situated in Bangladesh. MTBL provides various consumer banking products and a wide range of commercial banking services also.

2.2 Historical Background of MTBL:

The Company was incorporated on September 29, 1999 under the Companies Act 1994 as a public company limited by shares for carrying out all kinds of banking activities with Authorized Capital of Tk. 38,00,000,000 divided into 38,000,000 ordinary shares of Tk.100 each. The Company was also issued Certificate for Commencement of Business on the same day and was granted license on October 05, 1999 by Bangladesh Bank under the Banking Companies Act 1991 and started its banking operation on October 24, 1999. The bank conducts all types of commercial banking activities including foreign exchange business and other financial services. During the first two years of operations, the bank's main focus was on the delivery of personalized customer services and expansion of its clientele base. As envisaged in the Memorandum of Association and as licensed by Bangladesh Bank under the provisions of the Banking Companies Act 1991, the Company started its banking operation and entitled to carry out the following types of banking business: 1. All types of commercial banking activities including Money Market operations. 2. Investment in Merchant Banking activities. 3. Investment in Company activities. 4. Financiers, Promoters, Capitalists etc. 5. Financial Intermediary Services. 6. Any related Financial Services.

2.3 Legal Form:

The Company was incorporated on September 29, 1999 under the Companies Act 1994 as a public company limited by shares for carrying out all kinds of banking activities with Authorized Capital of BDT 200 million divided into 2,000,000 ordinary shares of BDT 100 each. At present, Authorized Capital of the company is BDT 10,000,000,000 (BDT 10 Billion) divided into 1,000,000,000 (One billion) ordinary shares of BDT 10 each.

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Company Registration No: C38707 (665)/99 on September 29, 1999 Bangladesh Bank Permission No: BRPD (P) 744(78)/99-3081 on October 5, 1999 Registered Office: MTBL Centre 26 Gulshan Avenue, Gulshan 1 Dhaka 1212, Bangladesh. SWIFT Code: MTBL BD DH

Corporate Website: www.mutualtrustbank.com 2.4 Mission and Vision of MTBL:

Mission: The mission of MTBL known as We aspire to be one of the most admired banks in the nation and be recognized as an innovative and client-focused company, enabled by cutting-edge technology, a dynamic workforce and a wide array of financial products and services.--- MTBL Group. Vision: Mutual Trust Bank's vision is based on a philosophy known as MTB3V. The organization envisions MTB to be: 1. One of the Best Performing Banks in Bangladesh. 2. The Bank of Choice. 3. A Truly World-class Bank.

2.5 Products and Services:

The MTBL concentrates the following categories of banking services: Retail Banking: Deposit Product Loan Product MTB Cards NRB: NRB Savings A/c Corporate Banking: Treasury: Term Finance Money Market Working Capital Finance DIBOR Trade Finance Foreign Exchange Offshore Banking Primary Dealers Business Syndication & Structured Finance

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2.6 MTBL Packages: Retail Wholesale SME Financing

MTB Krishi MTB Mousui MTB Revolvig Loan MTB Digoon MTB Small Business Loan MTB Green Energy Loan

NRB Savings Account

NRB saving A/C NRB DPS A/C NRB FDR

Treasury

Deposit Products:
Regular Savings Account Current Account Brick by Brick MTB Double Saver Plan MTB Education Plan Fixed Deposit MTB Millionaire Plan Monthly Benefit Plan MTB Senior MTB Inspire MTB Junior MTB Ruby MTB Graduate MTB Shanchay MTB Kotipati

Term Finance Working Capital Finance Trade Finance Syndication & Structured Finance Off-Shore Banking

Money Market DIBOR Foreign Exchange Primary Dealers Business

Loan Products:
MTB Personal Loan MTB Auto Loan MTB Home Loan MTB Home Equity Loan

MTB Card Products:

Credit cards Debit cards
Table 2.1: Packages of Mutual Trust Bank Ltd.

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2.7 MTBL Branches:

Figure 2.1: MTBL Branches.

2.8 MTBL Board of Directors:

The following are members of the MTBL Board of Directors Dr. Arif Dowla, Chairman Mr. Rashed Ahmed Chowdhury,Vice chairman Mr. Sayeed Manzur Elahi Mr. Md. Hedayetullah Mr. Mohammed Abdur Rouf Mr. Md. Abdul Malek Mr. Md. Wakiluddin Mrs. Khwaja Nargis Hossain Mr. Anjan Chowdury Mr. Q.A.F.M Serajul Islam Mr. Anis A. Khan,Managing Director & CEO.

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2.9 Company Organogram:

Diagram 2.1: Functional Organ gram.

2.10 Management Hierarchy:

Diagram 2.2: Management Hierarchy.

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2.11 Branch Employee Hierarchy (Bashundhara Branch):

Branch Manager & Vice President

First Ass.Vice President & Deputy Manager (FAVP)

Junior Ass.Vice President (JAVP)

GB Department

Cash Department

Officer

Assistant Officer

Officer

Assistant Officer

Diagram 2.3: Branch Employee Hierarchy.

2.12 Internet Banking of MTBL:

The Internet banking service of Mutual Trust Bank Ltd. was launched six years ago. Now almost all the customer use internet banking. There are some terms and conditions of using internet banking given by MTBL to their customer. They are: Eligibility & Access Privileges: Customer must be 18 years of age or older to subscribe to Internet Banking Services If customer wishes to access their MTB accounts for view-only and do not wish transactions to be allowed using Internet Banking, he/ she must explicitly request VIEW-ONLY access when requesting activation.

Joint Accounts: For joint accounts where the mode of operation is indicated as either or survivor or either to operate, username can be activated with FULL or VIEW-ONLY access for only one joint account holder as per request received from the accountholder. MTB shall act on the instruction received first. The other joint account holders shall expressly agree with the arrangement and give their consent in writing on the application form for use of Internet Banking.

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Confidentiality: MTB will take reasonable care to maintain the confidentiality of information related to the Customer. MTB may not disclose customers personal information to any external organization unless required by law or without informing customer and thus request to activate a self-chosen username. MTB may be required from time to time to disclose customers personal information to government or judicial bodies or agencies or regulators, but will do so only under proper authority of law.

Security: MTB shall strive at all times to ensure that customers personal data is protected against unauthorized or accidental access, processing or erasure. MTB shall maintain this commitment to data security by designing, implementing and exercising appropriate processes where physical, electronic and managerial measures are addressed to safeguard and secure customers personal data. MTB Internet Banking is equipped with Secure Socket Layer (SSL) protocol as well as industry standard encryption techniques to protect data. MTBs web servers are protected behind firewalls and systems are reasonably monitored to prevent unauthorized access.

Customer Responsibilities: To enable customer to use the Service, MTB shall allow customer to choose a username and password as well as register mobile number along with other required information for the purpose of Internet Banking. The username and password along with m-PIN sent to customers mobile number will be used to identify customer whenever he/ she accesses the Service. Customer acknowledges that username, password and m-PIN will verify customers authenticity and therefore customer will be responsible for all transactions and instructions initiated through Internet Banking by the use of the correct username, password and m-PIN. Customer must take care not to choose a password that is likely to be guessed by anyone trying to access the Service pretending to be the Customer. Customer should take care not record password in a way that could make it accessible or recognizable by someone else. Customer must ensure at all times that the mobile number registered with Internet Banking is accessible and operable only by him/ herself and none other. Customer must ensure at all times that the e-mail address registered for the purpose of Internet Banking is also accessible and operable only by him/ herself and none other. Customer is liable for all losses and expenses due to unauthorized use if Customer has acted fraudulently or, with gross negligence, with intentional

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misconduct or if Customer is in willful default of any of the security obligations stated in this agreement. Anti-Money Laundering: Customer agrees and confirms that he/ she will not use MTB Internet Banking for money laundering or violate any law of the land related to money laundering. MTB reserves the right to ask for clarification and or information from the customer on any transaction and customer shall be required to respond in writing to such queries within 7 working days.

MTBS Rights & Responsibilities: MTB shall take reasonably practicable steps to ensure that the banks systems in connection with Internet Banking Services are installed with adequate security designs and to control and manage the risks in operating the systems, taking into account any law, rules, regulations, guidelines, circulars, codes of conduct and prevailing market practices which may be applicable to MTB from time to time. MTB shall not be responsible for any loss, damage, liability or claim arising, directly or indirectly from any error, delay or failure in performance of any of its obligations hereunder which is caused by fire or natural disaster, strike, civil unrest, any inoperability of communication facilities or any other circumstances beyond the control of MTB.

2.13 My Work At MTBL:

In my internship program I have worked in the general banking side of the bank. My job responsibilities as an intern are given below. Helping customers to open various new accounts. Such as- Savings account, DPS, FDR. Taking Cheque book Requisition. Receiving Cheque. Inward outward clearing registers writing. Maintain cheque book Register. Update Account opening Form. Solving various customer quarries.

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CHAPTER 3
REVIEW OF THE LITERATURE
3.1 Literature Review:
Internet Banking: The rise of Internet Banking is also due to its number of benefits for both the provider and the customer as well. From the banks perspective these are mainly related to cost savings (Sathye, 1999; Robinson, 2000) and Internet Banking remains one of the cheapest and more efficient delivery channels (see Pikkarainen et al., 2004). Other rationales for the adoption of such services are also related to competition as Internet Banking strategy has been an interesting way to retain existing customers and attract new ones (Robinson, 2000). Among the numerous advantages to banks feature mass customization, more effective marketing and communication at lower costs amongst others (Tuchila, 2000). Benefits for the end users are numerous as well and include mainly convenience of the service (time saved and globally accessible service); lower cost of transaction and more frequent monitoring of accounts among others (see Pikkarainen et al., 2004). It is noteworthy that there is also a number of push factors encouraging the adoption of internet banking that have been evoked in the literate In spite of all these numerous advantages of Internet Banking, many people still prefer to conduct their banking transactions at the bank, something which they had been doing for years. Thus, apart from security aspects, there are numerous factors and barriers that making people still prefer the traditional way for their banking transactions. Internet banking is advantageous to both the banks and customers. Service Quality: Service quality has become an issue that businesses have focused up on with e-services that enable electronic communication; information gathering, transaction processing and data interchange between online vendors and customers across time and space (Featherman and Pavlou, 2002). In online environments, service quality is defined as the extent to which a website facilitates efficient and effective shopping, purchasing, and delivery of product and services (Zeithaml et al., 2002). Santos (2003) described e-service quality in terms of overall customer evaluations and judgments regarding the excellence and the quality of e-service delivery in the virtual marketplace. A study by Parasuraman et al. (2005) on the Internet service quality of online shopping websites resulted in the development of a service quality scale, the e-SQ scale, consisting of seven dimensions: efficiency, system availability, fulfillment, privacy, responsiveness, compensation and contact. It is slightly different from the e-SQ scale developed by Zeithaml et al. (2001) which has 11 dimensions: reliability, responsibility, access, flexibility, and ease of navigation, efficiency, assurance, security, price knowledge, site aesthetics and customization / personalization. Furthermore, a study by Ribbink et al. (2004) in an e-commerce context (online book and CD stores) the service quality dimensions consisted of: ease of use, escape, responsiveness and customization. Cristobal et al. (2007) further developed a service quality scale which consists of multidimensional constructs of web design, customer service, assurance and order management.

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Responsiveness: Responsiveness is the willingness to help customers and provide Prompt service (Zeithaml et al, 2006). This dimension is concerned with dealing with the customers requests, questions and complaints promptly and attentively. Handling of problems and returns through the site. A Bank is known to be responsive when it communicates to its customers how long it would take to get answers or have their problems dealt with. To be successful, companies need to look at responsiveness from the view point of the customer rather than the companys perspective (Zeithaml et al., 2006). Responsiveness also captures the notion of flexibility and ability to customize the service to customers need. Standard for speed and promptness thats refects the companies view of process requirement may be very different from the customer requirement. Responsiveness concerns the willingness or eagerness of employees for service provision. It involves turnaround time of service actions like timely dispatch of a receipt or quickly calling back the customer (Zethaml et al., 2002). Privacy and Security: Trust has been identified as an important factor for those financial related internet services; moreover, empirical study supports that consumers make many online decisions almost solely on the basis of trust (Avinandan & Prithwiraj, 2003; Urban, Sultan and Qualls, 2000). For Internet banking, trust plays an extremely important role for the acceptance and use, which has been supported by both research and empirical studies, especially in developing countries (Benamati and Serva, 2007). Trust building is very important for internet banking adoption. Privacy and security concern are the two crucial factors for trust building, which has been pointed out as the top two factors influencing user adoption. Privacy and security have been discussed broadly both in academia and practice. Privacy is defined as the ability to control and manage information about oneself (Belanger, Hiller and Smith, 2002). Security is defined as the ability to protect against potential threats. From consumers standpoint, security is the ability to protect consumers information from information fraud and theft in the online banking business. Customers have doubts about the trust ability of the e-bank's privacy policies (Gerrard and Cunningham, 2003). Trust has striking influence on user's willingness to engage in online exchanges of money and personal sensitive information (Friedman et al, 2000; Wang et al, 2003). Privacy is an important dimension that may affect users' intention to adopt e-based transaction systems. Encryption technology is the most common feature at all bank sites to secure information privacy, supplemented by a combination of different unique identifiers, for instance, a password, mother's maiden name, a memorable date, or a few minutes of inactivity automatically logs users off the account. Besides, the Secure Socket Layer, a widely-used protocol use for online credit card payment, is designed to provide a private and reliable channel between two communicating entities; the use of Java Applet that runs within the user's browser; the use of a Personal Identification Number, as well as an integrated digital signature and digital certificate associated with a smart card system (Hutchinson and Warren, 2003). Thus, a combination of smart card and biometric recognition using fingerprints offers a more secure and easier access control for computers than the password method. Zeithaml et al (2000) developed e-SERVQUAL for measuring e-service quality, identifying 11 dimensions: access; ease of navigation; efficiency; flexibility; reliability; personalization; security/privacy; responsiveness; assurance/trust; site aesthetics; and price knowledge. Hence, it is hypothesized that privacy has a positive effect on customer satisfaction.

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Assurance: Assurance refers to the ability the internet banking convey trust and confidence to their consumers. Madu and Madu argued that the online banking must ensure that their employees are knowledgeable about their operation, and courteous in their responses to the customers. Schneider and Perry suggested some web features that help promote the assurance to consumers. For instances, providing detailed banks information (e.g. background, mission statement, announcement, banks handling private data, a direct relationship might be established among the three concepts. Assurance is defined as the employees knowledge and courtesy and the service providers ability to inspire trust and confidence (Zeithaml et al., 2006). According to Andaleeb and Conway (2006), assurance may not be so important relative to other industries where the risk is higher and the outcome of using the service is uncertain. The trust and confidence may be represented in the personnel who link the customer to the organization (Zeithaml et al., 2006. Assurance is a set of courtesy and knowledge of employees along their ability to instill confidence. The assurance dimension is taken from an integrated Assurance is a set of courtesy and knowledge of employees along their ability to instill confidence. The assurance dimension is taken from an integrated. Reliability: Reliability means the quality of being dependable or reliable on something (Lin and Chin 2007). Reliability is defined as the ability to perform the promised service dependably and accurately or delivering on its promises (Zeithaml et al, 2006, p. 117) .Regarding to service quality dimension of reliability the internet has big affect on it. Madu2002. Santos 2002 defines reliability as the ability to perform the promise service accurately and frequently updating the website. Since most of the online customers are really concerned about the reliability of virtual service providers. (Yant and fand 2004).( Gilly 2002) sate reliability as the product that came was represent accurately by the website, you get what you ordered from the site the product was delivered in time promise by the bank. Based on the theoretical review in this study it is found that reliability is one of the most highly frequently mention dimension in e service quality. (Parasyraman 1985, Johnston 1988). Reliability is found as important in banking perspective however its different from customer perspective. For internet banking reliability is mostly based on physical bank. It is important for the bank to conduct business both online and offline. It is also suggest that technical function and accurate record provided by internet should be focused on by banking service provider in on line services. Madu2002. Reliability involves dependability and uniformity in performance. It means the firm honors the commitments it makes. Specifically, billing accuracy, proper record maintenance and delivering the service within acceptable time limit describes the reliability of online services (Saha and Zhao, 2005). Customer Retention: Customer retention means the activity that a selling organization undertakes in order to reduce customer defections. Successful customer retention starts with the first contact an organization has with a customer and continues throughout the entire lifetime of a relationship. Previous studies have identified the benefits that customer retention delivers to an organization. In fact, the longer a customer stays with an organization or company the more utility than seeking new customers. (Edvardsson et al, 2000). Many factors consisting of higher initial costs of finding and attracting new customers, increases in both the value and number of purchases, positive word of mouth promotion and the customer

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better understanding of the organization affects the loyalty of customers and the time that customers stay with the organization. Apart from the benefits that the longevity of customers brings, research findings also suggest that the costs of customer retention activities are less comparing the costs of acquiring new customers. For example, (Rust and Zagorsk) declared that the cost of attracting new customers may be five times of keeping existing customers. However, maintaining high levels of satisfaction will not, by itself causes customer loyalty. Today, retaining customers becomes a priority. In spite of importance of customer retaining, some research shows that longevity does not alone leads to profitability (Andreassen, 1999). In other research, (Beckett et al, 2000) found interesting conclusions as to why consumers appear to remain loyal to the same financial provider such as banks, in spite of in many factors they hold less favorable views toward these service providers. For example, many consumers appear to perceive little differentiation between banks, because according to their opinion, the change of banks essentially is useless. Secondly, consumers appear motivated by convenience. Finally, consumers associate changing banks with high switching costs in terms of the potential sacrifice and effort involved. Furthermore, it is necessary for bank management to be carefully considering the factors that might increase customer loyalty and retention rates. There are little empirical researches that investigate the reasons result in customer loyalty and retention. Previous surveys focused on identifying factors which causing customer retention. Others researches have focused on developing measures of customer satisfaction, customer value and customer loyalty without specifically looking into other potential meaningful factors. Examples of mentioned factors are competitive advantage.

3.2 Conceptual Frame Work:

Service Quality

Responsiveness

Privacy and Security

Customer Retention

Assurance

Dependent variable

Reliability Independent variable

Diagram 3.1: Conceptual Frame Work.

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3.3 Research Questions:

1. Does Service Quality affect Customer retention in context of Mutual Trust Bank? 2. Does Responsiveness affect Customer retention in context of Mutual Trust Bank? 3. Does security and Privacy affect Customer retention in context of mutual Trust Bank? 4. Does Assurance affect Customer retention in context of Mutual Trust Bank? 5. Does Reliability affect Customer retention in context of Mutual Trust Bank?

3.4 Hypothesis:
1. Service Quality affects Customer retention in context of Mutual Trust Bank. 2. Responsiveness affects Customer retention in context of Mutual Trust Bank. 3. Privacy and Security affects Customer retention in context of Mutual Trust Bank. 4. Assurance affects Customer retention in context of Mutual Trust bank. 5. Reliability affects Customer retention in context of Mutual Trust bank.

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CHAPTER 4
RESEARCH METHODOLOGY
4.1 Research Design:
As shown in the diagram of the conceptual framework of the research there are five independent variables and one dependent variable. The conceptual framework also shows that there is a direct relationship between the Independent variables and the dependent variable. It is very important to explore the type & intensity of this relationship so that the earlier mentioned purpose of the study can be met. The study will enable the bank to understand the factors of internet banking which actually helps to improve the Customer retention. Thus they can plan for their future plan of action or strategies and try to provide a good internet banking service to retain more customers.

4.2 Research Type:

This research is Descriptive in nature. Under descriptive research it will be a causal study. Because the type of study that will be carried out to test the hypothesis and to answer the research questions will be a causal study. This type of study will show a cause and effect relationship of the independent and dependent variables.

4.3 Sampling Method:

The sampling methods that have been adopted for the research is as follows: Sampling Frame: The population of the research is formed by the customers of Mutual Trust Bank LTD, Bashundhara Branch. The sampling frame for the research will be the official list of customers in the Banks database in Bashundhara branch. So it will be the probability sampling. Which is a subset of a statistical population in which each member of the subset has an equal probability of being chosen.(Levin & Rubin,2000) Sampling Technique: A systematic random sampling method has been used where every 3rd customer arriving in the branch will be contacted. Among those whoever fall under the criteria of holding an account and use internet banking for more than a year & visiting the branch at least once every two weeks will be interviewed. Sample Size: 30 clients were interviewed who are using internet banking of Mutual Trust Bank. So the sample size is 30.

4.4 Instrument:
A structured questionnaire was selected for this study. The questionnaire is consisting of 18 questions regarding Service Quality, Responsiveness, Privacy & Security, Assurance and Reliability. Each item is of 5 point Liker scale, that ranges from 1(strongly disagree) to 5 (strongly agree).

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4.5 Data Collection:

For collecting the data both primary and secondary sources are used. Primary Sources: Conversations with the bank employees and customers. Discussions with the employees who handle the internet banking system. Questionnaires used in interview. Secondary Sources: Mutual Trust Banks global and regional websites. Various Publications and manuals on their internet banking.

4.6 Data Collection Method:

The questionnaire is distributed among the 30 respondents. The questionnaires were surveyed personally at the branch of Mutual Trust Bank Bashundhara branch. This was possible because of a prior notice from the branch officers of an arrival of a client. There was an economy in data collection due to the focus provided by standardized Questions. Only questions of interest to the researcher are asked, recorded, codified, and Analyzed. Because they are standardized, they are relatively free from several types of errors. They are relatively easy to administer.

4.7 Data Analysis:

For data analysis purpose, SPSS software have used as it provides in-depth investigation in data analysis and visualization. Reliability analysis, regression analysis and co-relation analysis have used to analysis of the data. Stepwise regression analysis can be carried out to test hypotheses to find which independent variable(s) individually and collectively provide a meaningful contribution towards the explanation of the dependent variable noted that if an investigator wishes to determine whether some conceptually newer measures add anything to the depending variable. MS Excel has also used to carry out calculations in some cases. The researchers have investigated Internet banking Factors impact in Customer retention of Mutual Trust Bank Bashundhara branch. Frequency Table: The sample size of the research consists of 20 male and 10 female respondents. 66.7% of male and 33.3% of female customers participates in this survey which is shown at below. Among the responding 10 customers age was between 15-25 years, 11 customers age was between 26-35 years, 6 customers age was between 36-45 years and 3 customers age was between 46 and above which is shown below. There are three occupation ranges in the survey. There were 19 respondents, who are service holders which is 63.3%, 4 are businessman which is 13.3% and 7 who are student with 23.3%.

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Statistics

Age N Valid 30

Gender 30

Occupation 30

Missing

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Reliability Analysis:

Service Quality and Customer Retention:

Interpretation: Here the alpha value is 0.896, which is more then 0.5. So, the question is clear to the audience. Responsiveness and Customer Retention:
Reliability Statistics Cronbach's Alpha .883 N of Items 2

Interpretation: Here the alpha value is 0.883, which is more then 0.5. So, the question is clear to the audience. Security & Privacy and Customer Retention:
Reliability Statistics Cronbach's Alpha .839 N of Items 2

Interpretation: Here the alpha value is 0.839, which is more then 0.5. So, the question is clear to the audience.

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Assurance and Customer Retention:

Reliability Statistics Cronbach's Alpha .825 N of Items 2

Interpretation: Here the alpha value is 0.825, which is more then 0.5. So, the question is clear to the audience. Reliability and Customer Retention:
Reliability Statistics Cronbach's Alpha .825 N of Items 2

Interpretation: Here the alpha value is 0.825, which is more then 0.5. So, the question is clear to the audience. Regression Analysis: Service Quality and Customer Retention:

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Interpretation: Here the value of 2 is .682 means 68.2%. Thats mean the effect of service quality on customer retention is 68.2%. Responsiveness and Customer Retention:

Interpretation: Here the effect of responsiveness on customer retention is 67.5%.

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Security & Privacy and Customer Retention:

Interpretation: Here the value of 2 is .560. Thats mean the effect of privacy and security on customer retention is 56%. Assurance and Customer Retention:

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Interpretation: Here the value of 2 is .500. Thats mean the effect of assurance on customer retention is 50%. Reliability and Customer Retention:

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Interpretation: The effect of reliability on customer retention is 58.1%. Correlation analysis: Correlation analysis was conducted on all variables to explore the relationship between variables. The bivariate correlation procedure was subject to a two tailed of statistical significance at two different levels highly significant (p<.01) and significant (p<.05).

Hypothesis testing: Ho: null hypothesis = no relationship Ha: alternative hypothesis = relationship Relationship between Service Quality and Customer Retention:
Correlations Customer Retention Customer Retention Pearson Correlation Sig. (2-tailed) N Service Quality Pearson Correlation Sig. (2-tailed) N **. Correlation is significant at the 0.01 level (2-tailed). 30 .826
**

Service Quality 1 .826

**

.000 30 1

.000 30 30

Interpretation: At 5% level of significance we cannot accept the null hypothesis as T value dont falls in (-2.021 to +2.021) and accept alternative hypothesis. So,

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according to the Pearson correlation test there is a relationship between service quality and customer retention, which is moderately significant. Relationship between Responsiveness and Customer Retention:
Correlations Customer Retention Customer Retention Pearson Correlation Sig. (2-tailed) N Responsiveness Pearson Correlation Sig. (2-tailed) N **. Correlation is significant at the 0.01 level (2-tailed). 30 .821
**

Responsiveness 1 .821
**

.000 30 1

.000 30 30

Interpretation: There is a moderately significant relationship between responsiveness and customer retention. Relationship between Security & Privacy with Customer Retention:
Correlations Customer Retention Customer Retention Pearson Correlation Sig. (2-tailed) N Privacy and Security Pearson Correlation Sig. (2-tailed) N **. Correlation is significant at the 0.01 level (2-tailed). 30 .749
**

Privacy and Security 1 .749

**

.000 30 1

.000 30 30

Interpretation: According to the Pearson correlation test there is a relationship between security & privacy with customer retention, which is moderately significant.

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Relationship between Assurance and Customer Retention:

Correlations Customer Retention Customer Retention Pearson Correlation Sig. (2-tailed) N Assurance Pearson Correlation Sig. (2-tailed) N **. Correlation is significant at the 0.01 level (2-tailed). 30 .707
**

Assurance 1 .707
**

.000 30 1

.000 30 30

Interpretation: At 5% level of significance we cannot accept the null hypothesis as T value dont falls in (-2.021 to +2.021) and accept alternative hypothesis. So, there is a relationship between assurance and customer retention. Relationship between Reliability and Customer Retention:
Correlations Customer Retention Customer Retention Pearson Correlation Sig. (2-tailed) N Reliability Pearson Correlation Sig. (2-tailed) N **. Correlation is significant at the 0.01 level (2-tailed). 30 .762
**

Reliability 1 .762
**

.000 30 1

.000 30 30

Interpretation: According to the test there is a moderately significant relationship between reliability and customer retention as the T value dont falls in (-2.021 to +2.021) and accept alternative hypothesis.

4.8 Findings:
After analyzing the data we have find that there is reliability between the independent variables and dependent variables. Thats mean the questions are clear to the audience. After the regression analysis we can see that the 2 value of the independent variables have a positive effect on the dependent variable. In the correlation analysis there are moderately significant relationship between the independent variables and the dependent variable.

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4.9 Discussion:
It is important for a bank to retain its customers, because it is the retention of loyal customers who in turn would bring new customers for the bank in future. It is much cheaper for the bank to retain its customers than to attract new customers which would require further promotional expense. Through this research, researchers have mentioned some factors which are helpful for retaining customers. They are as follows; 1) Service Quality. 2) Responsiveness. 3) Privacy and Security. 4) Assurance. 5) Reliability.

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CHAPTER 5
CONCLUSION AND RECOMMENDATION
5.1 Conclusion:
Working as an intern in MTBL I have truly enjoyed my internship program from the learning and experience viewpoint. I am confident that this three months experience will definitely help me to build up my career in future. The research clearly indicates that internet banking features of Mutual Trust Bank Ltd. helps to retain customers. If the bank plans to expand the customer base of internet banking they should focus more on service quality, responsiveness, privacy & security, assurance and reliability factors of internet banking. Proper web-hosting is required for this. Customers should also be made aware of unethical practices like sniffing, spoofing, phishing and other malicious software which can be used by hackers. Attention should also be given in the encryption of the information which is exchanged between the users and the bank. More ever the bank should be more aware to make their internet banking service more quality full for their customers. I think this research will be helpful for Mutual Trust Bank Ltd. to make their internet banking much better in future. This research will be also beneficiary for other researcher who wants to do research on this topic in future.

5.2 Recommendation:
It is suggested that a better research on the impact of Internet banking in customer retention can be carried out so that more people can be habituated with the internet in Bangladesh. At the current situation, the condition of information technology is improving slowly in Bangladesh. The connectivity of the internet of Bangladesh is expected to improve. A more useful and effective research can be carried out in the near future if connectivity and network improvements are witnessed by customers. A study on a large population sample is likely to give more accurate results. If Mutual Trust Bank Ltd. increases its customer base and do a survey on a larger sample size, it will give more accurate information and result. Proper steps should be taken to make the Internet Banking service more efficient and client friendly. A research should be made by considering the users of internet banking across all the major banks that are operating in the country.

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REFERENCES
[1] Guangying Hua, (April 2009), Internet Banking and Commerce, Journal of internet banking, vol. 14, no.1 (http://www.arraydev.com/commerce/jibc/2009-04/Online%20Banking_GHua.pdf) [2] Asli Yuksel Mermod, (April 2011), Internet Banking and Commerce, Journal of internet banking, vol. 16, no.1 (http://www.arraydev.com/commerce/jibc/2010-08/1104-Publ_PDFVersion.pdf). [3] Chun Wang and Zheng Wang, (2006:07), The Impact of Internet on Service Quality in the Banking Sector (http://epubl.ltu.se/1653-0187/2006/07/LTU-PB-EX-0607-SE.pdf). [4] Pandachi K, Seetanah B and Appadu A, A STUDY ON THE USE OF IN TERNET BANKING AMONG SMEs IN MAURITIUS (http://www.uom.ac.mu/sites/irssm/papers/Padachi,%20Seetanah%20&%20Appadu%20~ %2046.pdf) [5] Anesh Maniraj Singh, (2004), Trends in South African Internet Banking, Aslib Proceedings, Vol.56, Iss: 3 pp.187-196. [6] Blanca Hernndez-Ortega, (December 2007), Internet Banking and Commerce, Journal of internet banking, vol. 12, no.3 (http://www.arraydev.com/commerce/jibc/2007-12/Blanca_Final.pdf) [7] http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1761937/ [8] Annual Report 2012 of Mutual Trust Bank Ltd. [9] Mutual Trust Bank Ltd. website (http://www.mutualtrustbank.com/) [10] http://www.ukessays.com/essays/information-systems/the-literature-review.php

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APPENDIX A
A.1 Questionnaire: Good Morning / Good Afternoon, I am Umme Sauda Bente Morad doing my Internship in Mutual Trust Bank Ltd, Bashundhara branch Dhaka. I have to submit a report on the impact of internet banking on customer retention as a part of my Internship program. For that I am conducting a survey on Mutual Trust bank customers. I would be glad and grateful if you help me in the process through answering the survey questions. Personal Information 1. Male 2. Female

3. Age:

15-25

26-35

36-45

45 above

Occupation:

. 1= strongly disagree; 5=Strongly agree;

1) You are satisfied in the Banks service quality. 2) The bank is well known and has a good reputation. 3) The bank provides sufficient information when customer needs it in case of any problem. 4) The bank helps its customer willingly and provides best service. 5) The bank resolves any problem very quickly which encounters with the 1 1 1 1 1 2 2 2 2 2 3 3 3 3 3 4 4 4 4 4 5 5 5 5 5

2= Disagree;

3= Moderate;

4=Agree;

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6) 7)

8)

9)

online transaction. The function of the online transaction is easy to operate and you rely on it. When the bank promises you to do something within a certain time, it does so. The site of the bank gives sufficient promises to its customers about their service. The bank provides sufficient and accurate informations to its customers.

1 1 1

2 2 2

3 3 3

4 4 4

5 5 5

1 1 1 1 1 1 1 1 1 1

2 2 2 2 2 2 2 2 2 2

3 3 3 3 3 3 3 3 3 3

4 4 4 4 4 4 4 4 4 4

5 5 5 5 5 5 5 5 5 5

10) The information context and texts are easy to understand. 11) You are able to get in the site quickly. 12) It is easy to complete a transaction quickly through the banks website. 13) You have enough privacy and security on your informations that you have given to the bank. 14) You fill safe in the transaction with the bank. 15) The banks site is secure for credit card informations. 16) The bank will not misuse your informations. 17) The bank is responsible enough towards its customers. 18) The bank does not do any compromise with the service quality and customer preference.

Thank You