ANALYSIS OF CRITICAL FACTORS

INFLUENCING ADOPTION OF e-BANKING

Ramakrishnan N*1, Subhrajit Dey*2
1

Associate Professor, Institute of Management, Christ University, Bangalore

1

e-mail: ramakrishnan.n@christuniversity.in

Scholar, Institute of Management, Christ University, Bangalore

2

e-mail: subhrajit.dey@mba.christuniversity.in

Abstract The need for deployment of

Information technology in various sectors has
been a growing phenomenon. The banking
industry witnessed a paradigm shift from
traditional paper-based mode of operation to
paperless transactions and online updates, thus
fuelling the growth of e-banking. This paper
focuses on analysis of critical factors for
e-banking based on research studies.
Keywords: Information technology, paperless
transactions, e-banking, Critical factors.

I INTRODUCTION
The banking sector plays an active
role in the emerging economy of India. There
has been a perception of formal and rigid
approaches being followed in banking
institutions.[1]
Banking institutions could provide
leadership in this era of economic
transformation. This has been facilitated by
deployment of information technology in the
shift towards paperless banking or e-banking,
Electronic banking or e-banking
created a revolution in the banking services
sector.
e-banking refers to those types of
services using which customers of a bank
could avail and carry out most of the banking
services
through
computers,
ATMs
(Automated Teller Machines) or mobile
phones. Electronic Funds Transfer (EFT) plays
an important role in the e-banking approach,
and is utilized by a large segment of bank
customers. Electronic funds transfer helps to
minimize usage of cheques and paper-based
transactions by deployment of information and
communication technology. EFTs are initiated
through devices like cards or codes that allow
us or those whom we authorize to access our
account. Most banking institutions use ATM
or debit cards and Personal Identification

Numbers (PINs) for this purpose. They also

use other types of debit cards requiring
signature or a scan of the first holder of the
account. For example, some use radio
frequency identification (RFID) or other forms
of contactless technology that scans the
account-related information without direct
contact. Countries also have the federal
Electronic Fund Transfer Act (EFT Act) to
cover some electronic consumer transactions.
[2].
E-banking includes various platforms,
but not limited to ATMs, Internet Banking,
Telephone Banking, and Electronic Demand
Draft Creation.
II. SHIFT TO e-BANKING
With the advent of universal banking,
the banking sector transformed to fast-paced
banking approaches and methodologies. Their
core mission shifted towards customer
retention through speedy and accurate online
banking. E-banking involved integration with
telephonic
systems
and
web
based
technologies to focus on various segments of
the society. This enabled a paradigm shift from
profit-orientation to customer-orientation.
Many traditional banks did not have
online banking operations until a few years
ago. In the recent past, such strategies have
become more prevalent.
The shift to e-banking has been
witnessed among the nationalized banks and
also among other entities such as cooperative
banks and smaller private banking institutions.
The banks may differ with regard to their
underlying motivations for increasing green
products and services (e.g. to enhance longterm growth prospects, or sustainability
principles on which a firm is based). The
growth, variation and innovation behind such

developments indicate that we are in the midst

of a revolution in the banking industry.
In the year 1986, Societe Generale
Bank of Nigeria (SGBN) introduced online,
real-time banking within its 5 branches in
Lagos metropolis. Today, many of the
consolidated banks are embracing electronic
network banking. This allows their personnel
and equipment to sell and deliver prompt
services to the public at no extra cost as and
when required. The focus is more towards
customer value, that understands their
requirements and satisfies them promptly,
efficiently and conveniently, This is done in
ways that are beneficial to the customers and
the bank to facilitate survival in the midst of
keen industrial global competition. Many of
them had changed their old perception about
consumers, products and services and the
entire systems of operation. [3]/
The main economic advantages
resulted out of this revolutionary shift include
aspects such as steady growth, employment
generation, business expansion of banks,
money market growth, and participation of
various banks in the International market,
Studies have indicated a 130%
increase in the usage of Internet banking in
India between 2007 and 2011.
According to the Reserve Bank of
India (RBI), there has been a change in
customer behaviour towards e-banking. This is
evident in the increasing share (by volume) of
non-cash transactions, as depicted below:

Users of banking services considered

that Internet banking had significant advantage
in Usefulness and purpose. [6]. Online banking
was also suggested to be the cheapest channel
for delivery of banking services [7].
III.

STUDIES AND ANALYSIS RELATED

TO e-BANKING

Research on e-Banking: A case from

literature
The e-banking scenario in Nigeria was
highlighted in a research conducted by Sunday
Tunmibi Emmanuel Falayi. The research was
done using accidental sampling method with a
sample size of 40. The sample was drawn from
9
different
banks
using
structured
questionnaires. Descriptive statistical methods
were used for analysis.
[4]
One of the key perspectives of the
research involved study of the percentage of
trust in e-banking with reference to various
age groups.

Fig. 2. Percentage of trust in e-banking across age groups

[4]
Another perspective was the analysis
of the influence of network and other bankingrelated issues on e-banking.

Fig. 1. Rise of e-Money

Some of the challenges related to

e-Banking in India include safety and security,
and reduced level of preparedness on the part
of banks and customers in the adoption of new
technological advancements, and infrastructure
constraints for expansion of e-delivery
channels. [5].

Internet penetration in customers

of the bank
36%
users of internet
non-users of
internet
64%
Fig. 4. Internet penetration in customers of the bank

The study with reference to a customer

sample in a particular bank revealed that 64%
of customers were Internet users.
Fig. 3. Influence of network and other banking issues on
e-banking

[4]
A higher percentage of respondents
(nearly 60%) agreed that network may not be
always reliable. About 70% agreed that there
are occasions when the ATM will make
deductions from their account without any
withdrawal of cash, while only 40% agreed
that they have had an experience of
fraudulent acts with scammers during mobile
money transfer. On e-banking, only 4 5 % of
the respondents agreed that the Nigeria
banking system is stable enough for e-banking
and about 77% agreed that insecurity in the
financial institutions in Nigeria may jeopardize
e-banking in Nigeria. [4]
Study on E-Banking: Indian Scenario
A research was conducted in a leading
Nationalised bank in India with the aim of
finding the Acceptance and Satisfaction of
e-Banking Services among the banks
customers. The exploratory research was
conducted to find whether the customers of the
bank have accepted e-banking services, and
also whether they were satisfied or not.
Both primary and secondary sources
of data were used for the research. The
secondary data was derived from the issues
and complaints of customers which included
the e-banking measures like, ATMs, Internet
banking, Mobile banking. Primary data was
derived through usage of structured
questionnaires.
The findings of the research are
depicted in the following chart:

The preference of banking services as

perceived by customers is depicted in the
following chart.
PREFERENCE OF SERVICES

OTHERS
INTERNE 8%
T
BANKING
23%
MOBILE
BANKING
0%

ATM
69%

Fig. 5. Preference of Services

As indicated, only 23% of the

customers preferred Internet banking services.
The key parameters which influenced adoption
of e-banking services as indicated by the
respondents were Convenience of access to the
e-banking service, Security, and Userfriendliness.

Convenience
18.20%
27.30%
81.80%

Important

Indifferent

Not Important
Fig. 6. Convenience of access as an influencing factor in the
adoption of e-banking

Communications
sustainability.
REFERENCE

Security
9%

55%

27%

Very Important

Important

Indifferent

Not Important

Fig. 7. Security as an influencing factor in the adoption

of e-banking

User-Friendliness
18%
9%

46%

27%
Most Important

Important

Indifferent

Not Important

Fig. 8. User-friendliness as an influencing factor in the

adoption of e-banking

While around 27% of the respondents

expressed that convenience of access to ebanking services was important, 82% of the
respondents felt that security in e-banking was
important or highly important. About 73% of
the respondents expressed that userfriendliness was either important or very
important in e-banking
IV. CONCLUSION
The focus on e-banking and its
utilization has been continuously increasing,
and various approaches are being adopted by
banking institutions across the globe.
However, there is scope for an enhanced level
of e-banking services considering the need to
be competitive and to offer increasingly
efficient banking services to customers. Banks
could also exploit the emerging technological
trends in the Information Technology and

arena

for

better

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