DISSERTATION PROJECT REPORT

ON

A Study of Customer perception towards E-banking

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

IN PARTIAL FULFILLMENT OF AWARD OF MASTERS DEGREE

IN BUSINESS ADMINISTRATION

TO

AMITY BUSINESS SCHOOL

AMITY UNIVERSITY UTTAR PRADESH

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DECLARATION

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

DatePlace- Noida

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

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CERTIFICATE

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

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Date:

Dr. S.K Laroiya

HOD(Department of Economics),
Amity Business School
Amity University, Uttar Pradesh

ACKNOWLEDGEMENT

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

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Sunil Khatri

TABLE OF CONTENTS

Contents

Page no.

Declaration

2.

Certificate

3.

Acknowledgement

4.

Table of contents

5.

Executive Summary

Introduction

Literature Review

26

Research Objective &

Methodology

29

Data Analysis & Results

34

Conclusion and Suggestions

57

Bibliography

60

Annexure

62

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

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

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

Chapter 1
Introduction

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INTRODUCTION

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

Transactions electronically without visiting a brick-and-mortar institutions.

3. E-Banking denotes the provision of banking and related service through
Extensive use of information technology without direct recourse to the bank by
the customer.

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Bank
Information
technology

Customer

Figure 1: E-banking principle

NEED FOR E-BANKING

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

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

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Figure 2: Electronic banking & its components

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EVOLUTION OF E-BANKING

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

Traditional banking

Virtual or E-banking

Gunpowder

Nuclear charged

Personalized services,
time consuming, limited
access

Real time transactions,

integrated platform, all
time access

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Figure 3: Transition from traditional to E-banking

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

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

Figure 4: E-Banking transaction mechanism

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E-BANKING PRODUCTS

Automated Teller Machine (ATM):

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

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Telebanking or Phone Banking:

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

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

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

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

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TYPES OF INTERNET BANKING OR E-BANKING:

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

1. Informational- this is the basic level of Internet banking. Typically, the bank has
marketing information about the banks products and services on a stand-alone
server. The risk is relatively low, as informational systems typically have no path
between the server and the banks internal network. This level of Internet banking
can be provided by the banks or outsourced. While the risk to a bank is relatively
low, the server or web site may be vulnerable to alteration. Appropriate controls
therefore must be in place to prevent unauthorized alterations to the banks server
or web site.
2. Communicative- this type of Internet banking systems and the customer. The
interaction between the banks system and the customer. The interaction may be
limited to electronic mail, account enquiry, loan applications, or static file updates
(name and address change). Because these servers may have a path to the banks
internal networks, the risk is higher with this configuration than with
informational systems. Appropriate controls need to be in the place to prevent,
monitor, and alert management of any unauthorized attempt to access the banks
internal networks and computer systems. Virus controls also become much more
critical in this environment.

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

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

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

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

Transaction speed- Online bank sites generally execute and confirm

transactions at or quicker than ATM processing speeds.

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

Effectiveness- Many online banking sites now offer sophisticated tools,

including account aggregation, stock quotes, rate alert and portfolio managing
program to help you manage all of your assets more effectively.
DISADVANTAGES OF INTERNET BANKING

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

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

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

E- BANKING SERVICES:

1. Online bill payment service:

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

Fund transfer:

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

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

Investing through Internet banking:

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

Recharging your prepaid phone:

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

Shopping at your fingertips:

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

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Table 1: List of some banks operating E-Banking in India & their technology vendors
Bank Name

Technology Vendor

Service offering

ABN AMRO Bank

Infosys (Bank Away)

NetBanking

Abu Dhabi Commercial Bank Infosys (Bank Away)

ADCB NetLink

Bank of India

I-flex

BOIonline

Citibank

Orbitech (now Polaris)

Citibank Online

Corporation Bank

I-flex

CorpNet

Deutsche Bank

db direct

Federal Bank

Sanchez

FedNet

Global Trust Bank

Infosys (BankAway)

ibank@gtb

HDFC Bank

i-flex/ Satyam

NetBanking

HSBC

Online@hsbc

ICICI Bank

Infosys, ICICI Infotech

Infinity

IDBI Bank

Infosys (Bank Away)

i-net banking

IndusInd Bank

CR2

IndusNet

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Punjab National Bank

Infosys (Bank Away)

Internet Banking

Standard Chartered Bank

In-House

Me Standard Chartered Online

State Bank of India

Satyam/Broadvision

onlinesbi.com

UTI Bank

Infosys (Bank Away)

I connect

INTERNET BANKING VERSUS TRADITIONAL BANKING

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

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

IMPACT OF E-BANKING ON TRADITIONAL SERVICES

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

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

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

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THE INDIAN SCENARIO

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

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

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Some of the distinctive features of E-banking are:

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

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Chapter 2
Literature Review

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Literature Review

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

Chandana R, Unnithan, Paula M.C., Swatman in their research paper titled EBanking Adaptions and Dot.Com viability: A comparison of Australian and Indian
experiences in the Banking sector a comparative study of Australian and Indian
experiences in eBusiness was done, which seeks to identify the effectiveness of
dot.coms as indicators of eBusiness uptake and success on a sector-by-sector basis
was undertaken. It was concluded that the banking industry is now a very mature

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one and banks are being forced to change rapidly as a result of open-market forces
such as the threat of competition, customer demand, and technological
innovations such as the growth of the Internet. E-Banking is a successful strategic
weapon for banks to remain profitable in a volatile, and competitive market place
of today in both Indian and Australian Economies despite the differences of IT
usage.

G. Kannabiran and P.C. Narayan discuss in their article the experiences of a

private-sector bank in deploying Internet banking and eCommerce in India.
Strategic alignment of business and IT strategies, planning and implementation of
e-banking initiatives, and management of benefits have been captured, along with

key contributions to development.

Huggins points to the fact that traditional boundaries in banking are disappearing.
Using eBusiness methods, major retailers and telecom providers are starting to
offer financial services to their clients. Extending the value chain and offering
versatile services seems to be the key to retaining competitiveness in the sector.
Attitudes are also shifting from direct transactions to savings and investments, as
the baby boomers reach their fortis and fifties, and prepare for retirement.

Mario Martinez Guerreroin his paper titled Profiling the adoption of Online
banking Services in the European Union offers an empirical investigation on the
adoption of online banking services among European citizen. The use of ebanking services is explained on the basis of socio-demographic and Internet
specific behavioral indicators. The performed analyses provide support for the
influence of country, age, profession and several Internet behaviors on the use of
E-banking.

The Indian Internet Banking Journey In 2001, a Reserve Bank of India survey
revealed that of 46 major banks operating in India, around 50% were either
offering Internet banking services at various levels or planned to in the near
future. According to a research report,( India Research, Kotak Securities, May
2000.) while in 2001, India's Internet user base was an estimated 9 lakh; it was

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expected to reach 90 lakh by 2003. Also, while only 1% of these Internet users
utilized the Internet banking services in 1998, the Internet banking user base
increased to 16.7% by mid- 2000.
Customers usually perceive risks in conducting transactions electronically and
particularly if the transactions involve money. Risk perception can be of six
different types: time risk, finacial risk, performance risk, psychological risk and
safety/confidentiality risk. It is generally considered that risk perception could be
higher for electronic banking services. This study aims to understand extent to
which whether this is consideration is valid as well as to determine the levels of
risk perception differences among those using Internet Banking and those not
using it.

Chapter 3
RESEARCH
OBJECTIVE &
METHODOLOGY

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RESEARCH OBJECTIVE

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

To study the awareness level of people regarding E-Banking.

To find out the factors that influences the adoption of E-Banking services.

To find out the differences in risk perception between those using E-Banking and
those not using E-banking.

To know the causes why customers are not using internet banking.

To find out the main reasons for which people use internet banking.

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RESEARCH METHODOLOGY

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

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

SCOPE OF THE STUDY:

Although many major banks have started offering E-banking services, the slow pace will
continue until the critical mass is achieved for PC, internet connections and telephones.
However, the upsurge of service class with growing demands is pressurizing the
government and bureaucracy in the country to support and develop new initiatives for a
faster spread of E-banking. But then to there is a fear in the mind of customer using
internet as a medium for the banking transaction.

34 | P a g e

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

RESEARCH DESIGN

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

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

SAMPLING
We have used convenience sampling technique. It is also called haphazard or accidental
sampling. Members of the population are chosen based on their relative ease of access.
To sample friends, co-workers, or shoppers at a single mall, are all examples of
convenience sampling. Sometimes called grab or opportunity sampling, this is the

35 | P a g e

method of choosing items arbitrarily and in an unstructured manner from the frame.
Though almost impossible to treat rigorously, it is the method most commonly employed
in many practical situations.

Sample Technique: Convenience sampling

Sample Area: NCR
Sample Size: 120

LIMITATIONS OF THE STUDY:

The survey was done in the NCR region and may not truly express the opinion of
the whole country.

There is lack awareness on the part of people about E-banking.

Most of the people are not techno-savvy. Though internet penetration is growing
still it is not at that level.

Sample Size of the research may not be substantial.

There was a lack of time on the part of respondents.

36 | P a g e

Chapter 4
DATA ANALYSIS &
RESULTS

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DATA ANALYSIS & INTERPRETATION

1) Age group

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

Statistics
agegroup
N

Valid
Missing

120
0

Mean

2.2083

Median

2.0000

Mode
Std. Deviation
Variance

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2.00
1.17320
1.376

agegroup
Cumulative
Frequency
Valid

Percent

Valid Percent

Percent

18-25

40

33.3

33.3

33.3

26-35

42

35.0

35.0

68.3

36-45

16

13.3

13.3

81.7

46-60

17

14.2

14.2

95.8

4.2

4.2

100.0

120

100.0

100.0

60+
Total

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

2) Gender

: 1) Male 2) Female

Statistics
Gender
N

Valid
Missing

120
0

Mean

1.3250

Median

1.0000

Mode
Std. Deviation
Variance

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1.00
.47034
.221

Gender
Cumulative
Frequency
Valid

Percent

Valid Percent

Percent

male

81

67.5

67.5

67.5

female

39

32.5

32.5

100.0

120

100.0

100.0

Total

INTERPRETATION:

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

3) Frequency of visiting your bank branch per month?

Case Processing Summary

Cases
Valid
N

Missing
Percent

Total

Percent

Percent

agegroup * Frequency of
visiting your bank branch per

120

100.0%

.0%

120

100.0%

month?

agegroup * Frequency of visiting your bank branch per month? Crosstabulation

Count
Frequency of visiting your bank branch per month?
Less than 1
agegroup

1 to 3 times

3 to 8 times

8 to 12 times

over 12 times

Total

18-25

15

14

40

26-35

10

10

10

42

36-45

16

46-60

17

60+

26

27

16

17

34

120

Total

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Chi-Square Tests
Asymp. Sig. (2Value
Pearson Chi-Square
Likelihood Ratio
Linear-by-Linear Association
N of Valid Cases

df

sided)

60.143a

16

.000

67.364

16

.000

1.103

.294

120

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

expected count is .67.

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

4) Which of the following e-banking facilities do you think should

be provided by your bank?(please choose the single most
important one)

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

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

To make a deposit
To get advice for investment options
To inquire about a balance
To withdraw cash
Others

45 | P a g e

Statistics
The main reason that you typically visit your branch for?
N

Valid

120

Missing

Mean

2.8417

Median

3.0000
3.00a

Mode
Std. Deviation

1.22300

Variance

1.496

a. Multiple modes exist. The smallest value is shown

The main reason that you typically visit your branch for?
Cumulative
Frequency
Valid

To make a deposit

Percent

Valid Percent

Percent

25

20.8

20.8

20.8

18

15.0

15.0

35.8

To inquire about a balance

35

29.2

29.2

65.0

To withdraw cash

35

29.2

29.2

94.2

5.8

5.8

100.0

120

100.0

100.0

To get advice for investment

options

Others
Total

46 | P a g e

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

6) Do you have an internet banking account?

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a) Yes
b) No

Statistics
Do you have an internet banking
account?
N

Valid

120

Missing

Mean

1.2583

Median

1.0000

Mode

1.00

Std. Deviation

.43955

Variance

.193

Do you have an internet banking account?

Cumulative
Frequency
Valid

Percent

Valid Percent

Percent

yes

89

74.2

74.2

74.2

no

31

25.8

25.8

100.0

120

100.0

100.0

Total

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Case Processing Summary

Cases
Valid
N
agegroup * Do you have an

Missing
Percent

120

internet banking account?

Percent

100.0%

.0%

agegroup * Do you have an internet banking account?

Crosstabulation
Count
Do you have an internet banking
account?
yes
agegroup

no

Total

18-25

34

40

26-35

39

42

36-45

14

16

46-60

12

17

100

20

120

60+
Total

Chi-Square Tests
Asymp. Sig. (2Value
Pearson Chi-Square
Likelihood Ratio
Linear-by-Linear Association
N of Valid Cases

df

sided)

19.451a

.001

15.045

.005

8.342

.004

120

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

expected count is .83.

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Total
N

Percent
120

100.0%

INTERPRETATION:
The above graph shows the association between age group and user- non-user status. The
Pearson chi-square value of .001 shows that there is an association between the two.

50 | P a g e

As we can see that the most of the respondents in the age group 26-35 have an internet
banking account and very few of the respondents in the age group 60+ have an internet
account.

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

Case Summary
Cases
Valid
N
$var22a

Missing
Percent

100

83.3%

a. Dichotomy group tabulated at value 1.

51 | P a g e

Total

Percent
20

16.7%

Percent
120

100.0%

$var22 Frequencies
Responses
N
banking servicesa

Percent of Cases

prodinfo

55

11.9%

55.0%

loaninfo

57

12.3%

57.0%

Down_loanapp

52

11.2%

52.0%

Trans_activity

45

9.7%

45.0%

Chk_balance

57

12.3%

57.0%

Apply_loan

34

7.3%

34.0%

Acc_transfer

72

15.6%

72.0%

Bill_payment

69

14.9%

69.0%

others

22

4.8%

22.0%

463

100.0%

463.0%

Total
a. Dichotomy group tabulated at value 1.

52 | P a g e

Percent

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

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8) What was the single most important reason that you choose
your current bank as your Internet bank? (please choose one)
1.
2.
3.
4.

I have a traditional bank account with the same bank

The brand name of the bank
The excellent service offered by this bank
Other

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

54 | P a g e

9) In addition to your Internet bank account, do you also have a

traditional bank account?
1. Yes
2. No

Statistics

Do you also have a traditional bank account in addition to an internet

account?
N

Valid

100

Missing

20

Mean

1.0000

Median

1.0000

Mode

1.00

Std. Deviation

.00000

Variance

.000

Do you also have a traditional bank account in addition to an internet

account?
Cumulative
Frequency
Valid

yes

Missing

System

Total

Percent

100

83.3

20

16.7

120

100.0

Valid Percent
100.0

Percent
100.0

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

55 | P a g e

10)

What are the reasons for which you opened an Internet

bank account? (Please prioritize the following list in the order

of importance).

(Rank on a scale of 1-6 where1 being the most important & 6 being the least
important)
1.
2.
3.
4.
5.
6.

Convenience (24 hours service, anywhere connectivity) ______________

Curiosity______________
Safe and secure______________
Low service charge______________
Easy to maintain my banking transaction activity______________
Online shopping ___________________

56 | P a g e

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

57 | P a g e

11)
For your choice of an Internet bank, please indicate how
much each of the following factors are/were important to you:
(Rate on a scale of 1-6 where 1 being most important & 6 being least
important)
1.
2.
3.
4.
5.

Better rate and lower service charge______________

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

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

59 | P a g e

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

60 | P a g e

6. Not available through my bank

7. Others

Case Summary
Cases
Valid
N
$var33a

Missing
Percent

120

100.0%

Total

Percent
0

.0%

Percent
120

100.0%

a. Dichotomy group tabulated at value 1.

$var33 Frequencies
Responses
N
reasons not opening a ebank acc

Percent of Cases

Var_unaware

65

17.3%

54.2%

Var_security

80

21.3%

66.7%

Var_timeconst

38

10.1%

31.7%

Var_novalue

34

9.0%

28.3%

Var_new

83

22.1%

69.2%

Var_unavailable

44

11.7%

36.7%

Var_others

32

8.5%

26.7%

376

100.0%

313.3%

Total
a. Dichotomy group tabulated at value 1.

61 | P a g e

Percent

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

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Chapter 5
CONCLUSIONS &
SUGGESTIONS

63 | P a g e

CONCLUSIONS

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

The conclusions that can be drawn are:

1. Most of the people use E-banking because of the ease and convenience of doing
transactions 24 hours from anywhere.
2. Most of the people in the age group of 18-35 i.e the youth are familiar with the
concept of E-banking and are among the prominent users of this facility.
3. Most of the people open an internet banking account with a bank because of the
brand name of the bank and also due to the fact that they have a traditional
banking account with the same bank.
4. Most of the people in the age group of 46+ are either unaware or have a
disinterest in the service. They are more satisfied with traditional system of
banking.
5. The reasons for not opening an internet account are mainly due to unawareness or
due to security concerns.
6. Most of the people who do internet banking do so for online transaction of money
and for shopping purposes.
7. The masses are still not using the services thoroughly due to various hurdling
factors like insecurity and fear of hidden costs etc.

64 | P a g e

SUGGESTIONS
E-banking would drive us into an age of creative destruction due to non-physical
exchange, complete transparency giving rise to perfectly electronic market place and
customer supremacy. We can see the time is changing and with the passage of time
people are accepting technology but there is still a lot of perceptual blocking still to be
removed.
The banks need to increase the penetration of E-banking to the masses. This can be
achieved through increasing the awareness levels of the customers towards E-banking.
Some of the ways to do this are:
1. Give proper training to customers for using E-banking.
2. Create a trust in the mind of customers towards security of there accounts.
3. Provide a platform from where the customers can access different accounts at
single time without extra charge.
4. Make the site more user friendly.
5. Customers should be motivated to use E-banking facilities more.

65 | P a g e

Chapter 6
Bibliography

66 | P a g e

Bibliography

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

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

SOFTWARES USED
1. SPSS
2. MS-EXCEL

67 | P a g e

3. MS-WORD

Chapter 7
ANNEXURE

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

Less than 1
1 to 3 times
3 to 8 times
8 to 12 times
over 12 times

2. The main reason that you typically visit your bank branch (please
choose the single most important reason)?
a)
b)
c)
d)
e)

To make a deposit
To get advice for investment options
To inquire about a balance
To withdraw cash
Others

3. Which of the following e-banking facilities do you think should be

provided by your bank?(please choose the single most important one)

69 | P a g e

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

4. Do you have an internet banking account?

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

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

6. What banking services do you use which your Internet bank offers? (Please check all
those which you are currently using)
a) Seeking product and rate information
b) Calculate loan payment information
c) Download loan applications
d) Download personal bank transaction activity.
e) Check balances on-line

70 | P a g e

f) Apply for consumer loans or credit cards online

g) Inter-account transfers
h) On-line bill payments
i)

Others

7. What was the single most important reason that you choose your
current bank as your Internet bank? (please choose one)
a)
b)
c)
d)

I have a traditional bank account with the same bank

The brand name of the bank
The excellent service offered by this bank
Others

8. In addition to your Internet bank account, do you also have a

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

1. Better rate and lower service charge______________

2. Bank familiarity______________
3. Security of Transaction______________
4. Convenience (24 hours service from anywhere) ______________
5. Quick service (transaction completed in seconds instead of
minutes) ______________

71 | P a g e

6. Variety of features and services that are offered(for example; bill

payment, account reconciliation, electronic bill payment)
______________
7. Integrated value-added services using other on-line services and
resources (for example; other brokerage account summary)
______________
10.The main reasons that you might fear for while opening an Internet
bank account ? (check all that apply)
1. Never heard of Internet banking
2. Concerned about security
3. Haven't taken time to open an account
4. Don't see any real value in having this type of account
5. Too new. I would like to see how it works, then I may open an
account
6. Not available through my bank
7. Others

Respondent Details:

1) Name

: ____________________________________________________

2) Address

: ____________________________________________________

3) Mobile & E-Mail : ____________________________________________________

4) Gender
5) Age group
+____Years

72 | P a g e

: 1) Male

2) Female

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

THANK YOU FOR SPARING YOUR PRECIOUS TIME

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