CUSTOMER SATISFACTION OF ONLINE BANKING SERVICES IN SBI

Anupa S1 and Sibeena Salam2

ABSTRACT
The Internet has become a vital part of peoples daily lives. It has changed consumer
behaviour in many ways, including financial transactions formerly requiring a visit to a
bank branch to achieve. Commercial banks have been in the forefront in utilizing this to
meet customer needs for on-demand financial services. A system allowing individuals to
perform banking activities at home, via the internet is online banking. Online banking
through traditional banks enable customers to perform all routine transactions, such as
account transfers, balance inquiries, bill payments, and stop-payment requests, and some
even offer online loan and credit card applications. Account information can be accessed
anytime, day or night, and can be done from anywhere. This paper discuss the concept of
online banking,advantages and disadvantages of online banking,products and services
offered through online banking and level of customers satisfaction of online banking
services in SBI and it conclude that online banking offers unique bennefits to both the
customer and bank. And the customer find online banking service that suits his needs
because of getting services more conveniently and secure.
INTRODUCTION
Online banking (or Internet banking or E-banking) allows customers of a financial
institution to conduct financial transactions on a secured website operated by the
institution, which can be a retail bank, virtual bank, credit union or building society. To
access a financial institution's online banking facility, a customer having personal Internet
access must register with the institution for the service, and set up some password (under
various names) for customer verification.
1

Assistant Professor, A J College of Arts & Science, Thonnakkal

Assistant Professor, A J College of Arts & Science, Thonnakkal

The password for online banking is normally not the same as for [telephone banking].
Financial institutions now routinely allocate customers numbers (also under various
names), whether or not customers intend to access their online banking facility.
Customers numbers are normally not the same as account numbers, because number of
accounts can be linked to the one customer number. The customer will link to the
customer number any of those accounts which the customer controls, which may be
cheque, savings, loan, credit card and other accounts. Customer numbers will also not be
the same as any debit or credit card issued by the financial institution to the customer.
Keywords: Online Banking, Customer Satisfaction, Fund transfer, Internet banking.

LITERATURE REVIEW
. . The strategic focus of the banks changed from the production oriented to customer
oriented. Hence the customers satisfaction is indispensable the organization. Roger
(2011) analyses the importance of Universal banking in India. Globalization,
liberalization and deregulation of financial markets in many developed and developing
countries have resulted in increased disintermediation and have made commercial banks
vulnerable to interest rate risk. The developments in information technology and
telecommunications are allowing an international pooling of financial resources, thereby
spreading the risk across more than one market.
Deena Amatev and Mr. Coy (2010) have expressed their mind in their extract
titled Fleet Helps Customers do it my way on line. The two authors have expressed a
positive attitude towards the enhancement of customer service. Banking organizations,
they say, should go beyond homebanking (traditional functions like opening of accounts,
funds transfer, balanceenquiries, bills payment and making proper investment). The two
authors stated that customers should get to know how to explore the web sites to create
awareness of on line products and services.
Johri and Jauhari (2010) also analyse the importance of technology and issues
emerging from this technology. According to them, technology is emerging as a keydriver of business in the financial services industry. The advancement in computing and
telecommunication has revolutionalised the financial industry and banking on the net is
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fast catching on. As e-commerce gets transformed into m-commerce with the increasing
use of technologies like WAP, banking business is in for a major overhaul.
Bhasin (2009) has analysed the impact of Information technology on the
banking sector. Information technology has revolutionized the various aspects of our
life. It has transformed the repetitive and overlapping systems and procedures into simple
single key pressing technology resulting in speed, accuracy and efficiency of conduction
business. The computerization of banks has provided a major push for enabling them to
enter the newer activities. The banking industry has prepared itself and is strongly
emerging to play a major supplementary role in nurturing e-commerce applications.

OBJECTIVES

To identify the Concept online banking.

To Know about advantages and limitations of online banking.

To identify the products and services offered through Online banking facility.

To evaluate the satisfaction level of customers on online-banking services of SBI.

METHODOLOGY
The research is based on the customers satisfaction towards online banking services in
Trivandrum district of Kerala . The study is based on the primary data and Secondary
data.
Source of primary data
Primary data collected through well-framed and structured questionnaires to obtain the
well-considered opinions of SBI customers who operate different type of accounts.The
convenience sampling technique was followed.

Sampling plan
For the purpose of research a random sample of 100 respondents were chosen from the
Trivandrum district as the State Bank of Indias customers
Sources of secondary dataSecondary data were collected from various banks, books ,
journals,magazines ,websites etc.
Tools of analysis
Datas collected were edited and coded for reducing errors. Appropriate statistical tools
such as percentage, graphs were used for analysis. MS excel was used for making data
analysis.

ONLINE BANKING
Online banking is an electronic payment system

that enables customers of

a financial institution to conduct financial transactions on a website operated by the

institution, such as a retail bank, virtual bank, credit union or building society. Online
banking is also referred as Internet banking, virtual banking and by other terms. Internet
banking, Electronic clearing services, Electronic Fund Transfer, Real Time Gross
Settlement, Core Banking etc. are the latest electronic banking services introduced by
banks in India.
DEFINITION
The performance of banking activities via the Internet. Online banking is also known as
"Internet banking" or "Web banking." A good online bank will offer customers just about
every

service

traditionally

available

through

local

branch,

including

accepting deposits(which is done online or through the mail), paying interest on savings
and providing an online bill payment system.
HISTORY
The precursor for the modern home online banking services were the distance
banking services over electronic media from the early 1980s. The term 'Online' became

popular in the late '80s and referred to the use of a terminal, keyboard and TV (or
monitor) to access the banking system using a phone line. 'Home banking' can also refer
to the use of a numeric keypad to send tones down a phone line with instructions to the
bank. Online services started in New York in 1981 when four of the city's major banks
(Citibank, Chase Manhattan, Chemical and Manufacturers

Hanover) offered

home

banking services. using the videotex system. Because of the commercial failure of
videotex these banking services never became popular except in France where the use of
videotex (Minitel) was subsidised by the telecom provider and the UK, where
the Prestel system was used.
When the clicks-and-bricks euphoria hit in the late 1990s, many banks began to
view Web-based banking as a strategic imperative. The attraction of banks to online
banking are fairly obvious: diminished transaction costs, easier integration of services,
interactive marketing capabilities, and other benefits that boost customer lists and profit
margins. Additionally, Web banking services allow institutions to bundle more services
into single packages, thereby luring customers and minimizing overhead.
A mergers-and-acquisitions wave swept the financial industries in the mid-and
late 1998s, greatly expanding banks' customer bases. Following this, banks looked to the
Web as a way of maintaining their customers and building loyalty. A number of different
factors are causing bankers to shift more of their business to the virtual realm.
While financial institutions took steps to implement e-banking services in the
mid-1990s, many consumers were hesitant to conduct monetary transactions over the
web. It took widespread adoption of electronic commerce, based on trailblazing
companies such as America Online, Amazon.com and eBay, to make the idea of paying
for items online widespread. By 2000, 80 percent of U.S. banks offered e-banking.
Customer use grew slowly. At Bank of America, for example, it took 10 years to acquire
2 million e-banking customers. However, a significant cultural change took place after
the Y2K scare ended. In 2001, Bank of America became the first bank to top 3 million
online banking customers, more than 20 percent of its customer base. In comparison,
larger national institutions, such as Citigroup claimed 2.2 million online relationships
globally, while J.P. Morgan Chase estimated it had more than 750,000 online banking

customers. Wells Fargo had 2.5 million online banking customers, including small
businesses. Online customers proved more loyal and profitable than regular customers. In
October 2001, Bank of America customers executed a record 3.1 million electronic bill
payments, totaling more than $1 billion. In 2009, a report by Gartner Group estimated
that 47 percent of U.S. adults and 30 percent in the United Kingdom bank online.
The UK's first home online banking services known as Homelink was set up
by Bank of Scotland for customers of the Nottingham Building Society (NBS) in 1983.
The system used was based on the UK's Prestel viewlink system and used a computer,
such as the BBC Micro, or keyboard (Tandata Td1400) connected to the telephone
system and television set. The system allowed on-line viewing of statements, bank
transfers and bill payments. In order to make bank transfers and bill payments, a written
instruction giving details of the intended recipient had to be sent to the NBS who set the
details up on the Homelink system. Typical recipients were gas, electricity and telephone
companies and accounts with other banks. Details of payments to be made were input
into the NBS system by the account holder via Prestel. A cheque was then sent by NBS to
the payee and an advice giving details of the payment was sent to the account
holder. BACS was later used to transfer the payment directly.
Stanford Federal Credit Union was the first financial institution to offer online
internet banking services to all of its members in October 1994.
Today, many banks are internet only banks. Unlike their predecessors, these
internet only banks do not maintain brick and mortar bank branches. Instead, they
typically differentiate themselves by offering better interest rates and more extensive
online banking features.

PRODUCTS AND SERVICES OFFERED THROUGH ONLINE BANKING

FACILITY

Account Summary: Accounts which are Internet Banking Enabled may be displayed
along with the Current Balance, Total Balance, Unclear Balance and Available Balance
etc. (Savings /Current / Overdraft /Term Deposit / Loan Accounts).
Overdraft Details: Limit and Drawing Power for OD Accounts, Repayment Schedule for
Loan Accounts may be viewed.
Transactions Details: User may view, download and print of the last 14 transactions or
for specified period of selected account.
Online Requests: User may request for Stop Payment for a particular Cheque or Range
of Cheques in select accounts, Revoke of Stop Payment of Cheques already stopped.
User may also change his contact no. (phone no., mobile no., email etc.)
Funds Transfer between own Accounts: User may transfer funds from one account (with
requested transaction facility) to his/her another account to the extent of fund transfer
limit fixed by the bank from time to time, subject to the available balance, by selecting
from & to accounts.
Adding of Account in Beneficiary List: If amounts are frequently transferred to a
particular account, then the facility of adding that account in beneficiary list will be
available by providing a nick name to that account.
Viewing of Beneficiary Accounts: User may view all the beneficiaries that have been
added and may also modify the details of a beneficiary by selecting that beneficiary.
Fund transfer to other Beneficiary Account: User may transfer fund from his/her
account (with requested transaction facility) to any other third party account, maintained
with any of our CBS Branch, to the extent of fund transfer limit fixed by the bank from
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time to time, subject to the available balance, by selecting his/her account and giving
either third partys account number or selecting a beneficiary.
Standing Order: User may give standing order for transfer of funds from one account to
another to be executed on a predefined frequency (daily /monthly / month end). User may
also amend or cancel the standing order so given.
E-Payment Facilities: User may use E-Payment facility for payment of Direct (CBDT)
and Indirect (CBEC) taxes by debiting the account online and may print cyber receipt &
challan also.
Online Enquiry:

Cheque Enquiry: User may enquire status of a Cheque or Range of Cheques

issued in an account.

Cheque Books: User may enquire for Cheque books issued in an account.

Outward Cheques Enquiry: User may enquire status of specific Cheque or all
Cheques deposited in an account.

TDS Detail: User may view the Tax Deducted at Source details.

Other options:

Contact Details: User may view address details.

Change Login Password: User may change login password as per guidelines
available on website.

Change Transaction Password: User may change transaction password as per

guidelines available on website.

Change User Preference: User can change their User-Id, however the same can
be changed only once. User may set his/her display preference.

Login History: User may view login history.

ADVANTAGES OF ONLINE BANKING

Many banks have begun to offer customers the option of online-internet banking, a
practice that has advantages for both all parties involved. The convenience of being able
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to access accounts at any time as well as the ability to perform transactions without
visiting a local branch, draw many people to be involved. Some of these advantages of
online banking but are not limited to, include:
Customers convenience
Direct banks are open for business anywhere there is an internet connection. They are
also 24 hours a day, 365 days a year open while if internet service is not available,
customer services is normally provided around the clock via telephone. Real-time
account balances and information are available at the touch of a few buttons thus, making
banking faster, easier and more efficient. In addition, updating and maintaining a direct
account is easy since it takes only a few minutes to change the mailing address, order
additional checks and be informed for market interest rates.
More efficient rates
The lack of significant infrastructure and overhead costs allow direct banks to pay higher
interest rates on savings and charge lower mortgage and loan rates. Some offer high-yield
checking accounts, highyield certificate of Deposits (CDs), and even no-penalty CDs for
early withdrawal. In addition, some accounts can be opened with no minimum deposits
and carry no minimum balance or service fees.
Services
Direct banks typically have more robust websites that offer a comprehensive set of
features that may not be found on the websites of traditional banks. These include
functional budgeting and forecasting tools, financial planning capabilities, investment
analysis tools, loan calculators and equity trading platforms. In addition, they offer free
online bill payments, online tax forms and tax preparation.
Mobility
Internet banking also includes mobile capabilities. New applications are continually
being created to expand and improve this capability or smart-phones and other mobile
devices.
Transfers
Accounts can be automatically funded from a traditional bank account via electronic
transfer. Most direct banks offer unlimited transfers at no cost, including those destined

for outside financial institutions. They will also accept direct deposits and withdrawals
that the customer authorizes such as payroll deposits and automatic bill payment.
Ease of use
Online accounts are easy to set up and require no more information than a traditional
bank account.Many offer the option of inputting the customer's data online or
downloading the forms and mailing them in. If the customer runs into a problem, he has
the option of calling or e-mailing the bank directly.
Environment friendly
Internet banking is also environmentally friendly. Electronic transmissions require no
paper, reduce vehicle traffic and are virtually pollution-free. They also eliminate the need
for buildings and office equipment.
THE DISADVANTAGES OF ONLINE BANKING
Online Banking banking seems like an obvious choice to leave the hassles of traditional
money management behind in exchange for it. However, there are potential problems
associated with banking over the internet of which customers may not be aware.
Consumers need to weigh the advantages as well as the disadvantages of online banking
before signing up. Some of the disadvantages of internet banking include:
Bank relationship
A traditional bank provides the opportunity to develop a personal relationship with that
bank. Getting to know the people at your local branch can be an advantage when a
customer needs a loan or a special service that is not normally offered to the public. A
bank manager usually has some discretion in changing the terms of customer's account if
the customer's personal circumstances change. They can help customers solve problems
such as reversing an undeserved fee. The banker also will get to know the customer and
his unique needs. If the customer has a business account, this personal relationship may
help if the customer needs capital to expand. Its easier to get the banks support if there
is someone who understands customer's business and vouch for his operating plan.
Transaction issues
Sometimes a face-to-face meeting is required to complete complex transactions and
address complicated problems. A traditional bank can host meetings and call in experts to

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solve a specific issue.Moreover, international transactions may be more difficult (or

impossible) with some direct banks. If acustomer deposits cash on a regular basis, a
traditional bank with a drive-through window may be morepractical and efficient.
Service issues
Some direct banks may not offer all the comprehensive financial services such as
insurance and brokerage accounts that traditional banks offer. Traditional banks
sometimes offer special services to loyal customers such as preferred rates ad investment
advice at no extra charge. In addition, routine services such as notarization and bank
signature quarantee are not available online. These services are required for many
financial and legal transactions.
Security
Direct banks are subject to the same laws and regulations as traditional banks and
accounts are protected by the FDIC. Sophisticated encryption software is designed to
protect your account information but no system is perfect. Accounts may be subject to
phishing, hacker attacks, malware and other unauthorised activity. Most banks now make
scanned copies of cleared checks available online which helps to avoid and identify
check fraud. The timely discovery of discrepancies can be reported and investigated
immediately.
ANALYSIS OF

CUSTOMER SATISFACTION OF ONLINE BANKING

SERVICES IN SBI

The data collected from 100 respondents belonging to the age group of 20-50. Out
of this,80 respondents were interviewed with face to face interactions and 20 were

11

telephonicinterview.

12

13

Satisfaction on online banking service : Out of the total 100 respondents interviewed
40% of the rspondents were highly satisfied ,48% were satisfied and 12% were
dissatisfied ( figure 1).
Satisfaction on offline service : It was found that the out of the 100 respondents,32%
were highly satisfied , 40% were satisfied and 28% were dissatisfied (figure 2).
Preference for using onling banking : It has been observed that there to be have several
facilities for using onling banking. While conducting the interviews about 27% of the
rspondents prefered for deposits and withdrawals ,21% prefered for balance enquiry ,32%
were for bill payment aqnd 20% were for fund transfer (figure 3).
Internal force for using online banking : It was observed that 26% of the respondents
using online banking because of convinence ,32% were usin as the reason of ease of use ,
24% as for security and 14% revealed that was user friendly (figure 4).
Security in online banking : It was observed that 78% of the respondents admitted it to
be have security in online transactions, however 22% of the respondents found it to be
insecure (figure 5).
Difficulty in online banking : It was observed during interviews that 73% of the
respondents admitted that they did not have any problem in related with online banking
where as 27 % admitted that they have some problems being faced (figure 6).
Discussion

Analysis 1 After analysing the responses of 100 respondents through interviews it

was observed that 40% was highly satisfied with online banking. Majority of
customers are satisfied withits online banking services.

Analysis 2 It was to be analysed that 32% of respondents were satisfied with

offline banking also. However the most people satisfied with online banking.

Analysis 3 To evaluate the preference of facilities in online banking found that

customers are giving more preference to bill payments(32%) and also used for

14

withdrawal and deposit purposes, and least preference for fund transfer(20%).
Customers are using online banking because of its easy procedures.

Analysis 4 To ascertain the internal force for using online banking service , the
most reason is ease for use that the 32% of respondents.And 14% of respondents
wereusing online banking as the reason of user friendly. The other reasons were
convenience and security.

Analysis 5 78% of the respondents admitted that online banking is more secure
and provides for transactions than offline service. 22% of the respondents said
that they are not satisfied with the security of online banking. Customers believes
that online banking is safe rather than traditional banking. Customers are satisfied
with the online banking procedure.

Analysis 6 Major portion of customers are satisfied in security measured provided

by the bank in online banking large portion of respondents doesnt have any
difficulties in completing online transaction but some peoples faces some
difficulties .73% of respondents does not have any problems with online banking
whereas 27% have being faced some problems.

CONCLUSION
Online banking is the modern trend in the banking sector. It has very significant
role in the overall performance in the commercial banks. The study results shows that
most of respondents were satisfied with online banking.
Online banking is an electronic payment system . The rise of internet banks has
increased the competition of the banking business.Online banking offers unique benefits
and also have some drawbacks. The benefits of internet banking are undeniable, there are
some inconveniences and concerns of which customers should be aware of. Online
banking provides so many services such as fund transfer, auditing of accounts in
beneficiary list, e-payment facilities, online enquiry etc. All these help the customer
decides that internet banking is right for him, he must be sure to review other offers from
several banks. The large portions of respondents are using internet accounts because it is

15

easy to use.On the other hand many people have difficulty relying on the security of
online transactions, fearing the very real possibility of identity theft. We can conclude
that the customers are satisfied in online banking services. Banks provides various
services through internet like deposits, withdrawals, fund transfer, bill payments, etc. for
their customers.

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