A STUDY OF FACTORS INFLUENCING CONSUMER

ADOPTION OF INTERNET BANKING IN INDIA

INTRODUCTION
MARKETING IN THE INTERNET AGE
According to Norris (2000), an Internet market can be viewed as a direct parallel of the familiar
shop, store or emporium. It is, in essence, a virtual trading area where deals are made through a
computer screen, over a network. The shop-front is usually a set of web pages, the shelves
equate to the catalogue where products are stored and displayed, and the warehouse is the server.
Internet marketing or Internet-based marketing can be defined as the use of the Internet and
related digital technologies to achieve marketing objectives and support the modern marketing
concept. These technologies include the Internet media and other digital media such as cable and
satellite together with the hardware and software, which enable its operation and use (Chaffey, et
al., 2000).

The term electronic commerce is often used in a similar context to Internet marketing and has
become a standard term recognised for business transactions such as selling online, online bill
payments, home shopping/banking and improving market efficiency in dealing with suppliers
and clients (Novak and Hoffman, 1996). In the industrial age, marketers initiated and controlled
the exchange process, whereas in the Internet age customers increasingly initiate and control the
exchange, customer define what information they need, what offering they are interested in, and
what price they are willing to pay. In other worlds, Internet age marketing is the age of reverse
marketing (Sheth, et al., 2001). Karjaluoto (2002) argues that the commercialisation of the
Internet was only started in 1995. By the year 1999, the Internet had reached over 50 million
people. At the beginning of the year 2000, there were over 70 million computers connected to the
Internet and this development is accelerating at enormous speed. Within the next three to four
years, the number of people connected is likely to reach the 350 million mark worldwide. The
Internet provides consumers with a new means of obtaining useful information particularly with
regard to commercial products and services.
Electronic commerce is currently attracting a great deal of interest. Not only is it growing
rapidly, but it also has a significant impact on the computer market and the way people work
(Chaffey, et al., 2000). Wang (2002) highlights the importance of the Internet in facilitating
dyadic information flows between supplier and customer, emphasising that the inverse
relationship between the richness and reach of information no longer holds. As a result, the
Internet has the potential to encourage a simultaneous two-way flow of information between
large numbers of customers and suppliers. Norris, et al., (2000) point out that one of the biggest
implications for marketing theory and practice is the shift from a non-virtual market-place to a
virtual market-space where industry players unlike their traditional counterparts do not have to
have a physical presence. The market-space comprises four different spaces of opportunity:
virtual information space, virtual communication space, virtual transaction space and virtual
distribution space. In order to capture the opportunities provided by each of these spaces it is
necessary that firms have a website.

According to Weisman (2001), increasingly more consumers are migrating to electronic

commerce to make electronic bill payments, to pay for information online, and to purchase
products, services and prepaid cell phone airtime.

BENEFITS OF INTERNET IN BUSINESS

The benefits of internet in business have become widely known. When the Internet was still new
during the mid-1990s, it was corporations who first purchased pieces of cyberspace to create
their websites. Although they werent sure what the impact a website could make was at that
time, today, a website has become an indispensable tool in doing business. With the continuing
growth of the amount of information available on the Internet, as well as the increase in time that
people devote to being online, more and more businesses are investing research and money to
improve their online presence. Any company that does not tap into the many advantages of the
Internet will surely fall behind its competitors. Here are some of the benefits of internet in
business:

Improved Communications and Networking

The global nature of the web makes the world a lot smaller, making it more efficient for
companies to do business on the international realm. Through the Internet, companies can stay in
touch with their partners, investors, clients, and customers, regardless of their locations. Email,
web conferences, and VoIP make the transmission of important data more seamless. For instance,
companies can quickly communicate with suppliers via chat or email to make sure deliveries and
payments are covered. The Internet can save the company a lot of time and money as it reduces
the need for additional paperwork.

Customer Contact

A company website keeps customers abreast of new products and services, 24/7. Profit also
increases as their virtual store can cater to customers anytime, anywhere.

Wider business networks

Companies can also maintain ties with other organizations and sister companies through the
Internet. In real-time, they can all stay updated with new information about the business and
other important matters.

Access to Data

The Internet is very rich in information. Anything you need, you can find on the web. For
companies doing research in products, markets, industries, new ideas, and other topics, the
Internet is an effective tool to use. Individuals can even join forums where they can interact with
people from the same industry and exchange ideas.

Market Research and Internet Advertising

Businesses can conduct market research through the Internet. They can use online surveys to
study their market. They can directly ask consumers what they think about a particular product or
service. It is a very cheap and effective way of doing market research.

The Internet offers a new medium for advertising. Mailings, newspapers ads, and fliers are
slowly becoming obsolete as the Internet has become a more cost-effective way to reach
consumers. E-newsletters can now be sent directly to the in-boxes of customers with just a few
clicks of a mouse button.
Since the Internet spans the entire globe, a business market increases as anyone from anywhere
in the world becomes a potential customer. This increases market reach, thereby boosting product
recognition.

INTERNET BANKING
Internet banking allows customers to perform a wide range of banking transactions electronically
via the banks Web site. When first introduced, Internet banking was used mainly as an
information presentation medium in which banks marketed their products and services on their
Web sites. With the development of asynchronous technologies and secured electronic
transaction technologies, however, more banks have come forward to use Internet banking both
as a transactional as well as an informational medium. As a result, registered Internet banking
users can now perform common banking transactions such as writing checks, paying bills,
transferring funds, printing statements, and inquiring about account balances. Internet banking
has evolved into a one stop service and information unit that promises great benefits to both
banks and consumers.

Internet banking services are crucial for long-term survival of banks in the world of electronic
commerce (Burnham 1996). The market for Internet banking is forecast to grow sharply in the
next few years, affecting the competitive advantage enjoyed by traditional branch banks
(Duclaux 1996; Liao et al. 1999). Indeed, it also was estimated that financial institutions that
failed to respond to the need for Internet banking services would likely lose more than 10% of
their customer base by the year 2000 (Orr 1998; Tower Group 1996).

Internet banking would help banks present a potentially low cost alternative to brick and mortar
branch banking. Burnham found that the majority of banks with Web sites spent less than
US$25,000 to create a Web presence, and less than US$25,000 a year maintaining it. He
suggested that even if these figures were to rise as banks began to offer Internet banking services,
they would still be less costly than the traditional branch banking. For example, it requires
US$1.5 million to US$2 million to set up a traditional brick and mortar branch and US$350,000
to US$500,000 a year to operate it. Note that Burnhams figure of US$25,000 is just for creating
an electronic presence on the Web. A fully functional Internet banking site is likely to cost US$1
million to US$2 million. However, while traditional banks operating costs account for between
50% and 60% of revenues, running costs of Internet banking is estimated at between 15% and
20% of revenues (Booz-Allen & Hamilton 1997).

From the consumers perspective, Internet banking provides a very convenient and effective
approach to manage ones finances as it is easily accessible 24 hours a day, and seven days a
week. Besides, the information is current. For corporate customers, sophisticated cash
management packages offered through Internet banking provide them with up to the minute
information, allowing for timely funds management decisions (Kalakota and Whinston 1996).

INTERNET BANKING IN INDIA

Pikkarainen, Karjaluoto, and Pahnila, (2004) define Internet banking (IB) as an Internet portal,
through which customers can use different kinds of banking services ranging from bill payment
to making investments. It is the most innovative service offered by banks over the last decade.
This transformation from traditional banking to e-banking has been a 'quantum leap' change.

The banking system in India is significantly different from that of other Asian nations because of
the countrys unique geographic, social, and economic characteristics. India has a large
population and land size, a diverse culture, and extreme disparities of income.

In the 21st century, Internet banking has experienced exponential growth in many countries
around the globe and drastically changed traditional banking practice. According to Parisa
(2006), By offering Internet Banking services, traditional banks seek to lower operating costs,
improve customer experience, retain/expand customer base, reduce their branch networks, and
downsize the number of their service staff. Customers also benefit from the convenience, speed
and round-the-clock availability of Internet banking services. However, as noted by Kuisma et
al., (2007); Littler and Melanthiou, (2006), Though IB provides many advantages, there are still
a significant number of customers who refuse or reluctant to adopt IB services. Therefore,
understanding various reasons for this resistance (reluctance) would be useful for bank
management in formulating strategies aimed at increasing the overall usage of Internet banking.

According to Srivastava (2008), Some of the major psychological and behavioural factors
which affect the adoption of any innovation such as Internet banking include consumer
awareness, ease of use, security, accessibility, and technology phobia, in addition to reluctance to
change, preference for personalized services and cost of adopting the innovation. This study
aims to investigate the factors influencing the adoption of Internet banking services in
Chandigarh a rapidly growing city in Northern India.

In India, ICICI bank was the first bank which offered this delivery channel, by kicking off its
online services in 1996. Other private sector banks like Citibank, IndusInd Bank and HDFC and
Timesbank (now part of HDFC bank) started offering internet services in 1999. State Bank of
India launched its services in July 2001.

According to Geetha & Malarvizhi, the customers would conduct a variety of transactions
through internet banking facility which includes: account summary, details of historical banking
transactions, funds transfer, loan applications, bill payments, cheque book request, cheque status
enquiry, stop cheque request, credit card payments/ statements, facilities to contact account
managers, etc.

REVIEW OF LITERATURE
Unninthan (2001) described the impact of e-banking adaptation on Australian and Indian banking
sectors with the help of qualitative and quantitative analysis. The researcher found that Australia
had a strong platform for e-banking growth with 37.7 per cent of population willing to engage in
e-banking mostly in urban areas due to literate young working population with discretionary
income. However, India by comparison was played by weak infrastructure, low PC penetration
and consumer reluctance in rural sector. But the professionals are compelling the government
and bureaucracy in the country to support and develop new initiatives at a faster speed of internet
banking. However, in both the countries, e-banking was a successful strategic weapon for banks
to remain profitable in a volatile and competitive market place.

Sureshchander and Rajendran (2003), in their paper, focused on investigating the important
factors of customers perceived quality in banks of developing economy like India. The authors
had taken 15 public sector banks, 14 private banks and 14 foreign banks for the period under
study. The researchers found that there seems to be a great variation in respect of services offered
by three groups of banks. They used core services such as human element, systemization of
services, tangibility of services and social responsibility as critical factors. They analyzed that
three groups of banks in India seem to vary significantly in terms of service quality factors but
from the customer perception of service quality, it could be acceptable only if customers need
could be satisfied at the right time in a right manner.

Manoharan (2007) highlighted the e-payment system in India and its performance impact on
Indian banking sector. The author described that competition in banking industry had forced the
banks to rethink the way they operate their business. So, e-banking has made it possible to find
alternate banking practices. In the paper, the author divided the payment system in India into
three parts, i.e., large value payment system, retail payment system, and retail electronic system.
Each one includes different categories of e-payment. The author studied the performance of
various Indian payment 50 systems in the last three years in which RTGS emerged as the
principal payment system in India for wholesale payment. The study focused that having a huge
opportunity of epayment system in India still 90 per cent of transactions were cash based. So, an
effort should be made to increase the use of e-payment, and RBI should make efforts to
strengthen the legal framework of electronic banking system.

Ramani (2007) studied the impact of e-payment system on Indian banking sector. E-payment was
required for handling large volume of business payment and remittances for hassle free, quicker
and faster payment remittances at low cost, and paperless transactions. The researcher
highlighted various steps taken by RBI for the epayment. It includes RTGS, deferred net
settlement system such as electronic clearing services debit and credit, electronic fund transfer
and NEFT. The researcher studied that these methods had increased the use of core banking
solutions, data warehousing and data mining. E-payment had reduced the chances of fraud,
improved customer service by cutting the delay in payment obligation.

Singh and Malhotra (2007) made an attempt to discover factors affecting a banks decision to
adopt internet banking in India. The study was based on 88 banks comprising of public, private
and foreign banks covering financial years from 1997 to 2005. The results of the study showed
that large banks having high fixed expenses, high income and expenditure tend to use more
technology. Banks had used internet banking as complementary channel to existing branch
network. However, the private and foreign banks were quick adopter to internet banking than
public sector banks. The adoption of this innovation by other banks increases the probability that
a decision to adapt will be made as it has increased the profitability and productivity of banks.

Shah & Braganza (2007): This survey indicates the critical success factors in Internet banking
adoption. Shah and Braganza opined that different pieces of literature report different factors as
key to success and generally based on subjective, perceptual data. A synthesis of existing
literature is a basis for survey questions. The data was collected from UK-based financial sector
organizations that are offering their services on electronic channels, using postal questionnaires.
The top factors found to be most critical for the success in e-banking are: quick responsive
products/services, organizational flexibility, services expansion, systems integration and
enhanced customer service. An important lesson from this research is that organizations need to
view the e-banking initiative as a business critical area rather than just a technical issue. They
need to give attention to internal integration, which may include channels, technology and
business process integration, and improving the overall services to their customers.

Suresh (2008) highlighted that recently developed e-banking technology had created unpredicted
opportunities for the banks to organize their financial products, profits, service delivery and
marketing. The objectives of the study were to evaluate the difference between traditional and e-
banking, and to identify the core capabilities for the best use of e-banking. The author analyzed
that e-banking will be an innovation if it preserved both business model and technology
knowledge, and disruptive if it destroys both the model and knowledge. He also differentiated e-
banking from traditional banking in five ways, namely, value proportion, market scope, cost
structure, profit potential and value network. However, in order to exploit technical and business
capabilities of e-banking, banks should generate more customers inside and outside India so that
more revenues could be generated that lead to better future of Indian economy.

Kautish (2008) described the paradigm shift of banking sector from traditional banking to online
banking. The objective of the paper was to discuss the derivation of value added tool of online
banking system which was used to attract new customers and retain the existing ones. It helped
the banks to acquire more business from existing customers. People preferred to use online
banking because of its availability, better performance, ubiquity, speed and its effectiveness.
Further, the author discussed two bank models integrated banking model where the banks
provide internet banking services as an extension to their basic services like ATM and phone
banking. So, it is a kind of hybrid approach and the other was standalone internet banking model,
where the banks totally rely on the online channel. To improve the services through e-banking,
banks should think from the customers perspective and there should be creativity and innovation
in designing and implementation of e-banking processes. The author concluded that as e-banking
was a relatively new concept in the global banking scenario so the best of this concept was yet to
come.

Uppal, R.K. & Chawla, R. (2009): According to Uppal & Chawla (2009) ,This study highlights
customer perceptions regarding Internet banking services. A survey of 1,200 respondents was
conducted in October 2008 in Ludhiana district, Punjab. The respondents were equally divided
among three bank groups namely, public sector, private sector and foreign banks. The present
study investigates the perceptions of the bank customers regarding necessity of e-banking
services, quality of e-banking services, bank frauds, future of e- banking, preference of bank
customers regarding banks, comparative study of banking services in various bank groups,
preferences regarding use of Internet channels and problems faced by e-bank customers.

Malhotra, Pooja & Singh, B. (2010): In An analysis of Internet banking offerings and its
determinants in India, Malhotra, Pooja, & Singh noted: This study was an effort to represent
the current status of IB in India and the extent of Internet banking services offered by Internet
banks. The data for this study are based on a survey of bank websites explored during July 2008.
The sample consists of 82 banks operating in India on March 31, 2007. Multiple regression
technique is employed to explore the determinants of the extent of Internet banking services.

RESEARCH FRAMEWORK
The Banking sector has ushered into a new era with advent of Internet and its application in the
banking industry. Internet banking aims to assist the customers with easy and speedy transactions
but still many people refrain from availing this facility.

This research aims to determine and study the factors influencing the consumer adoption of
internet banking and in the process unearth the factors acting as a hindrance for people to take up
this service.
CONCEPTUAL MODEL

The framework postulates that a persons intention to adopt Internet banking is determined by
certain factors. These can be (but are not limited to) relative advantage, compatibility with
values, complexity, security, individuals self-confidence and feature availability. Internet
banking services, in return, is expected to affect the actual adoption of Internet banking.

Security

Individual's
Complexity self
confidence

Internet
Banking
Adoption
Compatibilit
Feature
y with
Availability
values

Relative
Advantage

Fig 3.1 Factors Affecting Consumer Adoption of Internet Banking

RESEARCH DESIGN

A research can be classified into one of the three following categories:

 Exploratory Research
Causal Research
Descriptive Research

This quantitative study is aimed at identifying the factors influencing the adoption of internet
banking among customers in Chandigarh. The idea behind this research is to study the impact of
one variable (independent) on the other (dependent), hence falls under the Descriptive Research
methodology.

A quantitative study, consistent with the quantitative paradigm, is an inquiry into a social or
human problem, based on testing a theory composed of variables, measured with numbers, and
analyzed with statistical procedures, in order to determine whether the predictive generalizations
of the theory hold true (Babbie and Mouton, 2002). The research was descriptive, that is it was
used to determine market characteristics. Malhotra (1999) defines descriptive research as a type
of conclusive research which has as its major objective the description of something. Thus, the
research, marked by a clear statement of the problem and detailed information needs, as was
shown in previous chapters, corresponds to descriptive research. Finally, the five Ws of research
specific to a descriptive design, have been identified (Malhotra, 1999): Who? (Consumers),
When? (Presently), Where? (In Chandigarh), Why? (To investigate factors influencing the
adoption of internet banking), Way? (By identifying consumers demographic characteristics,
perceptions, and attitudes towards internet banking).

As the respondents were considered at a fixed point in time, the research used a cross-sectional
methodology (Bailey, 1987). The cross-sectional study is the most frequently used descriptive
design in marketing research. Cross-sectional designs involve the collection of information from
any given sample of population elements only once (Malhotra, 1999).

Secondary data was collected through research papers, journals, websites, books, project reports
and so on.
OBJECTIVES OF THE STUDY
The main objective of the study is to study the factors influencing the customer adoption of
internet banking in Chandigarh. It is further divided into following sub-objectives:

i. To study the impact of Relative Advantage on customer adoption of internet banking

ii. To study the impact of Compatibility on customer adoption of internet banking
iii. To study the impact of Complexity on customer adoption of internet banking.
iv. To study the impact of Security on customer adoption of internet banking.
v. To study the impact of Individuals self-confidence on customer adoption of internet
banking.
vi. To identify the features most sought after by the customer influencing him/her to adopt
internet banking
vii. To identify the factors which act as a hindrance for customers to adopt internet
banking.

Hypothesis Formulation:

H1: Relative Advantage has a significant impact on the customer adoption of internet
banking.

H2: Compatibility has a significant impact on the customer adoption of internet banking.

H3: Complexity has a significant impact on the customer adoption of internet banking.

H4: Security has a significant impact on the customer adoption of internet banking

H5: Individuals self-confidence has a significant impact on the customer adoption of internet
banking

VARIABLES OF THE STUDY

Independent Variables

Relative Advantage
To found relative advantage to be an important factor in determining adoption of new
innovations. In general, perceived relative advantage of an innovation is positively related to its
rate of adoption (Rogers 1983). Likewise, as Internet banking services allow customers to access
their banking accounts from any location, at any time of the day, it provides tremendous
advantage and convenience to users. It also gives customers greater control over managing their
finances, as they are able to check their accounts easily. In view of the advantages that Internet
banking services offer, it would thus be expected that individuals who perceive Internet banking
as advantageous would also be likely to adopt the service.

Compatibility with values

Compatibility with values is measured by the fact that is the use of internet banking in
accordance with the lifestyle and family culture of an individual. Also, the customers preference
of physical money over electronic money or the vice versa may also play an important role in
determining the customer adoption of internet banking.

Complexity

Past research has indicated that an innovation with substantial complexity requires more
technical skills and needs greater implementation and operational efforts to increase its chances
of adoption (Cooper and Zmud 1990; Dickerson and Gentry 1983. As the Internet is very user
friendly with its point and click interface, it is likely that potential customers may feel that
Internet banking services are less complex to use, and hence would be likely to use such services.

Security

Bauer (1960), Webster (1969), and Ostlund (1974) introduced risk as an additional dimension in
diffusion and adoption. A common and widely recognized obstacle to electronic commerce
adoption has been the lack of security and privacy over the Internet (Bhimani 1996; Cockburn
and Wilson 1996; Quelch and Klein 1996; Rhee and Riggins 1997). This has led many to view
Internet commerce as a risky undertaking. Thus, it is expected that only individuals who perceive
using Internet banking as a low risk undertaking would be inclined to adopt it.

Individuals self confidence

Hill et al. (1986) found that self-efficacy predicts intentions to use a wide range of
technologically advanced products. Thus, an individual confident in having the skills in using the
computer and the Internet is more inclined to adopt Internet banking. This is because the
individual is comfortable in using the innovation.

Feature Availability

According to Sathye (1999), Access to computers and Internet is a prerequisite for adoption of
Internet banking. The higher the access to computer and Internet, wider is the probability of
Internet banking adoption. Separate studies by Doll, et al (1995) and Muylle (1998) indicated
that the easier it is to navigate the website, the better will be the overall user experience.
Attributes such as information content about the product, structure, language(s) offered, layout
features etc. would also affect consumers' perception of the user friendliness of the Internet
banking site and overall customer satisfaction.

Dependent Variable: Customer adoption of internet banking.

DATA COLLECTION

INSTRUMENT

Questionnaire:

A specific questionnaire designed for the purpose of the research was used. The questionnaire
had a filter question to segregate the internet banking users with the ones who dont.

Based on the response to the filter question, the respondent is directed either to part 1- that
involves questions pertaining to the general information for adopting internet banking services
and subsequently to part 2 that records the demographic information or the respondent is
directed to part 3 to list out the possible factors hindering him/her to adopt internet banking.

The part 1 of the questionnaire is to be filled by the respondents who use internet banking and
contained 20 questions of which 19 questions used a Likert scale ranging from 1 = Strongly
Agree to 5 = Strongly Disagree and the 20th question was a multiple choice qualitative question
that lists out the internet banking feature customers find most important.
Part 2 is the demographic study and it consist questions pertaining to the respondents
demographic profiles, such as age, gender, highest qualification and current profession.

Part 3 of the questionnaire is to be filled by the respondents who do not use internet banking and
contained a single multiple choice qualitative question listing the major inhibitors of Internet
banking adoption

Questionnaire Administration:

The questionnaire was administered both online and in print to record the maximum responses
possible. Online questionnaire was designed using the free service available from Google and the
same was then circulated to the target sample.

SAMPLING
The data collection method chosen for this study was Convenience sampling a statistical method
of drawing representative data by selecting people because of the ease of their volunteering or
selecting units because of their availability or easy access. The advantages of this type of
sampling are the availability and the quickness with which data can be gathered. In terms of this
study, Convenience sampling was chosen because overall market analysis had to be done to
understand the factors effecting the internet banking.

Sample frame: Restricted to sample that received the questionnaire by hand and mail.

Sample size: Approx. 50

Sampling method: Convenience sampling

Population of Study: Jaipur city

PILOT TESTING
A pilot test was conducted on the preliminary questionnaire to assess its comprehension and the
average completion time. Two rounds of pre-testing were conducted. The first round was
conducted on three Internet users (one male and two females). Based on feedback from this first
round, some questions were rephrased for clarity. The second round of pre-testing was conducted
with three other young working Internet users (two females and one male). They found the
questions generally clear; thus, the questionnaire was deemed ready for data collection.
3.5.4 RESPONSE RATE
The questionnaire was administered to 136 people both by hand and e-mail. Out of this a total of
43 completed questionnaires were received which were deemed fir to carry out further analysis.
Thus yielding a response rate of 31.62%.
3 DATA ANALYSIS & FINDINGS
4.1 EDITING AND CODING

Editing and coding of data was done using IBM SPSS v20. The data file can be obtained from
the URL given below for analysis and verification purposes.

http://bit.ly/PIEles

Further, independent variables and their corresponding questions are as tabulated below.
These are coded together by taking mean of values of Likert scale for each question.

Table 4.1 Questionnaire

Factors Questions
I find it easier to carry out my banking transactions using Internet
banking
Relative
Internet Banking saves time as compared to offline banking.
Advantage
Internet Banking is a convenient way to manage my finances.
Internet Banking is costly as compared to offline banking.
I prefer doing banking transactions with physical money as against
Compatibility electronic money.
with Values Internet banking is compatible with my lifestyle.
My family culture does not prefer internet banking.
Using Internet banking requires a lot of mental effort.
Navigating through the internet banking interface can be frustrating.
I am very skilled at using the Internet.
Complexity I prefer using search engine if I need help using internet banking
transactions.
I prefer to call up someone if I need help using internet banking
transactions.
I believe internet banking is prone to hacking.
Confidentiality of information is maintained in internet banking.
Security Increased security causes unnecessary delays.
Security provisions currently offered in internet banking in India are
adequate.
I feel confident carrying banking transactions online.
I am confident of using Internet banking even if I have never used such
Individuals Self
a system before.
Confidence
I am confident of using Internet banking if I have just the online help
function for assistance.
 Net banking for Visually Challenged
Secure Card Transactions
NRI Services
Foreign Travel Card
Remittance
Bill Payment
Online Shopping
Feature Mobile Banking Services
Availability Credit Card services
Issue Demand Drafts online
online tax payment
DEMAT and IPO services
Generate account statements
Funds transfer
If others, please specify_____________________________

4.2 RELIABILITY ANALYSIS

The questionnaire framed was tested for its reliability using Cronbachs Alpha coefficient.
Cronbachs alpha is computed in terms of the average inter-correlations among the
items measuring the concept. The closer Cronbachs alpha is to 1, the higher the internal
consistency reliability. Reliability analysis report generated using SPSS for all the questions in
questionnaire is shown below-

Table 4.2 Reliability Test

Reliability Statistics

Cronbach's Alpha N of Items

.874 20

Therefore, it can be seen Cronbachs Alpha comes out to be 0.874, which is closer to 1 and
greater than 0.6. Hence, this questionnaire can be deemed as internally reliable for consistency.
4.3 ANALYSIS OF DEMOGRAPHICS
4.3.1 AGE PROFILE

Age Demographics

100 100 100

86

53.5 53.5 53.5

43
32.6 32.6
23
14 14 14
6

Valid 20 - 29 years Valid 30 - 39 years Valid Above 40 years Valid Total

Ag
e profile of users varied as shown above-

Age
Total
20 - 29 years 30 - 39 years Above 40 years
No 4 6 4 14
Do you use internet banking?
Yes 19 8 2 29
Total 23 14 6 43

Fig 4.3.1 Age Demographics

It can be seen from above age demographics that for age category 20 29 years 83% of the
respondents agree to use internet banking. Further, for age category 30 39 years 57% agree
to use internet banking and for category Above 40 years only 33% respondents agree to use
internet banking. Hence, we can deduce that internet banking is more popular in the younger age
group i.e. 20- 29 years.
4.3.2 GENDER
As is clear from the figure below, 58.1 % of the respondents were male while the remaining
41.9% were females. Since the male: female ratio is 1.39 which is close to one, the study does
not include any gender bias.

Gender Demographics

100 100 100

58.1 58.1

43 41.9 41.9 41.9

25
18

Valid Female Valid Male Valid Total

Gender
Total
Female Male

Do you use internet No 7 7 14

banking? Yes 11 18 29
Total 18 25 43

Fig 4.3.2 Gender Demographics

Further from the Crosstabulation of gender and internet banking usage we can interpret that
61.1% of the female respondents use internet banking whereas in case of male respondents this
figure is a bit more at 72%.
4.3.3 QUALIFICATION
The figure below shows that the majority of the respondents were either post graduates or
graduates accounting for around 93.2% of the total respondents.

Further the cross tabulation table shows that among the post graduate respondents 66.67% do use
internet banking while 63.15% of the graduate respondents use this facility. The Doctorate and
High School respondents were a paltry 3 in number and all three of them agreed to using the
internet banking facility.

Qualification Demographics

100 100 100

95.3

48.8 48.8 51.2

43 44.2 44.2

21 19

2 2.3 4.7 2.3 4.7 2.3

1

Valid Doctorite Valid Post Graduate Valid Graduate

Valid High School Valid Total

Qualification
Post Total
Doctorate Graduate High School
Graduate
Do you use No 0 7 7 0 14
internet banking? Yes 1 14 12 2 29
Total 1 21 19 2 43

Fig 4.3.3 Qualification Demographics

4.3.4 PROFESSION
Out of the total respondents, majority were students around 34.9% followed by those in private
jobs (32.6%) while the self-employed respondents were the lease at around 11%.

Further the cross tabulation reveals that 44.4% of the respondents in Government jobs, 71.42%
in private job, 60% of self-employed and 80% of students use Internet banking facility. This
again validates that there is a greater tendency among the younger generation to adopt internet
banking.

Profession Demographics

100 100 100

65.1

53.5
43
32.6 34.9 32.6 34.9

20.9 20.9 20.9

14 15
9 11.6 11.6
5

Valid Govt. Job Valid Private Job Valid Self Emplyed

Valid Student Valid Total

Profession Total

Govt. Job Private Job Self Emplyed Student

No 5 4 2 3 14
Do you use internet banking?
Yes 4 10 3 12 29
Total 9 14 5 15 43
 Fig 4.3.4 Profession Demographics
4.4 MEASURES OF CENTERAL TENDENCY

4.4.1 MEASURE OF QUANTITATIVE QUESTIONS

Table 4.4.1 Ranking of Quantitave factors

Variables Range Minimum Maximum Mean Std. Variance

Deviation
Compatibility 2.33 1.67 4 3.2069 0.58699 0.345
Security 2 2 4 2.8707 0.47066 0.222
Complexity 2.4 1.8 4.2 2.8414 0.64449 0.415
Self Confidence 3.33 1 4.33 2.4138 0.77998 0.608
Relative Advantage 2.75 1.25 4 2.2759 0.55639 0.31

Above table is used to analyze and rank the various factors affecting consumer adoption to
internet banking. Mean, being a measure of central tendency can be used to rank the factors,
with 1 depicting most favored factor to adopt internet banking and 5 depicting the factor least
favored to adopt to internet banking.

4.4.2 MEASURE OF QUALITATIVE QUESTIONS

Survey consisted of two qualitative questions

First qualitative question was trying to know what all features and internet banking user
seek while opting for internet banking
Another qualitative question was trying to know what are the factors which limits the non-
users of internet banking to not to go for the same.

Each of these questions were coded as 1 for response and 0 for non-response, following tables
summarizes the response for each of these questions.

Table 4.4.2 Ranking of Qualitative factors

Feature Availability Mean Std. Deviation

Bill Payment 0.93103 0.257880715
4
Online Shopping 0.82758 0.384425872
6
Funds transfer 0.72413 0.454858826
 8
Online tax payment 0.65517 0.483725281
2
Mobile Banking Services 0.51724 0.508547628
1
Secure Card Transactions 0.48275 0.508547628
9
Credit Card services 0.41379 0.501230014
3
Issue Demand Drafts online 0.34482 0.483725281
8
Generate account statements 0.34482 0.483725281
8
DEMAT and IPO services 0.31034 0.470823615
5
Remittance 0.24137 0.43549417
9
Net banking for Visually Challenged 0.20689 0.41225082
7
Foreign Travel Card 0.17241 0.384425872
4
NRI Services 0.10344 0.309934047
8

It can be seen from above table that bill payments is the most preferred feature having
maximum mean and minimum standard deviation, just followed by online shopping.

Factors, which are responsible for less adoption to internet banking and in their order of
effectiveness are written below-

Table 4.4.3 Factors for not adopting internet banking

Factors Mean Standard Deviation

Mentally Frustrating 0.461538 0.518874522
Fear of security breach 0.428571 0.513552591
No Computer Knowledge 0.357143 0.497245158
Session expires a lot 0.214286 0.425815314
Can't remember passwords 0.214286 0.425815314
It can be seen that most people dont use internet banking, because it is Mentally
Frustrating to them.

4.5 CORRELATION

On applying correlation between the variables we find that the Customer adoption of internet
banking has a significant relationship with Relative Advantage, Security and Self Confidence
(significant at 0.01 level).
The results are shown in the table below:

Descriptive Statistics

Mean Std. Deviation N

RelativeAdvantage 2.2759 .55639 29

Compatibility 3.2069 .58699 29
Complexity 2.8414 .64449 29
Security 2.8707 .47066 29
SelfConfidence 2.4138 .77998 29
Adopt 3.7285 .43435 29

Table 4.5 Correlations

On the basis of these results we can accept or reject our hypothesis which shall be discussed in
the results and discussions section.
5 RESULTS & CONCLUSION

This research revealed that of the factors identified, Relative Advantage of using internet
banking over traditional banking influences the customer the most to adopt internet banking.
This is followed by self-confidence of the customer, complexity of the system and the security
of the transaction. Whereas, compatibility with values was identified as the least significant of
the factors that affects customer adoption of internet banking.

When we talk of the features that are most sought after by internet banking users, bill
payment was the most preferred choice followed by online shopping, funds transfer and online
tax payment. Whereas Foreign Travel Card and NRI Services were the least preferred choices.

The research also established that among the non-internet banking users, the factor that
contributed the most was the fact that majority of the respondents found the internet banking
service to be Mentally Frustrating followed by Fear of Security Breach, No Computer
Knowledge, Session expiring a lot and inability to Remember Passwords.

Hypotheses Accepted/Rejected
H1: Relative Advantage has a significant
impact on the customer adoption of internet Accepted
banking.
H2: Compatibility has a significant impact
on the customer adoption of internet Rejected
banking.
H3: Complexity has a significant impact on
Rejected
the customer adoption of internet banking.
H4: Security has a significant impact on the
Accepted
customer adoption of internet banking
H5: Individuals self-confidence has a
significant impact on the customer adoption Accepted
of internet banking
 Table 5: Results

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