39

Chapter – II

REVIEW OF LITERATURE

After liberalization, globalization and privatization, Indian banking system has

become quite complicated and varied. Banks have evolved into a technology for

delivering a wide range of financial services. IT has become responsible to bring a

paradigm shift in performance of the banks. The perceptions and expectations of the

customers and employees are continuously changing.

During the period of research, various libraries / institutions were visited. The

available related literature in these libraries / institutions was studied which proved to

be very useful in getting an insight into the main objectives of the study and finalizing

the methodology. An attempt is made in this chapter to review the Impact of

Technology on banking operations, under the head – ‘An Impact Study in the

Operations of Public and Private Sector Banks with reference to Andhra Bank and

ICICI Bank – Visakhapatnam City’. However for the sake of convenience, the

studies have been broadly classified into the following areas.

1. Indian banking (changes, trends, challenges)

2. Technology in banking

3. Information technology

4. E- banking

5. Internet banking

6. Online Banking

7. Mobile Banking

8. ATM

40

9. Service quality & SERVIQUAL Dimensions

10. Customer satisfaction and CRM.

11. Pre e-banking to Post e-banking (Traditional banking to E- banking).

12. Public Sector and Private Sector banks.

13. Employee Perceptions.

2.1 Indian Banking:

Indian banking today is witnessing drastic changes. The liberalization of the financial

sector and banking sector reforms have exposed the Indian banks to a new economic

environment that is characterized by increased competition and new regulatory requirements. As

a result, there is a transformation in every sphere of activities of the banks in India, especially in

Governance, nature of business, style of functioning and delivery mechanisms.

Liberalization and de-regulation process from 1991-92 has made a sea change in the

banking system. Globalization would gain greater speed in the coming years particularly on

account of expected opening up of financial services under World Trade Organization. Four

trends change the banking industry the world over, viz. 1) Consolidation of

players through mergers and acquisitions, 2) Globalization of operations, 3) Development of new

technology and 4) Universalisation of banking.

The new generation banks brought the necessary competition into the industry and

spearheaded changes towards higher utilization of technology, improved customer service and

innovative products. In spite of their strong and larger network, public sector banks proved to be

surprisingly quick and flexible to meet the emerging needs of customers. Change is the order of

the day.

41

Kulkarni G.R. (1980)22 examines the nature and. significance of the international

operations of Indian banks in the furtherance of their business strategies.

Malhotra R.N. (1990)23 reveals that, after 20 years of banks nationalization and

tremendous growth witnessed, the commercial banking system has entered a phase of

consolidation. The phase has coincided with considerable diversification of banking

services, a substantial measure of liberalization of the regulatory regime for imparting

flexibility to the financial system.

Kamesam Vepa (2001)24 analysed the future of Indian banking. He describes

some challenges that call for a dynamic, aggressive work culture to meet the demands of

customer relationships co-operate governance, and regulatory prescriptions. Technology

would play a pivotal role by providing solutions in the form of data ware housing and

analysis for decision support consideration of financial sector.

Kapil Sheeba (2004)25 concluded that Indian banking industry has embraced

many new features like Internet banking, ATMs, Phone banking etc. banks are now able

to offer products and services which were difficult or impossible with traditional banking.

But the banks in India still have to go a long way.

22 Kulkarni G.R., “International Dimensions of Indian Banking “, Economic and Political Weekly, Vol. 15, No. 48, Nov. 29, 1980, pp. M127. 2 Malhotra R.N., “On the Occasion of Bank Economists Conference – Banking In 1990s”, Reserve Bank of India Bulletin, January 1990. 24 Kamesam Vepa, “Information Technology Challenges to Banks”, Reserve Bank of India Bulletin. 2001. 25 Kapil Sheeba, “E-Banking: In Nascent Stage in India”, Professional Banker,2004.

42

Venugopal Dharmalingam (2004)26 describes that Post nationalization of

banks, the banking activities have increased by leaps and bounds. To remain

competitive, banks are adopting core banking system, which provides interlinkage

between branches. While formulating a technology policy, banks are taking into account

the vision of five to ten years and technology which is compatible to Basel II norms.

Rao N.V.M, Prakash Singh and Maheshwari Neeru (2005)27 analyses a

comparison of various models using metric method. The different elements of the metric

include revenue generation, value proposition, infrastructure etc. A mathematical model

has been developed to analyse whether investments in e-initiative increased productivity

and profitability in the Indian banking system. The model suggests that the performance

of the banking sector has improved considerably. Profitability, customer satisfaction, and

many other parameters show a market improvement.

Sahoo B. K., Sengupta J. K. and Mandal A. (2007)28 attempts to examine the trends

of the Indian commercial banks for the period: 1997-98 to 2004-05. First, the increasing average

annual trends in TE for all ownership groups indicate an affirmative gesture about the effect of

the reform process on the performance of the Indian banking sector. Second, the higher cost

efficiency accrual of private banks over nationalized banks indicate that nationalized banks,

26 Venugopal Dharmalingam, “Technology in Banks: Some Thoughts for the Future”, Professional Banker, 2004. 27Rao N.V.M, Prakash Singh, and Maheshwari Neeru, “A framework for evaluating e-Business models and Productivity Analysis for Banking Sector in India”, Journal of Internet banking and commerce, Vol. 10, No. 2, Summer 2005. 28 Sahoo, B. K., Sengupta, J. K. and Mandal, A., “Productive Performance Evaluation of the Banking Sector in India Using Data Envelopment Analysis”, International Journal of Operations Research, 4(2), 63-79. , 2007

43

though old, do not reflect their learning experience in their cost minimizing behaviour due to X-

inefficiency factors arising from government ownership.

Daddihal V.S. and Kulakarni P.K. (2008)29 analyses the changes in Virtual

Banking which includes Automated teller machines (ATMs), Shared ATM Net work,

Electronic fund Transfer at Point of Scale( EFTPOS), Smart Card, Phone Banking and

Internet Banking and related services.

Ipshita Bansal and Rinku Sharma (2008)30 sheds light on the Achievement of

Indian banking services - Formulation of customer service committee, Improvement in

the collection and processing of check, settlement of claims of the Deceased Depositors,

Improvement in Grievance Redressal Mechanism, Door step banking, Credit card

facilities, etc.

Uppal R.K. and Rimpi Kaur (2008)31 concluded that at present, government

should introduce third banking sector reforms. The major factors, which are critical for

the success in the complex scenario, are: Commitment to develop strong long lasting

relationship with customers and to provide quality services.

29 Daddihal V.S. and Kulakarni P.K, “Technology in Banks, A case Study of HDFC Bank”, Professional Banker, 70, April 2008. 30 Ipshita Bansal and Rinku Sharama,“Indian Banking Services : Achievements and Challenges”, The ICFAI University, Journal of Services Marketing, Vol VI, No.2, 2008. 31 Uppal R.K. and Rimpi Kaur, “ Banking Sector Reforms: Issues, Policies and Outlook”, Customer Relationship management in Indian Banking industry, New Century Publications, New Delhi, India, First Published 2008.

44

Diwanji Abizer (2010)32 reveals that Indian banks had to clean up their systems

and practices to ensure stability in a recovering economy. Four challenges must be

addressed before success can be achieved.

Moushumi Datta (2010)33 identified the emerging trends in Internet banking,

ATM’s, Credit cards and debit cards, Mobile phone usage, 24 hour banking service,

Unhindered competition amongst banks, privatization of the banking sector, Participation

of Foreign investment, Increased presence and influence of foreign banks.

Subbarao Duvvuri (2010)34 notes that the global financial crisis marked failure

in several parts of the financial system; but the one segment that remained robust amidst

failure all around was the payment and settlement system- the most technology intensive

part of the financial system.

2.1.1 Technology in Banking:

For the banks, technology has emerged as a strategic resource for achieving

higher efficiency, and for customers, it is the realization of their anywhere, anytime,

anyway banking dream. The recent trends show that most brick and mortar banks are

shifting from a product – centric model to a customer – centric model as they develop

their new e-banking capabilities. The delivery channels include direct up connections,

private networks, public networks etc, banks increasingly use internet as a channel for

32 Diwanji Abizer, “Indian Banking Sector 2010 - Opportunities and Challenges”, Chartered Financial Analyst – The Analyst, The Icfai University Press, February 2010. 33 Moushumi Datta, “Emerging Trends Influencing Banking in India”, Readers Shelf, Volume 6, Issue No.6, March, 2010. 34Subbarao Duvvuri, “Harnessing Technology to Bank the Unbanked”, Banking Technology Excellence Awards 2009 at IDRBT Hyderabad , 18th June , 2010.

45

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.

Mathew Joseph, Cindy McClure and Beatriz Joseph (1994)35 analyses the use

of technology in the delivery of banking services. Importance-performance grid, results

indicated that consumers have perceptual problems with some aspects of electronic

banking. Some strategic implications are discussed.

Radha V. and Gulati P. (2004)36 discusses that new technology always brought

some more fraudulent criminal activities developed around these technologies.

Prevention is basically a cycle of monitor, analyze, detect, act and protect. In this study

we discuss about the technology based opportunities that thieves take advantage and its

prevention and how to build future technology based banking services that can limit the

frauds.

James M Curran; Matthew L Meuter (2005)37 have demonstrated in their

research that multiple factors need to be considered when introducing technologies into

the service encounter. The practical application of these findings may guide marketers to

emphasize issues related to certain critical constructs when utilizing SSTs in their service

delivery.

35 Mathew Joseph,“Service quality in the banking sector: the impact of technology on service delivery”, International Journal of Bank Marketing, MCB University Press, 17/4,1999, pp. 182-191. 36 Radha V. and Ved P. Gulati, Journal of International Bank and Commerce, 2004. 37 James M Curran; Matthew L Meuter, “Self-service technology adoption: comparing three technologies” Journal of Services Marketing. Vol 19; No 2, 2005. pp.103-113.

46

Walfried M Lassar; Chris Manolis; Sharon S Lassar (2005)38 distinguishes

between innate consumer innovativeness, a generalized personality trait, and internet-

domain-specific or actualized innovativeness in order to explore consumer characteristics'

impact on adoption. Data are analyzed using logistic regression. Findings - While results

confirm the positive relationship between internets related innovativeness and online

banking them also surprisingly show that general innovativeness is negatively related to

online banking.

George Rigopoulos and Dimitrios Askounis (2007)39 explained that

Technology Acceptance Model (TAM) have been used for measuring users’ attitude

towards adoption of several IT based services. We present the model developed, as well

as initial results from a relevant survey at a Greek bank’s target users group.

Sonja Grabner-Krauter and Rita Faullant (2008)40 confirm the influence of

internet trust on risk perception and consumer attitudes towards internet banking.

Propensity to trust is a determinant not only for interpersonal relationships but also for

trust in technological systems.

38 Walfried M Lassar; Chris Manolis; Sharon S Lassar, “The relationship between consumer innovativeness, personal characteristics, and online banking adoption”, International Journal of Bank Marketing. Vol 23, No 2, 2005. pp. 176-199. 39 George Rigopoulos and Dimitrios Askounis, “A TAM Framework to Evaluate Users’ Perception towards Online Electronic Payments”, Journal of Internet Banking and Commerce, Vol. 12, No.3, December 2007 40 Sonja Grabner-Kra¨uter,and Rita Faullanr, ‘International Journal of Bank Marketing’, Emerald Group Publishing Limited., Vol. 26, No. 7, pp. 483-504, 2008

47

Gbolahan S. Osho (2008)41 indicate that competition among banks in this

attractive industry is a factor of the one offering the most convenient and appealing

technological advances.

Jha B.K., Gupta S.L. and Puneet Yadav (2008)42 analyse that the new

techniques hold the potential in making banks more profitable and the banking

experience more convenient for customers. At present not many customers in India are

using new techniques. But the trend is catching up albeit slowly.

Nagmal Reddy G. (2009)43 discusses that technology would make the customers

desert bank branches and the banks to lose personal touch. But the IT Developments

have only brought the customers closer to the banks.

Sven C. Berger (2009)44 studies the adoption of in-branch self-service

applications for sales purposes and integrates the moderating effects of personality and

relationship. This study aims to explain the adoption of self-service technology with

pro-active sales applications.

41 Gbolahan S. Osho, “How Technology is Breaking Traditional Barriers in the Banking Industry: Evidence from Financial Management Perspective”, 16 European Journal of Economics, Finance And Administrative Sciences - Issue 11,2008. 42 Jha B.K. and Gupta S.L, “Use and Effectiveness of New Technologies in Indian Banking: A Study” Icfai journal of services Marketing, Vol.VI, No.1, March 2008. 43 Nagmal Reddy G., “IT – Based Banking Services, Enhancing Efficiency.” Chartered Financial Analyst, November, The ICFAI University Press, 2009. 44 Sven C. Berger, “Self-service technology for sales purposes in branch banking - The impact of personality and relationship on customer adoption”, International Journal of Bank Marketing, Emerald Group Publishing Limited, Vol. 27 No. 7, 2009 pp. 488-505.

48

2.2 Information Technology:

IT and India have become synonymous. Information Technology shrunk the

world as a result of which, time & distance have become non-entities to large extent.

Technological innovation both extremely and internally brought about changes in

banking sector. The external innovation can be found in product and service offering.

Similarly internal innovation is found in operational functions of bank. This enabled the

banks to offer better quality of services to customers besides ensuring accurate

information at a faster rate on banking transaction.

Thus, the adoption of IT in banking has undergone several changes with the

passage of time, and it has become inseparable segment of banking organization.

Competitive advantage in the service industry is achieved through superior

customer service as emphasized by Beverley Lloyd-Walker and Yen Ping Cheung

(1998).45 The study looks at the ways in which IT is being used to support superior

quality customer service initiatives in the highly competitive Australian banking industry.

The extent to which the need to improve service quality influences IT planning and

purchases, and shifts in the level of influence over recent years, are detailed.

Hogan W.P. (1999)46 examines the prospects for banking. After a brief appraisal

of the knowledge available at the time of the Wallis Inquiry in 1997, attention is directed

to issues associated with asymmetric information and then technology.

45 Beverley Lloyd-Walker and Yen Ping Cheung, “IT to support service quality excellence in the Australian banking industry”, Managing Service Quality, Vol. 8, No 5, 1998. pp. 350-358. 46 Hogan.W.P, “The Future of Banking: A Survey”, Economic Record, Vol. 75, No 4, 1999. pp. 417-427.

49

The analysis by Mark R Nelson (1999)47 is based on historical analysis of the

industry literature, trends and patterns surrounding the interface between the

marketing and information services functions within the industry.

Idowu P.A., Alu A. and Adagunodo E.R. (2002)48 described the impact of IT

on the banking industry in Nigeria.

V.P. Gulati, M.V. Sivakumaran and C.Manogna (2002)49 reveals their views

on IT framework in Indian Banking sector. An attempt is made in this regard to identify

the principal components of a structured IT plan tailored to the needs of the banking

sector in India.

Johannes Liebach Lüneborg and Jørn Flohr Nielsen (2003)50 views on

survey data from 278 retail banks in Denmark, Finland, Norway and Sweden the study

analyzes differences due to size in the use of Internet-banking and customer-relationship

management. The findings mainly indicate that the positive effects of using customer-

focused technology are strongest in small banks.

47 Mark R Nelson, “Bank marketing and information technology: a historical analysis of the post-1970 period”, International Journal of Bank Marketing, Vol. 17, No. 6, 1999, pp. 265-274. 48 Idowu P.A, Alu A, and Adagunodo E.R, “The Effect of Information Technology on the Growth of the Banking Industry in Nigeria”, Electronic Journal of Information Systems in Developing Countries, Vol. 10, 2002. 49 Gulati.V.P, M.V. Sivakumaran and C.Manogna, “IT framework for the Indian banking sector”, ASCI JOURNAL OF MANAGEMENT 31(1&2), Copyright © 2002. 50 Johannes Liebach Lüneborg and Jørn Flohr Nielsen, “Customer-focused Technology and Performance in Small and Large Banks”, European Management Journal, Vol. 21, No. 2, pp. 258-269, 2003.

50

Bodo Land and Mark Colgate (2003)51 Investigates the impact of IT in a

relationship marketing context. This study provides empirical evidence that indicates

that those customers who do not exhibit an “IT gap” have more positive perceptions of

their relationship with their financial service provider.

Vijaysree (2004)52 analyzes that Information Technology (IT) is not merely a

technical function, but a management process which needs to be managed effectively.

Pereira M.J. (2004)53 presents a study of the Portuguese financial sector during

the period 1994-1999. The conclusion from this research indicates a complementary

effect (not substitution effect) between IST and labour, the strategic impact of IST in

several organisation areas, and the need to design new functions, other than the

traditional Cobb-Douglas function, to evaluate the impact of IST on organisations.

Seethalakshmi (2004)54 concludes that in the IT driven system, till everything

goes very perfect, we can get the expected and desirable result. As the degree of

uncertainity is more in banking sector, they have to depend more on building “Customer

relationship” which is permanent asset bringing in regular income rather than mere

hardware which have obsolescence as a critical factor.

51 Bodo Land, and Mark Colgate, “Relationship quality, online banking and the information technology gap”, International Journal of Bank Marketing, , pp. 29-37, 21st ,January,2003. 52 Vijaysree, “Information Technology Risk in Banking _ Management and Measurement”, Professional Banker, 2004. 53 Pereira M.J., “Impacts of information systems and technology on productivity and competitiveness of the Portuguese banking sector: an empirical study”, International Transactions in Operational Research, Vol. 11, No. 1, pp.43-62, 2004. 54 Seethalakshmi, “Customise Compete & Conquer through technology”, IBA Bulletin, March 2004.

51

Shastri R.V. (2004)55 discusses that Many Indian banks are adopting the

information technology not merely as a frill, but as a dire need. These are augmenting

profit pool, operational efficiency, customer management, product innovation,

distribution and reach, and efficient payment and settlement system. For the success of

any IT program, integration of IT and business strategy is crucial factor.

Firdoso and Bhroff T. (2004)56 discusses that the need of hour is banks

upliftment and its survival in the days of stiff competition. All Bankers should come

together and work as a team. They should set a task force to look into this aspect of

making ONLINE VOLUNTEERS, and take full advantage of the power of the NET and

VRS Force, which is available at present.

Uppal R.K. and Rimpi Kaur (2008)57 examines in the emerging competitive

environment and IT era, with little or no distinction in the product offerings.

In the study of Sonja Grabner-Kra¨uter and Rita Faullant (2008)58 presents

the conceptualization of internet trust as a specific form of technology trust, and its

pivotal role in the adoption process of internet banking, together with the extension of the

propensity to trust concept to technological systems. Their results confirm the influence

of internet trust on risk perception and consumer attitudes towards internet banking.

55 Shastri R.V., “Leading Issues in Banking Technology”, Professional Banker,2004. 56 .Firdoso and Bhroff T., “Technology: As Competitive Edge- IT Challenges & Opportunities for Rural Development, IBA Bulletin, March 2004.

57 Uppal R.K. and Rinpi Haur, “Customer Service in Banks: An Empirical Study”, the Icfai Journal of Management Research, April 2008. 58 Sonja Grabner-Kra¨uter, and Rita Faullant, ‘Department of Innovation Management and Entrepreneurship’, International Journal of Bank Marketing ,Emerald Group Publishing Limited,Vol. 26, No. 7, pp. 483-504, 2008.

52

Mohan K., Babu P George and Alexandru Nedelea (2008)59 examines the

gainful effects of the use of information technology and also gives a critical analysis of

the impact of IT on Indian banking performance and customer services.

Sarangapani A. and Mamatha T. (2008)60 described that Information

Technology (IT) has become an integral part of the banking system. The study discusses

the recent developments in the Indian banking industry, various IT initiatives, e-security

aspects, cyber laws and the RBI guidelines to regulate the e-security issues.

Saroj Kumar Datta and Sukanya Kundu (2008)61 focus on the impact of

information technology on Indian PSBs and how this is affecting the level of their

customer satisfaction.

Uppal R.K. and Rimpi Kaur (2008)62 analyzes the impact of IT on the

transformation of banks during the second phase of banking sector reforms. The specific

objective of the study is process and contents of bank transformation in the regime of

post-second banking sector reforms, and to study the challenges and opportunities for the

banking industry particularly to the public sector banks. The study is concerned with the

Indian banking industry. Total nine top banks have been selected on the basis of their

market share in business in 2003-04.

59 Mohan K., Babu P George and Alexandru Nedelea, www.seap.usv.ro/annals/ojs/index.php/annals/view

Article/6, 2008. 60 Sarangapani A, and Mamatha T., “IT Initiatives in E-banking and its Security Aspects” Professional Banker, 2008. 61 Saroj Kumar Datta and Sukanya Kundu, “A causal relationship between Information Technology and customer satisfaction – a case study on Indian public sector banks”, 2008

62 Uppal R.K.,and Rimpi Kaur, “ Indian Banks: Transformation through E- delivery Channels”, Banking With Technology, New Century Publications, New Delhi, India, First Published 2008.

53

Srinivas Vissapragada (2009)63 discusses the innovations in information

technology being used in the Indian banking system.

Sohani A.K. (2009)64 explains that The State Bank of India is facing

challenges from different players in the banking industry. With the help of numerous

technological initiatives, it is working to bring about organizational improvements in

order to withstand the competition.

Khushboo Khanbelwal M.S and Shwetha Choudhary M.S. (2010)65 have tried

to identify the impact of information technology. The research work is based on

secondary data comprising of case analysis. And their findings are Information

technology has greatly impacted the entire banking system of our country and its

application in banking has a very prospective future in India.

In this study Arti Chandini and Neeraja B. (2010)66 explained how service

sector has changed in the view of the globalization. It is emphatically stated that things

have changed drastically with the advent of information technology.

2.3 Electronic Banking:

Banks are using the electronic technology to meet the ever-increasing competition

in banking which has converted the traditional brick and mortar banking into Electronic

63 Srinivas Vissapragada, “Leveraging IT for better Banking Services”, Professional Banker, 2009. 64 Sohani A.K., “Technology Initiatives by State Bank of India”, Professional Banker, 2009. 65 Khushboo Khanbelwal M.S. and Shwetha Choudhary M.S., “Impact of information Technology on Customer Satisfaction in Banking System”, Readers Shelf, Volume No.6, Issue No.6, March 2010.

66 Arti Chandani and Neeraja B., “Emerging Trends in the Service Sector: Banking Sector”, Readers Shelf, International Business, Vol.6. Issue No.6, March 2010.

54

banking (E-banking). E-banking as far as information technology is concerned may be

identified with three channels viz., ATM, Internet Banking and Tele Banking. E-banking

is an innovative tool for banks that is fast becoming a necessity. It is a successful

strategic weapon for banks to remain profitable in a volatile and competitive market place

of today.

Balachandher Krishnan Guru, Santha Vaithilingam, Norhazlin Ismail and

Rajendra Prasad (2000)67 examine the evolution of electronic banking in Malaysia,

Developments in information technology and telecommunications have set in motion an

electronic revolution in the Malaysian banking sector. This in turn has resulted in new

delivery channels for banking products and services such as the automated teller

machines (ATM’s), telebanking and PC-banking. They analyze the various electronic

delivery channels utilized by local banks and to assess the consumers’ reactions to these

delivery channels.

Nikhil Agarwal, Ruchi Agarwal, Prasoon Sharma and Sherry A.M. (2003)68

prepares a background for discussion for e-banking and e-democracy. Their study will

look for such avenues where banking can play significant role in e-democracy. Farmer

Service Centre (FSCs) is concept is originated from usage of smart card technology for

67 Balachandher Krishnan Guru, Santha Vaithilingam, Norhazlin Ismail and Rajendra Prasad, “Electronic Banking in Malaysia: A Note on Evolution of Services and Consumer Reactions”, Journal of Internet Banking and Commerce, Vol 5, No 1, 2000.

68 Nikhil Agarwal, Ruchi Agarwal, Prasoon Sharma and Sherry A.M, “E-banking for comprehensive E- Democracy: An Indian Discernment”, Journal of internet banking and commerce, , Vol. 8, No. 1, June 2003.

55

village farmers. E-seva is a community billing service helping citizen of Andhra Pradesh

to access governmental services online.

Kaisa Snellman and Tiina Vihtkari (2003)69 compare complaining behavior in

traditional and technology-based service encounters. Drawing on 160 negative critical

incidents within Finnish retail banking, shows that, contradictory to common predictions,

there are no significant differences in the complaining rates between the two types of

service encounters. Attributes this finding to the high reliance of traditional

complaining methods in both types of service encounters.

Bhasir T.M. (2004)70 examines the concept of electronic governance indicates the

application of Information Technology to the computing processes to bring about simple,

moral, accountable, responsive and Transparent Governance. The application of IT in the

banking processes goes beyond mere computerization of standalone back – office

operations.

E-banking has the potential to transform the banking business as it significantly

lowers transaction and delivery costs as stated by Rupa Rege Nitsure (2004).71 Major

concerns such as the 'digital divide' between the rich and poor, the different operational

environments for public and private sector banks, problems of security and

69 Kaisa Snellman and Tiina Vihtkari, “Customer complaining behaviour in technology-based service encounters”, International Journal of Service Industry Management, MCB UP Limited, Vol. 14, No. 2, 2003, pp. 217-231, 70 Bhasir T.M, “ E- Governance of Indian Financial Sector”, IBA Bulletin, March 2004. 71 Rupa Rege Nitsure, “E-Banking: Challenges and Opportunities”, Economic and Political Weekly, Vol. 38, No. 51/52 (Dec. 27, 2003 - Jan. 2, 2004).

56

authentication, management and regulation, and inadequate financing of small and

medium scale enterprises (SMEs) are highlighted.

Agboola A.A. (2006)72 examined electronic payment systems and tele-banking

services in Nigeria. Thirty six out of the 89 banks in Nigeria as at the end of 2005 were

selected for the study. Findings of the study revealed that there has been a very modest

move away from cash. Connectivity via the use of Local Area Network (LAN) and wide

area network has facilitated electronic transfer of funds.

Chai Lee Goi, (2006)73 revealed that there are several underlying forces coming

together have caused the E-banking development in Malaysia. The development mainly

because of new marketing strategy especially to create E-Customer Relationship

Management (E-CRM) and to improve banking activities. The other reasons are

development of technology, applications and tools, as well as supported by the

government.

Jarunee Wonglimpiyarat’s (2007)74 studied with the business strategy in

managing payment innovations. Particularly, the study looks at the smart card - electronic

cash (e-cash) innovation in the financial service industry. The smart card e-cash has yet

to overcome obstacles to its diffusion.

72 Agboola A. A.,“Electronic Payment Systems and Tele banking Services in Nigeria”, Journal of Internet Banking and Commerce, Vol. 11, No.3, December 2006. 73 Chai Lee Goi, “Factors Influence Development of E-Banking in Malaysia, Journal of Internet Banking and Commerce, Vol. 11, No.2, August 2006. 74 Jarunee Wonglimpiyarat, “E-Payment Strategies of Bank Card Innovations”, Journal of Internet Banking and Commerce, Vol. 12, No.3, December 2007.

57

Rashi Sawhney (2008)75 assesses the current status of developments in electronic

banking (e-banking) and explores how it differs from conventional banking. He

identifies emerging trends and risk management issues related to rapid developments in

the area of e-banking that raise challenges for both banks and bank supervisors.

Dhekra Azouzi (2009)76 aims to check if the current and prompt technological

revolution altering the whole world has crucial impacts on the Tunisian banking sector.

Sadia Samar Ali and Bharadwaj R.K. (2010)77 analyses that Globalisation has

been regarded as the standard process for success. Financial institutions are providing

better service to have competitive advantage.

2.4 Internet Banking:

Internet banking is the latest and the cheapest technology introduced in the

banking. At the basic level, interknit banking can mean the setting up of a web-page by a

bank to give information about its products and services. At an advanced level, it

involves provision of facilities such as accessing of accounts, fund transfer, and buying

financial products or services online. This is called “Transactional Online Banking”. In

general Internet Banking refers to the use of internet as a delivery channel for the banking

services, including traditional services, such as opening an account or transferring funds,

as well as electronic bill presentation and payment, which allows the customers to pay

75 Rashi Sawhney, “Electronic Banking Risk Management Issues”, Banking With Technology, New Century Publications, New Delhi, India, First Published 2008. 76 Dhekra Azouzi, “The Adoption of Electronic Banking in Tunisia: An Exploratory Study”, Journal of Internet Banking and Commerce, Vol. 14, No.3, December 2009. 77 Sadia Samar Ali and Bharadwaj R.K.,“Factor analysis approach of decision making in Indian e-banking: a value adding consumer's perspective”, International Journal of Business Innovation and Research, Issue: Volume 4, Number 4, Pages 298 – 320, 2010.

58

and receive the bills on bank’s website. There are two ways to offers Internet Banking.

First, an existing bank with physical offices can establish a web-site and offer internet

banking in addition to its traditional delivery channel. Second, a bank may be established

as a “branchless”, “Internet only”, or “Virtual Bank”.

Marius Dannenberg and Dorothée Kellner (1998)78 shows that the appropriate

application of today's cutting-edge technology can lead to a momentous competitive

advantage for banks. This is illustrated by a scenario focusing on the potentials of

"Advising via Internet".

Margaret Tan and Thompson S. H. Teo’s (2000)79 research framework based

on the theory of planned behavior (Ajzen 1985) and the diffusion of innovations theory

(Rogers 1983) was used to identify the attitudinal, social and perceived behavioral

control factors that would influence the adoption of Internet banking. The results

revealed that attitudinal and perceived behavioral control factors, rather than social

influence, play a significant role in influencing the intention to adopt Internet banking.

Jorn Flohr Nielsen (2002)80 traces important antecedents of internet banking

adoption and analyses its impact on relationship – marketing performance. Based on

structural equation modeling, the findings offer some support for the view that the more

78 Marius Dannenberg and Dorothée Kellner, “The bank of tomorrow with today's technology”, International Journal of Bank Marketing, Vol. 16, No. 2, 1998. 79 Margaret Tan and Thompson S. H. Teo, “Factors Influencing the Adoption of Internet Banking”,Journal of the Association for Information System, Volume. 1, Article. 5, July 2000. 80 Jorn Flohr Nielsen, “Internet technology and customer linking in Nordoc banking”, International journal of service, Industry Management, Vol.13, No.5, pp. 475-495, 2002.

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advanced Internet applications adopted and the more attractive the Web site, the more the

banks are able to keep profitable customers.

Joris Claessens; Valentin Dem, Danny De Cock, Bart Preneel and Joos

Vandewalle (2002)81 discusses the security of today's electronic banking systems. They

focus on Internet and mobile banking and present an overview and evaluation of the

techniques that are used in the current systems.

Siriluck, Rotchanakitumnuai and Mark Speece (2003)82 analyzed that Many

Thai banks are currently implementing Internet banking. Banks that offer service via

this channel claim that it reduces costs and makes them more competitive; however,

many corporate customers are not highly enthusiastic about internet banking. An

understanding of why corporate customers do not accept internet banking can assist

banks to implement this self- service technology more efficiently.

Balwinder Singh and Pooja Malhotra (2004)83 try to help fill significant gaps

in knowledge about the Internet banking landscape in India. The study presents data,

drawn from a survey of commercial banks websites. It was also found that the

profitability and offering of Internet banking does not have any significant correlation.

81Joris Claessens; Valentin Dem, Danny De Cock, Bart Preneel and Joos Vandewalle, “On the Security of Today's Online Electronic Banking Systems”, Computers & Security, Vol. 21, No. 3, 2002, pp. 253-265. 82 Siriluck Rotchanakitumnuai and Mark Speece, “Barriers to Internet banking adoption: a qualitative study among corporate customers in Thailand”, International Journal of Bank Marketing, pp.312-323, 21st, July,2003. 83 Balwinder Singh and Pooja Malhotra, “Adoption of Internet Banking: An Empirical Investigation of Indian Banking Sector”, Journal of Internet Banking and Commerce, Vol. 9, No. 2, 2004.

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Gupta Ankur (2006)84 attempted to highlight the importance of data protection

in internet banking and dwell upon possible legal recourses which may adopted keeping

in mind the current legal framework in India with regards regulation of Information

Technology.

Murali Raman (2008)85 analyzed that Internet banking is one of the most popular

services utilized by the Malaysian retail banking customers in recent years.

Pekka Laukkanen, Suvi Sinkkonen and Tommi Laukkanen (2008)86

identified three groups of internet banking non-adopters, namely postpones, opponents

and rejecters. The data were collected by conducting an extensive postal survey among

the retail banking customers in Finland who had not adopted internet banking.

Nisha Gupta, Deepak Garg and Anita Rani (2008)87 Concluded that the

adoption of Internet banking in India will have its own advantages to both the banks and

the ultimate customers.

Gupta P.K. and Jamia Millia Islamia (2008)88 in their study identified the

weaknesses of conventional banking and explores the consumer awareness, use patterns,

84 Ankur Gupta, “Data Protection in Consumer E-Banking”, Journal of Internet Banking and Commerce, Vol. 11, No. 1, 2006. 85 Murali Raman, “Information Technology in Malaysia: E-service quality and Uptake of Internet banking”, Journal of Internet Banking and Commerce, Vol. 13, No.2, August 2008. 86 Pekka Laukkanen, Suvi Sinkkonen and Tommi Laukkanen, “Consumer resistance to internet banking: post poners, opponents and rejecters”, The International Journal of Bank Marketing, Emerald Group Publishing Limited, Vol. 26, No. 6, pp. 440-455, 2008.

87 Nisha Gupta, Deepak Garg and Anita Rani, “Internet Banking in India”, Banking with technology, New Century Publications, New Delhi,India, First Published 2008. 88 Gupta P.K. and Jamia Millia Islamia, “Internet Banking In India – Consumer Concerns And Bank Strategies”, Global Journal Of Business Research, Volume 2, Number 1, 2008.

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satisfaction and preferences for Internet banking vis-à-vis conventional form of banking

and also highlights the factors that may affect the bank’s strategy to adopt Internet

banking. It also addresses the regulatory and supervisory concerns of Internet banking.

Ganesan R and Vivekanandan K (2009)89 analyses that Internet banking has

made it easy to carry out the personal or business financial transaction without going to

bank and at any suitable time. This facility enables to transfer money to other accounts

and checking current balance alongside the status of any financial transaction made in the

account.

Rohaya Shaari and Hafizi Muhamad Ali (2009)90 analysed the question as to

how bank managers perceive the strategic and operational issues of Internet banking.

Sofri Yahya, Harashid and Thakur Rajendar Singh (2009)91 discussed the

factors that are affecting the acceptance of this form of banking in the Indian market.

It is believed that, in the future, Internet banking will recede in importance as a

strategic application to become a competitive necessity that must be adopted by most of

the government departments. Users of e- banking can perform common banking tasks

such as writing checks, paying bills, transferring funds, printing statements & balance

89 Ganesan R, and Vivekanandan K, “A Secured Hybrid Architecture Model for Internet Banking (e-Banking)” Journal of Internet Banking and Commerce, Vol. 14, No.1, April 2009. 90 Rohaya Shaari and Hafizi Muhamad Ali, “Demographic Influences on Internet Banking in Malaysia”, ICFAI Journal of Bank Management, 2009. 91 Sofri Yahya, Harashid, and Thakur Rajendar Singh, “Internet Banking in Hyderabad: Issues and Prospects”, Professional Banker, 2009.

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inquiry etc. Karthikeyan (2010)92 concluded that Internet banking has evolved into ‘one

stop service and information unit’ that promises great benefits to all i.e. banks, unit’ that

promises great benefits to all i.e. banks, consumers, citizens, employees and government.

The purpose of the Vasista T.G.K and Suneela M. (2010)93 paper is to discuss

the Reserve bank of India’s one of the focus points such as facilitating and protecting the

customer. So proposal aspects of Internet banking with the adoption of systems

perspective and exploration of recent technological trends are done as a part of research

prospects to the above mentioned point by Reserve bank of India but not to differ the

efforts of Reserve bank of India if it has already put.

Rahmath, Safeena and Hema (2010)94 determined the consumer’s perspective

on internet banking adoption. Information technology is considered as the key driver for

the changes taking place around the world.

2.6 On line Banking:

The Online Banking service allows customers to manage their money from any

type of browser device including mobile phones, internet enabled T.V and even small

hand electronic organizers. Using a PC to access the account, transfer funds, pay creditor

and check if payment has been made etc is called online banking. It allows customer to

have constant access to accounts at any time of day or night. Online banking reduces

92 Karthikeya.P, “ Role and Benefits of E- Banking In India”, Readers Shelf, Volume No.6, Issue No.4, January 2010. 93 Vasista T.G.K, and .Suneela M., “Electronic Customer Relationship Management in E- Banking Services Sector”, Readers Shelf, Volume 6, Issue No.6, March, 2010. 94 Rahmath Safeena and Hema , “Customer Perspectives on E-business Value: Case Study on Internet Banking”, Journal of Internet Banking and Commerce, Vol. 15, No.1, April 2010.

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paper cost and the risk of security. Service link brings the up-to-date information about

your online bank accounts directly to your desktop. The projected cleared balances for

the current day are also shown. Online banking ensured these services: Checking the

position of account, Moving the spare cash into and interest bearing account, making

high value payments without risk.

Caalin Guraau (2002)95 investigates and analyses the present situation of online

banking in Romania, and the appropriate strategies for the successful implementation and

development of online banking services in the Romanian context. Internet banking is

one of the newest Internet technology applications, which promises multiple benefits both

for the financial institutions and for clients. In the last five years a large number of banks

have launched Web sites, offering online banking services. While the implementation and

the functioning of these digital systems seem to be relatively smooth in the developed

economies, the situation may be different in countries with economies in transition.

Guosong Shao (2007)96 provides a detailed picture of research trends and

rigorousness in online banking research. The findings also show an obvious unbalance in

publication sources, research perspective, research methods, and sampling techniques in

online banking research. It is thus concluded that more diversified topical coverage and

better methodological rigors are needed in future online banking studies.

95 Caălin Guraău, “Online banking in transition economies: the implementation and development of online banking systems in Romania”, International Journal of Bank Marketing, Vol. 20, No. 6, pp. 285-296, 2002. 96 Guosong Shao, “The Diffusion of Online Banking: Research Trends from 1998 to 2006”, Journal of Internet Banking and Commerce, Vol. 12, No.2, August 2007.

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Tahir Masood Qureshi (2008)97 This era can safely be attributed as technology

revolution. The quick expansion of information technology has imbibed into the lives of

millions of people. Rapid technology advancements have introduced major changes in the

worldwide economic and business atmosphere. Online banking is also one of the

technologies which are fastest growing banking practices nowadays. It is vital to extend

this new banking feature to clients for maximizing the advantages for both clients and

service providers.

Madhurima Deb and Kavita Chavali (2009)98 investigate the significance of E-

Trust and E- loyalty in the context of online banking. The work done is original in the

sense that the study depicted several dimension of E- loyalty to have lucid understanding

of the impact of E- Trust on each of these dimensions. The study would benefit Mangers

and Academicians who would develop an in-depth knowledge about factors affecting E-

Trust and E-loyalty in the context of online banking.

Alain Yee-Loong Chong, Keng-Boon Ooi, Binshan Lin, and Boon-In Tan

(2010)99 examine the factors that affect the adoption of online banking in Vietnam.

Perceived usefulness, perceived ease of use, trust and government support were examined

to determine if these factors are affecting online banking adoption. Data was analyzed by

employing correlation and multiple regression analysis. The results showed that 97 Tahir Masood Qureshi, “Customer Acceptance of Online Banking in Developing Economies, Journal of Internet Banking and Commerce, Vol. 13, No.1, April 2008. 98 Madhurima Deb and Kavita Chavali, “A Study on the Significance of E- Trust and E-Loyalty in Online banking”, AIMS International Journal of Management, Volume 3, Number 3, , pp.241-257, September 2009. 99 Alain Yee-Loong Chong, Keng-Boon Ooi, Binshan Lin, Boon-In Tan, “Online banking adoption: an empirical analysis” International Journal of Bank Marketing, Emerald Group Publishing Limited,Vol. 28, No. 4, pp. 267-287, 2010.

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perceived usefulness, trust and government support all positively associated with the

intention to use online banking in Vietnam. Contrary to the technology acceptance model,

perceived ease of use was found to be not significant in this study.

2.7 Mobile Banking:

Mobile banking facility is an extension of internet banking. The bank in

association with the cellular service providers offers this service are now be able to give

their approval for the clearance of Cheque with the help of two-way communication

technology development. The two-way text messaging system technology allows

customers to submit request and get answers from the bank on their mobiles phones. The

HDFC Bank, ICICI Bank and CITI Bank are offering Mobile banking in India in

association with cellular Service Provider such as Orange Tel, Air Tel, sky Cell and BPL

Mobile. Through this access is available only through SMS technologies, all of them are

graduating to WAP-enabled mobile companies. These facilities are available even to

those customers with only credit card accounts with the bank.

The aim of the Sylvie Laforet and Xiaoyan Li (2005)100 study is to investigate

the market status for online/mobile banking in China. With the recent and forecasted high

growth of Chinese electronic banking, it has the potential to develop into a world-scale

internet economy and requires examination. Their studies offers an insight into

online/mobile banking in China, which has not previously been investigated. Distinct

100Sylvie Laforet and Xiaoyan Li, “Consumers’ attitudes towards online and mobile banking in China” International Journal of Bank, Marketing, Emerald Group Publishing Limited, Vol. 23, No. 5, pp. 362-380, 2005.

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differences and common trends between Chinese and other countries were observed with

clear indication of marketing strategy to be deployed by the service providers.

Hundal B.S. and Abhay Jain (2006)101 examines mobile banking in India only.

The research perspective is focused only on consumers and on certain limited number of

adopter’s characteristics. The research presented also has practical implications for

managers and policymakers who have to make strategies and decision in order to cater to

this hitherto unexplored new technology - based service market.

Jacobs Tom (2008)102 highlights the Mobile Banking limitations such as

security, lack of standard technology platform, communication protocol etc., Mobile

banking will pave the way to a cashless society. Very soon, we will expect the fruit stand

on the corner to accept payment through mobile phone. In order to position themselves

for the mobile banking revolution, banks should seek out solutions that have been

designed to support multiple channels across the entire customer life cycle. Banks need

platforms that have a vision and architecture for the future.

Consumers would prefer those financial institutions that offer easy and secured

ways of performing financial transactions. Thus, M-banking is all set to grow in the

future. The researcher Gauri S Parab (2010)103 highlights these advantages and focuses

on the challenges and opportunities that M-banking has in today’s Tec world. In his

101 Hundal B.S. and Abhay Jain, “Adoption of Mobile Banking Services in India”, Vol..IV, No.2, May 2006. 102 Tom Jacobs, “Multi Channel Banking” , Icfain University, 07M-2008-05-09-01. 103 Gauri S Parab, “Mobile Banking – Bringing Banking to Your Fingertips, , IUP publications, Advertising Express, July 2010.

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study she argues that the banking industry should effectively use Mobile Banking

channel and should educate the consumers about the huge scope of this new channel.

2.8 ATM (Automated Teller Machine):

ATM is an electronic machine, which is operated by the customer himself to

make deposits, withdrawals and other financial transactions. ATM facility is available to

the customer 24 hours a day. The customer is issued an ATM card. This is a plastic card,

which bears the customer’s name. This card is magnetically coded and can be read by

this machine. Each cardholder is provided with a secret personal Identification Number

(PIN). When the customer wants to use the card, he has to insert his plastic card in the

slot of the machine. After the card is a recognized by the machine, the customer enters

his personal identification number. After establishing the authentication of the

customers, the ATM allows the customer to enter the amount to enter the amount to be

withdrawn by him. After processing that transaction and finding sufficient balances in

his account, the output slot of ATM give the required cash to him. When the transaction

is completed, the ATM ejects the customer’s card.

Robert Rugimbana and Philip Iversen (1994)104 explored ATM usage entirely

from the viewpoint of consumers' demographics. Examines ATM usage patterns on the

basis of consumers' perceptions. The results based on a survey of 630 retail banking

consumers from two separate Australian banking institutions - a bank and a credit union -

suggest that ATM users from both institutions differed quite significantly from non-users

in their perceptions of at least three ATM attributes; convenience, reliability, and 104 Robert Rugimbana and Philip Iversen, “Perceived Attributes of ATMs and Their Marketing Implications”, International Journal of Bank Marketing, Vol. 12, No. 2, pp. 30-35, 1994.

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suitability. Furthermore, the results indicate that most users perceive ATMs as mere cash

dispensers.

Simon S.M. Ho and Victor T.F. Ng (1994)105 present the Comparisons between

traditional forms of payment and electronic systems with their inherent perceived risks by

customers are detailed. The objective of their study is to gain more insight into the

reasons why ATM cardholders accept or reject EFTPoS and how they view the risk of

EFTPoS when compared to credit cards and cash. They also examine whether the amount

of purchase has an effect on the level of perceived risk of alternative payment methods

and whether users of EFTPoS perceive the risk of EFTPoS differently from non-users.

Md. Rafiqul Islam, Samir Kumar and Sheel Pallab Kumar Biswas (2005)106

investigated the satisfaction levels of HSBC ATM cardholders (both staff and nonstaff)

with respect to various aspects (promptness of card delivery, the performance of HSBC

ATM, the service quality of ATM personnel etc.) of using HSBC ATM and their

opinions on various other related issues.

The objective of the Mete Feridun and Orhan Korhan (2005)107 study was to

design a simple human machine system, which would both incorporate these elements

and enable humans to use their full capacities while not over demanding or overloading.

105 Simon S.M. and Victor T.F., “Customers’ Risk Perceptions of Electronic Payment Systems” International Journal of Bank Marketing, MCB University Press Limited, Vol. 12 No. 8, pp. 26-38, 1994. 106 Md. Rafiqul Islam, and Samir Kumar Sheel, “Customer Satisfaction of ATM Service: A Case Study of HSBC ATM”, 2005. 107 Mete Feridun and Orhan Korhan, “Banking and Technology: Information Flow between the Human and the Machine through Automated Teller Machines”, Information Technology Journal, Vol. 4, No. 1, pp. 75-77, 2005.

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The design eliminates the information loss (equivocation) and gains (noise) and augments

the process in terms of accuracy, integrity and speed.

Sultan Singh and Komal (2009)108 present the impact of ATM on customer

satisfaction. This is a comparative study of three major banks i.e. State Bank of India,

ICICI bank and HDFC bank. This paper has been divided into two sections. A sample of

360 respondents equally representing each bank has been taken through questionnaire.

Data has also been collected through interview also.

2.9 Service quality & SERVIQUAL Dimensions:

Service quality is a measure of how well the delivered level of service matches

customer expectations. Pioneering work by Parasuraman et al. (1985) the SERVQUAL

instrument consists of five underlying dimensions, with two sets of 22 item statements for

the ‘expectation’ and ‘perception’ sections of the questionnaire. The five dimensions of

service quality were noticed by Parasuraman et al. (1991). These are reliability,

responsiveness, assurance, empathy and tangibles.

The most common definition of service quality is the discrepancy between

consumer’s expectations and perceptions of the service received. Accordingly, service

quality is defined as how well a delivered service level matches customer’s expectation.

Since the SERVQUAL was developed in 1988, various researchers have

recognized that both the instrument itself and the conceptualization of service quality

may benefit from further refinement (for example, Finn and Lamb 1991, Lee and Hing 108 Sultan Singh and Komal, “ Impact Of ATM On Customer Satisfaction: A Comparative Study of SBI, ICICI & HDFC bank”, Business Intelligence Journal, Vol. 2, No. 2, August 2009.

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1995). They have argued that the SERVQUAL instrument needs to be customized to the

specific service area.

Parasuraman.A, Leonard Berry and Valarie A. Zeithmal (1993)109,

responded to Brown, Churchill, and Peter’s (1993) critique of SERVIQUAL’s difference

– score conceptualization. The authors demonstrated that the claimed psychometric

superiority of the alternative non difference score concpetualisation is debatable. The

authors also argued that the SERVIQUAL conceptualization offers richer diagnostics.

Parasurman .A , valarie A. Zeithmal, and Leonard Berry(1994)110 , respond

to concerns raised by cronin and Taylor (1992) and Teas (1993) about the SERVIQUAL

instrument and the perceptions – minus – expectations specification invoked by it to

operationalise service quality. They offer a set of research directions for addressing

unresolved issues and adding to the understanding of service quality assessment.

Based on a wide survey of over 1,500 Italian customers, Umberto Filotto, Paola

Musile Tanzi, and Francesco Saita (1997)111 analyzed both payment services and sales

and private banking areas. In the former, human contact attributes of service prove to be

overemphasized when customer satisfaction is observed. In the latter, technology seems

extremely important in helping bank branch officers decide which new services to offer

109 Parasuraman and Leonard Berry , valarie A. Zeithmal , “ More on Improving Service Quality Measurement”, Volume 69, Number 1, Spring 1993. 110

Parasurman , valarie A. Zeithmal, and Leonard Berry , Reassessment of expectations as a comparison standard in measuring service quality, Journal of Marketing;; 58, 1,ABI/INFORM Global pg. 111, Jan 1994. 111 Umberto Filotto, and Paola Musile Tanzi, “Customer needs and front-office technology adoption” , International Journal of Bank Marketing, © MCB University Press, 15/1,13–21, 1997.

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to which customers. In both sections customers’ clusters are identified according to the

importance of different service attributes.

Faye X Zhu, Walter Wymer, and Injazz Chen’s (2002)112 paper explores the

impact of information technology (IT) on service quality in the consumer-banking sector.

It proposes a service quality model that links customer perceived IT-based service

options to traditional service dimensions as measured by SERVQUAL in the context of

customer perceived service quality and customer satisfaction. The analysis also show that

customers' evaluations of IT-based services are affected by their preference towards

traditional services, experiences in using IT-based services, and perceived IT policies.

Mathew Joseph and George Stone (2003)113 investigates some of the various

roles technology in general impacts the delivery of banking service. He developed a grid

that might prove useful to bank managers when making decisions convening the priority

of implementation of service – oriented technology. Key strategic implications are

discussed to include ways banks can improve the level of technology.

Sang-Lin Han, Seung Baek and Hanyang (2004)114 investigate the usefulness

and applicability of SERVQUAL in measuring online service quality and its relationships

to customer satisfaction and customer retention. It is an interesting finding that service

quality does not directly influence the level of customer retention. This study suggested a 112 Faye X Zhu, Walter Wymer and Injazz Chen, “IT-based services and service quality in consumer are banking”, Journal of Service Management, Vol. 13, No. 1, pp. 69-90, 2002. 113 Mathew Joseph and George Stone,“An Empirical Evaluation of US bank customer perceptions of the impact of technology on service delivery in the banking sector”, International Journal of Retail & Distribution Management, Volume 31, November 4, pp.190-202, 2003. 114 Sang-Lin Han and Seung Baek, “Antecedents and Consequences of Service Quality in Online Banking: An Application of the SERVQUAL Instrument”, Advances in Consumer Research, Volume 31, 2004.

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four-factor model of SERVQUAL including Tangibles, Reliability, Responsiveness, and

Empathy. Furthermore, we explored the relationships among customer satisfaction,

customer retention, and service quality. This study reveals that SERVQUAL is an

appropriate instrument for measuring the quality of online banking services.

The aim of the Mohammed Al-Hawari, Nicole Hartley and Tony Ward’s

(2005)115 study was to establish the critical determinants of automated service quality by

including those attributes of each main banking delivery channel that were currently

assessed by existing service quality instruments and those attributes that were currently

overlooked in the automated service quality literature. The proposed comprehensive

model was empirically validated by perceptual data collected from customers of banks,

building societies, and credit unions in Queensland, Australia.

Sanjay J Bhavani (2006)116 concludes that the competition among banks is

tough and the consumer benefits from it. As a result, Indian customers enjoy better

service quality, innovative products, and better bargains. Growth has been tremendous,

particularly in the retail segment including housing loans, vehicle loans and credit cards.

The coming fiscal will prove to be a transition phase for Indian banks, as they will have

to align their strategic focus to increasing interest rates.

115 Mohammed Al-Hawari, Hartley, and Tony Ward, “Measuring Banks’ Automated Service Quality: A Confirmatory Factor Analysis Approach”, Marketing Bulletin, 2005.

116 Sanjay J Bhayani, “Performance of New Indian Private Sector Banks: A Comparative Study”, The Icfai Journal of Management Research, Vol. V, No.11, November 2006.

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Amudha R. and Vijaya Banu C. (2007)117 in their study on “ Service Quality in

Banking with special reference to ICICI Bank Ltd., Tiruchirapalli District, the outcome

of their study shows that organizations can assess five dimensions of service quality to

determine the level of services provided and to decide which dimension need

improvement. In order to develop service quality, it is necessary to contact employees

frequency and evaluate their service experiences. By identifying strengths and weakness

pertaining to the dimensions of service quality, organizations can better allocate resources

to provide enhanced service.

Sunayna Khurana (2009)118 aims to identify customer preferences towards

online banking and to find out various service quality dimensions that affect customer

satisfaction. The five factors that influence the satisfaction level of customers are

responsiveness, reliability, efficiency, privacy of information and easiness to use. The

researcher is of the opinion that the present study can make its contribution in two ways.

First, it describes the customer preferences towards internet banking. Secondly, it

explains the various service quality dimensions that effect customer’s satisfaction and

importance of each factor. Responsiveness and reliability on the banks website are most

important factors that affect customer’s satisfaction. Various banks have to take

important steps to make their website more reliable and more responsive to give more

value and satisfaction to customers.

117 Amudha R. and C. vijaya Banu, Asia – Pacific Business Review, Volume III, Number – 2, , pp. 18-26, July – December 2007. 118 Sunayna Khurana, “ Managing Service Quality: An Empirical Study in Internet Banking”, The Icfai University Journal of marketing management, Vol.VIII, No. 3&4, August & November 2009.

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In the present banking scenario, service quality is an indispensable competitive

strategy to retain customer base. Banks are trying to win customer satisfaction and

loyalty by providing better quality services. In this study Sandip Ghosh Hazra and

Kailash B L Srivastava (2009)119examines the relationship of service quality with

customer loyalty, commitment and trust form the customers perspective in the Indian

banking sector. Data was collected from 300 customers of public and private sector

banks using structured interview schedules. The results show that dimensions of service

quality such as assurance – empathy, reliability and tangibles significantly predict

customer trust and commitment. The results also indicate that service quality is

positively associated with customer loyalty. Private bank customers are more committed

and loyal as they receive better quality of service. The study implies that public sector

banks should also come forward and try their best to provide better quality service to win

back their customers’ loyalty and commitment.

Padhy.P K and Swar B.N (2009)120 investigated the role of technology in

banking and its impact on perceived SQ (Service Quality) in public, private and foreign

banks in Orissa. Foreign bank was found to be very close to the expectations of

customers followed by ICICI and AXIS Bank private sector whereas the SQ of public

sector banks was found to be very low as SBI was ranked lowest on tangibility and

responsiveness and PNB was ranked lowest on assurance and empathy.

119 Sandip Ghosh Hazra, and Kailash BL Srivastava, “Impact of Service Quality on customer Loyalty Commitment and Trust in the Indian Banking Sector”, The Icfai University Journal of Marketing Management, Vol.VIII, No. 3&4, August & November 2009. 120 Padhy.P K and Swar B.N, “ A study on Customer Satisfaction and Service Gaps in Selected Private, Public and Foreign Banks”, 3rd IIMA Conference, Marketing Paradigms for Emerging Economics, Indian Institute of Management, 2009.

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Satisfaction of the customer depends on the quality of service, therefore,

measuring customer satisfaction helps the banks to understand the customer’s needs, and

change the strategies of the bank accordingly. Bharathi Kamath G. (2010)121 in her

study on “Measuring Service Quality (SERVIQUAL) in Banks”, she measured the

service quality of a public sector bank in Mangalore city by using the SERVQUAL

method. The data is collected from 243 bank customers in Mangalore city. The

SERQUAL is measured on five different dimensions of tangibility, reliability,

responsiveness, assurance and empathy. The analysis of data shows that expectations

are greater than performance; this indicates that perceived quality is less than

satisfactory and a service quality gap materializes.

2.10 Customer Satisfaction / CRM:

Customer Satisfaction: Customer satisfaction is equivalent to making sure that product

and service performance meets customer expectations. It is the perception of the

customer that the outcome of a business transaction is equal to or greater than his/her

expectation. Customer satisfaction occurs when the acquisition of products and /or

services provides a minimum negative departure from expectations when compared with

other acquisitions and when the marginal utility of a transaction is equal to or greater than

preceding acquisitions. Customer satisfaction occurs when the perception of the reward

from the purchase of goods or services by the customer meets or exceeds his/her

perceived sacrifice.

121 Bharathi Kamath G.,“Measuring Service Quality (SERVIQUAL) in Banks”, Prajnan Journal of Social and Management Sciences, National Institute of Bank Management, Vol.XXXIX No. 1, 2010.

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CRM : or Customer Relationship Management, is the business strategies designed to

optimize profitability, revenue, retention, and customer satisfaction. When used to

describe software, rather than business processes, CRM applications are those that focus

on relationships, rather than transactions.” Edward.D.John

“CRM aligns business process with customer strategies to build customer loyalty

an to increase profits overtime.” Rigby Reichheld & Schefter

There is nothing permanent except change. No Business organization shall stand

as an exception to this phrase. Customer needs keep changing day by day. Therefore it is

absolutely essential for any business to adopt the changes in the market. To adopt those

changes, the business must first track the changes in the customer wants and then respond

to it.

The purpose of the Mathew Joseph, Yasmin Sekhon, George Stone and Julie

Tinson (2005)122 study is to discover the underlying areas of dissatisfaction associated

with the banking experience in the UK, particularly as it relates to the implementation of

new service delivery technology in the banking industry. The researchers of the study

utilized three samples of banking customers residing in the southern part of the UK. It

involved distributing 300 surveys to a convenience sample of electronic banking

customers from the sampling area of interest in the UK. In order to qualify, respondents

122 Mathew Joseph, George Stone, and Julie Tinson, “An exploratory study on the use of banking technology in the UK, A ranking of importance of selected technology on consumer perception of service delivery performance”, International Journal of Bank Marketing, Emerald Group Publishing Limited, Vol. 23, No. 5, pp. 397-413, 2005.

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had to have used one of the available electronic banking services offered by the bank at

least once during the previous month. This analysis explored the ranking of importance

of selected technology on consumer perception of service delivery performance.

Richard Boateng and Alemayehu Molla (2006)123 explore some of the issues

that affected the key decisions that the bank made. These decisions relate to entering e-

banking, e-banking channel choice, e-banking development, enticing customers, and

managing channel conflict. The findings indicate that operational constraints related to

customer location, the need to maintain customer satisfaction and the capabilities of the

Bank's main software

Khandare D.M and Mohan S.Rode (2008)124 discusses that ‘a bank exists

because of its customers’ has become more pronounced and relevant in the present

context. Banks have to devise suitable systems and mechanisms to satisfy the needs and

expectations of various segments of customers for their survival. When competition is

tough, the best way for survival is to be in constant touch with the customers and letting

them know what bank can do for them.

The main objective of the Mohan and Rode S. (2010)125 study is to examine the

changing scenario of bank in the policy formation related to its customers. The study is

based on primary & secondary data. They collected the primary data from persons

123 Richard Boateng, and Alemayehu Molla, “Developing E-banking Capabilities in a Ghanaian Bank: Preliminary Lessons”, Journal of Internet Banking and Commerce, Vol. 11, No.2, August 2006. 124 Khandare.D.M, and Mohan S. Rode, “ Customer Satisfaction led Growth In Banking Sector”, The Journal of Business Studies, Vol.5, No.10, July 2008. 125 Mohan and Rode S., “Changing Current Trends in Banking Sector: A fight for Survival”, Bift’s Journal of International Management and Research, Volume – II, No-2, January – March, 2010.

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having their savings account in different banks (including private & nationalized banks in

Nanded City) by filling up well – structured questionnaire ad through personal meeting

with customers. They examine the customer suggestion instead of adopting banking

policies relating to customer services.

Madhu Jasola and Shivani Kapoor (2008)126 find the differences in an

organization’s services employing CRM vis a vis others, as perceived by the customer. It

is a discipline which enables the companies to identify and target their most profitable

customers. CRM involves new and advance marketing strategies which not only retain

the existing customers but also acquire new customers.

John Mylonakis (2009)127 aims to presents the Customer Relationship

Management (CRM) functions, as applied in the banking sector, examined from a bank

marketing point of view. The study was carried out in 2007 on a convenience sample of

300 respondents through the distribution of structured questionnaires to bank customers

within the area of Athens, Greece. The Greek banking market has adopted CRM

solutions in recent years, as banks have realized the need to maintain their customer base

and to better use their resources in order to promote their products and services. In

general, there is a positive attitude towards CRM.

126 Madhu Jasola and Shivani Kapoor , “CRM: A Competitive Tool for Indian Banking Sector”, Communications of the IBIMA , Volume 5, 2008. 127 John Mylonakis, “Customer Relationship Management Functions: A Survey of Greek Bank Customer Satisfaction Perceptions”, ICFAI Journal of Bank Management. 2009.

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2.11 Traditional Banking to E- banking(Pre e-banking to Post e-banking):

Banking is in a period in which we are seeing a decrease in the number of

traditional competitors due to industry consolidation. At the same time, we are seeing an

increase in the number of competitors for each customer and relationship. Technology-

enabled improvements and a desire to improve earnings stability have led many banks to

enter new markets (global and national). Local competition includes remote banks and

nonbank competitors. This, combined with a growing appetite for customization and

personalization, is driving the need to constantly transform applications and offerings to

meet new competition and changing customer preferences, expectations, and needs.

However, technology is always changing and improving, and banks typically and

desperately adapt in order to keep their customer base. Therefore, to take full advantage

of these ever changing solutions, the bank must act to make sure it has full access to

information between each solution. While ever-changing technology can pose

difficulties, it is still an essential tool to ensure an institution’s standing in the highly

competitive financial services market .

The e-banking delivery channel also has implications for other traditional banking

risks such as credit risk, liquidity risk, interest rate risk, and market risks. The impact

of the introduction of e-banking does not necessarily result in an increase or decrease in

the risk profile of the institution, but risks can be shifted, sometimes in complex ways.

Padamasai (2000)128 studied that productivity and profitability of five big banks

increased throughout the post-reforms period in terms of selected ratios of each

128 Padamsai, T. Profitability, Efficiency and Productivity of the Big Five Public Sector Banks in India, Dissertation, Dept. of Commerce, Delhi School of Economics, Uni. of Delhi, Delhi, 2000.

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parameter, but on account of efficiency, the performance of the top five banks is very

dismissal as inefficiency has increased during the study period. He suggested that if the

government sells its share in the profit making banks, it would be able to bail out the

weak banks.

Shapiro, (2002)129 studied the affects of cyberspace on efficiency and

productivity of banks. He also analyzed the nature of bank transformation.

Lorin M. Hitt and Frances X. Frei (2002)130 systematic study has been made

for whether and how characteristics or behaviors might differ between customers who use

electronic delivery systems and those who use traditional channels. Case studies and

detailed customer data from four institutions suggest that PC banking customers are

apparently more profitable, principally due to unobservable characteristics extant before

the adoption of PC banking.

Arora,K.(2003)131 highlighted the significance of bank transformation.

Technology has a definitive role in facilitating transactions in the banking sector and the

impact of technology implementation has resulted in the introduction of new products

and services by various banks in India.

129

Shapiro, C ,‘Will E- Commerce Erode Liberty’, Harvard Business Review, May- June, 2000 130 Lorin M. Hitt and Frances X. Frei, “Do Better Customers Utilize Electronic Distribution Channels? The Case of PC Banking”, Source: Management Science, Vol. 48, No. 6, pp. 732-748. June 2002 131 Arora, Kalpana , ‘Indian Banking: Managing Transformation Through IT’, IBA Bulletin, Vol. XXV, No. 3,, pp. 134-138, March 2003.

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Kaisa Snellman and Tiina Vihtkari (2003)132 compare complaining behavior in

traditional and technology-based service encounters. Drawing on 160 negative critical

incidents within Finnish retail banking, shows that, contradictory to common predictions,

there are no significant differences in the complaining rates between the two types of

service encounters.

Uppal, R.K. (2008)133 analysed banking in the post-LPG (Liberalization,

Privatization and Globalization) era and Information Technology (IT) era, On the basis

of five-point likert-type scale, this paper empirically analyzes the quality of e-banking

services in the changing environment. With different statistical tools such as weighted

average method and ranking, the paper concludes that most of the customers of e-banks

are satisfied with the different e-channels and their services.

David H. Wong, Nexhmi Rexha and Ian Phau (2008)134 aims to re-examine

the role of traditional service quality in an e-banking environment by providing a review

of how traditional service quality perceptions have evolved through the current and

continuing stream of change in banking technology and the corresponding changes in the

nature of how banks interact with their customers. And their Findings – While the

importance ranking of the five SERVQUAL dimensions has not changed dramatically

132 Kaisa Snellman and Tiina Vihtkari, “Customer complaining behavior in technology-based service encounters”, International Journal of Service Industry Management, MCB UP Limited, Vol. 14 No. 2, pp. 217-231, 2003.

133 Uppal, R.K., “Customer Perception of E-Banking Services of Indian Banks: Some Survey Evidence”, IUP Journal of Bank Management, 1 (February), VII (2008) 134 David H. Wong, Nexhmi Rexha and Ian Phau, “Re-examining traditional service quality in an e-banking era”, International Journal of Bank Marketing, Emerald Group Publishing Limited, Vol. 26 No. 7, 2008 pp. 526-545.

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over the years, large discrepancies were found between customer expectations and their

perceived performance of traditional banking services.

Uppal.R.K.(2008)135 describes that excellent mapping for the banks is a need of

the hour. The author concludes that average productivity & profitability is the highest in

case of New Private Sector Banks and Foreign Banks in post- ebanking period. During

this period, PSBs has made tremendous and remarkable improvement in many parameters

of productivity. But still they are lagging behind in performance when they compare them

with Foreign Banks and New Private Sector Banks.

Dhekra Azouzi (2009)136 aims to check if the current and prompt technological

revolution altering the whole world has crucial impacts on the Tunisian banking sector.

For instance; age, gender and educational qualifications seem to be important and they

split up the group into electronic banking adopters and traditional banking defenders and

so, they have significant influence on the customers’ adoption of e-banking.

Filomina P George, Mercia Selva Malar S. and Sudheendran M (2009)137

state the Advancement in computer technology and Internet has shown its effect on

traditional banking business in India. As Internet became more easily accessible, banks

capture new business opportunities.

135 Uppal, R.K., “Indian Banking Industry:Agenda for FutureAnalysis of Pre & Post e- Banking Period”, Journal of commerce and trade, Bi-annual Publication of Society For Advanced Management Studies , Vol. 3 No. 1 / April 2008. 136 Dhekra Azouzi, “The Adoption of Electronic Banking in Tunisia: An Exploratory Study”, Journal of Internet Banking and Commerce, Vol. 14, No.3, December 2009. 137 Filomina P George, S Mercia Selva Malar and Sudheendran M, “No more Traditional banking only Virtual,” Professional Banker. 2009.

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Dr. Dhiraj Sharma & Dr. R.K Uppal (2010)138 on their paper they attempts to

link banking technology with the financial productivity of Indian commercial banks. Till

date, it is a matter of debate whether Technology leads to better financial returns. There is

no conclusive evidence that IT induction improves financial performance of an

organization. The scholars call it “IT Productivity Paradox”. However, for Indian

banking industry, the correlation between Technology induction and financial

productivity is negative though statistically insignificant and low.

R. K. Uppal(2011)139 analyzes the performance of major banks in terms of

productivity and profitability in the pre and post e-banking period. The paper concludes

that performance of all the banks under study is much better in post-e-banking period and

further foreign banks are at the top position, whereas the performance of the public sector

banks is comparatively very poor. The paper suggests some measures to tackle the

challenges faced by the banks particularly public sector banks. At the end, paper suggests

how public sector banks can convert the emerging challenges into opportunities.

2.12 Public Sector and Private Sector Banks:

Kangis and Voukaltos (1997)140 compares the customers expectations and perceptions

of SQ in public and private sector banks in their study. The study reveals that customers

of private sector banks were found to have lower level of difference between

perceptions and banks. Convenient location, opening hours, friendliness and courtesy of

138 Dr. Dhiraj Sharma & Dr. R.K Uppal, “IT-Productivity Paradox in Banks – A study of India Banks in Hyper IT Era,” IJBEMR Volume 1, Issue 1,2010. 139 R. K. Uppal, “E-Age Technology–New Face of Indian Banking Industry: Emerging Challenges and New Potentials”, Journal of Social and Development Sciences Vol. 1, No. 3, pp. 115-129, Apr 2011. 140 Kangis and Voukaltos, “Private and Public Banks: A comparison of Customer Expectations and Perceptions”, Internation Journal of Bank Marketing, Vol. 15, No. 7, pp.279-287, 1997.

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employees were not considered as important factors by the customers of both sector

banks.

In their paper, Ram Mohan. T and Subhash C. Ray (2001)141 attempt a

comparison between PSBs and their private sector counterparts based on measures of

efficiency and productivity that use quantities of outputs and inputs. Both measures are

relevant in attempting a comparison between the private and public sectors.

In the study of A M Rawani and M P Gupta (2002)142 makes an attempt to

explore empirically the difference in the role of Information Systems (IS) in the banking

industry. The study indicates that IS plays a supportive role in public sector banks and a

strategic role in private and foreign sector banks. The study also indicates that the future

impact of IS does not vary significantly with the banking groups.

Meenakshi Rishi and Sweta C. Saxena (2004)143 highlight the role of labour

unions in public sector banks and their initial opposition to technological adoption. This

study charts out the path of technological innovation in the Indian banking industry post-

economic liberalization (1991-2) and identifies initial conditions in terms of competitive

environment and regulatory pressures that have contributed to the diffusion of these

innovations.

141 Ram Mohan. T and Subhash C. Ray, “Productivity and efficiency at public and private sector banks in India”, Document ,490.7004358, 14thJunbe, 2007. 142 Rawani.A.M and M P Gupta, “Role of Information Systems in Banks: An Empirical Study in the Indian Context” Vikalpa , Vol. 27, No. 4, October-December 2000. 143 Meenakshi Rishi and Sweta C. Saxena, “Technological Innovations in the Indian Banking Industry: The Late Bloomer”, Accounting Business and Financial History. Vol.14, No.3,. pp. 339-353, 2004.

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T T Ram Mohan and Subhash C Ray (2004)144 attempts a comparison of

performance among three category of banks – public, private and foreign – using

physical quantities of inputs and outputs , and comparing the revenue maximization

efficiency of banks duri9ng 1992 -2000. The findings show that PSBs performed

significantly better than private sector banks.

Sunil Kumar (2008)145 examines the objective of his analysis is to explore the

relationship between technical efficiency and profitability in India PSBs using the

‘efficiency – profitability matrix’. The study is confined to cross - sectional data for the

year 2005. A non – parametric technique named DEA was applied for computing TE

scores for 27 PSBs. The overall level of technical inefficiency in the Indian public sector

banking industry has been found to be around 11.5 percent. Also, banks affiliated with

the SBI group outperformed the banks in the NB group in terms of operating efficiency.

Sunil Kumar and Rachita Gulati (2008)146 examine the issue of convergence of

efficiency levels among Indian public sector banks (PSBs) during the post-reforms period

spanning from 1992/1993 to 2005/2006. That is, the banks with low level of efficiency at

the beginning of the period are growing more rapidly than the highly efficient banks. In

sum, the study confirms a presence of convergence phenomenon in the Indian public

sector banking industry.

144 Ram Mohan T.T,and Subhash C Ray, “ Comparing performance of public and private sector banks, A Revenue Maximisation Efficiency Approach, Economic and Political Weekly, March, 2004. 145 Sunil Kumar, “An analysis of Efficiency – Profitability in Indian Public Sector Banks”, Global Business Review, Vol. 9, No.1, Jan –June 2008. 146 Sunil Kumar and Rachita Gulati, “Did efficiency of Indian public sector banks converge with banking reforms?”, Published online: 15 November 2008 _ Springer-Verlag 2008.

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R.K.Uppal (2009)147 analyses the responses of 768 customers of public sector

bank, Indian private sector bank & Foreign Bank (each one from these groups) operating

in Amrithsar district of Punjab. It may be inferred that there is significant difference

among three bank groups with regard to the time customers have to spend to transact a

business. The e-banks are more efficient in regard to time factor.

Kajal Chaudhary and Monika Sharma (2011)148 discussed that the economic

reforms in India started in early nineties, but their outcome is visible now. Increased

competition, new information technologies and thereby declining processing costs, the

erosion of product and geographic boundaries, and less restrictive governmental

regulations have all played a major role for Public Sector Banks in India to forcefully

compete with Private and Foreign Banks.

2.13 Employee Perceptions

Kirsty Vaughan and Anna MacVicar (2004)149 investigates the implementation

of e-learning by UK culture and technology infrastructure company, including the pre-

implementation attitudes and perceptions of employees. The findings are discussed

together with the implications for research and practice in their study. In their study, the

practice of a blended approach adopted by an anonymised large multinational banking

organisation is presented as a case study.

147 R.K.Uppal, “ Customer Service in Indian Commercial Banks”, Asia Pacific Journal of Social Sciences, Vol-1(1), Jan-June, pp-127-141, 2009. 148 Kajal Chaudhary and Monika Sharma, “Performance of Indian Public Sector Banks and Private Sector Banks: A Comparative Study”, International Journal of Innovation, Management and Technology, Vol. 2, No. 3, June 2011. 149 Kirsty Vaughan and Anna MacVicar, “Employees’ pre-implementation attitudes and perceptions to e-learning A banking case study analysis”, Journal of European Industrial Training Vol. 28 No. 5, pp. 400-413, 2004.

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Constantine Lymperopoulos and Ioannis E. Chaniotakis (2004)150 aim to

identify the potential effects of e-banking through literature and surveys the Greek branch

employees’ perceptions in their paper. A questionnaire was designed and completed by

527 branch employees. Data factor analysis revealed the existence of four distinct factors

which were named banks’ “hard advantages”, “soft advantages”, “market effects”, and

“risk”, whereas further analysis provided evidence of the relationship that exists among

the perceptions, the personal characteristics of the respondents and the organisational

characteristics of their banks.

Thorsten Hennig-Thurau (2005)151 states that with the performance of service

personnel often constituting a major element of a service per se, the customer orientation

of service personnel is often regarded as a main determinant of service firms’ success.

The model is then empirically tested against a sample of 989 consumers for two service

contexts (i.e. book/CD/DVD retailers and travel agencies), with the results providing

support for most hypotheses. Implications of the findings for services and retail

management are discussed.

Masud Ibn Rahman, Hemanta Bahadur Gurung and Sampa Saha(2005)

152

investigates the level of job satisfaction of bank employees in Dhaka City identifying

150 Constantine Lymperopoulos and Ioannis E. Chaniotakis, “Branch employees’ perceptions towards implications of e-banking in Greece” International Journal of Retail & Distribution Management Volume 32 · Number 6, pp. 302-311, Emerald Group Publishing Limited · ISSN 0959-0552, 2004. 151 Thorsten Hennig-Thurau, “Customer orientation of service employees -Its impact on customer satisfaction, commitment, and retention”, International Journal of Service Industry Management, Vol. 15 No. 5, 2004 pp. 460-478, Emerald Group Publishing Limited, 0956-4233, 2005. 152 Masud Ibn Rahman, Hemanta Bahadur Gurung and

Sampa Saha, “Where the Job Satisfaction of Bank

Employees Lies: An Analysis of the Satisfaction Factors in Dhaka City”, Electronic copy available at: http://ssrn.com/abstract=1349453, 2005.

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the important job satisfaction factors that are associated with the overall satisfaction of

bank employees. Factors including payment, healthy relationship with colleagues, sense

of personal accomplishment, adequate information available to do job, ability to

implement new ideas and overall job satisfaction are found important for improving job

satisfaction of bank employees in Dhaka City. These factors are significantly related to

the overall satisfaction of the employees. The higher level of these factors is involved, the

higher overall satisfaction is likely to be. The factors that are influential have been

identified following overall job satisfaction through some statistical techniques.

Andreas-Nikolaos Papandreou (2006)153 concluded that the potential for on-line

banking is present for all banks to utilize. His thesis has shown that the Internet is a

unique opportunity and a major channel for distributing banking services in Greece. The

banks that stand to gain full advantage of this are the ones who have done their marketing

and demographic research and who are able to attract their targeted group by devising

interesting and memorable homepages to benefit from the increase in e-banking services.

Uppal R.K. and Rimpi Kaur (2007)154 in their study on “Quality of services in

E- Banks and Traditional Banks” examine the employee’s perceptions in India. The

study is based on a survey, it is concluded that although there are some drawbacks in

E-Banks like complaints regarding the usage of ATMs, high service charges and more

working hours leading to frustration among the employees. Accurate record 153 Andreas-Nikolaos Papandreou, “INTERNET BANKING IN GREECE: DEVELOPMENT, EVALUATION AND PERSPECTIVES”, Blekinge Institute of Technology School of Management Masters in Business Administration 2006. 154 Uppal R.K., and Rimpi Kaur, “Quality of services in E- Banks and Traditional Banks : An Empirical Study of Employees Perceptions in India”, The Icfai Journal of Management Research, Vol VI, No.2, February 2007.

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maintenance, attractive facilities and salaries to employees are other factors which make

these banks more preferable. This is due to advanced technology, disciplined

management, learning culture, having more satisfied customers and employees.

Ahmad Kaleem and Saima Ahmad (2008)155 reveal that Electronic distribution

channels provide alternatives for faster delivery of banking services to a wider range of

customers. This paper aims to collect bank employees’ perceptions of the potential

benefits and risks associated with electronic banking in Pakistan. The outcomes may help

the management of banks develop effective strategic planning for the future of electronic

banking in developing countries like Pakistan.

RK Uppal (2009)156 attempts to study the perceptions of bankers for internet

based e-banking services related with important issues like collaborative culture, training

& development, knowledge management. The perceptions of employees experienced in

e-banking system are surveyed where the study covers 60 employees of e-banks located

in selected districts of Punjab during the first half of July 2007. The study concludes that

there exists collaborative culture and employees are satisfied with the working of

e-channels. The employees experienced some frustration and a major problem of lack of

knowledge of e-channels and their operating ways while dealing with these channels, are

the most prevalent ones.

155 Ahmad Kaleem and Saima Ahmad, “Bankers’ Perceptions of Electronic Banking in Pakistan” Journal of Internet Banking and Commerce,, vol. 13, no.1April 2008. 156 RK Uppal, “Internet Based e-banking Services and Bankers’ Perspective in the Emerging Globalized Era - An Empirical Study”, Invertis Journal of Management Vol. 1, No. 1, pp 1-11, 2009.

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Dr. Muhammad Zafarullah, Dr. Hayat, and M. Awan (2010)157 conceptualizes

and measures key determinants of internal organizational orientation of service quality

from the employees’ perspective in this paper. The data collected from a sample of 150

employees of pure Islamic banks and conventional banks with IBBs (Islamic Banking

Branches or windows. Findings of this study guide the management of islamic banks to

indirectly influence customer perceptions through effective employees’ recruitment and

selection criteria, complemented by training to improve service oriented skills and

knowledge development about Sharia principles related with the products/ services

offered by Islamic banks in Pakistan.

Haitham Hmoud Al Shibly and Ibrahim H.Tadros (2010)158 designed their

research to theoretically address and empirically examine research issues related to the

question of what factors impact electronic government acceptance by Jordanian

employees. Two hundred questionnaires were distributed to employees at a municipality

in Jordan. Multiple regressions were used to analyze the data. The results of this study

show that System Quality, Information Quality, and Perceived Ease of Use, all have

significant effect on electronic government acceptance. Practical implications are

discussed.

157 Dr. Muhammad Zafarullah, Dr. Hayat, and M. Awan “Employees’ Perspective of Organizational Service Quality Orientation: Evidence from Islamic Banking Industry”, Journal of Brand Management (Under Review), BM10-132OA, 2010. 158

Haitham Hmoud Al Shibly and Ibrahim H.Tadros, “Employee’s Perceptions towards Electronic Government in Jordan”, European Journal of Scientific Research ISSN 1450-216X Vol.48 No.2, pp.169-176, 2010.

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Salman Khalid and Muhammad Zohaib Irshad (2010)159 have examined the

job satisfaction level of bank employees in Punjab Province. The result of their study

reveals that employees of private banks were more satisfied with pay, recognition, and

working hours as compared to public sector bank employees. Whereas, the employees of

public sector were satisfied with job security as compared to private sector bank

employees.

Conclusion

A review of the literature on the subject indicates that the introduction of IT,

Liberlisation and globalization is very vital for the present banking system. A

comprehensive review of the literature reveals, in the era of Liberlisation and

globalization, a paradigm shift is taking place in ownership, co-operate governance,

business, IT and performance of various bank groups. There is a paradigm shift in the

performance. Hence, there is a need to examine the impact of information technology

on the performance of bank on one hand and on the other hand, it is equally important to

assess the satisfaction levels of the customers in the banks, and that of the bank

employees. Therefore this study is concerned with mainly with the impact of

technology on banking operations, the performance of banks in pre e-banking and post

e-banking period, the perceptions of customers and employees on technological services

of banking.

159 Salman Khalid and Muhammad Zohaib Irshad, “Job Satisfaction Among Bank Employees in Punjab, Pakistan: A Comparative Study”, European Journal of Social Sciences – Volume 17, Number 4, 2010.