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2011
Ruby Manchanda
Roll No. 2326 / 1447, MBA 4th Sem, 2009 -
2011, HPUBS, HP University, Shimla
6/3/2011
1
CONSUMER ATTITUDE
TOWARDS INTERNETBANKING
SUBMITTED TO:
Professor (Dr.) Pawan
GargaMarketing
MBA, M.Phil, Ph. D.
HPUBS, HP University
Shimla
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DECLARATION
It is hereby declared that all the work presented in this project report
“Consumer Attitude towards Internet Banking”, to be submitted in
fulfilment of the requirements of the award of the degree of MBA in IT and
HR by Ruby Manchanda, Roll No. 2326 / 1447, is an authentic record of
her own work carried out under the guidance of Professor (Dr.) Pawan
Garga, Marketing, HPUBS, HP University, Shimla.
6/3/2011 Ruby
Manchanda
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CERTIFICATE
This is to certify that project report entitled “Consumer Attitude
towards Internet Banking”, which is submitted by Ruby Manchanda,
Roll No. 2326 / 1447, MBA (IT and HR), HPUBS, HP University, Shimla, is an
authentic record of the candidate’s work carried out by her under our
guidance.
This project report or any part thereof has not been submitted to any
university or institution for the award of any other degree or diploma.
Dr. Pawan Garga
Professor,
Project Guide,
Marketing,
HPUBS, HP University,
Shimla
6/3/2011
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ACKNOWLEDGEMENT
I take the great pleasure to recall with gratitude the people who have
been instrumental for the successful completion of this project work.
I would like to express deep sense of gratitude to my project guide, Dr.
Pawan Garga, Professor, Marketing, HPUBS, HP University, Shimla for his
valuable guidance without which the project would not have been
accomplished. The project has provided me with an opportunity to
understand the fundamentals of research and to understand the attitude
of people toward internet banking, how they perceive the emergence of this new style and how it is changing the environment of banking sector.
I am also indebted to all the teachers of HPUBS, HP University, Shimla who
have helped me directly or indirectly in accomplishing this task.
I would also like to record my deep sense of gratitude to my entire family
and friends, ex-colleagues, without whose blessings and encouragement
the project would not have seen the daylight.
I would also like to thank all my respondents heartily for giving me theirvaluable time and providing me with the information needed to carry out
the research successfully. Anand, Rajpal, Rattan, Amandeep and Aman Pal
deserve a special mention for helping me find interested respondents.
May God bless them all in all their endeavours.
6/3/2011 Ruby
Manchanda
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CONTENTS
ContentsDECLARATION........................................................................................................2
CERTIFICATE..........................................................................................................3
ACKNOWLEDGEMENT............................................................................................4
CONTENTS.............................................................................................................5
TABLE OF FIGURES................................................................................................7
EXECUTIVE SUMMARY............................................................................................8INTRODUCTION....................................................................................................10
TYPES OF INTERNET BANKING..........................................................................15
CHOOSING AN INTERNET ACCOUNT.................................................................16
BUSINESS CONSIDERATIONS IN INTERNET BANKING........................................17
CLIENT FOCUS...............................................................................................18
COST REDUCTION..........................................................................................18
MARKET EXPANSION......................................................................................18
ADVANTAGES OF INTERNET BANKING..............................................................19
ADVANTAGES TO THE CUSTOMER.................................................................19
ADVANTAGES TO THE BANK..........................................................................21
DISADVANTAGES OF INTERNET BANKING.........................................................22
RISKS ASSOCIATED WITH INTERNET BANKING.................................................24
PRECAUTIONS FOR INTERNET BANKING...........................................................28
SWOT ANALYSIS OF INTERNET BANKING..........................................................30
INTERNET BANKING IN INDIA............................................................................32PRODUCTS AND SERVICES OFFERED.............................................................32
THE FUTURE SCENARIO OF INTERNET BANKING IN INDIA..............................33
CUSTOMER ATTITUDE TOWARDS INTERNET BANKING......................................35
LITERATURE SURVEY...........................................................................................39
OBJECTIVE............................................................................................................43
RESEARCH METHODOLOGY.................................................................................44
DATA COLLECTION METHOD.............................................................................44
SAMPLING.........................................................................................................45
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SAMPLING DESIGN.........................................................................................45
SAMPLING FRAME..........................................................................................45
DATA COLLECTION AND ANALYSIS......................................................................46
RESULTS AND CONCLUSIONS..............................................................................66
LIMITATIONS........................................................................................................68
BIBLIOGRAPHY.....................................................................................................69
ANNEXURE...........................................................................................................70
ANNEXURE
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TABLE OF FIGURES
Figure 1 TYPES OF INTERNET BANKING...............................................................15
Figure 2 BUSINESS CONSIDERATIONS IN INTERNET BANKING.............................17
Figure 3 RISKS ASSOCIATED WITH INTERNET BANKING.......................................26
Figure 4 FACTORS CONTRIBUTING TOWARDS ADOPTION OF INTERNET BANKING
............................................................................................................................37
Figure 5 ATTITUDE TOWARDS INTERNET BANKING..............................................38
Figure 6 GENDER WISE DISTRIBUTION OF SAMPLE POPULATION.........................46
Figure 7 AGE WISE DISTRIBUTION.......................................................................47
Figure 8 EDUCATION WISE DISTRIBUTION...........................................................47Figure 9 OCCUPATIONAL DISTRIBUTION OF POPULATION....................................48
Figure 10 VISIT TO BANK BRANCH.......................................................................49
Figure 11 REASONS TO VISIT BANKS...................................................................50
Figure 12 e-BANKING FACILITIES AVAILABLE.......................................................50
Figure 13 COMPARISON OF AVAILABLE AND AVAILED FACILITIES........................51
Figure 14 e-BANKING FACILITIES AVAILED BY INDIVIDUALS................................52
Figure 15 ADOPTION OF INTERNET BANKING IN NEAR FUTURE...........................52
Figure 16 FACTORS PREVENTING USE OF INTERNET BANKING............................53
Figure 17 REASON TO ADOPT INTERNET BANKING..............................................55
Figure 18 USAGE FREQUENCY.............................................................................56Figure 19 FAVOURED ONLINE BANKING FACILITIES.............................................56
Figure 20 ASPECTS OF INTERNET BANKING SERVICES.........................................57
Figure 21 PREFFERED BANKS..............................................................................58
Figure 22 SOURCE OF INFLUENCE.......................................................................58
Figure 23 SATISFACTION OF USERS WITH INTERNET BANKING...........................59
Figure 24 PREFERRED PLACE OF ACCESS FOR INTERNET BANKING....................59
Figure 25 ISSUES ENCOUNTERED IN INTERNET BANKING....................................60
Figure 26 FACTORS AFFECTING POPULARTIY OF INTERNET BANKING.................61
Figure 27 AVAILABILITY OF MOBILE PHONES AND WEB BROWSING FACILITIES ON
MOBILE PHONES WITH USERS.............................................................................62Figure 28 PERCENTAGE OF RESPONDENTS AVAILING MOBILE BANKING SERVICES
............................................................................................................................62
Figure 29 FREQUENCY OF USAGE OF MOBILE BANKING......................................63
Figure 30 PREFERENCE TOWARDS MOBILE BANKING..........................................63
Figure 31 REASONS TO OPT FOR MOBILE BANKING.............................................64
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Figure 31 REASONS TO OPT FOR MOBILE BANKING
EXECUTIVE SUMMARY
Banking has always has been a highly information intensive activity that
relies heavily on information technology (IT) to acquire, process, and
deliver the information to all relevant users. Not only is IT critical in the
processing of information, it provides a way for the banks to differentiate
their products and services. Banks find that they have to constantly
innovate and update to retain their demanding and discerning customers
and to provide convenient, reliable, and expedient services. Driven by
challenge to expand and capture a larger share of the banking market,some banks invest in more bricks and mortar to enlarge their
geographical and market coverage. Others have considered a more
revolutionary approach to deliver their banking services via a new
medium: the Internet.
With the rapid diffusion of the Internet, banking in cyberspace is fast
becoming an alternative channel to provide banking services and
products. The Internet is now being considered as a strategic weapon and
will revolutionize the way banks operate, deliver and compete against one
another, especially when competitive advantages of traditional branchnetworks are eroding rapidly.
Indeed, the emergence of Internet banking has prompted many banks to
rethink their IT strategies in order to stay competitive. Customers today
are demanding much more from banking services. They want new levels
of convenience and flexibility on top of powerful and easy to use financial
tools and products and services that traditional retail banking could not
offer. Internet banking has allowed banks and financial institutions to
provide these services by exploiting an extensive public network
infrastructure.
Online banking was, therefore, introduced as a channel where bank’scustomers could perform their financial transactions electronically viatheir bank’s Web sites. An online banking user is expected to perform atleast one of the following transactions online:
➢ Checking account balance and transaction history
➢ Paying bills
➢ Transferring funds between accounts
➢ Requesting credit card advances
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➢ Ordering checks
➢ Managing investments and stocks trading
Using the Internet is more efficient than using other distribution mediums
because banks are looking for an increased customer base. Internet alsooffers the delivery of customized services to suit the needs and the likesof each user. It reduces cost and allows for spending time effectively onbusiness. It also provides for a convenient and effective way to managefinances that is easily accessible 24 hours a day, seven days a week. Inaddition, information is up to date.
Despite the many potential benefits, many teething problems need to beaddressed before Internet banking can become widely adopted. Theseinclude problems like teaching staff and customer how to work with
technology, set-up costs, legal issues, and lack of personal contact withcustomers. And from customer’s stand point, there are security andprivacy issues.
Through this research, an attempt has been made to find out the attitude
of the customers towards Internet banking. An analysis of the perception
of the customers towards Internet banking revealed the various
considerations that are prime factors in determining the adoption and
acceptance of this new system of banking.
The report is initiated with the understanding of the Internet banking,
followed by the literature survey, and detailed analysis of the data
collected and interpretation of the results of analysis.
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INTRODUCTION
A big revolution in the financial market, rapid revolutions incommunication market, evolution of Internet and allied technologies, andall the recent modern, sophisticated state-of-the-art technology basedservices have led to the banks adopting modern systems. Traditionalpaper-based banking had started becoming inefficient, dissatisfying forcustomers and restricting global presence. For many consumers,electronic banking means 24-hour access to cash through an automatedteller machine (ATM) or Direct Deposit of pay-cheques into checking orsavings accounts.
Electronic banking, also known as electronic fund transfer (EFT), usescomputer and electronic technology as a substitute for cheques and otherpaper transactions. EFTs is initiated through devices like cards or codesthat let you, or those you authorize, access your account. Many financialinstitutions use ATM or debit cards and Personal Identification Numbers(PINs) for this purpose. Some use other forms of debit cards such as thosethat require, at the most, your signature or a scan.
EFT is defined as any transfer of funds initiated through an electronic
terminal, telephonic instrument, or computer or magnetic tape or so as toorder, instruct, or authorize a financial institution to debit or credit anaccount. It utilizes computer and telecommunication components both tosupply and to transfer money or financial assets.
The trends in electronic banking system can be divided into categories:
➢ Technology oriented trends➢ Customer’s trends in adoption of electronic banking
Work on EFT can be segmented into three broad categories:
➢ Banking and Financial systems –a Large scale or wholesale payments (bank to bank
transfer)
b Small scale or retail payments (automated teller
machines and cash dispensers)
c Home banking (bill payment)
➢ Retailing payments –
a Credit cards (VISA or MasterCard)
b Private label credit / debit cards (J.C. Penney Card)
c Charge cards (American Express)
➢ On-line electronic commerce payments
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a Token – based payment systems
i Electronic cash (DigiCash)
ii Electronic cheques (NetCheque)
iii Smart cards or debit cardsb Credit – card based payment systems
i Encrypted credit cards (World Wide Web form –
based ecryption)
ii Third – party authorization numbers (First Virtual)
Thus, EFT offers several services that consumers may find practical. A fewdistribution channels for electronic banking are discussed as follows:
➢ Automated Teller Machines or 24-hour Tellers (ATMs) are electronic
terminals that let a person bank almost any time. To withdraw cash,make deposits, or transfer funds between accounts, one has togenerally insert an ATM card and enter the PIN. Some financialinstitutions and ATM owners charge a fee, particularly to consumerswho don’t have accounts with them or on transactions at remotelocations.
➢ Direct Deposit lets one authorize specific deposits, such as pay-cheques and Social Security cheques, to his / her account on aregular basis. One also may pre-authorize direct withdrawals so thatrecurring bills, such as insurance premiums, mortgages, and utility
bills, are paid automatically.
➢ Pay-by-Phone Systems allow a person to call a financial institutionwith instructions to pay certain bills or to transfer funds betweenaccounts. One must have an agreement with the institution to makesuch transfers.
➢ Personal Computer Banking allows handling many bankingtransactions via a personal computer. For instance, one can use hiscomputer to view the account balance, request transfers betweenaccounts, and pay bills electronically.
➢ The credit cards are the electronic cards used to obtain credit at thetime of purchasing articles or services. It is widely believed by thecustomers that the interest rates on credit cards are very high andas a result their use by general public is limited.
➢ Debit Card Purchase Transactions are carried out by makingpurchases with a debit card, which also may be an ATM card. Thiscould occur at a store or business, on the Internet or online, or byphone. The process is similar to using a credit card, with someimportant exceptions. While the process is fast and easy, a debitcard purchase transfer’s money - fairly quickly - from the bankaccount to the company’s account. So it’s important to have funds
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in one’s account to cover the purchase. This requires the keeping of accurate records of the dates and amounts of the debit cardpurchases and ATM withdrawals in addition to any cheques onewrites. The debit card information should be accessed or used only
at safe known stores, to avoid the possible loss of funds throughfraud. The ATM cum debit card service is the prime facility beingavailed by many customers.
➢ Electronic Cheque Conversion converts a paper cheque into anelectronic payment in a store or when a company receives a chequein the mail. In a store, when customer gives his cheque to a cashier,the cheque is run through an electronic system that captures thebanking information and the amount. The customer is asked to signa receipt and get a copy for his records. When the cheque has beenhanded back, it should be voided or marked by the merchant so that
it can’t be used again. The merchant electronically sendsinformation from the cheque (but not the cheque itself) to the bankor other financial institution, and the funds are transferred into themerchant’s account. When the customer mails-in a cheque forpayment to a merchant or other company, they may electronicallysend information from the cheque (but not the cheque itself)through the system, and the funds are transferred into theiraccount. For a mailed cheque, a customer should still receiveadvance notice from a company that expects to send the chequeinformation through the system electronically. The merchant orother company might include the notice on monthly statements orunder its terms and conditions. The notice also should state if themerchant or company will electronically collect a fee from theaccount — like a “bounced cheque” fee — if the funds areinsufficient to cover the transaction.
➢ The Internet Banking Service is also emerging as one of the mostpopular channel. This medium provides the banking servicesthrough the medium of Internet. Sometimes, the services areprovided through a web-page, sometimes by installing the softwareon the customers’ system and sometimes by accessing the servicesthrough mobile phones.
Thus, banks have traditionally been in the forefront of harnessingtechnology to improve the products, services and efficiency. They have,over a long time, been using electronic and telecommunication networksfor delivering a wide range of value added products and services. Thedelivery channels include direct dial – up connections, private networks,public networks etc and the devices include telephone, PersonalComputers including the Automated Teller Machines, etc. With thepopularity of PCs, easy access to Internet and World Wide Web (WWW),Internet is increasingly used by banks as a channel for receivinginstructions and delivering their products and services to their customers. This form of banking is generally referred to as Internet Banking, although
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the range of products and services offered by different banks vary widelyboth in their content and sophistication.
Broadly, the levels of banking services offered through Internet can becategorized in to three types:
➢ The Basic Level Service is the banks’ websites which disseminateinformation on different products and services offered tocustomers and members of public in general. It may receive andreply to customers’ queries through e-mail.
➢ In the next level are Simple Transactional Websites which allowcustomers to submit their instructions, applications for differentservices, queries on their account balances, etc, but do notpermit any fund-based transactions on their accounts.
➢ The third level of Internet banking services are offered by Fully Transactional Websites which allow the customers to operate ontheir accounts for transfer of funds, payment of different bills,subscribing to other products of the bank and to transactpurchase and sale of securities, etc.
The above forms of Internet banking services are offered by traditionalbanks, as an additional method of serving the customer or by new banks,who deliver banking services primarily through Internet or other electronicdelivery channels as the value added services. Some of these banks are
known as ‘virtual’ banks or ‘Internet only’ banks and may not have anyphysical presence in a country despite offering different banking services.
Thus, Internet banking means that the banking services such as servicesintroduction, loan application, account balance enquiry, fund transfer andso forth are provided by a bank through the Internet. Internet banking hasevolved into a “one step service and information unit” that promises greatbenefits to both banks and consumers.
According to Michael Karlin, the President and Chief Operation Officer of the world’s first virtual bank, Security First Network Bank, the idea of Internet Banking is as follows –
➢ One does not have to purchase any software, store any dataon computer or back up any information, since all thetransactions occur on the bank server over the infrastructureof the Internet.
➢ One can conduct the banking services anywhere one likes butneeds to have a computer and a modem.
➢ The banking facilities will be available 24 hours a day, 7 days
a week, and 365 days a year. One does not have to reconcilebank statements or track manually the ATM or paper cheques.
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From the perspective of banking products and services being offeredthrough Internet, Internet banking is nothing more than traditionalbanking services delivered through an electronic communication
backbone, viz, Internet. But, in the process it has thrown open issueswhich have ramifications beyond what a new delivery channel wouldnormally envisage and, hence, has compelled regulators world over totake note of this emerging channel. Some of the distinctive features of internet banking are:
➢ It removes the traditional geographical barriers as it couldreach out to customers of different countries / legal jurisdiction. This has raised the question of jurisdiction of law /supervisory system to which such transactions should be
subjected.➢ It has added a new dimension to different kinds of riskstraditionally associated with banking, heightening some of them and throwing new risk control challenges.
➢ Security of banking transactions, validity of electroniccontract, customers’ privacy, etc., which have all along beenconcerns of both bankers and supervisors have assumeddifferent dimensions given that Internet is a public domain,not subject to control by any single authority or group of users.
➢ It poses a strategic risk of loss of business to those banks who
do not respond in time, to this new technology, being theefficient and cost effective delivery mechanism of bankingservices.
➢ A new form of competition has emerged both from theexisting players and new players of the market who are notstrictly banks.
Internet Banking is a product of e-commerce in the field of banking andfinancial services. In what can be described as B2C domain for bankingindustry, Internet Banking offers different online services like balanceenquiry, requests for cheque books, recording stop-payment instructions,balance transfer instructions, account opening and other forms of traditional banking services. Mostly, these are traditional services offeredthrough Internet as a new delivery channel. Banks are also offeringpayment services on behalf of their customers who shop in different e-shops, e-malls etc. The transfer of customers’ funds inter-branch, intra-branch, inter-bank level forms the core and life of Internet banking. Thecustomisation in Internet banking allows the changes in formats of dates,currency, colour schemes etc. Further, different banks have differentlevels of such services offered, starting from level-1 where onlyinformation is disseminated through Internet to level-3 where online
transactions are put through.
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There are factors like availability of electronic and internet bankingservices, convenience, prompt banking services, location, and widernetwork are the prime factors that would help in selection of Internetbanking services.
Internet banking is still in nascent and infantile stage and is being availedby relatively few customers. Various studies and researches haverevealed that majority of customers are IT savvy and usually well –educated. The customers’ have to be encouraged to use this cost-effective, user-friendly delivery channel. All categories of customers desireconvenient, prompt and user-friendly modern banking services.
The more advanced electronic and Internet based banking services likecore banking solutions, real time gross settlement system allow on-
demand availability of computerised banking services; user-friendliness of bank’s website; promptness in issue of passbooks, chequebooks; updatingof passbook; quickness in issue of demand drafts; clearance of outstationcheques; generation of financial statements; availability of information;transfer of funds from one account to another; time taken to respondcustomers’ queries; transaction completion time; availability of alerts tousers; adoption of security measures. This also helps to ascertain thesatisfaction level of a customer. Internet security measures are veryessential for secure transactions between customer and main bankservices. These cover both the access level and application level securityand include passwords, digital signatures, socket layers, management of
session times. This is essential to boost the confidence level of customersand needs proactive support from financial as well as government ends tobridge the digital gap.
Credibility (trustworthy source, author’s credentials, evidence of qualitycontrol, respected authority, organizational support), accuracy (up todate, factual, detailed, exact, comprehensive, completeness, accuracy),reasonableness (fair, balanced, objective, no conflict of interest, absenceof fallacy,), support (listed sources, contact information, availablecorroboration, claims supported, documentation supplied), challenge (whosays so, why should I believe, who are the target audience), adapt (findrobust evidence before adapting to the information), file (file informationand gain knowledge), evaluate (as circumstances change) are the checkpoints for any internet banking system. The goal of this checklist is toprovide a quality internet banking facility to customers.
TYPES OF INTERNET BANKING
According to Aladwani (2001) different forms of online banking are web-
based banking where a customer can access his or her account(s) whenhe or she uses the Internet; second form of online banking is where a
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bank customer uses a modem to dial-up to a bank’s server to access his
or her bank account(s). The later type of online banking is known as dial-
up banking. A special type of dial-up banking is called an Extranet, a
private network between a bank and its corporate customers. Thulani et al (2009), Yibin (2003) and Diniz (1998) identify three functional
level/kinds of internet banking that are currently employed in the market
place and these are: Informational, Communicative and Transactional.
Figure 1 TYPES OF INTERNET BANKING
➢ Informational (Websites) - This has been identified as the first
level of internet banking. Typically the bank has the marketing
information about the bank’s products and services on a standalone
server. The risk is very low as informational systems typically have
no path between the server and the bank’s internal network.
Informational Internet banking simply means the bank provides
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basic information about its products and services, much like a
brochure. This is meant for marketing purposes only, and there is no
connection to the bank's main computer systems. This level of
Internet banking can be offered by the bank or outsourced. Whilethe risk to a bank is rather low, the server or Web site may be
susceptible to adjustment. To prevent unauthorized alterations to
the bank's server or web site, appropriate controls therefore must
be in place.
➢ Communicative/Simple transactional (Websites) - This type of
internet banking allows some interaction between the bank’s
systems and the customer. The interaction is limited to e-mail,
account inquiry, loan application or static file updates (name and
address). It does not permit any funds transfers. Communicativeonline banking allows for some communication between the patron
and bank. However, this is typically limited to fundamental
interactions such as account inquiries, new account updates, loan or
mortgage applications, contact information updates and balances.
Communicative online banking may connect with the bank's main
computer systems. The risk is higher with this configuration than
with informational systems since these servers may have a path to
the bank's internal networks. To prevent, monitor, and alert
management of any illegal attempt to access the bank's internalnetworks and computer systems, appropriate controls required to be
in place. In this environment, virus controls also become much more
critical.
➢ Advanced Transactional (Websites) - This level of internet
banking allows bank customers to electronically transfer funds
to/from their accounts, pay bills and conduct other banking
transaction online. The most popular online banking type,
transactional Internet banking offers all of the benefits of a
traditional brick-and-mortar institution. This includes full controlover your accounts - deposits, withdrawals, transfers, updates and
online payments. Increased security measures now make Internet
banking safe, secure and convenient, especially in the case of
mobile online banking. This is the highest risk architecture and must
have the strongest controls, since a path normally exists between
the server and the bank's or outsourcer's internal network.
CHOOSING AN INTERNET ACCOUNT
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Security is an important issue for internet accounts. Internet banking canbe highly secure but you need to be aware of safety precautions to take.Always take the time to read the small print too – it takes a few minutes,but it should help you understand the service.
Types of internet bank accounts and services include:
➢ Current Accounts – All the conveniences of a regular currentaccount, including credit and debit cards, cheque books andregular statements
➢ Current Accounts – with specific benefits (for instance,roadside recovery) and a small monthly fee to pay
➢ All in one and off-set accounts➢ Student accounts➢ Loan approval➢ Savings Accounts – Favourable interest rates because the
overheads are reduced.➢ Savings Accounts – Including those with tiered rates
depending on the savings amount➢ ISAs and mini-ISAs➢ Mortgages➢ Share Trading➢ Ethical Investments➢ Insurance Services➢ Business Bank Accounts
BUSINESS CONSIDERATIONS IN INTERNET BANKING
Internet banking can open a Pandora’s Box of opportunities for financialinstitutions. As soon as one bank begins Internet banking, other banksface the following quandary, “You are either on the Web, or you arerisking being on the Way”. Business considerations in Internet bankingcan be divided into three important factors: Client focus, cost reductionand market expansion.
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Figure 2 BUSINESS CONSIDERATIONS IN INTERNET BANKING
CLIENT FOCUS
Increase Customer Satisfaction
Internet banking allows customers to access banking services 24 hours a
day, 7 days a week. Like ATMs, Internet banking empowers customers to
choose when and where they conduct their banking. A Dynamic net report
came to the conclusion that, “the more delivery channels a bank offers
and the more functions available on an Internet site, the more convenient
it becomes for customers to conduct business and the higher the rate of
customer acquisition that a bank is likely to experience”.
Increase Customer Retention
One of the important advantages of Internet banking is its ability to
increase customer retention. Online branches have been shown to
dramatically reduce the loss of customers due to relocation needs.
COST REDUCTION
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A study by Booz Allen & Hamilton, analyzed the transaction cost
reductions that U.S. Internet banks gain. According to this study, the cost
per bank transaction for the customer varies from $1.07 for full service
branch transactions, to $0.54 for telephone transactions, and $0.01 fortransaction via the Internet. Lowered transaction costs are primarily due
to two factors: widespread Internet access and its low cost in the U.S.
which minimizes transaction processing costs, and the reduction of the
number of brick and mortars branches required to service an equivalent
number of customers, which dramatically lowers overhead costs.
MARKET EXPANSION
Internet banking will allow credit institutions to make further inroads into
new fields. Indeed by co-operating for example with IPS, telecom or
software, Internet banks can take advantages of cross-selling effects, to
offer personalized services to their customers and potentially win new
customers. In this context, the financial supermarket concept has arisen,
by which Internet banks, have horizontally integrated with other financial
services to provide their services on its platform and sometimes expanded
horizontally to include non-financial services such as online shopping.
ADVANTAGES OF INTERNET BANKING
In recent time internet banking has spread rapidly all over the globe. All
Banks are making greater use of internet banking facilities to provide
better service and to excel in competition. The spread of internet banking
has also greatly benefited the ordinary customer in general and corporate
world in particular. The following points summarize benefits of Internet based e-banking.
ADVANTAGES TO THE CUSTOMER
Internet banking does offer many benefits for both banks and their
customers. So the banks are doing what they can to encourage
customers to try it.
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I. An internet banking account is simple to open and use , just by
entering a few answers to the questions in a form while sitting
comfortably in home or office. To access the account, various
security measures are established such as usernames andpasswords. To complete the set up of the account, one just prints,
signs and sends in the form.
II. Internet banking costs less. Because there are fewer buildings to
maintain, and less involvement by salaried employees, there is a
much lower overhead with online banks. These savings allow them
to offer higher interest rates on savings accounts and lower lending
rates and service charges. Even traditional brick and mortar banks
offer better deals such as free bill paying services to encourage
their customers to do their banking online.
III. Comparing internet banks to get the best deal is easy. In a short
time, one can visit several online banks to compare what they
offer, savings and checking account deals as well as their interest
rates. Other things one can easily research are what credit cards are
available, credit card interest rates, loan terms and the banks own
rating with the FDIC.
IV. Bouncing a cheque (accidentally) should be a thing of the past
because one can monitor the account online any time, day or
night. One can track the balance daily, see what cheques have
cleared and when and know when automatic deposits and paymentsare made. This is all possible by simply going online to the banks
website and logging into one’s account.
V. One can keep his/her account balanced using personal computer
and monthly statement. The bank account information can be
downloaded into software programs; making is easy to reconcile the
account with just a few mouse clicks. The convenience of the data
capture online makes it much easier to budget and track where the
money goes. The internet bank account even allows one to view
copies of the cheques one has written each month.VI. With the ability to view the account at anytime, it is easier to catch
fraudulent activity in the account before much damage is done. As
soon as one logs into the account, one will quickly see whether
there is anything amiss when one checks on the deposits and
debits. If anyone writes a cheque or withdraws funds from the
account, one will see it right away. This lets one to get started on
correcting the problem immediately rather than having to wait to
receive a clue that it is happening as would be the case with a
traditional bank.
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VII.Internet banking offers a great deal more convenience than one
could get from a conventional bank. One is not bound by 'banker's
hours' and physical presence is not required. Time is not wasted
when one has work to do because one can do the banking withoutleaving the office. No matter where one is or what time it is, one can
easily manage the money. It reduces the pressure to stand in long
queues and is very time saving.
VIII.Convenience. Unlike any normal physical bank, online banking sites
never close. They're available 24 hours a day, seven days a week,
365 days a year and they're only just a mouse click away.
IX. Ubiquity. If one is out of station or even out of the country on a tour
or on an official trip, and suddenly a money problem arises, all one
has to do is log on to the internet and transfer funds from one
account to another and take care of personal needs and business 24
/7.
X. Transaction speed. Online banking initiates speedy transactions and
they are very cost effective and are generally quicker than the
transactions conducted at the ATM’s or at the bank.
XI. Efficiency. Free to access, manage and control all the bank
accounts, including Individual Retirement Accounts, CDs, even
securities, from one secure site, the individuals can efficiently
manage their money.
XII.Effectiveness. Managing the money, investment, bank accountswithout even going to the bank, getting email and wireless alerts on
various transactions, getting the statements online, making bill
payments on-line and transferring funds, all for free, has made the
banking highly effective.
General consumers have been significantly affected in a positive manner
by internet banking. Many of the ordinary tasks have now been fully
automated resulting in greater ease and comfort.
➢ Customer’s account is extremely accessible with an online account.➢ Customer can withdraw can at any time through ATMs that are now
widely available throughout the country.
➢ Besides withdrawing cash customers can also have mini banks
statements, balance inquiry at these ATMs.
➢ Through Internet Banking, customer can operate his account while
sitting in his office or home. There is no need to go to the bank in
person for such matter.
➢ Internet banking has also greatly helped in payment of utility bill.
Now there is no need to stand in long queues outside banks for thispurpose.
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➢ All services that are usually available from the local bank can be
found on a single website.
➢ The growth of credit card usage also owes greatly to internet
banking. Now a customer can shop worldwide without any need of carrying paper money with him.
➢ Banks are available 24 hours a day, seven days a week and they are
only a mouse click away.
ADVANTAGES TO THE BANK
Banking industry has also received numerous benefits due to growth of
internet banking infrastructure. There are highlighted below:
➢ The growth of internet banking has greatly helped the banks in
controlling their overheads and operating cost.
➢ Many repetitive and tedious tasks have now been fully automated
resulting in greater efficiency, better time usage and enhanced
control.
➢ The rise of internet banking has made banks more competitive. It
has also led to expansion of the banking industry, opening of new
avenues for banking operations.
➢ Internet banking has greatly helped the banking industry to reduce
paper work, thus helping them to move the paper less environment.
➢ Internet banking has also helped bank in proper documentation of
their records and transactions.
➢ The reach and delivery capabilities of computer networks, such as
the Internet, are far better than any branch network.
Banks have quickly leveraged the capabilities of the Internet and Web 2.0technologies and adopted the online banking model. Every mainstream
bank now offers a host of banking services and products to an everincreasing base of customers. Through online banking, banks have beenable to reach out to millions of customers not in their geographical area of operations and offer more products and a relatively better, convenientand flexible banking experience than that prevalent in traditional, fixed-location branches. The benefits can be studied in the following broadcategories:
➢ More Customers - Through online banking, better service levelsand strategic marketing initiatives, banks are able to reach out tomore customers than possible through traditional banking through
physical location branches.
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➢ Online Only Products and Services - Leveragability andamenability of new technologies, tools and widespread broadbandInternet acceptance, has made it possible for banks to offer a wholehost of online only products and services to customers, such as CDs,
e-bank statements, financial calculators, and personal finance newsfeeds.
➢ Broader Customer Base - Banking online has afforded customersuser-friendly features of Websites, robust security technologies,privacy protection measures, and mainstream Internet acceptance.Banks can reach out to a broader customer base beyond thegeographical confines of their locations or base operations.
➢ Attractive Rates and Incentives - Better management practices,consolidated operations and streamlined savings from managingand delivering online banking services allow banks to offer
attractive rates and other incentives to customers.➢ Cost Savings - Banks save a significant amount of operationalcapital from not having to open brick and mortar branches in newlocations and far-flung areas. These savings are passed onto theconsumer in the form of reduced or no fees for inter-bank and evenintra-bank money transfers, no fees for online payment of utilities'bills, and cash-back options on frequent use of online-applied bankcredit cards.
There are sound reasons why internet banking is growing. The economic
advantages have encouraged banks to provide an increasing range of easy to use services via the internet. Customers have found doing
business online simple and speedy and have become very comfortable
with the arrangement. Internet banking gives people more control over
their money in a very convenient way that they find enjoyable and
reassuring.
DISADVANTAGES OF INTERNET BANKING
Internet banking services provide a number of benefits to consumers. But
while it has its advantages, customers wishing to join the trend need to
know its disadvantages as well. Despite the growing popularity of internet
banking, it cannot be denied that some people still remain hesitant doing
transactions online especially where money is concerned. Amidst the
aggressive marketing made by the numerous financial institutions that
have gone online, some sectors of society are still doubtful about this type
of banking notably on the aspect of security.
Major disadvantages can be listed as follows:
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➢ Identity Confirmation - Federal regulations require that financial
institutions confirm each customer's identity. This may present a
logistical issue, as copying and faxing documents is sometimes
necessary.➢ Security Concerns - With hacking and identity theft on the rise,
Internet banking customers have to place a certain amount of trust
in the bank that their account information and personal information
are safe.
➢ Customer Service - If you bank at a traditional bank, you can go to
the bank and speak to someone face to face about your problem
but, with an Internet bank, you will likely spend a lot of time on the
phone being passed around and placed on hold.
➢ Accessibility - If the Internet goes down in your area or the area of
the banking office, you will be unable to access your accounts. This
includes being unable to withdraw money from ATMs or to use your
debit card.
➢ Fees - Many Internet banks don't have ATMs, which means you will
have to pay ATM fees. This can cost you more money than paying
the regular monthly fees at a brick and mortar bank.
➢ Technical problems - Some people avoid using Internet banking
services because they find it difficult to understand how it works.
Also, the fact that a wrong click can cause monetary losses may be
a deterrent.➢ Proxy websites - A few cases of forgery have been reported in
online banking. There are some fraudulent or proxy websites, which
can hack information (user name and password) entered by a
person for some transaction, and later misuse it. In such cases,
people lose their money without knowing and by the time, they get
the bill, huge losses may have been incurred.
➢ Impersonal - Doing transactions on the internet can be very
impersonal. In other words, you only do business with the use of a
computer. No individual to receive and check your money or correctsome wrong information that you might have written on a certain
form. And so for people comfortable dealing with real people who
provide personalized services and using paper and money, internet
banking is not ideal.
➢ Lack of trust - Many people still don't trust the internet. For the
new users who have performed financial transactions for only a few
times, they may still have this doubt whether or not they did the
right thing such as clicked the right button and so on. They can only
be comfortable once they print the transaction receipt and thetransaction appeared on the bank statement.
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➢ Difficult for first timers - For a first time user, navigating through
a website of an internet bank may be hard and may take some time.
Opening an account could also take time as some sites ask for
numerous personal details including a photo identification which cancause inconvenience to the potential customer. Because of this
complexity, they may be discouraged to use this internet banking
service.
➢ Bank site changes - Most banks upgrade their online programs on
a periodic basis sometimes adding new features and products.
When this happens, the bank may ask customers to re-enter
account information which can be a cause of worry.
RISKS ASSOCIATED WITH INTERNET BANKING
Since its debut nearly two decades ago, online banking has become one of the fastest-growing Internet activities. But that growing popularity hasalso brought increasing anxiety over whether something as private andpersonal as a bank account can be fully protected in the relativelyunregulated and un-policed world of the Internet. Without doubt, usinginternet banking is usually an excellent decision but as with any type of service, it would be important to understand any potential risks associated
with internet banking.
The greatest potential when banking online has to do with identitytheft. For your identity to be stolen, hackers use a variety of differentploys such as pharming, phishing, hacking, viruses, fraudulenttransactions, and unauthorized access. What happens is that once youhave been targeted, not only your personal information would be stolenbut also your financial information. From there, these thieves can doserious damage by emptying your bank accounts, making purchases oncredit under your name, etc. Unfortunately, trying to find the responsible
parties is extremely difficult and once identity has been stolen, it takesmany years to recover. Therefore, when choosing internet banking, thegreatest risk is theft and most important decision has to do with onlinesecurity.
Although all ploys are used, phishing is the most common, especiallywhen it comes to internet banking. Typically, you would receive an emailthat looks like an official notice coming from your bank. The bank’sletterhead might be used, actual names of bank executives, etc. Withinthe email, you would be notified of some reason that you mustimmediately provide confidential details or connect to a provided link. For
instance, the message may state that someone was trying to access youraccount and to protect your assets, immediate action is required.
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Unsuspecting people will gladly provide the information being requestedor follow the link where they are required to complete a form that alsogives the crooks sensitive information.
At home, you have virus protection and a secured hosting servicebut when public computers are used, they go through open or publicrouters, which means anyone could gain access to that same connectionand start capturing information, often through keystroke software. In notime, these criminals would know where you bank, your account number,logon ID, PIN, etc.
Finally, pharming is also very dangerous when it comes to internetbanking. In this case, crooks will compromise a non-secure onlinefinancial institution so when a customer logs in to manage finances, they
are quickly and without knowing redirected to a bogus site that looksidentical to the real bank. Of course, as information is entered and moneytransactions completed, all the information is collected.
Keystroke logging is another common method of perpetrating onlinebanking theft. This literally involves the user’s keystrokes being recorded,in a number of ways, and then using this information to access accountswithout authorisation and make fraudulent transactions. To do this, thefraudsters may use software, hardware, keyboard sniffers, keyboardoverlays or even optical surveillance like video cameras.
The information, revealed in the above specified manners, is thencaptured by the fraudsters and used to make unauthorisedtransactions on an account. Banks and service providers requireguarding against various types of online attacks. The purpose of an attackmay vary. In operating systems of particular kind, attackers may try toexploit known vulnerabilities. During a short time frame, they also may tryto make an unauthorized entry into a Web site repeatedly thus denyingservice to other customers. Types of attacks may include:
➢ Sniffers - Also familiar as network monitors, this software is used to
capture keystrokes from a specific PC. Logon Ids and passwords
may be captured with this software.➢ Guessing Passwords - We can test all possible combinations to
enter into a network using this software.
➢ Brute Force - A technique to capture encrypted messages then
using software to break the code and gain access to messages, user
ID's, and passwords.
➢ Random Dialling - To dial every number on a known bank
telephone exchange, this technique is used. The purpose is to find a
modem connected to the network. This could then be used as a
point of attack.
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➢ Social Engineering - To gain information about the system along
with changing password, an attacker calls the bank's help desk
impersonating an authorized user.
➢
Trojan horse - A programmer can insert code into a system thatwill let the programmer or another person illegal entrance into the
system or network.
➢ Hijacking - Attempting to deduce information from them there by
intercepting transmissions. Internet traffic is particularly susceptible
to this threat.
While these threats are real and pose a serious risk to users of internetbanking, it cannot be denied that online banking has benefits thatoutweigh the issues. As long as users are aware of potential problems thatmay compromise their accounts, and take security seriously, these threats
can be avoided and users can enjoy the convenience of online bankingwithout falling victim to frauds.
Because of rapid changes in information technology, there is no finalityeither in the types of risks or their control measures. Both evolvecontinuously. The thrust of regulatory action in risk control has been toidentify risks in broad terms and to ensure that banks have minimumsystems in place to address the same and that such systems are reviewedon a continuous basis in keeping with changes in technology. In thefollowing paragraphs a generic set of risks are discussed:
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Figure 3 RISKS ASSOCIATED WITH INTERNET BANKING
➢ Operational risk - Operational risk, also referred to astransactional risk is the most common form of risk associated withInternet banking. It takes the form of inaccurate processing of transactions, non enforceability of contracts, compromises in dataintegrity, data privacy and confidentiality, unauthorized access /intrusion to bank’s systems and transactions etc. Such risks canarise out of weaknesses in design, implementation and monitoringof banks’ information system. Besides inadequacies in technology,human factors like negligence by customers and employees,
fraudulent activity of employees and crackers / hackers etc. canbecome potential source of operational risk. Often there is thin lineof difference between operational risk and security risk and bothterminologies are used interchangeably.
➢ Security risk - Security risk arises on account of unauthorizedaccess to a bank’s critical information stores like accounting system,risk management system, portfolio management system, etc. Abreach of security could result in direct financial loss to the bank.For example, hackers operating via the Internet could access,retrieve and use confidential customer information and also canimplant virus. This may result in loss of data, theft of or tampering
with customer information, disabling of a significant portion of bank’s internal computer system thus denying service, cost of
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repairing these etc. In addition to external attacks banks areexposed to security risk from internal sources e.g. employee fraud.Employees being familiar with different systems and theirweaknesses become potential security threats in a loosely
controlled environment. They can manage to acquire theauthentication data in order to access the customer accountscausing losses to the bank.
➢ System architecture and design - Choice of appropriatetechnology is a potential risk banks face. Technology which isoutdated, not scalable or not proven could land the bank ininvestment loss, a vulnerable system and inefficient service withattendant operational and security risks and also risk of loss of business.
➢ Reputational risk - Reputational risk is the risk of getting
significant negative public opinion, which may result in a critical lossof funding or customers. Such risks arise from actions which causemajor loss of the public confidence in the banks' ability to performcritical functions or impair bank-customer relationship. It may bedue to banks’ own action or due to third party action. The mainreasons for this risk may be system or product not working to theexpectations of the customers, significant system deficiencies,significant security breach (both due to internal and externalattack), inadequate information to customers about product use andproblem resolution procedures, significant problems withcommunication networks that impair customers’ access to their
funds or account information especially if there are no alternativemeans of account access. Such situation may cause customer-discontinuing use of product or the service. Directly affectedcustomers may leave the bank and others may follow if the problemis publicized.
➢ Legal risk - Legal risk arises from violation of, or non-conformancewith laws, rules, regulations, or prescribed practices, or when thelegal rights and obligations of parties to a transaction are not wellestablished. Given the relatively new nature of Internet banking,rights and obligations in some cases are uncertain and applicabilityof laws and rules is uncertain or ambiguous, thus causing legal risk.
➢ Money laundering risk - Application of money laundering rulesmay also be inappropriate for some forms of electronic payments. Thus banks expose themselves to the money laundering risk. Thismay result in legal sanctions for non-compliance with “know yourcustomer” laws.
➢ Cross border risk - It includes legal and regulatory risks, as theremay be uncertainty about legal requirements in some countries and jurisdiction ambiguities with respect to the responsibilities of different national authorities. Such considerations may exposebanks to legal risks associated with non-compliance of different
national laws and regulations, including consumer protection laws,
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record-keeping and reporting requirements, privacy rules andmoney laundering laws.
➢ Outsourcing risk - The outsourcing of banking services /operations contains certain elements of operational risks. The
dependence on third parties for business operations also increasesoperational risks. The operational risks also tend to increase whenbanks choose different IT partners.
➢ Strategic risk - This risk is associated with the introduction of a
new product or service. Degree of this risk depends upon how well
the institution has addressed the various issues related to
development of a business plan, availability of sufficient resources
to support this plan, credibility of the vendor (if outsourced) and
level of the technology used in comparison to the available
technology etc.
➢ Network risk - Network security is related to the securing of
infrastructure used for storage and transmission of information. It
depends on the type of the data being transmitted. Personal data is
considered extremely critical and companies expect adequate
security measures to protect this. So proper documentation, design
and implementation of the network, firewalls, password protection,
antivirus on all the network, measures to prevent unauthorized
access, secure connections, adequate encryption techniques, in-
built security mechanisms in operating systems and locked rooms
for servers etc. are part of network security measures. There is useof hardware and software, certain policies on control and
authentication.
➢ Physical security - It involves securing of building, work areas,
devices and data in the form of documents through multiple-level
access control systems, security guards, clear disk and clear screen
policies, file suppression systems, temperature sensors, smoke-
detectors, dedicated and isolated work areas, visitor’s policy,
random bag checks, closed circuit television cameras (CCTV) etc.
➢ Personnel security - It is the arrangement made to address thepotential threat arising from the employees of offshore vendors.
Maintaining confidentiality and non-disclosure of agreements, terms
and conditions of employment, policies regarding use of mobile
phones, pens, papers etc., background screening, training of
information security, defined user access rights, policies and
procedures, e-mail and internet access controls, extensive log
monitoring form a part of personnel security measures.
➢ Other risks - Traditional banking risks such as credit risk, liquidity
risk, interest rate risk and market risk are also present in Internetbanking. These risks get intensified due to the very nature of
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Internet banking on account of use of electronic channels as well as
absence of geographical limits. Credit risk is the risk that a counter
party will not settle an obligation for full value, either when due or at
any time thereafter. Banks may not be able to properly evaluate thecredit worthiness of the customer while extending credit through
remote banking procedures, which could enhance the credit risk.
Another facility of Internet banking is electronic money. It brings
various types of risks associated with it. Liquidity Risk arises out of
a bank’s inability to meet its obligations when they become due
without incurring unacceptable losses, even though the bank may
ultimately be able to meet its obligations. Similarly banks dealing in
electronic money face interest rate risk because of adverse
movements in interest rates causing decrease in the value of assets
relative to outstanding electronic money liabilities. Banks also face
market risk because of losses in on-and-off balance sheet positions
arising out of movements in market prices including foreign
exchange rates. Risk of unfair competition is also there. The
open nature of Internet may induce a few banks to use unfair
practices to take advantage over rivals. Any leaks at network
connection or operating system etc., may allow them to interfere in
a rival bank’s system.
PRECAUTIONS FOR INTERNET BANKING
Customers should never share personal information like PIN numbers,passwords etc with anyone, including employees of the bank. PIN orpassword mailers should not be stored, the PIN and/or passwords shouldbe changed immediately and memorised before destroying the mailers.
Change your password regularly. Keep your password a combination of alphabets, special characters and numbers.
It is important that documents that contain confidential information aresafeguarded.
Customers are advised not to provide sensitive account-relatedinformation over unsecured e-mails or over the phone.
Take simple precautions like changing the ATM PIN and online login andtransaction passwords on a regular basis.
Also ensure that the logged in session is properly signed out.
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Customers should never access their Internet banking accounts throughhyperlinks embedded in e-mails, suspicious pop-up windows, or Internetsearch engines. They should instead access their bank accounts by typingthe website addresses at the address bar of the browser, or by
bookmarking the genuine website and using that function to access theiraccounts.
Log on to banks only from a secure computer. Never log on from a publiccomputer in a hotel or cafe, and be careful when logging on to unknownnetworks with a laptop.
A more secure URL will begin with "https://" and be followed by the bankname. Make sure the bank's padlock is displayed in a corner of the sitebefore you log on.
Icons for security companies would be visible on the home page. Whilethere are many, the most popular and effective is VeriSign. An icon,statement, or the actual company name would be clearly visible.
Customers should be wary of opening unexpected e-mails withattachments, and should think twice before visiting suspicious websites.
Customers should install personal firewall software and anti-virus software, andshould regularly download the latest updates available. This software will helpward off attempts by fraudsters to plant harmful viruses or worms in personalcomputers. Keep anti-virus and anti-spyware software up to date.
Given that passwords are commonly used as the basic factor of
authentication, we recommend that banks adopt a second factor, whichcannot be easily stolen by fraudsters, for customer authentication.
Examples of second-factor authentication include digital certificates, one-
time passwords generated by a security device and SMS-based one-time
passwords. In addition, high-risk retail Internet banking transactions
should at least include unregistered third-party fund transfers and
payments, and change requests concerning customers' sensitive
information (for example a correspondence address).
Use “keypad” for logging when you are not using your own PC. There
might be a risk of capturing your key stokes.
Don't click on website links/attachments in un-known/ suspicious emails. These links may take you to replica of bank's website and ask for keyingin your user-id & password(s).
If you get a warning e-mail, call your bank -- don't click on any providedlinks.
If your computer is acting strangely -- for instance, reacting slowly or
getting pop-ups -- avoid using it for online banking until you can get itchecked out.
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Be leery of fly-by-night, Internet-only banks with high interest rates on
savings or checking accounts. Make sure the bank is certified and is
insured.
And, most importantly, use a different user name and password for eachfinancial account.
Educate yourself about the various ways in which information is captured.Being aware and recognizing a ploy puts you in control.
It is necessary to check your internet banking account at regular intervals. The intervals can be every two or three days or at the most one or twoweeks. If you do not check your account for a long time, you may notcome to know of what is happening to it. If you find any discrepancy,
inform the bank authorities at once.
Many banks send their account holders SMSs regarding any activity takingplace at their account. SMS alerts are also an important tool sinceany transaction carried out on account is reported to the account holderthrough as SMS.
Put password on your computer as well and also the screen saverpassword.
SWOT ANALYSIS OF INTERNET BANKING
Strengths of Internet banking lie in the following areas
➢ Larger network area for banks
➢ Private data communication for internal use of banks
➢ Greater reach to customers
➢ On-demand service for the customers
➢ Time saving access to bank services
➢ Uniform, cost-effective services
➢ Standardization of working procedures
➢ Enables to receive feedback
➢ Provides competitive edge in the banking world
➢ Brings out transparency in the system
➢ Increased customer satisfaction (24 hours, 7 days convenience)
➢ Increased customer acquisition
➢ Increased customer retention (less loss of customers due to
relocation needs)
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➢ Cost reduction (reduced transaction costs, lower transaction
processing costs, reduction in number of branches, lower overhead
costs)
➢
Helps in market expansion➢ Customization or personalization of services for customers
➢ Quicker time to market
➢ Ability to introduce new products and services quickly and
successfully
➢ Ability to understand its customers’ needs
➢ Access to information easily across any location
➢ Easy online application for all accounts, personal loans, mortgages
Weaknesses in this system
➢ Missing personal human touch
➢ Requirement of huge investments for implementation
➢ Need of expert staff
➢ Rapid advancements in technology render existing systems
obsolete easily
➢ High risk vulnerability
➢ Availability of low potential customers
➢ Low awareness among customers
➢ Obsolescence of technology in terms of security on Internet
➢ Lack of knowledge
➢ Implementation of newer technology is little complicated
Opportunities available in this field
➢ Providing value added, user-friendly and convenient banking system
➢ Core competency can be developed
➢ Concentration and integration of various service delivery channels
➢ Gain of efficiency and profitability
➢ Standardising services
➢ Faster flow and access of information
➢ Develop data warehouses and customer support services
➢ Provisions for feedback
➢ Multi channel Internet banking to increase cost efficiency in
transaction costs
➢ Lower entry barriers
➢ Leapfrogging low PC penetration
➢ Development of mobile internet banking solutions
➢ Disintermediation and commoditisation
➢ Evolving customer efficient frontier➢ Integrating emerging technologies
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➢ Greater customer loyalty
➢ Three T strategy – talent, technology, traffic
➢ Quality customer service with personal attention
Threats and challenges to the system
➢ Maintaining business edge over competitors in the context of
sameness in IT infrastructure
➢ Multiple vendor support
➢ Maintaining alternative in case of failure of system
➢ Shorter life of technology
➢ Lack of technical expertise
➢ Outsourcing, organisational, reputational, supervisory, location,
operational, information security, systematic systemic and legalrisks
➢ Digital divide
➢ Decreased volume of some products because of commoditisation
➢ Diverse, conflicting national regulations
➢ Maintaining secured IT infrastructure for business operations
➢ Promotion and advertisement
INTERNET BANKING IN INDIA
Internet banking, which has gained wide acceptance internationally, bothas a medium of delivery of banking services and as a strategic tool forbusiness development, is fast catching up in India with more and morebanks entering the fray. India can be said to be on the threshold of amajor banking revolution with net banking having already been unveiled.Out of the 46 banks surveyed by RBI, 11 banks are providing Internetbanking services at different levels, 22 banks proposed to offer Internetbanking in near future while the remaining 13 banks have no immediateplans to offer such facility. The number of Internet users is growing everyyear exponentially. The growth potential is, therefore, immense. Furtherincentives provided by banks would dissuade customers from visitingphysical branches. The facility of accessing their accounts from anywherein the world by using a home computer with Internet connection, isparticularly fascinating to Non-Resident Indians and high net worthIndividuals having multiple bank accounts. Costs of banking servicethrough the Internet form a fraction of costs through conventionalmethods. The cost-conscious banks in the country have therefore activelyconsidered use of the Internet as a channel for providing services. Fullycomputerized banks, with better management of their customer base are
in a stronger position to cross-sell their products through this channel.
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PRODUCTS AND SERVICES OFFERED
Banks in India are at different stages of the web-enabled banking cycle.
With the adoption of information technology, the banks put up a web-sitethat provides a general information on the banks, its location, services
available e.g. loan and deposits products, application forms for
downloading and e-mail option for enquiries and feedback, request for
opening of accounts, requisition for cheque books, stop payment of
cheques, viewing and printing statement of accounts, movement of funds
between accounts within the same bank, querying on status of requests,
instructions for opening of Letters of Credit and Bank Guarantees etc.,
facility of review, receipt and payment of bills on-line, transactional
facilities, online real time shopping etc. Some banks have tied up withcomputer training companies, computer manufacturers, Internet service
providers and portals for expanding their Net banking services, and
widening their customer base. Setting up of Internet kiosks and
permeation through the cable television route to widen customer base are
other priority areas in the agendas of the more aggressive players.
Banks providing Internet banking services have been entering into
agreements with their customers setting out the terms and conditions of
the services. The terms and conditions include information on the access
through user-id and secret password, minimum balance and charges,authority to the bank for carrying out transactions performed through the
service, liability of the user and the bank, disclosure of personal
information for statistical analysis and credit scoring also, non-
transferability of the facility, notices and termination etc.
Leading banks have announced the launch of mobile banking services.
Under Mobile Banking services, customers can scan their accounts to seek
balance and payments status or instruct banks to issue cheques, pay bills
or deliver statements of accounts. Gradually, the cellular phones willbecome the premier Internet access device. Mobile banking will further
minimise the need to visit a bank branch.
THE FUTURE SCENARIO OF INTERNET BANKING IN INDIA
Indian banks offering online services still have a long way to go. For onlinebanking to reach a critical mass, there has to be sufficient number of
users and the sufficient infrastructure in place. Various security optionslike line encryption, branch connection encryption, firewalls, digital
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certificates, automatic signoffs, random pop-ups and disaster recoverysites are in place or are being looked at. There is as yet no CertificationAuthority in India offering Public Key Infrastructure which is absolutelynecessary for online banking. The customer can only be assured of a
secured conduit for its online activities if an authority certifying digitalsignatures is in place. The communication bandwidth available today inIndia is also not enough to meet the needs of high priority services likeonline banking and trading. Banks offering online facilities need to havean effective disaster recovery plan along with comprehensive riskmanagement measures. Banks offering online facilities also need tocalculate their downtime losses, because even a few minutes of downtimein a week could mean substantial losses. Some banks even today do nothave uninterrupted power supply unit or systems to take care of prolonged power breakdown. Proper encryption of data and effective use
of passwords are also matters that leave a lot to be desired. Systems andprocesses have to be put in place to ensure that errors do not take place.
The contract details are often one-sided, with the bank having theabsolute discretion to amend or supplement any of the terms at any time.For these reasons domestic customers for whom other access points suchas ATMs, telebanking, personal contact, etc. are available, are oftenhesitant to use the Internet banking services offered by Indian banks.
The Internet is in the public domain whereby geographical boundaries areeliminated. Cyber crimes are therefore difficult to be identified and
controlled. In order to promote Internet banking services, it is necessarythat the proper legal infrastructure is in place.
Notwithstanding the above drawbacks, certain developments taking placeat present, and expected to take place in the near future, would create anenvironment conducive for online banking to flourish. For example,Internet usage is expected to grow with cheaper bandwidth cost. TheDepartment of Telecommunications (DoT) is moving fast to makeavailable additional bandwidth, with the result that Internet access willbecome much faster in the future. This is expected to give a fillip toInternet banking in India.
Collecting and sharing credit information on borrowers of lendinginstitutions online would give a fillip to electronic banking. Banks aremoving in for technological up gradation on a large scale. Internet bankingis expected to get a boost from such developments.
Reserve Bank of India has taken the initiative for facilitating real timefunds transfer through the Real Time Gross Settlement (RTGS) System.Under the RTGS system, transmission, processing and settlements of theinstructions will be done on a continuous basis. Gross settlement in a real
time mode eliminates credit and liquidity risks. Any member of the systemwill be able to access it through only one specified gateway in order to
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ensure rigorous access control measures at the user level. The system willhave various levels of security, viz., Access security, 128 bit cryptography,firewall, certification etc. Further, Generic Architecture, both domestic andcross border, aimed at providing inter-connectivity across banks has been
accepted for implementation by RBI. Banks have been advised to developdomestic generic model in their computerization plans to ensure seamlessintegration. The above mentioned efforts would enable online banking tobecome more secure and efficient.
With the process of dematerialisation of shares having gainedconsiderable ground in recent years, banks have assumed the role of depository participants. In addition to customers’ deposit accounts, theyalso maintain demat accounts of their clients. Online trading in equities isbeing allowed by SEBI. This is another area which banks are keen to get
into. Transfer of funds can be made through credit/debit/ smart cards andcheques, with the central payment switch enabling the transactions.Banks are showing interest in this new concept, which will facilitate inter-bank funds transfers and other e-commerce transactions, thushighlighting the role of banks in e-commerce as intermediaries betweenbuyers and sellers in the whole payment process.
WAP (Wireless Application Protocol) telephony is the merger of mobiletelephony with the Internet. It offers two-way connectivity, unlike Mobile
Banking where the customer communicates to a mailbox answeringmachine. Users may surf their accounts, download items and transact awider range of options through the cell phone screen. WAP may providethe infrastructure for P2P (person to person) or P2M (person to merchant)payments. It would be ideal for transactions that do not need any cashbackup, such as online investments. Use of this cutting edge technologycould well determine which bank obtains the largest market share inelectronic banking.
Keeping in view all the above developments, Internet banking is likely togrow at a rapid pace and most banks will enter into this area soon. Rapidstrides are already being made in banking technology in India and Internetbanking is a manifestation of this. Every day sees new tie-ups, innovationsand strategies being announced by banks. A sea change in bankingservices is on the cards. It would, however, be essential to have in place aproper regulatory, supervisory and legal framework, particularly asregards security of transactions over the Net, for regulators andcustomers alike to be comfortable with this form of banking.
CUSTOMER ATTITUDE TOWARDS INTERNET BANKING
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Research on consumer attitude and adoption of internet banking showed
there are several factors predetermining the consumer’s attitude towards
online banking such as person’s demography, motivation and behaviour
towards different banking technologies and individual acceptance of newtechnology. It has been found that consumer’s attitudes toward online
banking are influenced by the prior experience of computer and new
technology. The adoption of electronic banking forces consumers to
consider concerns about password integrity, privacy, data encryption,
hacking, and the protection of personal information. Electronic banking
requires perhaps the most consumer involvement, as it requires the
consumer to maintain and regularly interact with additional technology (a
computer and an Internet connection). Consumers who use e-banking use
it on an ongoing basis and need to acquire a certain comfort level with the
technology to keep using it.
Several studies have investigated why individuals choose a specific bank.
Important consumer selection factors include convenience, service
facilities, reputation and interest rates. Customers have less time to spend
on activities such as visiting a bank and therefore want a higher degree of
convenience and accessibility. The service-quality attributes that the
Internet banks must offer to induce consumers to switch to online
transactions and keep using them are perceived usefulness, ease of use,
reliability, responsiveness, security, and continuous improvement. Theindividual expectations regarding accuracy, security, network speed, user-
friendliness, and user involvement and convenience were the most
important quality attributes in the perceived usefulness of Internet-based
e-retail banking. The crucial factors that affect an individual’s decision to
use or not to use online services the individual’s age, the difficulties of
using the Internet, the fear of changes in the banking sector due to
technological development and the lack of information concerning
products and services provided to customers through electronic delivery
channels. Factors such as the speed of transactions or the cost of usingthe Internet have little impact on an individual’s final decision.
The six composite dimensions of electronic service quality, including the
provision of convenient/accurate electronic banking operations; the
accessibility and reliability of service provision; good queue management;
service personalization; the provision of friendly and responsive customer
service; and the provision of targeted customer service are important in
revealing customer attitude towards Internet banking. Perceived
usefulness, security and privacy (i.e. perceived credibility), perceived easeof use and computer self-efficacy are the main perusing factors to accept
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online banking system. Perceived usefulness is the extent to which a
person believes that using a particular system will enhance his or her
performance, while perceived ease of use is the extent to which a person
believes that using a particular system will be free of effort.Adoption is the acceptance and continued use of a product, service or
idea. The consumers go through “a process of knowledge, persuasion,
decision and confirmation” before they are ready to adopt a product or
service. The adoption or rejection of an innovation begins when “the
consumer becomes aware of the product”.
For adoption of Internet banking, it is necessary that the banks offering
this service make the consumers aware about the availability of such a
product and explain how it adds value relative to other products of its own
or that of the competitors. Consumers must become aware of the new
brand or technology. The amount of information consumers have about
online banking has been identified as a major factor impacting the
adoption. The use of online banking services is fairly new experience to
many people and low awareness of online banking is a major factor in
causing people not to adopt online banking.
Figure 4 FACTORS CONTRIBUTING TOWARDS ADOPTION OFINTERNET BANKING
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Perceived Risk reflects an individual’s subjective belief about the possiblenegative consequences of some type of planned action or behaviour, due
to inherent uncertainty. The Perceived Risk associated with onlinetransactions may reduce perceptions of behavioural and environmentalcontrol, and this lack of control is likely to negatively influence internetbanking intentions. Owing to the open Internet technology infrastructureand lack of sufficient laws concerning internet banking activities, the trustand trust related-concepts (that is, perceived risk, credibility, image andreputation) have been integrated with the adoption models to explain theadoption behaviour.
Web quality attributes for measuring perception towards Internet banking,
falls into four broad categories: information quality, transaction speed,user-friendliness, and security. Four web quality attributes were
introduced to improve the understanding of consumer attitudes and
adoption intentions.
Figure 5 ATTITUDE TOWARDS INTERNET BANKING
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LITERATURE SURVEY
Rahmath Safeena, Abdullah and Hema Date (2010) believe that the
evolution of e-banking started from the use of ATMs (automatic teller
machines) and telephone banking (tele-banking), direct bill payment,
electronic fund transfers etc. They conducted a study to determine the
consumer’s perspective on adopting Internet banking. Their study
revealed that perceived usefulness, perceived ease of use; consumer
awareness and perceived risk are the important determinants of online
banking adoption. They also concluded that majority of customers are
accepting online banking because of many favourable factors. However,
since the sample size is limited, the results cannot be generalized and
might vary according to location and demography of the people.
Joseph et al. (1999) investigated the influence of internet on the
delivery of banking services. They found six underlying dimensions of e-
banking service quality such as convenience and accuracy, feedback and
complaint management, efficiency, queue management, accessibility and
customization. Jun and Cai (2001) identified 17 service quality
dimensions of internet banking service quality. These are reliability,responsiveness, competence, courtesy, credibility, access,
communication, understanding the customer, collaboration, continuous
improvement, content, accuracy, ease of use, timeliness, aesthetics,
security and divers features. They also suggested that some dimensions
such as responsiveness, reliability and access are critical for both
traditional and internet banks. Jayawardhena (2004) transforms the
original SERVQUAL scale to the internet context and develops a battery of
21 items to assess service quality in e-banking. By means of an
Exploratory Factor Analysis (EFA) and a Confirmatory Factor Analysis(CFA), these 21 items are condensed to five quality dimensions: access,
website interface, trust, attention and credibility. From the provider
perspective, there are target quality and delivered quality. The focus of
process or supply-led quality definition is rather internal than external,
and it is defined as conformance to requirements. It lays emphasis on the
importance of the management and the supply-side quality, and there is
an important role of the process in determining the quality of outcome
(Ghobadian, 1994). Achieving the quality of conformance between the
planned (target) quality level and the real quality delivered to customersdepends on the service quality management system in an organization.
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Members of Department of Information Technology, Members of
Department of Banking Supervision, Members of Legal
Department, Members of Department of Banking Operations andDevelopment of Reserve Bank of India consider Internet Banking as
another way of delivering traditional banking services through an
electronic communication backbone. They have also provided certain
distinctive features attributed to internet banking.
➢ It removes the traditional geographical barriers as it could reach outto customers of different countries / legal jurisdiction. This hasraised the question of jurisdiction of law / supervisory system towhich such transactions should be subjected.
➢ It has added a new dimension to different kinds of risks traditionallyassociated with banking, heightening some of them and throwingnew risk control challenges.
➢ Security of banking transactions, validity of electronic contract,customers’ privacy, etc., which have all along been concerns of bothbankers and supervisors have assumed different dimensions giventhat Internet is a public domain, not subject to control by any singleauthority or group of users.
➢ It poses a strategic risk of loss of business to those banks who donot respond in time, to this new technology, being the efficient and
cost effective delivery mechanism of banking services.➢ A new form of competition has emerged both from the existingplayers and new players of the market who are not strictly banks.
The report also covers legal and regulatory issues, security and
technology issues and supervisory and operational issues. Legal issues
are related to jurisdiction of laws, validity of electronic contracts etc.
Security issues include questions of adopting the technology standards for
access control, encryption / decryption, firewalls, digital signatures, public
key infrastructures etc. The supervisory and operational issues includerisk control measures, advance warning system, information technology
audit and re-engineering of operational procedures etc.
The report states that the cost of delivery of banking services through this
medium is several times less than that incurred through traditional
methods and that is why more and more banks are adopting the medium
of Internet to deliver their services. The report also mentions the risk of
survival the banks face if they do not adopt this medium. The report also
discusses the scenario of Internet banking in India.
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Justin Robinson and Winston Moore carried out a study to see the
attitudes and preferences in relation to the Internet Banking in the
Caribbean. Their study revealed that only a relatively modest population
of Caribbean still preferred to use the Internet banking and that toomainly for checking balances and making bill payments. Their study
revealed that there is still a lot of insecurity regarding this medium in the
minds of people. Their study also brought forth the finding that debit /
ATM card users are 20% more likely to adopt the Internet Banking.
The study of customer attitude towards Internet Banking was also carried
out by Ya-Yueh Shih in the ChungHua University, Taiwan. This study is
based on the Theory of Planned Behaviour. The research has mainly
focussed on the adoption of Internet banking in relation to the individual
beliefs, individual attitudes, subjective norms, and perceived behaviouralcontrols. The theory of planned behaviour states that the behavioural
intention is a function of attitude and subjective norms. Bandura (1977)
applied this concept to Internet Banking where this refers to the
knowledge of being able to perform banking through the medium of
Internet, knowledge about resource constraints like time, money etc.
Ajzen (1991) discovered that these factors reflect the perceived ease
and difficulty with which the behaviour is affected. The extended theory of
TPB has brought forward four broad categories of attributes that help to
understand the customer attitude and adoption intentions about Internetbanking, shopping and services: information quality, transaction speed,
user-friendliness and security. Their study concluded that information
quality (complete, correct, and rapidly updated), transaction speed,
security concerns positively influence the customer attitude towards
Internet banking. User-friendliness (clear and easy to-follow instructions,
HELP menus, simple operating procedures) does not influence the attitude
towards Internet banking positively. It was also concluded that attitudinal
belief has significant impact on the attitude, normative belief has a
significant impact on the subjective norms, control belief on perceivedbehavioural control, subjective norms and perceived behavioural control
on behavioural intentions and finally the behavioural intentions have a
significant impact on the actual usage.
Daniel (1999) and Karjaluoto (2003) have identified the following
delivery platforms for electronic banking:
Type of Service Description
PC banking (private dial up) Proprietary software, distributed by
the bank, is installed by thecustomer on their PC. Access to
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bank via a modem linked directly to
the bank.
Internet banking Access their bank via Internet.
Managed network The bank makes use of an online
service provided by another party.
TV based
The use of satellite or cable to
deliver account information to the
TV screens of customers (Also
Internet based)
Telephone banking
Customers access their bank via
telephone (Own personal ID andpassword required)
Mobile phone banking (SMS, WAP,
3rd generation)
Access with text messages (SMS),
Internet connection (WAP), or high
speed 3rd generation mobile
connection (also Internet based)
According to Rogers and Shoemaker (1971), consumers go through “a
process of knowledge, persuasion, decision and confirmation” before theyare ready to adopt a product or service. According to Sara Naimi
Baraghani (2007), the technological innovations pass through the
following stages:
➢ Knowledge
➢ Persuasion
➢ Decision
➢ Implementation
➢
Confirmation Trust as defined by Mayer (1995) is the willingness of a party to be
vulnerable to the actions of another party based on the expectation that
the other will perform a particular action important to the trustor,
irrespective of the ability to monitor or control that other party. According
to Sara Naimi (2007), making a banking transaction on the Internet is a
form of trusting behaviour, since a consumer makes him/her vulnerable to
the actions to the Internet. She further added that the customer willingly
becomes dependent on the Internet and expect the Internet to perform
whatever the consumer wants it too. Her study revealed that bothtechnological and trust-based issues are important to influence a
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customer’s behavioural intention to use Internet banking and that to
attract the customers to use Internet banking, the Internet banking sites
have to be designed according to both the aspects. She also explained
that the new users base their attitude more on perceived ease of use andusefulness, privacy protection, accuracy to declaration and unauthorized
access etc. Tan and Teo identified social indicators, understanding,
communality, and personal experience as important factors that help to
develop trust in Internet banking. She has also discussed the early
adoption stage strategies of internet banking, usually the push strategy
where the internet banking service providers use all forms of media
advertising to provide knowledge about these services to wider audiences.
The information should include reference to time saving, convenience, low
costs, and information availability etc. The customer should not be made
to undergo drastic changes in behaviour and the information and
instructions should be made available to him in the languages he is
comfortable with. The basic steps involved in push strategy are outlined
as follows:
➢ Build customer’s recognition of internet banking
➢ Attract customers to the web site
➢ Attract customers by ease of access
➢ Build customer’s confidence
➢ Offer incentives
The other strategy available is pull strategy where the diffusion is
increased amongst the internet users and effective co-operation between
various channels has to be arrived at. Support from industry regulators
and the government should be increased to make the growth more
effective. So the pull strategies can be easily summed up as: increasing
service value by collaboration with internet service providers, free internet
access, expanding banking services and increasing linkages; being
proactive, educating people about internet banking, supporting the
government, working with industrial regulators.
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OBJECTIVE
With cyber-cafes and kiosks springing up in different cities access to theNet is going to be easy. Internet banking (also referred as e-banking) isthe latest in this series of technological wonders in the recent pastinvolving use of Internet for delivery of banking products & services. Eventhe Morgan Stanley Dean Witter Internet research emphasised that Web ismore important for retail financial services than for many other industries.
Internet banking is changing the banking industry and is having the majoreffects on banking relationships. Banking is now no longer confined to thebranches were one has to approach the branch in person, to withdrawcash or deposit a cheque or request a statement of accounts. In trueInternet banking, any inquiry or transaction is processed online withoutany reference to the branch (anywhere banking) at any time. ProvidingInternet banking is increasingly becoming a "need to have" than a "nice tohave" service. The net banking, thus, now is more of a norm rather thanan exception in many developed countries due to the fact that it is thecheapest way of providing banking services.
Hence, the objective that was sought to be accomplished through this
research was to:➢ Determine attitude of people towards Internet banking➢ Which customers are using Internet banking and which are not using➢ Why the customers are not using Internet banking➢ What other e-banking facilities are more popular?
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RESEARCH METHODOLOGY
Any systematic research begins with the problem formulation or defining
of the problem of research. The term problem means any question or
issue to be examined. Here the issue to be examined has been defined as
determining the “Consumer Attitude towards Internet Banking”.
The next step involved is the literature review. Literature review is defined
as the documentation of the comprehensive review of the published and
unpublished work from secondary sources of data in the areas specific
interest to the researcher.
The next step entails designing of a descriptive and exploratory research
in order to understand the problem and carry out the research in a lucid
manner.
Descriptive research is also called Statistical Research. The main goal of this type of research is to describe the data and characteristics aboutwhat is being studied. The idea behind this type of research is to studyfrequencies, averages, and other statistical calculations. Although this
research is highly accurate, it does not gather the causes behind asituation. Exploratory research is used to obtain information concerningthe current status of the phenomena to describe "what exists" withrespect to variables or conditions in a situation. Here it was attempted tofind out the main factors affecting the attitude customers towards Internetbanking.
DATA COLLECTION METHOD
The primary research was carried out through questionnaire method. Thequestionnaire was structured in such a manner to avoid ambiguous
responses and to aid analysis of the collected data. The questionnaire was
then circulated among the chosen population in two manners:
➢ Mail - enabled questionnaire – This questionnaire was circulated via
mail among the respondents who filled in the answers and then
mailed it back to us.
➢ Web - enabled questionnaire – This questionnaire was administered
to the respondents by hosting the questionnaire at a website
http://www.eSurveysPro.com/Survey.aspx?id=2adad196-8ec8-45cc-
bc85-3d787e14fade . The chosen population was taken randomly
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from across the net users and allowed the sample population to be
fairly even.
The questionnaire administered to respondents is available for reference
at ANNEXURE.
The secondary data collection was carried out by studying online
database, journals and surveys.
The data collected is then organized, compiled, analyzed and interpreted.
SAMPLING
The sampling technique followed is convenience sampling.
The sample size chosen is 100.
The sample area is not limited to any particular geographical location. The
sample unit is Internet users of various areas.
SAMPLING DESIGN
The targeted population was chosen in an unstructured manner onconvenience basis on “as is, when is” available manner. The convenience
method allows using members on relative ease. This method is difficult to
be treated by statistical techniques but is most commonly employed in
practical purposes. Co-workers, friends, internet users, members of
various forums all form a part of the population in this technique.
SAMPLING FRAME
In the person assisted convenience random sampling, every person has
an equal chance of being selected. The responses were collected from the
people who were willing to participate in the survey. To some extent,
judgement sampling was applied when the mails or links were sent out.
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DATA COLLECTION AND ANALYSIS
The primary research was conducted from 7th May, 2011 to 16th May,
2011. The survey targeted a total of 100 individuals but in all 128 people
participated in the survey.
The data was obtained through the use of structured questionnaires and
convenience sampling. In relation to background information on gender,
age etc., the first block deals with awareness regarding internet banking.
The second block covers the attitude for the non-Internet banking
customers. The third block covers the attitude of the customers who useInternet banking. The fourth and final block is for all the customers to get
the feedback on internet banking services and mobile banking services.
The first section provides the background details of the population and
sets the environment for the rest of the survey.
The analysis of the responses of the first section revealed the following
characteristics of the population –
A total of 128 participants responded to the survey. Out of these 83 weremales and 45 females. So the gender wise distribution can be studied as
Figure 6 GENDER WISE DISTRIBUTION OF SAMPLE POPULATION
Most of the respondents were in the age group 20 – 30 years but anoverall distribution can be shown as follows:
Figure 7 AGE WISE DISTRIBUTION
This diagram indicates that maximum respondents are young people in
the age group 20 – 30 years followed by less than 20 years. This is
because the convenience sampling was carried out and the most easilyavailable sample was student and young working population. If we see the
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educational qualifications of this population, the highest category is that
of graduates forming a 57% chunk followed by post graduates at a decent
36%.
Figure 8 EDUCATION WISE DISTRIBUTION
This shows that population is educated enough to understand the
intricacies involved with Internet banking and can be an active participant
in this field. Also the population is intelligent enough to understand the
questions being posed to them and respond correctly. So, judgemental
analysis will be used rarely only.
The next analysis of the sample population will be done on the basis of
the occupation or their area of work. This lets us decide which target
population finds it more convenient to use Internet banking.
Figure 9 OCCUPATIONAL DISTRIBUTION OF POPULATION
As is obvious from the above diagram, most of the population consists of
working professionals who form a mighty 55% of the sample. This is
because the survey was carried out by online circulation and this
population has easy access to Internet at workplace as well as homes. The
homemakers were not able to participate in this survey due to lack of
reach. However, students have shown a fairly decent participation in the
survey and that is mostly because all institutes have internet facilities and
various students are linked to one another either through their online
student associations or through social media.
So, the above analysis reveals that mainly male graduate working
professionals in the age group 20 – 30 years participated in the survey.
Having discussed the demographical distribution, the banking
requirements and availability can be discussed.
Nearly 59 – 60 % of people visit the bank branch only once in a fewmonths and the main reason for visiting the bank is to make deposits and
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discuss loans and investments – some things that are not so easily done
over any other medium. With the coming of ATMs and Internet banking
most of the transactions take place outside the four walls of a bank
branch. However, 19% people still visit the bank once a month and this isclosely followed by a 1 – 5 times visit made by 15% people. Rarely does a
person feel the need of making a visit > 10 times a month to his bank
branch now-a-days.
Figure 10 VISIT TO BANK BRANCH
The surveyed population was also asked about the main reason thatnecessitated this visit to the branch. And for nearly 47% people, the need
was accentuated by the requirement of making deposits. However, 26%
people favoured reasons other than making deposits or withdrawals,
inquiring balances or discussing investment options. These reasons
primarily figured:
➢ To update the passbook
➢ To open fixed deposits
➢ To make general inquiries
➢ Loan related discussions➢ To redress the discrepancies
➢ Things that have to be done manually like closing an account,
requesting branch change, opening a new account, requesting for a
locker etc.
➢ To get foreign exchange
➢ To discuss queries, complaints and problems
➢ If the net banking is not working due to some reasons
➢ ATM related queries
➢ To reset passwords or to generate passwords➢ To take care of ad-hoc things like submitting documents
➢ To cash cheques and to request chequebooks
➢ For matters concerning PF and PPF
Figure 11 REASONS TO VISIT BANKS
14% people still visit bank branches to withdraw cash, 9% to get firsthand
advice. Merely 4% people visit for mundane purpose like inquiring
balances.
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The following figure discusses the e-Banking facilities provided by banks:
Figure 12 e-BANKING FACILITIES AVAILABLE
The ATM and Internet banking services follow each other at heels standing
at 27% and 26% respectively. Together, for 53% of the surveyed
population these e-Banking services are available. The relatively new
entrants in the field of e-banking like Telephone banking, Mobile banking
and SMS banking are also being widely distributed to the customers. But it
is observed that the mobile banking services have greater penetration
than telephone banking and nearly 18% people can avail these services.
Similarly, 15% people can avail SMS banking whereas only 14% people
can avail the telephone banking. This shows that the banks are tryingtheir level best to make the various e-banking facilities popular and these
figures are bound to rise drastically in near future.
Figure 13 COMPARISON OF AVAILABLE AND AVAILED FACILITIES
It can be seen that all those people for whom the ATM facility is available
avail it. But that is not the case with Internet banking. And also, though,
telephone banking, mobile banking and SMS banking are available to awider section, only a handful of these people avail these services. Clearly,
ATM is still a leader when it comes to e-banking but Internet banking is
trying to bridge the gap rapidly.
If we see the facilities availed chart individually, we will find that there is a
constant decrease in the users of the e-banking services with the crest
being observed for ATM services and the trough for telephone banking
services. The curve starts rising slightly again for mobile and SMS
banking. The facilities availed are plotted against the percentage of the
users of the respective service. While 45% people use ATM services, only33% of the surveyed population uses Internet banking. SMS banking is
used by 8% of people, followed by mobile banking that attracts 7% people
and last of all comes Telephone banking with 6.96% users. This can help
the bank to identify the area where it needs to push its business. There is
still a lot of potential untapped in Internet banking and mobile banking
and the banks can benefit from this, if they seize the opportunity timely.
The individual usage chart is shown as follows:
Figure 14 e-BANKING FACILITIES AVAILED BY INDIVIDUALS
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The section 2 of the questionnaire was meant for only those customers of
the bank who did not use Internet banking. This section helps us to find
out the reasons why people do not prefer to use Internet banking and
whether they have any intention of using Internet banking facility infuture.
Nearly 68% of the users, who are currently not using Internet banking, are
planning to use this facility in near future. Another 14% are inclined
towards Internet banking usage and nearly 8% of the population is not
likely to use this facility. 4% of the population is still undecided whether it
should take up Internet banking or not. Thus, we can safely infer that the
idea of Internet banking is fast catching up and people are very likely to
use it for future banking transactions. In big cities, Internet banking has
already made great forays into the lives of the people.
Figure 15 ADOPTION OF INTERNET BANKING IN NEAR FUTURE
The main factor that prevented the people from using Internet banking
was the concern about security. 51% of the population stated this
intention unequivocally. So clearly, if this aspect of Internet banking is
addressed, the usage will increase greatly. Banks can strengthen thesecurity provided for online transactions, adopt new technologies, and
educate their customers thereby building their confidence in these
services.
People are always resistant to change and this reflects in adoption of
Internet banking also. 33% of the respondents feel comfortable with the
traditional banking and hence, do not find any motivation in adopting
Internet banking. Change will come slowly and steadily. The Internet
banking will have to be eulogized and people made aware of the benefitsthat can be derived from these services. Once people realize that all their
banking services are available at just the click of the mouse, they might
change their mindset but this attitudinal change cannot be done
overnight.
Few sporadic incidences of under age, never heard of internet banking,
service charges on visiting bank branch, not being much involved with
banking services and less support for online services were also mentioned
by surveys but these were individually spread out reasons.
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So, it can be safely determined that it is mainly the security concern that
prevents the bank customers from adopting Internet banking. The
diagrammatic representation of this is as follows:
Figure 16 FACTORS PREVENTING USE OF INTERNET BANKING
This completes the analysis of the section 2 which reveals that the users
are willing to take up internet banking in future, if the banks improve upon
the security services provided for the Internet banking and addresses the
concerns of people in this regards.
The next section of the questionnaire was meant for those customers of
the bank who used Internet banking. This section deals with aspect whatfacilities people prefer to avail online, frequency of usage, possible factors
and preferred services that favour the use of Internet banking, relied
banks, satisfaction derived by the customers, issues faced while using
these services, and factors contributing towards the encouragement and
popularity of Internet banking.
The prime reason for taking up Internet banking is attributed to the
convenience derived by the user i.e. the 24 hours service 365 days a year,
anywhere connectivity and hassle free transactions. The benefits derived
in terms of convenience are the major reason as to why nearly 76%people opened an Internet account. The second position here is bagged
by quick service delivered to the customer as the wait period is eliminated
and one does not have to stand in long queues and wait for his turn. 55%
people quoted this as the major reason to open an Internet banking
account. Easy to maintain banking transaction activity prompted 53%
people to use Internet banking. All the database handling is done online
and all the information is catalogued systematically. Though curiosity
about this emerging field also led 39% people to start using Internet
banking but this reason is of least importance as compared to otherfactors. 35% people felt strongly about the geographical constraints as
being a major factor for adopting Internet banking services and for 33%
people online shopping was the driving factor. The other factors that led
to the adoption of the Internet banking can be listed as follows –
➢ Safe and secure – A compelling motive for 32.5% people and has an overall
moderate priority
➢ Integrated value added services – Availability of various services along
with banking facility is also a strong motivator as felt by 31% people.
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➢ Better rate and lower service charges – This has strong potential for high
banking activity areas. 28% population stated this as an important
consideration while adopting Internet banking.
➢ Variety of features and services offered – This is favoured by 26.5%
people as being of prime importance when opening an Internet bankingaccount.
The priority wise distribution of the reasons is shown in the stacked
columnar chart where the reasons have been plotted against the
percentage of response received in each section of priority. This will help
us to see clearly what importance is imparted to what reason by the
customers.
Figure 17 REASON TO ADOPT INTERNET BANKING
Even though the Internet banking has been decently adopted, still the
frequency of usage is restricted to only 1 – 5 times a month. From
amongst the surveyed population, 37% people use this facility for 1 – 5
times a month. 24% people use this facility 5 – 10 times a month and
since the use is ever increasing, it comes as no surprise that 21% people
prefer to use it for more than 15 times a month. 18% people prefer
accessing their internet bank accounts 10 – 15 times in a month.
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Figure 18 USAGE FREQUENCY
The next question analyzed the most popular facilities that are usedonline. And in response to this, it was observed that account inquiry was
clearly the most favoured facility among the respondents. This was closely
followed by online bill payments and transfer of funds between accounts.
While the former was favoured by 23.2%, the latter two were favoured by
22.57% and 22.26% respectively, the difference being marginal only. 19%
people use internet banking for retrieving bank statements. Only handful
of people use this facility for processing payrolls, loan payments, applying
for consumer loans and credit cards, booking movie and flight tickets,
online shopping, retrieving credit card statements, opening deposits etc.
The total number of respondents for these uses put together account for
13% of the total surveyed population.
Figure 19 FAVOURED ONLINE BANKING FACILITIES
The respondents were asked to rate various aspects of Internet bank
services provided by the bank. This will provide an idea about how to
improve the internet banking facilities, what the customers look for and
various other clues as to how the bank should go about designing itsInternet banking programme.
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Figure 20 ASPECTS OF INTERNET BANKING SERVICES
From the above diagram, it is clear that when users think of Internet
banking, convenience rules their minds, hearts, thoughts and actions. A
staggering 56% people think that convenience is the first aspect that
should be addressed by the banks. Account security is also important
considering that Internet can make banking vulnerable to many risks and
as a result a solid 51% people feel that it is a crucial for the Internet
banking facility. 48% people also feel that the bank services go a long way
in deciding which Internet services are to be preferred. Accessibility anduser friendliness rank next with a 44% population feeling that this aspect
determines the success of Internet banking. The banks cannot overlook
the efforts to make Internet or rather e-banking popular, providing
encouragement to use these facilities as nearly 34% people are influenced
by these initiatives alone. And lastly, customer bases his decision on the
customer care facilities.
It was also noted that all these aspects are of equal and very high
importance as far as the consumers are concerned and this makes the
designing and provision of Internet banking services slightly tricky andcomplicated.
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Based on the research survey, it was observed that State banks were
most favoured with respect to Internet banking followed by ICICI and
HDFC. Citibank stood fourth in terms of attracting customers. Customers
also use the Internet banking services provided by PNB, Axis and Yesbanks. The reason of preferring a particular bank is beyond the scope of
this research.
Figure 21 PREFFERED BANKS
The survey also tried to figure out the source of encouragement that led
the respondents to use Internet banking. Mainly the media and friends
suggested the option to respondents. In some cases, the family was
influencing factor.
Figure 22 SOURCE OF INFLUENCE
Nearly all the users were satisfied by the Internet services provided to
them and rarely a non-satisfied respondent was encountered. The
satisfaction level runs really high amounting to a staggering 96% with
only 4% of the users being dissatisfied. Further research has shown that
this dissatisfaction may be caused due to issues in Internet connectivityetc.
Figure 23 SATISFACTION OF USERS WITH INTERNET BANKING
And also while considering the Internet banking, the place of access is
also of prime importance because this goes a long way in determining the
physical, operational and security risks to the customer’s account. But it
was observed that users were conscientious enough to use these services
in the protected environment of their homes and work places. Some usersavailed the internet facilities even at their mobiles thereby becoming
mobile banking customers. Rarely did people use public cyber café for
operating their Internet banking accounts.
Figure 24 PREFERRED PLACE OF ACCESS FOR INTERNET BANKING
The satisfaction derived from the Internet banking has already been
discussed in preceding pages. In continuation with the same, respondentswere asked if they had faced any issues while using Internet banking.
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Most of the users have been able to perform hassle free transactions but
some users did encounter certain problems while operating their Internet
bank accounts. Some of the issues that were faced can be discussed as:
➢ Sometimes due to server maintenance or slow network, the internetbanking facility is not available.
➢ Slow speed may affect the quality of transaction.
➢ Money transfer issues like sometimes the amount gets debited from
the account, but is not credited to the merchant account. Such
issues are also faced in ticket bookings and reservations.
➢ Only limited features are available and for other purposes, a bank
visit is necessitated.
➢ The transactions in countries not registered with the bank are a little
problematic to carry out.
But these are few and far spread incidences and it can still be inferred
that people are by and large satisfied by their Internet banking facilities.
Figure 25 ISSUES ENCOUNTERED IN INTERNET BANKING
The respondents were then asked to identify the factors contributing the
most to the popularity of the Internet banking on a 5 point scale.
Convenience is of utmost importance in this regards getting the highestpriority (62%) from amongst all the factors. The next factor promoting
Internet banking is user friendliness of the banking site with 44%
respondents giving it the highest ranking. For 38% users, transaction
speed goes a long way to make the Internet banking popular and another
34% set of respondents feel that it is the security features taken up by the
bank to make transactions secure that contribute towards the popularity
of Internet banking. The information quality (timely access to correct,
complete, updated information) comes at last place with 33.6% users in
its favour. Again, as it was observed earlier also, the users consider allthese factors to be equally important. This makes it a little difficult to
understand the psychology behind the Internet banking.
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Figure 26 FACTORS AFFECTING POPULARTIY OF INTERNETBANKING
The last section deals with a general outlook on Mobile banking. Since
Mobile banking is closely related with the Internet banking, it was thought
appropriate to gather the views of people regarding this new mode of
banking.
With rare exceptions, nearly all the respondents use mobile phones. Also,
for 72% of the respondents, we browsing and Internet surfing support is
available on their mobile phones itself. These general pointers indicate
that, if channelized properly, there is a lot of potential for mobile banking.
The following charts show the statistics for the availability of mobile
phones and web browsing support on mobile phones available with the
respondents respectively.
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Figure 27 AVAILABILITY OF MOBILE PHONES AND WEB BROWSINGFACILITIES ON MOBILE PHONES WITH USERS
Despite the widespread availability of mobile phones and web browsing
facilities, it was observed that very few people preferred to use mobile
banking services. Of all the respondents, a mere 29% of the respondents
carried out banking through mobile phones. Rest all either preferredtraditional or some other mode of banking.
Figure 28 PERCENTAGE OF RESPONDENTS AVAILING MOBILEBANKING SERVICES
And again the frequency of usage of these services stands at 1 – 5 times a
month. There are some users who prefer to use it 10 – 15 times and rarely
does a respondent use this facility for more than 15 times a month.
Figure 29 FREQUENCY OF USAGE OF MOBILE BANKING
Despite all the inhibitions in the minds of the respondents regarding the
mobile or e-banking in general, a fairly considerable number (71%) of
people believe that they would prefer mobile banking over traditional
banking.
Figure 30 PREFERENCE TOWARDS MOBILE BANKING
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Finally, the respondents were asked to choose reasons that make them
opt mobile banking and ease of access was the prime reason for choosing
this facility. It was favoured by 32% of people. The time saving aspect also
gained favour among 24% of the respondents. Since, the users arefamiliar with the functioning of the mobile phones, so ease of use is in
good books of 21% respondents. The safety and risk free use and service
quality are at the tail ends of the list with 12% and 11% votes.
Figure 31 REASONS TO OPT FOR MOBILE BANKING
In the end, the users were asked to provide some suggestions that will
help us to promote the use of Internet Banking. The following suggestions
were received from the users:
➢ To give proper information about it to the customers➢ By telling the benefits to the friends / good word of mouth➢ By concentrating on making it more secure and convincing people
about its security➢ Advertisements on popular TV channels, bank branches, ATMs,
popular Internet sites and social media➢ Through encouragement drives initiated by bank➢ In person demos for people that still visit the bank in order to show
how easy it is and how to operate it on phone / demo kiosks in thebranch
➢ Direct marketing to the customers not availing themselves of theservice / door to door marketing
➢ While opening the bank account, the service provider must give fulland accurate information regarding the service and provided withthe credentials required for Internet Banking
➢ Promotion by bank staff ➢ User friendly sites / improving GUI to make it more friendly and
quick➢ Convenience and comfort of the user
➢ By giving the information in ATM receipts and passbooks➢ Educating the customers➢ Internet safety seminars, e-learning➢ Incentives for using Internet Banking services➢ Internet Banking awareness canopies at various prime locations➢ Providing local language support for the convenience of the
customer➢ Service improvement in field of Internet Banking
Some of these suggestions might already be in practice and some of these can be incorporated in order to promote the Internet Banking. These
will help increase the awareness regarding the Internet banking and willhelp promote this new channel of banking.
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Internet banking has revolutionized the lives of people as well as methodof banking. People have developed a positive attitude towards InternetBanking and believe that it has taken away the pressure from lives. It has
reduced the need to stand in long queues and is quite time saving. This isthe prime reason why people these days prefer to use Internet banking.However, positive and negative go hand in hand. There are people whobelieve that Internet banking can be availed only by Internet addicts andthat mobile banking is better proposition than Internet bankingconsidering the wider reach of mobiles than Internet. And in order topromote mobile and SMS banking, the service charges should be lowered. Those who favour mobile banking feel that provision of faster net accesson mobiles will promote this facility further. Yet another group believesthat Internet is an integral part of our economy now and banking
integration with Internet should be definitely encouraged. And if someefforts are made to make it more users friendly and secure, people willdefinitely prefer this medium. They strongly advocate the idea thatInternet banking is the need of hour.
However, security with regards to Internet banking is of major concern.Also, there should be provision to customize the Internet banking facilitiesaccording to the individual requirements of the users. This will allow themto use the facility without any hesitation. Also various advanced bankingfeatures should also be handled in future.
The users also feel that the complaint resolution is not efficient in case of net banking and this aspect should be improved by the banks. Timelyresolution of transaction related problems will further promote Internetbanking.
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RESULTS AND CONCLUSIONS
The use Internet in banking represents the leveraging of an incrediblyefficient medium to provide a very cost and time efficient distributionchannel. This is not to discount the large, nascent opportunity for growthin this industry. As commerce continues to increase, and increasingamounts of people embrace wireless financial service products, there isfertile ground that can be reaped for great profits, by banks that maintaina presence on the Internet.
In the preceding sections, we analyzed the attempts to understand the
customer attitude towards Internet Banking.
The results from the survey suggest that nearly 33% of individualsindicated that they utilize Internet banking services. The highestutilization rates were amongst the young working professionals. In termsof frequency of use, most people (37%) indicated that they tend to accessonline banking services 1 – 5 times every month.
The result of this study also shows that account inquiry and on-line billpayment are two most favoured Internet banking activities. The study alsoreveals that convenience and security are two most crucial aspects to
determine how efficient any Internet banking activity is, though, otheraspects like overall bank services, accessibility, user friendliness,encouragement to use e-banking and customer care cannot be ruled out. The satisfaction level among the users from these services runs very high.Most users were conscientious enough to use these services in theprotected environments of their homes and work places so as to mitigatesome of the risks observed in Internet banking. Customer convenience,user friendliness and transaction speed are some factors that go a longway in determining the popularity of a given Internet banking service.
The survey analysis has revealed that people have positive but cautious
attitude towards Internet banking. They have started accepting it and aremainly satisfied but as they say a burnt child dreads the fire. People arewary in making the use of this new medium. It is the young population in20s – 35s that have accepted this medium with least resistance but othersare fast catching up. It was also aimed to find out the main reason whycustomers are not using Internet banking. The major reason is theconcern about security, the various risks associated with the Internetwhich do not let the ties of trust be knit between the bank and customer.It was observed that ATMs are the most popular e-banking facilities,followed by Internet banking. The next preference is given to mobilebanking. SMS banking is also picking up but telephone based banking isthe least preferred of all.
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As far as user attitude towards Mobile banking is concerned, it can be saidthat ease of access and time saving facility will help it to grow by leapsand bounds. But this field is still in budding stages and is still too early todraw any conclusions. But people, by and large have a positive attitude
towards this new medium and that might just turn the table in its favour.
The relatively small size of population and concentration of the survey toa particular environment does not guarantee standard results. Similarstudies can be conducted elsewhere and the results compared.
But despite these limitations, it can be stated fairly confidently that thefield of Internet banking is no longer considered a taboo and is creepinginto the society silently and slowly. It is revolutionizing the way weperceive the banking around us. People have welcomed Internet bankingwith open arms and are adventuring into the fields of SMS and mobile
banking also. The study has found answers to most of the objectives andhas opened some areas where more research can definitely be taken up.
We can see that the times are changing and with the passage of time,people have started accepting Internet banking for all the potential that itholds. However, there are still some perceptual blockings that have to beaddressed carefully by the banks by giving proper training about Internetbanking, by making it more secure, safe and risk free, by promoting thismedium of banking and providing convenient, user friendly services.
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LIMITATIONS
The study was conducted to see how the customers’ perceive the Internet
banking. There is still room for further investigation into the adoption of
this mode of banking.
There are certain limitations with the research carried out. The
participants comprised a small sample, only 100 and assumed to be
homogeneous and enough to carry out the research. Most of the
respondents are either students or working professionals. So, the results
cannot be generalized in the wake of this limitation. The underlyingassumption is that the survey conducted in limited area represents the
general psyche of the users.
The analysis also takes some judgemental nature.
The concept of internet banking is still in budding stages.
The expertise of the questionnaire design is limited.
More research would be useful in understanding the role of trust, security
measures in the adoption of Internet banking and also in enhancing the
use of internet banking.
More researches can be carried out in terms of distinction of public and
private sector banks, individual customers and corporate customers etc in
terms of the factors influencing their adoption decisions, the criterion for
selecting online banking services, the products and services perceived to
be useful.
The research has been carried out with time and budgetary constraints.
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BIBLIOGRAPHY
1. Internet Banking: Disruptive or Sustaining Technology, Professor Lynda
Aplegate, Paul Hazell, Ziad Raphael, 7th May, 2001
2. Attitudes and Preferences in Relation to Internet Banking in the Caribbean,
Justin Robinson and Winston Moore
3. Customer Perspectives on E-business Value: Case Study on Internet
Banking, Journal of Internet Banking and Commerce, April 2010, Vol. 15,
No. 1, Rahmath Safeena, Abdullah, Hema Date
4. Report on Internet Banking, Reserve Bank of India
5. Factors Influencing the Adoption of Internet Banking, Sara Naimi
Baraghani, Supervised by Dr. Seyed Hessameddin Zegordi and Dr.
Mohammed Khalifa, January, 2007
6. The study of customer attitude towards Internet Banking based on the
Theory of Planned Behaviour, Ya-Yueh Shih, 2007
7. Customer perception towards Internet Banking w.r.f. to private and foreign
banks in India (use of MDS), Siddharth Agarwal, 2009
8. Progress, Trends, and Management in e-Banking – A Case Study of Banks
in Himachal Pradesh, Vikas Sharma, 2008
9. http://www.banknetindia.com/banking/ibkgintro.htm
10.http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre14.shtm
11.http://correctbanking.com/
12.http://webinternetbanking.com/disadvantagesinternetbanking.html 13.http://www.buzzle.com/articles/disadvantages-of-internet-banking.html
14.http://www.ehow.com/facts_4743500_disadvantages-internet-
banking.html
15.http://articles.moneycentral.msn.com/Investing/StockInvestingTrading/how
-dangerous-is-online-banking.aspx#pageTopAchor
16.http://corvuswire.com/banking/potential-risks-associated-with-internet-
banking/
17.http://www.itnewsafrica.com/2009/11/internet-banking-know-the-risks/
18.http://e-bankingservise.blogspot.com/2008/09/security-precautions.html
19.http://www.info.gov.hk/hkma/eng/viewpt/20040715e.htm20.https://netbanking.netpnb.com/bayimgs/pnbibs/helpfile/safeguard.htm
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21.http://www.articlesbase.com/online-business-articles/precautions-about-
net-banking-820608.html#ixzz1K2HHkzt1
22.http://finance778.com/Online-Banking/20080122/329.html
23.http://www.banking-guide.org.uk/internet-banking.html
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24.http://www.ehow.com/list_6949866_types-internet-banking.html
ANNEXURE
Questionnaire – Customer Attitude towards Internet Banking
ACADEMIC PROJECT _ HPUBS, HP University, Shimla
This survey is a part of the academic project. The information provided here will
be treated completely confidential and not be misused.
1. Name ______________________________________________________________
2. Gender
Male Female
3. Age
Less than 20 years 20 - 30 years
30 - 40 years 40 - 50 years
>50 years
4. Education
Secondary Senior Secondary
Graduation Post Graduation or more
5. Occupation
Student Homemaker
Working Professional Business
Service Other
If other, please specify,
________________________________________________________
6. How often do you visit the bank branch in a month?
Once a month 1 - 5 times a month
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5 - 10 times a month >10 times a month
Once in a few months
7. The main reason to visit the bank branch is …. (please choose a single
most important reason)
To make deposits To withdraw cash
To get advice for investment options To inquire balance
Other
If other, please specify,
______________________________
8. What are the e-banking facilities provided by your bank? (Mark all that
apply)
ATM Internet banking
Telephone banking Mobile banking
SMS banking
9. Which of the e-banking services provided by your bank are used by you?
(Mark all that apply)
ATM Internet banking
Telephone banking Mobile banking
SMS banking
For the users who do not use Internet banking
10.Do you plan to use the internet banking in near future?
Very Unlikely Somewhat Unlikely
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Neither likely nor unlikely Somewhat likely
Very likely
11.What are the main reasons that you have not preferred Internet banking?
(Mark all that apply)
Under age Never heard of Internet banking
Concerned about security Little knowledge about internet
Comfortable with traditional banking Others
If others, please specify,
__________________________________________________________
For the users who use Internet banking
12.What is the most important reason you opened an Internet account?
(Prioritize according to the order of importance 1 being least important
and 5 being most important)a. Convenience (24hrs. service, anywhere connectivity) _____
b. Curiosity about Internet banking _____
c. Safe and secure _____
d. Easy to maintain banking transaction activity _____
e. Online shopping _____
f. Better rate and Lower service charges _____
g. Geographical constraints _____
h. Quick service _____
i. Variety of features and services offered _____
j. Integrated value added services _____ 13.How many times a month do you use Internet banking facility?
1 - 5 times a month 5 - 10 times a month
10 - 15 times a month Over 15 times
14.What are the various banking facilities that you use online?
On-line Bill payment Account Inquiry
Transfer funds between accounts Retrieving bank statements
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Applying for consumer loans and credit cards Process payrolls
Loan payments and loan applications Other
If other, please specify,
________________________________________________________
15.Rate the following aspects of internet services provided by your bank on
the scale from 1 to 5 (1 being the lowest and 5 being the highest degree)
Bank service_____ Account security _____
Convenience_____ User friendliness _____
Accessibility _____ Customer care _____
Encouragement to use e-banking _____
16.Would you like to disclose the name of the bank with which you have
Internet account?
___________________________________________________________________________
17.Who suggested the option of Internet banking to you?
Friends Media Family
18.Are you satisfied by your Internet banking services?
Yes No
19.Where do you access the Internet banking facility?
At home At office / workplace
Public place Through mobile phone
If any other, please
specify,_____________________________________________________
20.Did you encounter any issues while using Internet banking?
Yes No
If yes, please specify,
__________________________________________________________
For all the customers
21.Rank the following according to the perceived contribution in making
Internet banking popular? (1 being the lowest and 5 being the highest
value)
a. The information quality (providing correct, complete and updated
information timely) _____ b. The transaction speed _____
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c. User friendliness _____
d. Security _____
e. Convenience _____
22.Do you have a mobile phone?
Yes No
23.Does your mobile phone have web browsing or internet facility?
Yes No
24.Do you avail mobile banking services?
Yes No
25.If the answer to above question is yes, how often do you use such services
in a month?
1 - 5 times 5 - 10 times
10 - 15 times >15 times
26.Would you prefer mobile banking services over traditional banking
method?
Yes No
27.What are the reasons to opt for mobile banking? If you do not use mobile
banking, please answer on the basis of your expectations. (Mark all that
apply)
Highly time saving
Ease of access
Safe and risk free
Service quality
Ease of use
28.How do you think the awareness about the internet banking can be
increased?
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
29.Any other comments?
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___________________________________________________________________________
___________________________________________________________________________
Thanking you for sparing some time for this survey. Have a great day ahead
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