ANALYTICAL STUDY ON INTERNET BANKING SYSTEM IN

INDIA

A project submitted to

University of Mumbai for partial completion of the degree of

Master in commerce

Under the faculty of commerce

By

PARYANI ROMA SANJAY

Under the guidance of

DR. TASNEEM RAZMI

H. R. COLLEGE OF COMMERCE AND ECONOMICS

Vidyasagar Principal K. M. Kundnani Chowk,

123, Dinshaw Vacha Rd,

Churchgate,

Mumbai, Maharashtra 400020

JANUARY 2021
ANALYTICAL STUDY ON INTERNET BANKING SYSTEM IN
INDIA

A project submitted to

University of Mumbai for partial completion of the degree of

Master in commerce

Under the faculty of commerce

By

PARYANI ROMA SANJAY

Under the guidance of

DR. TASNEEM RAZMI

H. R. COLLEGE OF COMMERCE AND ECONOMICS

Vidyasagar Principal K. M. Kundnani Chowk,

123, Dinshaw Vacha Rd,

Churchgate,

Mumbai, Maharashtra 400020

JANUARY 2021
 H. R. COLLEGE OF COMMERCE AND ECONOMICS

Vidyasagar Principal K. M. Kundnani Chowk,

123, Dinshaw Vacha Rd, Churchgate, Mumbai, Maharashtra 400020

CERTIFICATE

This is to certify that MS. PARYANI ROMA SANJAY (Roll No. 77) has worked and
duly completed her Project Work for the degree of Master in Commerce under the
Faculty of Commerce in the subject of Advanced Accountancy and her project is
entitled, “ANALYTICAL STUDY OF INTERNET BANKING SYSTEM IN
INDIA” under my supervision. I further certify that the entire work has been done by
the learner under my guidance and that no part of it has been submitted previously for
any Degree or Diploma of any University.

It is her own work and facts reported by her personal findings and investigations.

______________________

(DR. TASNEEM RAZMI)

Date of Submission: 30th JANUARY, 2021.

 DECLARATION

I the undersigned MISS. PARYANI ROMA SANJAY here by, declare that the work
embodied in this project work titled “ANALYTICAL STUDY ON INTERNET
BANKING SYSTEM IN INDIA”, forms my own contribution to the research work
carried out under the guidance of DR. TASNEEM RAZMI is a result of my own
research work and has not been previously submitted to any other University for any
other Degree/Diploma to this or any other University.

Wherever reference has been made to previous works of others, it has been clearly
indicated as such and included in the bibliography.

I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

(PARYANI ROMA SANJAY)

(ROLL NO. 77)

Certified by

______________________
(DR. TASNEEM RAZMI)
 ACKNOWLEGMENT

To list who all have helped me is difficult because they are so numerous and the depth
is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the UNIVERSITY OF MUMBAI for giving me chance
to do this project.

I would like to thank my Principal, DR. POOJA RAMCHANDANI for providing the
necessary facilities required for completion of this project.

I take this opportunity to thank our Coordinator, for her moral support and guidance.

I would also like to express my sincere gratitude towards my Project Guide DR.
TASNEEM RAZMI whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference books
and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project especially my Parents and Peers who supported
me throughout my project.
 INDEX
CHAPTER TITLE PAGE
NO. NUMBER
1 INTRODUCTION 1 - 35
1.2 History of Banking in India
1.3 Evolution of Internet Banking
1.4 Internet Banking V/S Traditional Banking
1.5 Mechanics of Internet Banking
1.6 Various Types of E-Banking
1.7 Salient Features of Internet Banking
1.8 Role and Significance of Internet Banking
1.9 Advantages of Internet Banking
1.10 Disadvantages of Internet banking
1.11 Challenges Faced by Banks and Regulators
1.12 Prospects of Internet Banking
1.13 Impact of COVID-19 on Internet Banking
2 RESEARCH METHODOLOGY 36 - 40
2.1 Scope of Study
2.2 Objectives of Study
2.3 Research Design
2.4 Basis of Study
2.5 Sample Size
2.6 Data Collected
2.7 Population
2.8 Methods/Tools of Analysis
2.9 Limitations of Primary Data
3 LITERATURE REVIEW 41 - 52
4 DATA ANALYSIS, DATA 53 - 67
INTERPRETATION AND PRESENTATION
4.1 Data Analysis
4.2 Data Interpretation
5 CONCLUSIONS AND SUGGESTIONS 68 -73
5.1 Findings
5.2 Suggestions
5.3 Conclusion
BIBLIOGRAPHY 74 - 75
ANNEXURE 76 - 78
CHAPTER 1: INDRODUCTION

1.1 INTERNET BANKING

Internet banking (or E-banking) means any user with a personal computer and a browser
can get connected to his banks website to perform any of the virtual banking functions.
In Internet banking system the bank has a centralized database that is web-enabled.
Internet banking is the term used for new age banking system. Internet banking is also
called as online banking and it is an outgrowth of PC banking. Internet banking uses
the internet as the delivery channel by which to conduct banking activity, for example,
transferring funds, paying bills, viewing checking and savings account balances, paying
mortgages and purchasing financial instruments and certificates of deposits. Internet
banking is a result of explored possibility to use internet application in one of the
various domains of commerce. It is difficult to infer whether the internet tool has been
applied for convenience of bankers or for the customers’ convenience. But ultimately
it contributes in increasing the efficiency of the banking operation as well providing
more convenience to customers. Without even interacting with the bankers, customers
transact from one corner of the country to another corner. There are many advantages
of online Banking. It is convenient, it isn‘t bound by operational timings, there are no
geographical barriers and the services can be offered at a minuscule cost (IAMAI‘s,
2006). Electronic banking has experienced explosive growth and has transformed
traditional practices in banking.

PC banking is a form of online banking that enables customers to execute bank

transactions from a PC via a modem. In most PC banking ventures, the bank offers the
customer a proprietary financial software program that allows the customer to perform
financial transactions from his or her home computer.

The customer then dials into the bank with his or her modem, downloads data, and runs
the programs that are resident on the customer’s computer. Currently, many banks offer
PC banking systems that allow customers to obtain account balances and credit card
statements, pay bills, and transfer funds between accounts.

Internet banking, sometimes called online banking, is an outgrowth of PC banking and

mobile banking. Internet banking uses the Internet as the delivery channel by which to
conduct banking activity, for example, transferring funds, paying bills, viewing

1
checking and savings account balances, paying mortgages, and purchasing financial
instruments and certificates of deposit.

An Internet banking customer accesses his or her accounts from a browser— software
that runs Internet banking programs resident on the bank’s World Wide Web server,
not on the user’s PC.

Net Banker defines a “true Internet bank” as one that provides account balances and
some transactional capabilities to retail customers over the World Wide Web. Internet
banks are also known as virtual, cyber, net, interactive, or web banks.

In its very basic form, e-banking can mean the provision of information about a bank
and its services via a home page on the World Wide Web (WWW). More sophisticated
e-banking services provide customer access to accounts, the ability to move their money
between different accounts, and making payments or applying for loans via e-Channels.
The term e-banking will be used in this book to describe the latter type of provision of
services by an organization to its customers. Such customers may be either an
individual or another business. To understand the electronic distribution of goods and
services, the work of Report and Sviokla (1994; 1995) is a good starting point. They
highlight the differences between the physical market place and the virtual market
place, which they describe as an information-defined arena. In the context of e-banking,
electronic delivery of services means a customer conducting transactions using online
electronic channels such as the Internet? Many banks and other organizations are eager
to use this channel to deliver their services because of its relatively lower delivery cost,
higher sales and potential for offering greater convenience for customers. But this
medium offers many more benefits, which will be discussed in the next section. A large
number of organizations from within and outside the financial sector are currently
offering e-banking which include delivering services using Wireless Application
Protocol (WAP) phones and Interactive Television. Many people see the development
of e-Banking as a revolutionary development, but, broadly speaking, e-banking could
be seen as another step in banking evolution. Just like ATMs, it gives consumers
another medium for conducting their banking. The fears that this channel will
completely replace existing channels may not be realistic, and experience so far shows
that the future is a mixture of “clicks (e-banking) and mortar (branches)”. Although

2
start-up costs for an internet banking channel can be high, it can quickly become
profitable once a critical mass is achieved.

The Internet has levelled the playing field and afforded open access to customers in the
global marketplace. Internet banking is a cost-effective delivery channel for financial
institutions. Consumers are embracing the many benefits of Internet banking. Access
to one’s accounts at any time and from any location via the World Wide Web is a
convenience unknown a short time ago.

Thus, a bank’s Internet presence transforms from ‘brouchreware’ status to ‘Internet

banking’ status once the bank goes through a technology integration effort to enable
the customer to access information about his or her specific account relationship.

The six primary drivers of Internet banking includes, in order of primacy are:

 Improve customer access

 Facilitate the offering of more services
 Increase customer loyalty
 Attract new customers
 Provide services offered by competitors
 Reduce customer attrition

3
1.2 HISTORY OF BANKING IN INDIA

Without a sound and effective banking system in India it cannot have a healthy
economy. The banking system of India should not only be hassle free but it should be
able to meet new challenges posed by the technology and any other external and internal
factors.

For the past three decades India's banking system has several outstanding achievements
to its credit. The most striking is its extensive reach. It is no longer confined to only
metropolitans or cosmopolitans in India. In fact, Indian banking system has reached
even to the remote corners of the country. This is one of the main reasons of India's
growth process.

The government's regular policy for Indian bank since 1969 has paid rich dividends
with the nationalisation of 14 major private banks of India. Not long ago, an account
holder had to wait for hours at the bank counters for getting a draft or for withdrawing
his own money. Today, he has a choice. Gone are days when the most efficient bank
transferred money from one branch to other in two days. Now it is simple as instant
messaging or dial a pizza. Money has become the order of the day.

The first bank in India, though conservative, was established in 1786. From 1786 till
today, the journey of Indian Banking System can be segregated into three distinct
phases. They are as mentioned below:

 Early phase from 1786 to 1969 of Indian Banks

 Nationalisation of Indian Banks and up to 1991 prior to Indian banking sector
Reforms.
 New phase of Indian Banking System with the advent of Indian Financial &
Banking Sector Reforms after 1991.

To make these phases more explanatory, the scenarios are prefixed as Phase I, Phase II
and Phase III.

4
PHASE I:

The General Bank of India was set up in the year 1786. Next came Bank of Hindustan
and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank
of Bombay (1840) and Bank of Madras (1843) as independent units and called it
Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank of
India was established which started as private shareholders banks, mostly Europeans
shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab
National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and
1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank,
and Bank of Mysore were set up. Reserve Bank of India came in 1935.

During the first phase the growth was very slow and banks also experienced periodic
failures between 1913 and 1948. There were approximately 1100 banks, mostly small.
To streamline the functioning and activities of commercial banks, the Government of
India came up with The Banking Companies Act, 1949 which was later changed to
Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965).
Reserve Bank of India was vested with extensive powers for the supervision of banking
in India as the Central Banking Authority.

During those day’s public had lesser confidence in the banks. As an aftermath, deposit
mobilisation was slow. Abreast of it the savings bank facility provided by the Postal
department was comparatively safer. Moreover, funds were largely given to traders.

PHASE II:

Government took major steps in this Indian Banking Sector Reform after independence.
In 1955, it nationalised Imperial Bank of India with extensive banking facilities on a
large scale especially in rural and semi-urban areas. It formed State Bank of India to act
as the principal agent of Reserve Bank of India and to handle banking transactions of
the Union and State Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalised in 1960 on
19th July, 1969, major process of nationalisation was carried out. It was the effort of

5
the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in
the country were nationalised.

Second phase of nationalisation Indian Banking Sector Reform was carried out in 1980
with seven more banks. This step brought 80% of the banking segment in India under
Government ownership.

The following are the steps taken by the Government of India to Regulate Banking
Institutions in the Country:

1949: Enactment of Banking Regulation Act.

1955: Nationalisation of State Bank of India.

1959: Nationalisation of SBI subsidiaries.

1961: Insurance cover extended to deposits.

1969: Nationalisation of 14 major banks.

1971: Creation of credit guarantee corporation.

1975: Creation of regional rural banks.

1980: Nationalisation of seven banks with deposits over 200 crore.

After the nationalisation of banks, the branches of the public sector bank India rose to
approximately 800% in deposits and advances took a huge jump by 11,000%. Banking
in the sunshine of Government ownership gave the public implicit faith and immense
confidence about the sustainability of these institutions.

PHASE III:

This phase has introduced many more products and facilities in the banking sector in
its reforms measure. In 1991, under the chairmanship of M Narasimham, a Committee
was set up by his name which worked for the Liberalisation of Banking Practices.

The country is flooded with foreign banks and their Automated Teller Machine (ATM)
stations. Efforts are being put to give a satisfactory service to customers. Phone banking
and net banking is introduced. The entire system became more convenient and swift.
Time is given more importance than money.

6
The financial system of India has shown a great deal of resilience. It is sheltered from
any crisis triggered by any external macroeconomics shock as other East Asian
Countries suffered. This is all due to a flexible exchange rate regime, the foreign
reserves are high, the capital account is not yet fully convertible, and banks and their
customers have limited foreign exchange exposure.

7
1.3 EVOLUTION OF INTERNET BANKING

There have been significant developments in the e-financial services sector in the past
30 years. According to Devlin (1995), until the early 1970s functional demarcation was
predominant with many regulatory restrictions imposed. One main consequence of this
was limited competition both domestically and internationally. As a result there was
heavy reliance on traditional branch based delivery of financial services and little
pressure for change. This changed gradually with deregulation of the in-E-Banking
Management IGI Global, distributing in print or electronic forms without written
permission of IGI Global is prohibited industry during 1980s and 1990s, whilst during
this time, the increasingly important role of information and communication
technologies brought stiffer competition and pressure for a faster pace of change. The
Internet is a relatively new channel for delivering banking services.

Since the late 1990s E-Banking has developed from virtual insignificance to tens of
millions of users worldwide (OECD, 2001). In India e-banking is recent origin. Only
in the early 1990s there has been start of non-branch banking services. Opening up of
economy in 1991 marked the entry of foreign banks. They brought new technology
with them. Banking products became more and more competitive. Need for
differentiation of products and services was felt. The good old manual systems on
which Indian Banking depended upon for centuries seem to have no place today. The
credit of launching internet banking in India goes to ICICI Bank, Citibank and HDFC
Bank followed with internet banking services in 1999. Several initiatives have been
taken by the Government of India as well as the Reserve Bank of India to facilitate the
development of e-banking in India. The Government of India enacted the IT Act, 2000
with effect from October 17, 2000 which provided legal recognition to electronic
transactions and other means of electronic commerce. The Reserve Bank is monitoring
and reviewing the legal and other requirements of e-banking on a continuous basis to
ensure that e-banking would develop on sound lines and e-banking related challenges
would not pose a threat to financial stability. A high level Committee under
chairmanship of Dr. K.C. Chakrabarty and members from IIT, IIM, IDRBT, Banks and
the Reserve Bank of India, prepared the “IT Vision Document- 2011- 17”, for the
Reserve Bank of India and banks in India which provides an indicative road map for
enhanced usage of IT in the banking sector. To cope with the pressure of growing
competition, Indian commercial banks have adopted several initiatives and e-banking

8
is one of them. The competition has been especially tough for the public sector banks,
as the newly established private sector and foreign banks are leaders in the adoption of
e-banking.

Banking has come a long way since the days of regular visits to tellers. Now a customer
can take a picture of a cheque with his smartphone to deposit it into a savings or
checking account and receive SMS banking alerts in the form of texts. The evolution
of online banking started in the 1980s when the definition and the practice of internet
banking were far different than what exists today.

9
1.4 INTERNET BANKING V/S TRADITIONAL BANKING

The basic difference between Internet banking and traditional banking is that in
traditional banking the customer has to visit the branch in person for the basic banking
needs viz. withdrawal or deposit of cash, transfer of funds, statement of accounts, etc.
In Internet banking, on the other hand, these operations can be performed through the
PCs without physically visiting the bank branch. It is a win-win solution both for
customer and the bank. The customer is not put to inconvenience of traveling, and the
time so saved can be effectively utilized in other productive ways, whereas the bank
earns by having lower overheads, establishments, premises and maintenance costs, in
turn resulting into reduced per transaction cost. The greatest advantage of Internet
banking is that it enables a customer to perform basic banking transactions through PC
or Laptop, located anywhere in the world. Through the internet, customer accesses the
banks website for viewing the account details or performing the basic banking
transactions. The difference between Internet Banking and Traditional Banking is that
Internet Banking enables a person to transfer money anytime and anywhere in the world
by just using mobile phones or computers with an internet connection. While
Traditional Banking is concerned with transferring money physically from the banks.

The other major advantages emerging out of Internet banking are as follows:

1. The customer can perform basic banking transactions, round the clock.
2. No personal visit to the branch is required.
3. One can access and operate one‘s account from anywhere in the world.
4. The extensive, geographically divergent, traditional brick and mortar structure
of the branch need not be there.
5. The requirement of staff at branches gets optimized.
6. Easy, convenient, efficient and speedy banking services both for the bank and
the customer.
7. Transaction is automatically reconciled and posted in all required data tables,
thus reducing the workload.
8. Accessibility: Individuals must visit banks only during the working hours.
Internet banking is accessible at any period and it offers 24 hours admittance.

10
9. Security: Traditional banking does not meet e-security threats. Online banking
is the alluring target for hackers. Security is one of the difficulties faced by
clients in accessing accounts through internet.
10. Cost: The cost experienced by traditional banks contains a lot of functioning
and static costs. Such costs are eradicated as the e-banks do not have corporeal
attendance.
11. Customer Service: ln traditional banks, the employees and clerical staff of the
bank can join only few clients at a time. In online banking, the clients do not
have to stand in lines to bring out certain bank transactions.

11
1.5 MECHANICS OF INTERNET BANKING

The basic steps involved in completing transactions through Internet banking are
extremely simple and are available in a user-friendly environment. One does not
necessarily need to possess detailed computer knowledge to complete transactions
through internet banking. The availability of a user-friendly demo version of the site as
well as on-line help means that even first time users are able to use the facility. The
entire mechanism involved in Internet banking is outlined below:

1. Access the Bank‘s website

2. Click on the option which provides Internet Banking
3. Enter the User-ID, Password/PIN
4. Perform the requisite transactions
5. Logout

12
1.6 VARIOUS TYPES OF E-BANKING

A. INTERNET BANKING

Internet Banking lets you handle many banking transactions via your personal
computer. For instance, you may use your computer to view your account balance,
request transfers between accounts, and pay bills electronically. Internet banking
system and method in which a personal computer is connected by a network service
provider directly to a host computer system of a bank such that customer service
requests can be processed automatically without need for intervention by customer
service representatives. The system distinguishing between those customer service
requests which are capable of automated fulfilment and those requests which
require handling by a customer service representative. The system is integrated with
the host computer system of the bank so that the remote banking customer can
access other automated services of the bank. The method of the invention includes
the steps of inputting a customer banking request from among a menu of banking
requests at a remote personnel computer; transmitting the banking requests to a host
computer over a network; receiving the request at the host computer; identifying
the type of customer banking request received; automatic logging of the service
request, comparing the received request to a stored table of request types, each of
the request types having an attribute to indicate whether the request type is capable
of being fulfilled by a customer service representative or by an automated system;
and, depending upon the attribute, directing the request either to a queue for
handling by a customer service representative or to a queue for processing by an
automated system.

B. AUTOMATED TELLER MACHINE (ATM)

An automated teller machine or automatic teller machine (ATM) is an electronic

computerized telecommunications device that allows a financial institution's
customers to directly use a secure method of communication to access their bank
accounts, order or make cash withdrawals and check their account balances without
the need for a human bank teller. Many ATMs also allow people to deposit cash or

13
cheques, transfer money between their bank accounts, top up their mobile phones'
pre-paid accounts or even buy postage stamps.

On most modern ATMs, the customer identifies him or herself by inserting a plastic
card with a magnetic stripe or a plastic smartcard with a chip, which contains his or
her account number. The customer then verifies their identity by entering a pass
code, often referred to as a PIN (Personal Identification Number) of four or more
digits. Upon successful entry of the PIN, the customer may perform a transaction.

C. CREDIT CARDS/DEBIT CARDS

The Credit Card holder is empowered to spend wherever and whenever he wants
with his Credit Card within the limits fixed by his bank. Credit Card is a post-paid
card. Debit Card, on the other hand, is a prepaid card with some stored value. Every
time a person uses this card, the Internet Banking house gets money transferred to
its account from the bank of the buyer. The buyers account is debited with the exact
amount of purchases. An individual has to open an account with the issuing bank
which gives debit card with a Personal Identification Number (PIN).

When he makes a purchase, he enters his PIN on shops PIN pad. When the card is
slurped through the electronic terminal, it dials the acquiring bank system- either
Master Card or VISA that validates the PIN and finds out from the issuing bank
whether to accept or decline the transactions. The customer can never overspend
because the system rejects any transaction which exceeds the balance in his account.

D. TELE BANKING

Undertaking a host of banking related services including financial transactions from

the convenience of customers chosen place anywhere across the GLOBE and any
time of date and night has now been made possible by introducing on-line
Telebanking services. By dialling the given Telebanking number through a landline
or a mobile from anywhere, the customer can access his account and by following
the user-friendly menu, entire banking can be done through Interactive Voice
Response (IVR) system. With sufficient numbers of hunting lines made available,

14
customer call will hardly fail. The system is bi-lingual and has following facilities
offered

 Balance inquiry and transaction inquiry in all

 Inquiry of all term deposit account
 Statement of account by Fax, e-mail or ordinary mail.
 Cheque book request
 Stop payment which is on-line and instantaneous
 Transfer of funds with CBS which is automatic and instantaneous
 Utility Bill Payments
 Renewal of term deposit which is automatic and instantaneous

E. SMART CARD

Banks are adding chips to their current magnetic stripe cards to enhance security
and offer new service, called Smart Cards. Smart Cards allow thousands of times
of information storable on magnetic stripe cards. In addition, these cards are highly
secure, more reliable and perform multiple functions. They hold a large amount of
personal information, from medical and health history to personal banking and
personal preferences.

F. E-CHEQUE
 An e-Cheque is the electronic version or representation of paper cheque.
 It can now be used in place of paper cheques to do any and all remote
transactions.
 An E-cheque work the same way a cheque does, the cheque writer "writes"
the e-Cheque using one of many types of electronic devices and "gives" the
e-cheque to the payee electronically. The payee "deposits" the Electronic
Cheque receives credit, and the payee's bank "clears" the e-Cheque to the
paying bank. The paying bank validates the e-Cheque and then "charges"
the check writer's account for the check.

15
G. MOBILE BANKING

Mobile banking is a term used for performing balance checks, account transactions,
payments, credit applications and other banking transactions through a mobile
device such as a mobile or Personal Digital Assistant. The earliest mobile banking
services were offered over SMS. With the introduction of the first primitive smart
phones with WAP support enabling the use of the mobile web in 1999, the first
European banks started to offer mobile banking on this platform to their customers.

F. NEFT/RTGS

NEFT means national electronic fund transfer system and RTGS means Real
Time Gross Settlement System which enables an effective service, economical
and reliable system of transfer of funds from bank to bank as well as from
remitter’s account in a particular bank to beneficiary’s account in another bank
across the country. IT is useful to customers to transfer funds from one bank branch
to another branch and also another bank.

16
1.7 SALIENT FEATURES OF INTERNET BANKING

Online banking solutions have many features and capabilities in common, but
traditionally also have some that are application specific.

The salient features of Internet Banking in India enlisted below:

 Easily adoptable by customers.

 Easy to deploy and maintains.
 Cost effective solution.
 Enables the bank to reach its customers on the net.
 Reduce rush at the counters of the bank.
 Enables the customers of the bank to access information from anywhere and at
any time.
 Balance and transaction history search.
 Transaction history export.
 Order new statements.
 Mobile banking.
 Transfers.
 Pay bills with BPAY
 Receive bills online with BPAY view
 Pay anyone payments.
 Multi payments
 SMS banking services

A feature commonly unique to Internet banking is Personal financial management

support, such as importing data into personal accounting software. Some online
banking platforms support account aggregation to allow the customers to monitor all of
their accounts in one place whether they are with their main bank or with other
institutions.

17
1.8 ROLE AND SIGNIFICANCE OF INTERNET BANKING

Internet banking has transformed the financial industry. Banking customers can
perform most transactions by themselves on their own computer at hours that work for
them. No longer do customers have to wait in lines at the bank or rush to get to their
bank before it closes. They can withdraw cash, perform transfers and make payments
with the click of a mouse.

Internet banking is convenient for those who are working from home, have limited time
or want to keep track of their finances 24 hours a day. Internet banking allows account
holders to transfer funds, pay bills, keep a more accurate balance ledger, and report
fraudulent transactions and more. Anyone who has a laptop or desktop computer with
Internet access may do their banking from anywhere in the world.

There is a potential for identity theft or fraud when consumers use Internet banking.
Financial institutions have software programs in place to deter criminal activity.
Account holders can protect themselves by using a firewall on their own computers.
Financial institutions prefer online banking because it reduces manpower, attracts
consumers and makes financial reporting easier. Consumers can enjoy the benefits of
banking at a time and place of their choosing. Internet banking is a fact of life for many
individuals today with a busy lifestyle. Some individuals will have a brick and mortar
bank that offers Internet banking in addition to going to the brick and mortar location.
Other banks exist only on the Internet that does not have a physical location.

Computers were originally destined for a minor role in banks, primarily intended to
facilitate accounting transactions. Subsequently, once its superiority was firmly
established, it grew in status as a tool for management information and a host of other
inventions. Although the accounting aspect is still quite important and relevant, IT has
a far greater role to play to day to day banking operations, especially in decision making
process. Further, facilities like ATM, Anywhere Banking, Internet as well as Mobile
Banking have been increasing their presence. It has, to be conceded that ‘Information
Technology’ is not the end in itself, but is useful tool in the hands of the management
to leverage business prospects in its favour and enhance efficiency.

18
Banks now have come under great pressure to reduce operational costs to safeguard
their bottom lines. With banking tuning more and more customer-centric with every
passing day, technology as an enabler has helped banks to launch a whole array of
customer-centric products such as ATMs, Debit Cards, 24 hour Anywhere Banking.
Customer Relations Management is now a very potential concept. Internet Banking also
has a role to play in ensuring a fair return to shareholders, by facilitating in ensuring
greater profits to the banking sector. The recent emerging trends in self-service
channels, namely ATM,s, Call-centres, Internet and Mobile Banking would increase
the use of E-banking as this offer the twin benefit i.e. convenience to the customers and
reduction and cost of operation to the banks. The popularity of internet banking likely
depends upon inculcating in customers about their security and personal privacy of their
money and assets.

19
1.9 ADVANTAGES OF INTERNET BANKING

As per the Internet and Mobile Association of India's report on online banking 2006,
"There are many advantages of online banking. It is convenient, it isn't bound by
operational timings, there are no geographical barriers and the services can be offered
at a very low cost."

Through Internet banking, you can check your transactions at any time of the day, and
as many times as you want to. Where in a traditional method, you get quarterly
statements from the bank. If the fund transfer has to be made outstation, where the bank
does not have a branch, the bank would demand outstation charges. Whereas with the
help of online banking, it will be absolutely free for you.

24/7 availability of banking services and flexibility are the acknowledged advantages
of online banking. Better interest rates on CDs and savings accounts that are opened
online, wider array of financial products and services for customers are other attractive
features of online banking. The advantages of Internet banking are obvious. Business
people can access their personal and business account information while saving a trip
to the bank. You can check your balance whenever you need to, even if the bank is
closed. Not only that, but you can pay your bills online as well, which saves both time
and money on postage.

Another advantage of Internet banking is the ability to easily compare services offered
by different banks. You can buy financial products and apply for loans online, and in
doing so, you can compare your options to ensure that you get the best possible services.
You can even buy insurance online through Internet banking services. Stocks and bonds
and other investments can be managed with online banking from your home or office
independent of a financial intermediary like a stockbroker.

 Convenience:
Internet banking's major benefit to account holders is convenience. It allows an
account holder to monitor usage of his account and perform basic transactions
online for his banking account. From the privacy of your home, you can transfer
funds, check your bank balance and pay your bills at any time of the day or
night.

20
 Scheduling Payments:
You can schedule a transaction today but delay the processing until a later date.
This enables you to pay your bills in once without the money immediately
leaving your account.
 Learning Curve:
Many people feel uncomfortable with trying something new, and they feel
nervous about working through a learning curve when their money is involved.
 Paperless:
Online banking is paperless. Paperless banking is environmentally friendly, but
many people feel more comfortable having a paper trail when they pay their
bills.
 An online account is simple to open and easy to operate.
 It's convenient, because you can easily pay your bills and transfer your funds
between accounts from nearly anywhere in the world.
 You do not have to stand in a queue to pay off your bills. Also you do not have
to keep receipts of all of your bills, as you can now easily view your
transactions.
 It is available all the time. You can perform your tasks from anywhere and at
any time, even at night or on holidays when the bank is closed. The only thing
you need to have is an active internet connection.
 Fast and Efficient:
Funds get transferred from one account to the other very fast. You can also
manage several accounts easily through internet banking.
 You can keep an eye on your transactions and account balance all the time.
 It's a great medium for the banks to endorse their products and services.
 More online services include loans and investment options.
 Low Cost Banking Service:
Internet banking reduce enable to reduce operational costs with better quality of
services. It provides convenience with high customer service at lower rate. The
Bank charges minimal amount for operations which reflect that the e-banking
services are reasonable and efficient.

21
 Low Interest Rates:
Internet banking provides low interest rate on mortgage loans than banks. The
operational cost is also low which helps to saving amount that is beneficial for
the customers. There are various other facilities such as no minimum balance
account which helps to maintain account with zero balance. It increases total
disposable income of the consumers without even worry about maintaining
minimum balance.
 Benefits and Rewards:
A lot of online banks offer more benefits and rewards to their customers that
not only benefit the bank but also benefit their customers. Online banks are
willing to offer higher interest rates and better transfer services to their
customers who regularly use online banking. This happens partly due to the fact
that the banks have to bear reduced costs when serving online customers.
Therefore, the overall banking experience is obviously better than that of
visiting a physical bank branch and handling the same transaction.
 Notifications and Alerts:
Customers are instantly alerted or notified about new changes in the system.
From changes in the policy to logins from new devices, customers get instant
notifications and alerts. However, if you’re associated with a real bank, you
would probably get a text alert or a customer service agent will call you to notify
about major changes. Chances are, you’re missing out on a lot of changes.
Banks also endorse new products, services and schemes like new investment
options, changes in the loan policies, etc. to online customers first.
 Security:
With internet banking, you can always monitor your account activities. This not
only serves as a history of all the transactions but also helps you identify threats
and suspicious activities before any severe damage can be done to your account.
Online accounts are protected with encryption software that ensures complete
safety to the user. Alerts related to passwords and digital signatures are sent
periodically to maintain the security of the account.

22
 Lesser Limitations:
Traditional banks have several constraints like operating hours, the physical
location of the bank branch, holidays, etc. You don’t have to wonder if it’s a
holiday with online banking, or what time is it to perform a transaction. Be it
Sunday or the middle of the night and you will still be able to do everything
(and even more) through their app or website as its available twenty-four hours
a day, throughout the year.
 More Features:
Apart from being flexible, some banks go out of their way to satisfy their
customers by not penalizing on withdrawals on the certificate of deposits, letting
customers maintain accounts with no minimum balance, etc. Moreover, banks
generally offer more offers and discounts on credit and debit cards used by
customers who have online accounts.
 Better Customer Service:
Banking websites and apps come with customized web pages to solve customer
queries and often have a dedicated ‘Frequently Asked Question’ (FAQs) section
that helps in answering common customer queries. You can chat with a
customer service agent or call them if you need more help. This not only saves
the time of the customers but also that of the bank employees who can shift their
focus to more important things.

23
1.10 DISADVANTAGES OF INTERNET BANKING

Internet banking or electronic banking allows customers to access their accounts at any
time from any computer or smart phone. This banking style has a lot of advantages,
including 24-hour account monitoring, the ability to bank from anywhere and fast
transactions. However, this system has some distinct disadvantages, too.

 Difficult for beginners:

Newbies often face difficulty in trying to get the hang of e-banking. Initially,
customers are scared of losing their money and are often hesitant to explore all
the options and features that are available on the website or on the app. New
users often give up and stick to traditional banking if timely assistance isn’t
provided. Understanding the usage of internet banking might be difficult at the
first. That said, there are some sites which offer a demo on how to access online
accounts (not all banks offer this). So, a person who is new to technology might
face some difficulty.
 Inconvenience:
Sure, online banks are open throughout the year but they are a serious cause of
inconvenience in certain instances. For example, if you get locked out of your
account you will be unable to perform any banking transactions. However, in a
real bank, you establish relationships with the staff, who know you on a personal
level and will be willing to assist you in such cases. You wouldn’t have to be
on the phone explaining your situation to an unknown customer service agent
which by the way, might also take several days. Also, a few online banks don’t
allow cash deposits. To deposit cash, you will be required to email a check and
transfer money from another account or bank, or use their e-check deposit
service.
 Trust and Responsibility:
Fake websites and phishing sites are common in this age of technology. Can
you really trust all websites? Is it wise to trust an online site with all your
money? What if the website folds up and all your money is gone? This wouldn’t
happen in a real bank. There is trust between the bank and their customers – you
know your money is safe with the bank – because they take responsibility for

24
 your money. Real banks are permanent and reliable while some websites are
not.

 Inability to Handle Complex Transactions:

While you can easily pay bills and transfer funds, you can’t perform complex
transactions online. When a large sum of money is involved, it is advisable to
visit a real bank and sort it out in-person rather than doing it online. Some
financial transactions also need a document verification (like buying a house)
so it is better to submit them physically than digitally.
 Financial Jargon:
Financial jargon can often get between you and your money. Knowledge is
power-or, in this case, knowledge is money. Though financial literacy can’t be
achieved overnight, it can be helped along by a grasp of the basic terms that are
commonly used by advisors, analysts, economists, and commentators.
 Security Issues:
Sure, most banks are well-reputed and established, there are times when you
face security issues. There’s always a risk of actual and/or identity theft. It’s
also possible to get unauthorized access to your account via a stolen or hacked
log-in credentials. Internet banking is completely insecure as there are many
problems related to the website and data can be hacked by the hackers. It can
leads to financial loss to the users. The financial information can also be stolen
that can also create financial loss. Security of transactions is a big issue. Your
account information might get hacked by unauthorized people over the internet.
 Technological Issues:
If you don’t have a decent connection or there are bugs in the software, or say,
there is a power cut or maybe the servers have gone down – websites are bound
to crash and you will undoubtedly face a lot of technological issues. While you
may get various types of customer service at the moment but sooner or later,
you will get frustrated. However, someone is always around to help you in a
real bank. You cannot have access to online banking if you don’t have an
internet connection; thus, without the availability of internet access, it may not
be useful.

25
 Virtual Assistance:
When you need assistance during e-banking, your concern is generally assigned
to an anonymous customer service agent who is unlikely to know you. Wouldn’t
you rather talk to a personal banker when you’re in a fix than an unknown agent?
A personal banker will also know your transaction history, your personal details
and will be in a better position to assist you.
 Complicated Websites:
Some websites look like a page straight from a super complex scientific
experiment. Written in a secret code language with bizarre fonts and colours. I
mean, sure some websites are simple and you can get all the things done in a
jiffy. But some websites are downright complicated and confusing. With pop-
ups, errors, links, and interlinks, redirections to probably a million pages, it gets
really difficult to understand.
 Other Limitations:
E-banking isn’t for everyone. Illiterate and the elderly cannot use online
banking. Neither can an individual access their accounts if they don’t have an
internet connection.

26
1.11 CHALLENGES FACED BY BANKS AND REGULATORS

E-banking is a generic term for delivery of banking services and products through
electronic channels, such as the telephone, the internet, the cell phone, etc. The concept
and scope of E-banking is still evolving. It facilitates an effective payment and
accounting system thereby, enhancing the speed of delivery of banking services
considerably. Several initiatives taken by the government of India, as well as the
Reserve Bank of India (RBI), have facilitated the development of E-banking in India.
The government of India enacted the IT Act, 2000, which provides legal recognition to
electronic transactions and other means of electronic commerce. The RBI has been
preparing to upgrade itself as a regulator and supervisor of the technologically
dominated financial system. It issued guidelines on risks and control in computer and
telecommunication system to all banks, advising them to evaluate the risks inherent in
the systems and put in place adequate control mechanisms to address these risks. The
existing regulatory framework over banks has also been extended to E-banking. It
covers various issues that fall within the framework of technology, security standards,
and legal and regulatory issues. While E-banking has improved efficiency and
convenience, it has also posed several challenges to the regulators and supervisors.

 Difficulties in implementation of global technology:

There is a need to have an adequate level of infrastructure and human capacity
building before the developing countries can adopt global technology for their
local requirements. In developing countries, many consumers either do not trust
or do not access to the necessary infrastructure to be able to process e-payments.
 Confidentiality, integrity and authentication:
These three are the very important features of the banking sector and were very
successfully managed all over the world before the coming of internet.
Communication across an open and thus insecure channel such as the internet
might not be the best base for bank-client relations as trust might partially be
lost.
 Customer Satisfaction:
In today’s competitive world, satisfaction of customers is a major challenge for
the banking sector because customers have alternative choices in various types
of services provided by banks.

27
 Availability of Personnel services:
In present times, banks are to provide several services like social banking with
financial possibilities, selective up gradation, computerization and innovative
mechanization, better customer services, effective managerial culture, internal
supervision and control, adequate profitability, strong organization culture etc.
Therefore, banks must be able to provide complete personnel service to the
customers who come with expectations.
 Competition:
The nationalized banks and commercial banks have the competition from
foreign and new private sector banks. Competition in banking sector brings
various challenges before the banks such as product positioning, innovative
ideas and channels, new market trends, cross selling ad at managerial and
organizational part this system needs to be manage, assets and contain risk.
Banks are restricting their administrative folio by converting manpower into
machine power i.e. banks are decreasing manual powers and getting maximum
work done through machine power. Skilled and specialized man power is to be
utilized and result oriented targeted staff will be appointed.
 Handling Technology:
Developing or acquiring the right technology, deploying it optimally and then
leveraging it to the maximum extent is essential to achieve and maintain high
service and efficiency standards while remaining cost effective and delivering
sustainable return to shareholders. Early adopters of technology acquire
significant competitive advances Managing technology is therefore, a key
challenge for the Indian banking sector.
 Security Risk:
The problem related to the security has become one of the major concerns for
banks. A large group of customers refuses to opt for e-banking facilities due to
uncertainty and security concerns. Most of internet users are not using internet
banking in India because of security concerns. So it’s a big challenge for
marketers and makes consumers satisfied regarding their security concerns,
which may further increase the online banking use.

28
 Privacy risk:
The risk of disclosing private information & fear of identity theft is one of the
major factors that inhibit the consumers while opting for internet banking
services. Most of the consumers believe that using online banking services make
them vulnerable to identity theft.
 The Trust Factor:
Trust is the biggest hurdle to online banking for most of the customers.
Conventional banking is preferred by the customers because of lack of trust on
the online security. They have a perception that online transaction is risky due
to which frauds can take place.
 Customer Awareness:
Awareness among consumers about the e-banking facilities and procedures is
still at lower side in Indian scenario. Banks are not able to disseminate proper
information about the use, benefits and facility of internet banking. Less
awareness of new technologies and their benefits is among one of the most
ranked barrier in the development of e-banking.
 Less Internet Penetration in Indian Context:
The internet banking channel has evolved over the years. The knowledge and
availability of internet is still a one of the biggest challenges that prevails in
Indian context. So the penetration of internet and knowledge related to internet
are major hurdles.

29
1.12 PROSPECTS OF INTERNET BANKING IN INDIA

Despite of various problems that are prevailing in context with e-banking in India, the
following opportunities are motivating the marketers for implementing e-banking:

 Untapped Rural Markets:

Contributing to 70% of the total population in India is a largely untapped market
for banking sector. In all urban areas banking services entered but only few big
villages have the banks entered. So that the banks must reach in remaining all
villages because majority of Indian still living in rural areas.
 Multiple Channels:
Banks can offer so many channels to access their banking and other services
such as ATM, Local branches, Telephone/mobile banking, video banking etc.
to increase the banking business.
 Worthy Customer Service:
Worthy customer services are the best brand ambassador for any bank for
growing its business. Every engagement with customer is an opportunity to
develop a customer faith in the bank. While increasing competition customer
services has become the backbone for judging the performance of banks.
 Internet Banking:
It is clear that online finance will pick up and there will be increasing
convergence in terms of product offerings banking services, share trading,
insurance, loans, based on the data warehousing and data mining technologies.
Anytime anywhere banking will become common and will have to upscale, such
up scaling could include banks launching separate internet banking services
apart from traditional banking services.
 Retail Lending:
Recently banks have adopted customer segmentation which has helped in
customizing their product folios well. Thus retail lending has become a focus
area particularly in respect of financing of consumer durables, housing,
automobiles etc., Retail lending has also helped in risks dispersal and in
enhancing the earnings of banks with better recovery rates.

30
 Indian Customers:
The growing Indian banking sector with its strong home country linkages, seek
a unique combination of Indian ethnicity and global standards that offers a
valuable nice opportunities for Indian banks. The biggest opportunity for the
Indian banking sector today is the Indian costumers. Demographic shifts in
terms of income level and cultural shifts in terms of life style aspirations are
changing the profile of the Indian customer. This is and will be a key driver of
economic growth going forward.
 Increasing Internet Users & Computer Literacy:
To use internet banking it is very important or initial requirement that people
should have knowledge about internet technology so that they can easily adopt
the internet banking services. The fast increasing internet users in India can be
a very big opportunity and banking industry should encash this opportunity to
attract more internet users to adopt internet banking services.
 Initiatives taken by government agencies for financial literacy:
Financial literacy and education play a crucial role in financial inclusion, and
inclusive growth. A study reported that there is significant impact of financial
literacy on use of internet banking, If customers are not financially educated
they will simply avoid using new online services and not change their traditional
way of banking, thus banks will not be able to convert users into their new
online banking strategies. Various government institutions like RBI, SEBI,
IRDA and various other market players have taken a number of initiatives on
financial education. They have prepared a school curriculum along with various
topics including internet banking, banking product and services, net banking to
educate the school students, college students, working executives, middle
income group, home makers, retired personnel, self-help groups etc.
 Competitive Advantage:
The benefit of adopting e-banking provides a competitive advantage to the
banks over other players. The implementation of e-banking is beneficial for
bank in many ways as it reduces cost to banks , improves customer relation ,
increases the geographical reach of the bank , etc. The benefits of e- banking
have become opportunities for the banks to manage their banking business in a
better way.

31
1.13 IMPACT OF COVID-19 ON INTERNET BANKING

The novel coronavirus outbreak has caused a crisis of a magnitude that has never known
to have happened before. It has brought a considerable change in the lives of people
who are affected by it. No one needs to be a scholar to understand that this pandemic
would be leading us to a significant change in the way we live and conduct our daily
businesses of life. It would not be wrong to assume that we could be intruding into a
lifestyle that would be very different from how we lived and conducted ourselves
before; having said that one of the areas that we may observe a sea of change is “Digital
Banking”. Among all the things the Covid-19 may have a transforming impact on
digital banking.

 How does Covid-19 impact on digital banking affect consumer behaviour?

We may see a long-lasting change in the customer’s digital behaviour due to
this pandemic. Due to the enormous crisis, we find ourselves in; there could be
a rise in the online banking activity among the people which would be a definite
change from the earlier tradition of frequent visitations to banks. The customers
may be forced to adopt the digital way of banking due to covid-19 impact, which
earlier people would be reluctant to use. The more people use this form of
banking; they will understand the convenience it brings and is less likely to
continue their visits to the bank branches. We may also see a considerable
acceleration in the digital trends as the importance of digital banking would
surge as an impact on digital banking due to the Covid-19.

 How are banks responding to the Impact on digital banking?

As per the health recommendations, the most common way of containing the
spread of coronavirus is by avoiding personal contact. This implies that people
are required to engage less physically and as much as possible, spend more time
at homes. In such a situation, due to the impact on digital banking, the banks in
various countries have reduced their opening hours and have advised more and
more people to use the facility of online banking. Banks have also sent out some
advisories informing their customers about the importance and benefits attached
to online banking. They have also shared tutorials on how to use digital banking
and have expanded the various forms of transactions that can be carried out by
the customers remotely.
32
 What are the areas that will be affected due to the Covid-19 impact on
digital banking?
Due to the social distancing norms amid coronavirus physical banking
distribution would subside and digital customer experience would be the
fundamental area of differentiation and competition for financial institutions.
The financial institutions would be looking to provide customer-based and
straightforward banking experiences. Excellent digital customer experience will
bring more and more customers to the digital landscape. Customers who are
content with the digital experience are more likely to open new bank accounts
with their existing banks. They may be less sensitive to price and may generate
more positive oral words.
We may see the pandemic stimulating a sweeping and systematic change of high
impact digital journeys in the banks like on boarding of customers and
origination of products that may combine to deliver an excellent digital
experience to the customers. The digital banking apps may also start providing
a user-friendly and straightforward user experience in the future which will, in
turn, benefit in reducing barriers of digital and financial literacy. As a result,
expect the doors of digital banking to be opened to people who use technology
less.

 Shift from servicing to engagement

Another impact on digital banking could be that we may see a definite shift from
servicing to engagement. When the present crisis situation in the country
normalizes, the customers will be seen spending fewer times at bank branches.
So what does it imply? It implies that the banks would need to promote and sell
more and more products through digital banking to compensate for fewer sales
through its branches. There shall be the virtual business model of selling and
marketing all over the world, and the banks would stop using purely
transactional digital apps which include checking balances and making
payments and transfers and start using apps enabling deeper customer
engagement.
The banks may be required to develop digital marketing and personalization
capabilities equalling those of e-commerce platforms like Google and use an

33
 exceptional amount of data in order to understand the financial needs of their
customers. As per the Harvard Business Review, one of the most apparent
Covid-19 impacts on digital banking would be the insertion of data-enabled
services into many aspects of life than before.
The banks can implement sophisticated data analytics tools along with real-time
campaign management that would help the banks translate the data of their
customers into meaningful insight and can act on such idea by providing
recommendations at the right place and time. It will help in revenue generation
and engagement, which would be crucial for the financial institutions after the
pandemic subsides.

 Use of next-generation technologies

It may be expected that the banks, in the future, would be dealing with an
accelerated pace of change in the digital market. After the pandemic, digital
banking distribution may be emphasized more due to the fact that the magnitude
of competition and innovation in the digital banking among the financial
institutions is likely to gain pace. It may require from the financial institutions
to acclimatize to changes and uncertainties at a steady pace, thereby pushing the
technology infrastructure massively.
The customer needs may see a profound change and the banks to cope with
these changes are likely to move away from the legacy technologies to adopting
fast and scalable digital technologies such as Artificial Intelligence and cloud
platforms. These technologies are more efficient and can significantly reduce
the costs of processing and storage. The next-generation technologies are
capable of handling enormous amounts of queries from customers and clients.
The pace of such acceleration in the digital competition would allow the banks
to come up with new and updated enhancements and features through their
digital banking apps and further implement them in a quick and safe way. The
banks may also adopt software development techniques like agile and
continuous delivery which will play a vital role in allowing the financial
institutions to reduce their time to market and provide new digital services to
their customers with a view to gain a competitive advantage.

34
 Challenges arising due to the Covid 19 impact on digital banking
There are some technical as well as operational challenges that are faced by the
customers and banking systems when faced with such a pandemic and its impact
on digital banking. As we all know, a sizeable Indian population is unbanked
that means without access to a bank account. So the main challenge for the
banking sector firstly would be to embrace new technological changes
themselves and thereafter introduce it to the general public. Considering a large
number of people in the rural areas maybe not accustomed to digital banking
introducing them to such new technology would not be an easy task.
The customers look for safety as the primary aspect in any situation, and India’s
banking sector has witnessed a lot of cyber frauds that have caused huge losses.
Therefore with more people switching to digital banking post-COVID 19, the
banks must devise and implement stringent measures to curb these and provide
a secure framework and system.

35
CHAPTER 2: RESEARCH METHODOLOGY

The system of collecting data for research projects is known as research methodology.

Formulating of research questions along with sampling whether probable or non-

probable is followed by measurement that includes surveys and scaling. This is
followed by research design, which may be either experimental or quasi-experimental.
The last two stages are data analysis and finally writing the research paper, which is
organized carefully into graphs and tables so that only important relevant data is shown.
Research Methodology provides various steps that can be adopted by the researcher in
studying his research problems.

The Research Methodology is a way to systematically solve the research problem. It

may be understood as a science of Studying how research is done scientifically. The
scope of research methodology is wider than that of research methods. When we talk
of research methodology we not only talk of research methods but also consider the
logic behind the methods we use in the context of our research study and explain why
we are using a particular method or technique.

2.1 SCOPE OF THE STUDY

Nowadays, internet banking has become a necessity and forms a part of life. Therefore,
there is a significant scope to examine the factors influence the use of internet banking
in India. Traditional branch based retail banking remains the most wide spread method
for banking transaction. However the internet technology rapidly changing the way of
designing and delivering the personal services. Now Commercial banking are
introduced internet based e-banking system to improve their operations and to reduce
the cost. Despite all their efforts aimed at developing better and easier internet banking
system, these systems remain unnoticed by the customer. Advertisers and marketers
have been trying to understand the customer perception towards internet banking. This
study tries to analyse the factors which influence the use of internet banking in India.
The scope of this research has a very good future. Therefore there is a need to
understand users’ acceptance of internet banking and a need to identify the factors that
can affect their intention to use the Internet Banking.

36
2.2 OBJECTIVES OF THE STUDY

Primary Objective:

 To study the customer perception towards internet banking in India.

Secondary Objective:

● To explore the factors that affect customer perception towards internet banking.

● To examine whether there is any relationship with the demographic variable and
respondent’s perception about internet banking.

● To examine whether the user and non-user perception differs.

● To study the problems faced by customers while using internet banking.

● To measure the satisfaction level of people towards internet banking.

● To examine the main transactions carried out by users through internet banking.

● To understand whether their banks educate them about internet banking.

● To examine whether the user feels safe sharing their data online.

2.3 RESEARCH DESIGN

Research Design is the basis framework which provides guidelines for the rest of the
research process. It is a map or blueprint according to which the research is to be
conducted. A research design is purely and simply the framework or plan for the study
that guides the collection and analysis of data. The present study was conducted to
understand the customer perception towards internet banking in India.

Research design is the conceptual structure within which research is conducted; it

constitutes the blueprint for the collection, measurement and analysis of data .For the
present study, exploratory study and descriptive study has been followed.

Exploratory Study:

An exploratory study is undertaken when not much is known about the situation at
hand, or no information is available on how similar problems or research issues have
been solved in the past. Explorative studies are undertaken to better comprehend the

37
nature of the problem since very few studies might have been conducted in that area.
Explorative studies are also necessary when some facts are known, but more
information is needed for developing a viable theoretical framework.

Descriptive Study:

A descriptive study is undertaken in order to ascertain and be able to describe the

characteristics of the variables of interest in a situation. The goal of a descriptive study
is to offer to the researcher a profile or to describe relevant aspects of the phenomenon
of interest from an individual, organizational, industry oriented or other perspective.

2.4 BASIS OF STUDY

The research project on “ANALYTICAL STUDY ON INTERNET BANKING

SERVICES IN INDIA” is based on the following:

 Primary Data:
Primary data are those collected by the investigator himself for the first time
and thus they are original in character. They are collected for a particular
purpose. Since they are collected for the first time for the purpose of a study it
is primary in nature.
A primary research was conducted for which questionnaire has been prepared
and data has been collected from 83 respondents with the help of a google
survey form.
 Secondary Data:
Secondary Data are those which have been collected by some other person for
his purpose and published. So a researcher is said to make use of secondary data
.Secondary data are usually in the shape of finished product.
The other required data has been acquired from other sources like research
journals, government publications, newspaper articles and authenticated
websites.

38
2.5 SAMPLE SIZE

 The sample size of the survey was 83 from different strata of total population.
 The respondents were ensured complete confidentiality of their opinion and
view.

2.6 DATA COLLECTED

 Data includes facts which are required to be collected to achieve the objectives
of the research project.
 The main source of information for this study is based on the data collection.
 The data collected are both primary and secondary in nature.

2.7 POPULATION

 Our sample population belongs to India.

 Our sample population belongs to all sections of all society such as different
income group, different occupation group, different age group, etc.

2.8 METHODS/TOOLS OF ANALYSIS

 Percentage Analysis
 Bar Graph
 Pie Chart
 Diagrams

2.9 LIMITATIONS FOR PRIMARY DATA

 The study is confined only to urban area in particular.

 Covering larger area for primary data collection is not possible amidst the
lockdown.
 Primary data collection solely dependent on Google form surveys.

39
 Many respondents are from the age group of 20 – 39 years. Hence, it does not
cover views of all age groups correspondently.
 The survey conducted may not be considered as comprehensive study as only
limited respondents could be contacted because of Covid – 19 situation and time
constraint.
 Objectives, the purpose of study and the questions had to be explained to the
respondents and in this context their responses may be biased.
 Some of the respondents were reluctant to give their responses.
 Only limited sample size has been considered for the study and therefore, the
conclusions drawn on this may not be a reflection of the entire population.

40
CHAPTER 3: LITERATURE REVIEW

 Rajesh Kumar Srivastava (2011) investigated that Internet banking is still at

infancy stage in the world. Many studies focused on usage of internet banking
but many factors on non-usage were overlooked. This research was carried out
to validate the conceptual model of internet banking. The causes were identified
and researched through correcting the causative factors so that internet banking
can be used by more people. The research is focused on what are the customer‘s
perceptions about internet banking and what are the drivers that drive
consumers. How consumers have accepted internet banking and how to improve
the usage rate were the focus of research area in this study. Qualitative
exploratory research using questionnaire was applied. 500 respondents were
selected for study after initial screening. They were all bank customers. The
study revealed that education, gender, income plays an important role in usage
of internet banking. Not much research has been done on these areas as they
were focused more on the acceptance of technology rather than on people. The
research corroborated the conceptual framework stating that if skills can be
upgraded there will be greater will to use internet banking by consumers.
Inhibitory factors like trust, gender, education, culture, religion, security, and
price can have minimal effect on consumer mind-set towards internet banking.
 Rao et al. (2011) identified a theoretical framework of Internet banking in India
and found that as compared to banks abroad, Indian banks offering online
services still have a long way to go. For online banking to reach a critical mass,
there has to be sufficient number of users and the sufficient infrastructure in
place. I.T. has introduced new business paradigms and is increasingly playing a
significant role in improving the services in the banking industry. Internet
banking is becoming more and more popular today, as is banking via digital
television. Beyond doubt, a substantial part of the future of banking business
lies in a banking environment that is less and less branch-based and where
customers are able to access banking services remotely. The automated service
quality research has been limited to relationship management rather than service
quality or its acceptance by consumer.
 Corrocher (2011) investigated the determinants of the Internet technology
adoption for the provision of banking services in the Italian context and also

41
 studied the relationship between the Internet banking and the traditional banking
activity, in order to understand if these two systems of financial services
delivery are perceived as substitutes or complements by the banks. According
to the results of the empirical analysis, banks seem to perceive Internet banking
as a substitute for the existing branching structure, although there is also some
evidence that banks providing innovative financial services are more inclined
to adopt the innovation than traditional banks. Technology has had a remarkable
influence on the growth of service delivery portions.
 Prof.K.T. Geetha1 & V.Malarvizhi (2011) had investigated that the factors
which are affecting the acceptance of e-banking services among the customers
and also indicates level of concern regarding security and privacy issues in
Indian context. Primary data was collected from 200 respondents through a
structured questionnaire. Descriptive statistics was used to explain demographic
profile of respondents and Factor and Regression analyses were used to know
the factors affecting e-banking services among customer in India. The finding
depicts many factors like security and privacy and awareness level increased the
acceptance of e-banking services among Indian customers. The finding shows
that if banks provide them necessary guidance and ensure safety of their
accounts, customers are willing to adopt e-banking.
 R.GEETHA(2011) had explained that the Online banking or Internet banking
allows the customers to conduct banking, financial and insurance transactions
on a secure and protected website operated by their retail or virtual bank.
Normally the customer would have to make a trip to the bank to do these
transactions, but with the advent of internet banking the ease of account
operation for customers has gone up. All the customer requires is a PC with an
internet connection and internet banking login id and password to use this
facility.
 Sankaran, Vidya (2010) aim was to find out the customers perception to
internet banking and also tries to examine whether there is any relation between
various demographic variables and customers perception about internet
banking. The sample consisted of 200 bank customers, 54 from State Bank of
India, 44 from ICICI, 27 from HDFC, 19 from other private sector banks, and
56 from other public sector banks. The convenience sampling technique was

42
 adopted for selecting the respondents. Tool for measuring the variables was
developed by the researcher with the help of previous studies. A questionnaire
was developed on a five point Likert scale. The reliability and validity of the
questionnaire was assessed and found to be 0.7501.
 Malhotra, Pooja & Singh, B. (2010) investigates present status of Internet
banking in India and the extent of Internet banking services offered by Internet
banks. In addition, it seeks to examine the factors affecting the extent of Internet
banking services. The data for this study are based on a survey of bank websites
explored during July 2009. The sample consists of 82 banks operating in India.
Multiple regression technique is employed to explore the determinants of the
extent of Internet banking services. The results show that the private and foreign
Internet banks have performed well in offering a wider range and more
advanced services of Internet banking in comparison with public sector banks.
Among the determinants affecting the extent of Internet banking services, size
of the bank, experience of the bank in offering Internet banking financing
pattern and ownership of the bank are found to be significant. The primary
limitation of the study is the scope and size of its sample as well as other
variables (e.g. market, environmental, regulatory etc) which may have an effect
on the decision of the banks to offer a wide range of Internet banking services.
The purpose of the study is to help fill significant gaps in knowledge about the
Internet banking landscape in India. The findings are expected to be of great use
to the government, regulators, commercial banks, and other financial
institutions, e.g. co-operative banks planning to offer Internet banking bank
customers and researchers. An understanding of the factors affecting the extent
of Internet banking services is essential both for economists studying the
determinants of growth and for the creators and producers of such technologies.
Moreover, this paper contributes to the empirical literature on diffusion of
financial innovations, particularly Internet banking in a developing country, i.e.
India.
 Dr. Saroj K. Datta (2010) concluded that the factors which are affecting the
acceptance of e-banking services among adult customers and also indicates
level of concern regarding security and privacy issues in Indian context. Primary
data was collected from 200 respondents, above the age of 35, through a

43
 structured questionnaire. Statistical analysis, descriptive statistics was used to
explain demographic profile of respondents and also Factor and Regression
analyses were used to know trend of internet use and factors affecting e-banking
services among adult customer in India. The finding depicts many factors like
security & privacy, trust, innovativeness, familiarity, awareness level increase
the acceptance of E Banking services among Indian customers. The finding
shows that in spite of their security and privacy concern, adult customers are
willing to adopt online banking if banks provide him necessary guidance. Based
on the results of current study, Bank‘s managers would segment the market on
the basis of age group and take their opinion and will provide them necessary
guidance regarding use of online banking.
 Polaris Software Lab (2010) had this study Polaris Software Lab Limited
(POLS.BO),a leading Financial Technology Company, launched Intellect(TM)
PRIVACY based on state-of-the-art technology and four patents filed by the
Indian Institute of Technology Madras. IndusInd Bank has become the first
bank in India to implement Intellect(TM) PRIVACY, an online and internet
banking security card, for its internet banking customers. The technology will
protect customers and banks from practically all kinds of phishing attacks, viz.
deceptive e-mail, key/screen logger, brute force/dictionary attacks and Trojans,
etc .Intellect PRIVACY uses multi factor ,dynamic authentication technology
providing for authorizing online banking transactions, in a completely secure
platform. Commenting on the innovation, Professor L S Ganesh, Coordinator
of the programmer, said, "At IIT Madras, the Department of Computer Science
and Engineering and the Department of Management Studies got particularly
interested in designing an internet security technology that is cost efficient and
easy to use in a rapidly growing e-commerce scenario, and transferring it
commercially.
 Azouzi, D. (2009) this paper aims to check if the current and prompt
technological revolution altering the whole world has crucial impacts on the
Tunisian banking sector. Particularly, this study seeks some clues on which we
can rely in order to understand the customers' behaviour regarding the adoption
of electronic banking. To achieve this purpose, an empirical research is carried
out in Tunisia and it reveals that panoply of factors is affecting the customers-

44
 attitude toward e-banking. For instance; age, gender and educational
qualifications seem to be important and they split up the group into electronic
banking adopters and traditional banking defenders and so, they have significant
influence on the customers' adoption of e-banking. Furthermore, this study
shows that despite the presidential incentives and in spite of being fully aware
of the e-baking‘s benefits, numerous respondents are still using the conventional
banking. It is worthy to mention that the fear of loss because of transactions
errors or hackers plays a significant role in alienating Tunisian customers from
online banking.
 Elizabeth Daniel (2009) concluded that the newest delivery channel to be
offered by the retail banks in many developed countries and there is wide
agreement that this channel will have a significant impact on the market. Aims
to quantify the current provision of electronic services by major retail banking
organizations in the UK and the Republic of Ireland. Additional in- sight into
the banks' adoption of this new channel is gained by exploring two areas
important in the analysis of new offerings, that is: an organization‘s approach
to innovation; and their view of the current and future markets. By use of a
mailed questionnaire, it was found that 25 per cent of the banks in the UK and
the Republic of Ireland which responded to this survey are already offering
online transactional services to consumers in their homes. The largest group of
respondents (50 per cent) is those that are currently testing or developing such
services, while just 25 per cent of the respondents were in organizations not
providing or developing such services. It is also found that the organization‘s
vision of the future, their prediction of customer acceptance, which tends to be
very low, and their organizational culture of innovation are the most important
of the suggested factors in their adoption of electronic delivery.
 Hill (2009) conducted a study concerned with identifying the characteristics of
online banking users. She mentioned that it is commonly assumed that
demographics do influence the acceptance of electronic self-service tools, such
as online banking. The result of the study was that people who use such services
are young, trendy and high earning. They actively seek out online banking tools,
and they want to conduct all transactions through the same channel.

45
 B. Dizon, J.A. (2009) have founded that "E- Baking‘s appeal is primarily its
convenience. Clients now a day‘s want instant results; they don't want to wait
anymore," said Francisco M. Caparros, Jr., senior vice-president of Asia United
Bank and president of Banc Net. It's also turned out to be a more efficient way
to process transactions, as e-banking does away with most of the paperwork that
clients have to accomplish. "A lot of people don't like filling forms," Mr.
Caparros added. "Online banking, in particular, relies on usernames and
passwords which need to be protected," said Ferdinand G. La Chica, first vice-
president and marketing group head for Sterling Bank of Asia. These anti- theft
barriers are at times supplemented by transaction passwords and "tokens", often
a key chain-like device that is issued to the client and generates random, one-
time passwords to enable him to log into his account online. Last year, the Rural
Bank Association of the Philippines announced that its members are looking to
appoint local merchants like sari-sari stores as third party agents where
consumers can open new accounts and make large payments. Such informal
outlets will enable banks to reach out to small-income businesses and
individuals, particularly those in the agrarian sector, most of who are based
outside the city centre.
 Uppal, R.K. & Chawla, R. (2009) highlights the customer perception
regarding e-banking services. A survey of 1,200 respondents was conducted in
Ludhiana district, Punjab. The respondents were equally divided among three
bank groups namely, public sector, private sector and foreign banks. The present
study investigates the perceptions of the bank customers regarding necessity of
e-banking services, quality of e-banking services, bank frauds, future of e
banking, preference of bank customers regarding banks, comparative study of
banking services in various bank groups, preferences regarding use of e-
channels and problems faced by e-bank customers. The major finding of this
study is that customers of all bank groups are interested in e-banking services,
but at the same time are facing problems like, inadequate knowledge, poor
network, lack of infrastructure, unsuitable location, misuse of ATM cards and
difficulty to open an account. Keeping in mind these problems faced by bank
customers, this paper frames some strategies like customer education,
seminars/meetings, proper network and infrastructure facilities, online shopping

46
 facilities, proper working and installation of ATM machines, etc., to enhance e-
banking services. Majority of professionals and business class customers as well
as highly educated and less educated customers also feel that e-banking has
improved the quality of customer services in banks.
 Tero pikkarainin (2008) concluded that advances in electronic banking
technology have created novel ways of handling daily banking affairs especially
via the online banking channel. The acceptance of online banking services has
been rapid in many parts of the world and in the leading e banking countries the
number of e banking contracts has exceeded 50 percent. Investigates online
banking acceptance in the light of traditional technology acceptance model
(TAM), which is leveraged into the online environment. On the basis of the
focus group interviewed with banking professionals, TAM literature and
banking studies we develop a model indicating online banking acceptance
among private banking customers in Finland. The model was tested with the
survey sample of 268 respondents. The finding of the study indicates that
perceived usefulness and information on online banking on the web site were
the main factors influencing online banking acceptance.
 Reeti, Sanjay, and Malhotra, A. (2008) examined about the Customers’
perspectives regarding e-banking in an emerging economy. So that, the author
determining various factors affecting customer perception and attitude towards
and satisfaction with e-banking is an essential part of a bank's strategy
formulation process in an emerging economy like India. To gain this
understanding in respect of Indian customers, the study was conducted on
respondents taken from the northern part of India. The major findings depict
that customers are influenced in their usage of e-banking services by the kind
of account they hold, their age and profession, attach highest degree of
usefulness to balance enquiry service among e-banking services, consider
security &trust most important in affecting their satisfaction level and find slow
transaction speed the most frequently faced problem while using e-banking.
 Hsun, K.S. (2008), this study considers the coherence of the financial service
sector and adopts different observational variables to identify innovation capital
(training and R&D density) and process capital (IT system sufficiency). The
results show that human capital has a direct impact on both innovation capital

47
 and process capital, which in turn affect customer capital; while finally,
customer capital affects business performance. In addition, there is a negative
relationship between process capital and customer capital in the financial
service sector. It suggests that in the financial service sector, customer
satisfaction relies on a sufficient degree of training and R&D density.
Intemperate investment on the support of e-banking operation systems may not
be a good answer.
 Malhotra, P. & Singh, B. (2007) stated that the larger banks, banks with
younger age, private ownership, and higher expenses for fixed assets, higher
deposits and lower branch intensity evidence a higher probability of adoption
of this new technology. Banks with lower market share also see the Internet
banking technology as a means to increase the market share by attracting more
and more customers through this new channel of delivery. Further, the adoption
of Internet banking by other banks increases the probability that a decision to
adopt will be made .An understanding of the factors affecting this choice is
essential both for economists studying the determinants of growth and for the
creators and producers of such technologies. From this perspective,
understanding the factors determining the adoption of technology becomes
highly relevant from the policy point of view. Moreover, the studies on the
adoption of financial innovations are related to developed markets, e.g. US or
European banking markets. Hence, this paper contributes to the empirical
literature on diffusion of financial innovations, particularly Internet banking, in
a developing country.
 Forrester Research, December (2007) Research from the GfK Group shows
that the number of online shoppers in six key European markets has risen to
31.4 percent from 27.7 percent last year. This means that 59 million Europeans
use the Internet regularly for shopping purposes. However, not only does the
number of online shoppers grow, the volume of their purchases also increases
over-proportionally. In the US, online sales are forecasted to exceed $36 billion
in 2002, and grow annually by 20.9 percent to reach $81 billion in 2006.
Europeans are spending more money online as well. For instance, Europe‘s
largest discount carrier, easy Jet Airline Co., sold $80 million more tickets
online in the six months ended March 31 than it did a year earlier Whereas

48
 combined revenues for Amazon.com’s European operations grew at more than
70 percent annually in each of the past three quarters, topping $218 million.
 Shah & Braganza (2007) indicates the Critical Success Factors in e-banking
and the author suggest in this article that the organizational factors, which are
critical to the success of e-banking, are investigated. Different pieces of
literature report different factors as key to success and generally based on
subjective, perceptual data. A synthesis of existing literature is a basis for survey
questions. The data was collected from UK based financial sector organizations
who are offering their services on electronic channels, using postal
questionnaires. The top factors found to be most critical for the success in e-
banking are: quick responsive products/services, organizational flexibility,
services expansion, systems integration and enhanced customer service. An
important lesson from this research is that organizations need to view the e-
banking initiative as a business critical area rather than just a technical issue.
They need to give attention to internal integration, which may include channels,
technology and business process integration, and improving the overall services
to their customers.
 Awamleh (2006) analyses the internet banking channels and service
preferences of educated banking consumers in the UAE and examines the
factors influencing the intention to adopt or to continue the use of internet
banking among both users and non-users of internet banking. It is shown that
although the banking sector in the UAE is a regional leader, internet banking in
the UAE is yet to be properly utilized as a real added value tool to improve
customer relationship and to attain cost advantages. The Technology
Acceptance Model (TAM) was used to identify factors influencing the intention
to adopt and continued use of internet banking customers. Data was collected
from internet banking users and potential users in the United Arab Emirates and
factor analyses and multiple regression analyses were conducted to examine the
data. Relative usefulness is introduced as one of the factors and is defined as the
degree to which a new technology is better than existing ones. There is a
significant difference between users and non-users on six of the seven factors
identified. Further, it was revealed that relative usefulness, perceived risk,
computer efficacy and image had a significant impact on continued usage of

49
 internet banking for IB Users, while relative usefulness and result
demonstrability were the only ones significant for Non-users of internet
banking. The effects of age, gender, income, and e-commerce users also
explored. Result demonstrability is significant for all categories of non-users
except for those with income below AED 7,000.Implications of results were
discussed, and future research directions outlined.
 Bauer, Malik & Falk (2006) reviews the measuring the quality of E-Banking
portals. In the internet economy, the business model of web portals has spread
rapidly over the last few years. Despite this, there have been very few scholarly
investigations into the services and characteristics that transform a web site into
a portal as well as into the dimensions that determine the customer‘s evaluation
of the portal‘s service quality. Based on an empirical study in the field of e-
banking the authors validate a measurement model for the construct of web
portal quality based on the following dimensions: security and trust, basic
services quality, cross-buying services quality, added value, transaction support
and responsiveness. Findings – The identified dimensions can reasonably be
classified into three service categories: core services, additional services, and
problem-solving services. Originality/value – The knowledge of these
dimensions as major determinants of consumer‘s quality perception in the
internet provides banks a promising starting point for establishing an effective
quality management for their e-businesses.
 Kamiya (2006) explains that Indian banks are trying to make your life easier.
Not just bill payment, you can make investments, shop or buy tickets and plan
a holiday at your fingertips. In fact, sources from ICICI Bank tell us, "Our
Internet banking base has been growing at an exponential pace over the last few
years. Currently around 78 per cent of the bank's customer base is registered for
Internet banking." To get started, all you need is a computer with a modem or
other dial-up device, a checking account with a bank that offers online service
and the patience to complete about a one-page application--which can usually
be done online. You can avail the following services: Bill payment Services,
Fund Transfer, Credit Card, Internet shopping, and Investment though Internet
etc. Due to the Internet banking the life of an individual becomes easy and raises
the standard of life of the humans.

50
 Veneeva (2006) explains that the world is changing at a staggering rate and
technology is considered to be the key driver for these changes around us. Many
activities are handled electronically due the acceptance of information
technology at home as well as at workplace. Internet can be seen as a truly global
phenomenon that has made time and distance irrelevant to many transactions.
The evolution of electronic banking started from the use of automatic teller
machines (ATM) and has Passed through telephone banking, direct bill
payment, electronic fund transfer and the revolutionary online banking .The
future of electronic banking according to some is the acceptance of WAP
enabled banking and interactive-TV banking (Petrus & Nelson, 2006). But it
has been forecasted that among all the categories, online banking is the future
of electronic financial transaction. The rise in the e-commerce and the use of
internet in its facilitation along with the enhanced online security of transactions
and sensitive information has been the core reasons for the penetration of online
banking in everyday life.
 T.C. Edwin Cheng, (2006) This study investigates how customers perceive and
adopt Internet Banking (IB) in Hong Kong. We developed a theoretical model
based on the Technology Acceptance Model (TAM) with an added construct
Perceived Web Security, and empirically tested its ability in predicting
customers? Behavioral intention of adopting IB. We designed a questionnaire
and used it to survey a randomly selected sample of customers of IB from the
Yellow Pages, and obtained 203 usable responses. We analyzed the data using
Structured Equation Modeling (SEM) to evaluate the strength of the
hypothesized relationships, if any, among the constructs, which include
Perceived Ease of Use and Perceived Web Security as independent variables,
Perceived Usefulness and Attitude as intervening variables, and Intention to Use
as the dependent variable. The results provide support of the extended TAM
model and confirm its robustness in predicting customers? Intention of adoption
of IB. This study contributes to the literature by formulating and validating
TAM to predict IB adoption, and its findings provide useful information for
bank management in formulating IB marketing strategies.
 Hans H. Bauer 16 September 2006 says that the mobile payment services
markets are currently under transition with a history of numerous tried and

51
failed solutions, and a future of promising but yet uncertain possibilities with
potential new technology innovations. At this point of the development, we take
a look at the current state of the mobile payment services market from a
literature review perspective. We review prior literature on mobile payments,
analyse the various factors that impact mobile payment services markets, and
suggest directions for future research in this still emerging field. To facilitate
the analysis of literature, we propose a framework of four contingency and five
competitive force factors, and organize the mobile payment research under the
proposed framework. Consumer perspective of mobile payments as well as
technical security and trust are best covered by contemporary research. The
impacts of social and cultural factors on mobile payments, as well as
comparisons between mobile and traditional payment services are entirely
investigated issues. Most of the factors outlined by the framework have been
addressed by exploratory and early phase studies.

52
CHAPTER 4: DATA ANALYSIS, INTERPRETATION AND
PRESENTATION

4.1 DATA ANALYSIS

1. Gender

MALE 47
FEMALE 36
TOTAL 83

GENDER

MALE FEMALE

43%
57%

 The result shows that majority of respondents i.e., 57% are males who are using
the E-Banking services and 43% are females who are using E-Banking services.
 Females are not using this service often as compared to the opposite gender.

53
2. Age

20 – 39 46
40 – 59 34
60 & above 03
Total 83

Age

4%

41%
55%

20-39 40-59 60 & above

 The result shows that majority of respondents fall under the category of 20 – 39
years age group and it shows that E-Banking is mainly famous among
youngsters as they are the major users of E-Banking services.
 Least number of respondents come under 60 & above years age category.

54
3. Are you aware about net banking services provided by banks?

Yes 82
No 1
Total 83

Are you aware about the net banking services

provided by banks?
1%

99%
Yes No

 From the above pie chart we can understand that a majority of 99% of
respondents are aware about the E-Banking services in India and only 1% are
not aware about the same.
 This also shows the concept of E-Banking is famous among majority of people
in India.

55
4. Do you think E-Banking services are necessary in current scenario?

Yes 81
No 01
Maybe 01
Total 83

Do you think E-Banking services are necessary in

current scenario?
1% 1%

98%

Yes No Maybe

 From the above pie chart we can understand that a majority of 98% of
respondents feel that E-Banking is essential in the current scenario.
 1% people feel that it’s not necessary and 1% people are unsure regarding the
same.

56
5. Are you availing E-Banking services?

Yes 78
No 05
Total 83

Are you availaing E-banking services?

6%

94%

Yes No

 As we can observe from the above pie chart that a majority of 94% of
respondents are availing to E-Banking services in India.
 6% respondents are yet to avail E-Banking services.
 This also tells us that maybe people are still scared to avail to these services
despite being aware about the same.

57
6. If yes, to what extent are you satisfied with your bank’s E-banking services?

Highly Satisfied 22
Satisfied 42
Neutral 13
Dissatisfied 01
Total 78

How satisfied are you with your bank's E-banking

services?
1%

17%
28%

54%

Highly Satisfied Satisfied Neutral Dissatisfied

 From the above pie chart we can understand that a majority 54% of E-banking
users are satisfied with the services provided by their banks.
 28% users are highly satisfied with the services and 17% have a neutral feeling
about the same.
 We can observe there are 1% respondents who are dissatisfied with their bank’s
E-banking services.

58
7. Which of the following benefits accrue to you while using E-Banking services?

Time Saving 68
Less Expensive 32
Easy Funds Transfer 65
Easy Processing 45
All of the above 01

Benefits accrue while using E-banking

Easy Processing 45

Easy Funds Transfer 65

Less Expensive 32

Time Saving 68

0 10 20 30 40 50 60 70 80

Benefits accrue while using E-banking

 From the above bar diagram we can understand that majorly respondents use E-
banking because its time saving and the transfer of funds is easy.
 Some consider processing through E-banking is easier and it’s less expensive.

59
8. Do you feel safe disclosing your details to the internet?

Yes 25
No 30
Maybe 28
Total 83

Do you feel safe disclosing your details to the

internet?

34% 30%

36%

Yes No Maybe

 Observing the above pie chart majorly people are either not feeling safe to share
their details on the internet or they are not sure about the same.
 Only about 30% respondents feel safe to share their details online.

60
9. Which type of problem are you facing while using E-Banking services?

More time taking for funds transfer 09

Slow speed in working 18
Critical process 20
Not easy for uneducated people 46
Servers down 2
Risk of hacking 2
None 6

Problems faced while using E-banking

None 6

Risk of hacking 2

Servers down 2

Not easy for uneducated people 46

Critical process 20

Slow speed in working 18

More time taking for funds transfer 9

0 5 10 15 20 25 30 35 40 45 50

Problems faced while using E-banking

 Observing the above bar graph we can understand that the main issues faced by
majority of the people is that it’s not easy for uneducated people to understand
or access internet banking.
 There are some who fear hacking of accounts and some face issues when the
servers are down.
 Many feel it’s a critical process and requires a lot of understanding.
 6 respondents have no issues with their internet banking services.

61
10. What are your main transactions that you prefer to do by E-Banking?
Money Transfers 78
Checking your current balance 52
Investments 24
Order cheque book 23
Pay bills 57
IPO/Right Issue 20

Main transactions preferred through E-banking

IPO/Right Issue 20

Pay bills 57

Order cheque book 23

Investments 24

Checking your current balance 52

Money Transfers 78

0 10 20 30 40 50 60 70 80 90

Main transactions preferred through E-banking

 Observing the above bar graph, the main transactions carried out are money
transfers.
 The next major transaction carried out are bill payments and checking of current
balance.

62
11. Do you know the necessary precautions to be taken to avoid frauds?

Yes 67
No 16
Total 83

Do you know the necessary precautions to be

taken to avoid frauds?

19%

81%

Yes No

 Considering the above pie chart, 81% of the respondents know about the
necessary precautions to be taken to avoid frauds.
 The rest 19% are still aware about the precautions which can be risky for them.

63
12. Does your bank educate you about the net banking services being offered?

Yes 52
No 18
Maybe 13
Total 83

Des your bank educate you about the net

banking services being offered

16%

22%
62%

Yes No Maybe

 Observing the above pie chart, there are 62% banks that educate their customers
about the internet banking services that they provide.
 About 22% banks still do not educate their customers which could make it
difficult for their customers.

64
13. How likely are you to recommend internet to your family/friends/colleagues?

Quite Likely 37
Likely 35
Neutral 11
Least Likely 0
Total 83

How likely are you to recommend internet

banking?
0%

13%

45%

42%

Quite likely Likely Neutral Least likely

 Considering the above pie chart, 45% of the respondents are quite likely to
recommend internet banking and 42% are likely.
 13% of respondents are neutral about the same.
 None of them choose to not recommend internet banking.

65
4.2 DATA INTERPRETATION

 From the above bar graph, pie chart, and diagrams it is shown that 57% of
respondents are males and 43% of the respondents are females.
 From the above percentage analysis, bar graphs, pie charts and diagrams, it is
shown that maximum number of respondents are coming under the age group
of 20 – 39 years.
 From the above bar graphs, pie charts and diagrams, it is shown that minimum
number of respondents are coming above the age of 60 years.
 The major finding of the study is that maximum number of respondents are
aware about the internet banking services provided by their respective banks.
 It is concluded that majority respondents think it’s necessary to opt for internet
banking services in the current scenario.
 Majority of the respondents are availing to internet banking services provided
by their banks.
 It is concluded that majority of the respondents are highly satisfied or satisfied
by the internet banking services provided by their banks. Very few are
dissatisfied by their bank’s internet banking services.
 Respondents have opted for internet banking services majorly because it’s time
saving and the transfer of funds is easier. Many have also opted for internet
banking because the processing is easy and it’s less expensive.
 It is observed that majority of the respondents do not feel safe or are unsure
about their safety in disclosing their personal information to the internet. But
still about 30% respondents do feel safe disclosing their personal details to the
internet.
 Majority of the respondents find internet banking a problem as it’s not easy for
uneducated people.
 Apart from that the major problem faced by respondents is that it is a critical
process and at times the working speed is slow either due to servers being down
or the system being slow in general.
 From the above bar graphs, pie charts and diagrams, it is concluded that the
majority of the respondents use internet banking mainly for money transfers.

66
 Another major reason for using internet banking is to pay the bills or to check
their current bank balance at any point of time.
 It is observed that majority of the respondents are aware about the necessary
precautions to be taken in order to avoid any kind of frauds.
 From the above bar graphs, pie charts and diagrams we can observe that
majority of the respondents’ banks educate them about the internet banking
services provided by them.
 Some are unsure whether their banks educate the customers or not and some say
their banks do not educate about the internet banking services.
 From the above bar graphs, pie charts and diagrams majority of the respondents
are quite likely or likely to recommend internet banking to their
friends/family/colleagues. Some are neutral about the same.
 None of the users chose not to recommend internet banking to their
family/friends/colleagues.

67
CHAPTER 5: CONCLUSIONS AND SUGGESTIONS

5.1 FINDINGS

 After conducting the survey, it is quite safe to say that the residents of India
have a very positive perspective towards the internet banking system in India.
 It is understood that majority are aware about the internet banking system in
India.
 It is also understood that majority avail to the internet banking services offered
by their banks.
 Despite being aware about internet banking there are some respondents who do
not avail to internet banking services.
 Majority of users still have a fear of disclosing personal details to the internet
due to frauds and misuse of details provided.
 It was observed that majority of the respondents feel that it’s necessary to have
internet banking services in the current scenario.
 It was observed that though there are so many services provided through internet
banking still users mainly use internet banking only for money transfers or to
pay bills.
 It is understood that respondents mainly accrue to internet banking as it is time
saving and the transfer of funds is easier.
 Majorly respondents face issues with internet banking as it is a critical process
and it is not easy for uneducated people.
 The users are all satisfied with the internet banking services provided by their
respective banks except a few who say they are dissatisfied with the services
they are using.
 Majority of the users are aware about the necessary precautions to be taken to
avoid fraudulent acts. But still they are about 19% of the users do not know the
necessary precautions they should be taking to secure their account and avoid
frauds.
 Majority of the respondents say that their banks educate them about the internet
banking services provided by them but still there are many who are unaware as
to whether their bank educates its customers or not because when asked they
responded “maybe”.

68
 Still there are many banks who do not educate their customers properly about
the internet banking services which also makes it difficult for users to
understand the critical online banking process, especially for uneducated people
or for people with less knowledge about technology.
 Majority of the respondents say they would recommend internet banking to their
family or friends or colleagues while few had a neutral view regarding the same.
 Despite the issues faced by the users, none of them say that they wouldn’t
recommend internet banking to their family or friends. This shows they
understand the importance of it as of today.

69
5.2 SUGGESTIONS

 The government should set up programs to explain the importance of internet

banking to the people and help ease the work for the public.
 The banks should properly guide their customers about the internet banking
services that they provide so that the users do not face much trouble in
understanding he bank’s internet banking system.
 The banks should assure their customers about the necessary precautions and
steps taken by them to ensure the safety and security of their customers so that
the customers can trust their system to opt for internet banking.
 The banks should try and make the internet banking easy, user friendly and
hassle free for everyone to understand.
 The banks should make arrangements to act quickly in situations where the
servers are down.
 The government should conduct programs to educate the people about the
necessary precautions to be taken to avoid frauds.

 Bankers need to build, maintain, and enhance customer relationships in this

tough competitive environment through internet banking.
 Provide a platform from where the customers can access different accounts at
single time without extra charge.
 Banks need to take necessary steps to prevent failure in transactions.
 Queue management should be done to prevent heavy traffic in sites and banks
need to ensure customer satisfaction.
 Demonstration of E-Banking should be provided to the existing customers to
promote E-Banking.
 Provide discounts on shopping through E-Banking.
 Prompt dealing with permanent customers and speedy transactions without
harassing the customers.

70
5.3 CONCLUSION

Studies show that the mostly used e-banking services are inter account transfer,
payment to other personal account, transfer to credit card account, recharge mobile
phones, standing order transactions, savings, current and fixed deposit account
application and debit/ credit card. No doubt studies reveal that e-banking reduces time
in transactions as well as crowd in the banks. One can easily sit at home or at cyber to
have transfer of money, recharge of vouchers, making FD’s, etc. Few banks have
offered full-service online banking successfully. Banks have not only provided e-
banking facility to the customers but also increased the satisfaction level of customers.
In India, people are still not fully aware of advantages of e-banking but those who are
tech savvy are using e-banking successfully. There was a time when customers used to
go the bank, Insurance companies, and railway station for various purposes and used to
stand in long queue for hours and hours but now many people prefer e-banking to save
time, energy, fuel, money etc. Important thing is that people need to be technically
sound so that they can use e-banking facility properly. Banks should also generate trust
in the minds of customers that e-banking is safe.

There is still a lot needed for the banking system to make reforms and train their
customers for using internet for their banking account. Going through the survey the
main problem lies that still customer have a fear of hacking of accounts and thus do not
go on for internet banking. Banks are trying their level best by providing the best
security options to the customers but then to there is lot of factors which betrays a
customer from opening an internet bank account. Banks are providing free internet
banking services also so that the customers can be attracted. The maximum numbers of
internet bank account holders are males, youth and service class. If proper training
should be given to customer by the bank employs to open an account will be beneficial
secondly the website should be made friendlier from where the first time customers can
directly make and access their accounts.

When investigating all the variables and the response by consumers, this study reveals
that the perception of the consumers can be changed by factors such as time saving,
Authenticity and security, Reliability and convenience (anywhere connectivity), Good
transaction speed, Reduce cost per transaction, Overall satisfaction. The study also
provides the kind of correlation between different factors. As per our basic assumptions

71
we consider only those consumers who know how to use Internet and have an access to
Internet, and our study considered only the situation wherein banks provide Internet
banking services.

In case of the consumers who don’t use Internet banking services, having all facilities
at their disposal, technology was not the biggest issue. The first thing that all bankers
should concern about is the requirement of awareness. Even though these people are
inclined towards the manual banking, these can be turned to potential customers, it is
well proven thing, which says the surrounding influences the individual’s behaviour or
in India only environment that surrounds the public determines the behaviour and
decisions of the individuals. So if consumer sees most of their colleagues or friends
who surround him using Internet banking then it may influence his decision to follow
Internet banking option.

Technology innovation and fierce competition among existing banks have enable a
wide array of banking products and services, being made available to retail and
wholesale customer through an electronic distribution channel, collectively referred to
as e-banking. The integration of e-banking application with legacy system implies an
integrated risk management approach for all banking activities of a banking institution.
Latest recommendations of Basel Committee recognize that each bank’s risk profile is
different and requires a tailored risk mitigation approach appropriate for the scale of e-
banking operations, the materiality of the risks present and the willingness and ability
of the institution to manage their risks. This implies that a “one size fits all” approach
to e-banking risk management issues may not be appropriate.

Banks have traditionally been in the forefront of harnessing technology to improve

product and efficiency. Technology is altering the relationships between banks and its
internal and external customers. Technology has also eroded the entry barriers faced by
many industries. With one time investment, technology has brought about superior
products and channel management with a special focus on customer relationship. The
incremental costs incurred for expansion and diversification are also more beneficial.

The major driving force behind the rapid spread of e-banking is its acceptance as an
extremely cost effective delivery channel. But on the flipside, it is associated with risks
such as reputation risk, security risk, cross-border risk and strategic risk, which are
unique to e-banking. Banks need to have an effective disaster recovery plan along with

72
comprehensive risk management tool is significant not only to the bank but also to the
banking system as a whole. All these issues underscore the importance of sound
supervisory policies and high level of international co-operation among the bank
regulators. The Basel Committee on banking Supervision has taken the lead in this area
through the creation of its Electronic Banking Group – a group comprising 17 central
banks and bank supervisory agencies in the late 1999. The main focus of this group has
been to develop sound risk management practices.

Internet has created plenty of opportunities for players in the banking sector. While the
new entrants have the advantage of latest technology, the good-will of the established
banks gives them a special opportunity to lead the online world. By merely putting
existing service online won’t help the banks in holding their customer close. Instead,
banks must learn to capitalize their customer’s different online financial-services
relationships. The article “Will Banks Control Online Banking?” focuses on how banks
have to reinvent their role to remain as their customers’ preferred bank.

Coming home, India is on threshold of a major banking revolution with the invasion of
net banking. With the concept of payment gateway coming in, banks are vying with
one another for the lion’s share in the market. Highlighting the benefits of payment
gateway over the open-loop payment mechanism, the article “Banking in the Cyber
worlds” gives a brief report of the tug of war between the two major Indian e-banking
players.

73
BIBLIOGRAPHY

 Agarwal Reeti, Rastogi Sanjay & Mehrotra Ankit (2009). Customers‟

Perspectives regarding e-banking in an emerging economy, Journal of Retailing
and Consumer Services 16, pp.340-351.
 Malhotra, P. and Singh, B. (2010), “An analysis of internet banking offerings
and its determinants in India”, Internet Research, Vol. 20 No. 1, pp. 87-106.
 Mishra A K (2005), “Internet Banking in India Part-I”,
http://www.banknetindia.com/ banking/ibkg.html, 15 Sept. 2010.
 Srivastva Saurabh (2009). Internet Banking - A Global Way to Bank, Retrieved
from http://www.indianmba.com/Faculty_Column/FC908/fc908.html on 18
March 2009.
 Anthony, R. (2004), “User Friendly E-Banking: A Survey of Online E-Banking
Retail Initiatives”, Communications of the ACM, Vol.47, Iss. 10, pp.99-102.
 Asghar, O. (2004), “Banking in a cloud of electrons”.
 Kamiya, J. (2006), “How E-Banking Can Ease Your Life”, Rediff.com.
 Adoption of Internet Banking: An Empirical Investigation of Indian Banking
Sector by Balwinder Singh, Reader, Department of Commerce and Business
Management, Guru Nanak Dev University, Amritsar, India.
 Bank netindia- http://www.banknetindia.com/banking/ibkgintro.htm
 Express computers: articles:- http://ezinearticles.com/?A-Brief-History-of
Internet- Banking & id=353450
 Data Protection in Consumer E-banking Journal of Internet Banking and
Commerce, April 2006, vol.11,no.1
(http://www.arraydev.com/commerce/jibc/)
 Services provided by the bank through “E-Banking in India” by Abhinav
Tawani, www.scribd.com/doc/25049932/Final-Project-on-E-banking
 Towards online banking by Soutiman Das Gupta,
[email protected]
 The Indian internet banking journey, www.icmrindia.org

74
 Mannan, Syed Abdul,(2010). Technology in Indian banks and customer
perception: An empirical study in Maharashtra. International conference on
Business & Information technology.available at
http://www.kln.ac.lk/uokr/ICBI2010/30.pdf accessed on 2nd March, 2012.
 Shrivastava, Rajesh Kumar,(2007).Customer’s perception on usage of Internet
Banking.Innovative Marketing, 3(4),pp.67-73 www.icicibank.com, ICICI bank
Portal, accessed on Jan, 2012
 Vandana Tandon Khanna1 & Neha Gupta (2015) “Customer’s Perception about
Banks Technology for Innovative Delivery Channels of Public Sector Banks
(PSBs) of India”, International Journal of Business and Management; Vol. 10,
No. 2; 2015 ISSN 1833-3850 E-ISSN 1833-8119.
 R.Elavarasi, (2012) “A study on the customer perception towards e-banking”,
International Journal of Multidisciplinary Research Vol.2 Issue 1, January 2012,
ISSN 2231 5780.
 Harris.M (2007) “Internet banking is becoming need to have service”
 Apart from the given articles, some newspaper articles and journals were also
referred.

75
ANNEXURE

Questionnaire:

This survey is for a research project conducted by a student of HR College, Mumbai

for the purpose of studying the customer perspective towards E-Banking services in
India.

Q. Name

Q. Gender

 Male
 Female
 Other

Q. Age

 20 – 39
 40 – 59
 60 and above

Q. Are you aware about the net banking services provided by banks?

 Yes
 No

Q. Do you think e-banking services are necessary in current scenario?

 Yes
 No
 Maybe

Q. Are you availing e-banking services?

 Yes
 No

76
Q. If yes, to what extent are you satisfied with your bank’s e-banking services?

 Highly Satisfied
 Satisfied
 Neutral
 Dissatisfied

Q. Which of the following benefits accrue to you while using e-banking services?

 Time Saving
 Less Expensive
 Easy Funds Transfer
 Easy Processing
 Other

Q. Do you feel safe disclosing your details to the internet?

 Yes
 No
 Maybe

Q. Which type of problem ae you facing while using e-banking services?

 More Time Taking For Funds Transfer

 Slow Speed In Working
 Critical Process
 Not Easy For Uneducated People
 Other

Q. What are your main transactions that you prefer to do by e-banking?

 Money Transfers
 Checking Your Current Balance
 Investments
 Order Cheque Book
 Pay Bills
 IPO/Right Issue
 Other

77
Q. Do you know the necessary precautions to be taken to avoid frauds?

 Yes
 No

Q. Does your bank educate you about the net banking services being offered?

 Yes
 No
 Maybe

Q. How likely are you to recommend internet banking services to your

family/friends/colleagues?

 Quite Likely
 Likely
 Neutral
 Least Likely

78