A Praject Report on A Study on E-Banking facility of Kotak Mahindra Bank nlineBanking ered Ls Submitted To: Prof, Srushti Mehta Submitted By: Rushi Patel (P1340) Khyati Thakker (P1347) gi Be Class: PGDM- I Batch: 2013-15 1[PageINTRODUCTION Intemet 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. Intemet 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 custome! ? 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 comer of the country to another corner, Banks have traditionally been in the forefront of hamessing technology to improve their products, services and efficiency. They have, over a long time, been using electronic and telecommunication networks for delivering a wide range of value added products and services. The delivery channels include direct dis — up connections, private networks, publie networks ete, and the devices include telephone, Personal Computers including the Automated Teller Machines, ete. With the popularity of PCs, easy access to Internet and World Wide Web (WWW), Internet is increasingly used by banks as a channel for receiving instructions and delivering their products and services to their customers, This form of banking is generally referred to as Intemet Banking. although the range of products and services offered by different banks vary widely both in their content and sophistication, From the perspective of banking products and services being offered through Internet, Internet banking is nothing more than traditional banking services delivered through an electronic communication backbone, viz, Internet. But, in the process it has thrown open issues which have ramifications beyond what a new delivery channel would normally envisage and, hence, has compelled regulators world over to take note of this emerging channel. 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 10| Pagcost, Electronic banking has experienced explosive growth and has transformed traditional practices in banking Private Banks in India were the first to implement internet banking services in the banking industry. Private Banks, due to late entry into the industry, understood th the establishing network in remote comers of the country isa very difficult task. It was clear to them that the only way to stay connected to the customers at any place and at any time is through imemet applications. They took the internet applications as a weapon of competitive advantage to corner the great monoliths like State Bank of India, Indian Bank etc. Private Banks are pioneer in India to explore the versatility of intemet applications in delivering services 10 customers, ‘Some of the distinctive features of e-banking are: 1, It removes the traditional geographical barriers as it could reach oul to customers of different countries / legal jurisdiction. This has raised the question of jurisdiction of law / supervisory system to which such transactions should be subjected, 2. It has added 2 new dimension to different kinds of risks traditionally associated with banking, heightening some of them and throwing new risk control challenges. 3. Security of banking transactions, validity of electronic contract, customers’ privacy, etc., which have all along been concems of both bankers and supervisors have assumed different dimensions given that Internet is a public domain, not subject to control by any single authority or group of users. 4. It poses a strategic risk of loss of business to those banks who do not respond in time, to this new technology, being the efficient and cost effective delivery mechanism of banking services, 5. A new form of competition has emerged both from the existing players and new players of the market who are not strictly banks. From the perspective of banking products and services being offered through Internet, internet banking is nothing more than traditional banking services delivered through an electronic communication backbone, viz, Internet. But, in the process it has thrown open | Pagissues which have ramifications beyond what a new delivery channel would normally envisage and, hence, has compelled regulators world over to take note of this emerging channel. Some of the distinctive features of e-banking are: 1. It removes the traditional geographical barrier as it could reach out to customers of different countries / legal jurisdiction. This has raised the question of jurisdiction of law Isupervisory system, to which such transactions should be subjected 2. I lus added a new dimension to different kinds of risks traditionally associated with banking, heightening some of them and throwing new risk control challenges, 3. Security of banking transactions, validity of electronic contract, customers” privacy, etc, which have all along been concems of both bankers and supervisors have assumed different dimensions given that Intemet is a public domain, not subject to control by any single authority or group of users. 4. It poses a strategic risk of loss of business to those banks who do not respond in time, to this new technology, being the efficient and cost effective delivery mechanism of banking, services, 5. Anew form of competition has emerged both from the existing players and new players of the market who are not strictly banks ‘The Regulatory and Supervisory concems in e-banking, arise mainly out of the distinctive features outlined above. These concerns can be broadly addressed under three broad categories, viz, (i) Legal and regulatory issues, Gi) Security and technology issues and (iii) Supervisory and operational issues. Legal issue cover those relating to the jurisdiction of Law, validity of electronic contract including the question of repudiation, gaps in the legal / regulatory environment for electronic commerce. On the question of jurisdiction the issue is whether to apply the law of the area where access to Internet has been made or where the transaction has finally taken places. Security of e-banking transactions is one of the most important areas of concems to the regulators. Security issues include questions of adopting internationally accepted state of the art minimum technology standards for access control, encryption / decryption (minimum key length etc), firewalls, verification of digital signature, Public Key Infrastructure (PKI) ete, 22|Pag‘The regulator is equally concemed about the security policy for the banking industry, security awareness and education, ‘The supervisory and operational issues include risk control measures, advance waming system, Information technology audit and re-engineering of operational procedures. The regulator would also be concerned with whether the nature of products and services offered are within the regulatory framework and whether the transactions do nol camouflage money- laundering operations. The Central Bank may have its conem about the impact of Intemet banking on its monetary and credit policies. As long as Intemet is used only as a medium for deliveryof banking services and facilitator of normal payment tansactions, pethaps, it may n otimpact monetary policy However, when il assumes a stage where privale sector initiative produces electronic substitution of money like e-cheque, account based cards and digital coins, its likely impact ‘on monetary system cannot be overlooked. Even counties where e-banking has been quite developed, its impact on monetary policy has not been significant. In India, such eoncem, for the presentis not addressed as the e-banking is still in its formative stage. Kotak Mahindra Bank is Indian financial service firm established in 1985. It was previously known as Kotak Mahindra Finance Limited, a non-banking financial company, In February 2003, Kotak Mahindra Finance Lid, the group's flagship company was given the licence to carry on banking business by the Reserve Bankof India (RBD. Kotak Mahindra Finance Ltd. is the first company in the Indian banking history to convert to a bank, Today it has more than 363 branches, 20,000 employees and 10,000 crore inrevenue, Mr. Uday Kotak is Executive Vice Chairman & Managing Director of Kotak Mahindra Bank Lid. In July 2011 Mr-C. Jayaram and Mr. Dipak Gupta, appointed Joint Managing Directors of Kotak Mahindra Bank. Dr.Shankar Acharya is the chairman of board of Directors in the company. ‘hole time directors of the Bank, were ‘The Bank has ils registered office at Nariman Bhavan, Nariman Point, Mumbai 13| PageKolak Mahindra bank reached the top 100 most trusted brands of India in The Brand Trust Report published by Trust Research Advisory in 2011 OBJECTIVE OF THE STUDY ¥ A Study on customer's satisfaction on E-Banking facility of Kotak Mahindra Bank. To study the reasons for the limited use of e-banking services To create Awareness among customers towards e-banking services vvy ‘To study and to make e-banking users snare various e- banking risks like Phi identity theft, frauds of plastic money, Trojan, malware ete. RESEARCH METHOD, * Descriptive Methad:- ‘The term descriptive research refers to the type of research question, design, and data analysis that will be applied to a given topic. Descriptive studies, primarily concerned with finding out "what is", where is, how is and may also give different preferences according to demographic factor such as age, gender income level, education level POPULATION + A Population can be defined as including all people or items with the characteristics one wishes to understand. We are selected the users of Kotak bank of Ahmedabad city. wa| PageSAMPLE FRAME * For our research purpose we are selected respondents who are e-banking users of KOTAK BANK. RESEARCH TOOL ‘Questionnaire consisting of dased ended questions. A form containing a set of questions will be submitted to the respondents to gain statistical information, Unstructured question in which possible answers are not suggested, and the respondent chooses from the given options. The questionnaire also contains a section which has certain factors which are related to the liker scale, SAMPLE SIZE ‘The sample size is 200. .MPLING TECHNIQUE Simple Random Technique SAMPLING UNITS. ‘The customers of KOTAK BANK. COLLECTION OF DATA. © Primary Data: We would collect data through Questionnaire * Secondary Data: We would collect data from Research papers, Internet and intranet of Kotak bank 15|PageEXPECTED CONTRIBUTION OF STUDY It will contribute significantly, ina very positive manner to E-banking users, non e- banking users & society as they will be aware of the benefits as well as various risks & threats of e-banking. BENEFICIARIES. E-banking users, non e-banking users & society at large are the benefictaries as will be aware of the PROS & CONS of E-banking. SCOPE ‘The scope would be wide as we can come across the benefits as well as various risks & threats of e-banking. To gain accurate results for the study, 100 people were given questionnaire to know HOW MUCH THEY ARE SATISFIED WITH THE E-BANKING FACILITIES OF KOTAKBANK. The scope of the study was limited to the customers of KOTAK bank & the city of Ahmedabad, 16|PageCHAPTER 2; LITERATURE REVIEW 1] Dospinescu Octavian, Rusu Daniela, “Alexandruloan Cuza”(2006)have carried out a research on “ the adoption of electronic banking services in developing countries ~ the Romanian case” information systems.vol.2,pg no. 34-67. ‘The developments taking place in information and communication technology are affecting the financial institutions worldwide. This evolution had transformed the way banks deliver their services, using technologies such as automated teller machines, phones, the Internet, credit cards, and electronic cash. In this scenario, banking in Romania had undergone some changes. Many banks have been investing in Internet technology in order to maintain a competitive edge and satisfy thelr customers. The Internet, phone, mobile or electronic banking offered in the Romanian banking market is in full development process, and the banks have to win the confidence of the individual and corporate body customers, taking into account the fact that the transactions that are made on the online system are perceived as highly risky, But the level of accessibility regarding the performing of banking operations straight from the company office or from home without depending on the opening hows of pay-offices determines a growing number of customers to resort to this kind of services. 2] Dr. Asma Mobarek, (2004), has carried out a research on “e-banking practices and customer satisfaction. a case study in Botswana”, international jaurnal of bank marketing, vol. 21, pp. 94 — 103, This research involves the study of four commercial banks in Botswana, these being — Standard Chartered Bank, First National Bank, Barclays Bank and Bank of Baroda. All these banks are providing e-banking services to their customers, The usual E-banking services new account provided by hanks are account management: bill payment and presentment opening: consumer wire transfers; investmenvbrokerage services; loan application and approval; account aggregation; cash management ; small business loan applications, approvals, or advances; commercial wire transfers: business-to-business payments: employee benefits/pension administration etc. The paper includes an analysis of customers” perception towards e-banking services, the quality of e- banking services provided by the banks and the W|Pagconstraints in achieving customer satisfaction. The focus of the paper particularly on four nternet banking, tele-banking and manual banking. The main focus is done on internet banking as itis the delivery channel delivery channels namely: Automated Teller Machine (ATM). that seems to be slowly growing in Botswana after the ATM delivery channel. Consumer behaviour is changing partly because of less spare time. The way of use of financial services is classified by individuality, mobility, independence of place and time and flexibility. Financial transactions caused by purchases will more and more be carried out by non- and near- banks. These facts represent big challenges for banks. Banks are using the Internet as a new distribution channel. The hypotheses are tested and show that there is a relationship between age group. occupation type and some aspects of e-banking. At last that Banks must adapt to the electronics age. Consumers demand it. Economics drives it. Banks must exploit it 3] DrS. Arummgaperumal, (July 2006), has carried out a research on “impact of cyber- crime on virtual banking”, Journal Compu ter Science-8.T.Hindu College, Nagereai This paper basically deals with the online risks that the banks and their clients face during the online transactions they undertake. As more organizations provide greater online access for their customers, professional criminals are successfully using phishing techniques to steal personal finances and conduct identity theft at a global level. The popularity which virtual banking services have won among customers, owning to the speed, convenience and continuous access they offer, is likely to increase in the future. However, several issues of concem would need to be pro-actively attended. While most of electronic banking has built- in security features such as encryption, prescription of maximum monetary limits and authorizations, the system operators have to be extremely vigilamt and provide clear-cut guidelines for operations, On the larger issue of electronically initiated funds transfer, issues like authentication of payments instructions, the respon ility of the customer for secreey of the security procedure would also need to be addressed, So for the better security multifactor authentication is best to make the virtual banking much safer with higher security in the coming years 18 | Pag4]Dr. Abba Chandra, (July 2010), has carried outa research on “analytical research on Indian online banking and users" privacy”, global journal of enterprise information system, vol.2 isssue.t. ‘An empirical study is conducted to evaluate the existence and format of privacy policies of different banks of India in conducting online banking through their websites. The objective of thi paper is to throw some light on the study, methodology, and its results. The websites disclose personal information of the users to Third Parties, which may or may not have their own privacy policies, is 10 be counted as one of the reasons for the same. This study also finds that no Universal Standard format for a Privacy Policy has been designed and declared for banks in India yet. It will be very helpful for net banking consumers, if there is an authority to monitor and control the proper format and Points included in the privacy policy for banks. 19| PageNR Institute of Business Management- PGDM_ Opp, Law Garden, Ellisbridge, Ahmedabad — 380006, India Phone: 26447636 Fax: 26445958 Website: www.ntibmorg CERTI This is to certify thatMr..Rushi Patel Roll No.P1340 And Ms. Khyati Thaker Roll No.P1347, students of NR Institute of Business Management- PGDM have successfully completed their Summer Internship Project on “A Study on E-Banking facility of Kotak Mahindra Bank” in partial fulfillment for the requirements of the PGDM programme. This is their original work and has not been submitted elsewhere, Srushti Mehta Dr. Hitesh Ruparel Assistant professor Director & Project Guide 21 PageCHAPTER: 3 THEBANKING SECTOR IN INDIA HISTORY NATIONALIZATION POST-INDEPENDENCE LIBRALIZATION (GROWTH OF BANKING AND ITS DEVELOPMENT PORTERS’ 5-FORCE ANALYSIS 20|PageHISTORY Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India, which started in 1786, and Bank of Hindustan, which started in 1790; both are now defunct. The oldest bank in existence in India is the State Bank of India, whichori ginated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years the Presideney banks acted as quasi-central banks, as did their suecessors, The three banks merged in 1921 to form the Imperial Bank of India, which, upon India’s independence, became the State Bank of India, NATIONALISA‘ Despite the provisions, control and regulations of Reserve Bank of India, banks in India except the State Bank of India or SBI, continued to be owned and operated by private persons. By the 1960s, the Indian banking industry had become an important tool to facilitate the development of the Indian economy. At the same time, it had emerged as a large employer, and a debate had ensued about the nationalization of the banking industry. Indira Gandhi, then Prime Minister of India, expressed the intention of the Government of India. in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalization." The meeting received the paper with enthusiasm. Thereafter, her move was swift and sudden. The Government of India issued an ordinance and nationalized the 14 largest commercial banks with effect from the midnight of July 19, 1969 Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9 August 1969 21| PageA second dose of nationalization of 6 more commercial banks followed in 1980.The siated reason for the nationalization was to give the government more control of credit delivery. ‘With the second dose of nationalization, the Government of India controlled around 91% of the banking business of India. Later on, in the year 1993, the govemment merged New Bank of India with Punjab National Bank. It was the only merger between nationalized banks and resulted in the reduction of the number of nationalized banks from 20 to 19. After this, until the 1990s, the nationalized banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy POST- INDEPENDENCE The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal, paralyzing banking activities for months, India's independence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included: The Reserve Bank of India, India's central banking authority, was nationalized on January 1,1949 under the terms of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948(RBI, 2005p) In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India. LIBERALISATION In the early 1990s, the then Narasimha Rao government embarked on a policy of liberalization licensing a small number of private banks. These came to be known as New Generation tech-savvy banks, and included Global Trust Bank (the first of such new generation banks to be setup), which later amalgamated with Oriental Bank of Commerce. Axis Bank(earlieras UTI Bank), ICICI Bank and HDFC Bank 22| PageThis move, along with the rapid growth in the economy of India, revitalized the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. ‘The next stage for the Indian banking has been set up with the proposed relaxation in the noms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%, at present it has gone up to 74% with some restrictions. ‘The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave ushered in a modem outlook and tech-savvy methods of working for traditional banks. Al this led to the retail boom in India People not just demanded more from their banks but also received more, Currently (2007), banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy. Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region, The Reserve Bank of India is an autonomous body, with minimal pressure from the goverment. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rate-and this has mostly been true .With the growth in the Indian economy expected to be strong for quite some time-especially in its services sector-the demand for banking services, especially retail banking, mortgages and investment services are expected tobe strong, One may also expect Mats, takeovers, and asset sale, 2a|PagGROWTH OF BANKING AND DEVELOPMENT INDIA The world’s second largest populated country, India, is the apple of the eye for the world now. The world economies are seeing it as their potential market. This has been going on since quite some time now, ever since 1991 reforms of liberalization, globalization and privatization, Indian markets in urban areas have grown appreciably and are on the verge of saturation, so corporates have started tapping rural markets, since more than 60 per cent of India’s population lives in rural areas. India has been considerably shielded from the global recession. Firstly, we are not very dependent on the exports for our GDP and have a good consumer base in India, Secondly. we area saving prone economy, unlike western economies which are consumption prone. Thirdly, when banks across the world are falling like a pyramid of playing cards; we are safe. steady and strong, with our banks which have acted like a strong backbone of our economy during present turmoil. And just like the FMCG sector, there is tremendous growth potential in the banking sector, because firstly, the rural masses have the habit of saving and spending only when need ed Secondly. their small credit requirements for agriculture, cottage industry and marriages ete. According to researches carried out by the Reserve Bank of India (RBI), on an all India basis, 59 per cent of the adult population in the country has bank accounts and 41 per cent don't. In rural areas, the coverage of banks is 39 per cent, against 60 per cent in urban areas, There is only one bank for a population off 3000. Within the retail segment, housing loans grew by 20% CAGR. during the same period and consisted ~10% of the total bank credit. Thus, the banks, which had a big challenge on the unsecured loan front, had at the same time a bigger opportuni ty in the mortgage-backed security portfolio. Abundant liquidity in the banking system during FY10 has been ensured through secular growth in deposits, low credit demand and prudent borrowing schedule issued by the 24| Pagegoverment to maintain a balanced growth, According to a research report, despite the huge borrowings of Rs4510 bn by the government in FY10, the money held in reverse repo by banks remained considerably high. This will provide nopportunity to the banks to utilize the money in the most efficient and effective way to the benefit of both the customer and the economy as a whole comprising various stake holders, Having talked about comfortable liquidity and the much-wanted stability in the banking system, one can expect that bond yields will remain in a higher range and would not fall significantly. Other reasons which are likely to support this fact inelude: + Lower than expected government borrowings + Reduced global risk premium + Higher credit growth. This brings another oppomtunity for the banks to eam higher income. Besides the favourable condition for liquidity and high bond yield, it is expected that the Net Interest Margin (NIM) will not expand much. The banks need to have higher incremental CD ratio. improvement in spreads and stable yield on investments to improve NIMs. Banks are expected to have a low cost of deposits owing to a stable interest rate scenario and ample liquidity in the system. In the past few years, fee income has been the major contributor of revenue for private sector banks. Private sector banks have leveraged those areas toachieve the above, which publicsector banks have not been able to, viz., transaction related services and third party pro ducts sales,among others, to increase this non-fund based income. ‘Thus, we can very well say that the current situation has provided a lot of opportunities and challenges to the existing banks. 25|PagPORTER’S FIVE FORCES ANAL: ‘Threat of New Entrants. The average person can’t come along and start up 2 bank, but there are services, such as internet bill payment, on which entrepreneurs can capitalize Banks, are fearful of being squeezed out of the payments business, because it is a good source of fee-based revenue. Another tend that poses a threat is companies offering other financial services. What would it take for an insurance company to start offering mortgage and loan services? Not much. Also, when analysing a regional bank, remember that the possibility of a mega bank entering into the market poses a real threat . Power of Suppliers. The suppliers of capital might not pose a big threat, but the threat of suppliers luring away human capital does, If a talented individual is working in a smaller regional bank, there is the chance that person will be enticed away by bigger banks, investment firms, etc . Power of Buyers. The individual doesn't pose much of a threat to the banking industry, but one major factor affecting the power of buyersis relatively high switching costs. If a person has a mortgage, car loan, credit card, checking ‘account and mutual funds with one particular bank, it ean be extremely tough for that person to switch to another bank. In an attempt to lure in customers, banks try to lower the price of switching, but many people would still rather stick with their current bank. On the other hand, large corporate clients have banks wrapped around their litle fingers. Financial institutions - by offering better exchange rates, more services, and exposure to foreign capital markets - work extremely hard to get high- margin corporate clients, Availability of Substitutes. As you can probably imagine, there are plenty of substitutes in the banking industry. Banks offer a suite of services over and above taking deposits and lending money, but whether it is insurance, mutual funds or fixed income securities, chances are there is non-banking finaneial services eompany that can offer similar services. On the lending side of the business, banks are seeing competition rise from unconventional companies. Sony, General Motors and Microsoft all offer preferred financing to customers who buy big 26|Paglicket items. If car companies are offering O%efinancing, why would anyone want to get a car loan from the bank and pay 5-1 %interest? Competitive Rivalry. The banking industry is highly competitive. The financial services industry has been around for hundreds of years, and just about everyone who needs banking services already has them. Because of this, banks must altempt to lure clientsaway from competitor banks. They do this by offering lower financing, preferred rates and investment services. The banking sector is in a race to see who can offer both the best and fastest services, but this also causes banks to experience a lower ROA. They then have an incentive to take on high-risk projects. In the long run, ‘we're likely to see more consolidation in the banking industry. Larger banks would prefer to take over or merge with another bank rather than spend the money to market and advertise to people 27 | PageCHAPTER: 4 ‘THE KOTAK MAHINDRA BANK VISION STATEMENT THEIR BUSINESSES KOTAK"S SPIRIT OF SERVICE SWOT ANALYSIS. 2a|PageION STATEMENT. ‘The Global Indian Financial Services Brand (Our customers will enjoy the benefits of dealing with a global Indian brand that best understands their needs and delivers customized pragmatic solutions across multiple platforms, We will be a world class Indian financial services group. Our technology and best practices will be bench- marked along international lines while our understanding of customers will be uniquely Indian, We will be more than a repository of our customers’ savings. We, the toup, will be single window to every financial service in a customer's universe. ‘The Most Preferred Employer in Financial Services A culture of empowerment and a spirit of enterprise attract bright minds with entrepreneurial streak to join us and stay with us. Working with a home grown professionally managed company, which has partnerships with international leaders, gives our people a perspective that is universal as well as unique ‘The Most Trusted Financial Services Company ‘We will create an ethos of trust across all our constituents, Adhering to high standards of compliance and corporate governance will be an integral part of building trust Value Creation ‘Value creation rather than size alone will be our business driver. 29|PagDeclaration WeKhyati Thakker and Rushi Patel student of NR Inslitule of Business Management hereby declare that we had successfully completed this project om “E-BANKING FACILITIES OF KOTAK MAHINDRA BANK" inthe academic year 2013-15, We declare that this submitied work is done by us and to the best of our knowledge: no such ‘work has been submitted by any other person for the award of degree or diploma, We also declare that all the information collected from various secondary and primary sources has been duly acknowledged in this project report (wwwkotak.com) 3[ PageTHEIR BUSINESSES Kotak Mahindra Bank Ltd * Kotak Mahinda Bank Ltd is a one stop shop for | banking needs. The bank offers personal finance solutions of every kind from savin gs accounts to credit cards, distribution of mutual funds to life insurance products. Kotak Mahindra Bank offers transaction banking, operates lending verticals, manages IPOs and provides working capital loans. Kotak has one of the largest and most respected Wealth Management teams in India, providing the widest range of solutions to high net worth individuals, entrepreneurs, business families and employed professionals. Kotak Mahindra Old Mutual Life Insurance Ltd + Kotak Mahindra Old Mutual Life Insurance Lid is a Company that combines its international strengths and local advantages to offer its customers a wide range of innovative life insurance products, helping them take important financial decisions at every stage in life and stay financially independent. The company covers over 3 million lives and is one of the fastest growing insurance companies in India. Kotak Securities Ltd + Kotak Securities is one of the largest broking houses in India with a wide geographical reach .Kotak Securities operations include stock broking and distribution of various financial products including private and secondary placement of debt, equity and mutual funds. Kotak Securities operate in five main areas of business: * Stock Broking (retail and institutional) Depository Services Portfolio Management Services Distribution of Mutual Funds Distribution of Kotak Mahindra Old Mutal Life Insurance Lid products. 20|PageKotak Mahindra Capital Company (KMCC) * Kotak Investment Banking (KMCC) is a full-service investment bank in India offering a wide suite of capital market and advisory solutions to leading domestic and multinational corporations, banks, financial institutions and government companies. Our services encompass Equity & Debt Capital Markets, M&A Advisory, Private Equity Advisory, Restructuring and Recapitalization services, Structured Finance services and Infrastructure Advisory & Fund Mobilization, Kotak Mahindra Prime Ltd (KMPL) © Kotak Mahindra Prime Lid is among India’s largest dedicated passenger vehicle finance companies. KMPL offers loans for the entire range of passenger cars, multi- utility vehicles and pre-owned cars. Also on offer are inventory funding and infrastructure funding to car dealers with strategic arrangements via various ear manufacturers in India as their preferred financier, Kotak International Business * Kotak International Business specialises in providing a range of services to overseas customers seeking to invest in India, For institutions and high net worth individuals outside India, Kotak International Business offers asset management through a range of offshore funds with specific advisory and discretionary investment management ser vices. 31| PagKotak Mahindra Asset Management Company Ltd (KMAMC) Kotak Mahindra Asset Management Company offers a complete bouquet of asset management products and services that are designed to suit the diverse risk retum profiles of each and every type of investor. KMAMC and Kotak Mahindra Bank are the sponsors of Kolak Mahindra Pension Fund Lid, which has been appointed as one of six fund managers to manage pension funds under the New Pension Scheme (NPS). Kotak Private Equity Group (KPEG) Kotak Private Equity Group helps nurture emerging businesses and mid-size enterprises to evolve into tomorrow's industry leaders. With a proven track record of helping build companies, KPEG also offers expertise with a combination of equity capital, strategic support and value added services. What differentiates KPEG is not merely funding companies, but also having a close involvement in their growth as board members, ad visors, strategists and fund-raisers. Kotak Realty Fund Kotak Realty Fund deals with equity investments covering sectors such as hotels, IT parks, residential townships, shopping centres, industrial real estate, health eare, ret ail, education and property management. The investment focus here is on development projects and enterprise level investments, both in real estate intensive businesses. 32 (PageSWOT ANALYSIS OF KOTAK STRENGHTS: | Innovative financial product of diverse categories 2. Kotak Mahindra Finance Ltd. is the first company in the Indian banking history to convert intoa bank, 3. OF, for, by the customers. 4, Has over 20,000 employees 5. Customer account base of over 2.7 million /EAKNESS: 1, Low publicity and marketing as compared to other premium banks in the urban area OPPORTUNITIES: 1. Explore opportunities abroad by International banking 2. Kotak has launched SPIRIT OF SERVICE campaign, Through this campaign it can secure higher and higher levels of CUSTOMER SATISFACTION, LOY ALTY ETC. THREATS: 1, Heavy weight corporate like TATA & SONS, RELIANCE CAPITAL, L&T. ADITYA BIRLA, BAJAJ FINSERV, and MUTHOOT FINANCE are trying very hard and leaving no stone untumed to acquire banking license 2. Competitors: ICICI, SBI, AXIS, BOB, HSBC ete 33|PageSt ee (CHAPTER: 5 E-BANKING (Data collected through INTERVIEW) MEANING E-BANKING FACILITIES AND PRODUCTS E-BANKING BENEFITS: SWOT ANALYSIS OF E-BANKING B| PageE-BANKING MEANI E-BANKING IS ELECTRONIC BANKING. The provision of banking service through electronic channels and the customers cam access the data without time and geographical location. “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-enablal”. TIES & PRODUCTS RAC Intemet banks offer a variety of features and perks, rushing to lure online customers. The race is on to increase market share and creates customer loyally with features that make online banking friendlier, more useful, and less expensive. E-Banking lures customers with ‘convenience’. THE THREE BROAD FACILITIES THAT E-BANKING OFFERS ARE: Convenience - Complete your banking al your convenience, in the comfort of your home or at any place you can access the Net. NomoreQs- There are no queues at an online bank 24/7 service - Bank online 24 hours a day, 7 days a week and 52 weeks a year Below is 2 detailed review of features found in Intemet banking around the world? ONLINE APPLICATIONS: Consumers can begin their banking relationship with an online application. No need to waste time driving to a local branch to begin a banking relationship. Consumers can fill out and submit electronically all necessary information needed to open a checking, savings account or even a fixed deposit, When the application is submitted, the bank will mail you a signature a5|Pagecard for its records and request you to mail or wire your initial funds, Firms like American Express enable customers applying for an account to fund their new account electronically via a credit card or cheque from another banking institution. There are some firms such as Wingspan and USABancShares.com that enable customers to digitally sign their applications. ACCOUNT ACCESS: Intemet banking customers now have the ability to view their accounts online, including checking, savings, loans and credit cards. No need to wait for your monthly statements or ‘wait in queue for the next available customer service representative. Account access enables customers to view most recent activity on accounts, including cleared checks, deposits, ATM transactions and balances as of previous day's activities. Customers no longer have to hold on tothe cleared checks, since their bank will store them for them online, ACCOUNT TRANSFERS: Intemet banking customers have the ability to transfer funds to and from their accounts online. With a simple online form, customers can move money from a checking account to 2 savings account and vice versa within the safety and convenience of their home without javing to visit the ATM. Funds transferred online are updated in less than three hours. In addition, customers can set up recurring transfers to accounts. A recurring transfer will take place on the customer specified date, with a specified amount BILL PAY MEN’ Online bill payment enables customers to pay anyone, friends or family, as well as a pay their bills electronically. As an addon feature to Internet banking, bill payment enables customers to send paper checks to anyone or an electronic check to any institution that accepts electronic bill payments. Touse bill payment, customers are required to set up their payees online, Customers then have the ability to set up recurring, automatic payments to a specific biller on a specified day or just a one-time payment, Amrange payments three to five 36 [Pagedays, before the due date, to ensure timely delivery. It is important to note thal not all banks provide bill payment as a free feature. AUTOMATED TELLER MACHINE: ATM is designed to perform the most important function of bank. It is operated by plastic card with its special features. The plastic cardiis replacing cheque, personal attendance of the Customer, hanking hour's restrictions and paper based verification. There are debit cards. ATMs used as spring board for Electronic Fund Transfer. ATM itself can provide information about customers account and also receive instructions from customers - ATM cardholders. An ATM is an Electronic Fund Transfer terminal capable of handling cash deposits, transfer between accounts, balance enquiries, eash withdraw: and pay bills. It may be on-line or Off-line, The on-line ATN enables the customer to avail banking facilities from anywhere. In off-line the facilities are confined to that particular ATM assigned. Any customer possessing ATM card issued by the Shared Payment Network System can go to any ATM linked to Shared Payment Networks and perform his transactions. CREDIT-DEBIT CARD: ‘The Credit Card holder is empowered to spend wherever and whenever he wants with his 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 Intemet 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 is ing bank which gives debit card with a Personal Identification Number (PIN). When he makes a purchase, he enters dxhis PIN on shops PIN pad. When the card is slurped through the electronic terminal, it dials the sequiring hank 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. The bank never faces a default because the amount spent is debited immediately from the customer's account. a7 [PageSMART CARDS: 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 muttiple functions. They hold a large amount of personal information, from medical and health history 10 personal banking and personal preferences. Apart from this ALERTS, SMS BANKING, MOBILE BANKING, PHONE BANKING, Are also parts of E-banking? 24/7 CUSTOMER SERVICE: Although it is easy 10 yield to the temptation of allowing the Internet to replace expensive branch personnel and overhead, many banks have found that a customer service staff ready at any hour is well worth the expense. This can be especially tue as customer's transition to online banking and need help learning the features. Offering telephone and email contacts are abasic level of service. Offering live chat assistance is the exceptional level. ACCESS TO OLD TRANSACTIONS: Choices made in designing the Intemet interface may include how much history will be available online. Some banks have chosen to show only 30-45 days, while others offer a history of six months ora year. 3a (PageCATEGORIZE TRANSACTIONS AND PRODUCE REPORTS: Functionality is king as online banking customers using these festures enjoy a Web interface that delivers the utility of a money management software application. EXPORT YOUR BANKING DATA: Most banks offering the management interface also allow easy downloading of financial information into files that can be imported into Microsoft Money and Intuit's Quicken. INTERACTIVE GUIDES & TOOLS TO HELP SELECTION OF PROPER PRODUCT: Although online, interactive guides through a bank's products, adds complexity to the programming italso serves the bank by.assisting potential -—_eustomers inchoosing new products or services. Interactive Tools to design a savings plan, choose a mortgage, obtain online insurance quotes all tied to applications These tools help remove some of the mystery involved in so many account options and costs. LOAN STATUS AND CREDIT CARD ACCOUNT INFORMATION: Bank customers are familiar with reviewing their checking account information, but many banks are adding the ability to look at one's loan status and credit card information as well, Access to as many accounts held at the bank seems to be the goal VIEW DIGITAL COPIES OF CHECKS: This, again, is remo ving addown side to online banking. It makes images of checks available as replacement for sending out cancelled checks or sheets of printed check images. ONLINE FORMS FOR ORDERING CHECKS, STOP PAYMENT, ETC. Convenience is popular and if a customer visits his or her online account frequently it only makes sense to allow the ability to reorder checks or perform certain other commands 39|PagePREFACE Management today is must for day-to-day life. Management is the integral part of the business, Inthis world, all things need proper management for its success. Business without proper management is like a castle of sand built on seashore, Even individuals need proper management for running their life smoothly. Only theoretical knowledge is not enough in PGDM along with one needs some practical exposure in the corporate world also. PGDM provides this opportunity through the medium of summer training. This taining has madeone thing clear that there are two pillars for getting success in business ie. efficiency and effectivenesss it means not only doing right things but also doing things rightly In PGDM Theory of 1y subject is important but without its practical knowledge it becomes unless particularly for the Management Students. As a student of the Business Administation, we have studied many theories and concepts in the classroom, but only after taking up this project work we have experienced & understood these Management theories & practices inits fullest sense, which plays avery vilal role in business field today. The knowledge of management is incomplete without knowing the practical application of the theories studied. ‘This project report gives knowledge of E-BANKING FACILITIES OF KOTAK MAHINDRA BANK. This training has brought positive changes in our life & career. The training gave us a lot exposure which will be helpful to us for the rest of the PGDM curriculum, We consider our self-fortunate enough for getting guidance from one of the best banks at a very important stage of our career. 4lPagthrough the same interface. These features and many others help customers save time, simplify their lives and provide greater value than conventional banking. SWOT ANALYSIS OF E-BANKING STRENGHTS: ” Customer access to information 24 hours a day Timely access to information Ability to offer a customer more than one method of retrieving information Sophisticated technology systems Diversity helps to capture different types of market. ‘The ability to cut internal cost due to advanced technology Increased efficiency due to automation Increased accuracy of banking transaction a a convenience WEAKNESS: High cost of service © Continual wants of customers wants and needs Initial investment in technology will be expensive. OPPORTUNITIES: ‘The ability to have a larger customer base Global expansion-This is an enormous market which will be a great opportunity in the future The ability to take advantage of the growing opportunity of intemet banking. © Can achieve customer loyalty and satisfaction THREATS: Continuously changing technology © Uncertainty of the banking industry. Competition from the lower price operation. ° Possible failure of product due to non-acceptance of customers 40| PagCHAPTER: 6 E-BANKING PRODUCTS & FACILITIES OF KOTAK BAN At KOTAK MAHINDRA BANK E-BANKING IS CONVINIENCE-BANKING. In today’s day and age time is money. All of us work hard and have a busy schedule. Doing our banking should be easy, quick and convenient and should not add to your worries. At Kotak Mahindra Bank, they realize this and hawe specially tailored a wide range of value added products and services to make our money work for us, These, coupled with the highest standards of customer values, make customers life easier & simpler. Following are various E-BANKING FACILITIES carried out by KOTAK BANK, 1) Net Banking Helps to View details across Accounts, Term Deposits and Demat Accounts - 24x7 Kotak Mahindra Bank's Net Banking service brings us the timeless world of instant banking, It is quick and easy, available to us 24X7 and it's absolutely free! Key Features + Bank 24X7- anywhere, anytime * Move Money - Within our own Kotak Accounts, to someone else's Kotak Account, to another bank via NEFT(National Electronic Funds Transfer/ RTGSiReal Time Gross Settlement) and Demand Draft + We have the option to ‘Pay Now’, Pay ata later date’ or ‘Schedule Regular Payments! ¢ Weeven have the option to ‘Save the Transaction and pay when desired. + Weean even view all your ‘Completed Transactions’ along with the status. ‘We can book a Term Deposit and can do a premature withdrawal online + Wecan add a Beneficiary and Multiple accounts can be mapped for a beneficiary for ‘Transfer Type. (Eg. - NEFT / RTGS etc). Beneficiaries added at other channels like branch too, will be available for the customer on Net Banking to make a uansfer to. 4l|Page# View details across Accounts, Term Deposits and Demat Accounts. * We can Pay our utility bills , VISA Credit Card bills, Recharge Prepaid Mobile phones and DTH accounts and even pay your Direet tax through Kak Bill Pay Net Banking Features - What all can you do online? Net Banking gives us a host of services, giving us.a complete control of our accounts: * View account balance, account activity, place standing instructions and cheque status ¢ Open a Term Deposit + Transfer funds online between yourthird party accounts with Kotak Mahindra Bank or any other bank account via RBI's NEFT or RTGS system ® Place request for a cheque book, Debit Card PIN , payment gateway registration and lots more © Pay your Utility Bills on Kotak Bill Pay + Safe online shopping with Kotak Nete@rd * View securities available for Demat * View current Mutual Fund holdings. * Buy and redeem Mutual Funds online 2) Kotak Payment Gateway Instant, convenient and secure way of shopping and making payments online, Kotak Payment Gateway enables us to shop online at over S000 websites, make utility bill payments across more than 60 companies and 42 cities, following are some of the websites through which you can shop online © www bigeinemas.com © wwwwaairtel.in © swww.yatra.com © wwww,vodafone.in © wuw.makemytrip.com «shopping indiatimes.com 42|Page