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DISSETATION REPORT ON E-BANKING SUBMITTED TO:INSTITUTE OF MANAGEMENT AND INFORMATION SCIENCES (IMIS) BHUBANESWAR In partial fulfillment of post graduate

diploma in management (Session:2011-2013) UNDER THE SUPERVISION OF: PROF. BRAHMADEV PANDA

SUBMITTED BY:PARITOSH BEURIA Roll no:- 11DM063

DECLARATION
I PARITOSH BEURIA hereby declare that the dissertation report entitled E-Banking submitted for the partial fulfillment of Post graduate diploma in management from Institute of Management and Information Sciences , Bhubaneswar is original document of mine and data provided is authentic and the best of my knowledge.

Paritosh Beuria

ACKNOWLEDGEMENT

Gratitude is not a thing of expression, it is more a matter of feeling There is always a sense of gratitude which one express for others for their help and supervision in achieving their goals. I too express my deep gratitude to Prof. Brahmadev Panda for helping me to complete this dissertation report successfully.

Paritosh Beuria

PREFACE

With the rapid globalization of the Indian economy, enterprises are facing with ever Changing competitive environment. Enterprises are adopting strategies aimed at developing competitive advantage based on enhanced customer value in terms of product differentiation, quality, speed, service and costs. In the post liberalization era,With the deregulation of Indian economy, the financial service sector witnessing a complete metamorphosis and technology is playing a very significant role in this record. Over the last decade India has been one of the fastest adopters of information technology, particularly because of its capability to provide software solution to organizations around the world. This capability has provided a tremendous impetuous to the domestic banking industry in india to deploy the latest in technology, particularly in the internet banking and e-commerce arenas. Banks are growing in size by mergers and acquisitions, which have been driven by communication and technology. Technology is playing a major role in increasing the efficiency, courtesy and speed of customer service. It is said to be the age of Ebanking. An online banking user is expected to perform at least of the following transactions online: 1) checking account balance and transaction history 2) Paying bills 3) Transferring funds between accounts 4) Requesting credit card advances 5) Ordering checks 6) Managing investments and stocks trading

INDEX
Declaration Acknowledgement Preface E-banking Literature Review Research Methodology Data analysis and Interpretation Findings SWOT Analysis Conclusion Suggestions Bibliography Annexure

E-BANKING

WHAT IS E-BANKING?
Electronic banking is one of the truly widespread avatars of E-commerce the world over. Various authors define E-Banking differently but the most definition depicting the meaning and features of E-Banking are as follows: 1) Banking is a combination of two, Electronic technology and Banking. 2) Electronic Banking is a process by which a customer performs banking Transactions electronically without visiting a brick-and-mortar institutions. 3) E-banking denotes the provision of banking and related service through Extensive use of information technology without direct recourse to the bank by the customer.

NEED FOR E-BANKING


One has to approach the branch in person, to withdraw cash or deposit a cheque or request a statement of accounts. In true internet banking, any inquiry or transaction is processed online without reference to the branch (anywhere banking) at any time.Providing Internet banking is increasingly becoming a need to have than a nice to have service. The net banking, thus, now is more of a norm rather than an exception in many developed countries due to the fact that it is the cheapest way of providing banking services. Banks have traditionally been in the forefront of harnessing 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 dial up connections, private networks, public networks etc and the devices include telephone, Personal Computers including the Automated Teller Machines, etc. With the popularity of PCs, easy access to Internet and World Wide Web (WWW), Internet is increasingly used by the 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 Internet Banking, although the range of products and services offered by different banks vary widely both in their content and sophistication.

EVOLUTION OF E-BANKING The story of technology in banking started with the use of punched card machines like Accounting Machines or Ledger Posting Machines. The use of technology, at that time,was limited to keeping books of the bank. It further developed with the birth of online real time system and vast improvement in telecommunications during late 1970s and 1980s.it resulted in a revolution in the field of banking with convenience banking as a buzzword. Through Convenience banking, the bank is carried to the doorstep of the customer. The 1990s saw the birth of distributed computing technologies and Relational Data Base Management System. The banking industry was simply waiting for these technologies. Now with distribution technologies, one could configure dedicated machines called front-end machines for customer service and risk control while communication in the batch mode without hampering the response time on the front-end machine.

E-BANKING TRANSACTION MECHANISM

E-BANKING PRODUCTS
Automated Teller Machine (ATM ) These are cash dispensing machine, which are frequently seen at banks and other locations such as shopping centers and building societies. Their main purpose is to allow customer to draw cash at any time and to provide banking services where it would not have been viable to open another branch e.g. on university campus. Telebanking or Phone Banking Telephone banking is relatively new Electronic Banking Product. However it is fastly becoming one of the most popular products. Customer can perform a number of transactions from the convenience of their own home or office; in fact from anywhere they have access to phone. Customers can do following:Check balances and statement information Transfer funds from one account to another Pay certain bills Order statements or cheque books Demand draft request Mobile Banking Mobile banking comes in as a part of the banks initiative to offer multiple channel banking providing convenience for its customer. A versatile multifunctional, free service that is accessible and viewable on the monitor of mobile phone. Mobile phones are playing great role in Indian banking- both directly and indirectly. They are being used both as banking and other channels. Internet Banking The advent of the Internet and the popularity of personal computers presented both an opportunity and a challenge for the banking industry. For years, financial institutions have used powerful computer networks to automate million of daily transactions; todayoften the only paper record is the customers receipt at the poin t of sale. Now that their customers are connected to the Internet via personal computers, banks envision similar advantages by adopting those same internal electronic processes to home use.

TYPES OF INTERNET BANKING OR E-BANKING


Understanding the various types of Internet banking will help examiners assess the risks involved. Currently, the following three basic kinds of Internet banking are being employed in the marketplace. Informational- this is the basic level of Internet banking. Typically, the bank has marketing information about the banks products and services on a stand -alone server. The risk is relatively low, as informational systems typically have no path between the server and the banks internal network. This level of Internet banking can be provided by the banks or outsourced. While the risk to a bank is relatively low, the server or web site may be vulnerable to alteration. Appropriate controls therefore must be in place to prevent unauthorized alterations to the banks server or web site. Communicative- this type of Internet banking systems and the customer. The interaction between the banks system and the customer. The interaction may be limited to electronic mail, account enquiry, loan applications, or static file updates (name and address change). Because these servers may have a path to the banks internal networks, the risk is higher with this configuration than with informational systems. Appropriate controls need to be in the place to prevent, monitor, and alert management of any unauthorized attempt to access the banks internal networks and computer systems. Virus controls also become much more critical in this environment. Transactional- this level of Internet banking allows customers to execute transactions. Since a path typically exists between the server and the bank or outsourcers internal network, this is the highest risk architecture and must have the strongest controls. Customer transactions can include accessing accounts, paying bills, transferring funds etc.

ADVANTAGES OF INTERNET BANKING


Convenience- Unlike your corner bank, online banking sites never close; theyre available 24 hours a day, seven days a week, and theyre only a mouse click away. Ubiquity- If youre out of state or even out of the country when a money problem arises, you can log on instantly to your online bank and take care of business, 24\7. Transaction speed- Online bank sites generally execute and confirm transactions at or quicker than ATM processing speeds. Efficiency-You can access and manage all of your bank accounts, including IRAs, CDs, even securities, from one secure site. Effectiveness- Many online banking sites now offer sophisticated tools, including account aggregation, stock quotes, rate alert and portfolio managing program to help you manage all of your assets more effectively. Most are also compatible with money managing programs such as quicken and Microsoft money.

DISADVANTAGES OF INTERNET BANKING


Start-up may take time-In order to register for your banks online program, you will probably have to provide ID and sign a form at a bank branch. If you and your spouse wish to view and manage their assets together online, one of you may have to sign a durable power of attorney before the bank will display all of your holdings together. Learning curves- Banking sites can be difficult to navigate at first. Plan to invest some time and\or read the tutorials in order to become comfortable in your virtual lobby. Bank site changes- Even the largest banks periodically upgrade their online programs, adding new features in unfamiliar places. In some cases, you may have to re-enter account information.

E- BANKING SERVICES:
1. Bill payment service Each bank has tie-ups with various utility companies, service providers and insurance companies, across the country. It facilitates the payment of electricity and telephone bills, mobile phone, credit card and insurance premium bills. To pay bills, a simple one-time registration for each biller is to be completed. Standing instructions can be set, online to pay recurring bills, automatically. One-time standing instruction will ensure that bill payments do not get delayed due to lack of time. Most interestingly, the bank does not charge customers for online bill payment. 2. Fund transfer Any amount can be transferred from one account to another of the same or any another bank. Customers can send money anywhere in India. Payees account number, his bank and the branch is needed to be mentioned after logging in the account. The transfer will take place in a day or so, whereas in a traditional method, it takes about three working days. ICICI Bank says that online bill payment service and fund transfer facility have been their most popular online services. 3. Credit card customers Credit card users have a lot in store. With Internet banking, customers can not only pay

their credit card bills online but also get a loan on their cards. Not just this, they can also apply for an additional card, request a credit line increase and God forbid if you lose your credit card, you can report lost card online. 4. Railway pass This is something that would interest all the aam janta. Indian Railways has tied up with ICICI bank and you can now make your railway pass for local trains online. The pass will be delivered to you at your doorstep. But the facility is limited to Mumbai, Thane, Nasik, Surat and Pune. The bank would just charge Rs 10 + 12.24 percent of service tax. 5. Investing through Internet banking Opening a fixed deposit account cannot get easier than this. An FD can be opened online through funds transfer. Online banking can also be a great friend for lazy investors. Now investors with interlinked demat account and bank account can easily trade in the stock market and the amount will be automatically debited from their respective bank accounts and the shares will be credited in their demat account. Moreover, some banks even give the facility to purchase mutual funds directly from the online banking system. So it removes the worry about filling those big forms for mutual funds, they will now be just a few clicks away. Nowadays, most leading banks offer both online banking and demat account. However if the customer have there demat account with independent share brokers, then need to sign a special form, which will link your two accounts. 6. Recharging your prepaid phone Now there is no need to rush to the vendor to recharge the prepaid phone, every time the talk time runs out. Just top-up the prepaid mobile cards by logging in to Internet banking. By just selecting the operator's name, entering the mobile number and the amount for recharge, the phone is again back in action within few minutes. 7. Shopping at your fingertips Leading banks have tie ups with various shopping websites. With a range of all kind of products, one can shop online and the payment is also made conveniently through the account. One can also buy railway and air tickets through Internet banking.

List of some banks operating E-Banking in India

IMPACT OF E-BANKING ON TRADITIONAL SERVICES


One of the issues currently being addressed is the impact of e-banking on traditional banking players. After all, if there are risks inherent in going into e-banking there are other risks in not doing so. It is too early to have a firm view on this yet. Even to practitioners the future of e-banking and its implications are unclear. It might be convenient nevertheless to outline briefly two views that are prevalent in the market.The view that the Internet is a revolution that will sweep away the old order holds much sway. Arguments in favor are as follows: E-banking transactions are much cheaper than branch or even phone transactions. This could turn yesterdays competitive advantage - a large branch network - into a comparative disadvantage, allowing e-banks to undercut bricks-and-mortar banks. This is commonly known as the "beached dinosaur" theory. E-banks are easy to set up so lots of new entrants will arrive. Old-world systems, cultures and structures will not encumber these new entrants. Instead, they will be adaptable and responsive. E-banking gives consumers much more choice. Consumers will be less inclined to remain loyal. E-banking will lead to an erosion of the endowment effect currently enjoyed by the major UK banks. Deposits will go elsewhere with the consequence that these banks will have to fight to regain and retain their customer base. This will increase their cost of funds, possibly making their business less viable. Lost revenue may even result in these banks taking more risks to breach the gap. Portal providers are likely to attract the most significant share of banking profits. Indeed banks could become glorified marriage brokers. They would simply bring two parties together eg buyer and seller, payer and payee.

E-BANKING WORLD WIDE


Since its inception, Internet banking has experienced strong and sustained growth. World Bank report on leapfrogging in e-finance pointed out that the three countries with impressive progress in information technology in this sense are Estonia, Republic of Korea and Brazil. Creation of the worlds leading electronic banking systems has been done at a remarkably low cost compared to other world-class internet banks . In the European Union, 60 million people, representing 18 per cent of the adult population, use online banking In France, the number of online banking accounts is recording an annual growth rate of 75 per cent. However, Estonia is a country that has become a leader in Internet banking (which now reaches 18 per cent of the population), not only among Eastern European countries but in world rankings, through a combination of easyto- use software, free-of-charge transactions and behavior changes resulting from the influence of the Nordic countries IT culture on Estonia. A sector in which Latin America is seems to be performing better than in other industries is online retail banking. Growth in this area has been driven by traditional banks, which have used the online channel to generate customer loyalty and improve their operating margins. Two Brazilian banks, Bradesco and Banco do Brasil, have thus achieved more than 4 million online customers each. Mexico is another leader of Internet banking in Latin America. It adopted legislation providing for the development of both E-Commerce and e-finance. In Mexico, the number of online bank users more than tripled from 700,000 in 2000 to 2.4 million in 2001, and it could reach 4.5 million in 2005 (E-Marketer 2002b). One reason for the success of Latin American banks online ventures seems to be the attention they have paid to providing retail customers with multiple ways to access their accounts (Internet, telephone, wireless). However, given that the share of the total population that actually has a bank account is relatively small, the expansion of Latin American online banking may be facing a bottleneck. Compared with overall Internet usage estimated at 4.4 million in Australia, the major banks together have attracted only 1.2 million to online banking. The Internet is a global phenomenon and so is e-finance. Its deployment is not limited to developed countries, and indeed some developing countries such as India and the Republic of Korea are experiencing particularly strong growth in E-Banking. In Asia

one of the most impressive records has been achieved by the Republic of Korea. The Republic of Korea is leading in online brokerage and in mobile banking. In South-East Asia Internet banking is also developing rapidly in Thailand, Malaysia, and Singapore and to a lesser extent, in the Philippines. In Bangladesh there is a large gap between the computerization of foreign banks and that of local commercial banks and as regards the state of their intra- and inter-branch online networks. However, 75 per cent of local banks are planning to introduce EBanking,which implies very dynamic improvements. Apart from North and South Africa the Sub Saharan Africa is the region that is seriously lagging behind in Internet banking, although it is giving to the rest of the world the good example of microfinance developments.

LITERATURE REVIEW

Literature Review
Product and Technology group, ICICI Bank, in its paper Corporate banking using technology in transactions it was inferred that Information Technology has revolutionized the services and mode of services offered by the banks to their corporate clients. The emergence of E-Banking has enabled the banks to offer real-time transactions and integrate all customers related functions. Indian Banks are utilizing the new technology to provide better technology and convenient access to its customers and India is thus poised to for a huge growth in the world of electronic banking. Chandana R, Unnithan, Paula M.C., Swatman in their research paper titled EBanking Adaptions and Dot.Com viability: A comparison of Australian and Indian experiences in the Banking sector a comparative study of Australian and Indian experiences in eBusiness was done, which seeks to identify the effectiveness of dot.coms as indicators of eBusiness uptake and success on a sector-by-sector basis was undertaken. It was concluded that the banking industry is now a very mature one and banks are being forced to change rapidly as a result of openmarket forces such as the threat of competition, customer demand, and technological innovations such as the growth of the Internet. E-Banking is a successful strategic weapon for banks to remain profitable in a volatile, and competitive market place of today in both Indian and Australian Economies despite the differences of IT usage. G. Kannabiran and P.C. Narayan discuss in their article the experiences of a private-sector bank in deploying Internet banking and eCommerce in India. Strategic alignment of business and IT strategies, planning and implementation of e-banking initiatives, and management of benefits have been captured, along with key contributions to development.

RESEARCH METHODOLOGY

OBJECTIVES OF THE STUDY:The main objectives of the study are: To study the awareness level of service class people regarding E-Banking. To find out the frequency and the factors that influences the adoption of Ebanking services. To measure the satisfaction level of people. To understand the problems encountered in by service class people while using E-Banking services(ATM, Phone banking, etc)

DATA ANALYSIS AND INTERPRETATION

DATA ANALYSIS AND INTERPRETATION


Awareness of people regarding e-banking service provided by the bank while opening an account
No. of Respondents Fully aware Had an idea No idea Total Percentage

37 46 17 100

37% 46% 17% 100%

Awareness about e-banking services


17 37 Fully aware Had an idea No idea

46

Interpretation As seen from Table 1, overall percentage of service class people having complete knowledge about e-banking services provided by the bank while opening an account in it is 37%, those having some idea about it is 46% and the percentage of people having no awareness of e-banking services provided by the bank is 17%. It can reasonably, be concluded that nearly 85% of the population is having awareness about e-banking services

Sources from which the respondents get the knowledge about the e-banking Services

No. of Respondents Personal Visit Executive from Bank Advertisements Friends /Relatives Others

Percentage

15 21 34 26 2

15% 21% 34% 26% 2%

Sources of awareness about e-banking


2 15 26 Personal Visit Executive from Bank 21 Advertisements Friends/Relatives Others 34

Interpretation Table 2, indicates the percentage distribution of awareness avenues, the major are in favour of advertisements, which score 34% among different avenues such as personal visit, executives of the banks, advertisements and friend/relatives. While the least score is for personal visit and that of other sources.

Awareness of E-Banking services


No. of Respondents ATM Debit Card Credit Card Phone Banking Mobile Banking Internet Banking Total Percentage

88 60 50 40 50 50 338

26.03% 17.75% 14.79% 11.83% 14.79% 14.79% 100%

Relative awareness about different ebanking services


30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% ATM Debit Card Credit Card Phone Mobile Internet Banking Banking Banking Relative awareness about different ebanking services

Interpretation

E-banking constitutes services provided in terms of ATMs, Debit Card, Credit Card, Phone Banking, Mobile Banking, Internet Banking etc, of which the first six have been covered. Amongst these ATM scores the largest used service status (26.03%) as indicated by table 3 figures. Close on the heels is Debit card (17.75%), Credit card (14.79%), while phone banking lags behind by scoring the least ie.,11.83%.

Users of E-banking services


No. of Respondents Users Non Users Total Percentage

74 26 100

74% 26% 100%

26%,

Users Non Users

74%

Interpretation

Table 4 shows that among those aware (which account for 83 in number) about 74 persons use e-banking services, which is 74% of total population studied.

Day Wise

Week- % wise

Fortnightly

Monthly %

Infrequently %

ATM Debit Card Credit Card Phone Banking Mobile Banking Internet Banking

4 2

36.36 31 18.18 11

55.36 13 19.64 7

37.14 11 20 10

25.58 9 23.26 8

13.85 12.31

9.09

8.93

17.14 6

13.95 18

27.69

3.57

8.57

16.28 13

20

7.14

11.43 2

4.65

13.85

35.36 3

5.36

5.71

16.28 8

12.31

11

100

56

100

35

100

43

100

65

100

120 100 80 60 40 20 0 ATM Debit Card Credit Card Phone Banking Mobile Banking Internet Banking

Interpretation To find out the level of usage amongst the service class, percentage has been calculated from the total completely filled in questionnaires and the incomplete questionnaires were discarded. The frequency of usage of ATM is highest which is evident from table 5, followed by debit card.

Factors influencing the level of usage Strongly More than average


All time availability Ease of use Nearness Security Direct access Friends/ Relatives Status symbol

Average

Less than average

Not at all

Total

56 32 21 12 32 3 7

8 22 18 10 12 8 11

11 7 14 13 7 14 14

1 2 5 4 2 7 7

3 1 0 1 0 8 10

79 64 58 40 53 40 49

90 80 70 60 50 40 30 20 10 0 Not at all Less than average Average More than average Strongly

Interpretation A study of the factors, table 6, influencing the usage was made by listing out various factors such as all time availability, ease of use, nearness etc., and from which it came to fore that amongst the various factors all time availability is ranked as the major motivating factor, followed by ease of use, direct access, nearness, security in decreasing order of importance. Quite interestingly friends and relatives, status symbol scored the least motivating factors.

Various benefits accruing from E-Banking services to its users


No. of Respondents Time Saving Inexpensive Easy Processing Easy Fund Transfer Others Percentage

70 21 40 26 8

42.42% 12.72% 24.24% 15.75% 4.85%

Benefits of e-banking

Time saving Inexpensive Easy Processing EasyFund Transfer Others

Interpretation When asked to list various benefits accruing from the usage of e-banking, time saving received highest percentage score at 42.42% among different benefits such as time saving (42.42%), inexpensive (12.72%), easy processing (24.24%), easy fund transfer(15.75%). Quite interestingly, easy processing feature scored more than the inexpensiveness of the e-banking services. The other benefits accruing to the people include ready availability of funds, removal of middlemen and no rude customer relation executives.

FINDINGS

FINDINGS OF THE STUDY


The overall percentage of servicemen having complete knowledge about ebanking services provided by the bank while opening an account in it is 37%, those having some idea about it is 46% and the percentage of people have no awareness of e-banking services provided by the bank is 17%. It can reasonably, be concluded that nearly 85% of the population is having awareness about ebanking services. The percentage distribution of awareness avenues, the major skewness is in favour of advertisements, which score 34% among different avenues such as personal visit, executives of the banks, advertisements and friend/relatives. While the least score is for personal visit. Among those aware (which account for 83 in number) about 74 persons use ebanking services, which is 74% of total population studied. E-banking constitutes services provided in terms of ATMs, Debit Card, Credit Card, Phone Banking, Mobile Banking, Internet Banking etc, of which the first six have been covered. Amongst these ATM scores the largest used service status (26.03%) Close on the heels is Debit card (17.75%), Credit card (14.79%), while phone banking lags behind by scoring the least ie.,11.83 . To find out the level of usage amongst the service class, percentage has been calculated from the total completely filled in questionnaires and the incomplete questionnaires were discarded. The frequency of usage of ATM is highest followed by debit card.. A study of the factors, influencing the usage was made by listing out various factors such as all time availability, ease of use, nearness etc., and amongst the various factors all time availability is ranked as the major motivating factor, followed by ease of use, direct access, nearness in decreasing order of importance. Quite interestingly friends and relatives, status symbol scored the least motivating factors.

CONCLUSION

CONCLUSION The usage of E-banking is all set to increase among the service class. The service class at the moment is not using the services thoroughly due to various hurdling factors like insecurity and fear of hidden costs etc. So banks should come forward with measures to reduce the apprehensions of their customers through awareness campaigns and more meaningful advertisements to make E-banking popular among all the age and income groups. Further, with increasing consumer demands, banks have to constantly think of innovative customized services to remain competitive. EBanking is an innovative tool that is fast becoming a necessity. It is a successful strategic weapon for banks to remain profitable in a volatile and competitive marketplace of today.

In future, the availability of technology to ensure safety and privacy of etransactions and the RBI guidelines on various aspects of internet banking will definitely help in rapid growth of internet banking in India.