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Research Article
325
Rural banking through internet: A study on use of internet banking among rural consumers
Bhavesh J. Parmar et al
326
Rural banking through internet: A study on use of internet banking among rural consumers
Bhavesh J. Parmar et al
concept of Automated Teller Machines (ATMs) is the best example. At present, ATMs are
city oriented in our country. It is inevitable that ATMs will be widely used, in semi-urban
and rural areas. The technology-led process is leading us to what has been described as
virtual banking. The benefits of such virtual banking services are manifold. Through the
competition, many banks quickly realized that there are a momentous number of customers
like to do banking electronically. As such, many banks, based on their existing 24-hour
telephone banking systems, have developed and implemented several important e-banking
applications so that their customers now are able to pay bills, transfer money among
accounts, check account history, download statement information, and computerize
their checkbooks online all at easy and around the clock (Morral, 1995).
2. Literature review
Joseph et al. (1999) investigated the influence of internet on the delivery of banking services.
They found six underlying dimensions of e-banking service quality such as convenience and
accuracy, feedback and complaint management, efficiency, queue management, accessibility
and customization. Jun and Cai (2001) identified 17 service quality dimensions of i-banking
service quality. These are reliability, responsiveness, competence, courtesy, credibility,
access, communication, understanding the customer, collaboration, continuous improvement,
content, accuracy, ease of use, timeliness, aesthetics, security and divers features. They also
suggested that some dimensions such as responsiveness, reliability and access are
critical for both traditional and internet banks. Jayawardhena (2004) transforms the
original SERVQUAL scale to the internet context and develops a battery of 21 items to
assess service quality in e- banking. By means of an Exploratory Factor Analysis (EFA) and
a Confirmatory Factor Analysis (CFA), these 21 items are condensed to five quality
dimensions: access, website interface, trust, attention and credibility. From the provider
perspective, there are target quality and delivered quality. The focus of process- or supplyled quality definition is rather internal than external, and it is defined as conformance to
requirements. It lays emphasis on the importance of the management and the supplyside quality, and there is an important role of the process in determining the quality of
outcome (Ghobadian, 1994). Achieving the quality of conformance between the planned
(target) quality level and the real quality delivered to customers depends on the service
quality management system in an organization. According to IAMAI report on online
banking 2006, 43% of online banking user hasnt started online financial transaction because
of security reasons, 39% havent started because they prefer face to face, 22% havent
started because they dont know how to use, for 10% sites are not user friendly and for 2%
banks are not providing the facility of internet banking. According to research 68% of the
customers cannot say that when they will be starting the financial transactions through
internet. Only 37% of Indian Internet users come from Top 10 cities i.e. Mumbai, Bangalore,
Delhi, Calcutta, Chennai, Pune, Hyderabad, Ahmedabad, Surat and Nagpur. As per IAMAI
and I-cube, the number of active Internet user (i.e. ones who logon to Internet at least once a
month) is now 32 million and numbers who have used Internet at least once stands at 46
million. In 2001, a Reserve Bank of India survey revealed that of 46 major banks operating
in India, around 50% were either offering Internet banking services at various levels or
planned to in the near future. (The Indian Internet Banking Journey) According to a research
report,( India Research, Kotak Securities, May 2000.) while in 2001, India's Internet
user base was an estimated 9 lakh; it was expected to reach 90 lakh by 2003. Also, while
only 1% of these Internet users utilized the Internet is banking services in 1998, the Internet
banking user base increased to 16.7% by mid- 2000. Meuter et al. (2000) have identified
critical incidents of customer satisfaction and dissatisfaction with technology-based service
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Rural banking through internet: A study on use of internet banking among rural consumers
Bhavesh J. Parmar et al
encounters. Given that business-to- business transactions are the fastest growing segment of
technology-driven services (Hof, 1999); Meuter and his colleagues (2000) suggested
investigating what drives business customer satisfaction or dissatisfaction with technology
driven services. According to Gnroos (1982), customers distinguish the quality of customer
interactions that take place during service delivery (functional quality) and the quality of the
outcome the customer receives in the service encounter (technical quality). Customers
perceive the quality of services of Internet banking based on the performance of online
delivery systems not on the processes in which the delivered service is developed and
produced. Because customers perceive Internet banking service quality based on relatively
standardized outcomes determined by online systems, customer attitudes toward that
outcome reflect overall quality of services delivered. Mary Modahl, an analyst at Forrester
Research, has spent the past several years researching the impact of the Internet
on business, using questionnaires, focus groups and interviews. To make sense of the
marketplace, she has developed a concept she calls "Techno graphics," an approach that
examines and ranks computer users by their comfort level with technology and how likely
they are to use the Internet. This scheme yields three basic users: Early Adopters,
Mainstream Users and Laggards. These groups can be further broken down into such
subgroups as "Handshakes, Successful Professionals with low technology tolerance";
"Gadget Grabbers, lower-income consumers focused on tech-based entertainment"; and
"New-Age Nurturers, affluent believers in technology for family and education."
Understanding this segmentation model, argues Modahl, is vital for companies eager to
remain profitable. Role of technology in customer-company interactions and the number of
Technology-based products and
services have been growing rapidly. Although these
developments have benefited customers, there is also evidence of increasing with
customer frustration in dealing technology-based systems. (Sharman Lichtenstein & Kirsty
Williamsony, Australia) research on Understanding the Consumer adoption internet
banking of Australia country investigated several factors influences on consumer adoption
of internet banking, including theories of consumer behavior in mass media choice and
use, innovation diffusion, technology acceptance, online consumer behavior, online
service adoption, service switching costs and the adoption of internet banking. Other factors
which they consider for adoption decision influencing factors likes accessibility, self
efficiency, usability, risk & costs, relative advantages, knowledge & support etc. by doing
that survey they found how the consumer adoption internet banking derived by the various
factors. It is very important to devise the strategy for technology & e-banking adoption by
the bank. Also understanding the attitudes of various customers is helpful for the
differentiate services of the banks. Ya-Yueh Shih studied customer attitude towards Internet
banking based on the Theory of Planned Behavior in Taiwan. Research has demonstrated
that operational precision is a significant quality consideration in products and services
involving computer technology. Since the Internet has become a major area for
marketing and transactions, individuals would expect accuracy in the information they
receive on the Internet. He has also given following parameters.
2.1 Transaction speed: The advent of web technology constitutes a new medium of
commerce which puts the customer in a position to directly and quickly interact with the
web services of the bank and never communicate with any employees.
2.2 User-friendliness: From the viewpoint of technology, ease of use is generally
considered an important quality attribute in technical computer services accordingly;
transactions conducted via traditional branch banking only involve communication
with operators, increasing the importance of issues like ease of resource use and
ASIAN JOURNAL OF MANAGEMENT RESEARCH
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Rural banking through internet: A study on use of internet banking among rural consumers
Bhavesh J. Parmar et al
available help information. Obviously, user- friendliness sheds some light on the behavior
intention of Internet banking.
2.3 Security Instead of a direct physical experience with the services or products, the virtual
nature of the web medium seeks to retain traditional customer trust by graphic display. Van
Slyke and Belanger (2003) pointed out that in e-business, security must go both ways: (1) the
user identity needs to be verified so the merchant knows this is a legitimate user; and (2) the
merchant identity must be verified so the user knows the merchant is legitimate. (Mahmood
H Shah, Sajid Khan & Mark Xu) A Survey on of Critical Success Factors in e-Banking
considered 21 variables that enable a successful implementation of e-banking. Some of the
variable are User-friendly website, Secure website and other related systems, Support
from top management, Fast responsive customer service (better that usual), Promotion of
electronic e-commerce within organization, All time availability of services, Fast and
integrated business processes. They found that the speed up & simply decision are making
pro-active changes in the website & flexibility and speed in service delivery with the help of
internet banking services which is necessary for change response to the changes in the
market-place. From an e-banking point of view, this may include: restructuring the
organization to speed up decision making, re-engineering processes to web-enable them, or
simply making pro-active changes in the website to attract more visitors or to increase its
appeal for conducting business. Quick responsive products/services factor is related to
flexibility and speed in service delivery. This would imply that an organization should be
able to deliver its products via electronic channels much faster than other channels and it
should be able to make quick changes in services, if necessary, in response to the changes in
the market-place. Services expansion was related to marketing products to new segments as
well as offering extra services to utilize the capabilities of e-channels. Business processes and
systems integration and enhanced customer services were next in the list of importance.
Several converging reference domains and theories suggest numerous potential influences on
consumer adoption of internet banking, including theories of consumer behavior in mass
media choice and use, gratification theories, innovation diffusion, technology acceptance,
online consumer behavior, online service adoption, service switching costs and the adoption
of internet banking. Factors in Consumer Adoption of Internet Banking Attention,
Usability, Convenience, Usability, Convenience, Self-efficacy, Accessibility. The
framework shows that a bank must first attract banking consumer attention to the internet
banking service before the consumer will consider internet banking. However, unless the
consumer has a high level of internet accessibility at home or at work, she is unlikely to
consider using internet banking. The consumer also assesses whether it is convenient to
conduct her banking that way (convenience), how usable the application appears (usability),
and her perceived competence at internet use and banking application use (self-efficacy). The
four factors of accessibility, self-efficacy, convenience and usability are interrelated, as will
be shown later. The consumer also considers whether the perceived relative advantages of
internet banking compared with other banking forms outweigh perceived risks and costs. In
addition, the availability of sufficient support and in depth knowledge from the bank and its
employees contribute significantly to the adoption decision.
329
Rural banking through internet: A study on use of internet banking among rural consumers
Bhavesh J. Parmar et al
Lack
of awareness
internet banking and
benefits
330
Rural banking through internet: A study on use of internet banking among rural consumers
Bhavesh J. Parmar et al
community banks, decided to provide Internet access to their customers and becoming
the dominant provider of local Internet connection services for the local community, thus
hoping to lock in customers to their financial institution (Klinkerman 2000).
3. Research objectives
1.
2.
3.
4.
4. Research methodology
The study employs primary data as well as secondary data. Secondary data was collected
from different published sources. Primary data was collected by structured questionnaire
survey. Non probability and convenience sampling applied to conduct this research. Data is
collected from 200 respondents for the purpose of determining the rural consumers
preference towards Internet Banking. All items were measured by responses on a five-point
Likert scale in agreement/relevance with statements, ranging from 1= strongly Disagree/
Completely Irrelevant to 5=Strongly Agree/Completely Relevant. The analysis of primary
data was carried out using Statistical Package for the Social Sciences (SPSS) 16.0 trial
version for windows.
4.1 Sample area
For the study we have collected samples as respondents from branch of public and private
sector bank situated in town of north Gujarat region. Further respondents are having
account in respective bank and are from nearby villages.
4.1.1 Sample selection
Our main objective is to identify perception regarding to internet banking among rural
consumers for that we approached total 465 respondents, having account in various banks and
selected 200 respondents who are currently user of internet banking.
5. Analysis
Table 2: (Age of respondents)
Age
20-30
30-40
40-50
50-60
60-70
>70
Total
Respondent
126
30
24
20
0
0
200
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Rural banking through internet: A study on use of internet banking among rural consumers
Bhavesh J. Parmar et al
Balance
Inquiry
Bill
payment
Fund
transfer
Daily
16.0%
2.0%
1.0%
Weekly
44.5%
7.0%
6.5%
Monthly
26.5%
32.5%
Occasional
11.5%
Never use
Total
Credit
card
payment
Stock &
treading
Demate
RTGS
4.0%
4.5%
0.5%
5.5%
5.0%
6.5%
2.0%
17.5%
28.0%
7.5%
12.5%
9.0%
26.0%
38.0%
18.0%
11.0%
13.0%
11.0%
1.5%
32.5%
37.0%
48.5%
72.5%
63.5%
77.5%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
0%
332
Rural banking through internet: A study on use of internet banking among rural consumers
Bhavesh J. Parmar et al
Better
Rate
18
23
12
7
41
56
40
3
2
1029
Bank
familiarity
11
16
15
6
28
47
53
17
2
891
Bank
Location
23
22
14
15
19
40
34
29
9
995
Size of
Bank
34
28
17
17
15
10
21
35
25
1024
5.145
4.455
4.975
Security
Convenience
Service
Features
35
15
19
24
20
7
12
32
40
980
36
39
20
30
25
6
11
19
16
1192
24
21
32
31
22
16
10
14
30
1056
10
23
42
37
8
8
8
30
31
977
5.12
4.9
5.96
5.28
4.885
Course
Gender & Minimizing inconvenience
respect to traditional banking
Gender & user friendly
Gender & security / privacy
Gender & speedy transaction
Gender & time saving
Gender & trust worthy
Age & Minimizing inconvenience
respect to traditional banking
Age & user friendly
Age & security / privacy
Age & speedy transaction
Age & time saving
Age & trust worthy
Income & Minimizing inconvenience
respect to traditional banking
2 .
df
2Tab.
4.082
9.487
3.810
9.487
4.661
9.487
2.569
9.487
3.418
9.487
1.022
9.487
19.594
12
21.02
6.817
12
21.02
7.857
12
21.02
9.178
12
21.02
13.065
12
21.02
27.795
12
21.02
36.876
20
31.41
Result
Significantly
Independent
Significantly
Independent
Significantly
Independent
Significantly
Independent
Significantly
Independent
Significantly
Independent
Significantly
Independent
Significantly
Independent
Significantly
Independent
Significantly
Independent
Significantly
Independent
Significantly
Dependent
Significantly
Dependent
333
Rural banking through internet: A study on use of internet banking among rural consumers
Bhavesh J. Parmar et al
14
15
14.792
20
31.41
17.948
20
31.41
36.897
20
31.41
25.311
20
31.41
32.046
20
31.41
27.700
20
31.41
14.240
20
31.41
14.973
20
31.41
17.865
20
31.41
40.143
20
31.41
31.522
20
31.41
20.391
16
26.29
6.705
16
26.29
14.789
16
26.29
19.321
16
26.29
17.636
16
26.29
16.787
16
26.29
16
Income & time saving
17
Income & trust worthy
18
19
20
Occupation & security / privacy
21
Occupation & speedy transaction
22
Occupation & time saving
23
Occupation & trust worthy
24
25
26
Education & security / privacy
27
Education & speedy transaction
28
Education & time saving
29
30
Significantly
Independent
Significantly
Independent
Significantly
Dependent
Significantly
Independent
Significantly
Dependent
Significantly
Independent
Significantly
Independent
Significantly
Independent
Significantly
Independent
Significantly
Dependent
Significantly
Dependent
Significantly
Independent
Significantly
Independent
Significantly
Independent
Significantly
Independent
Significantly
Independent
Significantly
Independent
5.1 Findings
The concept & Technology are new to the rural consumer in recent year, mostly people
are using nearer to one year. The different facilities of I-banking which are provided
by the bank in that, balance inquiry are the mostly preferred out by its various facilities,
the concept are not much developed so the other types of facilities are provided by the
bank are not having much usage likes Term loan, online FD, Demand Draft facilities
etc. Out of various hypothesis testing, mostly null hypothesis are accepted, except some
hypothesis Age is not dependent on trustworthiness. Comparing the traditional banking
with I banking it seems that most respondent are satisfying with I banking that I banking
provide the different types of facility available to the respondent to use. Expectations of
consumers towards I-banking are, it should be time saving and convenient to use,
ASIAN JOURNAL OF MANAGEMENT RESEARCH
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Rural banking through internet: A study on use of internet banking among rural consumers
Bhavesh J. Parmar et al
should be user friendly and best in security. Reasons for using I-banking facilities are,
by having traditional account in the same bank and excellent services provided by it.
6. References
1. H.S. Srivatsa, Srinivasan., (2007), research on Banking Channel Perceptions, An
Indian Youth perspective, International Marketing Conference on Marketing &
Society, 8-10 April, 2007, IIMK.
2. Khan, M.S., Mahapatra, S.S. and Sreekumar., (2009), Service quality evaluation
in internet banking: an empirical study in India, International. Journal of Indian
Culture and Business Management, 2(1), pp 30-46.
3. Klinkerman, Steve., (2000), Bridging Two Worlds. (Management strategies in
transforming banking companies to compete in e-commerce.). Banking Strategies.
September, pp 26-27.
4. Lichtenstein, S., and Williamson, K. (n.d.). Understanding consumer adoption of
internet banking: an interpretive study in the Australian banking context.
5. Mahmood H Shah (Cranfield University, UK), Sajid Khan (Cardiff University, UK)
and Mark Xu (University of Portsmouth, UK), A Survey on of Critical Success
Factors in e-Banking, Morrall, Katherine (1995), Business turn to online banking.
Bank Marketing. January, p.11.
6. Nachiket Mor, Head of ICICI's Treasury-, in March 2000 The Indian Internet Banking
Journey. Online Banking Report (2000), Internet Strategies for Financial Institutions.
July, 2000.
7. Polatoglu, V.N., Ekin, S.,(2001), International Journal of Bank Marketing, An
empirical investigation of the Turkish consumers' acceptance of internet banking
services".
8. Sharman Lichtenstein, Deakin University, Australia, Kirsty Williamson Monash
University and Charles Sturt University, Australia, research on Understanding
Consumer Adoption of Internet Banking: An Interpretive Study In The Australian
Banking Context, Journal of Electronic Commerce Research, 7, pp 2-3.
9. Ya-Yueh Shih research on the study of customer attitude towards Internet banking
based on the Theory of Planned Behavior of Taiwan.
335