1.

1 INTRODUCTION OF THE BANKING SECTOR

 Definition of Bank:
Establishment authorized by a government to accept deposits, pay interest, clear checks
make loans, act as an intermediary in financial transactions, and provide other financial
services to its customers.

Definition of internet banking:

In general terms, the business activity of accepting and safeguarding money owned by
other individuals and entities, and then lending out this money in order to earn a profit.

Internet banking system:

Internet Banking System is a system that has been developed in order to help clients with
the daily day-to-day transactions. Internet banking systems means that clients can now do
banking at the leisure of their homes. Also known as online banking, the system allows
both transactional and non-transactional features. Online banking or internet banking
allows customers to conduct financial transactions on a secure website operated by the
retail or virtual bank.

1.2 HISTORY OF INTERNET BANKING

The term online banking was first started in 80s. The term online became popular in
the late '80s and referred to the use of a terminal, keyboard and TV (or monitor) to access the
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banking system using a phone line. Home banking can also refer to the use of a numeric
keypad to send tones down a phone line with instructions to the bank. Online services started
in New York in 1981 when four of the citys major banks (Citibank, Chase Manhattan,
Chemical and Manufacturers Hanover) offered home banking services using the videotext
system. Because of the commercial failure of videotext these banking services never became
popular except in France where the use of videotext was subsidized by the telecom provider
and the UK, where the Prestel system was used.
The UKs first home online banking services was set up by the Nottingham Building
Society (NBS) in 1983 .The system used was based on the UK's Prestel system and used a
computer, such as the BBC Micro, or keyboard (Tan data Td1400) connected to the telephone
system and television set. The system (known as 'Home link') allowed on-line viewing of
statements, bank transfers and bill payments. In order to make bank transfers and bill
payments, a written instruction giving details of the intended recipient had to be sent to the
NBS who set the details up on the Home link system. Typical recipients were gas, electricity
and telephone companies and accounts with other banks. Details of payments to be made
were input into the NBS system by the account holder via Prestel. A cheque was then sent by
NBS to the payee and an advice giving details of the payment was sent to the account holder.
BACS was later used to transfer the payment directly.
Stanford Federal Credit Union was the first financial institution to offer online internet
banking services to all of its members in Oct, 1994. Later on it was adopted by worldwide
banks.

1.3 INTRODUCTION TO THE INTERNET BANKING

INTRODUCTION:
3

It is said that necessity is the mother of invention. And true, it is seeds of Internet
were sown in the ashes of the world war having bombed the cities of Hiroshima and
Nagasaki, US military was forced to provide the answer to the question What if someone
bombed the USA? So for many years after the war, most of the US military research
concentrated on ways and means to survive the nuclear holocaust. And one of the most
important strategic problems was- How would us authorities communicate with each other
in the aftermath of a nuclear attack? computers were already there.
But, communication networks were connected to each in a private fashion- in sort of
chains: somewhat like an electricity line to your home. This means that if even one chain in
the middle were blown up, the whole network would collapse. Then in the 1960s the
problem was taken by Americas foremost military think tank, the Rand Corporation. After a
lot of ideas were put up and knocked down, Paul baron- a rand thinker hit upon an idea.
What if the network was not built like a chain but like a fish net? he said. If one strand on
the fish net broke the net would still be functional.
After spending many agonizing hours over it, he came up with 11-volume report for
the pentagon. But, as fate would have it was rejected. By then, young engineers were
impressed by the idea and worked on it. Well before the end of the decade, the first net was
created and called ARPANET, connecting four American research organizations- university
of Utah, university of California in Los Angeles and Santa Barbara, and Stanford research
institute. Internet as a communication medium and as a repository of information has caught
the imagination of computer users. This has fuelled an unparalleled growth in the number of
Internet users.
Internet banking is the term used for new age banking system. Internet banking is also
called as online banking and it is an outgrowth of PC banking. Internet banking uses the
internet as the delivery channel by which to conduct banking activity, for example,
transferring funds, paying bills, viewing checking and savings account balances, paying
mortgages and purchasing financial instruments and certificates of deposits (Hague et al,
2009). Internet banking is a result of explored possibility to use internet application in one of
the various domains of commerce. It is difficult to infer whether the internet tool has been
applied for convenience of bankers or for the customers convenience. But ultimately it
contributes in increasing the efficiency of the banking operation as well providing more
convenience to customers. Without even interacting with the bankers, customers transact
from one corner of the country to another corner.
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 that the
establishing network in remote corners of the country is a 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 internet 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
4

Banks are pioneer in India to explore the versatility of internet applications in delivering
services to customers.
Customers have started perceiving the services of bank through internet as a prime
attractive feature than any other prime product features of the bank. Customers have started
evaluating the banks based on the convenience and comforts it provides to them. Bankers
have started developing various product features and services using internet applications.
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 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.
The Central Bank may have its concern about the impact of Internet banking on its
monetary and credit policies. As long as Internet is used only as a medium for delivery of
banking services and facilitator of normal payment transactions, perhaps, it may not impact
monetary policy. However, when it assumes a stage where private 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 countries where i-banking has
been quite developed, its impact on monetary policy has not been significant. In India, such
concern, for the present is not addressed as the Internet banking is still in its formative stage.

Broadly, the levels of banking services offered through INTERNET

can be categorized In to three types:
(i)

The Basic Level Service is the banks websites which disseminate information on
different products and services offered to customers and members of public in
general. It may receive and reply to customers queries through e-mail,

(ii)

In the next level are Simple Transactional Websites which allow customers to
submit their instructions, applications for different services, queries on their
account balances, etc., but do not permit any fund-based transactions on their
accounts,

(iii)

The third level of Internet banking services are offered by Fully Transactional
Websites which allow the customers to operate on their accounts for transfer of
funds, payment of different bills, subscribing to other products of the bank and to
transact purchase and sale of securities, etc.
The above forms of Internet banking services are offered by traditional banks, as
an additional method of serving the customer or by new banks, who deliver
banking services primarily through Internet or other electronic delivery channels
as the value added services. Some of these banks are known as virtual banks or
Internet only banks and may not have any physical presence in a country despite
offering different banking services.

Some of the distinctive features of Internet-banking are:

1. It removes the traditional geographical barriers as it could reach out to customers of
different countries / legal jurisdiction. This has raised the question of jurisdiction of
law / supervisory system to which such transactions should be subjected.
2. It has 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 concerns 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.

The Regulatory and Supervisory concerns in i-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
(ii) Security and technology issues and
(iii) Supervisory and operational issues.
Legal issues 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
place. Allied to this is the question where the income has been generated and who should tax
such income. There are still no definite answers to these issues.

1.4 INTERNET BANKING AT STATE BANK OF INDIA

WHERE SBI WAS?

In early 1990s more than 7000 branches were using traditional manual procedures.
These manual procedures were inherited from the Imperial Bank. Traditional procedures
were evolved over decades very few changes were brought in those procedures as per the
need of time. In that time, mainframe or mini computers were used for MIS,
RECONCILLATION & FUND SETTLEMENT PROCESS, or we can say that for
backhand operations purpose.

CHANGES BROUGHT IN INFORMATION TECHNOLOGY BY

SBI:In the next decade internet facility was provided for individuals. All SBI branches
were connected and ATMS were launch 2001 - KMPG appointed consultant for preparing IT
Plan for the Bank. Later on Core banking proposed by the IT consultancy company. 2002
All branches computerized but on decentralized systems, there the initiative of core banking
took place 2008- more than 6500 branches (95% of business) on Core Banking Solution
(CBS) Internet Banking facility for Corporate customers were also launched in early 2008
More Interfaces developed with e-Commerce & other sites through alternate channels like
ATM & Online Banking. All Foreign Offices were brought on Centralized Solution Large
network is playing the role of backbone for connectivity across the country.
Multiple Service Providers are providing the links BSNL, MTNL, Reliance, Tata &
reliance which are making the system errorless and provide high speed. Multiple
Technologies to support the networking infrastructure Leased lines, Dial-up, CDMA &
VSAT.

1.5 AXIS BANK INTERNET BANKING:

Facilities provided to the users:

Axis bank internet banking is the banks internet service, offering the following
facilities to the user: balance enquiry, statement of account, and request for issue of
cheque book, view personal account information, details of holding / statement of
demat accounts and other facilities as the bank may decide to provide from time to
time like transfer of funds between accounts.

User refers to any person who has an account with the bank and who has been
authorised by the bank to avail of axis bank internet banking.

Account refers to the users saving and / or current account and / or fixed deposit
and / or cash credit account and / or depository account and / or any other type of
account so designated by the bank to be covered under the axis bank internet banking
facility.

Terms refer to terms and conditions for use of axis bank internet banking as detailed
in this document.

Services Available on Internet Banking:

Internet banking will be provided to user with certain default facilities that do not
require second factor authentication (Net secure) as detailed out in Annexure? I. to
avail all the facilities of internet banking a user has to register for Net secure (second
factor authentication) online by logging into internet banking. The facilities available
with and without net secure are detailed out in Annexure? I.

1.6 HDFC INTERNET BANKING

HDFC Internet Banking Security Tips:

HDFC bank has been one of the pioneers in extending internet banking service to
cater to anytime, anywhere banking needs of its customers by leveraging on to its state-ofthe- art technology platforms. Internet banking has also been exploited by hacker and
fraudsters to deceive the banks customer and commit frauds. While the bank has best-of-thebreed solutions, processes and people deployed to extend secure banking to its customers, it
is important for our customers to know that security is incomplete without u.
Customers need to follow secure computing guidelines to avert any frauds or security
breaches to their accounts, as keys to the internet banking accounts are held by respective
account owners in the form of customer IDs and internet banking passwords (IPIN).

1.7 ADVANTAGES OF INTERNET BANKING

Advantages of Internet Banking:
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Internet Banking has several advantages over traditional banking which makes
operating a bank account simple and convenient. Internet Banking allows you to conduct
various transactions using the banks website and offers several advantages. Some of
advantages of internet banking are as follows:

Internet Banking account is simple to open and easy to operate.

Internet Banking is quit convenient as you can easily pay bills can transfer funds
between accounts, etc. Now you do not have to stand in a queue to pay off your bills;
also you do not have to keep receipt of all the bills as you can now easily view your
transaction.

Internet Banking is available all the time, i.e. 24x7. You can perform your yask from
anywhere and at any time; even in night when the bank is closed or on holidays. The
only thing you need to have is an internet connection.

Internet Banking is fast and efficient. Funds get transferred from one account to the
other very fast. You can also manage several accounts easily through internet
banking.

Through internet banking, you can keep an eye on your transactions and account
balance all the time. This facility also keeps your account safe. This means that by
the ease of monitoring your account at any time, you can get to know about any
fraudulent activity or threat to your account before it can pose your account to severe
damage.

Internet Banking is also a great medium for the banks to endorse their products and
services. The services include loans, investment option, and many others.

Is the nature of business forcing customers to use internet banking? Or, is there
something in it for the customers? Indeed there are many advantages to doing
internet banking:

(i) It is easy to open an internet banking account. You sit, in the comfort of
your home or office, and type in your answers to a few questions. You set
up security measures that will be used to access your account, like
usernames, passwords, etc. then, all you need to do is print off and sign a
form to send it in to complete the process.
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(ii) Internet banking is cheaper. With the advantage of having no physical

structure to keep up, virtual banks have low overhead. They can afford to
cut you a break by offering higher interest rates on your savings. The will
also offer lower overdrafts fees. Even banks that are backed by physical
buildings encourage online banking with free bill paying services.
(iii)

Internet banking allows you to compare deals easily. You can go to

different online banks and find out their interest rates and polices about
checking and savings accounts. You can learn what credit cards they offer,
and at what rates. You can compare loan terms. You can check with the
FDIC to check the banks credibility.

(iv)Internet banking customers can watch their daily balances. By going on the
internet to the banks website you can look at what is going on in your
account any day or time. You can check your balance. You can find out if a
particular check has cleared your account or see when automatic deposits
are made. All these services make check bouncing nearly a thing of the past.
(v) Your monthly statement can be reconciled by using your computer. You can
download your bank data into a software program like quicken or Microsoft
money. Then, with a few clicks of your mouse you can square up your
account. Through your internet banking account, you can even see copies of
checks you have written.
(vi)You have a better chance to catch fraudulent use if you have an internet
banking account. When you check your debits and deposits, you will mostly
notice if something is there that you did not do. If someone withdraws
money from your account, you will know it as soon as you log on and look
over your account. Then, you can work on correcting the situation long
before you would even notice it with conventional banking.
(vii)
Internet banking is much more convenient than traditional banking.
You do not have to wait for the bank to open its doors. You do not have to
drive to get there. If you are using internet banking for your office, you will
not have to waste valuable time going to the bank. You can manage your
funds anywhere, any time.
Internet banking is growing for a reason. People are getting accustomed to transacting
business over the internet. They are enjoying the convenience and the control over their
money that internet banking gives them.

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1.8 DISADVANTAGES OF INTERNET BANKING

Disadvantages of internet banking:
Though there are many advantages of internet banking, but nothing comes without
disadvantages and everything has its pros and cons; same is with internet banking. It also has
some disadvantages which must be taken care of. The disadvantages of internet banking
include the following:

Understanding the usage of internet banking might be difficult for a beginner at the
first go. Though there are some sites which offer a demo on how to use internet
banking, But all does not offer this facility. So, a person who is new to internet
banking might face some difficulty.

You cannot have access to internet banking if you dont have an internet connection;
thus without the availability of internet access, internet banking may not be useful.

Security of transactions is a big issue. Your account information might get hacked by
unauthorized people over the internet.

Password security is must. After getting your net banking password, do change it
and memorize it otherwise your account may be misused by someone who gets to
know your password inadvertently.

You cannot use internet banking, in case; the banks server is down.

Another issue is that sometimes it becomes difficult to note whether your transaction
was 0.successful or not. It may be due to the loss of internet connectivity in between,
or due to a slow connection, or the banks server is down.

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2.1 REVIEW OF LITERATURE

Today, we cannot think about the success of a banking system without information
technology and communication. It has enlarged the role of banking sector in the economy.
The financial transactions and payment can now be processed quickly and easily. The banks
with the latest technology and techniques are more successful in the competitive financial
14

market. They have been able to generate more and more business resulting in their greater
profitability.
Various empirical and theoretical studies have been undertaken at the national and
international level to analyse the impact of e-banking and information and communication
technology (ICT) on banking sector, customers, and service quality and payment system. The
studies mainly focus upon e-banking impact on productivity and profitability primarily due to
core banking system, electronic fund transfer, real time gross settlement system and
electronic clearing services. From the customer angle the studies primarily focus upon; why
customers choose e-banking products and increase in their level of satisfaction due to phone
banking, mobile banking, internet banking, website services, ATMs, etc. These services have
not only improved the satisfaction level of customers, but also helped in reduction of
processing time and transaction time.
The productivity of banks in terms of time saving and attending the customers at the
branches have also improved. The review of following studies throws light upon different
aspects of e-banking. To know the impact of e-banking on various aspects, the research
studies undertaken for the review have been classified into four categories, i.e., studies
related to banks, studies related to customers, studies related to service quality and studies
related to technology.

2.2 STUDIES RELATED TO BANK:

(1) Study by Talwar, (1999)
He examined the IT Revolution in banking sector which had not only provided
improved service to the customer, but also reduced the operational cost. The author brought
15

out that computerization of banks, introduction of Real Time Gross Settlement System,
setting up of Infinite, Electronic Payment Products(such as Electronic Clearing Service) had
ensured better resource management, systematic efficiency and substantially reduced interbranch reconciliation entries. However fear of hacking, tampering of data, secrecy
maintenance were certain issues which pose threats on usage 44 of electronic banking. The
challenges in banking sector were manifold but still the constitution of National Payment
Council by RBI and development of the integrated payment and settlement system was a step
in this direction to remove the obstacles coming in the way of using electronic banking.
(2) Study by Suresh chander and Rajendran (2003)
In their paper, he focused on investigating the important factors of customers
perceived quality in banks of developing economy like India. The authors had taken 15
public sector banks, 14 private banks and 14 foreign banks for the period under study. The
researchers found that there seems to be a great variation in respect of services offered by
three groups of banks. They used core services such as human element, systemization of
services, tangibility of services and social responsibility as critical factors.
They analysed that three groups of banks in India seem to vary significantly in terms of
service quality factors but from the customer perception of service quality, it could be
acceptable only if customers need could be satisfied at the right time in a right manner.

(3) Study by Manoharan (2007)

He highlighted the e-payment system in India and its performance impact on Indian
banking sector. The author described that competition in banking industry had forced the
banks to rethink the way they operate their business. So, e-banking has made it possible to
find alternate banking practices. In the paper, the author divided the payment system in India
into three parts, i.e., large value payment system, retail payment system, and retail electronic
system. Each one includes different categories of e-payment. The author studied the
performance of various Indian payment 50 systems in the last three years in which RTGS
emerged as the principal payment system in India for wholesale payment.
The study focused that having a huge opportunity of e-payment system in India still 90
per cent of transactions were cash based. So, an effort should be made to increase the use of
e-payment, and RBI should make efforts to strengthen the legal framework of electronic
banking system.

(4) Study by Ramani (2007)

He studied the impact of e-payment system on Indian banking sector. E-payment was
required for handling large volume of business payment and remittances for hassle free,
quicker and faster payment remittances at low cost, and paperless transactions. The
researcher highlighted various steps taken by RBI for the epayment. It includes RTGS,
deferred net settlement system such as electronic clearing services debit and credit, electronic
fund transfer and NEFT. The researcher studied that these methods had increased the use of
16

core banking solutions, data warehousing and data mining. E-payment had reduced the
chances of fraud, improved customer service by cutting the delay in payment obligation.

(5) Study by Singh and Malhotra (2007)

He made an attempt to discover factors affecting a banks decision to adopt internet
banking in India. The study was based on 88 banks comprising of public, private and foreign
banks covering financial years from 1997 to 2005. The results of the study showed that large
banks having high fixed expenses, high income and expenditure tend to use more technology.
Banks had used internet banking as complementary channel to existing branch network.
However, the private and foreign banks were quick adopter to internet banking than public
sector banks. The adoption of this innovation by other banks increases the probability that a
decision to adapt will be made as it has increased the profitability and productivity of banks.

(6) Study by Aki (2002)

He highlighted the impact of technology in banking sector. New technologies cannot
replace the branch network but these can support old methods of delivering the services. The
author evaluated the structural change in Finnish banking sector from the period 1993 to
2002 which showed that 42 per cent of households have internet connection with banks and
90 per cent have mobile banking services. ICT has had both inter-sectoral and intra-sectorial
impact. The author concluded that main goals of management of technology were to improve
customer satisfaction, reduce cost and develop new methods to collect and analyse the
customer information.

(7) Study by Suresh (2008)

He highlighted that recently developed e-banking technology had created unpredicted
opportunities for the banks to organize their financial products, profits, service delivery and
marketing. The objectives of the study were to evaluate the difference between traditional and
e-banking, and to identify the core capabilities for the best use of e-banking. The author
analysed that e-banking will be an innovation if it preserved both business model and
technology knowledge, and disruptive if it destroys both the model and knowledge. He also
differentiated e-banking from traditional banking in five ways, namely, value proportion,
market scope, cost structure, profit potential and value network. However, in order to exploit
technical and business capabilities of e-banking, banks should generate more customers
inside and outside India so that more revenues could be generated that lead to better future of
Indian economy.

(8) Study by Dannenberg and Kellner (1998)

In their study, they overviewed the opportunities for effective utilization of the Internet
with regard to the banking industry. The authors evaluated that appropriate application of
todays cutting edge technology could ensure the success of banks in the competitive market.
17

They evaluated the services of banks via internet as websites provides sophisticated line of
products and services at low price. The authors analysed that transactions via internet reduce
the risk of data loss to customers, chance to cut down expenses, higher flexibility for bank
employees, re-shaping the 43 banks image into an innovative and technologically leading
institutes, etc. The researchers found that banks could move one step further by entering into
a strategic alliance with internet service provider. So, the bank of tomorrow stands to be
feasible with todays technology.

(9) Study by Daniel (1999)

In his research paper, he described e-banking as the newest delivery channel offered by
the retail banks in many developing countries. The objective of the study was to analyse the
current provision of electronic services of major retail banking organizations in the UK. The
researcher through a questionnaire found that 25% banks in the UK were those already
providing e-banking services, 50% banks were testing or developing such services while 25%
were not providing any e-banking services. Electronic channels, PC, digital TV and all these
provide greater accessibility and services at lower price. To make services more adaptable,
customers should be provided maximum choice and convenience. Restriction and limitation
within organization to operate the services and its market share or strength were viewed as
important to decide and operate the e-banking services.

(10) Study by Sathye (1999)

In his research paper, he explored the factors affecting the adoption of internet banking
by Australian customers. The author stated that internet and other virtual banking had
significantly lower the cost structure than traditional delivery channels. So, the banks should
encourage customers to use internet for banking transactions. The author also emphasized
that for adoption of internet banking, it was necessary that the banks offering this service
made the consumers aware about the availability of such a product and explain how it adds
value to the other products. The analysis of the study showed that security concerns and lack
of awareness stand out as the reasons for non-adoption of internet banking by Australian
customers. However, internet should be considered as a part of overall customers service and
distribution strategy. These measures could help in rapid migration of customers to internet
banking resulting in considerable saving of operating costs of banks.

2.3 STUDIES RELATED TO CUSTOMER:

(1) Study by Simon and Victor (1994)
He examined the reasons why ATM card holders accept or reject EFTPOS and how
they viewed the risk of EFTPOS when compared to credit and cash. The authors signified
that more marketing research and consumer participation was needed in designing and
18

introducing e-banking services so as to gain more user acceptance. They signified that in
order to reduce fears in the minds of people regarding security, it was required to introduce
risk reduction techniques such as money back guarantee, live demonstration and free trial to
reduce psychological, financial and time loss risk. The researchers suggested that to prove epayment methods more successful, it should be based on proper marketing risk, prompt
service support, sufficient legal protection and awareness.

(2) Study by Krishnan (2001)

He examined the evolution of E-banking in Malaysia and analyse the various electronic
delivery channels used by local banks to assess the consumer reaction to these delivery
channels. The objective of the study was to present progressive development of e-banking,
electronic delivery channels and some pertinent issues for successful implementation of Ebanking. The study was based on a sample of 300 bank customers, and revealed that 90 per
cent of respondents visit their bank branches at least once every month, 63.3 per cent
customers indicated four or more visits to ATMs every month, 20 per cent of the respondents
were using tele-banking services.
Only 6.7 per cent customers indicated that they would not be interested at all using
these services. The 52 results showed that among different channels of e-banking like mobile
banking, internet banking, ATMs, PC banking; ATMs were widely accepted by the people.
The researcher also found that bank branches and interaction with human tellers were still
important. 60 per cent of the respondents had internet access at home and it presents a
positive indication of PC banking in future. The author concluded that for successful
implementation of e-banking, the major pre-requisites were legal and physical infrastructure
because e-banking requires a lot of tangible and technological changes in banks.

(3) Study by Singh and Singh (2002)

He described that technology has provided customers new ways of delivering the
products. Banks began to look e-banking as a mean to replace traditional banking. E-banking
products and services like ATM, EFT were a source of differentiation for all the banks. The
researchers analyzed the revised technology adoption life cycle model. Customers were
divided into five categories that are innovators, visionaries, pragmatists, conservatives and
sceptics and application of technology and marketing of banking services was done on that
basis. The authors explained that the banks required a dynamic strategic technique for
adoption of innovative technology.

(4) Study by Kassim (2005)

He explored the growing needs and expectations of the consumers in Qatar. Due to
competition, the banks had to offer a broader range of products and services at more
19

competitive prices through more efficient and convenient channels. The study investigated
the discrepancy between customer expectation and perception toward E-banking services.
The author compared the expected and perceived value of E-banking services through mean
responses which showed that largest discrepancies were found in the availability of
instructions and personnel assistance on how to use e-banking services and functionality. The
author concluded that to increase overall service quality of E-banking, management and
employees should find out what customers expect in terms of procedure handling, efficiency,
accessibility and updated information about products and services.

(5) Study by Robbins (2006)

He tried to evaluate whether the adoption of e-banking by the banks affected the
importance of bank location. The study looked into the state of consumer adoption of ebanking products and growth of e-banking products since 1995. The study also investigated
whether consumer choice had changed as a result of increased e-banking use and how banks
had responded. The study also questioned why location was 57 still important today. The
author focused that e-banking was not a perfect substitute of physical presence of banks in
the market. Consumers want the convenience of e-banking products but only of those banks
which fall close to their place. So, the location of a bank

2.4

STUDIES RELATED TO SERVICE QUALITY:

(1) Study by Joseph et al. (1999)

He evaluated the impact of electronic banking on the service delivery by the banks to
its customers. Researchers reviewed that when customers were in direct contact with the
technology (such as internet banking), they can exercise better control, whereas when there
was absence of direct contact (such as telephone banking), lesser control was perceived. A
sample of 440 electronic banking customers was taken, and 300 usable questionnaires were
analyzed. Six factors model was used to adequately represent the data, and the factors chosen
were convenience, accuracy, efficiency, queue management, accessibility and customization.
The study examined customers perception for electronic banking services, attributes of
electronic banking services and consumer perception of e-banking.
The study suggested that banks should provide statements of all transactions;
customers should be provided toll free numbers; and banks should also develop electronic
banking facilities to meet the needs of elderly and disabled people.

(2) Study by Nataraajan and Angur (1999)

In their paper, he examined the applicability of alternative measures of service quality
in the developing economy like India and accessed related issues in that context. They
analyzed that technological changes were causing banks to rethink their strategies for
20

services offered to both commercial and individual customers. The researchers in the study
put an emphasis on SERVQUAL and SERVPERF models of service quality measured on 5point liker scale. The results indicated that although many banks had provided financial
incentives to customers to utilize ATM, EFT and ECS but still the customers and banks
believed in personnel banking and traditional banking services.

(3)Study by Mantel (2000)

In his study, he proposed a framework for describing why consumers use electronic
banking products such as electronic bill payment, credit cards, debit cards, stored value and
e-cash for their banking needs. The author explained that consumer behaviour was consistent
with their preference, which includes convenience, incentives, control, privacy, security and
personnel involvement. The paper suggested that consumers make rational decisions
regarding the use of alternative of E-payment instruments rather than irrationally resistant to
change. Migration towards electronic banking products was more dependent on establishing
business cases rather than overcoming consumer reluctance. Further, the study provided that
greater control, convenience and communication power were some of the reasons which
made the consumers shift to electronic payment products.

(4) Study by Zeithaml (2002)

He focused on service delivery through electronic channels. The study presented the
definition, conceptualization and measurement of electronic service quality, and then offered
some ideas for future research. As the author focused on measuring the service quality of web
based services, therefore, E-SQ has been divided into two scales; E-SQ core scale and
recovery scale. Efficiency, reliability and privacy form the core scale which could be used to
measure customer perception of service quality. However, responsiveness, compensation and
contact were to be known as recovery scale. The overall construct of E-SQ was identified
first in terms of its dimensions, then its attributes that compare each dimension. The author
concluded that demographic, behaviour and experience also affect E-SQ which was not
included in the study but needs to be investigated.

(5)Study by Fang and Shih (2004)

In their paper, they highlighted that with the liberalization and internalization of the
financial market, banks had to face intense pressure for high service quality and
administrative efficiency. The authors made an attempt to prove that how an individuals
belief, attitude, subjective norms and perceived behaviour could influence the bank to change
its strategy and policy according to their need and convenience. Theory of planned behaviour
(TPB) and theory of reasoned action (TRA) were studied for the said purpose. The results of
the study were supported towards TPB and TRA and provide a good fit to the data. The
21

authors concluded that banking online proved to be extremely beneficial to the customers
because of saving in cost, time, space it offers and its quick response to complaints and its
delivery of improved services.

2.5 SERVICE RELATED TO TECHNOLOGY:

(1) Study by Raghvan (2006)
He highlighted the transformation in the banking sector due to effect of information
technology, tele-communication and electronic data processing. He also attempted to
visualize the perception of banks in India in the year 2020 taking into account the impact of
internet banking, ATMs, EFT on the performance of banks and initiative taken in
liberalization, privatization and globalization. He also evaluated the future of online and
internet banking. Due to tangible and proven benefits, automation of manual processes;
online and internet banking was slated to increase manifold. Ho also evaluated that currently
an estimated 46 lakh net users were online and this was estimated to touch 160 lakh by
March 2008. Furthermore, he analyzed the projected indicators of banks in India in 2020 with
special emphasis on internet banking, online banking and electronic banking.

(2) Study by Raja et al. (2008)

He evaluated the impact of e-payment system on the business opportunities. They
identified that due to the growth of internet users, various electronic payment mechanisms
had been developed to cater the diversity of applicants. The researchers classified the epayments into three main groups, namely, cash like systems, check like systems, and hybrid
systems which were further classified into credit cards, debit cards and electronic cheques.
They identified three main issues related to e-payment that were security issues, low interest
among businessmen, and heavy reliance on traditional payment methods. They also analyzed
that there were technical and cultural problems which hinder the path of e-payments.
However, to make e-payments more effective, security threats should be reduced; and people
should be realized that traditional payment methods were more time consuming than
electronic payment methods. They should also be realized that plastic card payments were
more convenient, easier and more secure than cash or cheques.

(3) study by Sarangapani and Mamtha (2008b)

He studied the impact of Information Technology on banking sector and its security
related aspects. Due to recent developments in banking industry and with introduction of
Basel-I and II implementation; customers are more demanding now and it requires innovation
in banking services. The1 researchers found that now the banking industry has been more
customer-oriented with unlimited market place, extensive product breadth and e-enabled
services provided to the customers.

22

The IT initiatives in banking industry have resulted into reduction of time.

Introduction of negotiated dealing system, screen based trading and RTGS for online
settlement of inter-bank transfers of fund had also resulted into safe, secure and quick
movements of funds. The authors also studied e-security aspects of banking which pose
damage and threat to the existing e-banking system. It includes unauthorized access to
computer system or network, stealing information, e-mail bombing, data diddling, denial of
service, viruses, etc.
The authors concluded that existing legal framework was adequate to meet the
challenges of e-banking; and it had become essential to create awareness of e-banking among
customers, banks and society. Different attempts have been made by the researchers to give a
close look to the concept of electronic banking. The review of literature provided that ebanking services have a negative impact on banks profitability in the short run because of
increased capital costs on account of technical and electronic infrastructure, training their
employees and also to create the environment where the banks can electronically operate
smoothly. However, these services have a positive impact on the profitability of banks in 65
the long run. Despite the increasing importance of E-banking services, the research pertaining
to E-banking in Indian context has been limited. While concluding, it can be said that ebanking services are complementary to the existing branch network and not a substitute to it.

(4) Study by Krishnamurthy (2006)

He highlighted the advantages, risks, innovations and convenience involved in ebanking. ATM, telephone, internet and cluster banking helped banks to deliver the products
more effectively. The author, in his paper, also described operational efficiency of e-banking.
It included basic e-banking, simple transactional and advanced transactional e-banking. Each
site offered a differential kind of services to customers. The author also commented upon
some risks such as loss of secrecy of the customers, financial stability, fraud prone
possibilities, eruption of legal claims, etc. So, the author suggested that banks should adopt
such a strategy in which risks and innovation in banking products move parallel and
simultaneously.

(5) Study by Jain and Hundal (2006)

He described the importance of mobile banking and barriers in the adoption of mobile
banking. The paper examined the forces that can act as barriers in mobile banking service
adoption. The objective of the study was to find the reasons why the people had not fully
accepted the technology though it provided much advantage to the banking customers as
compared to previous technologies. The results of the study indicated that consumers got
disheartened by the complicated function while accessing the mobile banking services which
lead to rise in their dissatisfaction level, as no proper guidance was provided to them. The
23

researchers suggested that service 63 providers should be aware of the problems of their
customers. The findings of the study gave a brief outlook for the practical implication for
managers and policy-makers who have to make strategies and decisions in order to cater the
unexplored service market.

24

3. RESEARCH METHODOLOGY

3.1 Title of the study :

The title of the study is Consumer attitude towards the use of Internet
Banking.

3.2 Objective of the study :

25

Main objective: A study on attitude toward the using Internet Banking by

customer.

3.3 Research design method :

Use of research design: Descriptive research design.

3.4 Sampling Method and Sampling size of study :

Area of research study: different Banks customer in North Gujarat.
Sampling Unit: The Sampling unit primarily includes the customers of
various banks.
Sampling technique: Convenient Sampling Technique.
Sample size: 100 questionnaires.

3.5 Research Design:

Primary Data: Primary data has been collected through well-designed
questionnaire by interviewing existing customers of the State Bank of India,
ICICI Bank, HDFC Bank, AXIS Bank and other different Banks.
Secondary Data: Secondary Data has been collected from the various books,
magazines, Newspapers, Internet websites etc.

3.6. Data Collection Method:

Primary data for this research study is collected by conducting survey by using precoded structured questionnaire

3.7. Data Collection Instrument:

Structured Questionnaire for the data collection utilised for the study. It has basically
two sections. First section refers to collection of personal and demographic information of
respondents. Second part has questions pertaining to factors affecting to consumers attitudes
towards internet banking

26

27

 This section is focusing on data Interpretation and Analysis.

First the study has been considered description statistics followed by
frequency analysis and percentile analysis. The study has done Factor
analysis to get factor identified.

4.1 DEMOGRAPHIC PROFILE OF RESPONDEND

Demographic
variables
AGE

Sub Categories

Frequency

21-30 YEAR
31-40 YEAR

Percent
39
39

28

39.0
39.0

41-50 YEAR
ABOVE 50 YEAR
TOTAL

15
7
100

15.0
7.0
100

GENDER

MALE
FEMALE
TOTAL

62
38
100

62.0
38.0
100

ANNUAL
INCOME

BELOW 100000
100000 - 500000
500000 - 1000000
ABOVE 1000000
TOTAL

21
42
30
7
100

21.0
42.0
30.0
7.0
100

OCCUPATION

SALARIED
BUSINESS
TOTAL

77
23
100

77.0
23.0
100

MARITAL
STATUS

MARRIED
SINGLE
TOTAL

74
26
100

74.0
26.0
100

INTERPRETATION:To serve the objective to study consumer attitude towards using internet banking the above
mentioned demographic variable were considered. The respondent coverage has response
from each category. The demographic characteristic which was found covered in past studies
was considered in the study. Each characteristics category was also prepared with the help of
past studies and population characteristics.
The study has observed each category of demographic character as per the above table. Only
extreme of income category and age category has comparative low respondent due to
population characteristics.

AGE :-

29

7
15
21-30 YEAR

39

31-40 YEAR

41-50 YEAR

ABOVE 50 YEAR

39

INTERPRETATION:The above pie chart of Age as demographic character of the study, shows that the age group
of 21 to 30 years and 31 to 40 years has more than one-third (78%) of total respondents . The
respondent having age group more than 50 years has only 7 percentage of total respondents.

GENDER :-

38
MALE

FEMALE
62

INTERPRETATION:The above pie chart of Gender as demographic character of the study, shows that the Male
respondent is 62, and female responded is 38.Male respondent is more than Female
respondent.

ANNUAL INCOME :-

30

Frequency
BELOW 100000

100000
7 - 500000

21

500000 - 1000000

30
42

ABOVE 1000000

INTERPRETATION:The above pie chart of Income as demographic character of the study, shows that the Income
group of 100000 500000 and 500000 1000000 has more than 70% (72 respondent). The
respondent having Income group of below 100000 has 21% and the respondent having
income group of above 1000000 has only 7% of total respondent.

OCCUPATION :-

23
SALARIED

BUSINESS

77

INTERPRETATION:The above pie chart of Occupation as demographic character of the study, shows that the
salaried respondents group is more than One third of the total respondent (77%). The
respondent having salaried group is 77, and the respondent group of business people is 33 of
total respondent

MARITAL STATUS :31

Frequency
26%

MARRIED

SINGLE

74%

INTERPRETATION:The above pie chart of Marital Status as demographic character of the study, shows that the
respondent group of married people is more than the respondent group of single. The group
of married respondent is 74 percentage and the respondent group of single people is only 26
percentage of total respondent.

Account of respondent in Bank?

Frequency
32

Percentage

YES
NO
TOTAL

100
0
100

100.0
0.0
100.0

Frequency
100
100
80

Frequency

60
40
20
0
YES

0
NO

Interpretation:The above question was taken into consideration as a confirmatory question to make
clear about the respondent appropriateness for the study. To serve the above purpose this
question was asked in dichotomous format with only two option Yes and No. So
inappropriate responses collected by wrong respondent can be cancelled.
The above chart shows 100 percentages on Yes option which represents 100 respondents
are having Account in bank and so the respondent responses are 100 percent eligible to
consider for the study.

Which types of account do you have in Bank?

33

Frequency
SAVING ACCOUNT
CURRENT ACCOUNT
TOTAL

Percentage
91
9
100

91.0
9.0
100.0

91
100
80
60
40
20
0

T
RR
EN
CU

SA
VI
N

AC
CO
U

AC
CO
U

Frequency

INTERPRETATION:The above question was taken into consideration as a confirmatory question to make
clear about the respondent appropriateness for the study.
The above chart shows 91 percentage respondent having Saving account, And only 9
percentage respondent having current account.

34

 Do you have any idea about Internet Banking?

Frequency

Percentage

YES
NO
TOTAL

100
0
100

100.0
0.0
100.0

Frequency
100
80
Axis Title

60

Frequency

40
20
0

YES

NO
Axis Title

INTERPRETATION:The above question was taken into consideration as a confirmatory question to make
clear about the respondent appropriateness for the study. To serve the above purpose this
question was asked in dichotomous format with only two options i.e. Yes and No. So
inappropriate responses collected by wrong respondent can be cancelled.
The above chart shows 100 percentage on Yes option which represents 100 respondents
are having Idea about the Internet Banking and so the respondent responses are 100 percent
eligible to consider for the study.

35

 Have you tried or used Internet Banking?

Frequency

Percentage

YES
NO
TOTAL

100
0
100

100.0
0.0
100.0

Frequency
100
100
80
Axis Title

60

Frequency

40
20
0

NO0

YES
Axis Title

INTERPRETATION:The above question was taken into consideration as a confirmatory question to make
clear about the respondent appropriateness for the study. To serve the above purpose this
question was asked in dichotomous format with only two options Yes and No. So
inappropriate responses collected by wrong respondent can be cancelled.
The above chart shows 100 percentages on Yes option which represents 100
respondents are tried or used Internet Banking and so the respondent responses are 100
percentages eligible to consider for the study.

36

1. Internet Banking is more convenient than branch banking?

Frequency

Percentage

STRONGLY DISAGREE

0
3
14
55
28
100

DISAGREE
NEUTRAL
AGREE
STRONGLY AGREE
TOTAL

55

28
14

ST
RO
N

ST
RO
N

G
LY

EU

TR
AL

AG
RE
E

G
LY

D
IS
AG
RE
E

60
50
40
30
20
10
0

0.0
3.0
14.0
55.0
28.0
100.0

Frequency

INTERPRETATION:The response on the above mentioned question has been found agree side as it has 83
percentage consist of strongly agree and agree side. Moreover 14 percentage respondent has
replied for neutral option. Although 3 percentage respondent has replied disagree and
strongly disagree. Based on above chart. percentage coverage, Majority respondent has been
found Agree that they have sufficient exposure on Internet Banking.

37

2. Internet Banking transaction can be done faster than branch

banking?
Frequency
STRONGLY DISAGREE

0
5
7
36
52
100

DISAGREE
NEUTRAL
AGREE
STRONGLY AGREE
TOTAL

0.0
5.0
7.0
36.0
52.0
100.0

52
36

ST
RO
N

ST
RO
N

G
LY

EU

TR
AL

AG
RE
E

G
LY

D
IS
AG
RE
E

60
50
40
30
20
10
0

Percentage

Frequency

INTERPRETATION:The response on the above mentioned question has been found agree side as it has 88
percentage consist of strongly agree and agree side. (52% respondent Strongly agree, and
36% respondent Agree). Moreover 7 percentage respondent has replied for neutral option.
Although 5 percentage respondent has replied disagree and strongly disagree. Based on
above chart, percentage coverage, Majority respondent has been found Agree that they can be
done Internet Banking transaction faster than Branch Banking.

38

3. Internet Banking enables me to conduct banking transaction at

anywhere and anytime?
Frequency
STRONGLY DISAGREE

0
2
18
37
43
100

DISAGREE
NEUTRAL
AGREE
STRONGLY AGREE
TOTAL

0.0
2.0
18.0
37.0
43.0
100.0
43

37
18

G
LY

EU

TR
AL

AG
RE
E

ST
RO
N

ST
RO
N

G
LY

D
IS
AG
RE
E

45
40
35
30
25
20
15
10
5
0

Percentage

Frequency

INTERPRETATION:From the above graph we can interpret that the most of the people strongly Agree that
the Internet Banking transaction can be done at anytime and anywhere. 80% respondent have
replied for agree side. 18 percentage of respondent has replied for neutral option. Although 2
percentage of respondent has replied for disagree with statement, because of network
problem of lack of computer knowledge.

39

4. Internet Banking saves the time, for example no need to wait in

queue for depositing or withdrawing the cash?
Frequency
STRONGLY DISAGREE
DISAGREE

Percentage
0
0
4
39
57
100

NEUTRAL
AGREE
STRONGLY AGREE
TOTAL

0.0
0.0
4.0
39.0
57.0
100.0
57
39

ST
RO
N

ST
RO
N

G
LY

EU

TR
AL

0
N

AG
RE
E

G
LY

D
IS
AG
RE
E

60
50
40
30
20
10
0

Frequency

INTERPRETATION:From the above graph we can interpret that most of the people strongly agreed that the
Internet Banking is no need to wait in queue for depositing and withdrawing a cash easily so
they can save their time. more than 90% respondent has replied for agree side in this regard.
Moreover, only 4 percentage respondent has replied for neutral option. No any
respondent has replies disagree or strongly disagree in this statement.

40

5. I think that Internet Banking save my time and money?

Frequency
STRONGLY DISAGREE

Percentage
0
1
5
35
59
100

DISAGREE
NEUTRAL
AGREE
STRONGLY AGREE
TOTAL

0.0
1.0
5.0
35.0
59.0
100.0
59

35

ST
RO
N

ST
RO
N

G
LY

EU

TR
AL

AG
RE
E

G
LY

D
IS
AG
RE
E

60
50
40
30
20
10
0

Frequency

INTERPRETATION:From the above graph we can interpret that most of the people strongly agreed that the
Internet Banking save their time and money. more than 90% respondent has replied for agree
side in this regard.
Moreover, only 5 percentage respondent has replied for neutral option. And only 1
percentage respondent has replies disagree with this statement.

41

6. I think that Internet Banking is easy to use?

Frequency
STRONGLY DISAGREE
DISAGREE
NEUTRAL
AGREE
STRONGLY AGREE
TOTAL

1
8
35
34
22
100
35

1.0
8.0
35.0
34.0
22.0
100.0

34
22

ST
RO
N

ST
RO
N

G
LY

G
LY

EU

TR
AL

AG
RE
E

D
IS
AG
RE
E

35
30
25
20
15
10
5
0

Percentage

Frequency

INTERPRETATION:The response on the above mentioned question has been found neutral side as it has
88 percentage consist of neutral side. 34 percentage respondent has replied Agree, and 22
percentage respondent has replied strongly agree. Although 9 percentage respondent has
replied disagree and strongly disagree. Based on above chart, percentage coverage, Majority
respondent has been found Agree and neutral side that they feel Internet Banking is easy to
use.

42

7. Internet Banking allows easier maintenance of transaction activities?

Frequency
STRONGLY DISAGREE

0
5
19
61
15
100

DISAGREE
NEUTRAL
AGREE
STRONGLY AGREE
TOTAL

0.0
5.0
19.0
61.0
15.0
100.0

61

19

15

ST
RO
N

AG
RE
E
G
LY
ST
RO
N

G
LY

EU

TR
AL

D
IS
AG
RE
E

70
60
50
40
30
20
10
0

Percentage

Frequency

INTERPRETATION:From the above graph we can interpret that most of the people Agreed that the Internet
Banking allows easier maintenance of transaction activities. more than 75% respondent has
replied for agree side in this regard.
Moreover, 19 percentage respondent has replied for neutral option. And only 5
percentage respondent has replies disagree with this statement. Some people cant believe
that Internet Banking is easy to maintain of transaction because of lack of knowledge about
the Internet Banking.

43

8. I feel that using Internet banking is financially secure to conduct

banking transaction?
Frequency
STRONGLY DISAGREE
DISAGREE
NEUTRAL
AGREE
STRONGLY AGREE
TOTAL

4
12
39
43
2
100

39

4.0
12.0
39.0
43.0
2.0
100.0

43

12
4

ST
RO
N

ST
RO
N

G
LY

EU

TR
AL

AG
RE
E

G
LY

D
IS
AG
RE
E

45
40
35
30
25
20
15
10
5
0

Percentage

Frequency

INTERPRETATION:From the above graph we can interpret that most of the people Agreed that the Internet
Banking is financially secure to conduct banking transaction. 45% respondent has replied for
agree and strongly agree side.
Moreover, 39 percentage respondents have replied for neutral option. And 16
percentage respondent has replies disagree and strongly disagree with this statement. Some
people cant believe that Internet Banking is financially secure to conduct banking
transaction. Because of some people facing problem regarding security or hacking.

44

9. I feel that its important to keep the password and login id secretly
for using internet banking?
Frequency
STRONGLY DISAGREE

Percentage
0
6
20
30
44
100

DISAGREE
NEUTRAL
AGREE
STRONGLY AGREE
TOTAL

0.0
6.0
20.0
30.0
44.0
100.0
44

30
20

ST
RO
N

ST
RO
N

G
LY

EU

TR
AL

AG
RE
E

G
LY

D
IS
AG
RE
E

45
40
35
30
25
20
15
10
5
0

Frequency

INTERPRETATION:From the above graph we can interpret that most of the people Agreed that the
important to keep the password and login id secretly for using Internet banking. 74%
respondent has replied for agree and strongly agree side. because of most of the people facing
the problem about the password protection by forget password, password hacking by link
their password etc.
Moreover, 20 percentage respondents have replied for neutral option. And only 6
percentage respondent has replies disagree and strongly disagree with this statement. Some
people cant feel its important to keep password and login id secretly.

45

10. I believe that the Internet Banking system can never make mistake
in the conduction of banking transaction?
Frequency
STRONGLY DISAGREE
DISAGREE
NEUTRAL
AGREE
STRONGLY AGREE
TOTAL

2
16
46
29
7
100

2.0
16.0
46.0
29.0
7.0
100.0

46
29
16
7

ST
RO
N

G
LY
ST
RO
N

G
LY

EU

TR
AL

AG
RE
E

D
IS
AG
RE
E

50
45
40
35
30
25
20
15
10
5
0

Percentage

Frequency

INTERPRETATION:From the above graph we can interpret that most of the people has replied neutral
option for that the Internet Banking is financially system can never make mistake in the
conduction of banking transaction. 46% respondent has replied for neutral side in this
question.
Moreover, 36 percentage respondents have replied for agree and strongly agree side.
Some people feel internet banking can never make any mistake. And 18 percentage
respondent has replies disagree and strongly disagree with this statement. Some people
believe that the internet banking system can mistake.

46

11. I like the idea to use Internet Banking?

Frequency
STRONGLY DISAGREE

0
2
8
55
35
100

DISAGREE
NEUTRAL
AGREE
STRONGLY AGREE
TOTAL

0.0
2.0
8.0
55.0
35.0
100.0

55
35

ST
RO
N

AG
RE
E
ST
RO
N

G
LY

EU

TR
AL

G
LY

D
IS
AG
RE
E

60
50
40
30
20
10
0

Percentage

Frequency

INTERPRETATION:From the above graph we can interpret that most of the people Agreed that to like the
idea to using Internet Banking. 90% respondent has replied for agree and strongly agree side.
In which 35% respondents are strongly agree and 55% respondents are agree with this
statement.
Moreover, 8 percentage respondents have replied for neutral option. And 2 percentage
respondent has replies disagree and strongly disagree with this statement.

47

12. My favourable attitude would be use Internet Banking rather than

that of traditional banking for banking activities?
Frequency
STRONGLY DISAGREE
DISAGREE
NEUTRAL
AGREE
STRONGLY AGREE
TOTAL

2
5
11
55

2.0
5.0
11.0
55.0
27.0
100.0

27
100

55

27

ST
RO
N

AG
RE
E
ST
RO
N

G
LY

TR
AL
EU
N

11

G
LY

D
IS
AG
RE
E

60
50
40
30
20
10
0

Percentage

Frequency

INTERPRETATION:
From the above graph we can interpret that most of the people Agreed that their
favourable attitude would be use Internet Banking rather than that of traditional banking.
More than 80% respondent has replied for agree and strongly agree side.
Moreover, 11 percentage respondents have replied for neutral option\ with this
statement. And 7 percentage respondent has replies disagree and strongly disagree with this
statement.

48

49

5.1.Overview of Factor Analysis

The present study has applied descriptive factor analysis on the basis of a set of 12
statements. Each statement represents one variable affecting attitude towards using internet
banking measured at a 5-point Likert scale.

Factor analysis is used for:

Identifying the underlying dimensions, or factors that explain the correlations among
a set of variable.
Identifying a new, smaller set of uncorrelated variables to replace the original set of
correlated variables.

Define the Problem

Define the Variable Inter- Correlation Matrix
Identify the Appropriate Method of Factor Analysis
Determine the Appropriate Number of Factors
Rotate the Factors
Compute Factor Scores or Identify Surrogate Variables
Determine the Model Fit

50

5.2

Reliability Analysis :Cronbach's Alpha

No. of Items
.857

12

The study has been started factor analysis with reliability analysis. This is the basic
requirement in case of lickert scale base database. So the whole data has once put for the
Reliability study and as per the thumb rule of 0.6 , this study for appropriate to go for further
analysis.
It is compulsory to check the reliability of the scale used. The reliability of the scale
can be tested by a widely used method, namely Cronbachs Alpha. Reliability scale method
also known as cronbachs alpha method. It is the average of all possible split-half coefficients
resulting from different ways of splitting the scale items. This coefficient varies from 0 to 1,
and a value of 0.6 or less generally indicates unsatisfactory internal consistency reliability.
We found cronbachs alpha .857 from 12 items in our study.

5.3

KMO and Bartlett's Test :-

Kaiser-Meyer-Olkin Measure of Sampling Adequacy.

Bartlett's Test of Sphericity

Approx. Chi-Square
Df

.796
453.304
66

Sig.

.000

Kaiser-Meyer Oklin (KMO) Measure of Sampling Adequacy:

It is an index generally used to examine the appropriateness of factor analysis. Higher
values (between 0.5 and 1.0) indicate the adequacy of the data for application of factor
analysis. Values below 0.5 imply that factor analysis may not be appropriate. We found KMO
value is 0.796 in our study. So, it is appropriate for the further study.

51

5.4 RESULT TABLES

(1) Communalities
Initial
Internet banking is more convenient than branch
banking
Internet banking transaction can be done faster than
branch banking
Internet banking enables me to conduct banking
transaction at anytime and anywhere
Internet banking saves the time, for example, no to wait
in queue for depositing or withdrawing the cash.
I think that internet banking saves my time and money
I think that internet banking is easy to use
Internet banking allows easier maintenance of
transaction activities
I feel that using internet banking is financially secure to
conduct banking transaction
I feel that its important to keep the password and login
id secretly for using internet banking
I believe that internet banking system can never make
any mistake in the conduction of banking transaction
I like the idea to use internet banking
My favourable attitude would be to use internet banking
rather than that of traditional banking for banking
activities

Extraction

1.000

.529

1.000

.599

1.000

.651

1.000

.735

1.000
1.000

.558
.529

1.000

.520

1.000

.654

1.000

.646

1.000

.565

1.000

.777

1.000

.671

INTERPRETATION:
The above table represents the communalities. So as per the requirement the
communalities table should be more than 0.5. Under the table we convey that all are having
more than 0.5.there is no extraction below the 0.5. So no reduction in construct (questions)
required.

52

2. Total Variance Explained

1
2

Total
4.809
1.442

Extrac
tion
Sums
of
Square
d
Loadin
gs
% of
Varian
ce
40.073
12.016

Cumulati
ve %
40.073
52.089

3
4
5
6
7
8
9
10
11
12

1.183
.810
.777
.631
.565
.517
.455
.320
.286
.204

9.857
6.754
6.475
5.254
4.710
4.310
3.791
2.670
2.387
1.701

61.946
68.700
75.175
80.430
85.140
89.450
93.241
95.912
98.299
100.000

Compo
nent

Initial
Eigenv
alues

Rotation
Sums of
Squared
Loadings

Total
4.809
1.442

% of
Varian
ce
40.073
12.016

Cumul
ative
%
40.073
52.089

total

Varianc
e%

2.966
2.321

24.717
19.340

Cumula
tive %
24.717
44.057

1.183

9.857

61.946

2.147

17.889

61.946

INTERPRETATION:The above table represents the total variance. This table explains total variance
explained by no. of factor identified. There are 3 factor explain the 61.946 cumulative %.
According to thumb rule it is necessary that the factor have more than 60% cumulative value.
So here the study has good as per need with more than 60% cumulative variance explained.

53

3. Rotated Component Matrix :-

I like the idea to use internet banking

I believe that internet banking system can never
make any mistake in the conduction of banking
transaction
My favourable attitude would be to use internet
banking rather than that of traditional banking for
banking activities
I think internet banking is easy to use
Internet banking allows easier maintenance of
transaction activities
Internet banking enables me to conduct banking
transaction at anytime and anywhere
Internet banking transaction can be done faster
than branch banking
Internet banking is more convenient than branch
banking
Internet banking saves the time, for example, no to
wait in queue for depositing or withdrawing the
cash
I think internet banking is easy to use
I feel that using internet banking is financially
secure to conduct banking transaction
I feel that its important to keep the password and
login id secretly for using internet banking

Component
1
.835

.738

.704
.647

.780
.748
.654
.751
.690
.680
.502

.610

INTERPRETATION:
The above table shows that number of factor at rotated component matrix. There are 3
factors resulted in these rotated component matrix. The 1st factor explained the EASE OF
USE and the 2 nd factor explained the CONVENIENT and the 3 rd factor explained the
SECURITY CONCERN. It is necessary to have an each factor loading minimum value 0.5.
And here the results shows criteria fulfilled for each statement.

54

5.5 FACTOR TABLE

NO

FACTOR

EASY TO USE

CONVENIENCE

SECURITY
CONCERN

I like the idea to use internet banking

I believe that internet banking system can never make
any mistake in the conduction of banking transaction
My favourable attitude would be to use internet
banking rather than that of traditional banking for
banking activities
I think internet banking is easy to use
Internet banking enables me to conduct banking
transaction at anytime and anywhere
Internet banking transaction can be done faster than
branch banking
Internet banking is more convenient than branch
banking
Internet banking saves the time, for example, no to wait
in queue for depositing or withdrawing the cash
I think internet banking is easy to use
I feel that using internet banking is financially secure to
conduct banking transaction

55

FINDINGS

Internet banking is time saving process.

People can satisfy about net banking facility.
Internet banking is more convenient than branch banking.
Internet banking is allows to easier maintenance of transaction activity.
Internet banking can be faster than branch banking.
Internet banking is easy to use anywhere and anytime.
Its provide 24 hours facility.
There is no need to wait in queue for depositing or withdraw the money.
Its providing low operating cost & charges.
Some people can believe that machine cannot make any mistake.
But in our study we found that some people believe that there is a problem about the
password protection. And sometime transaction may be a wrong.

CONCLUSION
56

We have taken the research study on CUSTOMER ATTITUDE TOWARDS USING

INTERNET BANKING for a period of 15 days and we have got the good chance to know
about the customer attitude towards using the internet banking. After studying about the
Internet Banking, we have concluding some of the result from it, which is under:
Most of the respondents have fully satisfied with Internet Banking Service providing by the
different Banks in India. Internet Banking having some errors and problem relating to
transaction activities but solution is also available to avoid some errors and problem relating
to Internet banking. We have given suggestion for improving Internet Banking facilities and
services.
On the basis of our study, internet banking has bright future in India. Now a days peoples are
attractive with the Internet Banking facilities and services, and more and more peoples are
adopt Internet Banking.

SUGGESTION
57

Most of people havent knowledge about internet banking, so first of all Banks should

to focus on to create awareness regarding internet banking.

Language barrier problem also found in rural area, so that internet banking facilities

must be cut this limiting factor of language.

Many times, people have perception that slow network issue might make their
transection failure and with this assumption they prioritise normal banking than
internet banking. So Banks should first develop such possibilities on low band
connectivity and then make awareness to overcome the issue.
As it is faster & time saving so that individual should adopt internet banking.

Sometime there is problem in the password security so, that banks and users have to

take care about the password security.

Some people think that internet banking is not easy to use so, banks must have to
provide a demo for the use of internet banking.
If banks can take care about the above suggestion than they can give better internet
banking facility to the customers with new developing customer base.

58

BIBLIOGRAPHY
1. http://www.allprojectreport.com/MBA-project/finance-project-report/retail-bankingservice-in-rewari-city/retail-banking-service-project-report.htm
2. http://www.moneycontrol.com/company-facts/internetbanking/history/HDF01
3. http://www.hdfcbank.com/aboutus/default.htm.
4. http://www.sbibank.com/aboutus/default.htm.
5. http://www.axisbank.com/about/default.htm.
6. Reference:
(i)
Talwar (1999),
(ii)
Ramani(2007)
(iii)
Singh and malhotra(2007)
(iv)
Suresh(2008)
(v)
Krishnan(2001)
(vi)
Singh(2004)
(vii) Kassim(2005)
(viii) Robbin (2006)
(ix)
Mantel(2000)
7. http://snujagarwal.hubpages.com/hub/advantages-and-disadvantages-of-internetbanking.

59

RESEARCH QUESTIONNAIRE
Respected Sir / Madam,
We, the student of VMPCMS (BBA PROGRAME) of Ganpat University are conducting a
research on Customers attitude towards the use of internet banking services. In this
regard, we would be highly grateful to you if you favour us by answering this questionnaire.
60

We also assure you that the data provided by your will be kept confidential and utilized for
academic purpose only.
==================================================================
PART A: RESPONDENTS DEMOGRAPHICS:
Gender -

1. Male

2. Female

Age 1. 21 30

2. 31 40

3. 41 50

4. Above 50

Marital Status 1. Married

2. Single

Occupation 1. Salaried

2. Business

Annual Income 1. Below 1,00,000

2. 1,00,000 5,00,000

3. 5,00,000 10,00,000

4. Above 10,00,000

1. Do you have account in bank?

1. Yes

2. No

2. Which types of account are you have in bank?

1. Saving account

2. Other Specify_____________

3. Do you have any idea about Internet banking?

1. Yes

2. No

4. Have you tried or used internet banking?

1. Yes

2. No

61

PART B: ABOUT RESPONDENTS ATTITUDE TOWARDS INTERNET BANKING:

(Please tick mark in the appropriate boxes)
No.

Statements

Factor 1: Convenience:
CON1 Internet banking is more convenient than
branch banking.
CON2 Internet banking transaction can be done
faster than branch banking.
CON3 Internet banking enables me to conduct
banking transactions at anytime and
anywhere.
CON4 Internet banking saves the time, for
example, no to wait in queue for
depositing or withdrawing the cash.
CON5 I think that internet banking saves my
time and money.
Factor 2: Ease of Use
PEOU1 I think that internet banking is easy to use.
PEOU2 Internet
banking
allows
easier
maintenance of transaction activities.
Factor 3: Security Concerns
SEC1 I feel that using internet banking is
financially secure to conduct banking
transactions.
SEC2 I feel that its important to keep the
password and login id secretly for using
internet banking.
SEC3 I believe that internet banking system can
never make any mistake in the conduction
of banking transaction.
Factor 4: Attitude towards Internet Banking Use
ATT1 I like the idea to use internet banking.
ATT2 My favourable attitude would be to use
internet banking rather than that of
traditional banking for banking activities.

Strongly
Disagree

Disagree

Neutral

Agree

Strongly
agree

1
1

2
2

3
3

4
4

5
5

1
1

2
2

3
3

4
4

5
5

Give suggestion if any:_______________________________________________________

62