A THESIS ON

AN INVESTIGATION INTO SEMIURBAN CONSUMER’S

PERCEPTION AND LEVEL OF ACCEPTANCE OF INTERNET
BANKING AND SMS BANKING w.r.t AXIS BANK, ICICI, SBI,
KARNATAKA, ING VYSYA,HDFC AT RAJAHMUNDRY

MBA Course

A report in partial fulfillment of

the requirements of
THE MBA PROGRAM

1
 TABLE OF CONTENTS

1. LIST OF TABLES and ILLUSTRATIONS 7

2. ABSTRACT 8

3. INTRODUCTION 9

4. OBJECTIVES 9

4.1. LIMITATIONS 10

4.2. METHODOLOGY 11-12

4.3. FINDINGS 13

5. INDUSTRY PROFILE 14-23

6. REVIEW OF LITERATURE 24-30

7. RESEARCH DESIGN / METHODOLOGY 31-33

8. RESULTS AND ANALYSIS 34-49

9. CONCLUSIONS 50-52

10. REFERENCES 53

11. APPENDICIES 54-59

12. GLOSSARY ` 60-65

2
 LIST OF TABLES & ILLUSTRATIONS
Table-1 no of persons having internet at their home -34
Table illustrates no of persons having internet according to age group

Table-2 time spending on internet -35

Table illustrates time spending on internet

Table-3 Frequency of visiting your bank branch per month -36

Table illustrates no of times they visiting the bank

Table-4 The main reason that you typically visit your bank branch -37
Table illustrates purpose of visiting the bank

Table-5 The e-banking facilities provided by your bank -38

Table illustrates facilities provided by their bank

Table-6 banking services do you use which your Internet bank offers -39
Table illustrates basically for seeking product and rate information

Table-7 reason that you chose this particular bank as Your Internet bank -40
Table illustrates choosing particular bank for internet banking

Table-8 E-banking services you use provided by the bank -41

Table illustrates more no of persons using atm services

Table-9 the name of bank you have an internet bank or sms banking account -42
Table illustrates more no of persons using which internet banking account

Table-10 internet banking and sms banking you have a traditional bank account -43
Table illustrates having traditional account

Table-11 reason that you chose this particular bank as internet bank -44
Table illustrates reason for using such particular bank

Table-12 most important reasons you opened an internet bank A/C -45

3
Table illustrates reason for using internet banking
ABSTRACT
Introduction of new technologies allowed banking institutions to offer new
channels of service outlets like ATM facility, Internet Banking, Telephone Banking
and Mobile Banking. Indian consumers too have access to many new channels to
interact with their bank. Banks race against each other in bringing the latest
technology for the benefit of their customers and themselves. But not many studies
have been conduced to evaluate if “Internet Banking” channel is utilized properly by
the customers in India. Reasons for customer apathy towards Internet banking
channel, if that exist, have also not been analyzed in an Indian context earlier. As
banking is ranked No. 1 industry in service industry. The industry came with many
recent technological developments. Almost all public and private banks are offering
internet banking. The problem is why the customers are not using the internet banking
w.r.t public banks and private banks.

An analysis of the differences in consumer perceptions between bank customers

using Internet Banking and sms banking those not using Internet Banking was done and
it showed that risk perceptions in terms of financial, psychological and safety risks
among customer not using the internet was more meaningful than those using internet
banking. Customers not preferring to use internet banking thought that they would be
swindled when using this service, and therefore, are particularly careful about high risk
expectation during money transfers from and between accounts. Only 37% of Indian
Internet users come from Top 10 cities i.e. Mumbai, Bangalore, Delhi, Calcutta,
Chennai, Pune, Hyderabad, Ahmedabad, Surat and Nagpur.

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. Maximum of the person who are going on for internet banking lies in the age
bracket of 26-35. but the rise in the age the level of users become low. Approximately
17% of female use internet banking. This matter of concern for banks what are the
causes why this is happening. Although many major banks have started offering I-

4
banking services, the slow pace will continue until the critical mass is achieved for PC,
internet connections and telephones.

INTRODUCTION
Tremendous growth of Internet during the mid-nineties prompted banks to utilize
Internet as a medium for offering banking services. In Internet Banking banks
allow their customers to perform banking transactions through their web site in a secure
way. ICICI Bank was the first bank in India which offered this delivery channel,
by kicking off its online banking services in 1996. Other private sector banks like
Citibank, IndusInd Bank and HDFC Bank and Timesbank (now part of HDFC
Bank) started offering internet banking services in 1999. SBI launched its internet
banking services in July 2001. Other public sector banks like State Bank of India,
Bank of Baroda, Allahabad Bank, Syndicate Bank and Bank of India, also rolled their
services during the same time.
RESEARCH OBJECTIVES

The purpose of this study is to provide a better understanding of the adoption of

technology-based services, and to model customer behavior in the mobile banking and
internet banking context. On the basis of a review of the literature sampling developed
from the theory as well as the various general objectives regarded as pertinent to this
research, the research questions listed below were formulated.

• To gain a comprehensive understanding of the phenomenon under investigation, and

in order to be able to provide a sufficient justification for answering that question, a
number of subordinate questions need to be addressed.

• In this technology era many customers of the banks are not aware of the recent
technology developments like internet banking. So, it is the need to identify the causes
that why customers are not using internet banking and mobile banking services and also
to examine which segment group of customers is using different e-banking facilities.

• To compare the Internet services of different banks that provide to the customers
and to analyze which bank is satisfying its customer needs w.r.t internet banking and
SMS banking.

5
• Examine whether Theory of Planned Behaviour (TpB) or Technology Acceptance Model
can be applied in Internet banking and sms banking adoption and usage.

LIMITATIONS

1. The study is confined only to the service of SMS and internet banking.

2. The study is confined to only few banks.

3. The analysis is as per the respondent’s response. So the results may be biased.

4. The study is confined to only city, where the sample size is less.

5. Many customers are not aware for these services.

6. Many customers even though they are not aware of these services, the response
may be bias because feeling inferior to say that they doesn’t know.

6
 RESEARCH METHODOLOGY

RESEARCH TYPE
We use descriptive research and exploratory research design in our studies.
Descriptive Research is also called Statistical Research. The main goal of this type of
research is to describe the data and characteristics about what is being studied. The idea
behind this type of research is to study frequencies, averages, and other statistical
calculations. Although this research is highly accurate, it does not gather the causes
behind a situation.
Descriptive research is used to obtain information concerning the current status of
the phenomena to describe "what exists" with respect to variables or conditions in a
situation. Here we also tried to find out the main cause why there is perceptual blocking
of the Indian customers towards internet banking. The methods involved range from the
survey which describes the status quo, the correlation study which investigates the
relationship between variables, to developmental studies which seek to determine
changes over time.

• Statement of the problem

• Identification of information needed to solve the problem

• Selection or development of instruments for gathering the information

• Identification of target population and determination of sampling procedure

• Design of procedure for information collection

• Collection of information

• Analysis of information

• Generalizations and/or predictions

7
SAMPLING

We have used convenience sampling technique. It is also called haphazard or

accidental sampling. Members of the population are chosen based on their relative ease
of access. To sample friends, co-workers, or shoppers at a single mall, are all examples
of Convenience sampling. Sometimes called grab or opportunity sampling, this is the
method of choosing items arbitrarily and in an unstructured manner from the frame.
Though almost impossible to treat rigorously, it is the method most commonly employed
in many practical situations

Sample Unit: Internet Users, sms banking (for banks)

Sample Technique: Convenient sampling

Sample Size: 150

TOOLS

Statistical: SPSS

Techniques: MDS and Multiple Regressions

8
 FINDINGS AND CONCLUSIONS
“Success is the sweetest thing in this world”….the future of banking industry depends on
efforts of all concerned parties such as service providers, service facilitators, regulatory
system and customers. The banking Business has always been different from other
business because it comes under service industry and financial industry category. Every
one making a financial transaction is anxious about the security of his money. Hence the
bank, regulatory authorities and other organizations must try their best to make banking
sector as secure as possible.

The main objective of the study was to identify the factors that were influencing internet
banking adoption among customers in India. The survey banking adoption among
customers in India. The survey produced empirical confirmation of seven factors which
did influence internet banking acceptance. The factors produced by survey were:
perceived usefulness, perceived ease of use, consumer awareness, consumer security

9
concerns, quality of facilities, subjective norms and trust and privacy.
The survey instrument’s reliability and construct validity test results were found
satisfactory.

Industry Profile

The banking environment has suddenly become quite challenging after the
subprime crisis that surfaced last year and which has resulted in an unprecedented global
liquidity crunch. The flattening of the world has dramatically impacted both the
dynamics and the pace of global banking business. Mergers, acquisitions, consolidation,
expansion, diversification of lines of business, shifting customer orientation and the
changing regulatory environment are building up the pressure for banks to explore new
possibilities by abandoning the familiar and embracing the unconventional. Competition
is compelling banks to be agile and innovate everyday. In this milieu, what really enables
banks to build a lasting competitive advantage is the ability to continuously innovate,
achieve differentiation and respond quickly to dynamic business challenges.
The banking sector has witnessed wide ranging changes under the influence of
the financial Sector reforms initiated during 2008. The approach to such reforms in India
has been one of gradual and non-disruptive progress through a consultative process. The
emphasis has been on deregulation and opening up the banking sector to market forces.
The Reserve Bank has been consistently working towards the establishment of an
enabling regulatory framework with prompt and effective supervision as well as the
development of technological and institutional infrastructure. Persistent efforts have been
made towards adoption of international benchmarks as appropriate to Indian conditions.
While certain changes in the legal infrastructure are yet to be effected, the developments
so far have brought the Indian financial system closer to global standards.

BANKING ACTIVITIES
Banks' activities can be divided into retail banking, dealing directly with individuals;
business banking, providing services to mid-size business; corporate banking dealing

10
with large business entities; private banking, providing wealth management services to
High Net Worth Individuals; and investment banking, relates to helping customers raise
funds in the Capital Markets and advising on mergers and acquisitions. Banks are now
moving towards Universal Banking, which is a combination of commercial banking,
investment banking and various other activities including insurance.

TECHNOLOGICAL DEVELOPMENTS
Technology has brought about strategic transformation in the working of banks. With
years, banks are also adding services to their customers. The Indian banking industry is
passing through a phase of customers market. The customers have more choices in
choosing their banks. With stiff competition and advancement of technology, the service
provided by banks has become more easy and convenient.
THE INDIAN FINANCIAL NETWORK (INFINET)
The Indian Financial Network, a VSAT-based communication back-bone for the
national payment system, was equipped with a full transponder on the INSAT-3B
satellite to carry out its operations. This was spearheaded by the Institute for
Development and Research in Banking Technology (IDRBT), a Hyderabad-based
research institute promoted by the Reserve Bank of India, is currently undergoing major
changes. INFINET can be used for both intra and interbank applications. Banks can
develop and port intra bank applications on their own. Interbank applications are being
developed together by the Reserve Bank of India, IDRBT and member banks.
The network consists of over 700 VSATs located in 127 cities of the country and
utilizes one full transponder on INSAT 3B. Applications such as Real Time Gross
Settlement, Central Funds Management System, Security Settlement System, Electronic
Clearing System and Electronic Funds Transfer, being developed by the RBI will be
ported on the INFINET and in a true sense; the INFINET will become the backbone for
the National Payment Systems. These applications will use the SFMS platform. Some of
the applications, which the members are using on the network, are Any Branch Banking
(Multi Branch Banking), Fast Collection of Cheques, Cash Management Products, ATM
Network, Interbank reconciliation, Corporate E-mails etc.

11
 The INFINET is the most secure platform that technology can provide. Here are
its salient features:
 INFINET being a CUG, it provides a high level of security against intruders.
Outsiders cannot enter or penetrate the network. In the case of VSAT Network, the IP
Addresses for IDUs at the remote VSAT locations are allotted and maintained by the
Hub and cannot be changed by the endusers. This takes care of the network integrity and

 In the space segment, the data transmission, even in broadcast mode, is encrypted
using proprietary standards and the packets cannot be opened at any VSAT location
except the one specified as the destination VSAT.

 In the case of Leased Line Network (LLN) IPSEC 56 will be used to provide state-of-
the-art encryption and security.

 Apart from the above layers of network security, there will be a host of in-built
security mechanisms in each application that is deployed on the INFINET - like
password, access control, encryption, digital signatures and certification and in some
applications there will be smart card and/or bio-metric authentication as well.

 Application level Security at par with international standards is provided through

Symmetric Key and Public Key Cryptography and IDRBT will act as the Certification
Authority for the Banking and Financial Sector.

INTERNET BANKING (E-BANKING)

Internet banking (or E-banking) means any user with a personal computer and a browser
can get connected to his bank -s website to perform any of the virtual banking functions.
In internet banking system the bank has a centralized database that is web-enabled. All
the services that the bank has permitted on the internet are displayed in menu. Any
service can be selected and further interaction is dictated by the nature of service. The
traditional branch model of bank is now giving place to an alternative delivery channels

12
with ATM network. Once the branch offices of bank are interconnected through
terrestrial or satellite links, there would be no physical identity for any branch. It would a
borderless entity permitting anytime, anywhere and anyhow banking. The network which
connects the various locations and gives connectivity to the central office within the
organization is called intranet. These networks are limited to organizations for which
they are set up. SWIFT is a live example of intranet application.

INTERNET BANKING IN INDIA

The Reserve Bank of India constituted a working group on Internet Banking. The group
divided the internet banking products in India into 3 types based on the levels of access
granted. They are:
 Information Only System: General purpose information like interest rates, branch
location, bank products and their features, loan and deposit calculations are provided in
the banks website. There exist facilities for downloading various types of application
forms. The communication is normally done through e-mail. There is no interaction
between the customer and bank's application system. No identification of the customer is
done. In this system, there is no possibility of any unauthorized person getting into
production systems of the bank through internet.

 Electronic Information Transfer System: The system provides customer- specific

information in the form of account balances, transaction details, and statement of
accounts. The information is still largely of the 'read only' format. Identification and
authentication of the customer is through password. The information is fetched from the
bank's application system either in batch mode or off-line. The application systems
cannot directly access through the internet.

 Fully Electronic Transactional System: This system allows bi-directional capabilities.

Transactions can be submitted by the customer for online update. This system requires
high degree of security and control. In this environment, web server and application

13
systems are linked over secure infrastructure. It comprises technology covering
computerization, networking and security, inter-bank payment gateway and legal
infrastructure.

 Automated Teller Machine (ATM): ATM is designed to perform the most important
function of bank. It is operated by plastic card with its special features. The plastic card
is replacing cheque, personal attendance of the customer, banking hours restrictions and
paper based verification. There are debit cards. ATMs used as spring board for
Electronic Fund Transfer. ATM itself can provide information about customers account
and also receive instructions from customers - ATM cardholders. An ATM is an
Electronic Fund Transfer terminal capable of handling cash deposits, transfer between
accounts, balance enquiries, cash withdrawals and pay bills. It may be on-line or 0ff-line.
The on-line ATM enables the customer to avail banking facilities from anywhere. In off-
line the facilities are confined to that particular ATM assigned. Any customer possessing
ATM card issued by the Shared Payment Network System can go to any ATM linked to
Shared Payment Networks and perform his transactions.

 Credit Cards/Debit Cards: The Credit Card holder is empowered to spend wherever
and whenever he wants with his Credit Card within the limits fixed by his bank. Credit
Card is a post paid card. Debit Card, on the other hand, is a prepaid card with some
stored value.Every time a person uses this card, the Internet Banking house gets money
transferred to its account from the bank of the buyer. The buyers account is debited with
the exact amount of purchases. An individual has to open an account with the issuing
bank which gives debit card with a Personal Identification Number (PIN). When he
makes a purchase, he enters his PIN on shops PIN pad. When the card is slurped through
the electronic terminal, it dials the acquiring bank system - either Master Card or VISA
that validates the PIN and finds out from the issuing bank whether to accept or decline
the transactions. The customer can never overspend because the system rejects any

14
transaction which exceeds the balance in his account. The bank never faces a default
because the amount spent is debited immediately from the customer’s account.
 Smart Card: Banks are adding chips to their current magnetic stripe cards to
enhance security and offer new service, called Smart Cards. Smart Cards allow
thousands of times of information storable on magnetic stripe cards. In addition, these
cards are highly secure, more reliable and perform multiple functions. They hold a large
amount of personal information, from medical and health history to personal banking and
personal preferences.

CORE BANKING SOLUTIONS

Core Banking Solutions is new jargon frequently used in banking circles. The
advancement in technology especially internet and information technology has led to
new way of doing business in banking. The technologies have cut down time, working
simultaneously on different issues and increased efficiency. The platform where
communication technology and information technology are merged to suit core needs of
banking is known as Core Banking Solutions. Here computer software is developed to
perform core operations of banking like recording of transactions, passbook
maintenance, interest calculations on loans and deposits, customer records, balance of
payments and withdrawal are done. This software is installed at different branches of
bank and then interconnected by means of communication lines like telephones, satellite,
internet etc. It allows the user (customers) to operate accounts from any branch if it has
installed core banking solutions. This new platform has changed the way banks are
working. Now many advanced features like regulatory requirements and other
specialised services like share (stock) trading are being provided.

REAL TIME GROSS SETTLEMENT (RTGS)

RTGS is an electronic settlement system of Reserve Bank of India without involvement
of papers. To facilitate an Efficient, Secure, Economical, Reliable and Expeditious
System of Fund transfer and clearing in the Banking sector throughout India. Real time

15
gross settlement systems (RTGS) are a funds transfer mechanism where transfer of
money takes place from one bank to another on a "real time" and on "gross" basis.
Settlement in "real time" means payment transaction is not subjected to any waiting
period. The transactions are settled as soon as they are processed. "Gross settlement"
means the transaction is settled on one to one basis without bunching with any other
transaction. Once processed, payments are final and irrevocable.

ELECTRONIC CLEARING SERVICE

Electronic Clearing Service is another technology enhancement happened in the banking
industry. The customer willing to use this facility is required to fill in the mandate form
from the corporate/any utility service institution for ECS mode of credit and debit. The
customer needs to prepare the payment date and submit it to the “sponsor Bank” and
after that everything happened electronically, so customer can thereby make payments as
well as receive all incomes electronically.
MOBILE BANKING
Mobile banking (also known as M-Banking, banking, SMS Banking etc.) is a term used
for Performing balance checks, account transactions, payments etc. via a mobile device
such as a mobile phone. Mobile banking today (2007) is most often performed via SMS
or the Mobile Internet but can also use special programs called clients downloaded to the
mobile device.
Mobile Banking Services:
 Account Information
 Payments, Deposits, Withdrawals, and Transfers
 Investments (Portfolio management services, Real-time stock quotes, personalized
alerts and notifications on security prices)

16
LATEST ISSUE APPLICATION SUPPORTED BY BLOCKED AMOUNT
(ASBA)
SEBI has introduced the facility of making application through “APPLICATION
SUPPORTED BY BLOCKED AMOUNT” process, in book built public issue. ASBA is
an application containing an authorization to block the application money in the bank
account, for subscribing to an issue. If an investor is applying through ASBA, his
application money shall be debited from the bank account only if his/her application is
selected for allotment after the basis of allotment is finalized, or the issue is
withdrawn/failed. In case of rights issue his application money shall be debited from the
bank account after the receipt of instruction from the registrars. Merchant bankers,
Registrars and Self Certified syndicate banks (SCSBs) are advised to provide the ASBA
facility in rights issues with suitable modifications to ASBA process specified by SEBI
for public issue through book building route, as deemed fit. SCSB is a bank which is
recognized as a bank capable of
providing ASBA services to investors. The list of SCSBs is as below:
· Axis Bank
· Bank of Baroda
· Corporation Bank
· HDFC Bank
· ICICI Bank Ltd
· IDBI Bank Limited
· Kotak Mahindra Bank
· State Bank of Bikaner & Jaipur
· State Bank of India
· Union Bank of India
· Yes Bank Limited

The objective of introducing ASBA is to ensure that the investor's funds leave his bank
account only upon allocation of shares in public issues. The ASBA process also ensures

17
that only the requisite amount of funds is debited to the investor's bank account on
allotment of shares. In this mechanism, the need for refunds is completely obviated.

The Internet has brought many unique benefits to marketing. Internet marketing is
associated with several business models. The goods are sold directly to consumers (B2C)
or businesses (B2B). E-Shop is the most ubiquitous form of commerce on the World
Wide Web. t involves a company presenting a catalogue of its wares to internet users and
providing facilities whereby such customers can purchase these products. Almost
invariably such a site will contain facilities for ordering and paying for products by
means of credit cards. The Business Model is:
1. Choose a product
2. Pay
3. Receive shipping channel
4. Follow up service Consumers

The Internet banking is changing the banking industry and is having the major
effects on banking relationships. Internet banking involves use of Internet for delivery of
banking products & services. It falls into four main categories, from Level 1 - minimum
functionality sites that offer only access to deposit account data - to Level 4 sites - highly
sophisticated offerings enabling integrated sales of additional products and access to
other financial services- such as investment and insurance. In other words a successful
Internet banking solution offers Exceptional rates on Savings, CDs, and IRAs Checking
with no monthly fee, free bill payment and rebates on ATM surcharges· Credit cards
with low rates. Easy online applications for all accounts, including personal loans and
mortgages 24 hour account access. Quality customer service with personal attention

DRIVERS OF CHANGE

Advantages previously held by large financial institutions have shrunk considerably. The
Internet has leveled the playing field and afforded open access to customers in the global
marketplace. Internet banking is a cost-effective delivery channel for financial

18
institutions. Consumers are embracing the many benefits of Internet banking. Access to
one's accounts at anytime and from any location via the World Wide Web is a
convenience unknown a short time ago. status once the bank goes through a technology
integration effort to enable the customer to access information about his or her specific
account relationship. The six primary drivers of Internet banking includes, in order of
primacy are:

· Improve customer access

· Facilitate the offering of more services

· Increase customer loyalty

· Attract new customers

· Provide services offered by competitors

· Reduce customer attrition

INDIAN BANKS ON WEB

The banking industry in India is facing unprecedented competition from non-

traditional banking institutions, which now offer banking and financial services over the
Internet. The deregulation of the banking industry coupled with the emergence of new
technologies, are enabling new competitors to enter the financial services market quickly
and efficiently.

Indian banks are going for the retail banking in a big way. However, much is still
to be achieved. This study which was conducted by students of IIML shows some
interesting facts:

· Throughout the country, the Internet Banking is in the nascent stage of development
(only 50 banks are offering varied kind of Internet banking services).
· In general, these Internet sites offer only the most basic services. 55% are so called
'entry level' sites, offering little more than company information and basic marketing
materials. Only 8% offer 'advanced transactions' such as online funds transfer,
transactions & cash management services.

19
 LITERATU RE REVIEW

What is bank?
A banker or bank is a financial institution whose primary activity is to act as a payment
Agent for customers and to borrow and lend money. It is an institution for receiving,
Keeping, and lending money.
What is online banking?
Online banking (or Internet banking) allows customers to conduct financial transactions
On a secure website operated by their retail or virtual bank, credit union.
Need for internet banking:

One has to approach the branch in person, to withdraw cash or deposit a cheque or
request a statement of accounts. In true Internet banking, any inquiry or transaction is
processed online without any reference to the branch (anywhere banking) at any time.
Providing Internet banking is increasingly becoming a "need to have" than a "nice to
have" service. The net banking, thus, now is more of a norm rather than an exception in
many developed countries due to the fact that it is the cheapest way of providing banking
services.

20
 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, although
the range of products and services offered by different banks vary widely both in their
content and sophistication.

India’s banking sector is growing at a fast pace. India has become one of the most
preferred banking destinations in the world. The reasons are numerous: the economy is
growing at a rate of 8%, Bank credit is growing at 30% per annum and there is an ever
expanding middle class of between 250 and 300 million people (larger than the
Population of the US) in need of financial services. All this enables double-digit returns
on most asset classes which is not so in a majority of other countries. Foreign banks in
India achieving a return on assets (ROA) of 3%, their keen interest in expanding their
businesses is understandable – even more so when compared with the measly 1%
average ROA for the Top 1000 banks in the world. From the perspective of banking
products and services being offered through Internet, Internet banking is nothing more
than traditional banking services delivered through an electronic communication
backbone, viz, Internet. But, in the process it has thrown open issues which have
ramifications beyond what a new delivery channel would normally envisage and, hence,
has compelled regulators world over to take note of this emerging channel. Some of the
distinctive features of i-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 /

21
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.

Why this research:

An analysis of the differences in risk perceptions between bank customers using

Internet Banking and those not using Internet Banking was done and it showed that risk
perceptions in terms of financial, psychological and safety risks among customer not
using the internet was more meaningful than those using internet banking. Customers not
preferring to use internet banking thought that they would be swindled.

When using this service, and therefore, are particularly careful about high risk
expectation during money transfers from and between accounts. Only 37% of Indian
Internet users come from Top 10 cities i.e. Mumbai, Bangalore, Delhi, Calcutta,
Chennai, Pune, Hyderabad, Ahmedabad, Surat and Nagpur. Another day and another
number. 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. Maximum of the person who are going on for
internet banking lies in the age bracket of 26-35. but the rise in the age the level of users

22
become low. Approximately 17% of female use internet banking. This a matter of
concern for a banks

What are the causes why this is happening?

Although many major banks have started offering i-banking services, the slow
pace will continue until the critical mass is achieved for PC, internet connections and
telephones. However, the upsurge of IT professionals with growing demands is
pressuring the government and bureaucracy in the country to support and develop new
initiatives for a\ faster spread of i-banking. But then to there is a fear in mind of customer
using internet as a medium for the banking transaction.

Private and foreign banks are trying to turn more and more customer towards the
Usage if internet for the banking transaction. This study is basically to know the relation
of various independent variables on the customer usage of internet for banking.

SMS BANKING SERVICES

According to the euro net mobile banking guide, there are currently close to 400
mobile operators in 133 countries who are signining up 4 to 6 new customers every
second. This implies that more people are going mobile like never before. The novel
method presented in this paper is an interactive SMS banking agent that is incrementally
scalable for banking operations. Hence, a mobile banking solution called SMS banking
that allows people to bank with their mobile phone is presented in this paper.

Introduction

SMS banking is a mobile technology that allows you to request and receive
banking information from your mobile phone via short message service (SMS).

23
Individuals or corporate bodies can manage their bank accounts, check their account
balances, perform check requests, money transfers, pay some bills, and perform other
banking transactions using their mobile phones. There are two methods of SMS widely
used in applications; they are the PUSH & PULL (seylan bank, n.d). Push SMS is
sending a message from application (i.e., SMS server in this case) to the mobile phone. It
is a one way message. In other words, it’s the mobile application that initiates a message.
An example could be a deposit alert, which alerts the user when a deposit is made to
his/her account. Pull SMS is sending a request and obtaining a reply. This is a full duplex
scenario where a user sends a request to the SMS banking application and the application
replies worth the information requested. An example is when a user requests his bank
account balance.

THE NEED FOR SMS BANKING

The telecommunication industry worldwide has scrambled to bring what is

available to networked computers to mobile devices. Presently, the use of electronic
banking is considerably high and as more and more users sign up for electronic banking,
the maturity as regards remote banking is on the increase. With electronic banking, users
can now conveniently carry out banking transactions, but this convenience cannot be
achieved if the user does not have access to the internet, hence, in other words, the user
cannot carry out a banking transaction while waiting for a bus, or perhaps while having
lunch in a restaurant. With SMS banking, convenience can be achieved 24hrs a day. This
is because a user has access to his mobile phone all day, at all times. So, to efficiently

24
achieve a truly convenient banking mode, a truly mobile mode of banking has to be
explored, hence the need for SMS banking.

HOW SMS WORKS:

SMS works for short message service; it’s a mobile technology that allows for
sending and receiving text or even binary messages to and from a mobile phone. The
relative ease of use of SMS makes it possible for a user to learn how to send SMS easily.
More than 160 billion SMS are exchanged each month in European countries (mavrakis,
2004). SMS use the special signaling channel instead of the voice channel and is
therefore a very reliable media channel. Mavrakis, 2004 identifies two types of SMS
which can be classified by the origin of the message.

MOBILE ORIGINATED (MO): SMS-MOs’ are sent from a mobile phone and could
be sent either to another mobile phone (such when a mobile subscriber sends a personal
message to another subscriber) or to a computer application that will process the
message.

MOBILE TERMINATED (MT): SMS-MTs’ are transmitted to a mobile phone.

They also could send by another mobile phone or generated by a computer application.
The SMS processing computer applications usually runs on corporate serves that are
connected to the SMS network through specialized connectors and gateways connected
to the SMS centers of mobile operators (mavrakis, 2004). These servers are assigned
short numbers instead of the traditional 10-digits mobile numbers. These numbers also
known as short codes are usually 4 to 6 digits long. These numbers are operator specific.
Also a premium fee (a fee other than the fixed rates for SMS) can be charges on these
short codes; in other words, users would pay more for sending SMS to short codes.

25
DATA MINING IN SMS BANKING
Due to the large number of users and the large amount of financial transactions
expected to be carried out using SMS banking, there is a need for methodologies of
knowledge discovery and data mining (KDD). Data mining is becoming increasingly
common in both the private and public sectors. Industries such as banking, insurance,
medicine, and retailing commonly use data mining to reduce costs, embance research,
and increase sales.

DATA QUALITY
This is one of the biggest challenges of data mining. Data quality refers to the
accuracy and completeness of the data. Data quality is mostly affected by the structure
and consistency of the data being analyzed. For example, a user might want to check his
account balance but mistakenly enters a wrong account number, this would most
definitely affect the result he gets from SMS banking application.

INTEROPERABILITY
Interoperability refers to the ability of a computer system or data to work with
other systems or data using common standards or processes. Hence, it should be possible
for an SMS application to use the data gotten from another SMS application.

MISSION CREEP

26
 Mission creep refers to the use of data for purposes other than that for which the
data was originally collected. This happens when account information and financial
transactions are audited against fraud or illegalities.
PRIVACY
This is of great concern because, users account information needs to be kept
private and the same time analyze. In SMS banking, using data mining techniques, the
saving culture of a particular age group can be analyzed.
OPERATIONS OF SMS BANKING
1. Creating an account
2. Checking account balances
3. Transferring of funds
4. Changing of pin code
ADVANTAGES OF SMS BANKING
1. Convenience
2. Accessibility
3. Portability
4. Saves time
5. Reduced costs
6. Less human resource required

RESEARCH DESIGN:
Research is a process of finding a solution to a problem or a question through the use of
scientific tools and techniques. Marketing research is a methodical and purposeful study
conducted to obtain solutions for specific marketing problems. As marketing research is

27
a systematic and formalized process, it follows a certain sequence of research actions.
The marketing research process has the following steps.

Formulating the problem

Developing Objectives of the research

Designing an effective research plan

Data collection techniques

Evaluating the data and preparing a research report

APPLYING THE RESEARCH DESIGN PROCESS TO THE THESIS

To identify the consumers perception and level of acceptance of internet banking and
SMS banking

28
 To formulate the objectives of the research

Preparing the synopsis report

Preparation on review of literature &

Collection of phase -1 data and evaluating the data, Limitations

Presentation of Interim Thesis

Data collection Phase -2

Data Analysis

Formulation of Findings & Making valid recommendation

Preparation & Presentation of Final report

RESEARCH MODEL

Based on the literature review and findings of the qualitative study conducted on a
focus group, the researcher developed a research model indicating the acceptance of
internet banking among customers. The model contained seven factors that the
researcher posits to have an effect on internet banking acceptance . The constructs
for consumer security concerns, customer security awareness
was
was
and trust and privacy was added to the model to make it more relevant for internet
banking acceptance. Research constructs and hypotheses posited are given in Table 1.
Questionnaire for the survey was designed to gather the respondent’s personal
information and views about the factors included in the research model. The survey

29
questionnaire contained four sections. Section
included in the research model. The survey questionnaire contained four sections. Section
I contained questions for capturing respondent’s demographic details. Section II,
questions to collect respondent’s computer and internet usage, Section III, questions
to collect users banking patronage and usage of e-banking channels and finally
Section IV, questions to measure the respondent’s views on the research model. In
total, fifty four
items were added in the survey questionnaire for measuring the seven constructs used
in the research model. Pre-testing of the survey questionnaire was carried out.
Respondents in the pre-test mentioned that questions were straight forward and they
did not face any problems in responding.

DATA ANALYSIS

How many persons having internet at their home

AGE OWN A DON’T

INTERNET HAVE
INTERNET
18-25 27 3

26-35 51 1

30
 36-45 20 2

46-60 8 4

61 + 1 3

ILLUSTRATION 1:

From the above interpretation we can say that age group between 18-25 own a internet
of 27%while % who don’t own an internet is 3%, similarly % between 26-35 own an
internet of 51% while 1 %don’t own internet, 36-45 own an internet of 20% while
2%don’t own, 46-60 own 8%internet while 4% don’t own, 61and above own 1
%internet, 3%don’t own. Finally we can see that age group 26-35 own maximum % of
internet.

The time you are using internet

A) less then a month
B) 1 to 6 months
C) 6 to 12 months
D) More than a year
Age A) less than B) 1 to 6 C) 6 to 12
a month months months
18-25 3 2 12

26-35 0 0 15

36-45 0 3 0

46-60 0 2 8

61+ 1 3 0

ILLUSTRATION 2:
From the above interpretation we can say that all the younger have been using internet
since last one year but age group between 36-45, 46-60and 61 and above have started

31
using internet in recent . Finally we can the age group between 26-35 are the maximum
users of the internet.

Frequency of visiting your bank branch per month?

a) Less than 1
b) 1 to 3 times
c) 3 to 8 times
d) 8 to 12 times
e) Over 12 times
AGE <1 1 TO 3 3TO8 8TO12 12+
18-25 11 14 10 3 2

26-35 4 1 3 8 26

36-45 2 3 2 4 5

46-60 4 8 2 2 1

61-+ 5 0 0 0 1

ILLUSTRATION 3:
From the above interpretation we can say that in comparison to all the above age groups
maximum no. of time that is being visited to the bank is of age group between 26-35
that’s is around 12 times in a month .

The main reason that you typically visit your bank branch (please choose the single most
important reason)?
· to make a deposit
· to get advice for investment options
· to inquire about a balance
· to withdraw cash

32
· other
AGE DEPOSIT ADVICE BALANCE WITHDRAWAL OTHERS
18-25 10 8 13 7 2

26-35 10 4 7 17 4

36-45 3 0 4 7 2

46-60 4 4 5 4 0

61-+ 1 0 2 3 0

ILLUSTRATION 4:
From the above interpretation we can say that the reason for visiting bank maximum no.
of time is basically is for the cash withdrawal that to is done by the age group between
26-35 that is of 17.
The e-banking facilities provided by your bank?
· ATM
· Online banking
· Telephone banking
· Mobile banking
· SMS banking
AGE ATM ONLINE TELEPHONE MOBILE SMS
18-25 20 21 12 15 25

26-35 10 29 14 18 30

36-45 2 16 2 15 12

46-60 14 25 2 2 14

61-+ 5 2 2 2 5

ILLUSTRATION 5:

33
From the above interpretation we can say that all the above age groups says that the
mostly all the facilities is provided by their banks whether it be atm online, telephone ,
mobile expect to the person who belong to the age group of 61 and above .

What banking services do you use which your Internet bank offers? (Please check all
you are currently using)
· Seeking product and rate information
· Calculate loan payment information
· Download loan applications
· Download personal bank transaction activity.
· Check balances on-line
· Apply for consumer loans or credit cards online
· Inter-account transfers
· On-line bill payments
· Others

34
ILLUSTRATION 6:
From the above interpretation we can that the person use internet bank offers basically
for seeking product and rate information and secondly for checking balance and then
they use for to download loan information ,then to download personal bank transaction
activities.
What was the single most important reason that you chose this particular bank as
Your Internet bank? (Please choose one)
· I have a traditional bank account with the same bank
· The brand name of the bank
· The excellent service offered by this bank
· Others

ILLUSTRATION 7:

From the above interpretation we can say that the reason for choosing particular bank for
internet bank account is because of the excellent services offered by the bank and second
most important reason is that of brand name of the bank.

35
The E-banking services you use provided by the bank?
PARAMETERS NO OF RESPONDENTS
Atm 81
Online banking 42
Telephone banking 19
Sms banking 8

ILLUSTRATION 8:

From the above interpretation we can say that more no of respondents are using ATM
services.

What is the name of bank you have an internet bank or sms banking account with

36
 BANK NO OF RESPONDENTS
Axis 34
Icici 58
Hdfc 25
Sbi 15
Karnataka 13
Ing vysya 5

ILLUSTRATION 9:

From the above diagram we can represent more no of respondents having their internet
banking with Icici .

○ In addition to your internet banking and sms banking do you have a traditional
bank account?

YES 146
NO 4

ILLUSTRATION 10:

37
From the above diagram we can represent more no of customers are having traditional
account with the same bank.

What was the simple most important reason that you chose this particular bank as
internet bank?

PARAMETERS NO OF RESPONDENTS
I have a traditional bank A/c with the same 89
bank
The brand name of the bank 26
The excellent service offer by the bank 29
Others 6

ILLUSTRATION 11:

From the above diagram we can represent customers are having a traditional account
with the same bank and excellent service offered by the bank for this reasons they are
opened internet banking account.

What are the most important reasons you opened an internet bank A/C
PARAMETERS NO OF RESPONDENTS
Convenience 24
Curiosity 18

38
 Better rates 16
Safe and secure 24
Low service charge 12
Easy to maintain banking transaction 16
activity
Online shopping 40

ILLUSTRATION 12:

From the above diagram we can represent why the customers are showing importance to
internet banking account. More no of respondents saying that it is useful for online
shopping and convenience.

The main reason that you have not opened an internet bank account yet

PARAMETERS NO OF RESPONDENTS
Never heard of internet banking 38
Concerned about security 19
Haven’t taken time to open an account 8
Don’t see any real value in having this type 48
of account
Not available through my bank 20
Others 17

ILLUSTRATION 13:

From the above diagram we can represent why the customers are not interested to open
internet banking and sms banking account. More no of respondents is saying that don’t
see any real value in having this type of account.

39
MDS
After filling up the 63 column and 150 rows of SPSS data we get the table of responses
of 150 respondents’ perception about our 6 brands and their 9 attributes. calculation of
weighted mean of every column and finally we get the 6*10 matrix form of our weighted
mean MDS data, which would be input to SPSS for final MDS output. The 6*10 matrix
is given below-
PARAMETERS AXIS ICICI HDFC SBI KARNATAKA ING
/ BANKS VYSYA
Accessibility 2.8800 3.4179 3.4706 3.2791 3.4051 2.8545
Account security 2.9517 3.5385 3.5550 3.2532 3.3819 2.8824
Bank service 4.2475 3.6963 3.5468 3.9609 4.0975 2.7358
Convenience 2.8101 3.5365 3.8282 2.8101 3.4356 2.7734

Training to use 2.1745 3.2791 3.7123 2.6493 3.3490 2.4468

banking services
Encourage 2.6790 3.2791 3.5385 2.8698 3.4051 2.7836
customer to use
e-banking

Location 3.2687 3.2574 3.1222 2.9707 2.8500 2.4000

Design 3.2441 3.8142 3.5550 3.0222 3.1170 2.7429

USER 3.8692 2.7087 3.3544 2.6238 3.4051 2.9401

FRIENDLINESS

40
The Lower Triangular matrix
Raw (unscaled) Data for Subject 1
1 2 3 4 5
1 6.000
2 2.172 6.000
3 2.393 0.932 6.000
4 1.511 1.407 1.937 6.000
5 1.786 1.163 0.954 1.361 6.000
6 2.061 2.264 2.475 1.540 2.146

The index of fit or R-square and stress should be measured. Thus R-square indicates
goodness of fit, whether stress value represents badness of fit. So for any research higher
value of R-square and lower value of Stress is expected. The high R-square value
represents MDS model is well fitted with the given problem. In our case,
Stress = .01817 RSQ = .99785

Young's S-stress formula 1 is used

s-stress improvement
1 .02311

2 .01992 .00319
3 .01838 .00154
4 .01698 .00139
5 .01564 .00134
6 .01434 .00130
7 .01327 .00107

8 .01266 .00061

Iterations stopped because S-stress improvement is less than .001000 Stress and squared
correlation (RSQ) in distances For matrix

41
 Stress = .01817 RSQ = .99785

Configuration derived in 2 dimensions

Stimulus Coordinates
Dimension
Stimulus Number Stimulus Name 1 2
(Banks)
1 AXIS 1.1537 1.4040
2 ICICI -1.0363 -0.3486
3 HDFC -1.5704 -0.1294
4 SBI 0.5452 -0.0590
5 KARNATAKA -0.7060 0.3541
6 ING VYSYA 1.6138 -1.2210

Optimally scaled data (disparities) for subject

1 2 3 4 5
1 0.000
2 2.800 0.000
3 3.126 0.577 0.000
4 1.590 1.590 2.126 0.000
5 2.126 0.890 0.890 1.318 0.000
6 2.665 2.800 3.366 1.590 2.800

Data collected from the survey were analyzed and interpreted using various
statistical techniques usually employed in positivistic study. Statistical analysis was
carried out using SPSS (Statistical Package for Social Sciences) version 14.0.
Descriptive analysis techniques like average, percentage, frequencies etc were
performed on the data for getting an overall structure of the sample. The reliability
and construct validity of the research instrument were assessed before final analysis
of the data. The Cronbach alpha coefficient for each research variable was computed to
test for reliability. To analyze for convergent and discriminate validity of the
constructs, factor analysis was used.

DISCUSSIONS AND IMPLICATIONS

Internet Banking

42
Internet Banking facility, which is increasingly being used by the corporate clients and
also by the retail customers, has been extended to the customers of 199 additional
branches during the financial year thereby taking the number of branches covered to 913.
On-line trading with IL&FS has been made live during the financial year.

SMS Banking
SMS Banking has been launched for customers during the financial year.

Mobile Banking
Having introduced SMS Banking, the Bank is exploring with companies that offer
cutting edge technologies for using the Mobiles for carrying out financial transactions at
authorized outlets.
This study also revealed that Subjective norms have positive effect on intention.
This indicates the relative importance of the social influence on non-users of internet
banking. This finding has implication for marketers; it indicates that advertisements in
media or press play important roles in forming intention toward internet banking
adoption.
For researchers, past research on technology acceptance implicitly assumed that
the success of a system adoption and use is mainly dependent on technological aspect
and does not consider the notion of uncertainty. However, the advent of the Internet has
introduced uncertainty and risk in system acceptance and use because people often need
to use the Internet to communicate, collaborate, and transact with individuals and
organizations without physical face-to-face interaction. Thus, uncertainty is increasingly
becoming the underlying determinant of the Internet-base system usage.
The implication of these findings and conclusions are that, banks need to play a
leading role in influencing the perception, and there by the attitude and behavior of
current and potential internet banking users. The outcome of this study has two practical
implication and recommendation for banks.

CONCLUSION

43
 There is still a lot needed for the banking system to make reforms and train their
customers for using internet for their banking account. Going through the survey the
main problem lies that still customer have a fear of hacking of accounts and thus do not
go on for internet banking. Banks are trying their level best by providing the best
security options to the customers but then to there is lot of factors which betrays a
customer from opening an internet bank account.

Banks are providing free internet banking services also so that the customers can
be attracted. By asking the bank employs we came to know that maximum numbers of
internet bank account holders are youth, business man. If proper training should be given
to customer by the bank employs to open an account will be beneficial secondly the
website should be made friendlier from where the first time customers can directly make
and access their accounts.

We can see the time is changing and we the passage of time people are accepting
technology there is still a lot of perceptual blocking which hampers the growth it’s the
normal tendency of a human not to have changes work on the old track, that’s also one of
the reason for the slow acceptance of internet banking accounts.
· Give proper training to customers for using i-banking
· Create a trust in mind of customers towards security of their accounts
· Provide a platform from where the customers can access different accounts at single
time without extra charge.
· Make their sites more users friendly.
· Customers should be motivated to use I- banking facilities more.

44
 Factors that affect Internet and SMS BANKING adoption
Most and Least Perceived Factors in Internet and SMS Banking Adoption

Internet Banking SMS BANKING

Items Items

Faster Internet access speed is important I would use cell phone banking if I could use it on
for Internet banking. a trial basis first to see what it can offer

Internet banking makes it easier to do I would use cell phone banking if I could see a
banking trial demo first

Internet banking is a convenient way to I would use cell phone banking if I could test cell
manage my finances phone banking first

Internet banking is compatible with my I would use or be more likely to use cell phone
lifestyle banking if cell phone banking was compatible
with my lifestyle

Using Internet banking fits into my I would use or be more likely to use cell phone
working style banking if using my cell phone to conduct
banking transactions fits into my working style

Information concerning my Internet Cell phone banking is a risky mode of banking to

banking transactions can be tampered use
with.

Information concerning my Internet Cell phone banking would allow me to manage my

banking transactions will be known to finances more efficiently
others.

My decision to adopt Internet banking is Cell phone banking would be complex to use
influenced by my family

Using Internet banking requires a lot of I would use cell phone banking if cell phone
mental effort banking increased my status

Internet banking is a difficult way to Cell phone banking would require a lot of mental
conduct banking transactions effort

45
 Indian economy is witnessing stellar growth over the last few years. There
have been rapid developments in infrastructural and business front during the
growth period. Internet adoption among Indians has been increasing over the last
one decade. Indian banks have also risen to the occasion by offering new channels
of delivery to their customers. Internet banking is one such new channel which has
become available to Indian customers. Customer acceptance for internet banking has
been good so far. In this study the researcher tried to conduct a qualitative and
quantitative investigation of internet banking customer acceptance among Indians.
The researcher tried to identify important factors that affect customer’s behavioral
intention for internet banking. The researcher also proposes a research model which
was extended from Technology Acceptance Model for predicting internet banking
acceptance.
The findings of the study would be useful for Indian banks in planning and
upgrading their internet banking service. Banks could increase internet banking
adoption by making their customer awareness about the usefulness of the service.
It is seen that from the study that the variable perceived usefulness has a positive
influence on internet banking use, therefore internet banking acceptance would
increase when customers find it more usefulness Banks should plan their marketing
campaigns taking into consideration this factor. Proper marketing communications
which would increase consumer awareness would result in better acceptance of
internet banking.
The variable perceived ease of use had a positive influence on internet banking
use. That means customers would increase internet banking usage when they find it
easier to use. Banks should therefore try to develop their internet banking site and
interface easier to use. Banks could also consider providing practical training
sessions for customers at their branches on usage of internet banking interface The
findings of the study would be useful for Indian banks in planning and upgrading
their internet banking service

46
 REFERENCES

Ajzen, I. (1985). From Intentions to Actions: A Theory of Planned Behaviour. in Action

Control (Kuhland, J., and Beckman, J. (Eds) , From Cognition to Behaviour, pp.11-39 ).
Heidelberg: Springer

Davis, F., Bagozzi, R., & Warshaw, R. (1989). User Acceptance Of Computer
Technology: A Comparison Of Two Theoretical Models. Management Science,
35(8), pp. 982-1003

Davis, F. D.. (1989). Perceived Usefulness, Perceived Ease of Use, and User Acceptance
of Information Technology. MIS Quarterly, 13(3), pp.318-339.

IMRB, & IMAI. (2006). Internet in India-2006 (Summary Report of I-Cube 2006) . New
Delhi: IMRB International(eTechnology Group@IMRB)

Creativity in mobile banking-www.wit-software.com

Innovations in SMS banking-A K SOHANI, KATURI NAGESWARA RAO

Marketing research by BERRY G.C

Marketing Research by Malhotra N.K. , fifth edition

M.S., Mahapatra, S.S. and Sreekumar (2009) ‘Service quality evaluation invinternet
banking: an empirical study in India’, Int. J. Indian Culture and Business Management,
Vol. 2, No. 1, pp.30–46.

The Indian Internet Banking Journey - Nachiket Mor, Head of ICICI's Treasury, in
March 2008.

The Impact Of Internet Banking Service Quality On Business Customer

Commitment

47
 APPENDICES

QUESTIONNAIRE

Name …………………………………………………………………..
Age 18-25__ , 26-35__, 36-45__, 46-60__, 60 +____
Gender – MALE, FEMALE
Occupation …………………………………………………………….

2) Do you own a internet?

a) Yes b) No

3) The time you are using internet

A) Regularly
B) 5 times in a week
C) 6 to 12 times in half of a month

3) Frequency of visiting your bank branch per month?

a) Less than 1
b) 1 to 3 times
c) 3 to 8 times
d) 8 to 12 times
e) Over 12 times

4) The main reason that you typically visit your bank branch (please choose the single
Most important reason)?
to make a deposit
to get advice for investment options
to inquire about a balance

48
to withdraw cash
other

5) The e-banking facilities provided by your bank?

ATM
Online banking
Telephone banking
Mobile banking
SMS banking

6) The e-banking services you use provided by the bank?

ATM
Online banking
Telephone banking
Mobile banking
SMS banking

For those who uses internet banking and sms banking service

1. What is the name of bank you have an Internet bank or sms banking account
with? ________

2. What are the most important reasons you opened an Internet bank account?
(Please prioritize the following list in the order of importance.
(A: the most important B: the least important)
Convenience (24 hours service, anywhere connectivity) ______________
Curiosity______________
Better rates______________

49
Safe and secure______________
Low service charge______________
Easy to maintain my banking transaction activity______________
Online shopping ___________________

3. What banking services do you use which your bank offers in internet banking and
sms banking? (Please check all you are currently using)

Seeking product and rate information

Calculate loan payment information
Download loan applications
Download personal bank transaction activity.
Check balances on-line
Apply for consumer loans or credit cards online
Inter-account transfers
On-line bill payments
Others

4. What was the single most important reason that you chose this particular bank as
your
Internet bank? (Please choose one)
I have a traditional bank account with the same bank
The brand name of the bank
The excellent service offered by this bank
Others

50
In addition to your Internet banking and SMS banking, do you also have a traditional
bank account?
Yes
No

PARAMETERS AXIS ICICI HDFC SBI KARNATAKA ING

/ BANKS VYSYA
Bank service
Account security
Accessibility
Convenience

Training to use
banking services
Encourage
customer to use
e-banking

Location

Customer
Relation
Management

USER
FRIENDLINESS

51
For those who didn’t use internet banking

The main reasons that you have not opened an Internet bank account yet? (Check all that
Apply)
· Never heard of Internet banking
· Concerned about security
· Haven't taken time to open an account
· Don't see any real value in having this type of account
· Too new. I would like to see how it works, and then I may open an account
· Not available through my bank
· Others

For your choice of an Internet banking and SMS banking, please indicate how
much each of the following
Factors (were) are important for you:
1. Better rate and lower service charge______________
2. Bank familiarity______________
3. Bank location (geographic) ______________
4. The size of bank (in terms of asset) ______________
5. Security of Transaction______________
6. Convenience (24 hours service from anywhere) ______________

52
7. Quick service (transaction completed in seconds instead of minutes)
______________
8. Variety of features and services that are offered (for example; bill payment,
Account reconciliation, electronic bill payment) ______________
9. Integrated value-added services using other on-line services and resources
(For example; other brokerage account summary) ______________

ABREVIATIONS

ACF Auto-Correlation Function

AFS Annual Financial Statement
AGM Annual General Meeting
ATM Automated Teller Machine
BIS Bank for International Settlements
BoP Balance of Payments
CAD Capital Account Deficit
CBS Consolidated Banking Statistics
CC Cash Credit
DBOD Department of Banking Operations and Development Department of
Banking Supervision, RBI
DESACS Department of Statistical Analysis & Computer Services, RBI
ECS Electronic Clearing Scheme
GDR Global Depository Receipt
IBS International Banking Statistics
IOTT Input-Output Transaction Table
ITRS International Transaction reporting system
NASSCOM National Association of Software and Services Companies

53
 GLOSSARY
account

Continuously updated record of transactions. Interest rates, charges, credit and with-
drawal limits and additional facilities will differ according to account type.

account statement

A summary in writing of all account transactions within a given period. Depending on

the type of account, interest is calculated on a monthly to yearly basis. Can be requested
online via telebanking or Multimat.

accrued interest

Interest payments accrued since the last interest due date up to a specified date prior to
the next due date.

admission to stock exchange dealing

Official listing of a security on a stock exchange.

agent

Legally independent businessman who is authorized by a third party (the principal) to act
on that party's behalf, to act as intermediary or to conclude business transactions.

allround fund

54
Investment fund which is not restricted to any particular countries, regions or sectors and
which invests globally

asset-backed securities

Specially created securities used for refinancing and collateralized by a pool of similar
claims (e.g. mortgage loans) and where debt service payments are covered by the income
generated by the pool.

Call option

The right to buy and accept a share – an option is a security, which represents the right of
its holder either to exercise or not exercise a transaction at a certain date. In the case of a
call option this means the right to buy or accept a share. The counterparty is obliged to
realise the trade should the other party wish it.

Capital adequacy

Characterises the risk of a bank having inadequate capital reserves in view of the risks it
is undergoing. Current ÈNB (Czech National Bank) and BIS regulations define capital
adequacy as the ratio between capital and risk-weighted assets.

Direct trading

As a part of this manner of trading in the exchange business system, operations among
members of the stock exchange are registered where the amount of securities is at least
CZK 200,000. The price and amount of the handled security is determined in advance by
an agreement of both contractual participants in direct trading. Thus in these operations
the transaction price is not created on the basis of comparison of an anonymous offer and
demand, because both participants of the transaction know each other in advance. The
price for which a direct transaction is concluded is not the stock-market rate, and its
variance with the valid rate is in no way restricted.

55
Eurodollar

Eurodollars are deposited in the accounts of banks (i.e. dollar claims and deposits),
which are non-residential banks from the viewpoint of the US. The result is that a
eurodollar is not subject to supervision and regulation in the countries where it is traded.
A eurodollar is also not directly dependent on US interest rates, even though, to a certain
extent, it is connected to the US banking system and is managed within banks in the
same manner as all other currencies. For a transaction to be designated as a eurodollar
transaction, the residency of the mediator is the decisive factor, rather than the residency
of the primary creditor or of the final debtor. For example, a US citizen lends funds to a
bank in London, which in turn lends these funds to the US: this transaction is a
eurodollar operation. On the other hand, if funds go via a US bank in New York, this
means that we are dealing with a domestic dollar operation. The affect of eurodollar
transactions on the banking system is specified below.

Euromarket

A euromarket is a market on which securities and debts are traded, which are
denominated in euro currencies. Euro currency markets, of which the eurodollar market
is the biggest, were established at the end of the Second World War, when the currencies
became convertible and when securities began to be truly traded on an international
scale. The preposition “euro” appeared almost accidentally and is rather confusing, as it
has no connection to Europe. A market with euro-securities exists in all major financial
centres, with London having the biggest share of this trading activity.

personal loan / Privatkredit / prêt personnel / prestito personale

Credit granted to a private person for non-commercial purposes solely on the basis of
that person's creditworthiness, income and financial circumstances. consumer loan,
instalment loan.

56
PIN code

Personal alphanumeric code for the electronic identification of a customer using an

account card. plastic money. PIN stands for personal identification number.

plastic money

Popular term for all plastic cards, such as credit cards, VISA card, Eurocard or ec card
used as paying medium instead of cash.

price drawn by lot

Price at which more than one buyer wishes to purchase the same stocks or bonds from
the same seller, or several sellers wish to sell to only one buyer. If not enough units are
available to satisfy the entire demand, lots are drawn to decide who can effect the
purchase or sale.

Banking institution where the owner or partners are liable with their personal assets.
Under Swiss law, the expression "private bank" refers only to institutions with the legal
form of an individual proprietorship, partnership firm or limited partnership. They exist
primarily in Geneva, Basle and Zurich.

private banking

Investment counselling and portfolio asset management services offered to international

private and institutional clients.

Put option

The right to sell, to supply a share – the option is a security, which expresses the right of
its holder to implement or not to implement a transaction at a certain date. Thus in the

57
case of a put option it means to sell or to supply somebody with a share. The
counterparty is obliged to implement the transaction if so desired by the other party.

Retail banking

Retail banking is understood to mean the provision of services to the general public, i.e.
the provision of credit repayable in instalments, mortgage loans, depositary services, etc.
In comparison to wholesale banking retail banking encompasses a large spectrum of
activities at many branches. Certain services offered by retail banking (e.g. credit cards)
are highly profitable.
Risk

Financial institutions and markets exist in a world of insecurity. A type of insecurity is

the risk. There are several types of risk. Obviously the most important risk of financial
markets is the credit risk, which means a risk of loss if the partner fails to honour his
commitments according to the conditions of the contract. In the category of credit risk,
the so-called settlement risk is sometimes specified, which is a risk of loss from a failure
to settle a transaction. Another important risk is market risk, which is divided into
interest, stock, commodity and rate risks. This is a risk of loss in the case of the small
liquidity of markets (risk of market liquidity), or risk of momentary insolvency (risk of
cashflow). Operational risk is a risk of risk in the case of human errors, fraud or
imperfection of information systems. Legal risk is a risk of loss if a contract is not legally
enforceable

Technical analysis

The changes of prices of stock are determined by many factors and many of them cannot
be anticipated. The estimation of the changes of prices of stock on the basis of economic
factors is the basis of fundamental analysis. The estimation of the changes of stock on
the basis of other factors is the subject of technical analysis, which is based only on the
records of the results of previous operations in stock. All this is based on the hypothesis
that the prices of stock reflect all the factors including psychological factors, which in
short-term investments are more important than the factors included into fundament al

58
analysis.

Wholesale banking

Wholesale banking is represented by services offered to enterprises, investment

companies, investment funds, pension funds, government agencies and the like. It
includes, for example, providingcredits,servicesofthedepository,leasing,etc.

Zero-coupon bond

The issue of a zero-coupon bond commits the issuer to pay a nominal value at a certain
date in the future. On the primary and secondary market it is sold for a price lower than
its nominal price. The difference between the nominal value and the sales price is the so-
called discount. A zero-coupon bond does not have coupon repayments between its issue
and the repayment of the nominalvalue.

59