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A Study on Mobile Banking and its Impact on Customer's Banking

Transactions: A Comparative Analysis of Public and Private Sector Banks in
India

Article · June 2016

DOI: 10.1177/2455265820160207

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 Research

A Study on Mobile Banking

and its Impact on Customer’s
Banking Transactions: A
Comparative Analysis of Public
and Private Sector Banks in India
by Nidhi Singh & Neena Sinha

Abstract
In India, we have more than 900 million mobile users but still mobile banking is used by 40 million customers
approximately. There can be various reasons behind this, such as need of active collaboration between banks and
Telecom Company, lack of accessibility to customers, cost, awareness about the mobile banking app etc. Banks have
to work on creating mobile banking awareness among the customers. They need to promote the benefits of mobile
banking and its effectiveness. In this paper, we aim to determine customer perception about mobile banking services
of banks. Customer has different views on mobile banking services provided by their service providers. We examine
the expectations of customers from banks towards mobile banking system. In this paper we also evaluate the impact
of mobile banking on customer experience after using mobile banking. This paper reflects the change in transactions
mode of customers through mobile banking. This paper also shares the initiatives taken by customers in their
banking usage after switching to mobile banking. For the survey, we have selected ten banks (five public sector and
five private sector banks) and tried to identify the characteristics of mobile banking system of these banks.

Keywords
Mobile Banking, Customer Perceptions, Features, Technology, Transaction Frequency, Customer Experience, Initiative.

Introduction
In India, commercial banking industry has involved various financial innovations, which means shifting their focus
from tradition banking to technology banking to satisfy the needs of their customers and to get competitive edge. Mobile
banking is one such innovation. Mobile Banking is defined as doing various banking transactions like fund transfer, balance
enquiry, investments, paying bills through the use of mobile phones. All the banks that are licensed and have branch in
India are allowed to provide mobile banking services to their clients. This facility helps customers to transfer fund from one
account to another account on a real time basis using mobile network. (TRAI, 2013)
This facility removes the space and time constraints from various banking transactions (Mishra & Sahoo, 2013).
This has made banking convenient for customers and also impacted their banking transactions. It is used not only for
banking but customers also for paying bills, booking movie tickets, mobile recharge etc. It helps banks to communicate with
their clients frequently and generate revenue in terms of increased customer’s transactions through mobile banking. This
paper inspects consumer perception about the mobile banking system provided by their bank and explains various factors
having an impact on their banking transactions through mobile. Bank have started using technology into their system

FIIB Business Review, Volume 5, Issue 2, April - June 2016 74


in the form of mobile banking to offer various benefits
to their customers such as liberty to pay bills anytime
and anywhere, making payments while sitting in home
or office, to receive account updates anytime. This helps
the customers to do banking transactions easily and
effectively without going to their bank’s branch.
Banks use mobile banking as an innovation
strategy to outperform in this competitive market. It
also helps banks to improve their performance and
maintain their efficiency among the customers (Batiz-
Lazo & Woldesenbet, 2006). Banks can get competitive
advantage and generate superior return by effectively
utilizing technological innovations (Roberts &Amit,
Research
2003). For this, continuous improvement in the banking
product and mobile banking process is expected from
banks (Porter, 2004). Data shows that India will generate
fee-based income through mobile banking of about
Rs. 20,250 crore over the next five years; this is possible
because of lower transaction cost, favorable environment
and increased usage (nextbigwhat.com). This explains
the impact of mobile banking on banks’ revenue and
growth. In this paper we tried to relate customer mode of
transactions in mobile banking and its impact on banks
performance. We have identified the revenue of banks in
last 10 years through fee based services including mobile
banking transactions.

Table 1. Fee Based Income of Select Banks (2005-15)

Company Name Axis Bank Bank Of Bank Of Canara Corporation HDFC ICICI I D B I Bank Punjab Na- State Bank Of
Ltd. Baroda India Bank Bank Bank Ltd. Bank Ltd. Ltd. tional Bank India
Mar- Fee Based 3305.2 3426 4500 4108.9 1550.7 6049.6 19210 1306.7 6912.9 35451.3
05 Income
Mar- Fee Based 4889.1 3610 5189.9 4308.1 1568.5 10450.5 30019.5 2719.7 7526.3 39962
06 Income
Mar- Fee Based 7789.6 4728.5 5967.1 4748.5 1872.5 12923.8 43308.6 2658.4 9700.2 48045
07 Income
Mar- Fee Based 13250.8 5401.7 7828.7 5688.5 2159.8 17145 56053.1 3489.8 11062.3 59142.6
08 Income
Mar- Fee Based 21732.6 7455 10916.5 6037.7 2648.5 24573 56258.9 7253 13766.4 76172.4
09 Income
Mar- Fee Based 25652 8972.9 10965.3 7239.2 3022.6 30059 48308.1 12254.5 16821.6 96408.6
10 Income
Mar- Fee Based 33574.2 10206.4 11810.5 7558.3 3533 35967.2 55146.4 15517.6 20451.9 115632.8
11 Income
Mar- Fee Based 43417 12260.9 12714.6 7969.3 3948.8 43121 54351.1 15307.6 23748.1 120909
12 Income
Mar- Fee Based 50251.5 12573.6 12631.5 7981.4 4380.1 51669.1 54616.6 22373.5 23447.7 114837.2
13 Income
Mar- Fee Based 53937.6 14373.9 14260.9 9398.3 4610.4 57349.5 63073.4 18183.4 25793.8 126113
14 Income
Mar- Fee Based 61210.7 14820.4 16100.2 9286 4475.6 65842 69798.9 19353.2 27448.8 131728.3
15 Income
Increase (%) 1751.95147 332.5861062 257.782222 125.997 188.618043 988.36948 263.34669 1381.0745 297.066354 271.575372

Source: www.rbi.org

Data shows that these banks have witnessed
tremendous growth in their fee based services in last
10 years. Mobile transactions also play very significant
role. This happened because of technology revolution
across the globe (Saxena, 2010). Many banks have
adapted electronic transactions platforms for providing
banking facilities. This is beneficial for both banks and
customers in terms of profit and cost (Valluri, 2012).
This paper studied various factors impacting customer
transactions after using mobile banking services.
Results show that there is a change in their transaction
through mobile banking. This result is supported by the
available data of mobile banking transactions which has
increased significantly in the last 10 years in India. This
has happened because of increased customer’s interest
in mobile banking and increased banking transactions
done through mobile. In recent years, the mobile banking
has been witnessing growing trend in volume and value

FIIB Business Review, Volume 5, Issue 2, April - June 2016 75


increasing by 108.5% (53.30 million in FY13 vis-à-vis
25.56 million in FY 12) and 228.9% (USD1.1 billion in
FY13 vis-à-vis USD0.2 billion in FY12 (fungood.in)
Mobile Banking started getting recognition
in India as customers gradually started using mobile
banking for their various banking transactions. But still,
in a country like India where we have high mobile users,
the possibility of offering various banking services on
technology is unused. Banks must understand this fact
and increase their penetration in technology business.
This will help customers to get better services and
also help banks to increase their reach and enhance
profitability.
Literature Review
With the tremendous use of mobile in India,
mobile services became a prospective alternative for the
banking sector. This growth is supported by literature as
well. Mobile banking transactions are gaining importance
and having huge potential due to availability and facility
to do transaction anytime and anywhere (Rugimbana,
1995). Banks should understand this trend and use
updated methods. Various studies explained that banks
need innovations and creativity in their banking facility
to gain competitive edge (Vyas, 2009; Rao et al. 2003).
Banks need to rethink about innovation in mobile
banking beyond online banking and make mobility
self-sufficient to satisfy customer needs and become
powerful delivery channel to provide immediate access
and complete control of their finances. This theory is
confirmed by other researchers also and assures a bright
future of mobile banking in India (Gupta, 1999; Pegu,
2000; Dasgupta, 2002). Banks should use this data and
create awareness about mobile services. Use of mobile
in banking is still in its nascent stage as compared
with entire banking dealings (Laukkanen, 2007; Yang,
2009). Millions of investors are using cheaper handsets
to make voice calls and do text in their daily lives. But
still millions of new users of mobile cells are without
the access of financial services in developing scenario.
This is the important discussion point among various
researchers (Safeena, Date, Kammani & Hundewale,
2012; Lin, 2010). They explained that banks should
create awareness among customers and increase their
customers by targeting non-online banking customers
who have mobile phones but may not be using internet
for banking, thus creating potential for mobile banking
(Vyas 2009). Data also shows that customers in urban/
metro area use mobile banking mostly to check account
balance and followed by viewing last three transactions.
Thus, constant and increasing use of mobile banking
FIIB Business Review, Volume 5, Issue 2, April - June 2016
Research
may encourage customers to use other facilities of bank
(Karjaluoto et al. 2002).
Banks should identify the benefits of mobile
banking for users. In this domain, cost is one of the most
significant factors which impacts mobile banking usage
of customers (Sadi & Noordin, 2011). In their study, Sadi
and Noordin (2011)found that customer attitude was
correlated negatively with cost. Their intention to use
mobile banking services decreases with increase cost;
therefore, customer must be aware about the cost saving
feature of mobile banking services through awareness.
This research is also supported by Singh, Srivastava,
and Srivastav (2010), who briefly explained that cost
incurred by the customers have a negative impact on
their intention to do mobile banking transactions. Mobile
banking device is considered to be cost effective option
for customers to manage transactions, get account
information and do payments (Clark, 2008). Mobile
device provides handiness, immediate response and
customized products to consumers.
Apart from various benefits, researchers
identified few issues in mobile banking which restrain
customers to choose it. Issue can be related to app security.
Sharma and Singh (2009) explained that the reason for
less usage of mobile banking in India may arise because
of security issues like frauds, misuse of accounts and user
friendly app. But these challenges in using m-payments
may decrease with time and by increasing knowledge of
mobile banking. It is hard for user using mobile banking
for the first time or those who use it seldom (Cracknell,
2004). However, the challenges may increase for users;if
some technical permission is required in their handsets
for virtual money transactions (Singh, 2007). Data
revealed the availability of more mobile set than bank
accounts (Porteous, 2006). Banks focus majorly on
offering feasible facilities to customers like ATMs, smart
card facility, point of sale facility etc. All this facility if
provided through technology offers asubstitute to deal
with money without using cash (Karjaluoto, 2002).
Mobile Banking in India and its Impact on
Customers
Introduction of mobile banking in 1980 helped
banking industry to achieve exponential growth in the
increased mobile transactions and improved customer
service (Garima& Gulati, 2013). But in India, mobile
banking is still in its nascent stage. Banks really need to
identify various factors impacting customer’s behavior
about mobile phone to grow mobile banking in India
(Patel, 2013).
76

A Report on Mobile banking (www.nextbigwhat.
com) says, “By 2015, $350 billion in payment and banking
transactions could flow through mobile phones, compared
with about $235 billion of total credit- and debit-card
transactions today in India”.This report highlights the
development of mobile transactions in India. “India
currently has more than 700 mobile subscribers. Of the
households more than 40 percent have at least one mobile
phone even doesn’t have bank accounts. We have just 240
million individuals with bank accounts, 20 million credit
cards, 88,000 bank branches, and 70,000 ATM”s.’. This
explains the growth trend and determines huge potential
to generate income from mobile transactions. Mobile
payment is considered convenient for customers and this
will increase the usage of mobiles for various banking
transactions by customers. Over the next five years it is
expected that unbanked rural market could act as a threat
for urban market in terms of size. Huge opportunity is
there for banks. (Source: nextbigwhat.com). In this paper,
we have highlighted the usage of various mobile banking
facilities and also frequency.
Mobile Banking is gaining popularity in India
with time. Main reason behind this can be enhanced use
of mobile by the customers. Mobile banking has emerged
significantly in last 10 years which symbolize innovation
in banking where both service and delivery mode is
technology based. Thus innovation and use of technology
have an effect on the distinctiveness of mobile banking
services (Lesley, 2001).
In developing countries like India, there are
more mobile phone users than bank account owners.
India stands second in terms of financially disqualified
households in the world which mean that more than
fifty percent of the population is financially underserved.
Report on financial inclusions by World Bank state that
35 percent of Indian population has bank account and 65
percent of the population is still in the need of various
financial services and access to financial institutions
facilities (Global Findex 2011).
Although growth can be seen in mobile banking
and it is beneficial for banks,there are many challenges
that Indian banks are experiencing through tremendous
increase in the mobile banking user database like mobile
set effectiveness, major privacy issues, transaction
feasibility and appropriateness, app compatibility,
consumer awareness and knowledge etc. Indian banks
are struggling with issues like technology adoption into
their systems which is very complex and banks should
make these technologies easy to use to customers. Data
shows that people are not very well updated with this
FIIB Business Review, Volume 5, Issue 2, April - June 2016
Research
upcoming mobile banking technology (Chaipoopirutana
& Vij, 2009).
Change in Consumer Experience after using
Mobile Banking Services.
Before the financial crisis, banking industry
gained customer trust through easy financing. After
the crisis, regulations have become strict about various
banking facilities which are forcing banks to identify
different sources of value creation. Digital banking is
one of the examples. Use of technology pushes banks
to increase customer relationship and build trust.
However, introduction of technology in banking is
always a widen issues as banks have been relatively
slow in implementing changes due to various regulatory
compliances (DeLaCastro et.al. 2014). Banks need to
focus more on these issues to attract customers. However,
as per the current trends customer’s confidence and
trust is increasing on their financial service providers.
Survey showed that 33 percent of customers have gained
confidence in last 12 years and customer’s confidence
loss has been declined by 40 percent as compared to last
year. After the introduction of online and mobile banking
facility, it has been become point of differentiation among
various banks. Integration of technology especially
mobile in banking witnessed arrival of new customers
in the data base and has impact on banking revenue
(Schlich, 2014).
Mobile banking not only offers facilities like
balance check, or do transactions they are also affecting
customer behavior. Integration of banking with their
personal mobile devices, customers are engaging
themselves in apps more than ever. Reason behind
this is mobile apps allow customers to avail banking
facilities without physical presence in branch. Customers
can also handle their money with a click. This facility
is encouraging customers to use mobile banking and
provide real life experience. They can carry out their
key transactions on Smartphones to save cost and time.
Mobile banking is convenient for them to use and is being
used on a regular basis. The habitual use of these apps
helps banks to have consumer on their display 30-40
times in a month (Jones, 2015). In this paper, we tried
to identify customer’s experience and change in attitude
after using mobile banking transactions. Result supports
the literature on customer’s attitude with mobile banking.
To determine the attitude of users about
adoption of mobile banking, many researchers have been
done to identify factors that determine the acceptance of
customers of mobile banking. Adoption of mobile banking
and acceptance depends on the customers trust (Singh,
77
 Research
Srivastava, & Srivastav, 2010; Kim, Shin, & Lee, 2007). Table 2. List of Banks Selected for Study.
They concluded that effectiveness of mobile banking
services, fraudprevention and secure privacy encourage Name of the Banks Market Capitalization(Rs. Cr)
customers to increase (continue to use) mobile banking HDFC Bank 273,596.95
transactions (Nayak, Nath & Goel, 2014).
SBI (State Bank of India) 218,058.39
Research Objectives ICICI Bank 182,365.71
yy To understand the perception of customers about Axis Bank 137,830.37
mobile banking system.
Kotak Mahindra Bank 126,389.96
yy To study various factors describing the use of mobile
banking services by the users. Bank of Baroda 42,371.37

yy To determine the impact of mobile banking on Punjab National Bank customers 29,487.46
customer’s mode of transactions. Canara Bank 15,940.19

Research Methodology Bank of India 11.495.70

This study was generated to understand IDBI Bank 10,922.95

customer perception and experience about mobile Source: moneycontrol.com, 2015
banking system. Exploratory and descriptive research
was used to collect relevant data. The respondents were Customer’s Perception about the Features of
randomly taken by using convenience sampling while Mobile Banking System
visiting the selected banks for the present study. Survey Data was collected for various factors and it
questionnaire was sent to more than 500 customers of was analyzed by using Factor analysis. Factor analysis
which 200 responses were received. 155 were selected is used to select relevant factors for the study and
for the present study as the rest of the questionnaires had remove insignificant items for mobile banking. To
incomplete information. Data was collected from three reduce dimension and identify relevant factors of mobile
district of Delhi-NCR region (Noida, Greater Noida and banking, factor analysis was conducted. Bartlett’s Test
South Delhi) of Sphericity was conducted and draws chi-square value
of 1142.204 with 300 degree of freedom at significance
Table 1. Number of Respondents for Each level of .000, which confirms that correlation matrix is
Category of Bank. not an identity matrix.
Name of the Banks Frequency Cumulative Percent Table 3. Profile of the Respondents
SBI (State Bank of 25 25 Age Monthly Qualifica- Occupation
India) Income tion
HDFC Bank 23 48 Below 25 10,000 or less: High School: Service-Govern-
Years: 34% 11.8% 29% ment /Public
Axis Bank 24 72 Sector: 13%

ICICI Bank 23 95 25-35 Years: 11,000 to 50, Graduate: Service-Govern-

50% 000: 45.1% 51% ment/Private
Bank of Baroda 25 120 Sector: 32%
Others* 35 155 36-45 Years: 51,000 to 150, Post Gradu- Business/
Total 155 9% 000:31.4% ate & Above: self-employed:
20% 35%
Source: Author’s survey
*Others include Bank of India, IDBI Bank, CANARA Bank, Kotak Bank 46-55 Years: 151,000 to 95 Not employed:
and Punjab National Bank customers. 2% 300,000: 2% 2%

The association of customers with banks range Above 55 301,000 to 120 Student: 18%
Years: 5% 500,000:6.9%
from 1 to 5 years and monthly income range from Rs
5000 to Rs1000000. Study contained the personal More than 155
501, 000:
characteristics and banking details of the respondents. To 2.9%
increase the reliability of inferences from the responses, Source: Author’s survey
out of 200, 155 were selected for the present study as the
rest of the questionnaires had incomplete information.

FIIB Business Review, Volume 5, Issue 2, April - June 2016 78


Further, a high KMO value of 0.804 (>0.5) showed
the use of factor analysis appropriate for finding relevant
factors. The factor analysis resulted in seven factors
which are awareness, value additions, user friendly,
app_compatibility, feasibility, security and accessibility
and reliability test was also conducted for these factors
to determine features of mobile banking services, which
showed the results of alpha coefficients for all factors
with reliability analysis which is above 0.7. This indicates
the good consistency of the questionnaire items.
Factor 1: Awareness: It assesses the awareness level
of consumer about mobile banking
services and features. This factor explains
responsiveness of customers towards
mobile banking.
Factor 2: Value additions: This factor judges the new
schemes and benefits provided by the
mobile banking. This factor evaluates
various new offers and facilities provided
under mobile banking and its benefits to
users.
Factor 3: User Friendly: Mobile banking is considered to
be easy and compatible with the situation.
User friendly is the factor which determines
the easiness of the mobile banking system.
This factor includes statements which
explain the friendliness of mobile app and
structure.
Factor 4: App-compatibility: This is the most important
factor in mobile banking. This factor
assesses the effectiveness and compatibility
of mobile banking system.
Factor 5: Feasibility: This factor shows the viability of the
mobile banking system. It also determines
the bank’s role in helping customer to
utilize the mobile banking app by provide
demo video or software
Factor 6: Security: Security is the major concern in
the mobile banking. This factor includes
variables which examine security issues of
mobile banking services. Under this factor,
we analyzed the security of app from virus
or hacking.
Factor 7: Accessibility: This factor determines the
convenience of mobile app. This factor tells
us the handiness feature of mobile banking
app.
FIIB Business Review, Volume 5, Issue 2, April - June 2016
Research
Experience of Customer after Switching to
Mobile Banking Services
Bartlett’s Test of Sphericity was conducted
and draws chi-square value of 368.707 with 55 degree
of freedom at significance level of .000, which confirms
that correlation matrix is not an identity matrix. Further,
a high KMO value of 0.763(>0.5) showed the use of
factor analysis appropriate for finding relevant factors.
Thus the relevant factors which are likely to enhance
the experience of consumers after using mobile banking
can be described as Initiatives and Transaction dealings.
These factors describe the impact of mobile banking
system on the variety of financial transactions done by the
customers. Transaction rate and reliability test was also
conducted for these factors, which showed the results of
alpha coefficients for all factors with reliability analysis
which is above 0.7. This indicates the good consistency of
the questionnaire items.
Factor 1: Initiatives: It is one of the important factors and
contains 5 variables. It assesses the initiatives or changes
customer experienced in doing financial transaction
through mobile banking. It reviewed the impact of mobile
banking services on customer transactions. This factor
gives the information about the increased usage of various
banking transactions done by the customers through
mobile banking. This directly impact performance of the
bank and revenue collected through mobile banking.
Factor 2: Transactions: This variable evaluates the use
of mobile banking and its impact on customer financial
investments and business’s banking transactions.
This factor examines various business dealings and
investments of customers and changes experienced
in these areas. How mobile banking impact customer
transactions is evaluated through this factor.
Hypotheses
Following hypotheses have been formulated:
H1: There is a significant impact of Demographic Variables
(Age and Occupation) of customer’s on the mobile
banking features and on the customer’s experience after
switching to mobile banking services
H2: Perception of customers of banks undertaken for
the present study is significant on the mobile banking
features and on the experience after switching to mobile
banking services.
H3: Impact of mobile banking transactions frequency is
significant on the mobile banking features and on the
experience switching to mobile banking.
79
 Research
Research Analysis and Findings and descriptive analysis were undertaken to find out the
relationship between the study variables. ANOVA results
Pilot testing was done for 50 customers. Factors
for various demographic and banking transactions of the
having factor loading greater or equal to 0.5 were
customers is summarized.
undertaken from the study. Various significance tests
like ANOVA, Compared means, Post Hoc, factor analysis

Table 4. Factor Analysis and Reliability Test-Mobile Banking Features and Customer’s Experience
after Switching to Mobile Banking
Factor Name of Statement Factor Eigen Factor Cronbach’s
Number Dimension Value Loading Alpha
I am not aware about the mobile banking services 0.76
There is always connection problem in mobile banking services 0.551

Mobile banking is not useful to me 0.848

Fl Awareness There is a privacy issues in Mobile banking services 0.503 6.4 25.62
Mobile banking services doesn't fit my working lifestyle 0.744
I don't know how to download mobile banking app 0.827
Mobile banking service requires a lot of mental efforts 0.747
Various discount schemes are available in mobile banking 0.864
offers 0.789
Value Addi-
F2 4.145 16.58
tion services Mobile banking app advises me about various investments opportu- 0.761
nities
Mobile banking updates me about my bill due date 0.586 0.341
Mobile banking is safe from viruses 0.803
Mobile banking is easy to handle 0.62
F3 User Friendly 1.779 7.118
Mobile banking provides details of all the banking products 0.692
effectively.] 0.503
Mobile banking services is feasible for me 0.712
App Compat-
F4 Mobile banking App is always updated 0.728 1.336 5.342
ibility
In Mobile banking, I can set my password 0.699
Mobile banking provides fund transfer facility anytime and anywhere 0.57
F5 Feasibility It provides bill payment services anytime and anywhere 0.626 1.244 4.976
Trial demo of mobile banking service is really useful 0.83
F6 Security Mobile banking services are not secure from hacking 0.71 1.1 4.399
F7 Accessibility Anyone can operate my mobile banking app 0.703 1.069 4274

Experience after switching to mobile banking

Factor Name of Statement Factor Eigen Factor Cron-
Number Dimension Value Load- bach’s
ing Alpha
Mobile banking has increased my fund transfer transactions. 0.682
I pay most of the bills through mobile banking now. 0.834

I have started reading E-billi E-Statement now 0.727

Fl Initiatives 4.13 30.38
I have become more tech-savvy now. 0.776
My fixedirecurring deposits transactions have been increased 0.554
I am using ticketing facility through mobile banking now 0.63 0.819
My Investment has not been affected after using mobile banking 0.693
services
Trans- There are no changes in my credit card usage after using mobile 0.666
F2 actions_ banking 1.56 31.36
Dealings
My business dealings are not affected by mobile banking 0.759
My Cheque related transactions are not affected by mobile banking 0.643
Source: Author’s survey

FIIB Business Review, Volume 5, Issue 2, April - June 2016 80


Impact of Demographic variables (H1: There is a
significant impact of Demographic Variables (Age
and Occupation) of customer’s on the mobile banking
features and on the customer’s experience after
switching to mobile banking services).
The result based on the demographic variable
(See Table 4) found that Security factor (F value= 2.60; p
value 0.05) has the significant impact based on the age of
the customers and Feasibility factor (F value=2.25; p value
0.005) has the significant impact based on the Occupation
of the customers. This signifies the relationship between
demographics of customer on mobile banking features
and accepts our first hypothesis (H1a). On the other hand,
survey showed that there is no impact of demographics
on the customer’s transaction experience after switching
to mobile banking. This rejects our first hypothesis (H1b)
Research
Perception of customers of selected Banks (H2:
Perception of customers of banks undertaken for the
present study is significant on the mobile banking
features and on the experience after switching to
mobile banking services).
Result explained that there is a significant
difference in the perception of customers of various
banks on the dimensions of mobile banking features like
security issues (F value=2.10; p value 0.004), user friendly
system (F value=2.10; p value 0.004) and Value added
schemes (F value= 3.12; p value 0.000). This accepts
our second null hypothesis (H2a). Result also explained
the significance of banks on customer experience like
Initiatives dimensions (F value=2.72; p value 0.001).
Opinions of customers about these factors are not similar
and also have different initiatives in mobile banking
transactions. Here our second hypothesis (H2b) is also
accepted for Initiative dimension.

Table 5. ANOVAs Result - Features of Mobile Banking and Experience of Customers after
switching to Mobile Banking
Factor Number H1(a) Demographics- Age H1(a) Demographics-Occupation (H2a) Banks

F Sig. F Sig. F Sig.

0.48 0.29
Accessibility 0.83 0.92 0.86 0.55

Alternate Hypothesis Rejected Rejected Rejected

security 2.60 0.05 1.70 0.14 2.10 0.04
Alternate Hypothesis Accepted Rejected Accepted
App_compatibility 2.08 0.11 1.81 0.12 1.64 0.13
Alternate Hypothesis Rejected Rejected Rejected
Feasibility 0.77 0.51 2.25 0.05 0.66 0.73
Alternate Hypothesis Rejected Accepted Rejected
User Friendly 2.05 0.11 0.45 0.81 2.10 0.04
Alternate Hypothesis Rejected Rejected Accepted
value addition 0.65 0.58 1.42 0.22 3.12 0.00
Alternate Hypothesis Rejected Rejected Accepted
Awareness 0.82 0.49 2.08 0.07 1.86 0.08
Alternate Hypothesis Rejected Rejected Rejected

Experience after using mobile banking

H1(a) Demographics- Age H1(a) Demographics-Occupation (H2a) Banks
F Sig. F Sig. F Sig.
trasanctions_dealings 1.68 018 0.27 0.93 0.48 0.87
Alternate Hvpotheseis Rejected Rejected Rejected
initiatives 0.29 0.83 1.17 0.33 2.72 0.01
Alternate Hvpotheseis Rejected Rejected Accepted

Source: Author’s survey

FIIB Business Review, Volume 5, Issue 2, April - June 2016 81


Post Hoc Test
Post hoc tests is used in this situations because
it consists of three or more means and additional
exploration of the differences among means is needed
to provide specific information on which means are
significantly different from each other. We used Tukey
HSD for types of banks. Result showed that for security
issues highest difference exist between Bank of India and
Punjab National Bank‘s customers, Perception of HDFC
Bank and SBI customer differs maximum in terms of user
friendly system and highest difference exists between
State Bank of India and IDBI bank’s customer with respect
to Value added services provided in mobile banking. It is
also determined from the result highest difference exists
between IDBI Bank and Bank of Baroda’s customers for
Initiative factor.
Research
Their initiatives differs after switching to mobile banking
services like fund transfer, bill payment, movie tickets etc.
IDBI Bank’ customer’s transactions rate increased after
using mobile banking services than Bank of Baroda.
Transaction Frequency of Customers (H3: Impact of
mobile banking transactions frequency is significant
on the mobile banking features and on the experience
switching to mobile banking).
Result described that three factors App
compatibility (F Value=4.70; p value 0.000), feasibility of
mobile app (F Value=3.26; p value 0.000), user friendly
system (F Value=5.61; p value 0.000) and awareness of
the mobile banking (F Value=3.80; p value 0.003) have
significant p value and analyze that the perceptions
of customers differ for these dimensions based on

Table 6. Post Hoc Test for Various Banks on the Features of Mobile Banking and Experience of
Customers after Switching to Mobile Banking
Hypothesis: H3 Hypothesis: H3

A. Tukey HSD for Security issues in mobile banking

Dependent Variable: Security

(I) In which bank do you have account? Mean Difference (I-J) Sig.
Bank of India Punjab National -2.00000* 0.047
Bank
Punjab National Bank Bank of India 2.00000* 0.047
B. Tukey HSD for User Friendly on mobile banking features
Dependent Variable: User_Friendly
(I) In which bank do you have account? Mean Difference (I-J) Sig.
SBI (State Bank of India) HDFC Bank -.78947* 0.023
HDFC Bank SBI (State Bank of .78947* 0.023
India)

C. Tukey HSD for Value Added Schemes provided by mobile banking

Dependent Variable: Value_addition
(I) In which bank do you have account? Mean Difference (I-J) Sig.
SBI (State Bank of India) IDBI Bank 2.07018* 0.001
IDBI Bank SBI (State Bank of -2.07018* 0.001
India)

D. Tukey HSD for Initiative factor of mobile banking experience

Dependent Variable: Initiatives
(I) In which bank do you have account? Mean Difference (I-J) Sig.
Bank of Baroda IDBI Bank -2.05556* 0.029
IDBI Bank Bank of Baroda 2.05556* 0.029
Source: Author’s survey

FIIB Business Review, Volume 5, Issue 2, April - June 2016 82

 Research
their frequency of transactions while using mobile Post hoc tests is used in this situations as it
banking. Customers have diverse beliefs about various consists of three or more means and additional exploration
mobile banking features. This leads to acceptance of of the differences among means is needed to provide
third hypothesis (H3a). On the other hand, factors like specific information on which means are significantly
Initiatives (F value=2.49; p value .002) and Transactions different from each other. We used Tukey HSD for
(F Value=2.49; p value.002) also impact transaction transaction’s level of customers and it impact on mobile
frequency of customers after switching to mobile banking banking features which found significant difference exists
services. Customers have diverse experience while using between customers using mobile banking several times
mobile banking services. This proves the acceptance of in a day and those who never use. We also determine
third hypothesis (H3b). the variation in the frequency level and its impact on
customer experience which demonstrated that customers
Table 7. ANOVAs Result- Transaction using mobile banking several times in a week do more
Frequency of Customers: Features of Mobile fund transfers, bill payments, movie tickets booking and
Banking and Experience of Customers after prefer E statement more than other customers .
Switching to Mobile Banking Discussion and Conclusion
(H3a_)Frecti.sericy of Around the world, banks are taking various
transaction technological initiatives to provide financial services. Use
F Sin.. of technology like mobile phones ensures their success
0_71
and directly impact bank performance. To achieve growth,
Accessibility 0_65 Banks must understand their customers perceptions
about mobile banking features and determines the impact
Alternate Hypothesis Rejected
of these features on consumer’s usage rate of mobile
security 0_65 0_71
banking. In this paper, we tried to identify customer’s
Alternate Hypothesis Rejected perception about mobile banking and also tried to analyze
ARR....compatibility 4.71 0_00 their experience after using mobile banking.
Alternate Hypothesis Accepted Study aimed to determine the impact of
Feasibility 3_26 0.00 demographic variable on customer’s view about mobile
Alternate Hypothesis Accepted banking. From the analysis, we found that there is an
impact of customer’s age on the use of mobile banking
User_FrienctlY 5.61 0.00
services. This study is also supported by literature
Alternate Hypothesis Accepted
review. Howcroft et al. (2002) explained the impact of
value addition 0_79 0.59 age and found in their research that customer’s age have
Alternate Hypothesis Rejected significant impact on mobile banking usage and customer
Awareness 7... 0_00 perceptions. In this paper we found customers of higher
Alternate Hypothesis
age group are more concerned about the security issues
of mobile banking which is in tune with the study done
Experience after usiii= mobile baulking
by Singh and Singh (2009). In this paper, it was found
(-13b) Frec_seric_.y. of transaction that occupation of customers also affects customer
F Sin_ perception. It means customers prefer feasible banking
trasaric ti021S dealings 2.49 0.02 system in their work. If system is effective and can be
Alternate Hypotheseis Accepted used anywhereit leads to higher usage of banking in their
work schedule.
initiatives 2_49 0_02
Alternate Hypotheseis Accepted

FIIB Business Review, Volume 5, Issue 2, April - June 2016 83

 Research
Table 8. Post Hoc Test for Frequency of Transactions on the Features of Mobile Banking and
Experience of Customers after Switching To Mobile Banking
Multiple Comparisons- Tukey HSD

Dependent Variable: App_compatibility

(I) How often do you use mobile banking services of your bank? Mean Difference (I-J) Sig.
Never Several times in a -1.57778* 0.003
day
Several times in a day Never 1.57778* 0.003
Multiple Comparisons- Tukey HSD
Dependent Variable: feasibility
(I) How often do you use mobile banking services of your bank? Mean Difference (I-J) Sig.
0.023
Several times in a week Never .97778* 0.004
Never Several times in a -.97778* 0.004
week
Multiple Comparisons- Tukey HSD
Dependent Variable: User_Friendly
(I) How often do you use mobile banking services of your bank? Mean Difference (I-J) Sig.
Several times in a day Never 1.31667* 0.033
Never Several times in -1.31667* 0.033
a day
Multiple Comparisons- Tukey HSD
Dependent Variable: awareness
(I) How often do you use mobile banking services of your bank? Mean Difference (I-J) Sig.
Several times in a week Never 1.16190* 0.002
Never Several times in a -1.16190* 0.002
week
Tukey HSD-For Frequency of transactions in mobile banking
Dependent Variable: Initiatives
(I) How often do you use mobile banking services of your bank? Mean Difference (I-J) Sig.
Several times in a week Never 1.13333* 0.001
Never Several times in a -1.13333* 0.001
week
Tukey HSD-For Frequency of transactions in mobile banking
Dependent Variable: Transactions
(I) How often do you use mobile banking services of your bank? Mean Difference (I-J) Sig.
Several times in a day Never -1.75000* 0.016
Never Several times in a 1.75000* 0.016
day
Source: Author’s Survey

Indian Banking Industry has identified the
importance of paperless banking and use of technology
in their system. This not only helps them to increase
customer satisfaction but also impact their profitability.
Literature also supports that banks are able to generate
revenue in terms of fees and messaging charges through
mobile banking (infoDEV, 2006). The research finding
confirmed the significance of mobile banking among
customers of different banks. To determine the factors
influencing usage of mobile banking, seven factors has

FIIB Business Review, Volume 5, Issue 2, April - June 2016 84


been identified through factor analysis viz. ‘Accessibility’,
‘Security’, ‘Value Added services’, ‘App compatibility’,
‘Awareness’, ‘User Friendly System’ and ‘Feasibility’.
Different bank customers have varied perception about
their bank’s mobile services related to security issues,
app usability and various value added scheme. Result
showed that customer prefer mobile banking if system is
user friendly and provide better services. In our research,
we found HDFC Bank and SBI customers are more
satisfied with the mobile services of their banks. This
data is also supported by the researches done by Kim,
Shin and Lee (2007). Customers are concerned about
the various security issues. We found Punjab National
bank customers are more worried about the security
issues than Bank of India and any other banks. Result
also determined that SBI customers get better value
added services than any other banks. This result conveys
that all banks must try to improve quality and security
issues of their services to attract more customers and
provide satisfactions. Literature also supports that
banking Industry must provide protection to customers;
guarantee to prevent from virus and other security issues,
flexibility of electronic devices (Hayat, 2009). Customers
will use electronic median for banking only when system
is suitable and hacking proof (Comninos et al., 2008).
This will help bank to gain trust of their customers which
will result into increased mobile banking transactions.
Mobile banking usage in various developing countries
is one the greatest technological revolution of the past
decade (Donner & Tellez, 2008). Users prefer mobile
banking not for convenience but for cost and access
factor (Cracknell, 2004). As accessibility of mobile
banking is increasing, customers stared using the system
more frequently. People are becoming more tech savvy
with the changing time. Mobile banking provides various
benefits to the customers in terms of saving cost and
time in going to the bank, waiting in queues etc. In this
paper we also tried to identify the impact of transaction
frequency on the perception of customers. Data revealed
that frequency of mobile banking transactions are
increasing with time. Mishra and Sahoo (2006) discussed
the various features of mobile commerce. According to
them, mobile commerce has more features as compared
to traditional way of doing financial transactions. This
includes features like localization, immediate response,
fast connectivity, flexible functions and user-friendly
authentication process. Study showed that significant
difference exists between customers’ perception, those
using mobile banking several times and who never used
it related to feasibility of the system, friendliness of the
system and difference exist in their awareness level about
FIIB Business Review, Volume 5, Issue 2, April - June 2016
Research
mobile banking also.
This shows that if Mobile Banking App is friendly
and easy to use, customer’s frequency of transactions
increases. Study explained that significant difference
found in the perception of customers those who use it
repeatedly and those who never use it. Data showed that
awareness about mobile banking services enhance with
increased usage rate. It also explained that those who
use this service several times in a day or week found app
more feasible and compatible with those who never used
it. Therefore, banks must encourage their customers
to increase their frequency of mobile banking access
to increase customer satisfaction and also enhance
awareness about the services.
There is significant business opportunity
available with banking industry with customers
nowadays. Customers trust their banks because
of convenience and security in doing transactions.
Customers prefer banks and use more banking facility if
system is flexible and accessible to operate. Integration
of technology especially mobile in banking witnessed
arrival of new customers in the data base and has impact
on banking revenue (Schlich, 2014).In this paper, we
also tried to relate mobile banking usage of customers
with their perceptions on mobile features. Considerable
results have been found and it determined that customer
perception changes with their usage rate of mobile
banking services. For Example, IDBI Bank customers are
doing more fund transfers activity, use of bill payment
services, booking more movie tickets etc. through mobile
banking as compared to other banks. They are more
technologically updated and prefer E statements after
using mobile banking.
The study also tried to analyze the impact
of mobile banking usage on the transactions rate
of customers. There exists significant difference in
the experience of customers about the transactional
aspects of mobile banking. This was visible in customer
investments, credit card usage, business dealings and
cheque related transactions which get affected by the
frequency of transactions done by them. Customers
who never use mobile banking do fewer transactions as
compared to those who use mobile banking several times
in a day.
Difference between the demographic variables
and customer’s mode of transactions was not found.
Thus,customers’ demographic profile doesn’t influence
their transactions behavior. Result also described that
frequent use of mobile banking services have an impact
on customer’s transactions rate. Frequent use of mobile
85

banking increases customer’s engagement in banking.
In this competitive world, banks must understand this
relationship and encourage customers to use mobile
banking frequently for their banking needs. This is
possible when banks understand customer’s need and
incorporate it their banking system to provide customer
satisfaction. This will not only help customers to fulfill
their banking needs efficiently, it will also improve bank’s
image and increase customer loyalty.
Various models have been used in the literature
and factors like usefulness, easiness, innovations, trust,
attitude, intention to use etc. have been identified and
their significance is also determined. It was concluded
in the research that introduction of mobile service is not
enough but banks must emphasis on the improvement
of features that leads to adoption of this service by
the customers (Kim, Shin & Lee 2007). Banks should
understand the importance of technology in the system
and how it can enhance relationship with customers and
increase profitability of the banks.
Managerial Implications
This paper will help banks to understand customer
perception about mobile banking usage and features. This
paper describes importance of E-transactions through
mobile for customers and also supports banks to work on
those areas to enhance relationship with customers. This
will automatically increase transactions of customers
and leads to higher fee based revenue for banks. This
paper compares ten different Banks in Delhi/NCR region
also provide customers views about various banks based
on their mobile banking services. Banks can use this data
and further analysis can be done to determine customer’s
requirements in mobile banking
Limitations and Scope for Future Research
This paper examined the impact of mobile
banking on the customer’s perception and their banking
transactions. Survey has been done for 155 respondents
of few selected banks. Criteria for selecting 155 samples
was purely based on convenience sampling and response
received from the selected banks. So, this study is limited
to selected banks and their limited number of customers.
An extension of the study may include more number of
public and private sector banks. Also large sample of
each bank would be useful for the study. Furthermore,
the data used in this study represents small geographical
areas. For future research, we can include complete
Delhi/NCR region. If the sample size is increased to a
FIIB Business Review, Volume 5, Issue 2, April - June 2016
Research
much larger size, say PAN India better results may come
in terms of customer’s perception of different banks and
its impact on usage of mobile banking services. Also,
better comparison can be done between the perceptions
of different bank’s customers on mobile banking.
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Author Profile
Prof. Nidhi Singh is an Assistant Prof. of Finance (Jaipuria Institute of Management) with more than 6 years of teaching experience and
2 years of corporate experience. She is a professional with UGC-NET qualification and NCFM certification (Capital/Derivative Market).
She is pursuing her Ph.D. from Indraprashta University, Dwarka. Her research interest areas are Banking and Risk Management, CSR,
Capital Market,Fixed Income Securities and Valuation, and Derivatives and Risk. She has presented paper in various conference and
have published several papers in national and international journals. She has attended FDP program in Case Methodology at IIM-A
and ‘Teaching Marketing Research’ in IIML (Noida Campus). She has written high-quality finance modules on Stock Market,Derivatives
and NCFM modules for various Financial Companies and provided Corporate Training on, “Indian Financial System and Equity Market
Developments”to the organizations like “FULLERTON GROUP LTD”, Artha Money Ltd etc. She can be reached atnidhi.singh@jaipuria.ac.in

Prof. Neena Sinha, is a Professor in University School of Management Studies, GGSIP University. She has been actively engaged in teaching
and research. In 1990-91 she was associated with Research Institute for Economics and Business Administration, Kobe University
Japan. Prior to joining GGS IP University Delhi, she worked as a faculty at Birla Institute of Technology and Science (BITS) Pilani. Shehas
published over fifty research papers in management journals and proceedings of National and International conferences. She can be
reached at dr_neenasinha@yahoo.com

FIIB Business Review, Volume 5, Issue 2, April - June 2016 87

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