An analysis of Internet banking offerings and its determinants in India

Paper By: Nabendu Maji

(nabendu.maji@gmail.com)

Institute of Management and Entrepreneurship Development

Bharati Vidyapeeth University

Abstract (summary):
This exploratory study is an attempt to present the present status of Internet banking in India and the extent of Internet banking services offered by Internet banks. In addition, it seeks to examine the factors affecting the extent of Internet banking services. The data for this study are based on a survey of bank websites explored during July 2008. The sample consists of 82 banks operating in India at 31 March 2007. Multiple regression technique is employed to explore the determinants of the extent of Internet banking services. The results show that the private and foreign Internet banks have performed well in offering a wider range and more advanced services of Internet banking in comparison with public sector banks. Among the determinants affecting the extent of Internet banking services, size of the bank, experience of the bank in offering Internet banking, financing pattern and ownership of the bank are found to be significant. The primary limitation of the study is the scope and size of its sample as well as other variables (e.g. market, environmental, regulatory etc) which may have an effect on the decision of the banks to offer a wide range of Internet banking services. The purpose of the study is to help fill significant gaps in knowledge about the Internet banking landscape in India. The findings are expected to be of great use to the government, regulators, commercial banks, other financial institutions, e.g. cooperative banks planning to offer Internet banking, bank customers and researchers. The bankers as well as society at large will come to know where the banks lag in terms of adoption of Internet banking and in providing different products and services. An understanding of the factors affecting the extent of Internet banking services is essential both for economists studying the determinants of growth and for the creators and producers of such technologies. Moreover, this paper contributes to the empirical literature on diffusion of financial innovations, particularly Internet banking, in a developing country, i.e. India.

1. Introduction The competitive pressures and the evolving requirements of consumers have required the banks to develop new technologies and tools. Internet banking that has revolutionised the banking industry worldwide is a product of this innovation. In general, Internet banking refers to the use of Internet as a delivery channel for the banking services, including traditional services, such as opening an account or transferring funds among different accounts, as well as new banking services, such as electronic bill presentment and payment, which allow the customers to pay and receive the bills on a bank's website. In India, slowly but steadily, the Indian customer is moving towards Internet banking. A number of banks have either adopted Internet banking or are on the threshold of adopting it. The Indian banks started Internet banking initially with simple functions such as getting information about interest rates, checking account balances and computing loan eligibility. Then the services were extended to online bill payment, transfer of funds between accounts and cash management services for corporate. The banks are using Internet banking technology to meet the ever-increasing competition. It has also emerged as a strategic resource for achieving higher efficiency, control of operations and reduction of cost by replacing paper based and labour intensive methods with automated processes thus leading to higher productivity and profitability. Internet-based electronic banking is one of the newest and least researched but most promising delivery channel for retail banking services. No doubt, considerable literature on this phenomenon is available worldwide, but in Indian context, there are only conceptual papers throwing light over the importance of Internet banking and its prospects for the Indianbanking industry. The present study aims to quantify the current state and performance of Internet banking in India in terms of various Internet banking services being offered and the factors that drive the development of such services. 2. Internet banking: literature review There are numerous papers that sought to study the present status and services of Internet bankinginternationally (see Table I [Figure omitted. See Article Image.]), for instance, [14] Egland et al. (1998), [33] Sathye (1997), [13] Diniz (1998), [26] Jayawardhena and Foley (2000), b17 b18 b19 b20 Furst et al. (2000a, b, 2002a, b), [7] Carlson et al. (2001), [38], [39] Sullivan (2000, 2001), [8] Chung and Paynter (2002), [37] Suganthi et al. (2001), [42] Vijayan and Shanmugam (2003), [22] Guru et al. (2003), [25] Jasimuddin (2001), [4] Awamleh et al. (2003), [6] Bojinov (2003), [43] Yeap and Cheah (2005), [3] Awamleh and Fernandes (2005), [5] Ayadi (2006), Hamid et al. (2007), [16] Floros (2008), and [41] Thulani et al. (2009). These studies investigated the status of Internet banking and banking services offered by Internet banks in developed countries like the US, the UK, Australia, New Zealand, Malaysia, United Arab Emirates and developing countries like Bulgaria, Saudi Arabia, Jordan, Tunisia, Greece and Zimbabwe. Despite the very late adoption of Internet technology in doing transaction online by banking institutions in developing countries, they are very fast catching up with the developed banking systems. These banks have been successful in implementation of introductory phase of Internet banking. However, the adoption of Internet banking services to a large extent is dependent on the value added services they can offer. A very little research exists on the implementation of Internet banking in transition and developing economies. Thus, there is a need to identify the actual status of Internet banking, i.e. how many banks offer Internet banking and what services they are offering, because an average customer will be interested to know whether net banking offers him/her a wide range of services. This study aims at assessing the extent to which Indian banks have adopted Internet banking to take advantage of opportunities in delivering banking products and improving customer relationship. Secondly, it investigates factors that explain which banks choose to offer a relatively wide range of Internet banking services, given that they offer transactional Internet banking. 3. The data and explanatory variables To date, it has been difficult to assemble comprehensive information on the Internet banking activities of banks in India, as there are no special reporting requirements for Internet banks, and hence there is no regularly compiled set of data about banks' Internet activities. A survey of banks' websites was executed for the purpose of exploring the present status of Internet banking and the extent of Internet banking services offered by Internet banks in India. In addition, bank communication in the form of phone calls and e-mail

was also used to gather information regarding the adoption dates of Internet banking. The websites of the banks were explored during the period of July 2008. The sample consists of 82 banks, which were operating in India as on 31 March 2007. Sample selection is based on the following criteria: - Only public (nationalised and SBI group), private (new and old private) and foreign banks which were operating in India as on 31 March 2007. - Banks whose websites were not found despite best efforts are considered as banks with no websites, hence non-Internet banks. - Banks offering only informational sites are considered as non-Internet banks. For the purpose of present study, 30 Internet banking services have been considered for the purpose of making comparative analysis of Internet banks. Table II [Figure omitted. See Article Image.] gives a brief description of all the 30 Internet banking services and weights (points) attached to each service. In order to measure the level of Internet banking services provided by banks, one point has been given to the bank for an Internet banking service of those shown in Table II [Figure omitted. See Article Image.], if it was provided by the bank. Using this rule, a bank can score a maximum of 30 points on this index and a minimum of zero. Total score has been calculated for each of the banks by adding the total number of Internet bankingservices provided by them. After calculating the total score of Internet banking services for each bank, the extent of Internet banking for each bank has been calculated as follows: Extent of IB of a particular bank = {Total score of the bank/Total no. of IB services considered (i.e. 30 items)}100. However, it should be noted that the logic behind assigning points to the attributes does not depend on the importance of the attribute nor on the quality of the information provided by the bank. Rather, it provides a measure of the quantity of Internet banking services made available through the Internet to the customers of the banks. 4. Adoption rates of Internet banks The survey results reveal that, in July 2008, all the banks in India had websites, of which 51 allowed transactions to be initiated through the Internet, which represents nearly 62 percent of total banks. However, the adoption rates across individual bank categories are not uniform. Adoption rates for transactional websites are highest in public sector and are lowest in foreign banks, thus providing a stiff competition between the private and public sector Internet banks. Among the private sector banks, new private sector banks (100 percent) lead the old private sector banks (61 percent) and among the public sector banks, SBI group (100 percent) leads the nationalised banks (95 percent) in providing Internet banking (Table III [Figure omitted. See Article Image.]). 5. Analysis of Internet banking services Tables IV [Figure omitted. See Article Image.] show the detailed results of the Internet banking services examination for sample banks during the survey period. The table shows the percentage of Internet banks offering each of the Internet banking services. The four categories of Internet banking services, i.e. view-only functions, account control functions, applications for new banking services and more advanced transactions have been discussed in detail. 5.1 View-only functions Table IV [Figure omitted. See Article Image.] shows that all the transactional Internet banks irrespective of their category, offer the view-only function, i.e. account balance enquiry. [14] Egland et al. (1998) showed that most Internet banks offered the services of balance inquiry. That generalisation applies even in case of India. Only 8 percent of Internet banks reviewed provides monthly statement by e-mail. A total of 16.7 percent of the foreign banks and 17.6 percent of banks in the private sector provide monthly statement by e-mail. While none of the Internet banks in public sector offer the same. All the transactional Internet banks provide interest rates upon their websites while only 24 percent of the banks provide foreign exchange updates. Again public sector banks lag behind in offering this service. Only 6 percent of private sector Internet banks provide an overview of bank

accounts in different banks at one instance, i.e. one view account. Only 14 percent of Internet banks provide a commentary upon market fluctuations. No public sector bank offers this service. 67 percent of the foreign banks and 47 percent of private banks provide demonstration of Internet banking on their websites. In general, foreign and private banks are more likely to offer general view functions of Internet banking except the balance enquiry and interest rates updates, where there is no difference among the categories of the banks. 5.2 Action/account control functions A total of 85.7 percent of the banks reviewed offer the facility of transferring funds between accounts while 83.7 percent of the banks offer the facility of transferring funds between third parties accounts. A total of 59 percent of the banks reviewed provided the opportunity of paying bills to third parties. All the banks irrespective of category have shown a high performance in offering the services of funds transfer and bill payments over the survey period. A look at Internet banking services beyond balance enquiry, funds transfer and bill payment reveals the pattern of what is offered by banks of different categories. As far as the services of providing customer correspondence and change of passwords are concerned there is no difference among the banks during the period of second survey. A total of 96 percent allow the creation or amendment of standing orders and request handlings (cheque book requests etc). A total of 100 percent of foreign and public and 88 percent of banks in private sector offer this service. A total of 51 percent of the banks allow alerts through e-mails or on mobiles. A total of 65 percent of private banks, 67 percent of foreign banks and 38.5 percent of public sector offer this service. Among the public sector banks, poor performance of nationalised banks in offering this service may be attributed to this lower percentage. A total of 88 percent of the banks allow enquiry about status of cheque. Banks have shown a poor performance in the provision of online TDS enquiry. In general, a stiff competition from private and foreign banks has forced the public sector banks to offer more control functions of Internet banking. 5.3 Applying for new banking services Relatively few banks offer the facility of making application and enabling new services. As the RBI does not permit the banks to allow account opening on Internet, however, at least the customer should be allowed to feed in personal details so that the process is expedited. Only 30.6 percent of the banks allow the customers to feed in personal details for applying to open a new account. A total of 83 percent of foreign and 35 percent of the private sector banks (57 percent of new private sector banks) offer this service. Public sector banks have shown a poor performance in offering this service. None of the banks in SBI group offer this service. A total of 70.6 percent of the private banks and 100 percent of the banks in foreign sector allow the customers to apply online for deposits (fixed deposits, saving deposits etc.). This drops to only 27 percent for the banks in public sector. A total of 32.7 percent of the banks offer online loan applications, among these, 83 percent of foreign banks, 35 percent of private sector and only 19 percent of public sector allows online applications for loans. Thus again providing a hedge of foreign and private banks over the public sector banks. 5.4 More advanced transactions Table IV [Figure omitted. See Article Image.] also contains information on the extent to which particular business lines - brokerage, investments, demat, credit card payments, trading, shopping and insurance services - were offered online. Private sector banks were more likely to offer insurance services, brokerage, trading online and shopping online compared with other categories. Some of the Internet banks have also started offering certain new services through Internet banking like tax payment, charity payment and railway ticket booking online. Public sector banks showed a tremendous performance in the provision of the services of tax payment and railway ticket booking online. 5.5 Corporate Internet banking Online corporate Internet banking (where businesses use the Internet to manage their bank balances) has been a growth area. This may reflect recognition by banks that business customers can be particularly active users of online banking services and may be among the banks' more profitable customers. The service is available on 77.6 percent of the transactional websites of

banks. A total of 100 percent of new private sector banks and banks in SBI group offer this service. Only old private sector Internet banks lag behind in offering this service. 5.6 Website privacy statements Both banks and their customers stand to benefit substantially from the increased ability to collect and analyse information obtained over the Internet. In particular, both can benefit from the collection and integration of large amounts of personal information that enhance the ability of banks to offer a wide range of products tailored to individual demands. But the collection, analysis, and distribution of information raise questions related to protecting personal privacy. A fundamental step many banks are taking to address online privacy is to post a statement of their policies about the collection and use of customer information. The database includes information on the number of transactional banks that had such a statement on their websites (see Table IV [Figure omitted. See Article Image.]). More than 90 percent of transactional Internet banks included a privacy policy statement on their websites. Foreign banks were more likely to post an on-line privacy policy than public and private sector banks. Indeed, 100 percent of the foreign banks included on their websites a statement about the collection and use of customer information, and almost 94 percent of private sector banks did so, as compared with 92 percent of the public sector banks. All Internet banks in new private sector and SBI group included on their websites a privacy statement. To acquire a clearer picture of the typical range of Internet services available at banks of different sizes, two categories of Internet banking services were defined. BASIC Internet banking is defined as the three coreInternet banking services: balance inquiry, funds transfer and bill payment. Premium Internet banking is defined as basic plus at least three other transactional services. Table IV [Figure omitted. See Article Image.] shows the proportion of banks by bank categories that offer only basic services to those that offer premiumInternet banking products. Almost 83 percent of Internet banks in foreign sector and nearly 47 percent in new private sector offer basic as well as premium Internet banking services. On the other hand, 61 percent ofInternet banks in public sector offer basic Internet banking services, while only 42 percent offer premium services. A noteworthy result emerges in SBI group. All the Internet banks in SBI group offer basic services, while a very few offer premium services. It means that although public sector banks can establish an online presence, they remain less likely to compete with foreign and new private sector banks on the basis of the range of offerings. To the extent that the variety of products is a key to attracting and maintaining a strong customer base, public sector banks may be at a disadvantage. 6. Extent of Internet banking services Table V [Figure omitted. See Article Image.] shows the extent of Internet banking services of 51 Internetbanks based on the information of key Internet banking services, drawn from websites of the banks. The table shows that ICICI Bank Ltd and HDFC Bank Ltd. offer maximum services through Internet banking with an extent of nearly 90 percent. After this, come foreign banks, i.e. ABN Amro and Citi Bank that score around 80 percent. UTI Bank Ltd. stands at third rank with an extent of nearly 77 percent while Kotak Mahindra Bank Ltd. stands at fourth place with an extent of nearly 73 percent. Thus, the first four ranks are acquired by new private and foreign Internet banks. The fifth rank is jointly shared by public sector banks, i.e. State Bank of India and Union Bank of India, with nearly 67 percent of services. The table shows that new private and foreign banks show higher levels ofInternet banking services. The remaining banks are in their early stages of development and introduction ofInternet banking services. 7. Factors affecting the extent of Internet banking services Depth of adoption is a relatively new construct defined as the extent to which a firm exploits an innovation's potential technological capabilities ([9] Cooper and Zmud, 1990; [15] Ettlie and Reza, 1992). After exploring the various Internet banking services offered by Internet banks factors, the next step is to investigate factors that explain which banks choose to offer a relatively wide range of Internet banking services. The purpose of this section is to explore the factors that affect the extent of Internet banking services being offered byInternet banks. The sample consists of 51 banks that are providing Internet banking services in India in July 2008 (as per the results explored in Table III [Figure omitted. See Article Image.]). Hence, the banks

that had not adoptedInternet banking or providing informational websites only were dropped. The financial data have been compiled as on 31 March 2007. 7.1 Explanatory variables Multiple regression analysis has been used to find the factors affecting the banks' extent of Internet bankingservices. The dependent variable in the regression analysis is extent that shows the extent of Internet banking services offered by each Internet bank (see Table V [Figure omitted. See Article Image.]). Definition and hypothesis development for the variables incorporated in the study are discussed below. 7.1.1 Size Size is an important variable affecting the banks' decision to adopt a wide array of Internet banking services. This is partly because it is relatively easy to observe and partly because it is typically taken as a proxy for all kinds of things: large firms are sometimes thought to be more capable (they may have higher quality or more technically able people on their staff, they may be freer from financial constraints, they may have market power or be more inclined to strategically pre-empt smaller rivals, they may have economies of scale and scope in R&D activities and in the application of their results and being able to take greater risks, the new innovation may be complementary with other activities they undertake or be capable of being applied to a wider range of activities than would be the case if the adopting firm were specialised, and so on) and for this reason, they may use innovations more intensively (i.e. on a large scale) and so earn more profits from adopting than smaller firms would. Thus, the expected sign is positive on this coefficient. 7.1.2 Age The coefficient of age is expected to be negative, because new banks are more flexible, do not have a legacy system to deal with and face smaller managerial obstacles to the adoption of the new technology. New banks may find it cheaper to install Internet banking technology in a package with other computer facilities compared to older banks that must add Internet banking to legacy computer system ([2] Ang and Koh, 1997; [40] Sullivan and Wang, 2005). [21] Giunta and Trivieri (2004) also propounded that the younger firms prove more ready to embrace innovative developments. 7.1.3 Experience It is plausible that banks will expand their services as they gain experience in offering Internet banking. Hence a variable, experience, has been included, which represents the number of years since the bank adoptedInternet banking. The variable may be considered a crude proxy for both accumulation of experience in general and reductions in the perceived risk of investments in Internet banking in particular. Hence, the Internet banking experienced banks would be expected to offer a wide array of Internet banking services. The expected sign on this variable is positive. 7.1.4 Deposits [38] Sullivan (2000) argued that a bank can generate a large number of Internet transactions if it has a sizeable customer base. As a proxy for customer base, deposits of the bank has been chosen. On the other hand, [19] Furst et al. (2002a) have shown that among Internet banks, those that place less emphasis on traditional funding tend to offer a wider range of Internet banking services, which is consistent with a more innovative business approach. Therefore, the sign expected on this variable is ambiguous. 7.1.5 Type of bank To account for nature of bank category, dummy variable private is included which takes the value of 1 if the bank happens to be a private bank (whether domestic or foreign) and takes a value of zero otherwise. The expected sign on private is positive as the banks with private ownership are supposed to offer a wide range ofInternet banking services.

The explanatory variables with their labels and expected signs that have been used to explain the relationship with the extent of Internet banking services are given in the Table VI [Figure omitted. See Article Image.]. 7.2 The model Multiple regression analysis has been used to find the factors affecting the banks' extent of Internet bankingservices. The dependent variable in the regression analysis is extent that shows the extent of Internet banking services offered by each Internet bank. Following model has been used to examine the relationship between the extent and the other explanatory variables affecting it: Equation 1 [Figure omitted. See Article Image.] where EXTENT i is the measure of range of Internet banking services for banki . In separate analyses of various bank categories, ownership dummy (private) will not be included, hence, the regression equation (1) will be modified as: Equation 2 [Figure omitted. See Article Image.] The parameters are estimated by the method of ordinary least square (OLS). 7.3 The results Table VII [Figure omitted. See Article Image.] presents the results of the multiple regression model, both for all banks and for banks under public (further categorised into nationalised and SBI group), private (further categorised into new private and old private) and foreign banks. Looking at results for all banks first, larger banks offer a wider range of Internet banking services than small banks. As expected, the coefficient on experience is positive, indicating that banks with greater experience inInternet banking offer a wider range of services. A very noteworthy result is with regard to deposits. The statistically significant negative coefficient on deposits indicates that, among Internet banks, those that place less emphasis on traditional funding offer a wider range of Internet banking services, which is consistent with a more innovative business approach. Age did not turn out to be a significant variable affecting expandedInternet banking services. The statistically significant positive coefficient on private indicates that private banks including foreign banks offer a wide range of Internet banking services in comparison to public banks. However, the results of the regression estimation are not similar for the bank categories sample to those for the all-bank sample. In case of public sector banks, only size of the bank is significant variable. All other variables are found to be insignificant. In the sub-category of nationalised banks, none of the variables turned out to be significant. In case of SBI group banks, banks that are large, are more inclined to offer a wide range of Internet banking services. In case of private showing that large other variables are variables is found insignificant. 8. Conclusions Internet banking has remained a nucleus issue of various studies all over the world. However there has constantly been a literature gap on the issue in India. The purpose of this paper is to help fill significant gaps in knowledge about the Internet banking landscape in India. The paper presents data, drawn from a survey of commercial banks' websites, on the number of banks that offer Internet banking and on the products and services they offer. The survey results reveal that, during the period of July 2008, 82 banks in India had websites, of which 51 allowed transactions to be initiated through the Internet in one form or the other, which represents nearly 62 percent of total sample banks. Most of the market is still untapped in India. The gap exists due to low adoption of Internet banking by old private sector and foreign banks. Private sector banks particularly new private banks and foreign Internet banks lead public sector Internet banks in offering a wide range and more advanced services of Internet banking. As most of the banking institutions in India have only recently started to offer Internet banking, there is a lot of scope for these institutions to expand their Internet banking services to have a more sophisticated customer base. It should also be remembered that only quantity of services will not serve the purpose, unless it is accompanied by quality also. The rate at which innovations are adopted by firms constitutes an important part of the process of technological change. After adopting a new technology, an important decision emerges before the (domestic) banks, as expected, size of the bank is positive and significant banks offer a wide range of Internet banking services than small banks. All found to be insignificant. In the sub-category of private banks, none of the to be significant. In case of foreign banks, all variables are found to be

firm management, i.e. the extent to which the capabilities of the new technology will be exploited labelled as "depth" of adoption. The decision is impacted by a number of influences, notably individual, organisational, technological and environmental and being aware of these factors and their importance is a potential decision opportunity for firm management. Through this study, an effort has been made to identify various bank characteristics which affect the extent of Internet banking services offered by Internet banks and being aware of these factors and their importance is a potential decision opportunity for bank management. The results of multiple regressions, examining the factors affecting the extent of Internet banking services, revealed that among banks that offer Internet banking, larger banks and banks that have offered this service for a longer time offer a wider range of services over the Internet. Large banks have more aggressive plans to offer Internet banking services in the future than smaller institutions. Also, banks relying less on deposits for financing, offer a wide range of services over the Internet, which is consistent with a more innovative business approach. Private banks offer a wider range of Internet banking services. Among various bank categories, size of the bank is the most prominent variable affecting the extent of Internet banking services. Financial Industry Perspectives Financial Industry Perspectives References 2. Ang, J. and Koh, S. (1997), "Exploring the relationships between user information satisfaction", International Journal of Information Management, Vol. 17 No. 3, pp. 169-77. 3. Awamleh, R. and Fernandes, C. (2005), "Internet banking: an empirical investigation into the extent of adoption by banks and the determinants of customer satisfaction in the United Arab Emirates", The Journal ofInternet Banking and Commerce, Vol. 10 No. 1. 4. Awamleh, R., Evans, J. and Mahate, A. (2003), "Internet banking in emergency markets: the case of Jordon - a note", The Journal of Internet Banking and Commerce, Vol. 8 No. 1. 5. Ayadi, A. (2006), "Technological and organizational preconditions to Internet banking implementation: case of a Tunisian bank", The Journal of Internet Banking and Commerce, Vol. 11 No. 1. 6. Bojinov, B. (2003), "What Bulgarian banks offer via Internet: an overview", No. 0310014, Economics Working Paper Archive (EconWPA), Finance. 7. Carlson, J., Furst, K., Lang, W.W. and Nolle, D.E. (2001), "Internet banking: market developments and regulatory issues", Society of Government Economists, Washington, DC. 8. Chung, W. and Paynter, J. (2002), "An evaluation of Internet banking in New Zealand", paper presented at 35th Annual Hawaii International Conference on System Sciences (HICSS'02), Big Island, HI. 9. Cooper, R.B. and Zmud, R.W. (1990), "Information technology implementation research: a technological diffusion approach", Management Science, Vol. 36, pp. 123-39. 13. Diniz, E. (1998), "Web banking in USA", The Journal of Internet Banking and Commerce, Vol. 3 No. 2. 14. Egland, K.L., Furst, K., Nolle, D.E. and Robertson, D. (1998), "Banking over the Internet", Quarterly Journal, Vol. 17 No. 4.

15. Ettlie, J.E. and Reza, E.M. (1992), "Organizational integration and process innovation", Academy of Management Journal, Vol. 35, pp. 795-827. 16. Floros, C. (2008), "Internet banking websites performance in Greece", Journal of Internet Banking and Commerce, Vol. 13 No. 3. 17. Furst, K., Lang, W.W. and Nolle, D.E. (2000a), "Who offers Internet banking?", Quarterly Journal, Office of the Comptroller of the Currency, Vol. 19 No. 2, pp. 27-46. 18. Furst, K., Lang, W.W. and Nolle, D.E. (2000b), "Internet banking: developments and prospects", working paper no. 2000-9, Economic and Policy Analysis, Office of Comptroller of the Currency, Washington, DC, September. 19. Furst, K., Lang, W.W. and Nolle, D.E. (2002a), "Internet banking: developments and prospects", working paper, Center for Information Policy Research, Harvard University, Cambridge, MA, April. 20. Furst, K., Lang, W.W. and Nolle, D.E. (2002b), "Internet banking", Journal of Financial Services Research, Vol. 22 Nos 1/2, pp. 93-117. 21. Giunta, A. and Trivieri, F. (2004), "Understanding the determinants of information technology adoption. Evidence from Italian manufacturing firms", discussion paper no. 38, Department of Economics and Statistics, University of Calabria, Arcavacata di Rende, Italy. 22. Guru, B.K., Shanmugam, B., Alam, N. and Perera, C.J. (2003), "An evaluation of Internet banking sites in Islamic countries", The Journal of Internet Banking and Commerce, Vol. 8 No. 2. 25. Jasimuddin, S.M. (2001), "Saudi Arabian banks on the web", The Journal of Internet Banking and Commerce, Vol. 6 No. 1. 26. Jayawardhena, C. and Foley, P. (2000), "Changes in the banking sector: the case of Internet banking in the UK", Internet Research: Electronic Networking Applications and Policy, Vol. 10 No. 1, pp. 19-30. 28. Malhotra, P. and Singh, B. (2006), "The impact of Internet banking on banks' performance: the Indian experience", South Asian Journal of Management, Vol. 13 No. 4, pp. 25-54. 29. Migdadi, Y.K.A. (2008), "The quality of Internet banking service encounter in Jordan", Journal of Internet Banking and Commerce, Vol. 13 No. 3. 33. Sathye, M. (1997), "Internet banking in Australia", The Journal of Internet Banking and Commerce, Vol. 2 No. 4. 35. Singh, B. and Malhotra, P. (2004a), "Internet banking: a comparative study of private and foreign banks in India", Journal of Applied Economics and Management, Vol. 2 No. 1, pp. 33-52. 36. Singh, B. and Malhotra, P. (2004b), "Adoption of Internet banking: an empirical investigation of Indianbanking sector", The Journal of Internet banking and Commerce, Vol. 9 No. 2. 37. Suganthi, R., Balachandher, K.G. and Balachandran, V. (2001), "Internet banking patronage: an empirical investigation of Malaysia", The Journal of Internet Banking and Commerce, Vol. 6 No. 1.

38. Sullivan, R.J. (2000), "How has the adoption of Internet banking affected performance and risk at banks? A look at Internet banking in the 10th Federal Reserve District", , Federal Reserve Bank of Kansas City, Kansas City, MO, December, pp. 1-16. 39. Sullivan, R.J. (2001), "Performance and operation of commercial bank web sites", , Federal Reserve Bank of Kansas City, Kansas City, MO, December, pp. 23-33. 40. Sullivan, R.J. and Wang, Z. (2005), "Internet banking: an exploration in technology diffusion and impact", working paper 05-05, Payments System Research Department, Federal Reserve Bank of Kansas City, Kansas City, MO. 41. Thulani, D., Tofara, C. and Langton, R. (2009), "Adoption and use of Internet banking Zimbabwe: an exploratory study", Journal of Internet Banking and Commerce, Vol. 14 No. 2. 42. Vijayan, P. and Shanmugam, B. (2003), "Service quality evaluation of Internet banking in Malaysia", The Journal of Internet Banking and Commerce, Vol. 8 No. 1. 43. Yeap, B.H. and Cheah, K.G. (2005), "Do foreign banks lead in Internet banking services?", The Journal ofInternet Banking and Commerce, Vol. 10 No. 2. Further Reading 1. Agarwal, N., Agarwal, R., Sharma, P. and Sherry, A.M. (2003), "E-banking for comprehensive edemocracy: an Indian discernment", The Journal of Internet Banking and Commerce, Vol. 8 No. 1. 2. Courchane, M., Nickerson, D. and Sullivan, R.J. (2002b), "Investment in Internet banking as a real option: theory and tests", The Journal of Multinational Financial Management, Vol. 12 Nos 4/5, pp. 347-63. 3. DeYoung, R. (2001), "The financial performance of pure play Internet banks", Economic Perspectives, Vol. 25 No. 1, pp. 60-75. 4. DeYoung, R. (2005), "The performance of Internet-based business models: evidence from the bankingindustry", Journal of Business, Vol. 78 No. 3, pp. 893-947. 5. Hasan, I., Maccario, A. and Zazzara, C. (2002), "Do Internet activities add value? The Italian bank experience", working paper, Berkeley Research Center, New York University, New York, NY. 6. Hernando, I. and Nieto, M.J. (2005), "Is the Internet delivery channel changing banks' performance? The case of Spanish banks", unpublished manuscript, Banco de Espaa, Madrid. 7. Kaushik, M. and Dhunna, M. (2006), "Internet banking: customers' profile", Amity Management Analyst, Vol. 1 No. 1, pp. 61-74. 8. Narayanan, V. (2000), "Nuts and bolts of Internet banking", Business Line, July 16. 9. Nickerson, D. and Sullivan, R.J. (2003), "Financial innovation, strategic real options and endogenous competition: theory and an application to Internet banking", working paper WP 03-01, Payments System Research, Federal Reserve Bank of Kansas City, Kansas City, MO.

10. Rao, G.R. and Prathima, K. (2003), "Internet banking in India", Mondaq Business Briefing, London, April 11. 11. Sathye, M. (2005), "The impact of Internet banking on performance and risk profile: evidence from Australian credit unions", The Journal of International Banking Regulation, Vol. 6 No. 2. Appendix Corresponding author Pooja Malhotra can be contacted at: pkwatra@gmail.com AuthorAffiliation Pooja Malhotra, Department of Business Management, Geeta Institute of Management and Technology, Kurukshetra, Haryana, India Balwinder Singh, Department of Commerce and Business Management, Guru Nanak Dev University, Amritsar, India Illustration Equation 1 Equation 2 Table I: List of studies on Internet banking Table II: List of Internet banking services Table III: Adoption rates of Internet banks in India Table IV: Key services offered by transactional Internet banks (percentage of Internet banks) Table V: Extent of Internet banking services Table VI: Description of variables affecting the extent of Internet banking services Table VII: Factors affecting the extent of Internet banking services